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New Leaf Brands (NLEF.OB) First Quarter Financial Results Show Increases in Sales, Revenues and Volume

New Leaf Brands, Inc. announced today the financial results of the first quarter ending March 31, 2010. As expected, the totals across the board were strong. Highlights of the results included:

• First Quarter Case Sales Increase 37% Over Previous Year
• First Quarter Revenues Increase 36% Over Previous Year
• 79,890 Cases Sold in April of 2010, 114% Increase over April 2009
• Newly Launched Lemonades Sells Out Initial Production in 14 Days, New Production Order Triples

In greater detail, net revenue from continuing operations for the quarter totaled $954,549, a 36% increase compared to $701,789 for the quarter ending March 31, 2009. New Leaf’s first quarter 2010 case volume increased 37% to 113,119 from 82,196 for the first quarter in 2009. The increase in revenue is attributed to expanded distribution and an increase in marketing programs.

Cost of sales for the quarter increased to $679,699 compared to $626,579 for the same period in 2009 (an 8% increase).Gross profit increased to $274,850 for the first quarter of 2010 compared to $75,210 for the first quarter of 2009 producing an improved gross profit margin of 28% versus 11% respectively. As production volumes were increased, monies were saved as a result of operating efficiencies attributable to the reduction of raw material costs due to greater volume purchases. This fact subsequently increased overall gross profits. The management team at New Leaf anticipates that this will continue throughout 2010 as volume levels are steadily increasing.

With regards to operating expenses, the first quarter of 2010 saw an increase of $1.72 million to $2.98 million as compared to the same quarter of 2009 when operating expenses totaled $1.26 million. The increase in operating expense for 2010 is attributed primarily to two factors. The first being an increase in marketing expense to $1.1 million from $630,442 in 2009. The second, more substantially, an Option and Stock Compensation expense of $1.1 million compared to $20,607 during 2009. General and Administrative expenses increased for the period ending March 31, 2010 to $489,220 compared to $428,573 for the same period in 2009.

Net loss for the period ended March 31, 2010 totaled $2.7 million or $(0.04) per share based on 63.8 million shares outstanding compared to a net loss of approximately $2.0 million or $(0.24) per share based on 8.4 million shares outstanding.

New Leaf President and Chief Executive Officer, Eric Skae, stated, “We are pleased with our first quarter revenue increase over the previous year and even more excited by the future prospects of our healthy beverage product line. With the warm summer months quickly approaching we expect to experience acceleration in sales for all of our great tasting healthy beverages, including our newly launched lemonades.” Mr. Skae continued, “We have remained focused on increasing our revenue and distribution network while maintaining operating efficiencies as confirmed by our increase in gross profit margin by 17 percentage points, or more than doubling since last year. As our sales volumes continue to increase, our profit margin should follow.”

New Leaf has seen incredible growth over the last year with regards to distribution. Now having products sold in 35 states through agreements with 120 distributors covering over 12,000 retail outlets, New Leaf also anticipates achieving the goal with Manhattan Beer to reach over 4,000 cold box locations in the New York metro area by the end of June. The New Leaf sales staff is also seeing success in the Western side of the country where their presence in Los Angeles now has a strong foothold and recent expansion in the key market state of Arizona has increased to cover 100% of the state. Another recent success has been the launch of a new product line of lemonades in three flavors and one half-and-half flavor which sold out its initial production in 14 days. New Leaf expects to triple case production to meet demand.

A final component of New Brands distribution strategy was the further expansion in the Chicago market, which would mean that New Leaf has enlarged its footprint in the three major Designated Marketing Areas (DMAs) throughout the country. This was achieved as issued in a press release last week when New Leaf signed a distribution agreement with River North Sales & Service Distribution, one of the largest beverage distributors in the Metro Chicago area servicing over 1,800 retail locations. River North is a major beer supplier for Budweiser and Anheuser-Busch amongst other well-known and recognized national and international brands.

In the press release, Phillip Birnbaum, General Manager of River North, was quoted as saying, “We have closely monitored the growth and demand for New Leaf for some time now and have been impressed with not only the packaging and appeal that New Leaf embodies, but also the marketing strategy that has really touched home with customers. New Leaf’s entire line of products tastes great and now is the opportune time to add New Leaf to our distribution network.”

New Leaf Brands develops, markets, and distributes functional ready-to-drink beverages, including teas and other functional drinks in the United States and internationally. The company sells 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™. More information on New Leaf Brands can be found on their website at

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