Clearly Canadian Beverage Corporation
OTC Bulletin Board : CCBEF

Clearly Canadian Beverage Corporation

August 29, 2005 16:35 ET

Clearly Canadian Announces Second Quarter Financial Results

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 29, 2005) - Clearly Canadian Beverage Corporation (OTCBB:CCBEF) today reported unaudited consolidated financial results for its second fiscal quarter ended June 30, 2005. (ALL FIGURES BELOW AND IN THE ATTACHED SCHEDULES ARE STATED IN U.S. DOLLARS.)

Per share figures have been adjusted in the following financial results to reflect a 10:1 consolidation which was completed May 2, 2005.

Three months ended June 30, 2005 (Q2-2005) compared with three months ended June 30, 2004 (Q2-2004)

Sales were $2,561,000 for Q2-2005 compared with $3,131,000 for Q2-2004, a decrease of 18%. This decline in sales is attributable to the cumulative impact of significantly reduced sales and marketing activities in recent years. This has been a direct result of working capital constraints which the Company has attempted to address, for the most part, through the Company's recently completed financings with BG Capital Group Ltd. (see news release dated June 2, 2005).

There was no significant change in our cost of sales and gross margin percentages, being 69% and 31% respectively, for Q2-2005 versus 70% and 30% respectively for Q2-2004.

General and administrative expenses were $46,000 lower in Q2-2005 compared with Q2-2004, as a result of ongoing cost cutting measures.

Selling expenses of $824,000 in Q2-2005 were approximately 32% of sales, compared with $892,000 or approximately 28% of sales in Q2-2004. The increase in the percentage of sales expended on selling expenses is a reflection of the increased cost associated with attempting to maintain market share in a competitive business throughout North America. During the balance of 2005, and in connection with the recent completion of its financing with BG Capital Group Ltd. ("BG Capital"), the Company has budgeted to increase its sales and marketing activities in an effort to increase market share.

Loss for the period for Q2-2005 was $1,678,000 (or $0.55 per share) compared with a Q2-2004 loss of $793,000 (or $1.06 per share). The loss for the current quarter includes:

a) a gain on settlement of debt ($220,000) in Q2-2005 (Q2-2004: $Nil) which was realized on obtaining reductions in certain accounts owing to creditors concurrent with the Company's recent refinancing; and

b) a stock compensation expense of $1,097,000 in Q2-2005 (Q2-2004: $Nil) which represents the non-cash value attributed to stock certain stock options granted during Q2-2005 in connection with the Company's recent financing with BG Capital.

"We completed the funding relative to our restructuring with BG Capital late in the second quarter. Our objectives in the second half of 2005 include increasing the availability of brand Clearly Canadian throughout North American markets through a strong network of direct store delivery partners. We are continuing to complement our field sales force by adding skilled resources to work closely with our distribution network and create new selling opportunities across all classes of trade. We are also actively working to fill regional distribution gaps and to provide brand Clearly Canadian greater marketing and promotional focus. In the third quarter, we expect to announce new distribution relationships in several important U.S. markets. In addition, the Company is currently working closely with current and potential new associates in the development of new business opportunities both domestically and internationally," said Douglas L. Mason, President and C.E.O. of Clearly Canadian Beverage Corporation.

Six months ended June 30, 2005 (YTD-2005) compared with six months ended June 30, 2004 (YTD-2004)

Sales were $4,289,000 for YTD-2005 compared with $6,065,000 for YTD-2004, a decrease of 29%. In addition to the cumulative impact of significantly reduced sales and marketing activities in recent years, the Company's financial condition in the first six months of 2005 also did not allow for planned sales initiatives to support the key Spring selling period. With the completion (May 28, 2005) of its financing with BG Capital, the Company now has a satisfactory level of inventory to meet current customer demands. The Company is continuing to complement its field sales force by adding skilled resources to work closely with its distribution network and create new selling opportunities across all classes of trade.

There was no significant change in the Company's cost of sales and gross margin percentages in YTD-2005 compared with YTD-2004.

Selling expenses of $1,466,000 in YTD-2005 were approximately 34% of sales, compared with $1,587,000 or approximately 26% of sales in YTD-2004. The increase in the percentage of sales expended on selling expenses is a reflection of the increased cost associated with attempting to maintain market share in a competitive business throughout North America. During the balance of 2005, and in connection with the recent completion of its financing with BG Capital (see news release dated June 2, 2005), the Company has budgeted to increase its sales and marketing activities in an effort to increase market share.

Loss for the period for the six months ended June 30, 2005 was $2,559,000 (or $1.25 per share) compared with $1,290,000 (or $1.79 per share) for the six months ended June 30, 2004. The loss for the current period includes:

a) a gain on settlement of debt ($220,000) in YTD-2005 (YTD-2004: $Nil) which was realized on obtaining reductions in certain accounts owing to creditors concurrent with the Company's recent financing; and

b) a stock compensation expense of $1,097,000 in YTD-2005 (YTD-2004: $Nil) which represents the non-cash value attributed to certain stock options granted in connection with the Company's recent financing with BG Capital.

About Clearly Canadian

Based in Vancouver, B.C., Clearly Canadian Beverage Corporation markets premium alternative beverages and products, including Clearly Canadian® sparkling flavoured water and Clearly Canadian O+2® oxygen enhanced water beverage, which are distributed in the United States, Canada and various other countries. Additional information about Clearly Canadian may be obtained on the world wide web at www.clearly.ca.

Statements in this news release that are not historical facts are forward-looking statements that are subject to risks and uncertainties. Words such as "expects", "intends", "may", "could", "should", "anticipates", "likely", "believes" and words of similar import also identify forward-looking statements. Forward-looking statements are based on current facts and analyses and other information that are based on forecasts of future results, estimates of amounts not yet determined and assumptions of management, including, but not limited to, the Company's ability to raise additional debt and/or equity financing to fund operations and working capital requirements, the Company's analysis of its current and future sales and sales trends, its product distribution systems, as well as anticipated changes thereto, the Company's expectations regarding the effects of its restructuring efforts and its product distribution, promotional and marketing activities and the potential benefits of such changes, efforts and activities on its results of operations in future periods. Actual results may differ materially from those currently anticipated due to a number of factors including, but not limited to, general economic conditions, changing beverage consumption trends of consumers, the Company's ability to generate sufficient cash flows to support general operating activities and capital expansion plans, competition, pricing and availability of raw materials, the Company's ability to maintain the current and future retail listings for its beverage products and to maintain favorable supply, production and distribution arrangements, laws and regulations and changes thereto that may affect the way the Company's products are manufactured, distributed and sold and other factors beyond the reasonable control of the Company. Additional information on factors that may affect the business and financial results of the Company can be found in filings of the Company with the U.S. Securities and Exchange Commission and with the British Columbia and Ontario Securities Commissions.

CLEARLY CANADIAN BEVERAGE CORPORATION

Douglas L. Mason, President and C.E.O.

CLEARLY CANADIAN BEVERAGE CORPORATION is the registered holder of various trademarks, including CLEARLY CANADIAN®. CLEARLY CANADIAN BEVERAGE CORPORATION, and its wholly owned subsidiaries, produce, distribute and market CLEARLY CANADIAN® and CANADIAN O+2®.



CONSOLIDATED BALANCE SHEETS
AS AT JUNE 30, 2005 AND DECEMBER 31, 2004
(in thousands of United States dollars, except where indicated)

Unaudited
June 30 December 31
2005 2004
$ $
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Assets

Current assets
Cash and equivalents 947 78
Accounts receivable 1,065 600
Inventories 1,345 524
Prepaid expenses, deposits and
other assets 135 167
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3,492 1,369

Long-term investments 28 29

Assets held for sale 408 415

Property, plant and equipment 2,150 2,252

Prepaid contracts 63 116
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6,141 4,181
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Liabilities

Current liabilities
Bank indebtedness - 272
Accounts payable and accrued
liabilities 3,099 4,150
Customer deposits 10 69
Short term debt 932 1,248
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4,041 5,739

Long-term debt 1,428 1,957
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5,469 7,696
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Shareholders' Equity (Deficiency)

Capital stock (note 5)
Authorized
Unlimited common shares without
par value
2,000,000 Class A preferred shares
2,000,000 Class B preferred shares

Issued
5,448,827 (2004 - 1,033,868) common
shares without par value

Outstanding
2,000,000 (2004 - nil) Class B
preferred shares 2,000 -
5,411,527 (2004 - 996,568) common
shares 62,242 58,590

Warrants
81,500 (2004 - 81,500) 165 165

Options
1,226,344 (2004 - 169,434) 1,133 36

Equity component of convertible
debenture - 26

Contributed surplus 836 810

Cumulative translation adjustment (1,048) (1,253)

Deficit (64,656) (61,889)
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672 (3,515)
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6,141 4,181
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CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(in thousands of United States dollars, except where indicated)

Unaudited Unaudited

For the For the
3 months ended 6 months ended
June 30 June 30 June 30 June 30
2005 2004 2005 2004
$ $ $ $
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Sales 2,561 3,131 4,289 6,065

Cost of sales 1,776 2,201 2,968 4,262
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Gross profit 785 930 1,321 1,803
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Expenses
General and administrative
expenses 576 622 1,208 1,230
Selling expenses 824 892 1,466 1,587
Amortization of property,
plant and equipment 28 32 60 63
Other expense 56 48 83 54
Financing costs 45 75 91 75
Interest on short-term debt 46 46 96 63
Interest on long-term debt 11 12 25 25
Royalty revenue - (4) (26) (4)
Gain on settlement of debt (220) - (220) -
Stock option benefit 1,097 - 1,097 -
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2,463 1,723 3,880 3,093
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Loss before income taxes (1,678) (793) (2,559) (1,290)

Provision for income taxes - - - -
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Loss for the period (1,678) (793) (2,559) (1,290)

Deficit - Beginning of
period (62,770) (57,300) (61,889) (56,280)

Stock Dividend (208) - (208) -

Prior period adjustments
Adoption of new accounting
standards - - - (523)
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Deficit - End of period (64,656) (58,093) (64,656) (58,093)
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Basic and diluted loss
per share (0.55) (1.06) (1.25) (1.79)
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Weighted average shares
outstanding 3,044,976 745,568 2,045,955 722,359
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Contact Information

  • Clearly Canadian Beverage Corporation
    Valerie Samson
    Manager, Communications
    800-663-5658 (USA) or 800-663-0227 (Canada)
    vsamson@clearly.ca
    or
    Clearly Canadian Beverage Corporation
    Clive Shallow
    Manager, Shareholder Relations
    800-663-5658 (USA) or 800-663-0227 (Canada)
    cshallow@clearly.ca
    www.clearly.ca