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August 24, 2010 at 13:39 PM EDT
New Leaf Brands Announces 2010 Second Quarter Financial Results

OLD TAPPAN, NJ -- (Marketwire) -- 08/24/10 -- New Leaf Brands, Inc. (OTCBB: NLEF)

  • Second Quarter Case Sales Increase 32.85% YOY
  • Second Quarter 2010 Revenue Increases 40% YOY
  • Second Quarter 2010 Gross Profit Margin Increased to 34.7% versus 22.9% in 2009
  • Six Months 2010 Case Sales Increase 34.65% YOY
  • Six Months 2010 Revenue Increases 38.6% YOY
  • Six months 2010 Gross Profit Margin Increased to 32.6% versus 17.2% in 2009

New Leaf Brands, Inc. (OTCBB: NLEF) ("Company"), a provider of great tasting, all natural, healthy beverages, announced the Company's financial results for the second quarter and six months ending June 30, 2010.

Eric Skae, New Leaf President and Chief Executive Officer, stated, " Today, the 'Official Beverage of Taste' is available in 37 states through over 125 distributors compared to 23 states and 55 distributors for the same period in 2009. Sales of New Leaf beverages have increased at a double-digit pace for the first half of 2010, outpacing the competition in the premium Iced Tea and Lemonade categories. Our growth is primarily attributable to our increased geographic territory distribution, case sales and total number of retail accounts. We are also pleased with our margin expansion to 34.7% for the second quarter of 2010 which is a direct result of our more focused implemented strategy. During the quarter we focused our growth efforts on expansion within key growth markets and controlled geographic expansion in markets with higher potential for growth. This has allowed us to reduce operating costs and build relationships with larger retailers as evidenced by our expansion incrementally into 42 Whole Food Market stores and 180 Giant Food Supermarkets. We believe our focus on building our distribution network while maintaining operating efficiencies will yield higher revenue and gross profit margin."

2010 Business and Product Updates

  • New Leaf expanded distribution in California in July with Coast Brands Group who will market New Leaf's 12 unique tea flavors sweetened with 100% organic cane sugar, 4 all natural lemonades made with 6%-10% real fruit juice and sweetened with 100% organic cane sugar and 2 diet iced teas sweetened with Splenda™ to more than 18 regional distributors who service more than 30,000 retail outlets in the states of California, Nevada and Arizona.
  • New Leaf expanded distribution with Whole Foods Market® through 42 additional Southern Pacific division stores.
  • Launched a new product lineup of lemonades in three flavors and one half-and-half flavor that sold out for the second time since market introduction in April. Production has been doubled to meet demand.
  • Homemade Lemonade flavor was the number one New Leaf beverage distributed by Manhattan Beer in the New York City metro area for June.
  • New Leaf opened distribution in 180 Giant Food Supermarkets operating in Virginia, Maryland, Delaware, and the District of Columbia.
  • As of today, New Leaf is available in 37 states, through more than 125 distributors compared to approximately 23 states and 55 distributors during the same period in 2009.

Financial Highlights for the Second Quarter Ended June 30, 2010:
Net Revenue from continuing operations for the quarter ending June 30, 2010 totaled $1.7 million, a 40% increase compared to $1.2 million for the quarter ending June 30, 2009. Revenue increased as a result of expanded distribution, an increase in the number of retailers offering our products and an increase in marketing programs. New Leaf's second quarter 2010 case volume increased 32.85% to 183,785 from 138,341 for the second quarter in 2010.

Cost of sales for the three months ending June 30, 2010 increased to $1.1 million, an 18.6% increase compared to $917,000 for the same period in 2009. Gross profit increased to $578,000 for the second quarter of 2010 compared to $272,000 for the second quarter of 2009 yielding an improved gross profit margin of 34.7% versus 22.9% respectively. Gross profit margin increased due to greater operating efficiencies realized as production volumes increase and the reduction in the price on raw materials. Management sees continued improvement in gross margins throughout 2010 as sales volumes continue to increase.

Operating expenses for the period ended June 30, 2010 and 2009 were $2.4 million and $1.4 million, respectively. The increase in operating expense for 2010 is primarily due an increase in Sales and Marketing expense to $1.5 million from $659,000 in 2009 and an increased stock-based compensation of $41,000 during the three month period ended June 30, 2010. General and Administrative expenses increased for the period ending June 30, 2010 to $542,000 compared to $499,000 for the same period in 2009, the increase of $44,000, was the result of relocating our New Jersey corporate office.

Net loss from continued operations for the period ended June 30, 2010 totaled $3.4 million or $(0.05) per share based on 63.8 million shares outstanding compared to a net loss of approximately $4.9 million or $(0.60) per share based on 8.5 million shares outstanding.

"We are pleased with our second quarter increase in revenue year over year and believe that we are poised to significantly increase our market share over the next twelve months. We continue to experience strong demand in the New York Metropolitan area and in California. In July we expanded distribution in California through Coast Brands Group who will market our products to more than 18 regional distributors who service more than 30,000 retail outlets. We expect the demand for our healthy and great tasting beverages to steadily increase in these two key markets and acceleration to continue in others such as Arizona, Chicago, and Texas," continued Mr. Skae.

Financial Highlights for the Six Months Ended June 30, 2010:
Net Revenue from continuing operations for the six months ending June 30, 2010 totaled $2.62 million, a 38.6 % increase compared to $1.9 for the same period ending June 30, 2009. Revenue increased as a result of expanded distribution, an increase in the number of retailers offering our products and an increase in marketing programs. New Leaf's first six months 2010 case volume increased 34.65% to 296,904 from 220,505 for the first six months in 2009.

Cost of sales for the six months ending June 30, 2010 increased to $1.77 million, a 13.5% increase compared to $1.56 million for the same period in 2009. Gross profit increased to $852,979 for the first six months of 2010 compared to $324,767 for the same period of 2009 yielding an improved gross profit margin of 32.6% versus 17.2% respectively. Gross profit margin increased due to greater operating efficiencies realized as production volumes increase and the reduction in the price on raw materials. Management sees continued improvement in gross margins throughout 2010 as sales volumes continue to increase.

Operating expenses for the six month period ended June 30, 2010 and 2009 were $5.3 million and $2.6 million, respectively. The increase in operating expense for 2010 is primarily due to an increase in Sales and Marketing expense to $2.7 million from $1.3 million in 2009. The increase in Sales and Marketing expense was attributable to an increased focus on establishing new markets for our products. General and Administrative expenses increased for the six month period ending June 30, 2010 to $2.1 million compared to $925,872 for the same period in 2009. The increase of $1,156,110 was due to the cost of transitioning to our new corporate office location and Option and Stock Compensation Expense increase of $1,124,986 in the six months period ended June 30, 2010.

Net loss from continued operations for the six month period ended June 30, 2010 totaled $6.1 million or $(0.10) per share based on 64.9 million shares outstanding compared to a net loss of approximately $7.4 million or $(0.91) per share based on 8.4 million shares outstanding.

About New Leaf Brands, Inc.:
Founded by Eric Skae in 2004 in Orangeburg, New York, New Leaf Brands (OTCBB: NLEF) was born out of the vision to provide consumers with a healthy and great tasting beverage. New Leaf Brands are available in 12 unique tea flavors sweetened with 100% organic cane sugar, 4 lemonades made with 6%-10% real fruit juice and sweetened with 100% organic cane sugar and 2 diet iced teas sweetened with Splenda™.

In the US, the refreshing beverages can be found in over 12,000 outlets including restaurants, delis, health food stores, pizzerias and other retail establishments. For more information, please visit http://www.newleafbrands.com/ or follow New Leaf on Twitter @DrinkNewLeaf and become a fan on Facebook (http://www.facebook.com/pages/New-Leaf-Tea/142029534279?ref=ts).

This press release may contain forward-looking statements, made in reliance upon Section 21D of the Exchange Act of 1934, which involve known and unknown risks, uncertainties or other factors that could cause actual results to differ materially from the results, performance, or expectations implied by these forward-looking statements. The Company's expectations, among other things, are dependent upon general economic conditions, continued demand for its products, the availability of raw materials, retention of its key management and operating personnel, its ability to operate its subsidiary companies effectively, need for and availability of additional capital as well as other uncontrollable or unknown factors which are more fully disclosed in the Company's Form 10-Ks and 10-Qs on file with the United States Securities and Exchange Commission.

Contacts:
Company:
David Tsiang
CFO
New Leaf Brands, Inc.
dtsiang@newleafbrands.com
(845) 365-1570

Media:
Danielle Terzian
Carolyn Izzo Integrated Communications
dterzian@ciicnews.com
(845) 358-3920, x14

Investor:
Alan Sheinwald/Mark McPartland
Alliance Advisors, LLC
asheinwald@allianceadvisors.net
markmcp@allianceadvisors.net
(914) 669-0222

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