##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended September 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period From  to
 Commission File Number 000-28820
 
 Jones Soda Co.
 (Exact name of registrant as specified in its charter)
 
 Washington
    
    52-2336602(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)234 Ninth Avenue NorthSeattle, Washington
    
    98109(Address of principal executive offices)
    
    (Zip Code)
 
 (206) 624-3357
(Registrants Telephone Number, Including Area Code)
 
 (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




---



##### 



JONES SODA CO.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2010
TABLE OF CONTENTS
 PageExplanatory Note
    
    
    3Cautionary Notice Regarding Forward Looking Statements
    
    
    3PART I. FINANCIAL INFORMATIONItem 1.
Financial Statements (Unaudited)a) Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009
    
    
    5b) Condensed Consolidated Statements of Operations  three and nine months ended September 30, 2010 and 2009
    
    
    6c) Condensed Consolidated Statements of Cash Flows  nine months ended September 30, 2010 and 2009
    
    
    7d) Notes to Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 4. Controls and Procedures
    
    
    25PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    25Item 1A. Risk Factors
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 5. Other Information
    
    
    27Item 6. Exhibits
    
    
    27EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



EXPLANATORY NOTE
 ®
 Jones Soda Jones Pure Cane Soda Jones Soda Co
 
 CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
    
    
    Our ability to successfully execute on our 2010 operating plan;
 
    
    Our inability to secure additional financing, including making draw downs under our
equity line of credit facility, or to generate sufficient cash flow from operations;
 
    
    Our ability to use the net proceeds from future financings, including draw downs under
our equity line of credit facility, to improve our financial condition or market value;
 
    
    Dilutive and other adverse effects on our existing shareholders and our stock price
arising from future securities issuances, including sale of our common stock pursuant to
our equity line of credit facility;
 
    
    Our ability to establish and maintain distribution arrangements with independent
distributors, retailers, brokers and national retail accounts, most of whom sell and
distribute competing products, and whom we rely upon to employ sufficient efforts in
managing and selling our products, including re-stocking the retail shelves with our
product, on which our business plan and future growth are dependent in part;
 
    
    Our ability to manage our inventory levels and to predict the timing and amount of our
sales;
 
    
    The inability of our exclusive manufacturer and distributor (National Beverage Corp.)
of Jones Soda12-ounce cans in the grocery and mass merchant channel to perform
adequately, which could impair our ability to meet demand;
 
    
    Our ability to modify our sponsorship arrangements in a timely manner to reduce our
obligations or make any other changes or to realize the benefits expected from our
sponsorship agreements, to which we have dedicated significant resources;
 
    
    Our reliance on third-party packers of our products, which could make management of
our marketing and distribution efforts inefficient or unprofitable;
 3




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##### Table of Contents




    
    Our ability to secure a continuous supply and availability of raw materials, as well
as other factors affecting our supply chain;
 
    
    Our ability to source our flavors on acceptable terms from our key flavor suppliers;
 
    
    Our ability to maintain brand image and product quality and the risk that we may
suffer other product issues such as product recalls;
 
    
    Our ability to attract and retain key personnel, which would directly affect our
efficiency and results of operations;
 
    
    Our inability to protect our trademarks and trade secrets, which may prevent us from
successfully marketing our products and competing effectively;
 
    
    Litigation or legal proceedings (including pending securities class actions), which
could expose us to significant liabilities and damage our reputation;
 
    
    Our inability to build and sustain proper information technology infrastructure;
 
    
    Our inability to maintain compliance with the continued listing requirements of The
Nasdaq Capital Market, including the $1 minimum bid price requirement, which may
adversely affect our market price and liquidity;
 
    
    Our inability to create and maintain brand name recognition and acceptance of our
products, which are critical to our success in our competitive, brand-conscious industry;
 
    
    Our ability to compete successfully against much larger, well-funded, established
companies currently operating in the beverage industry;
 
    
    Our inability to continue developing new products to satisfy our consumers changing
preferences;
 
    
    Global economic conditions that may adversely impact our business and results of
operations;
 
    
    Our ability to comply with the many regulations to which our business is subject.
  4




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##### Table of Contents



PART I FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 JONES SODA CO.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data)
 September 30, 2010
    
    
    December 31, 2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    2,562
    
    
    $
    4,975Accounts receivable, net of allowance of $91 and $87
    
    
    3,052
    
    
    
    2,508Taxes receivable
    
    
    397
    
    
    
    11Inventory, net
    
    
    2,711
    
    
    
    3,711Prepaid expenses and other current assets
    
    
    595
    
    
    
    487Total current assets
    
    
    9,317
    
    
    
    11,692Fixed assets, net of accumulated depreciation of $2,933 and $2,951
    
    
    358
    
    
    
    807Other assets
    
    
    414
    
    
    
    1,035Total assets
    
    $
    10,089
    
    
    $
    13,534LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,087
    
    
    $
    1,397Accrued liabilities
    
    
    1,193
    
    
    
    1,571Taxes payable
    
    
    122
    
    
    
    69Note payable, current portion
    
    
    
    
    
    
    125Total current liabilities
    
    
    2,402
    
    
    
    3,162Note payable
    
    
    
    
    
    
    219Long-term liabilities  other
    
    
    2
    
    
    
    Commitments and contingencies (Note 7)Shareholders equity:Common stock, no par value:Authorized  100,000,000; issued and outstanding shares 
27,695,165 and 26,427,989 at September 30, 2010 and December 31,
2009, respectively
    
    
    45,133
    
    
    
    43,925Additional paid-in capital
    
    
    6,388
    
    
    
    5,771Accumulated other comprehensive income
    
    
    390
    
    
    
    418Accumulated deficit
    
    
    (44,226
    )
    
    
    (39,961
    )Total shareholders equity
    
    
    7,685
    
    
    
    10,153Total liabilities and shareholders equity
    
    $
    10,089
    
    
    $
    13,534
  5




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##### Table of Contents



JONES SODA CO.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share data)
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenue
    
    $
    5,125
    
    
    $
    7,156
    
    
    $
    14,383
    
    
    $
    21,710Cost of goods sold
    
    
    3,575
    
    
    
    5,433
    
    
    
    10,553
    
    
    
    16,486Write-down of excess GABA inventory
    
    
    166
    
    
    
    210
    
    
    
    344
    
    
    
    210Gross profit
    
    
    1,384
    
    
    
    1,513
    
    
    
    3,486
    
    
    
    5,014Licensing revenue
    
    
    7
    
    
    
    19
    
    
    
    25
    
    
    
    70Operating expenses:Promotion and selling
    
    
    1,109
    
    
    
    1,590
    
    
    
    3,411
    
    
    
    6,151General and administrative
    
    
    1,256
    
    
    
    1,446
    
    
    
    4,685
    
    
    
    5,0062,365
    
    
    
    3,036
    
    
    
    8,096
    
    
    
    11,157Loss from operations
    
    
    (974
    )
    
    
    (1,504
    )
    
    
    (4,585
    )
    
    
    (6,073
    )Other income (expense), net
    
    
    26
    
    
    
    (65
    )
    
    
    18
    
    
    
    (65
    )Loss before income taxes
    
    
    (948
    )
    
    
    (1,569
    )
    
    
    (4,567
    )
    
    
    (6,138
    )Income tax benefit, net
    
    
    370
    
    
    
    87
    
    
    
    303
    
    
    
    88Net loss
    
    $
    (578
    )
    
    $
    (1,482
    )
    
    $
    (4,264
    )
    
    $
    (6,050
    )Net loss per shareBasic and diluted
    
    $
    (0.02
    )
    
    $
    (0.06
    )
    
    $
    (0.16
    )
    
    $
    (0.23
    )Weighted average basic and diluted common shares outstanding
    
    
    27,454,593
    
    
    
    26,454,729
    
    
    
    26,779,630
    
    
    
    26,455,293
  6




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JONES SODA CO.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 Nine months Ended September 30,2010
    
    
    2009OPERATING ACTIVITIES:Net loss
    
    $
    (4,264
    )
    
    $
    (6,050
    )Adjustments to reconcile net loss to net cash used in operating activities:Stock-based compensation
    
    
    601
    
    
    
    587Depreciation and amortization
    
    
    309
    
    
    
    621Write-down of excess GABA inventory
    
    
    344
    
    
    
    210Loss on disposal of fixed assets
    
    
    155
    
    
    
    127Deferred income taxes
    
    
    2
    
    
    
    34Change in allowance for doubtful accounts
    
    
    4
    
    
    
    (207
    )Other non-cash charges and credits
    
    
    7
    
    
    
    39Changes in operating assets and liabilities:Accounts receivable
    
    
    (598
    )
    
    
    (732
    )Taxes receivable
    
    
    (385
    )
    
    
    245Inventory
    
    
    969
    
    
    
    1,581Prepaid expenses and other current assets
    
    
    7
    
    
    
    170Other assets
    
    
    (58
    )
    
    
    (1,649
    )Accounts payable
    
    
    (311
    )
    
    
    (381
    )Accrued liabilities
    
    
    (381
    )
    
    
    (768
    )Taxes payable
    
    
    51
    
    
    
    23Net cash used in operating activities
    
    
    (3,548
    )
    
    
    (6,150
    )INVESTING ACTIVITIES:Redemption of certificate of deposit, restricted
    
    
    376
    
    
    
    Purchase of certificate of deposit, restricted
    
    
    
    
    
    
    (360
    )Short-term investments, net
    
    
    
    
    
    
    890Purchase of fixed assets
    
    
    (16
    )
    
    
    (97
    )Sale of fixed assets
    
    
    
    
    
    
    5Net cash provided by investing activities
    
    
    360
    
    
    
    438FINANCING ACTIVITIES:Proceeds from issuance of common stock, net
    
    
    1,050
    
    
    
    Proceeds from note payable
    
    
    
    
    
    
    360Proceeds from exercise of stock options
    
    
    59
    
    
    
    1Repayment of capital lease obligations
    
    
    
    
    
    
    (474
    )Repayment of note payable
    
    
    (345
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    764
    
    
    
    (113
    )Net decrease in cash and cash equivalents
    
    
    (2,424
    )
    
    
    (5,825
    )Effect of exchange rate changes on cash
    
    
    11
    
    
    
    170Cash and cash equivalents, beginning of period
    
    
    4,975
    
    
    
    11,736Cash and cash equivalents, end of period
    
    $
    2,562
    
    
    $
    6,081Supplemental disclosure:Cash paid (received) during period for:Interest
    
    $
    4
    
    
    $
    (5
    )Income taxes
    
    
    
    
    
    
    1Non-cash financing activity:Issuance of stock as commitment fee
    
    $
    97
    
    
    $
    
  7




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##### Table of Contents



JONES SODA CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1. Nature and Operations and Summary of Significant Accounting Policies
  
    
    Jones Pure Cane Soda®, a premium carbonated soft drink with three new
extensions launched in targeted markets during 2009:
 o
    
    Jones Refresco De Caña Pura,o
    
    Our seasonal soda (Jones Jumble),o
    
    Jones Zilch,our zero calorie offering; and
 
    
    WhoopAss Energy Drink®, an energy supplement drink.
  Basis of presentation and consolidation
   Use of estimates
  Seasonality
  8




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Recently issued accounting pronouncements
 Improving Disclosures about Fair Value Measurements
 Liquidity
   Jones Pure Cane Soda WhoopAss
Energy Drink
    9




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##### Table of Contents



Reclassifications
  2. Inventory
  September 30, 2010
    
    
    December 31, 2009Finished goods
    
    $
    1,982
    
    
    $
    2,794Raw materials
    
    
    729
    
    
    
    917$
    2,711
    
    
    $
    3,711
 Jones GABA Jones GABA
 3. Equity Financing
  10




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##### Table of Contents



4. Other Assets
  September 30, 2010
    
    
    December 31, 2009Certificate of deposit
    
    $
    
    
    
    $
    376GABA raw materials, net
    
    
    
    
    
    
    239GABA finished goods, net
    
    
    
    
    
    
    64Other
    
    
    414
    
    
    
    356$
    414
    
    
    $
    1,035
  Jones GABA
 5. Note Payable
  6. Stock-Based Compensation
  11




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##### Table of Contents



(a) Stock options:
  Outstanding OptionsWeighted AverageNumber of
    
    
    ExerciseShares
    
    
    PriceBalance at January 1, 2010
    
    
    1,389,496
    
    
    $
    2.96Options granted
    
    
    852,000
    
    
    
    0.88Options exercised
    
    
    (67,084
    )
    
    
    0.76Options cancelled/expired
    
    
    (395,878
    )
    
    
    2.51Balance at September 30, 2010
    
    
    1,778,534
    
    
    $
    1.96Exercisable, September 30, 2010
    
    
    902,290
    
    
    $
    2.91Vested and expected to vest
    
    
    1,665,884
    
    
    $
    2.02
 (b)
    
    Restricted stock awards:  Weighted-Weighted-Average
    
    
    AverageRestricted
    
    
    Grant Date
    
    
    ContractualShares
    
    
    Fair Value
    
    
    LifeNon-vested restricted stock at January 1, 2010
    
    
    33,833
    
    
    $
    6.06
    
    
    8.01 yrsGranted
    
    
    231,875
    
    
    
    1.12Vested
    
    
    (85,841
    )
    
    
    1.68Cancelled/expired
    
    
    (10,197
    )
    
    
    5.83Non-vested restricted stock at September 30, 2010
    
    
    169,670
    
    
    $
    1.51
    
    
    9.69 yrs
  (c) Stock-based compensation expense:
   12




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##### Table of Contents



Three months ended September 30,
    
    
    Nine months ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Type of awards:Stock options
    
    $
    83
    
    
    $
    115
    
    
    $
    431
    
    
    $
    479Restricted stock
    
    
    117
    
    
    
    31
    
    
    
    170
    
    
    
    108$
    200
    
    
    $
    146
    
    
    $
    601
    
    
    $
    587Income statement account:Promotion and selling
    
    $
    49
    
    
    $
    44
    
    
    $
    107
    
    
    $
    142General and administrative
    
    
    151
    
    
    
    102
    
    
    
    494
    
    
    
    445$
    200
    
    
    $
    146
    
    
    $
    601
    
    
    $
    587
  Nine months ended September 30,2010
    
    
    2009Expected dividend yield
    
    
    
    
    
    
    Expected stock price volatility
    
    
    92.7
    %
    
    
    87.4
    %Risk-free interest rate
    
    
    2.7
    %
    
    
    2.2
    %Expected term (in years)
    
    5.7 years

    
    5.9  yearsWeighted-average grant date fair-value
    
    $
    0.66
    
    
    $
    0.59
  7. Commitments and contingencies
 Commitments
   2015 andTotal
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    ThereafterSponsorships
    
    $
    7,330
    
    
    $
    160
    
    
    $
    320
    
    
    $
    1,550
    
    
    $
    1,595
    
    
    $
    1,641
    
    
    $
    2,064
 Legal proceedings
 Saltzman v. Jones Soda Company, et al.
 13




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##### Table of Contents



In re Jones Soda Company Securities Litigation
 Cramer v. van Stolk, et al.
     14




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##### Table of Contents



8. Comprehensive Loss
   Three months ended September 30,
    
    
    Nine months ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net loss
    
    $
    (578
    )
    
    $
    (1,482
    )
    
    $
    (4,264
    )
    
    $
    (6,050
    )Currency translations
    
    
    18
    
    
    
    239
    
    
    
    (28
    )
    
    
    461Comprehensive loss
    
    $
    (560
    )
    
    $
    (1,243
    )
    
    $
    (4,292
    )
    
    $
    (5,589
    )
 9. Segment Information
  Three months ended September 30,
    
    
    Nine months ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009United States
    
    $
    3,639
    
    
    $
    5,533
    
    
    $
    10,123
    
    
    $
    17,325Canada
    
    
    1,213
    
    
    
    1,461
    
    
    
    3,548
    
    
    
    3,844Other countries
    
    
    273
    
    
    
    162
    
    
    
    712
    
    
    
    541Total revenue
    
    $
    5,125
    
    
    $
    7,156
    
    
    $
    14,383
    
    
    $
    21,710
  10. Subsequent Events
  
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 You should read the following discussion and analysis in conjunction with our unaudited
condensed consolidated financial statements and related notes included elsewhere in this Report and
the 2009 audited consolidated financial statements and notes thereto included in our Annual Report
on Form 10-K , which was filed with the Securities and Exchange Commission (SEC) on March 31, 2010.
 This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain
forward-looking statements. These statements relate to future events or our future financial
performance. In some cases, you can identify forward-looking
statements by terminology such as believe, expect, intend, anticipate, estimate,
may, will, can, plan,
 15




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##### Table of Contents



predict, could, future, variations of such words, and similar
expressions. These statements are only predictions. Actual events or results may differ materially.
In evaluating these statements, you should specifically consider various factors, including the
risks outlined at the beginning of this report under Cautionary Notice Regarding Forward-Looking
Statements and in Item 1A of our most recent Annual Report on Form 10-K filed with the SEC. These
factors may cause our actual results to differ materially from any forward-looking statements.
Except as required by law, we undertake no obligation to publicly release any revisions to these
forward-looking statements that may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
 Overview
  
    
    Jones Pure Cane Soda®, a premium carbonated soft drink with three new
extensions launched in targeted markets during 2009:
 o
    
    Jones Refresco De Caña Pura,o
    
    Our seasonal soda (Jones Jumble),o
    
    Jones Zilch,our zero calorie offering; and
 
    
    WhoopAss Energy Drink®,an energy supplement drink.
  Jones Soda Jones Pure Cane Soda WhoopAss Energy Drink
    16




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##### Table of Contents




    
    expanding points of distribution for our products;
    
    creating strong alignment with our key distributors;
    
    developing innovative beverage brands and products;
    
    stimulating strong consumer demand for our existing brands and products, with primary
emphasis in the U.S. and Canada;
    
    inviting consumers to participate in our brand through submission of photographs to be
placed on labels through our interactive application of myJones.com; and
    
    licensing our brand equity for the creation of other beverage or non-beverage products.
 Jones Pure Cane Soda Jones Pure
Cane Soda Jones GABA
 Jones Organics tm Jones
Naturals ® Jones 24C ® Jones GABA ® Jones Soda WhoopAss Energy Drink.
   17




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##### Table of Contents



Results of Operations
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of2010
    
    
    Revenue
    
    
    2009
    
    
    Revenue
    
    
    2010
    
    
    Revenue
    
    
    2009
    
    
    Revenue(Dollars in thousands, except share data)Consolidated statements of operation data:Revenue
    
    $
    5,125
    
    
    
    100.0
    
    
    $
    7,156
    
    
    
    100.0
    
    
    $
    14,383
    
    
    
    100.0
    
    
    $
    21,710
    
    
    
    100.0Cost of goods sold
    
    
    (3,575
    )
    
    
    (69.8
    )
    
    
    (5,433
    )
    
    
    (75.9
    )
    
    
    (10,553
    )
    
    
    (73.4
    )
    
    
    (16,486
    )
    
    
    (75.9
    )Write-down of excess GABA inventory
    
    
    (166
    )
    
    
    (3.2
    )
    
    
    (210
    )
    
    
    (3.0
    )
    
    
    (344
    )
    
    
    (2.4
    )
    
    
    (210
    )
    
    
    (1.0
    )Gross profit
    
    
    1,384
    
    
    
    27.0
    
    
    
    1,513
    
    
    
    21.1
    
    
    
    3,486
    
    
    
    24.2
    
    
    
    5,014
    
    
    
    23.1Licensing revenue
    
    
    7
    
    
    
    0.1
    
    
    
    19
    
    
    
    0.3
    
    
    
    25
    
    
    
    0.2
    
    
    
    70
    
    
    
    0.3Promotion and selling expenses
    
    
    (1,109
    )
    
    
    (21.6
    )
    
    
    (1,590
    )
    
    
    (22.2
    )
    
    
    (3,411
    )
    
    
    (23.7
    )
    
    
    (6,151
    )
    
    
    (28.3
    )General and administrative expenses
    
    
    (1,256
    )
    
    
    (24.5
    )
    
    
    (1,446
    )
    
    
    (20.2
    )
    
    
    (4,685
    )
    
    
    (32.6
    )
    
    
    (5,006
    )
    
    
    (23.1
    )Loss from operations
    
    
    (974
    )
    
    
    (19.0
    )
    
    
    (1,504
    )
    
    
    (21.0
    )
    
    
    (4,585
    )
    
    
    (31.9
    )
    
    
    (6,073
    )
    
    
    (28.0
    )Other income (expense), net
    
    
    26
    
    
    
    0.5
    
    
    
    (65
    )
    
    
    (0.9
    )
    
    
    18
    
    
    
    0.1
    
    
    
    (65
    )
    
    
    (0.3
    )Loss before income taxes
    
    
    (948
    )
    
    
    (18.5
    )
    
    
    (1,569
    )
    
    
    (21.9
    )
    
    
    (4,567
    )
    
    
    (31.8
    )
    
    
    (6,138
    )
    
    
    (28.3
    )Income tax benefit, net
    
    
    370
    
    
    
    7.2
    
    
    
    87
    
    
    
    1.2
    
    
    
    303
    
    
    
    2.1
    
    
    
    88
    
    
    
    0.4Net loss
    
    $
    (578
    )
    
    
    (11.3
    )
    
    $
    (1,482
    )
    
    
    (20.7
    )
    
    $
    (4,264
    )
    
    
    (29.7
    )
    
    $
    (6,050
    )
    
    
    (27.9
    )Basic and diluted net loss per share
    
    $
    (0.02
    )
    
    
    
    
    
    $
    (0.06
    )
    
    
    
    
    
    $
    (0.16
    )
    
    
    
    
    
    $
    (0.23
    )
 18




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##### Table of Contents



As ofSeptember 30, 2010
    
    
    December 31, 2009(Dollars in thousands)Balance sheet data:Cash and cash equivalents and accounts receivable, net
    
    $
    5,614
    
    
    $
    7,483Fixed assets, net
    
    
    358
    
    
    
    807Total assets
    
    
    10,089
    
    
    
    13,534Long-term liabilities
    
    
    2
    
    
    
    219Working capital
    
    
    6,915
    
    
    
    8,530
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Case Sale Data (288-ounce equivalent):Finished products cases
    
    
    394,800
    
    
    
    538,500
    
    
    
    1,095,900
    
    
    
    1,691,800Concentrate cases
    
    
    
    
    
    
    317,600
    
    
    
    110,800
    
    
    
    685,800Total cases
    
    
    394,800
    
    
    
    856,100
    
    
    
    1,206,700
    
    
    
    2,377,600
 Quarter Ended September 30, 2010 Compared to Quarter Ended September 30, 2009
 Revenue
 24C Jones Soda Jones 24C ® Jones
GABA ®
  Gross Profit
  19




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##### Table of Contents



Licensing Revenue
 Jones Soda
 Promotion and Selling Expenses
 Jones Pure Cane Soda WhoopAss Energy
Drink
 General and Administrative Expenses
  Income Tax Benefit, Net
  Net Loss
  20




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##### Table of Contents



Nine Month Period Ended September 30, 2010 and 2009
 Revenue
 Jones GABA ® Jones 24C ® Jones Soda Jones 24C ® Jones GABA ® Jones Pure Cane Soda WhoopAss Energy Drink
  Gross Profit
 Jones Soda Jones GABA
 Licensing Revenue
 Jones Soda
 Promotion and Selling Expenses
  21




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##### Table of Contents



Jones Pure Cane Soda WhoopAss Energy Drink
 General and Administrative Expenses
  Income Tax Benefit, Net
  Net Loss
 Jones Soda
 Liquidity and Capital Resources
 Liquidity
  22




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##### Table of Contents



Jones Pure Cane Soda WhoopAss
Energy Drink
     23




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##### Table of Contents



Contractual Obligations
   2015 andTotal
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    ThereafterSponsorships
    
    $
    7,330
    
    
    $
    160
    
    
    $
    320
    
    
    $
    1,550
    
    
    $
    1,595
    
    
    $
    1,641
    
    
    $
    2,064
   Off-Balance Sheet Arrangements
  Seasonality
  Critical Accounting Policies
  Subsequent Event
  24




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##### Table of Contents



ITEM 4. CONTROLS AND PROCEDURES
 Procedures
 (a) Evaluation of disclosure controls and procedures
  (b) Changes in internal controls
  
 PART II OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
 Saltzman v. Jones Soda Company, et al. In re Jones
Soda Company Securities Litigation
 Cramer v. van Stolk, et al.
 25




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##### Table of Contents



ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  Total Number of
    
    
    Approximate DollarShares Purchased
    
    
    Value of Shares Thatas Part of Publicly
    
    
    May Yet Be PurchasedTotal Number of
    
    
    Average Price
    
    
    Announced Plans or
    
    
    Under the Plans orFiscal Period
    
    Shares Purchased(1)
    
    
    Paid per Share(1)
    
    
    Programs
    
    
    Programs (in $ 000)July 1 to July 31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    August 1 to August 30, 2010
    
    
    866
    
    
    $
    3.57
    
    
    
    
    
    
    
    September 1 to September 30, 2010
    
    
    757
    
    
    $
    3.32
    
    
    
    
    
    
    
    Total
    
    
    1,623
    
    
    $
    3.45
    
    
    
    
    
    
    
    
 
 (1)
    
    The number of shares reported above as purchased are attributable to shares withheld by the
Company as payment for withholding taxes due in connection with the vesting of restricted
stock awards issued under the Jones Soda Co. 2002 Stock Option and Restricted Stock Plan. The average price paid per share reflects the average market value per
share of the shares withheld for tax purposes. 26




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##### Table of Contents



ITEM 5. OTHER INFORMATION
 Summary of 2010 For Executive Officers
   divided by
  Information
Regarding 2011 Annual Meeting of Shareholders
  
 ITEM 6. EXHIBITS
 10.1*
    
    Summary of Jones Soda Co. 2010
Bonus Plan for Executive Officers31.1
    
    Section 302 Certification of CEO  William R. Meissner, Chief Executive Officer (Filed herewith.)31.2
    
    Section 302 Certification of CFO  Michael R. OBrien, Chief Financial Officer (Filed herewith.)32.1
    
    Section 906 Certification of CEO  William R. Meissner, Chief Executive Officer of Jones Soda
Co., pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (Filed herewith.)32.2
    
    Section 906 Certification of CFO  Michael R. OBrien, Chief Financial Officer of Jones Soda
Co., pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 (Filed herewith.)
 
 *
    
    Management contract or compensatory
plan or arrangement.
 27




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##### Table of Contents



SIGNATURES
   JONES SODA CO.By:
    /s/ WILLIAM R. MEISSNERWilliam R. MeissnerPresident and Chief Executive OfficerBy:
    /s/ MICHAEL R. OBRIENMichael R. OBrienChief Financial Officer 28