Caribbean Cigar Reports First Quarter Results; Company Also Enters Into New Agreement with Current Lender.

MIAMI--(BUSINESS WIRE)--Aug. 20, 1998--Caribbean Cigar Company (Nasdaq:CIGR) today reported unaudited results for its first quarter ended June 30, 1998.

Sales during the first quarter ended June 30, 1998 totaled $649,090, compared to $2,287,569 during the first quarter of fiscal 1997. The Company incurred a net loss of $580,333, or $.09 per share during the first quarter of fiscal 1998, compared to a net loss of $607,089, or $.12 per share, during the first quarter of fiscal 1997.

The Company noted that the decrease in fiscal 1998 first quarter sales primarily reflects increased competition and expanded supply from larger, well-known cigar manufacturers. This was compounded by the fact that the Company did not record sales of its flavored cigars between December 1997 and June 1998 due to a lack of inventory resulting from supply problems. Management further noted that shipments and sales of its flavored cigars are now underway and that it received very positive interest in this specialty cigar product, as well as its other premium products, during a recent industry trade show.

Caribbean Cigar also announced that its new management has executed an agreement with its current lender that favorably restructures the payment terms of its indebtedness under its line of credit. The new, more favorable terms include a payment schedule and full access to cash generated by product sales, as well as cash that may potentially be generated by the planned sale of its retail division. No further terms of the agreement were as yet disclosed.

"The consummation of this agreement with our lender," commented J.D. Jenkins, Chairman and CEO of Caribbean Cigar, "marks a very positive step forward in our efforts to hasten the Company's turnaround. Most importantly, the Company will not be encumbered by its line of credit. In turn, we will be able to manage the business, concentrating on maximizing the value of our inventory and other assets. We now intend to intensify our efforts to sell our retail division, as well as capitalize on the opportunities we believe exist to expand sales of our premium and flavored cigars."

Caribbean Cigar Company manufactures and distributes Signature Collection (SC)(tm), Calle Ocho(R), Free Cuba(tm), Celestino Vega(R), Rum Runner(R), West Indies Vanilla, and Island Amaretto. The Company is based in Miami and has production facilities in the Dominican Republic. -0-

                   COMPARATIVE OPERATING HIGHLIGHTS
                              (Unaudited)

                               For the Three Months Ended June 30,
                                     1998             1997
Sales                             $  649,090       $2,287,569

(Loss) from
 continuing operations            $ (478,721)      $( 623,301)
Income (loss) from
 discontinued operations            (101,612)          16,212
Net loss                          $ (580,333)      $ (607,089)
Basic and diluted net
 loss per common share:           $   ( 0.09)      $    ( .12)

Basic and diluted
 weighted average number
 of common shares                  6,339,527        5,128,852

Statements about the Company's future expectations and all other statements in the press release other than historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The Company intends that such forward-looking statements be subject to the safe harbors created thereby. Since these statements involve risks and uncertainties and are subject to change at any time, the Company's actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements.

CONTACT: B. Alan Associates, Inc., Boca Raton, Fla.

Barry A. Rothman, 561/483-7743

or

Caribbean Cigar Company, Miami

J.D. Jenkins, 305/267-3911