Castle Brands Announces Fourth Quarter and Fiscal 2009 Results

NEW YORK--(Business Wire)--
Castle Brands Inc. (NYSE Amex: ROX), an emerging developer and international
marketer of premium branded spirits, today reported financial results for the
three and twelve months ended March 31, 2009.

Full Year Fiscal 2009

For fiscal 2009, the Company had net sales of $26.1 million, a decrease from net
sales of $27.3 million in the prior year period. Net sales for fiscal 2008
included $2.3 million in excise and value added taxes from a one-time sale in
Ireland. Excluding the effects of this one-time $2.3 million increase in the
prior period, net sales increased 4.3% in fiscal 2009 as the Company continued
to focus on its more profitable brands and markets and its pricing strategy.

U.S. case sales increased 1% to 206,532 nine liter cases in fiscal 2009.
International case sales decreased to 83,806 cases in fiscal 2009 as compared to
108,469 cases in fiscal 2008. Total case sales for fiscal 2009 were 290,338
cases as compared to 313,288 cases in fiscal 2008.

Selling expense decreased 25% to $13.4 million in fiscal 2009 from $17.8 million
in fiscal 2008 due to cost containment efforts, including a decrease in
advertising and promotional expense.

The Company had a net loss of $21.7 million in fiscal 2009, or ($.68) per basic
and diluted share, compared to a net loss of $27.6 million, or ($1.81) in the
prior year. Net loss per common share basic and diluted for fiscal 2009 was
positively impacted by the increase in common stock outstanding in 2009
resulting from the October 2008 $15 million private placement and note
conversion.

The Company's annual goodwill and intangible assets impairment testing under
SFAS No. 142 resulted in an impairment charge of $4.8 million in fiscal 2009 and
$8.8 million in fiscal 2008. Fiscal 2009 results included a foreign exchange
loss of $4.1 million as compared to a gain of $2.3 million in fiscal 2008 due to
a stronger U.S. dollar. Results for fiscal 2009 included a pre-tax, non-cash
gain of $4.2 million from the exchange of the Company's 6% convertible notes.

Cash and cash equivalents, together with short-term investments, totaled $7.7
million at March 31, 2009 as compared to $5.8 million at March 31, 2008.

As of March 31, 2009, stockholders` equity was $26.0 million, an increase from
stockholders` equity of $14.8 million as of March 31, 2008, the end of the 2008
fiscal year.

Fourth Quarter 2009

In the fiscal 2009 fourth quarter, the Company had net sales of $5.9 million, a
decrease from net sales of $6.4 million in the prior year period. The Company
had a net loss of $9.0 million, or $(0.11) per basic and diluted share, in the
fiscal 2009 fourth quarter, compared to a net loss of $13.0 million, or $(0.83)
per basic and diluted share, in the comparable 2008 period.

The Company's annual goodwill and intangible assets impairment testing under
SFAS No. 142 resulted in an impairment charge of $4.8 million in the fourth
fiscal quarter of 2009 and a $8.8 million in fourth fiscal quarter of 2008.
Fourth quarter 2009 results included a foreign exchange loss of $1.3 million as
compared to a gain of $0.9 million in fourth quarter 2008 due to a stronger U.S.
dollar.

Fourth quarter 2009 selling expense was $2.2 million as compared to $4.2 million
in the fourth quarter of 2008.

Fiscal 2009 Developments

U.S. Sales

Despite a volatile U.S. retail environment, 2009 U.S. shipments increased 1%.
Shipments for Gosling`s rums increased 16%, our various bourbon brands increased
27%, Pallini liqueurs increased 11% and Brady`s Irish Cream increased 17%. While
sales decreased slightly on Knappogue Castle Whiskey, revenue per case increased
significantly, as the brand was repositioned to better compete with premium
single malts. Finally, while Boru vodka shipments were down 17%, price related
spending decreased by 21% as we focused more on profitable markets.

International Sales

Performance in international markets reflected a change in strategy whereby
unprofitable brands and markets were de-emphasized and distribution
relationships were re-crafted to achieve positive returns. All three major Boru
distribution relationships in the British Isles were renegotiated during the
year and Gosling`s rums and Clontarf Irish Whiskey became the top priority
brands for international development. With this change in emphasis, Clontarf
sales grew by 28% and Gosling`s continued its steady development.

Other key developments include:

* The U.S. now accounts for 71% of total case sales as the Company focused on
more profitable brands and markets;
* Selling expense decreased 25% due to continued cost containment efforts;
* Debt was retired and a $15 million private placement was completed;
* Tierras tequila, the first USDA certified organic tequila, was introduced; and

* Gross profit increased to 27% and gross margin increased to 32%.

Richard J. Lampen, President and Chief Executive Officer, said, "The capital
infusion from the private placement transaction and the conversion of our debt
into equity put our company on firmer footing. We continue in our goal to build
our own premium brands, support our existing agency brands, pursue new agency
relationships and make brand acquisitions. We recognize that ongoing expense
discipline is an essential part of achieving our goals. Our belief in our future
vision is underscored by our May 2009 repurchase of 1,000,000 shares of Castle
Brands common stock."

John Glover, Chief Operating Officer, commented, "Our results show the immediate
benefit of focusing sales and marketing on our more profitable brands. We
continue to concentrate on controlling costs throughout the organization and
promoting efficiency in our efforts to achieve profitability. Additionally, our
reinforced partner relationships should have a positive impact on operations in
the coming quarters."

$15 Million Private Placement and Note Conversion

In October 2008, the Company completed the sale of 1.2 million shares of Series
A Convertible Preferred Stock for $15 million at a purchase price of $12.50 per
share (which was, in effect upon conversion, $0.35 per share of common stock).
Concurrently with the closing, all of the Company's 6% convertible notes, in the
principal amount of $9 million, plus accrued interest, were converted into
shares of Series A Preferred Stock at a per share price of $23.21 (which was, in
effect upon conversion, $0.65 per share of common stock). Also, Castle Brands
(USA) Corp.'s 9% senior secured notes, in the principal amount of $9.7 million,
plus accrued interest, were converted into shares of Series A Preferred Stock at
a per share price of $12.50 (which was, in effect upon conversion, $0.35 per
share of common stock). The Company retired the remaining outstanding senior
notes by issuing common stock in May 2009.

The closing of the private placement and the conversion of the notes (and
subsequent automatic conversion of the Series A Preferred Stock issued in
connection therewith) resulted in the Company's issuance of approximately 86
million shares of common stock in the fourth quarter of fiscal 2009.

About Castle Brands Inc.

Castle Brands is an emerging developer and international marketer of premium
branded spirits within four categories of the spirits industry: vodka, rum,
whiskey, liqueurs and tequila. Castle Brands' portfolio includes, Boru Vodka,
Gosling's Rum, Pallini LimoncelloTM, RaspicelloTM and Peachcello TM, Knappogue
Castle Whiskey, Clontarf Irish Whiskey, Jefferson's TM and Jefferson's Reserve
Bourbon, Sam Houston Bourbon, Celtic Crossing Liqueur, Sea Wynde Rum, Brady's
Irish Cream and Tierras tequila.

Forward Looking Statements

This press release includes statements of our expectations, intentions, plans
and beliefs that constitute "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 and are intended to come within the safe harbor protection
provided by those sections. These statements, which involve risks and
uncertainties, related to the discussion of our business strategies and our
expectations concerning future operations, margins, profitability, liquidity and
capital resources and to analyses and other information that are based on
forecasts of future results and estimates of amounts not yet determinable. You
can identify these and other forward-looking statements by the use of such words
as "may," "will," "should," "expects," "intends," "plans," "anticipates,"
"believes," "thinks," "estimates," "seeks," "expects," "predicts," "could,"
"projects," "potential" and other similar terms and phrases, including
references to assumptions. These forward looking statements are made based on
expectations and beliefs concerning future events affecting us and are subject
to uncertainties, risks and factors relating to our operations and business
environments, all of which are difficult to predict and many of which are beyond
our control, that could cause our actual results to differ materially from those
matters expressed or implied by these forward looking statements. These risks
include our history of losses and expectation of further losses, our ability to
expand our operations in both new and existing markets, our ability to develop
or acquire new brands, our relationships with distributors, the success of our
marketing activities, the effect of competition in our industry and economic and
political conditions generally, including the current recessionary economic
environment and concurrent market instability. More information about these and
other factors are described under the caption "Risk Factors" in Castle Brands'
Annual Report on Form 10-K for the year ended March 31, 2009, filed with the
Securities and Exchange Commission.

When considering these forward looking statements, you should keep in mind the
cautionary statements in this press release and the documents incorporated by
reference. New risks and uncertainties arise from time to time, and we cannot
predict those events or how they may affect us. We assume no obligation to
update any forward looking statements after the date of this press release as a
result of new information, future events or developments, except as required by
the federal securities laws.

CASTLE BRANDS INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Three-months ended March 31, Twelve-months ended March 31,
2009 2008 2009 2008
Sales, net* $ 5,870,836 $ 6,378,382 $ 26,105,516 $ 27,325,168
Cost of sales* 4,157,947 4,715,432 18,203,361 19,272,708
(Benefit) provision for obsolete inventory (107,892 ) (165,456 ) (360,133 ) 1,541,579
Gross profit 1,820,781 1,828,406 8,262,288 6,510,881
Selling expense 2,166,071 4,158,351 13,429,965 17,843,761
General and administrative expense 2,032,379 2,144,236 9,203,575 8,368,727
Depreciation and amortization 579,657 237,728 1,307,536 1,029,579
Goodwill and other intangible asset impairment 4,845,287 8,750,000 4,845,287 8,750,000
Loss from operations (7,802,613 ) (13,461,909 ) (20,524,075 ) (29,481,186 )
Other income 3,750 11,676 60,724 11,676
Other expense (39,960 ) (80,964 ) (78,013 ) (121,683 )
Foreign exchange (loss) gain (1,255,595 ) 947,041 (4,117,564 ) 2,251,430
Interest expense, net (18,405 ) (485,662 ) (1,579,012 ) (1,679,395 )
Gain on exchange of 6% convertible subordinated notes - - 4,173,716 -
Credit on derivative financial instrument - - - 189,397
Income tax benefit 37,038 37,038 148,152 148,152
Minority interests 61,670 (7,432 ) 227,773 1,097,835
Net loss $ (9,014,115 ) $ (13,040,212 ) $ (21,688,299 ) $ (27,583,774 )
Net loss per common share, basic and diluted $ (.11 ) $ (0.83 ) $ (.68 ) $ (1.81 )
Weighted average shares used in computation, basic and diluted 81,549,666 15,629,776 31,883,995 15,263,930

* Sales, net and Cost of sales include excise taxes of $1,048,556 and $1,471,923
for the three-months ended March 31, 2009 and 2008, respectively, and $4,222,394
and $6,669,014 for the twelve-months ended March 31, 2009 and 2008,
respectively.

Sard Verbinnen & Co
Paul Caminiti/Jonathan Doorley, 212-687-8080

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