- Continue generating positive cash flow;
- Where appropriate, buy back stock; and
- Invest in the development and growth of our healthy beverage brands, particularly HappyWater ®.
©2015 Leading Brands, Inc.This news release is available at www.LBIX.com April 7, 2015 Dear Fellow Shareholder: Leading Brands: Significant Steps for Growth and Enhancing Shareholder Value We are intent upon increasing growth and enhancing shareholder value. To accomplish this, we are taking three significant steps to invest in our future that will place the Company in a strong position for long-term growth. They are:
- A new contract signed with our largest customer to ensure certainty of term;
- The Canada-wide roll-out of HappyWater® and new WaterBox™ packaging format; and
- An investment banker, Merriman & Co. of San Francisco, engaged to help us identify new strategic opportunities.
We are confident that consumers and retailers will be attracted to our blend of naturally alkaline spring and lithia water and that the product has the potential to return high margins and become self-sustaining. Our confidence is based on a three-year development program and test market in Vancouver, where we evolved and successfully implemented the brand message and marketing strategy.HappyWater ® contains naturally occurring lithia at levels that have been clinically proven to provide improvements in mood and behaviour. If you have not seen last September's New York Times article on the importance of lithia in your diet, I commend it to you: http://www.nytimes.com/2014/09/14/opinion/sunday/should-we-all-take-a-bit-of-lithium.html?_r=0. The timing of that recognition is uncanny. Moreover, our WaterBox™ format of packaging offers an attractive alternative to PET and BPA-laden water bottles for the fast-growing, health and environment-conscious consumer market. With 85% less plastic than conventional bottled water, the HappyWater® WaterBox™ not only dramatically reduces the environmental footprint of water packaging but also improves the way consumers integrate premium, naturally functional water into their everyday lives. We believe that the attributes of Happy Water® and WaterBox™ are sufficiently unique that they can be legally protected in addition to being difficult to replicate. Just as exciting, our box technology isn't limited to water and we are exploring how our juice lines could benefit from this innovative packaging. We Positioned the Company for this Success At the onset of the Great Recession in 2008, Leading Brands was significantly in debt and exposed to a contracting US market. We took action to protect the business and reposition the company for future growth. From March 1, 2009 through to the end of our last reported quarter we have (all amounts in Cdn$):
- Purchased almost $4,000,000 in new capital equipment, primarily to invest in our bottling plant and equipment to make us a more attractive partner to our customers, and new technology that facilitated the launch of the WaterBox™;
- Eliminated our long term debt of approximately $6,500,000;
- Repurchased almost 30% of Leading Brand's issued and outstanding shares;
- Returned 85% of our net income to shareholders through the repurchase of shares;
- Increased the Company's working capital by more than $2,000,000; and
- All while we developed an exciting new brand and packaging format for the Company, accomplished using existing cash flow.
Considering New InitiativesWith our business strengthened and positioned for growth, our investment banker's broad mandate includes, as a top priority, finding us an acquisition target involving one or more healthy, fast-growing food or beverage brands that have a strong foothold in the US market and a proven ability to execute there. We have structured the contract with Merriman & Co. so that virtually all of their compensation is tied to results. While there is no certainty that a transaction will take place, we believe that we should be searching for good fits that will supplement our current business and accelerate our market penetration and development, particularly in the United States. We continue to be guided by a simple yet effective philosophy: improve our balance sheet, return profits to shareholders when appropriate and invest in our brands. This approach fueled our successful turnaround and we are confident it will continue to guide us as we now focus on growth and value creation for all shareholders. Thank you for your continued support. If you have any questions or concerns, I invite you to write me at: RMcRae@LBIX.com. Sincerely, LEADING BRANDS, INC. Per: Ralph D. McRae Chairman & CEO About Leading Brands, Inc. Leading Brands, Inc. (Nasdaq:LBIX) is North America's only fully integrated healthy beverage company. Leading Brands creates, designs, bottles, distributes and markets its own proprietary premium beverage brands via its unique Integrated Distribution System (IDS)™ which involves the Company finding the best and most cost-effective route to market. The Company strives to use the best natural ingredients hence its mantra: Better Ingredients – Better Brands. Forward Looking Statements Certain information contained in this document includes forward-looking statements, including statements regarding the Company's plans and expectations, including regarding financial results, revenues and profitability, the benefits of cost saving measures, Happy Water® and WaterBox™, including the potential for those products to return high margins and become self-sustaining, and potential transactions. Words such as "believe", "expect," "will," or comparable terms, are intended to identify forward-looking statements concerning the Company's expectations, beliefs, intentions, plans, objectives, future events or performance and other developments. Such forward-looking information is based on management's expectations and assumptions, including that the new contract with the Company's largest customer (the "Contract") and the Company's cost saving measures will have the effect on the Company's financial results expected by management, that the cost saving measures will be implemented successfully, that the Company's roll out of Happy Water® and the demand for and profitability of Happy Water® and WaterBox™ will be consistent with management's expectations and that the Company's efforts to identify and complete a suitable acquisition transaction will be successful. Factors that could cause actual results to differ materially from those described herein include the Contract and cost saving measures having different effects on the Company's financial results and operations than those expected by management, that the cost saving measures will not be implemented successfully, that the Company's roll out of Happy Water® and the demand for and profitability of Happy Water® and WaterBox™ will not be consistent with management's expectations, unanticipated competition with the Company's products and that the Company's efforts to identify and complete a suitable acquisition transaction will be unsuccessful, as well as the risks disclosed in the Company's securities filings, which include the following: general economic conditions, weather conditions, changing beverage consumption trends, pricing, availability of raw materials, economic uncertainties (including currency exchange rates), government regulation, managing and maintaining growth, the effect of adverse publicity, litigation, competition and other risk factors described from time to time in securities reports filed by Leading Brands, Inc. There may be other factors that cause actual results not to be as anticipated, estimated or intended. Readers should not place undue reliance on forward-looking information. For all such forward-looking statements, we claim the safe harbor for forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All forward-looking statements included in this document are based on information available to the Company on the date hereof and speak only as of the date hereof. The Company undertakes no obligation to update these forward-looking statements, other than as required by applicable law.
CONTACT: Leading Brands, Inc. Tel: (604) 685-5200 Email: info@LBIX.com