News Column

CASTLE BRANDS INC - 10-K - Management's Discussion and Analysis of Financial Condition and Results of Operations

June 30, 2014

Overview

Our objective is to continue building Castle Brands into a profitable international spirits company, with a distinctive portfolio of premium and super premium spirits brands. To achieve this, we continue to seek to:

focus on our more profitable brands and markets. We continue to focus our

distribution efforts, sales expertise and targeted marketing activities on our

more profitable brands and markets;

grow organically. We believe that continued organic growth will enable us to

achieve long-term profitability. We focus on brands that have profitable growth potential and staying power, such as our rums and whiskies, sales of which have grown approximately 40% over the past two fiscal years;



build consumer awareness. We use our existing assets, expertise and resources

to build consumer awareness and market penetration for our brands;

leverage our distribution network. Our established distribution network in all

50 U.S. states enables us to promote our brands nationally and makes us an attractive strategic partner for smaller companies seeking U.S. distribution; and



selectively add new brand extensions and brands to our portfolio. We intend to

continue to introduce new brand extensions and expressions. We continue to explore strategic relationships, joint ventures and acquisitions to selectively expand our premium spirits portfolio. We expect that future acquisitions or agency relations, if any, would involve some combination of cash, debt and the issuance of our stock.. Recent Events



Common stock equity distribution agreement

In November 2013, we entered into an Equity Distribution Agreement (the "Distribution Agreement") with Barrington Research Associates, Inc. ("Barrington"), as sales agent, under which we may issue and sell over time and from time to time, to or through Barrington, shares (the "Shares") of our common stock, $0.01 par value per share ("Common Stock") having a gross sales price of up to $6.0 million.

Sales of the Shares pursuant to the Distribution Agreement may be effected by any method permitted by law deemed to be an "at-the-market" offering as defined in Rule 415 of the Securities Act of 1933, as amended, including without limitation directly on the NYSE MKT LLC or any other existing trading market for the Common Stock or through a market maker, up to the amount specified, and otherwise to or through Barrington in accordance with the placement notices delivered by us to Barrington. Also, with our prior consent, some of the Common Stock issued pursuant to the Distribution Agreement may be sold in privately negotiated transactions.

Page 19



Between November 15, 2013 and June 25, 2014, we sold 6.6 million Shares of Common Stock pursuant to the Distribution Agreement for gross proceeds of $5.7 million, before deducting sales agent and offering expenses of $0.2 million. We used a portion of the proceeds to finance the acquisition of an additional $4.3 million in bourbon inventory in support of the growth of our Jefferson's bourbon brand.

Exercise of 2011 Warrants



In November 2013, in accordance with certain terms of the warrants issued in connection with our June 2011 private placement (the "2011 Warrants"), the down-round provisions included in the terms of the 2011 Warrants were no longer in effect as a result of the historical volume weighted average price and trading volume of our Common Stock. As a result, we then reclassed the fair value of the outstanding warrant liability of $6.2 million to equity, resulting in an increase to additional paid-in capital. Further, we were no longer required to recognize any change in fair value of the 2011 Warrants in future reporting periods.

In the year ended March 31, 2014, we issued 10.1 million shares of Common Stock and received $3.8 million in cash upon the exercise of 2011 Warrants. On April 2, 2014, we called for cancellation all remaining 1.7 million unexercised 2011 Warrants as of April 21, 2014. All of these warrants were exercised prior to cancellation and we issued approximately 1.7 million shares of Common Stock and received $0.6 million in cash upon the exercise thereof.

Conversion of Series A Preferred Stock

On February 11, 2014, our Board of Directors approved the mandatory conversion of all outstanding shares of our 10% Series A Convertible Preferred Stock, par value $ 0.01 per share ("Series A Preferred Stock") pursuant to their terms, effective on or about February 24, 2014. Pursuant to the mandatory conversion, all outstanding shares of Series A Preferred Stock, and accrued dividends thereon, converted into approximately 26.2 million shares of Common Stock.

5% Convertible Subordinated Notes

In October 2013, we entered into a 5% Convertible Subordinated Note Purchase Agreement (the "Note Purchase Agreement"), with the purchasers party thereto (the "Purchasers"), which provides for the issuance of an aggregate initial principal amount of $2.1 million unsecured subordinated notes (the "Convertible Notes"). We used a portion of the proceeds to finance the acquisition of additional bourbon inventory in support of the growth of our Jefferson's bourbon brand.

The Convertible Notes bear interest at a rate of 5% per annum and mature on December 15, 2018. The Convertible Notes and accrued but unpaid interest thereon are convertible in whole or in part from time to time at the option of the holders thereof into shares of our Common Stock at a conversion price of $0.90 per share (the "Conversion Price"). The Convertible Notes may be prepaid in whole or in part at any time without penalty or premium, but with payment of accrued interest to the date of prepayment. The Convertible Notes contain customary events of default, which, if uncured, entitle each noteholder to accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, the Convertible Notes. We issued the Convertible Notes on October 31, 2013.

The Purchasers include certain related parties of ours, including an affiliate of Dr. Phillip Frost ($500,000), a director of ours and our principal shareholder, Mark E. Andrews, III ($50,000), a director of ours and our Chairman, an affiliate of Richard J. Lampen ($50,000), a director of ours and our President and Chief Executive Officer, an affiliate of Glenn Halpryn ($200,000), a director of ours, Dennis Scholl ($100,000), a director of ours, and Vector Group Ltd. ($200,000), a more than 5% shareholder of ours, of which Richard Lampen is an executive officer and Henry Beinstein, a director of ours, is a director.

We may forcibly convert all or any part of the Convertible Notes and all accrued but unpaid interest thereon if (i) the average daily volume of the Common Stock (as reported on the principal market or exchange on which the Common Stock is listed or quoted for trading) exceeds $50,000 per trading day and (ii) the volume weighted average price of the Common Stock for at least twenty (20) trading days during any thirty (30) consecutive trading day period exceeds 250% of the then-current Conversion Price. Any forced conversion will be applied ratably to the holders of all Convertible Notes issued pursuant to the Note Purchase Agreement based on each holder's then-current note holdings.

Keltic Facility



Also in October 2013, in connection with our execution and delivery of the Note Purchase Agreement, we and our wholly owned subsidiary, Castle Brands (USA) Corp. ("CB-USA"), entered into a Fourth Amendment, Waiver and Consent (the "Fourth Amendment") to the Loan and Security Agreement (as amended, the "Keltic Loan Agreement"), dated as of August 19, 2011, with Keltic Financial Partners II, LP, a Delaware limited partnership ( "Keltic") , to amend certain terms of our existing $8.0 million revolving credit facility (the "Keltic Facility") and $4.0 million term loan to finance purchases of aged whiskies (the "Bourbon Term Loan"). The Fourth Amendment modifies certain aspects of the EBITDA covenant contained in the Loan Agreement, permits us to incur indebtedness in an aggregate original principal amount of $2.1 million pursuant to the terms of the Note Purchase Agreement and Convertible Notes and permits the us to make regularly scheduled payments of principal and interest and voluntary prepayments on the Convertible Notes, subject to certain conditions set forth in the Fourth Amendment.

Page 20



In November 2013, we entered into a Fifth Amendment to the Keltic Loan Agreement with Keltic, to, among other things, amend certain terms of our existing $8.0 million revolving facility and $4.0 million term loan with Keltic to provide for the issuances of letters of credit under the Keltic Loan Agreement.

Expansion of Gosling's Stormy Ginger Beer

In support of our growth of the Gosling's brand and the Dark'n Stormy cocktail, through GCP, we have recently begun producing Gosling's Stormy Ginger Beer in Germany and the U.K for international sales including Australia, Germany, the U.K., the Netherlands, Denmark, Italy, Ireland and Dubai.

Operations overview



We generate revenue through the sale of our products to our network of wholesale distributors or, in control states, state-operated agencies, which, in turn, distribute our products to retail outlets. In the U.S., our sales price per case includes excise tax and import duties, which are also reflected as a corresponding increase in our cost of sales. Most of our international sales are sold "in bond", with the excise taxes paid by our customers upon shipment, thereby resulting in lower relative revenue as well as a lower relative cost of sales, although some of our United Kingdom sales are sold "tax paid", as in the U.S. The difference between sales and net sales principally reflects adjustments for various distributor incentives.

Our gross profit is determined by the prices at which we sell our products, our ability to control our cost of sales, the relative mix of our case sales by brand and geography and the impact of foreign currency fluctuations. Our cost of sales is principally driven by our cost of procurement, bottling and packaging, which differs by brand, as well as freight and warehousing costs. We purchase certain products, such as Gosling's rums, Pallini liqueurs, Gozio amaretto and Tierras tequila, as finished goods. For other products, such as Jefferson's bourbons, we purchase the components, including the distilled spirits, bottles and packaging materials, and have arrangements with third parties for bottling and packaging. Our U.S. sales typically have a higher absolute gross margin than in other markets, as sales prices per case are generally higher in the U.S.

Selling expense principally includes advertising and marketing expenditures and compensation paid to our marketing and sales personnel. Our selling expense, as a percentage of sales and per case, is higher than that of our competitors because of our brand development costs, level of marketing expenditures and established sales force versus our relatively small base of case sales and sales volumes. However, we believe that maintaining an infrastructure capable of supporting future growth is the correct long-term approach for us.

While we expect the absolute level of selling expense to increase in the coming years, we expect selling expense as a percentage of revenues and on a per case basis to decline, as our volumes expand and our sales team sells a larger number of brands.

General and administrative expense relates to corporate and administrative functions that support our operations and includes administrative payroll, occupancy and related expenses and professional services. We expect general and administrative expense in fiscal 2015 to be comparable to fiscal 2014, as we continue to control core spending. We expect our general and administrative expense as a percentage of sales to decline due to economies of scale.

We expect to increase our case sales in the U.S. and internationally over the next several years through organic growth, and through the extension of our product line via line extensions, acquisitions and distribution agreements. We will seek to maintain liquidity and manage our working capital and overall capital resources during this period of anticipated growth to achieve our long-term objectives, although there is no assurance that we will be able to do so.

We continue to believe the following industry trends will create growth opportunities for us, including:

the divestiture of smaller and emerging non-core brands by major spirits companies as they continue to consolidate; increased barriers to entry, particularly in the U.S., due to continued consolidation and the difficulty in establishing an extensive distribution network, such as the one we maintain; and the trend by small private and family-owned spirits brand owners to partner with, or be acquired by, a company with global distribution. We expect to be an attractive alternative to our larger competitors for these brand owners as one of the few modestly-sized publicly-traded spirits companies.



Our growth strategy is based upon partnering with other brands, acquiring smaller and emerging brands and growing existing brands. To identify potential partner and acquisition candidates we plan to rely on our management's industry experience and our extensive network of industry contacts. We also plan to maintain and grow our U.S. and international distribution channels so that we are more attractive to spirits companies who are looking for a route to market for their products. We expect to compete for foreign and small private and family-owned spirits brands by offering flexible and creative structures, which present an alternative to the larger spirits companies.

Page 21



We intend to finance any future brand acquisitions through a combination of our available cash resources, third party financing and, in appropriate circumstances, the further issuance of equity and/or debt securities. Acquiring additional brands could have a significant effect on our financial position, and could cause substantial fluctuations in our quarterly and yearly operating results. Also, the pursuit of acquisitions and other new business relationships may require significant management attention. We may not be able to successfully identify attractive acquisition candidates, obtain financing on favorable terms or complete these types of transactions in a timely manner and on terms acceptable to us, if at all.

Financial performance overview

The following table provides information regarding our beverage alcohol case sales for the periods presented based on nine-liter equivalent cases, which is a standard industry metric:

Years ended March 31, 2014 2013 Cases United States 307,584 302,602 International 81,790 69,457 Total 389,374 372,059 Rum 166,939 152,696 Vodka 55,145 69,600 Liqueurs 91,832 86,431 Whiskey 70,592 53,798 Tequila 1,153 1,337 Wine 3,709 7,469 Other 4 728 Total 389,374 372,059 Percentage of Cases United States 79.0 % 81.3 % International 21.0 % 18.7 % Total 100.0 % 100.0 % Rum 42.8 % 41.0 % Vodka 14.2 % 18.7 % Liqueurs 23.6 % 23.2 % Whiskey 18.1 % 14.5 % Tequila 0.3 % 0.4 % Wine 1.0 % 2.0 % Other 0.0 % 0.2 % Total 100.0 % 100.0 %



The following table provides information regarding our case sales of non-beverage alcohol products for the periods presented:

Years ended March 31, 2014 2013 Cases United States 403,195 248,309 International 26,323 16,272 Total 429,518 264,581 United States 93.9 % 93.8 % International 6.1 % 6.2 % Total 100.0 % 100.0 % Page 22



Critical accounting policies and estimates

A number of estimates and assumptions affect our reported amounts of assets and liabilities, amounts of sales and expenses and disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate these estimates and assumptions based on historical experience and other factors and circumstances. We believe our estimates and assumptions are reasonable under the circumstances; however, actual results may differ from these estimates.

We believe that the estimates and assumptions discussed below are most important to the portrayal of our financial condition and results of operations in that they require our most difficult, subjective or complex judgments and form the basis for the accounting policies deemed to be most critical to our operations.

Revenue recognition



We recognize revenue from product sales when the product is shipped to a customer (generally a distributor), title and risk of loss has passed to the customer under the terms of sale (FOB shipping point or FOB destination) and collection is reasonably assured. We do not offer a right of return but will accept returns if we shipped the wrong product or wrong quantity. Revenue is not recognized on shipments to control states in the U.S. until such time as the product is sold through to the retail channel.

Accounts receivable



We record trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the trade accounts receivable balances and charged to the allowance for doubtful accounts. We calculate this allowance based on our history of write-offs, level of past due accounts based on contractual terms of the receivables and our relationships with, and economic status of, our customers.

Inventory valuation



Our inventory, which consists of distilled spirits, bulk wine, dry good raw materials (bottles, labels and caps), packaging and finished goods, is valued at the lower of cost or market, using the weighted average cost method. We assess the valuation of our inventories and reduce the carrying value of those inventories that are obsolete or in excess of our forecasted usage to their estimated realizable value. We estimate the net realizable value of such inventories based on analyses and assumptions including, but not limited to, historical usage, future demand and market requirements. Reduction to the carrying value of inventories is recorded in cost of goods sold.

Goodwill and other intangible assets

As of March 31, 2014 and 2013, we recorded $0.5 million of goodwill that arose from acquisitions. Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. Intangible assets with indefinite lives consist primarily of rights, trademarks, trade names and formulations. We are required to analyze our goodwill and other intangible assets with indefinite lives for impairment on an annual basis as well as when events and circumstances indicate that an impairment may have occurred. Certain factors that may occur and indicate that an impairment exists include, but are not limited to, operating results that are lower than expected and adverse industry or market economic trends. We evaluate the recoverability of goodwill and indefinite lived intangible assets using a two-step impairment test approach at the reporting unit level. In the first step the fair value for the reporting unit is compared to its book value including goodwill. If the fair value of the reporting unit is less than the book value, a second step is performed which compares the implied fair value of the reporting unit's goodwill to the book value of the goodwill. The fair value for the goodwill is determined based on the difference between the fair values of the reporting units and the net fair values of the identifiable assets and liabilities of such reporting units. If the fair value of the goodwill is less than the book value, the difference is recognized as an impairment.

The fair value of each reporting unit was determined at each of March 31, 2014 and 2013 by weighting a combination of the present value of our discounted anticipated future operating cash flows and values based on market multiples of revenue and earnings before interest, taxes, depreciation and amortization ("EBITDA") of comparable companies. Other than the write downs of intangible and goodwill related to the wine brands discussed below, we did not record any impairment on goodwill or other intangible assets for fiscal 2014 or 2013.

Page 23



Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to the estimated residual values and reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We are required to amortize intangible assets with estimable useful lives over their respective estimated useful lives to the estimated residual values and to review intangible assets with estimable useful lives for impairment in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 310, "Accounting for the Impairment or Disposal of Long-lived Assets."

In March 2013, we determined to reduce our sales and marketing efforts on our wine brands, which do not provide a material contribution to our results of operations. We made this decision to optimize our resources and focus on our faster growing and more profitable spirits brands, and to reduce the levels of working capital required to maintain necessary inventory levels of bulk wine and finished goods. We intend to continue selling existing finished goods wine inventory through our current sales channels, but are actively seeking buyers for large lots and for our bulk wine. In connection with this decision, we recognized a loss of $1.7 million, consisting of $0.8 million on the write-down of net intangible assets and $0.9 million in goodwill, as well as $0.3 million charged to the provision for obsolete inventory to adjust both bulk wine and finished goods to estimated net realizable value, for the year ended March 31, 2013.

Stock-based awards



We follow current authoritative guidance regarding stock-based compensation, which requires all share-based payments, including grants of stock options, to be recognized in the income statement as an operating expense, based on their fair values on the grant date. Stock-based compensation was $0.4 million and $0.3 million for fiscal 2014 and 2013, respectively. We used the Black-Scholes option-pricing model to estimate the fair value of options granted. The assumptions used in valuing the options granted during fiscal 2014 and 2013 are included in note 13 to our consolidated financial statements.

Fair value of financial instruments

ASC 825, "Financial Instruments" ("ASC 825"), defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties and requires disclosure of the fair value of certain financial instruments. We believe that there is no material difference between the fair value and the reported amounts of financial instruments in the balance sheets due to the short-term maturity of these instruments, or with respect to the debt, as compared to the current borrowing rates available to us.

Results of operations



The following table sets forth, for the periods indicated, the percentage of net sales of certain items in our consolidated financial statements.

Years ended March 31, 2014 2013 Sales, net 100.0 % 100.0 % Cost of sales 63.0 % 63.8 % Provision for obsolete inventory 0.4 % 1.7 % Gross profit 36.6 % 34.5 % Selling expense 26.0 % 27.2 % General and administrative expense 11.5 % 11.6 % Depreciation and amortization 1.8 % 2.2 % Loss on wine assets 0.0 % 4.1 % Loss from operations (2.7 )% (10.6 )% Loss from equity investment in non-consolidated affiliate (1.0 )% (0.1 )% Foreign exchange loss (0.6 )% (0.6 )% Interest expense, net (2.2 )% (1.4 )% Net change in fair value of warrant liability (11.2 )% 0.7 % Income tax benefit, net 1.2 % 0.3 % Net loss (16.5 )% (11.7 )% Net income attributable to noncontrolling interests (1.9 )% (1.5 )% Net loss attributable to controlling interests (18.4 )% (13.2 )% Dividend to preferred shareholders (0.8 )% (1.8 )% Net loss attributable to common shareholders (19.2 )% (15.0 )% Page 24



The following is a reconciliation of net loss attributable to common shareholders to EBITDA, as adjusted:

Years ended March 31, 2014 2013 Net loss attributable to common shareholders $ (9,291,346 )$ (6,193,225 ) Adjustments: Interest expense, net 1,062,219 587,308 Income tax benefit, net (590,414 ) (118,349 ) Depreciation and amortization 860,254 920,305 EBITDA (loss) (7,959,287 ) (4,803,961 ) Allowance for doubtful accounts 403,049 86,869 Allowance for obsolete inventory 200,000 684,830 Stock-based compensation expense 393,914 282,314 Loss on wine assets - 1,715,728 Loss from equity investment in non-consolidated affiliate 502,518 22,549 Foreign exchange loss 284,962 247,431 Net change in fair value of warrant liability 5,392,594 (302,734 ) Net income attributable to noncontrolling interests 935,035 610,492 Dividend to preferred shareholders 384,599 744,468 EBITDA, as adjusted 537,384 (712,014 )



Earnings before interest, taxes, depreciation and amortization, or EBITDA, adjusted for allowances for doubtful accounts and obsolete inventory, loss on wine assets, non-cash compensation expense, loss from equity investment in non-consolidated affiliate, foreign exchange, net change in fair value of warrant liability, net income attributable to noncontrolling interests and dividend to preferred shareholders is a key metric we use in evaluating our financial performance. EBITDA is considered a non-GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act of 1933, as amended. We consider EBITDA, as adjusted, important in evaluating our performance on a consistent basis across various periods. Due to the significance of non-cash and non-recurring items, EBITDA, as adjusted, enables our Board of Directors and management to monitor and evaluate the business on a consistent basis. We use EBITDA, as adjusted, as a primary measure, among others, to analyze and evaluate financial and strategic planning decisions regarding future operating investments and allocation of capital resources. We believe that EBITDA, as adjusted, eliminates items that are not indicative of our core operating performance or are based on management's estimates, such as allowance accounts, are due to changes in valuation, such as the effects of changes in foreign exchange or fair value of warrant liability, or do not involve a cash outlay, such as stock-based compensation expense. Our presentation of EBITDA, as adjusted, should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items or by non-cash items, such as non-cash compensation, which is expected to remain a key element in our long-term incentive compensation program. EBITDA, as adjusted, should be considered in addition to, rather than as a substitute for, income from operations, net income and cash flows from operating activities.

Our EBITDA, as adjusted, improved to income of $0.5 million for the year ended March 31, 2014, as compared to a loss of ($0.7) million for the comparable prior-year period, primarily as a result of our increased sales and gross profit.

Fiscal 2014 compared with fiscal 2013

Net sales. Net sales increased 16.2% to $48.1 million for the year ended March 31, 2014, as compared to $41.4 million for the comparable prior-year period, due to the overall growth of our Gosling's, Jefferson's, Clontarf and Brady's brands. Our international case sales as a percentage of total case sales increased to 21.0% for the year ended March 31, 2014 from 18.7% for the comparable prior-year period due to strong growth in Irish whiskey sales in international markets. The overall sales growth was partially offset by a decrease in vodka sales due to continued price competition. We continue to focus on our faster growing brands and markets, both in the U.S. and internationally.

Page 25



The table below presents the increase or decrease, as applicable, in case sales by product category for the year ended March 31, 2014 as compared to the year ended March 31, 2013:

Increase/(decrease) Percentage in case sales increase/(decrease) Overall U.S. Overall U.S. Rum 14,309 5,467 9.4 % 4.7 % Liqueur 5,401 4,574 6.2 % 5.3 % Whiskey 16,727 11,071 31.1 % 35.0 % Vodka (14,456 ) (11,462 ) (20.8 )% (19.7 )% Tequila (184 ) (184 ) (13.8 )% (13.8 )% Wine (3,760 ) (3,760 ) (50.3 )% (50.3 )% Other (724 ) (724 ) (99.4 )% (99.4 )% Total 17,313 4,982 4.7 % 1.6 %



Gross profit. Gross profit increased 22.9% to $17.6 million for the year ended March 31, 2014 from $14.3 million for the comparable prior-year period, while our gross margin increased to 36.6% for the year ended March 31, 2014 compared to 34.6% for the comparable prior-year period. The increase in gross profit was primarily due to increased sales in the current period, while the increase in gross margin was due to an increase in sales of our more profitable brands, in particular the Jefferson's brands. During the year ended March 31, 2014, we recorded a net allowance for obsolete and slow moving inventory of $0.2 million, as compared to $0.7 million for the prior year period. We recorded these allowances on both raw materials and finished goods, primarily in connection with label and packaging changes made to certain brands, as well as certain cost variances. The allowance recorded in the prior year period included $0.3 million incurred in connection with our determination to cease supporting our wine brands. The net charges have been recorded as an increase to Cost of Sales in both periods. Net of the allowance for obsolete inventory, our gross margin for the year ended March 31, 2014 was 37.0% as compared to 36.2% for the comparable prior-year period.

Selling expense. Selling expense increased 11.2% to $12.5 million for the year ended March 31, 2014 from $11.3 million for the comparable prior-year period, primarily due to a $0.7 million increase in shipping costs due to increased sales vaolume, a $0.3 million increase in employee costs and a $0.1 million increase in advertising, marketing and promotion expense in support of our overall volume growth. The increase in sales resulted in a net decrease of selling expense as a percentage of net sales to 26.0% for the year ended March 31, 2014 as compared to 27.2% for the comparable prior-year period.

General and administrative expense. General and administrative expense increased 14.2% to $5.5 million for the year ended March 31, 2014 from $4.8 million for the comparable prior-year period, primarily due to a $0.3 million increase in bad debt expense due to the insolvency of certain international distributors and the write-off of uncollectable receivables from wine sales, as well as an overall increase in the allowance due to the increase in overall sales. Also, the year ended March 31, 2014 included a $0.1 million increase in each of professional fees, insurance and occupancy costs and employee expense. The increase in sales in the current period resulted in general and administrative expense as a percentage of net sales decreasing to 11.5% for the year ended March 31, 2014 as compared to 11.6% for the comparable prior-year period.

Depreciation and amortization. Depreciation and amortization was $0.9 million for the each of the years ended March 31, 2014 and 2013.

Loss from operations. As a result of the foregoing, loss from operations improved 70.0% to ($1.3) million for the year ended March 31, 2014 from ($4.4) million for the comparable prior-year period, which prior-year period included a ($1.7) million loss on wine assets. Net of the loss on wine assets, loss from operations improved 50.0% from ($2.7) million for the comparable prior-year period. As a result of our focus on our stronger growth markets and better performing brands, and expected growth from our existing brands, we anticipate improved results of operations in the near term as compared to comparable prior-year periods, although there is no assurance that we will attain such results.

Net change in fair value of warrant liability. We recorded the fair market value of the 2011 Warrants at their initial fair value. Changes in the fair value of the 2011 Warrants were recognized in earnings for each reporting period. For the year ended March 31, 2014, we recorded a non-cash charge for loss on the change in the value of the warrants of ($5.4) million, as compared to a gain of $0.3 million for the comparable prior-year period, primarily due to the effects of our increased share price on the Black-Scholes valuation. In November 2013, in accordance with certain terms of the 2011 Warrants, the down-round provisions included in the terms of the warrant ceased to be in effect due to the historical VWAP and trading volume of our Common Stock. As a result, the then outstanding warrant liability of $6.2 million was eliminated and recognized as an increase to additional paid-in capital. For the year ended March 31, 2014, holders of 2011 Warrants exercised 10.1 million 2011 Warrants and received shares of Common Stock. We received $3.8 million in cash upon the exercise of these warrants. In April 2014, we called for cancellation all remaining 1.7 million unexercised 2011 Warrants pursuant to their terms, after satisfying applicable conditions. Pursuant to the call for cancellation, holders of all 1.7 million unexercised 2011 Warrants exercised and received 1.7 million shares of Common Stock. We received $0.6 million in cash upon the exercise of these warrants. As a result, all outstanding 2011 Warrants have been exercised as of the date of this report. Accordingly, we are no longer required to recognize any changes in fair value of the 2011 Warrants in future reporting periods.

Page 26



Income tax benefit, net. We released the deferred tax asset valuation allowance allocated to GCP as of March 31, 2014 due to our determination that it was "more likely than not" that the GCP's deferred tax assets would be realized. "More likely than not" is defined as greater than 50% probability of occurrence. Our determination as to the ultimate realization of the deferred tax assets is dependent upon our judgment and evaluation of both positive and negative evidence, forecasts of future taxable income, applicable tax planning strategies, and an assessment of current and future economic and business conditions. In 2014, GCP was in a position of cumulative profitability on a pre-tax basis, considering its operating results for the three years ended March 31, 2014. We concluded that this record of cumulative profitability in recent years, in addition to a long range forecast showing continued profitability for GCP, provided sufficient positive evidence that the net U.S. federal tax benefits more likely than not would be realized. Accordingly, in the year ended March 31, 2014, we released the valuation allowance against GCP's net federal deferred assets, resulting in a $0.5 million benefit in provision for income taxes for the year ended March 31, 2014.

Loss from equity investment in non-consolidated affiliate. In August 2010, through CB-USA, we formed DP Castle Partners, LLC ("DPCP") with Drink Pie, LLC to manage the manufacturing and marketing of Travis Hasse's Original Apple Pie Liqueur, Cherry Pie Liqueur and any future line extensions of the brand. We have accounted for our investment in DPCP on the equity method of accounting. Results from this investment were de minimis in each of the years ended March 31, 2014 and 2013. In December 2013, we determined to cease marketing and selling these brands and returned the remaining inventory to Drink Pie, LLC. In connection with the discontinuation of marketing and sales efforts, we recognized a loss of $0.5 million from our investment in DPCP, including a $0.1 million loss on investment and write-offs of $0.4 million on the remaining receivable balances due from DPCP, for the year ended March 31, 2014.

Foreign exchange loss. Foreign exchange loss for the year ended March 31, 2014 was ($0.3) million as compared to a loss of ($0.2) million for the comparable prior-year period due to the net effects of fluctuations of the U.S. dollar against the Euro and their effects on our Euro-denominated intercompany balances due to our foreign subsidiaries for inventory purchases.

Interest expense, net. We had interest expense, net of ($1.1) million for the year ended March 31, 2014 as compared to ($0.6) million for the comparable prior-year period due to increased balances outstanding under our credit facilities. Due to expected balances on the Keltic Facility and other indebtedness, we expect interest expense, net to increase in the near term as compared to prior-year periods.

Net income attributable to noncontrolling interests. Net income attributable to noncontrolling interests during the year ended March 31, 2014 was ($0.9) million as compared to ($0.6) million for the comparable prior-year period, both the result of allocated net income recorded by our 60% owned subsidiary, Gosling-Castle Partners, Inc.

Dividend to preferred shareholders. For each of the years ended March 31, 2014 and 2013, we recognized a dividend on our Series A Preferred Stock of $0.4 million, as compared to $0.7 million in the prior-year period, as required by the terms of the preferred stock. Accrued dividends on our Series A Preferred Stock were only payable in Common Stock upon conversion or liquidation. Pursuant to the mandatory conversion described above in Recent Events, all outstanding shares of Series A Preferred Stock, and accrued dividends thereon, converted into Common Stock in February 2014. Accordingly, we will no longer recognize a dividend to preferred shareholders in future reporting periods.

Net loss attributable to common shareholders.As a result of the net effects of the foregoing, especially the non-cash charge for loss on the net change in fair value of warrant liability in the current year, offset by the loss on wine assets in the prior year, net loss attributable to common shareholders increased to ($9.3) million for the year ended March 31, 2014 as compared to ($6.2) million for the comparable prior-year period. Net loss per common share, basic and diluted, was ($0.08) per share for the year ended March 31, 2014 as compared to ($0.06) per share for the comparable prior-year period. Net loss per common share, basic and diluted, as reported in the current period was improved by the issuance of 43.0 million shares of Common Stock in connection with the Distribution Agreement, the conversion of Series A Preferred Stock and the warrant exercise described above.

Liquidity and capital resources

Overview



Since our inception, we have incurred significant operating and net losses and have not generated positive cash flows from operations. For the year ended March 31, 2014, we had a net loss of $8.4 million, and used cash of $5.8 million in operating activities. As of March 31, 2014, we had cash and cash equivalents of $0.9 and had an accumulated deficit of $140.0 million.

Page 27 Existing Financing



See Management's Discussion and Analysis of Financial Condition and Results of Operations - Recent Events for a discussion of our recent financing activities.

In March 2013, we entered into a Second Amendment to the Keltic Facility, providing for an increase in available borrowings (subject to certain terms and conditions) under the Keltic Facility for working capital purposes from $7.0 million to $8.0 million and the Bourbon Term Loan in the initial aggregate principal amount of $2.5 million, which was used for the purchase of bourbon inventory on March 11, 2013. Unless sooner terminated in accordance with their respective terms, the Keltic Facility and Bourbon Term Loan expire on December 31, 2016 (the "Maturity Date"). We may borrow up to the maximum amount of the Keltic Facility, provided that we have a sufficient borrowing base (as defined in the Keltic Loan Agreement). The Keltic Facility interest rate is the rate that, when annualized, is the greatest of (a) the Prime Rate plus 3.25%, (b) the LIBOR Rate plus 5.75% and (c) 6.50%. The Bourbon Term Loan interest rate is the rate that, when annualized, is the greatest of (a) the Prime Rate plus 4.25%, (b) the LIBOR Rate plus 6.75% and (c) 7.50%. Interest is payable monthly in arrears, on the first day of every month on the average daily unpaid principal amount of the Keltic Facility and the Bourbon Term Loan. After the occurrence and during the continuance of any "Default" or "Event of Default" (as defined under the loan agreement) we are required to pay interest at a rate that is 3.25% per annum above the then applicable Keltic Facility or Bourbon Term Loan, as applicable, interest rate. The Keltic Facility currently bears interest at 6.50% and the Bourbon Term Loan currently bears interest at 7.50%. We are required to pay down the principal balance of the Bourbon Term Loan within 15 banking days from the completion of a bottling run of bourbon from our bourbon inventory stock purchased on or about the date of the Bourbon Term Loan in an amount equal to the purchase price of such bourbon. The unpaid principal balance of the Bourbon Term Loan, all accrued and unpaid interest thereon, all fees, costs and expenses payable in connection with the Bourbon Term Loan are due and payable in full on the Maturity Date. In addition to closing fees, Keltic receives an annual facility fee and a collateral management fee (each as set forth in the Keltic Loan Agreement).

The Keltic Loan Agreement contains standard borrower representations and warranties for asset-based borrowing and a number of reporting obligations and affirmative and negative covenants. The Keltic Loan Agreement includes negative covenants that, among other things, restrict our ability to create additional indebtedness, dispose of properties, incur liens, and make distributions or cash dividends. At March 31, 2014, we were in compliance, in all material respects, with the covenants under the Keltic Loan Agreement.

Keltic required as a condition to funding the Bourbon Term Loan that Keltic had entered into a participation agreement providing for an aggregate of $750,000 of the initial $2.5 million principal amount of the Bourbon Term Loan to be purchased by junior participants. Certain related parties of ours purchased a portion of these junior participations in the Bourbon Term Loan, including Frost Gamma Investments Trust ($500,000), Mark E. Andrews, III ($50,000) and an affiliate of Richard J. Lampen ($50,000). Under the terms of the participation agreement, the junior participants receive interest at the rate of 11% per annum. We are not a party to the participation agreement. However, we are party to a fee letter with the junior participants (including the related party junior participants) pursuant to which we pay the junior participants an aggregate commitment fee of $45,000 paid in three equal annual installments of $15,000.

In August 2013, we entered into a Third Amendment (the "Third Amendment") to the Keltic Loan Agreement in order to modify certain aspects of the borrowing base calculation and covenants with respect to the Keltic Facility and permit us to make regularly scheduled payments of principal and interest and voluntary prepayments on the Junior Loan (as defined below), subject to certain conditions set forth in the Third Amendment. In addition, the Third Amendment provided us with the ability to increase the maximum aggregate principal amount of the Bourbon Term Loan from $2.5 million to up to $4.0 million following the identification of junior participants to purchase a portion of the increased Bourbon Term Loan amount. We paid Keltic an aggregate $25,000 amendment fee in connection with the execution of the Third Amendment.

Also in August 2013, we entered into a Loan Agreement (the "Junior Loan Agreement"), by and between us and the lending parties thereto (the "Junior Lenders"), which provides for an aggregate $1.25 million unsecured loan (the "Junior Loan") to us. The Junior Loan bears interest at a rate of 11% per annum, payable quarterly in arrears commencing November 1, 2013, and matures on October 15, 2015. The Junior Loan may be prepaid in whole or in part at any time without penalty or premium but with payment of accrued interest to the date of prepayment. The Junior Loan Agreement contains customary events of default, which, if uncured, entitle each Junior Lender to accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, the portion of the Junior Loan made by such Junior Lender. The Junior Loan Agreement provides for a funding fee of 2% per annum on the then outstanding Junior Loan balance (pro-rated for any period of less than one year), payable pro rata among the Junior Lenders on the date of the Junior Loan Agreement and on the first and second anniversaries thereof. The Junior Lenders include Frost Gamma Investments Trust, Mark E. Andrews, III and an affiliate of Richard J. Lampen. In connection with the Junior Loan Agreement, the Junior Lenders entered into the subordination agreement with Keltic; we are not a party to the subordination agreement.

Page 28



In December 2009, Gosling-Castle Partners, Inc., a 60% owned subsidiary, issued a promissory note in the aggregate principal amount of $0.2 million to Gosling's Export (Bermuda) Limited in exchange for credits issued on certain inventory purchases. This note matures on April 1, 2020, is payable at maturity, subject to certain acceleration events, and calls for annual interest of 5%, to be accrued and paid at maturity.

We have arranged various credit facilities aggregating 0.4 million or $0.5 million (translated at the March 31, 2014 exchange rate) with an Irish bank, including overdraft coverage, creditors' insurance, customs and excise guaranty, and a revolving credit facility. These facilities are payable on demand, continue until terminated by either party, are subject to annual review, and call for interest at the lender's AA1 Rate minus 1.70%.

Liquidity Discussion



As of March 31, 2014, we had shareholders' equity of $19.9 million as compared to $12.9 million at March 31, 2013. This increase is primarily due to the reclassification of our previous $6.2 million warrant liability as additional paid-in capital, the net issuance of $4.3 million of Common Stock under the Distribution Agreement and the exercise of $3.8 million of our 2011 Warrants, partially offset by our total comprehensive loss for the year ended March 31, 2014, including the $5.4 million loss on the fair value of warrant liability.

We had working capital of $19.1 million at March 31, 2014 as compared to $13.9 million as of March 31, 2013. This increase is primarily due to a $1.8 million increase in accounts receivable, a $0.9 million increase in inventory, a $0.6 million increase in prepaid expenses, a $0.5 million increase in deferred tax assets, a net $1.0 million decrease in accounts payable, accrued expenses and due to related parties and a $0.1 million decrease in our foreign revolving credit facility, partially offset by a $0.2 million decrease in due from shareholders and affiliates.

As of March 31, 2014, we had cash and cash equivalents of approximately $0.9 million, as compared to $0.4 million as of March 31, 2013. The increase is primarily attributable to the equity and debt issued, partially offset by the funding of our operations and working capital needs for the year ended March 31, 2014. At March 31, 2014, we also had approximately $0.4 million of cash restricted from withdrawal and held by a bank in Ireland as collateral for overdraft coverage, creditors' insurance, revolving credit and other working capital purposes.

In addition, between April 1, 2014 and June 27, 2014, we received $0.6 million in cash upon the exercise of 2011 Warrants to purchase 1.7 million shares of Common Stock.

The following may materially affect our liquidity over the near-to-mid term:

continued significant levels of cash losses from operations; our ability to obtain additional debt or equity financing should it be required; an increase in working capital requirements to finance higher levels of inventories and accounts receivable; our ability to maintain and improve our relationships with our distributors and our routes to market; our ability to procure raw materials at a favorable price to support our level of sales; potential acquisitions of additional brands; and expansion into new markets and within existing markets in the U.S. and internationally.



We continue to implement a plan to support the growth of existing brands through sales and marketing initiatives that we expect will generate cash flows from operations in the next few years. As part of this plan, we seek to grow our business through expansion to new markets, growth in existing markets and strengthened distributor relationships. As our brands continue to grow, our working capital requirements will increase. In particular, the growth of our Jefferson's brands requires a significant amount of working capital relative to our other brands, as we are required to purchase and hold ever increasing amounts of aged bulk bourbon to meet growing demand. While we are seeking solutions to our long-term bourbon supply needs, we are required to purchase and hold several years' worth of bulk bourbon in inventory until such time as it is aged to our specific brand taste profiles, increasing our working capital requirements and negatively impacting cash flows.

We are also seeking additional brands and agency relationships to leverage our existing distribution platform. We intend to finance our brand acquisitions through a combination of our available cash resources, borrowings and, in appropriate circumstances, additional issuances of equity and/or debt securities. Acquiring additional brands could have a significant effect on our financial position, could materially reduce our liquidity and could cause substantial fluctuations in our quarterly and yearly operating results. We continue to look to control expenses, seek improvements in routes to market and contain production costs to improve cash flows.

As of March 31, 2014, we had borrowed $2.0 million of the $8.0 million available under the Keltic Facility, leaving $6.0 million in then potential availability for working capital needs. As of the date of this report, we had borrowed $6.2 million of the $8.0 million available under the Keltic Facility, leaving $4.0 million in potential availability for working capital needs. We believe our current cash and working capital, the availability under the Keltic Facility, the proceeds that have been raised, and the additional funds available to be raised, under the Distribution Agreement, will enable us to fund our losses until we achieve profitability, ensure continuity of supply of our brands, and support new brand initiatives and marketing programs through at least March 2015.

Page 29 Cash flows The following table summarizes our primary sources and uses of cash during the periods presented: Years ended March 31, 2014 2013 (in thousands) Net cash provided by (used in): Operating activities $ (5,820 )$ (4,986 ) Investing activities (208 ) (294 ) Financing activities 6,494 5,237 Effect of foreign currency translation 3 (2 )



Net increase (decrease) in cash and cash equivalents $ 469$ (45 )

Operating activities. A substantial portion of available cash has been used to fund our operating activities. In general, these cash funding requirements are based on operating losses, driven chiefly by the costs in maintaining our distribution system and our sales and marketing activities. We have also utilized cash to fund our inventories. In general, these cash outlays for inventories are only partially offset by increases in our accounts payable to our suppliers.

On average, the production cycle for our owned brands is up to three months from the time we obtain the distilled spirits and other materials needed to bottle and package our products to the time we receive products available for sale, in part due to the international nature of our business. We do not produce Gosling's rums, Pallini liqueurs, Tierras tequila, or Gozio amaretto. Instead, we receive the finished product directly from the owners of such brands. From the time we have products available for sale, an additional two to three months may be required before we sell our inventory and collect payment from customers. Further, our inventory at March 31, 2014 included significant additional stores of bulk bourbon purchased in advance of forecasted production requirements. We expect to reduce the bulk bourbon in the normal course of future sales, generating positive cash flows in future periods.

During the year ended March 31, 2014, net cash used in operating activities was $5.8 million, consisting primarily of a net loss of $7.9 million, a $2.0 million increase in accounts receivable, a $1.2 million increase in inventory, a $0.6 million decrease in accounts payable and accrued expenses, a $0.6 million increase in prepaid expenses, a $0.2 million increase in other assets and $0.6 million in deferred tax benefit. These uses of cash were partially offset by a change in fair value of warrant liability of $5.4 million, a $0.5 million loss on equity investment in non-consolidated affiliate, stock based compensation expense of $0.4 million, depreciation and amortization expense of $0.9 million, and a provision for obsolete inventories of $0.2 million.

During the year ended March 31, 2013, net cash used in operating activities was $5.0 million, consisting primarily of a net loss of $4.8 million, a $4.0 million increase in inventory, a $0.9 million increase in accounts receivable, a $0.2 million increase in other assets, a $0.2 million increase in due from affiliates and a $0.3 million credit for the net change in fair value of warrant liability. These uses of cash were partially offset by a net $0.9 million increase in accounts payable and accrued expenses, an $0.8 million increase in due to related parties, a $1.7 million loss on wine assets, $0.7 million in allowance for obsolete inventory and depreciation and amortization expense of $0.9 million.

Investing Activities. Net cash used in investing activities was $0.2 million for the year ended March 31, 2014, representing $0.3 million used in the acquisition of fixed and intangible assets, partially offset by $0.06 million from a change in restricted cash.

Net cash used in investing activities was $0.3 million for the year ended March 31, 2013, representing approximately $0.1 million used in the acquisition of fixed and intangible assets and approximately $0.1 million in payments under a contingent consideration agreement.

Financing activities. Net cash provided by financing activities for the year ended March 31, 2014 was $6.5 million, consisting of $4.3 million in net proceeds from the issuance of Common Stock pursuant to the Distribution Agreement, $0.4 million in proceeds from the exercise of 2011 Warrants, $2.1 million from the issuance of 5% Convertible Notes, $1.25 million from issuance of the Junior Loan, offset by the $4.5 million paid on the Keltic Facility, $0.5 million paid on the Bourbon Term Loan and $0.1 million paid on the foreign revolving credit facilities.

Net cash provided by financing activities for the year ended March 31, 2013 was $5.2 million representing $2.6 million drawn on the Keltic Facility, $2.5 million in proceeds from an inventory term loan and $0.1 million drawn on the foreign revolving credit facility.

Page 30 Obligations and commitments



Irish bank facilities.We have credit facilities with availability aggregating approximately 0.4 million ($0.5 million) with an Irish bank, including overdraft, customs and excise guaranty, and a revolving credit facility. These facilities are payable on demand, continue until terminated by either party, are subject to annual review and call for interest at the lender's AA1 Rate minus 1.70%. We have deposited 0.4 million ($0.5 million) with the bank to secure these borrowings.

We are in compliance in all material respects with the covenants of our Irish bank facilities as of March 31, 2014.

Keltic Facility. For a discussion of the Keltic Facility, please see Existing Financing in "Liquidity and Capital Resources" above.

Bourbon Term Loan. For a discussion of the Bourbon Term Loan, please see Existing Financing in "Liquidity and Capital Resources" above.

Junior Loan Agreement. For a discussion of the Junior Loan Agreement, please see Existing Financing in "Liquidity and Capital Resources" above.

5% Convertible Subordinated Notes. For a discussion of the 5% Convertible Subordinated Notes, please see Recent Events in "Management's Discussion and Analysis of Financial Condition and Results of Operations" above.

Gosling-Castle Partners note.For a discussion of the Gosling-Castle Partners note, please see Existing Financing in "Liquidity and Capital Resources" above.

Currency Translation



The functional currencies for our foreign operations are the Euro in Ireland and the British Pound in the United Kingdom. With respect to our consolidated financial statements, the translation from the applicable foreign currencies to U.S. Dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. The resulting translation adjustments are recorded as a component of other comprehensive income.

Where in this annual report we refer to amounts in Euros or British Pounds, we have for your convenience also in certain cases provided a conversion of those amounts to U.S. Dollars in parentheses. Where the numbers refer to a specific balance sheet account date or financial statement account period, we have used the exchange rate that was used to perform the conversions in connection with the applicable financial statement. In all other instances, unless otherwise indicated, the conversions have been made using the exchange rates as of March 31, 2014, each as calculated from the Interbank exchange rates as reported by Oanda.com. On March 31, 2014, the exchange rate of the Euro and the British Pound in exchange for U.S. Dollars was 1.00 = U.S.$1.37516 (equivalent to U.S.$1.00 = 0.72707) and 1.00 = U.S.$1.66368 (equivalent to U.S.$1.00 = 0.60089).

These conversions should not be construed as representations that the Euro and British Pound amounts actually represent U.S. Dollar amounts or could be converted into U.S. Dollars at the rates indicated.

Impact of inflation



We believe that our results of operations are not materially impacted by moderate changes in the inflation rate. Inflation and changing prices did not have a material impact on our operations during fiscal 2014 or 2013. Severe increases in inflation, however, could affect the global and U.S. economies and could have an adverse impact on our business, financial condition and results of operations.

Recent accounting pronouncements

We discuss recently issued and adopted accounting standards in the "Accounting standards adopted" and "Recent accounting pronouncements" sections of note 1 of the "Notes to Consolidated Financial Statements" in the accompanying consolidated financial statements.

Page 31



Cautionary Note Regarding Forward-Looking Statements

This annual report includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, which involve risks and uncertainties, relate to the discussion of our business strategies and our expectations concerning future operations, margins, profitability, liquidity and capital resources and to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. We use words such as "may", "will", "should", "expects", "intends", "plans", "anticipates", "believes", "estimates", "seeks", "expects", "predicts", "could", "projects", "potential" and similar terms and phrases, including references to assumptions, in this report to identify forward-looking statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks and factors relating to our operations and business environments, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by these forward-looking statements. These risks and other factors include those listed under "Risk Factors" and as follows:

our history of losses recent worldwide and domestic economic trends and financial market conditions could adversely impact our financial performance; our potential need for additional capital, which, if not available on acceptable terms or at all, could restrict our future growth and severely limit our operations; our brands could fail to achieve more widespread consumer acceptance, which may limit our growth; our dependence on a limited number of suppliers, who may not perform satisfactorily or may end their relationships with us, which could result in lost sales, incurrence of additional costs or lost credibility in the marketplace; our annual purchase obligations with certain suppliers; the failure of even a few of our independent wholesale distributors to adequately distribute our products within their territories could harm our sales and result in a decline in our results of operations; the possibility that we cannot secure and maintain listings in control states, which could cause the sales of our products to decrease significantly; the potential limitation to our growth if we are unable to identify and successfully acquire additional brands that are complementary to our existing portfolio, or integrate such brands after acquisitions; currency exchange rate fluctuations and devaluations may significantly adversely affect our revenues, sales, costs of goods and overall financial results; our need to maintain a relatively large inventory of our products to support customer delivery requirements, which could negatively impact our operations if such inventory is lost due to theft, fire or other damage; the possibility that we or our strategic partners will fail to protect our respective trademarks and trade secrets, which could compromise our competitive position and decrease the value of our brand portfolio; an impairment in the carrying value of our goodwill or other acquired intangible assets could negatively affect our operating results and shareholders' equity; changes in consumer preferences and trends could adversely affect demand for our products; there is substantial competition in our industry and the many factors that may prevent us from competing successfully; adverse changes in public opinion about alcohol could reduce demand for our products; class action or other litigation relating to alcohol misuse or abuse could adversely affect our business; adverse regulatory decisions and legal, regulatory or tax changes could limit our business activities, increase our operating costs and reduce our margins;



We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in, or implied by, these forward-looking statements, even if new information becomes available in the future.


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Edgar Glimpses