Jones Soda posts fiscal Q4 net loss of US$1.8M, versus net loss of US$4.5M a year ago, on cost cuts, but revenue down 27% to US$3.1M

Graziela Medina Shepnick

SEATTLE , March 11, 2011 (press release) – Jones Soda Co. (the Company) (NASDAQ:JSDA - News), 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, 2010. The Company reported a net loss of $1.8 million, or ($0.06) per share, for the quarter ended December 31, 2010, a 59% improvement from the fourth quarter 2009 net loss of $4.5 million, or ($0.17) per share. The Company reported a net loss of $6.1 million, or ($0.22) per share, for 2010, an improvement of 42% over the 2009 net loss of $10.5 million, or ($0.40) per share.

William Meissner, President & Chief Executive Officer, stated, “During the fourth quarter we continued to witness the positive effects of our turnaround strategy. With a greater emphasis on our core glass bottle business, our year-over-year gross profit as a percentage of revenue in the fourth quarter improved and our expenses continued to decline due to our cost control measures executed over the past year. While we still have much work ahead of us, we are pleased with the progress made in 2010 toward stabilizing the business and creating a more solid growth platform for the future. As we move forward, we are committed to profitably expanding our glass bottles and reinvigorating demand for our recently re-launched WhoopAss Energy Drink. We believe that the turnaround strategy that we are executing, has positioned us to now start strategically expanding our market share.”

Fourth Quarter Review – Comparison of Quarters ended December 31, 2010 and December 31, 2009

    * Revenue decreased 27% to $3.1 million for the quarter ended December 31, 2010, compared to $4.3 million in the fourth quarter of 2009.
    * Gross profit increased to $557,000 for the quarter ended December 31, 2010, compared to a negative $1.1 million in the corresponding period a year ago. This increase primarily resulted from the impact of a $2.0 million charge in the fourth quarter of 2009, consisting of a $1.6 million write-down of excess GABA inventory and a $422,000 impairment of equipment located at a co-packer relating to our concentrate soda distribution (CSD) channel. The fourth quarter of 2010 includes an additional write-down of the remaining GABA inventory totaling $162,000. For the quarter ended December 31, 2010, gross profit as a percentage of revenue increased to 18%.
    * Operating expenses decreased 21% to $2.6 million, compared to the corresponding period a year ago, and were benefited by cost containment measures, including the reductions in workforce enacted during 2009.
    * Net loss improved 59% to $1.8 million, or ($0.06) per share, for the quarter ended December 31, 2010, from the fourth quarter 2009 net loss of $4.5 million, or ($0.17) per share.
    * Cash provided by operations during the quarter ended December 31, 2010 was $83,000 versus cash used in operations of $1.1 million during the fourth quarter of 2009. Our cash for the fourth quarter 2010 increased $2.9 million as a result of completing two draw downs under our equity line credit arrangement for net proceeds of approximately $3.0 million.

Full Year Review – Comparison of Year ended December 31, 2010 and December 31, 2009

    * Revenue decreased 33% to $17.5 million for the year ended December 31, 2010, compared to $26.0 million in 2009.
    * Gross profit increased 4% to $4.0 million for the year ended December 31, 2010, compared to gross profit of $3.9 million a year ago. This increase primarily resulted from a $2.2 million charge in the prior year, consisting of a $1.8 million write-down of excess GABA inventory and a $422,000 impairment of equipment located at a co-packer relating to our CSD channel. An additional write-down of the remaining GABA inventory totaling $506,000, was recorded in 2010. For the year ended December 31, 2010, gross profit as a percentage of revenue increased to 23%, compared to 15% for the year ended December 31, 2009.
    * Operating expenses for the year ended December 31, 2010 decreased 26% to $10.7 million, compared to the prior year and were benefited by cost containment measures, including our reductions in workforce during 2009.
    * Provision for income taxes for the year ended December 31, 2010 was a benefit of $338,000, and reflects a credit due to a non-recurring tax refund allowed from our Canadian operations, compared to an expense of $72,000 a year ago.
    * Cash used in operations during 2010 decreased to $3.5 million, from $7.3 million during the prior year.

Balance Sheet

As of December 31, 2010, the Company had cash and cash equivalents of approximately $5.4 million and working capital of approximately $8.1 million. Cash provided by operations during the quarter ended December 31, 2010 totaled $83,000. As of December 31, 2010, inventories were $2.3 million compared to $3.7 million as of December 31, 2009. As previously disclosed, during the first quarter of 2011, we completed our final draw down and sale under the equity line of credit arrangement for net proceeds of $2.2 million, and the equity line automatically terminated per its terms.

Conference Call

The Company will discuss its results for the quarter and year ended December 31, 2010 and its business outlook on its scheduled conference call today, March 10, 2011 at 1:30 p.m., Pacific time (4:30 p.m. ET). This call is being webcast and can be accessed by visiting the Investor section of our website at www.jonessoda.com. Investors may also listen to the call via telephone by dialing (719) 325-2418 (confirmation code: 7200608). In addition, a telephone replay will be available by dialing (858) 384-5517 (confirmation code: 7200608) through March 17, 2011, at 11:59 p.m. Eastern Time.

About Jones Soda Co.

Headquartered in Seattle, Washington, Jones Soda Co.® markets and distributes premium beverages under the Jones Soda, Jones Pure Cane Soda® and Whoopass Energy Drink® 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 or www.myjones.com.

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