Every year, Chris Reed is approached by J.M. Smucker Co. with what Smucker called a "lucrative" offer to buy out his natural soda company.

Reed turns the jelly maker's offer down flat, because it comes with strings he considers unacceptable: To continue running the company he would have had to cut his shaggy hair and shave his beard.

Apparently, investors of Reed's Inc. haven't heard the story.

Shares in the Los Angeles-based ginger ale, root beer and cola maker have fluctuated wildly this year dropping 62 percent between Feb. 21 and March 19 then surging 144 percent between March 20 and 27 on rumors that the company is a prime acquisition target, possibly even by Coca Cola Co.

The craziness has even extended directly to Reed, who said he has received telephone calls telling him an acquisition offer is on the way.

"I get anonymous calls pretty frequently saying that a company I've heard of is sending a non-disclosure agreement, and that I should be very happy with the offer," said Reed, who added he has no idea who has been calling him. "I got another one of those calls this week saying that the paper work was on its way. But, as of now, I've seen nothing."

For the record: Reed said he would consider an offer, but it has to be on his terms. He's not going anywhere and he doesn't want to give up control.

"I'd definitely consider any offer that would keep my current management team in place. I'm not interested in any buyout or any deal that would give control to another company," he said. "This company and this brand are my babies. I really just don't know what I'd do if I didn't have the company to run. I'm not ready to retire."

That may not be what investors want to hear, though.

The soda maker's signature ginger ale and other drinks are a hit at Trader Joe's and Whole Foods markets. And in July the company inked a deal that will put its entire line of sodas in all Ralphs supermarkets in the country. Sales rose to $13.1 million last year, up from $10.5 million in 2006.

But profits have been hard to come by, with losses of $5.58 million last year, more than double the $2.24 million loss of 2006. First quarter results were hardly more inspiring. Sales were up 18 percent to $3.56 million, but they were accompanied by a net loss of $1.99 million five times more than the $488,000 loss of a year ago. All in all, the company has lost $9.1 million over four years.

Howard Halpern, an analyst with Huntington, N.Y.-based micro-cap investment firm Taglich Brothers Inc., said Reed's which is committed to an all-natural brewing process that cuts no corners so far shows no signs of reversing its losses.

"The cash burn is still on," said Halpern, who has a neutral rating on the stock. "If Reed can roll back spending, like he has said he will, then that will make a big difference in investor confidence."

In July, Reed's upped its credit facility with First Financial, a commercial lender, to $2 million. Some investors on message boards were less than charitable about the facility, calling it a "Hail Mary" amid the cash burn.

Persistent optimism

Halpern said he's aware of the acquisition talk and the gyrations of the stock, but puts little significance on either.

He noted that the entire micro-cap market Reed's market cap is about $27 million has been in turmoil lately, with wild fluctuations in the market.

As for any acquisition, Halpern said that he has heard the rumors, though not specifically about Coca Cola. He noted the soft drink giant bought drink company Vitamin Water last year for $4 billion but still posted flat first quarter results. "I guess it would make sense for both companies, but in the current market, it really doesn't seem like a reality," he said.

Reed, too, said he doesn't get riled up about the stock price, though as the company's largest shareholder with 36 percent of outstanding shares he has an interest in it. "I watch the stock, but I don't get too consumed with the daily fluctuations," he said.

Of more interest to him: the company's latest offerings.

In September, Reed said he plans to roll out a line of all-natural energy drinks as well as a re-vamped look for his existing best-sellers, including Virgil's Root Beer and the Ginger Brews line.

He also hinted that the company may happily surprise investors with its second quarter sales and earnings report.

"If anyone has a problem with my management style, they can bring it up when we post earnings in two weeks," he said.

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