JSDA Jones Soda Co (QB)

Turnaround Plan Delivers 35% Net Loss Improvement for 2013

Jones Soda Co. (the Company or Jones Soda) (OTCQB:JSDA), a leader in the premium soda category and known for its unique branding and innovative marketing, today announced results for the fourth quarter and year ended December 31, 2013.

Results for 2013 continue to reflect the efforts of our Turnaround Plan, which was initiated with the change in management in the second half of 2012. These results also reflect investments to support our emerging partnerships with distributors and retailers in certain key markets, while continuing to work within a reduced and more prudent general and administrative cost structure.

For the year ended December 31, 2013, net loss improved to $1.9 million, or $(0.05) per share, compared to a net loss of $2.9 million, or $(0.08) per share, in the prior year. Cash at December 31, 2013 was $1.5 million compared to $1.7 million in the prior year, a decrease of $190,000.

“With six quarters into the Turnaround, we have made tremendous strides as evident in our dramatically-improved net operating results, stabilized balance sheet, cash position, and cash used in operations for the year approaching breakeven. The fourth quarter results are illustrative of the bumps along the way toward recalibrating a business to profitable growth in an industry that is undergoing rapid change,” stated Jennifer Cue, CEO of Jones Soda Co. Ms. Cue continued, “Still, the foundation for Jones’ future is very strong. We’ve got a powerful brand, an entrepreneurial team and a mindset to driving future growth through innovation once again.”

For the fourth quarter of 2013, revenues decreased by 32.1% to $2.1 million compared to the prior year quarter of $3.1 million. Net loss increased to $1.1 million, or $(0.03) per share, compared to a net loss of $448,000, or $(0.01) per share, for the fourth quarter 2012. The fourth quarter results were impacted by reduced revenue due to tradespend associated with a seasonal program, as well as general softness in sales across the CSD industry compared to a year ago. In addition, the results for 2012 were favorably impacted by sales of seasonal holiday packs.

Full Year Review - Comparison of Years Ended December 31, 2013 and 2012

• Revenue decreased 16.4% to $13.7 million, compared to $16.4 million last year.
• Gross margin decreased to 23.8% of revenue, compared to 27.4% of revenue last year.
• Operating expenses decreased 29.9% to $5.1 million, compared to $7.3 million last year.
• Net loss decreased to $1.9 million, or $(0.05) per share, compared to a net loss of $2.9 million, or $(0.08) per share, last year, an improvement of 34.8%.
• Cash used in operations was $317,000 compared to $2.9 million last year.

Fourth Quarter Review - Comparison of Quarters Ended December 31, 2013 and 2012

• Revenue decreased 32.1% to $2.1 million, compared to $3.1 million last year.
• Gross margin decreased to 12.2% of revenue, compared to 22.9% of revenue last year.
• Operating expenses increased 15.2% to $1.3 million, compared to $1.1 million last year.
• Net loss increased to $1.1 million, or $(0.03) per share, compared to a net loss of $448,000 or $(0.01) per share, last year, an increase of 138.6%.
• Cash provided by operations was $306,000 versus cash provided by operations of $247,000 last year.

Conference Call

The Company will discuss its results for the quarter and fiscal year ended December 31, 2013, on its scheduled conference call today, March 6, 2014, at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). This call will be webcast and can be accessed by visiting our website at www.jonessoda.com or www.jonessoda.com/company/jones-press/webcasts. Investors may also listen to the call via telephone by dialing (719) 325-2435 (confirmation code: 2097268). In addition, a telephone replay will be available by dialing (858) 384-5517 (confirmation code: 2097268) through March 13, 2014, at 11:59 p.m. Eastern time.

About Jones Soda Co.

Headquartered in Seattle, Washington, Jones Soda Co.® markets and distributes its premium beverages under the Jones® Soda, Jones Zilch®, Natural Jones™ Soda and WhoopAss™ Energy Drink brands. A leader in the premium soda category, Jones Soda is known for its variety of flavors, high quality ingredients (including pure cane sugar), and innovative labeling technique that incorporates always-changing photos sent in from its consumers. Jones Soda is sold through traditional beverage retailers in markets primarily across North America. For more information, visit www.jonessoda.com or www.myjones.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. Forward-looking statements include all passages containing words such as “will,” “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 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 or implied in the forward-looking statements. Factors that could affect the Company's actual results include, among others: its ability to successfully execute on its operating plans for 2014; its ability to maintain and expand distribution arrangements with distributors, independent accounts, retailers or national retail accounts; its ability to manage operating expenses and generate sufficient cash flow from operations; its ability to increase revenues and achieve case sales goals on reduced operating expenses; its ability to develop and introduce new products to satisfy customer preferences; its ability to market and distribute brands on a national basis; changes in consumer demand or market acceptance for its products; its ability to increase demand and points of distribution for its products or to successfully innovate new products and product extensions; its ability to maintain relationships with co-packers; its ability to maintain a consistent and cost-effective supply of raw materials; its ability to maintain brand image and product quality; its ability to attract, retain and motivate key personnel; its ability to protect its intellectual property; the impact of future litigation; the impact of intense competition from other beverage suppliers; and its ability to access the capital markets for any future equity financing, and any actual or perceived limitations by being traded on the OTCQB Marketplace. More information about factors that potentially could affect the Company’s operations or financial results is included in its most recent annual report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission on March 27, 2013, and in its quarterly reports on Form 10-Q filed in 2013. 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, the Company 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.CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except share data)

    Three months ended December 31,   Twelve months ended December 31, 2013   2012 2013   2012 (Unaudited) (Unaudited) Revenue $ 2,096 $ 3,089 $ 13,696 $ 16,384 Cost of goods sold   1,841     2,383     10,433     11,902   Gross profit 255 706 3,263 4,482 Gross profit % 12.2 % 22.9 % 23.8 % 27.4 %   Operating expenses: Promotion and selling 578 509 2,322 3,357 General and administrative   722     619     2,779     3,922     1,300     1,128     5,101     7,279   Loss from operations (1,045 ) (422 ) (1,838 ) (2,797 ) Other (expense) income, net   (8 )   (8 )   10     (15 ) Loss before income taxes (1,053 ) (430 ) (1,828 ) (2,812 ) Income tax expense, net   (16 )   (18 )   (65 )   (91 ) Net loss $ (1,069 ) $ (448 ) $ (1,893 ) $ (2,903 )   Net loss per share - basic and diluted $ (0.03 ) $ (0.01 ) $ (0.05 ) $ (0.08 ) Weighted average basic and diluted common shares outstanding 38,688,658 38,534,212 38,593,465 37,909,278   Three months ended December 31, Twelve months ended December 31, Case sale data (288-ounce equivalent) 2013 2012 2013 2012 Finished product cases 178,000 225,400 1,036,000 1,190,500    

JONES SODA CO.CONSOLIDATED BALANCE SHEETS(In thousands, except share data)

    December 31, 2013   2012 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,464 $ 1,654 Accounts receivable, net of allowance of $42 and $93 1,034 1,742 Inventory 2,315 2,223 Prepaid expenses and other current assets   410     264   Total current assets 5,223 5,883 Fixed assets, net of accumulated depreciation of $1,194 and $1,787 232 497 Other assets   59     640   Total assets $ 5,514   $ 7,020   LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 871 $ 885 Accrued expenses 892 767 Taxes payable 37 45 Deferred rent, current portion 35 30 Capital lease obligations, current portion   13     24   Total current liabilities 1,848 1,751 Capital lease obligations 16 58 Long-term liabilities — other 390 427 Shareholders’ equity: Common stock, no par value: Authorized — 100,000,000; issued and outstanding shares — 38,710,416 and 38,530,416 shares, respectively 52,981 52,867 Additional paid-in capital 7,941 7,590 Accumulated other comprehensive income 355 451 Accumulated deficit   (58,017 )   (56,124 ) Total shareholders’ equity   3,260     4,784   Total liabilities and shareholders’ equity $ 5,514   $ 7,020    

Jones Soda Co.Carrie L. Traner, 206-624-3357Vice President of Financectraner@jonessoda.com