Jones Soda Co. Announces Second Quarter Fiscal 2007 Financial Results

SEATTLE–(BUSINESS WIRE)–Jones Soda Co. (the Company or Jones) today announced financial results for the second quarter ended June 30, 2007.

Second Quarter Review

  • Total case sales of 1,722,795 cases (288 ounce equivalent) compared to 961,000 cases a year ago
  • Revenue increased 29.8% to $13.0 million compared to $10.0 million a year ago
  • Gross margin decreased to 34.2% versus 38.0% last year
  • Diluted earnings per share were $0.00 compared to $0.10 a year ago

Peter van Stolk, President and CEO stated, Although our second quarter revenues increased by approximately 30% driven by a double digit sales gain in our core bottle business, our concentrate sales were below plan due to some delays in the launch of our CSD product which negatively impacted our gross margin and profitability. While we are disappointed in the initial rollout of our Jones Soda cans we are focused on better managing our CSD manufacturing and distribution process and we remain optimistic about the many long-term growth prospects of this business.

Revenue for the second quarter of 2007 increased 29.8% to $13.0 million compared to $10.0 million in the second quarter of 2006. Gross margin for the second quarter decreased to 34.2% versus 38.0% in the second quarter of the prior year. Operating expenses as a percentage of sales for the second quarter increased to 38.4% from 31.1% in the corresponding period in the prior year. The company reported net income of $40,726, or $0.00 per diluted share, compared to net income of $2.3 million, or $0.10 in the second quarter ended June 30, 2006.

We are pleased to have secured distribution in more than 15,000 new retail locations in a relatively short period of time. Importantly, these new relationships have resulted in increased distribution for our bottles, including shelf space at Wal-Mart and Sams Clubs, which contributed to the segments recent strong performance, Mr. van Stolk commented. Looking ahead, we are committed to improving the execution of our CSD business across the board. At the same time, we are in the process of building a stronger organization that will ensure we are well positioned to capitalize on the many growth opportunities that we believe exist for our expanding portfolio of brands and products. We remain confident in our ability to capture meaningful market share of the $70 billion carbonated soft drink industry and to drive increased profitability in the years ahead.

About Jones Soda Co.

Headquartered in Seattle, Washington, Jones Soda Co. manufactures its Jones Soda, Jones Pure Cane Soda, Jones Energy, Jones Organics, Jones Naturals, Jones 24C and Whoopass brands and sells through its distribution network in select markets across North America. A leader in the premium soda category, Jones is known for its innovative labeling technique that incorporates always-changing photos sent in from its consumers. Jones Soda is sold through traditional beverage retailers and everywhere youd never expect to find a soda.

This press release contains forward-looking statements and projections concerning the Companys plans, strategies, expectations, predictions and financial projections concerning the Companys future activities and results of operations and other future events or conditions, and are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Words such as expect, believe, anticipate, may, will, plan, intend, estimate, could, and other similar expressions are intended to identify these forward-looking statements. In particular, statements in this release regarding potential growth opportunities, working capital and cash flow management, operational and expense controls, future profitability and results of operations are forward looking. Statements in this press release, and elsewhere, that look forward in time or include anything other than historical information involve risks and uncertainties that may affect the Companys actual results of operations. These statements by the Company are subject to certain risks, including, among others, future demand for its products, competition from other businesses providing similar products, the ability to maintain profitability and control expenses and the Companys ability to successfully execute its business strategy. These and other risks and uncertainties are discussed in more detail in the Companys periodic reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, which are available at the SEC website at www.sec.gov.

JONES SODA CO.

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited – $US)

         

 

  Three Months Ended

June 30,

  Six Months Ended

June 30,

    2007   2006   2007   2006
                 
Revenue   $13,012,473   $10,025,978   $22,200,512   $18,786,358
                 
Cost of Goods Sold   8,563,343   6,219,655   14,235,221   11,860,365
                 
Gross Profit   4,449,130   3,806,323   7,965,291   6,925,993
                 
Gross Margin   34.2%   38.0%   35.9%   36.9%
                 
Licensing Revenue   47,797   146,481   193,743   284,052

 

               
Operating Expenses(1):                
Promotion and Selling   3,474,142   1,992,670   5,832,863   4,107,493
General & Admin.   1,526,638   1,124,430   3,257,808   2,222,016

 

  5,000,780   3,117,100   9,090,671   6,329,509

Earnings (loss) before interest & taxes

  (503,853)   835,704   (931,637)   880,536
Interest income, net   416,269   100,637   857,356   113,347
Earnings (loss) before income taxes   (87,584)   936,341   (74,281)   993,883
Income tax benefit (expense)                
Current   (150,587)   (105,480)   (146,860)   (160,480)
Deferred   278,897   1,482,934   320,180   1,482,934
Earnings for the period   40,726   2,313,795   99,039   2,316,337
                 
Earnings per share:                
Basic   $0.00   $0.10   $0.00   $0.10
Diluted   $0.00   $0.10   $0.00   $0.10
                 
Weighted average number of common stock:            
Basic   25,771,972   22,891,891   25,782,275   22,321,479
Diluted   26,385,734   22,991,489   26,311,619   23,324,830
                 
(1) Includes non-cash stock based compensation:                
Promotion and selling   $131,084   $102,530   $199,088   $218,540
General and administrative   $194,334   $150,195   $334,230   $420,888

JONES SODA CO.

CONSOLIDATED BALANCE SHEET

($US)

         
 

 

June 30, 2007   Dec. 31, 2006
    (unaudited)
ASSETS        
         
Current Assets:        
Cash and equivalents   $15,167,271   $13,905,870
Short-term investments   15,374,969   16,318,510
Accounts receivable   5,835,458   6,914,422
Inventory   7,865,433   5,783,067
Deferred income tax asset   1,520,000   1,507,145
Prepaid expenses   1,926,952   712,690
    47,690,083   45,141,704
Deferred income tax asset  

3,714,719

  427,993
Capital assets   1,580,573   756,618
Other assets   1,277,259   1,414,138
Intangible assets   186,923   211,931
   

$54,449,557

  $47,952,384
         
LIABILITIES AND SHAREHOLDERS EQUITY    
         
Current Liabilities:        
Accounts payable and accrued liabilities   $6,746,362   $5,446,953
Current portion of capital lease obligations   169,279   70,471
Taxes payable   3,010   150,141
    6,918,651   5,667,565
Capital lease obligations less current portion   544,436   15,329
Shareholders equity  

46,986,470

  42,269,490
   

$54,449,557

  $47,952,384

JONES SODA CO.

CONSOLIDATED STATEMENT OF CASH FLOWS

($US)

         
 

 

Six months ended

June 30, 2007

 

Six months ended

June 30, 2006

    (unaudited)   (unaudited)
Cash flows from(used in) operating activities :        
Earnings for the period   $

99,039

  $ 2,316,337
Items not involving cash:        
Depreciation and amortization    

288,728

    118,983
Deferred income taxes     (320,180)     (1,482,934)
Stock based compensation     533,318     639,428
Change in assets and liabilities        
Accounts receivable     1,078,964     (1,079,943)
Inventory     (2,082,366)     154,665
Prepaid expenses     (1,214,262)     (313,274)
Taxes payable     (147,131)     143,472
Accounts payable and accrued liabilities     1,299,409     859,973
Net cash from (used in) operating activities     (464,481)     1,356,707
         
         
Cash flows from (used in) investing activities:        
Sale of short-term investments     938,770    
Purchase of capital assets     (438,625)     (177,009)
Purchase of intangible assets         (160,027)
Purchase of other assets        
Net cash from in investing activities     500,145     (337,036)
         
Cash flows from financing activities:        
Repayment of capital lease obligations     (44,823)     (59,193)
Proceeds from capital lease obligations     160,569    
Net proceeds from PIPE         28,113,000
Proceeds from exercise of options     1,109,991     688,065
Net cash from financing activities     1,225,737     28,741,872
Net increase in cash and cash equivalents     1,261,401     29,761,543
Cash and cash equivalents, beginning of period     13,905,870     1,176,101
Cash and cash equivalents, end of period   $ 15,167,271   $ 30,937,644
Supplemental Disclosure of Non-cash financing activities        
Acquisition of fixed assets   $ 512,168    

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