Castle Brands Closes Private Placement and Receives Cash Infusion of $15 Million

Business Wire, Oct 21, 2008

NEW YORK -- Castle Brands Inc. (NYSE Alternext US LLC: ROX), the maker of premium branded spirits, today announced that it closed the previously announced private placement pursuant to the purchase agreement entered into on October 11, 2008 with investors led by Dr. Phillip Frost, I.L.A.R. S.p.A., the owner of Pallini liqueurs, and Vector Group Ltd., and received a cash infusion of $15 million. Under the terms of the purchase agreement, the Company issued 1,200,000 shares of newly created Series A Convertible Preferred Stock for a price per share of $12.50 (which is, in effect upon conversion, $0.35 per share of the Company's common stock). After approval by the Company's stockholders at a special meeting of an amendment to the Company's charter to increase its authorized shares, each outstanding share of Series A Preferred Stock will be automatically converted into 35.7143 shares of the Company's common stock.

Concurrently with the closing, all of the Company's 6% convertible notes, in the principal amount of $9 million, due March 1, 2010, plus accrued interest, were converted into shares of Series A Preferred Stock at a per share price of $23.21 (which is, in effect upon conversion, $0.65 per share of common stock). In addition, substantially all of the outstanding principal of Castle Brands (USA) Corp.'s 9% senior secured notes, in the principal amount of $10 million, due May 31, 2009, plus accrued interest, were converted into shares of Series A Preferred Stock at a per share price of $12.50 (which is, in effect upon conversion, $0.35 per share of common stock).

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) will result in the Company's issuance of approximately 86 million shares of common stock. Holders of Series A Preferred Stock (comprised of the investors and the converting note holders, many of which are current stockholders of the Company) own, excluding present ownership, approximately 85% of the Company's common stock on an as-converted basis.

Mark Andrews, Chairman of the Board, stated, "We are very glad to have successfully completed this transaction, particularly in such a difficult financial environment. It brings a critically important equity infusion and also eliminates virtually all of our debt. Together, these developments put our company on much firmer footing, which will enable us to pursue our original vision of building our own premium brands, supporting our existing agency brands, pursuing new agency relationships and making brand acquisitions."

About Castle Brands Inc.

Castle Brands is an emerging developer and international marketer of premium branded spirits within five growing categories of the spirits industry: vodka, rum, tequila, whiskey and liqueurs/cordials. Castle Brands' portfolio includes Boru([R]) Vodka, Gosling's Rum([R]), Sea Wynde([R]) Rum, Tierras Tequila, Knappogue Castle Whiskey([R]), Clontarf([R]) Irish Whiskey, Jefferson's[TM] and Jefferson's Reserve([R]) Bourbon, Sam Houston([R]) Bourbon, Celtic Crossing([R]) Liqueur, Pallini([R]) Limoncello[TM], Raspicello[TM] and Peachcello[TM] and Brady's([R]) Irish Cream.

Note Regarding Forward-Looking Statements

All statements in this press release that are not historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by words such as "believe", "intend," "expect", "may", "could", "would", "will", "should", "plan", "project", "contemplate", "anticipate", or similar statements. Because these statements reflect Castle Brands' current views concerning future events, these forward-looking statements are subject to risks and uncertainties. Castle Brands' actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, demand for its products and services, its ability to compete effectively, its ability to increase revenue from its newer products and services and the other factors described under the caption "Risk Factors" in Castle Brands' Annual Report on Form 10-K for the year ended March 31, 2008 and Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008 filed with the Securities and Exchange Commission. Castle Brands undertakes no obligation to update publicly any forward-looking statements contained in this press release.

IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC

In connection with the stockholder proposal to amend the Company's charter to increase the number of authorized shares described above, the Company intends to file a proxy statement and other relevant documents with the Securities and Exchange Commission (the "SEC"). STOCKHOLDERS OF THE COMPANY ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT SUCH STOCKHOLDER PROPOSAL.