Gross Margin Hits Record 50%, 1190 Basis Points Above Year Ago        Company Reaches 10,795 Total Beverage Dispenser Locations,                          4,394 Above Year Ago 

SAN DIEGO, May 12, 2009 (GLOBE NEWSWIRE) -- Javo(r) Beverage Company, Inc. (OTCBB:JAVO), a leading provider of premium dispensable coffee and tea-based beverages to the food service industry, announced today its unaudited financial results for the first quarter of 2009.

Financial Highlights for the First Quarter

   * Gross profit margin expanded to 50%, an increase of 1,190 basis    points from the year ago period.   * The Company's total base of beverage dispensers at the end of the    quarter was 10,795, an increase of 4,394 from the same period    in 2008.   * Revenues increased 20% to $4.7 million from $3.9 million in the    first quarter 2008.   * Dispensed products revenue was $4.2 million, up 67% over first    quarter 2008.   * The Company had a loss from operations for the first quarter of    $1.8 million.  The loss excluding options expense and depreciation    was $.7 million, a $.4 million improvement versus the first quarter    of 2008. 

Business Review

The Company achieved gross revenue of $4.7 million, an increase of $0.8 million or 20% over the same quarter in 2008. The Company's revenue derives principally from the placement of beverage equipment, similar to a fountain soda or juice dispenser, that enables its foodservice customers to prepare coffee and/or tea on-demand and without waste from concentrate manufactured at its brewing facility. Each Javo dispenser placed at a customer location is expected to generate from $2,500 to $6,000 in annual dispensed product revenue. Revenue from dispensed products was the primary growth driver during the quarter reaching $4.2 million, a 67% increase compared to the year ago quarter. This increase was due to an increase in beverage dispensing locations serving Javo's coffee and tea products to a quarter-ending total of 10,795. Since the first quarter of 2008, the Company has added 4,394 new dispensing locations with a large concentration being with national accounts and regional chains that utilize Javo's hot and iced coffee concentrates within their retail beverage programs.

For the quarter, gross profit increased to $2.3 million, an increase of $0.8 million or 57% from the same period of 2008. Gross profit margin for the quarter expanded by 1,190 basis points to 50% as the Company has improved its operations through the integration of several manufacturing processes. This integration eliminated previously outsourced processing and packaging fees as well as freight charges to ship extracts and ingredients to third party co-packers. In addition, the Company's higher sales level allowed it to realize cost savings in unit production and packaging costs and to reduce its overall freight charges to nationally based customers.

First quarter sales and marketing expenses increased in line with revenue to $2.3 million, a 30% increase over the prior year's quarter. The increase was primarily due to variable marketing allowances tied to the Company's growing national account business. Excluding these national account pricing related allowances, expenses for salaries, travel and entertainment and other selling costs grew a modest $60 thousand versus year ago. The Company anticipates that sales and marketing expenses will decline as a percentage of revenue during 2009.

General and administrative expenses for the quarter increased 32% to $2.3 million compared to $1.7 million in the prior year. The year-over-year change of $0.5 million was due, primarily, to a $497 thousand increase in non-cash depreciation and amortization expense. The Company expects that general and administrative expenses will change modestly, primarily in non-cash depreciation and amortization expense during the remainder of 2009.

Other income/expenses were $1.4 million for the quarter ended March 31, 2009, compared to $.2 million in the same quarter of 2008. The increase of $1.2 million was primarily due to an increase in non-cash derivative income expenses of $1.3 million reported in connection with warrants issued to Javo's senior convertible debt partially offset by a $0.1 million reduction in non-cash interest expense for debt discount amortization related to the same convertible debt.

The Company's net loss for the quarter was $3.2 million compared with $1.8 million in the same quarter of the previous year. The increase of $1.4 million is primarily due to an $0.8 million increase in gross profit offset by a $1.3 million reduction in non-cash derivative income due to liability accounting for warrants, a $497 thousand increase in depreciation and amortization expense, a net $370 thousand increase in variable sales and marketing expenses, and a net $50 thousand increase in other general and administrative expenses. Excluding non-cash expenses, the net loss was $1.3 million, a $.1 million improvement over year ago.

Liquidity and Capital Resources

The Company used $2.3 million from cash and cash equivalents in operating activities in the three months ending March 31, 2009, versus $1.6 million in the same period in 2008. Overall, the Company improved its cash position as of March 31, 2009 to $8.0 million. The key contributor to the cash improvement was the receipt of $5.4 million in proceeds from a private placement of debt and equity securities. Subsequent to the end of the quarter, the Company successfully closed the balance of this private placement, raising a total of $23.0 million in gross proceeds. The offering provided the liquidity to retire the remaining balance on the Company's 2006 senior convertible notes and associated warrants. The Company anticipates that its current cash and cash equivalents, receivable financing, as well as cash flows from expected increased sales and gross profits in the remainder of 2009 will provide adequate capital to fund operations and required capital expenditures. Details of the recently completed private offering are contained in the Company's filing on Form 8-K on April 10, 2009.

Management Comment

Cody C. Ashwell, chairman and CEO of Javo Beverage Company, said, "The achievement of our 2008 objectives and the subsequent balance sheet improvements that have been accomplished have set the stage for a strong 2009. Specifically, having an installed base of nearly 11,000 dispensed beverage locations and an increasingly seasoned national sales force have given us a great deal of positive momentum to begin the year. As we move to the sales levels that are associated with our highest seasonality this spring and summer, we expect to see the operations improvements we made last year translate to increased gross profit and cash generation."

Gary Lillian, president of Javo Beverage Company, said, "Javo's sales team has continued to execute at a high level during challenging economic times, adding 711 on-demand beverage dispensing locations in the first quarter and bringing our total to 10,795. The focus of our growth during the cold months of the first quarter was on hot coffee placements within our base of approved national programs. As we prepare for the balance of the year, the macro trends are still very much in our favor. Specifically, we are well positioned within coffee and tea where recent industry studies indicate that 90% of the beverage growth in 2008 was generated.