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Expenses Down & Sales Up for Castle Brands

NEW YORK, Feb 17, 2009 (BUSINESS WIRE) — Castle Brands Inc. (AMEX:ROX), an emerging developer and international marketer of premium branded spirits, today reported financial results for the three and nine months ended December 31, 2008.

In the fiscal 2009 third quarter, the Company had net sales of $6.9 million, an increase from net sales of $6.4 million in the prior year period. The Company had a net loss of $2.2 million, or $(0.14) per basic and diluted share, in the fiscal 2009 third quarter, compared to a net loss of $6.9 million, or $(0.44) per basic and diluted share, in the comparable 2008 period.

For the nine months ended December 31, 2008, the Company had net sales of $20.2 million, a decrease from net sales of $20.9 million in the prior year period. Net sales for the nine months ended December 31, 2007 included $1.9 million in excise and value added taxes from a one-time sale in Ireland. Excluding the effects of this one-time $1.9 million increase in the prior period, net sales increased in the nine months ended December 31, 2008 as the Company continued to focus on its more profitable brands and markets and its pricing strategy.

U.S. case sales increased 15% to 53,393 nine liter cases in the third quarter of fiscal 2009 as the Company focused on more profitable brands. U.S. case sales accounted for 67% of total case sales, unchanged from the fiscal third quarter 2008. International case sales increased 15% to 26,491 cases. Reflecting the increases in U.S. and international case sales, global case sales in the third quarter were up 15% to 79,884 nine liter cases.

Selling expense for the three months ended December 31, 2008 decreased 21% to $4.0 million and for the nine months ended December 31, 2008 decreased 18% to $11.3 million due to cost containment efforts and a decrease in advertising, marketing and promotional expense.

Results for the three and nine months ended December 31, 2008 included a pre-tax, non-cash gain of $4.2 million from the exchange of the Company’s 6% convertible notes in the third quarter.

As of December 31, 2008, stockholders’ equity was $34.1 million, an increase from stockholders’ equity of $14.8 million as of March 31, 2008, the end of the fiscal year.

Richard J. Lampen, President and Chief Executive Officer, “The closing of the private placement transaction resulted in a significant capital infusion and the conversion of virtually all of our debt into equity. These developments put our company on firmer footing in our efforts to build our own premium brands, support our existing agency brands, pursue new agency relationships and make brand acquisitions. During the third quarter we implemented efforts to streamline our organization and find efficiencies at every level. We recognize that ongoing expense discipline is an essential part of achieving our goals.”

John Glover, Chief Operating Officer, commented, “Our third quarter results reflect our focused sales and marketing on our most profitable brands. We continue to aggressively cut and control costs throughout the organization and promote efficiency in our efforts to achieve profitability.” Mr. Glover added, “Our brands continued to perform well in the third quarter resulting in higher total sales volumes. Our reinforced partner relationships should have a positive impact on operations in the coming quarters.”

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