Changes for page Castle Brands
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... ... @@ -4,62 +4,29 @@ 4 4 5 5 = Paragraph 1 = 6 6 7 - The companydevelopandmarketpremium andsuper premium brandsthefollowingbeveragealcoholcategories: rum,whiskey, liqueurs,vodka andequila.Thecompany alsodevelopand marketrelated non-alcoholicbeverageproducts,includingGoslingsStormyGingerBeer.The companydistribute itsproductsinall 50 U.S. statesand theDistrictofColumbiaandinthirteen primaryinternational markets,including Ireland, GreatBritain,NorthernIreland, Germany,Canada,France, Finland,Norway,Sweden, Denmark, andtheDuty Freemarkets. The company market the followingbrands,among others:7 +Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. 8 8 9 -* Goslings rum® 10 -* Goslings Stormy Ginger Beer 11 -* Goslings Dark ‘n Stormy® ready-to-drink cocktail 12 -* Jefferson’s® bourbon 13 -* Jefferson’s Reserve® 14 -* Jefferson’s Ocean Aged at Sea® 15 -* Jefferson’s Wine Finish Collection 16 -* Jefferson’s The Manhattan: Barrel Finished Cocktail 17 -* Jefferson’s Chef’s Collaboration 18 -* Jefferson’s Wood Experiment 19 -* Jefferson’s Presidential Select™ 20 -* Jefferson’s Straight Rye whiskey 21 -* Pallini® liqueurs 22 -* Clontarf® Irish whiskey 23 -* Knappogue Castle Whiskey® 24 -* Brady’s® Irish Cream 25 -* Boru® vodka 26 -* Tierras™ tequila 27 -* Celtic Honey® liqueur 28 -* Gozio® amaretto 29 -* The Arran Malt® Single Malt Scotch Whisky 30 -* The Robert Burns Scotch Whiskeys 31 -* Machrie Moor Scotch Whiskeys 9 +== Sub-paragraph == 32 32 33 - CastleBrands objective is tocontinuebuildingCastleBrandsintoaprofitable internationalspiritscompany, witha distinctiveportfolioofpremiumandsuperpremiumspiritsbrands.To achievethis,the companycontinueto seekto:11 +Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. 34 34 35 - focuson its more profitable brands and markets. The company continue to focus its distribution efforts, sales expertise and targeted marketing activities on its more profitable brands and markets; grow organically. The company believe that continued organic growth will enable it to achieve long-termprofitability. The company focus on brands that have profitablegrowth potential and stayingpower, suchas its rums and whiskeys, sales of which have grown substantially in recent years; build consumer awareness. The company use its existing assets, expertise and resources to build consumer awareness and market penetration for its brands; leverage its distribution network. Its established distribution network in all 50 U.S. states enables it to promote its brands nationally and makes it an attractive strategic partner for smaller companies seeking U.S. distribution; and selectively add new brand extensions and brands to its portfolio. The company intend to continue to introduce new brand extensions and expressions. For example, Castle Brands has leveraged its successful Jefferson’s portfolio by introducing a number of brand extensions. Additionally, the company recently added the Arran Scotch Whiskies to its portfolio as agency brands. The company continue to explore strategic relationships, joint ventures and acquisitions to selectively expand its premium spirits portfolio. The company expect that future acquisitions or agency relations, if any, would involve some combination of cash, debt and the issuance of its stock.13 +== Sub-paragraph == 36 36 37 - **RecentDevelopments**15 +Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. 38 38 39 - OnMarch 29, 2017, the company entered into aStock Purchase Agreement under which the company acquired 201,000 shares (the “GCP Share Acquisition”) of the common stock of Gosling-Castle Partners Inc., or GCP, representing a 20.1% equity interest in GCP. GCP is a strategic globalexport venture between Castle Brands and the Goslingfamily. As aresult of the completion of the GCP Share Acquisition, its total equity interest in GCP increased to 80.1%. The consideration for the GCP Share Acquisition was (i) $20,000,000 in cash and (ii) 1,800,000 shares of its common stock, which shares are subject to an 18 month lockupcovenant. As a result of theGCP Share Acquisition, GCP will file as part of its U.S. federal consolidated income tax group for periods subsequent to the acquisition.17 +=== Sub-sub paragraph === 40 40 41 - In connection with the GCP ShareAcquisition, the companyalsoenteredintoan Amended and RestatedDistributionAgreementand an Export AgreementAmendment. Underthe AmendedandRestated DistributionAgreement,its subsidiary,CastleBrands(USA) Corp.(“CB-USA”), continuesas the exclusive long-termimporter anddistributor of certain beverageproducts,including “Goslings Rum” and “Goslings StormyGinger Beer” (collectively,the “Distribution Products”) throughout theUnited States,andsuchothermarketsasmay beaddedby mutualconsent of the parties (the “DistributionTerritory”).Theinitial termof the AmendedandRestated DistributionAgreementextends through March 31,2030, with automaticten-year renewal termshereafter, subjectto specific terminationrights held by eachparty. The Amended and RestatedDistributionAgreementautomatically terminatesuponthetermination,for any reason,ofthe Export Agreement.CB-USA willpurchaseDistribution Productsfrom GCP fordistributionin the Distribution Territory atprices set forthin theAmended and Restated DistributionAgreement, as may be mutually changed bytheparties. CB-USAis entitledto receivea net margin amount,certain reimbursementcosts, anda specified fee todefray normalverheadcosts, all as specified in the Amendedand RestatedDistributionAgreement. GCP willmaintainprimaryresponsibility and bearthe costsfor theoverallmarketing,advertising,andpromotionoftheDistributionProducts. Also, CB-USA hasa rightofrst refusalregarding thedistribution of any othercurrentor future rumr ginger beer productsGCP currently maintainsin, or addsto, itsproduct line for sale in the Distribution Territory.19 +Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. 42 42 43 -Under the Export Agreement Amendment, GCP maintains all global distribution rights (with the exception of Bermuda) during the term of the Export Agreement and continues as the exclusive authorized global exporter of certain beverage products (the “Export Products”) in all national or international markets, except Bermuda. The Export Agreement Amendment, among other things, assigns to GCP global distribution and exporting rights to Goslings Stormy Ginger Beer and all other Goslings Ginger Beer products and extends the initial term of the Export Agreement from 15 to 25 years, through March 31, 2030, with ten-year renewal terms thereafter, subject to specific termination rights held by each party. Under the Export Agreement Amendment, in the event Gosling’s Export decides to sell any or all of its trademarks (or other intellectual property rights) relating to the Export Products (other than Goslings Stormy Ginger Beer) during the term of the Export Agreement, GCP has a right of first refusal to purchase the trademark(s) (and intellectual property rights, if applicable) at the same price being offered by a bona fide third-party offeror. If GCP does not exercise its right of first refusal, then the company will acquire an identical right of first refusal. In the event Gosling’s Export decides to sell any or all of its Export Products and/or trademark(s), whether sold to an affiliate, a third party, GCP or us, GCP is entitled to share in the proceeds of such sale, as specified in the Export Agreement Amendment. A copy of the Amended and Restated Distribution Agreement and a Restated Export Agreement are filed as exhibits to this annual report on Form 10-K. See Note 44 44 45 - **Operations overview**22 += Paragraph 2 = 46 46 47 - The company generaterevenuethrough the saleofitsproductstoitsnetworkof wholesaledistributorsor,incontrolstates, state-operatedagencies,which, inturn,distributeits productstoretailoutlets.IntheU.S.,itssalespriceper caseincludesexcisetax andimportduties, which are also reflectedas a corresponding increaseintscostof sales.Mostofits internationalsalesaresold“inbond”, withthe excisetaxespaid by itscustomersuponshipment,therebyresultingin lower relativerevenue as wellsalowerrelativecost of sales, althoughsome ofits UnitedKingdom salesare sold “taxpaid”,asinthe U.S. The difference betweensales and netsales principallyreflectsadjustmentsforvariousdistributorincentives.24 +Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. 48 48 49 - CastleBrands gross profit is determined by the prices at which the company sell its products, its ability to control its cost of sales, the relative mix of its case sales by brand and geographyand the impact of foreign currency fluctuations. Its cost of sales is principally driven by its cost of procurement, bottlingand packaging, which differs by brand, as well as freight and warehousing costs. The company purchasecertain products, such as Goslings rums and ginger beer, Pallini liqueurs, Arran whiskies, Gozio amaretto and Tierras tequila, as finished goods. For other products, such as Jefferson’s bourbons, the company purchase the components, including the distilled spirits, bottles and packaging materials, and have arrangements with third parties for bottling and packaging. Its 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.26 +== Sub-paragraph == 50 50 51 - Sellingexpenseprincipallyincludesadvertisingand marketingexpendituresandcompensationpaidoitsmarketingandsalespersonnel.Itssellingexpense,asapercentageofsalesand percase,ishigherthanthatofitscompetitorsbecauseofits branddevelopment costs,levelof marketingexpendituresandestablishedsalesforceversusits relativelysmallbaseof case sales and sales volumes.However,thecompany believe thatmaintaininganinfrastructurecapableof supporting futuregrowthisthecorrect long-termapproach forit.28 +Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. 52 52 53 - Whilethe company expect the absolute level of selling expense to increase in the coming years, the company expect sellingexpense as a percentage of revenues and on apercase basis to decline or remain constant, as its volumes expand and its sales team sells a larger number of brands.30 +== Sub-paragraph == 54 54 55 -General and administrative expense relates to corporate and administrative functions that support its operations and includes administrative payroll, occupancy and related expenses and professional services. The company expect general and administrative expense in fiscal 2018 to be higher than fiscal 2017 due to costs associated with increased infrastructure to support its growth. However, the company expect its general and administrative expense as a percentage of sales to decline due to economies of scale. 56 - 57 -The company expect to increase its case sales in the U.S. and internationally over the next several years through organic growth, and through the introduction of product line extensions, acquisitions and distribution agreements. The company will seek to maintain liquidity and manage its working capital and overall capital resources during this period of anticipated growth to achieve its long-term objectives, although there is no assurance that the company will be able to do so. 58 - 59 -The company continue to believe the following industry trends will create growth opportunities for us, including: 60 - 61 -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 the company 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. The company expect to be an attractive alternative to its larger competitors for these brand owners as one of the few modestly-sized publicly-traded spirits companies. 62 - 63 -Castle Brands growth strategy is based upon growing existing brands, partnering with other brands and acquiring smaller and emerging brands. To identify potential partner and acquisition candidates the company plan to rely on its management’s industry experience and its extensive network of industry contacts. The company also plan to maintain and grow its U.S. and international distribution channels so that Castle Brands is more attractive to spirits companies who are looking for a route to market for their products. The company 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. 64 - 65 -The company intend to finance any future brand acquisitions through a combination of its 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 its financial position, and could cause substantial fluctuations in its quarterly and yearly operating results. Also, the pursuit of acquisitions and other new business relationships may require significant management attention. The company 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. 32 +Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.