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US – KonaRed announces strong sales growth for 2014

Substantial investment in advertising and marketing supports sales

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KOLOA, Hawaii – KonaRed Corporation reported strong sales growth for the twelve months ended December 31, 2014.

Twelve Months Ended December 31, 2014 Financial Summary

  • Consumer products sales plus delivery revenues increased 80% to $1,088,118 for the year ended December 31, 2014 compared to $604,772 for the year ended December 31, 2013.
  • Net sales (which include consumer product sales, delivery fees, and raw material ingredient sales) increased 39% to $1,254,234 for the year ended December 31, 2014, compared to $905,799 for the year ended December 31, 2013.
  • Cash provided by financing activities increased to $2,850,001 for the year ended December 31, 2014 versus $1,807,590 for the prior year, representing an increase of 58%.
  • Net working capital increased to a balance of $495,422 at December 31, 2014 from a balance of $363,748 at December 31, 2013.
  • Planned expenditures on advertising and marketing increased to $967,164 for the year ended December 31, 2014 versus $143,061 for the prior year, representing an increase of 576%.

Commenting on the 2014 full year financial results, KonaRed’s CEO Shaun Roberts stated, “Our first full year as a public company ended strongly and we are pleased with what we’ve accomplished thus far.

Sales growth continued and led to a 39% growth in overall revenue year-over-year, and consumer product related revenues up at an impressive rate of 80%. An example of the work done to increase sales is the entry of our nutritional supplement products into select Whole Foods Markets.

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Another example is the achievement of gaining placement of our three flavors of delicious beverages at 978 Kroger family of stores throughout the U.S., including Kroger, Food4Less, Ralphs and Fred Meyer, and other nationally recognized brands. Kroger is one of the world’s largest grocery retailers with close to $100 billion in sales in 2013.

We view Kroger’s selection of KonaRed products as a major milestone and anticipate continued expansion of our distribution network in 2015.”

Mr. Roberts continued, “2014 also saw us secure placement of our products into thousands of other stores including Walmart, and we expanded our distribution into the New York Metro area as well as many other top metro areas throughout the country, adding 30 new distribution points to our network.

It has been a solid year, but we’re not taking our eye off the ball and are pushing hard on new initiatives to further increase sales throughout 2015.”

Comparatively, due primarily to additional costs associated with KonaRed’s quick sales growth, cost of goods sold for the year ended December 31, 2014 increased by 144% to $1.09 million from $447,569 for the year ended December 31, 2013; gross margin decreased to $160,197 for FY2014, versus the gross margin of $458,230 for FY2013.

Additionally, some revenue items were reclassified during preparation of the Company’s FY2014 year-end financial statements and, as a result, full year sales were less than the estimate of $1.49 million published on January 27, 2015 and were a total of $1.25 million.

The Company’s net loss for FY2014 was $(4.6 million), or $(0.06) per share, versus a net loss of $(3.9 million), $(0.06) per share for FY2013. When the net losses for FY2014 and FY2013 are adjusted to exclude non-cash expenses totaling $2.1 million and $1 million, respectively, the comparative net losses decrease to $(2.5 million), or $(0.03) per share for FY2014, versus $(2.9 million), or $(0.04) per share for FY2013.

Net working capital increased to a balance of $495,422 at December 31, 2014 from a balance of $363,748 at December 31, 2013.

The Company raised $2.7 million through equity sales during the fiscal 2014, and $150,000 by rolling scheduled license fee payments due to its partner VDF FutureCeuticals Inc. into a senior convertible note.

Additionally, subsequent to FY2014 year-end, in January 2015 the Company entered into an agreement for the issuance of up to $1.1 million of unsecured subordinated convertible debentures maturing 18 months from each issuance date and issued a debenture in the principal amount of $440,000 for $400,000 in cash.

The Company may issue to Lender an additional $660,000 in Debentures consisting of two additional convertible debentures, each in the principal amount of $330,000, including $30,000 of original issue discount.

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