Jones Soda Co. Reports Net Loss For Fourth Quarter And Fiscal Year

Jones Soda Co., 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 Dec. 31, 2010. The company reported a net loss of $1.8 million, or ($0.06) per share, for the quarter ended Dec. 31, 2010, a 59 percent 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 percent over the 2009 net loss of $10.5 million, or ($0.40) per share.

William Meissner, president and chief executive officer, said in a prepared statement, "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."

Revenue decreased 27 percent to $3.1 million for the quarter ended Dec. 31, 2010, compared to $4.3 million in the fourth quarter of 2009.

Gross profit increased to $557,000 for the quarter ended Dec. 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 Dec. 31, 2010, gross profit as a percentage of revenue increased to 18 percent.

Operating expenses decreased 21 percent 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 percent to $1.8 million, or ($0.06) per share, for the quarter ended Dec. 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 Dec. 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.

Revenue decreased 33 percent to $17.5 million for the year ended Dec. 31, 2010, compared to $26.0 million in 2009.

Gross profit increased 4 percent to $4.0 million for the year ended Dec. 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 Dec. 31, 2010, gross profit as a percentage of revenue increased to 23 percent, compared to 15 percent for the year ended Dec. 31, 2009.

Operating expenses for the year ended Dec. 31, 2010 decreased 26 percent 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 Dec. 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.

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