Jones Soda Co. Reports Third Quarter 2009 Results

November 5, 2009 4:00 PM EST

SEATTLE--(BUSINESS WIRE)-- Jones Soda Co. (the Company) (NASDAQ: JSDA), a leader in the premium soda category and known for its unique branding and innovative marketing, today announced results for the quarter ended September 30, 2009. The Company reported a net loss of $1.5 million, or ($0.06) per share, for the third quarter 2009, an improvement of 72% over the third quarter 2008 net loss of $5.3 million, or ($0.20) per share.

"Our third quarter bottom-line results show meaningful improvement over the same period last year and represent our best performance in the last nine quarters, underscoring the positive progress we have made during the past 12 months to streamline our business," commented Joth Ricci, President & Chief Executive Officer.

Third Quarter Review

    --  Revenue decreased 18% to $7.2 million for the quarter ended September
        30, 2009, compared to $8.7 million in the third quarter of 2008.
    --  Gross profit increased 57% to $1.5 million or 21% of sales for the
        quarter ended September 30, 2009, compared to $966,000, or 11% of sales
        in the corresponding period a year ago.
    --  Operating expenses decreased 51% to $3.0 million, compared to the
        corresponding period a year ago and were benefited by cost containment
        measures undertaken over the last year, including an additional
        reduction in workforce during the third quarter of approximately 30%.
    --  Cash used in operations during the quarter decreased significantly to
        $823,000, versus cash used in operations of $3.8 million during the
        prior year period.

"With emphasis on higher margin sales opportunities for our Jones Soda glass bottles along with the restructuring of our sales and marketing platform, we have been able to drive improved bottom-line results on planned lower case volumes," continued Mr. Ricci. "Importantly, several new product extensions within our core glass business have performed well at retail, including Jones Jumble and Jones Refresco de Cana Pura. Additionally, our gross margin and operating expenses are both dramatically improved versus a year ago, and as a result, we significantly reduced our use of cash in the quarter."

Mr. Ricci, concluded, "We are proud of our year-over-year performance and are encouraged by a number of recent distribution wins. With the upcoming launch of new packaging and products, we are striving to generate top-line momentum as we head into next year."

Balance Sheet

As of September 30, 2009, the Company had cash and cash-equivalents of approximately $6.1 million and working capital of $11.3 million. Cash used in operations during the nine months ended September 30, 2009 totaled $6.2 million, of which $823,000 was used in the quarter ended September 30, 2009. The Company traditionally uses more cash in the first half of the year as inventory is built to support the historically seasonally-stronger shipping months of April through September, and expects the amount of cash used by operating activities to decrease in the second half of the year as receivables generated during its stronger shipping months are collected. As of September 30, 2009, inventories were $3.9 million compared to $6.8 million as of September 30, 2008; the $3.9 million does not include the long term portion of GABA raw materials purchased in conjunction with the Company's Pharma GABA supply agreement which is classified in other assets.

Conference Call

The Company will discuss its results for the quarter ended September 30, 2009 and its business outlook on its scheduled conference call today, November 5, 2009 at 1:30 p.m., Pacific time (4:30 p.m. ET). The live web cast of the conference call can be accessed from the Investor Relations section of the Jones Soda Web site at www.jonessoda.com. The replay will be available starting three hours after the call and remain in effect until September 2010.

About Jones Soda Co.

Headquartered in Seattle, Washington, Jones Soda Co. (R) markets and distributes premium beverages under the Jones Soda, Jones Pure Cane Soda(TM), Jones 24C(TM), Jones GABA(R), Jones Organics(TM), Jones Naturals(R) and Whoopass Energy Drink(R) brands and sells through its distribution network in markets primarily across North America. A leader in the premium soda category, Jones is known for its variety of flavors and innovative labeling technique that incorporates always-changing photos sent in from its consumers. Jones Soda is sold through traditional beverage retailers. For more information visit www.jonessoda.com, www.myjones.com, and www.jonesGABA.com.

Forward-Looking Statements Disclosure

Certain statements in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding our expectations concerning cash to be used by operating activities and the receivables to be collected in the second half of the year. Forward-looking statements include all passages containing words such as "aims," "anticipates," "becoming," "believes," "continue," "estimates," "expects," "future," "intends," "plans," "predicts," "projects," "targets," or "upcoming". Forward-looking statements also include any other passages that are primarily relevant to expected future events or that can only be evaluated by events that will occur in the future. Forward-looking statements are based on the opinions and estimates of the management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that could affect Jones Soda's actual results include, among others, its inability to achieve levels of revenue and cost reductions that are adequate to support its capital and operating requirements in order to continue as a going concern; its inability to generate sufficient cash flow from operations, or to obtain funds through additional financing or other strategic alternatives, to support its business plan; the impact of the global economic crisis, which has continued to have a greater than expected impact on the Company's business; its inability to increase points of distribution for its existing Jones GABA product or to successfully innovate new GABA products and product extensions; its inability to establish distribution arrangements with distributors, retailers or national retail accounts; its inability to maintain relationships with its co-packers; its inability to maintain a consistent and cost-effective supply of raw materials; its inability to receive returns on its trade spending and slotting fee expenditures; its inability to maintain brand image and product quality; its inability to protect its intellectual property; the impact of current and future litigation; and its inability to develop new products to satisfy customer preferences and the impact of intense competition from other beverage suppliers. More information about factors that potentially could affect Jones Soda's financial results is included in Jones Soda's most recent annual report on Form 10-K and quarterly reports on Form 10-Q filed in 2009 with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. Except as required by law, Jones Soda undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.

JONES SODA CO.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except share data)

(Unaudited - $US)

                Three Months Ended September    Nine Months Ended September 30,
                30,

                2009            2008            2009            2008

Revenue         $ 7,156         $ 8,684         $ 21,710        $ 29,787

Cost of goods     5,643           7,718           16,696          23,918
sold

Gross profit      1,513           966             5,014           5,869

Gross profit %    21.1       %    11.1       %    23.1       %    19.7       %

Licensing         19              43              70              152
revenue

Operating
expenses:

Promotion and     1,590           3,481           6,151           9,967
selling

General and       1,446           2,724           5,006           7,809
administrative

                  3,036           6,205           11,157          17,776

Loss from         (1,504     )    (5,196     )    (6,073     )    (11,755    )
operations

Other
(expense)         (65        )    66              (65        )    301
income, net

Loss before       (1,569     )    (5,130     )    (6,138     )    (11,454    )
income tax

Income tax
benefit           87              (130       )    88              (392       )
(expense)

Net loss        $ (1,482     )  $ (5,260     )  $ (6,050     )  $ (11,846    )

Net loss per
share, basic    $ (0.06      )  $ (0.20      )  $ (0.23      )  $ (0.45      )
and diluted

Weighted
average common
shares
outstanding:

Basic and         26,454,729      26,354,177      26,455,293      26,324,270
diluted

                      Three Months Ended September  Nine Months Ended September
                      30,                           30,

288-ounce equivalent  2009    2008                  2009      2008
case sales:

Finished products     538,500 712,300               1,691,800 2,416,200
case sales

Concentrate case      317,600 314,700               685,800   1,365,800
sales

Total case sales      856,100 1,027,000             2,377,600 3,782,000

JONES SODA CO.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

($US)

                                           September 30, 2009  December 31, 2008

                                           (Unaudited)

Assets

Current assets:

Cash and cash equivalents                  $ 6,081             $ 11,736

Short-term investments                       125                 890

Accounts receivable                          3,622               2,428

Inventory                                    3,929               5,654

Prepaid expenses and other current assets    974                 1,410

Total current assets                         14,731              22,118

Deferred income tax asset                    112                 98

Fixed assets                                 1,443               2,099

Other assets                                 1,884               --

Total assets                               $ 18,170            $ 24,315

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable                           $ 1,183             $ 1,469

Accrued liabilities                          2,034               2,788

Taxes payable                                60                  34

Note payable, current portion                125                 --

Capital lease obligations, current           --                  153
portion

Total current liabilities                    3,402               4,444

Note payable                                 235                 --

Capital lease obligations                    --                  321

Long term liabilities - other                59                  75

Commitments and contingencies

Shareholders' equity

Common stock, no par value:

Authorized: 100,000,000
Issued and outstanding: 26,454,949 and       43,925              43,924
26,460,409 shares, respectively

Additional paid-in capital                   5,631               5,044

Accumulated other comprehensive income       382                 (79     )
(loss)

Accumulated deficit                          (35,464 )           (29,414 )

Total shareholders' equity                   14,474              19,475

Total liabilities and shareholders'        $ 18,170            $ 24,315
equity

    Source: Jones Soda Co.

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