##### 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 June 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
(State or other jurisdiction of 
incorporation or organization)
    
    52-2336602
(I.R.S. Employer
Identification Number)234 Ninth Avenue North 
Seattle, Washington
(Address of principal executive offices)
    
    98109
(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




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##### 



JONES SODA CO.
 FORM 10-Q
 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2010
TABLE OF CONTENTS
 PageExplanatory Note
    
    
    3Cautionary Notice Regarding Forward Looking Statements
    
    
    3PART I. FINANCIAL INFORMATIONItem 1. Financial Statementsa)
Condensed Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009
    
    
    5b)
Condensed Consolidated Statements of Operations  three and six months ended June 30, 2010 and 2009
    
    
    6c)
Condensed Consolidated Statements of Cash Flows  six months ended June 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
    
    
    24PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    26Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26Item 6. Exhibits
    
    
    27EX-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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
    
    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)
 June 30, 2010
    
    
    December 31, 2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    2,522
    
    
    $
    4,975Accounts receivable, net of allowance of $122 and $87
    
    
    3,401
    
    
    
    2,508Inventory
    
    
    3,383
    
    
    
    3,711Prepaid expenses and other current assets
    
    
    564
    
    
    
    498Total current assets
    
    
    9,870
    
    
    
    11,692Fixed assets, net of accumulated depreciation of $2,852 and $2,951
    
    
    439
    
    
    
    807Other assets
    
    
    281
    
    
    
    1,035Total assets
    
    $
    10,590
    
    
    $
    13,534LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    2,375
    
    
    $
    1,397Accrued liabilities
    
    
    1,131
    
    
    
    1,571Taxes payable
    
    
    104
    
    
    
    69Note payable, current portion
    
    
    
    
    
    
    125Total current liabilities
    
    
    3,610
    
    
    
    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 
26,564,127 and 26,427,989 at June 30, 2010 and December 31,
2009, respectively
    
    
    44,083
    
    
    
    43,925Additional paid-in capital
    
    
    6,171
    
    
    
    5,771Accumulated other comprehensive income
    
    
    372
    
    
    
    418Accumulated deficit
    
    
    (43,648
    )
    
    
    (39,961
    )Total shareholders equity
    
    
    6,978
    
    
    
    10,153Total liabilities and shareholders equity
    
    $
    10,590
    
    
    $
    13,534
  5




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JONES SODA CO.


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share data)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenue
    
    $
    5,365
    
    
    $
    7,482
    
    
    $
    9,258
    
    
    $
    14,554Cost of goods sold
    
    
    3,894
    
    
    
    5,426
    
    
    
    6,979
    
    
    
    11,053Write-down of excess GABA inventory
    
    
    178
    
    
    
    
    
    
    
    178
    
    
    
    Gross profit
    
    
    1,293
    
    
    
    2,056
    
    
    
    2,101
    
    
    
    3,501Licensing revenue
    
    
    8
    
    
    
    23
    
    
    
    18
    
    
    
    51Operating expenses:Promotion and selling
    
    
    1,078
    
    
    
    2,241
    
    
    
    2,302
    
    
    
    4,561General and administrative
    
    
    1,745
    
    
    
    1,759
    
    
    
    3,428
    
    
    
    3,5602,823
    
    
    
    4,000
    
    
    
    5,730
    
    
    
    8,121Loss from operations
    
    
    (1,522
    )
    
    
    (1,921
    )
    
    
    (3,611
    )
    
    
    (4,569
    )Other expense, net
    
    
    (3
    )
    
    
    (21
    )
    
    
    (8
    )
    
    
    Loss before income taxes
    
    
    (1,525
    )
    
    
    (1,942
    )
    
    
    (3,619
    )
    
    
    (4,569
    )Income tax (expense) benefit
    
    
    (29
    )
    
    
    (25
    )
    
    
    (67
    )
    
    
    1Net loss
    
    $
    (1,554
    )
    
    $
    (1,967
    )
    
    $
    (3,686
    )
    
    $
    (4,568
    )Net loss per shareBasic and diluted
    
    $
    (0.06
    )
    
    $
    (0.07
    )
    
    $
    (0.14
    )
    
    $
    (0.17
    )Weighted average basic and diluted common shares outstanding
    
    
    26,451,211
    
    
    
    26,454,592
    
    
    
    26,439,596
    
    
    
    26,455,582
  6




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JONES SODA CO.



CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 Six months Ended June 30,2010
    
    
    2009OPERATING ACTIVITIES:Net loss
    
    $
    (3,686
    )
    
    $
    (4,568
    )Adjustments to reconcile net loss to net cash used in operating activities:Stock-based compensation
    
    
    401
    
    
    
    441Depreciation and amortization
    
    
    228
    
    
    
    424Inventory write-down
    
    
    246
    
    
    
    Write-down of excess GABA inventory
    
    
    178
    
    
    
    Loss on disposal of fixed assets
    
    
    155
    
    
    
    21Deferred income taxes
    
    
    2
    
    
    
    22Change in allowance for doubtful accounts
    
    
    35
    
    
    
    (163
    )Other non-cash charges and credits
    
    
    7
    
    
    
    39Changes in operating assets and liabilities:Accounts receivable
    
    
    (965
    )
    
    
    (1,264
    )Inventory
    
    
    201
    
    
    
    1,828Prepaid expenses and other current asset
    
    
    25
    
    
    
    364Other assets
    
    
    74
    
    
    
    (1,424
    )Accounts payable
    
    
    980
    
    
    
    (128
    )Accrued liabilities
    
    
    (436
    )
    
    
    (903
    )Taxes payable
    
    
    37
    
    
    
    (16
    )Net cash used in operating activities
    
    
    (2,518
    )
    
    
    (5,327
    )INVESTING ACTIVITIES:Redemption of certificate of deposit, restricted
    
    
    376
    
    
    
    Sales of short-term investments  net
    
    
    
    
    
    
    890Purchase of fixed assets
    
    
    (16
    )
    
    
    (82
    )Sales of fixed assets
    
    
    
    
    
    
    5Net cash provided by investing activities
    
    
    360
    
    
    
    813FINANCING ACTIVITIES:Proceeds from exercise of stock options
    
    
    60
    
    
    
    1Repayment of capital lease obligations
    
    
    
    
    
    
    (75
    )Repayment of note payable
    
    
    (345
    )
    
    
    Net cash used in financing activities
    
    
    (285
    )
    
    
    (74
    )Net decrease in cash and cash equivalents
    
    
    (2,443
    )
    
    
    (4,588
    )Effect of exchange rate changes on cash
    
    
    (10
    )
    
    
    (2
    )Cash and cash equivalents, beginning of period
    
    
    4,975
    
    
    
    11,736Cash and cash equivalents, end of period
    
    $
    2,522
    
    
    $
    7,146Supplemental disclosure:Cash paid (received) during period for:Interest
    
    $
    5
    
    
    $
    (11
    )Income taxes
    
    
    (1
    )
    
    
    1
  7




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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:
 
    
    Jones Refresco De Caña Pura,
    
    Our seasonal soda (Jones Jumble), and
    
    Jones Zilch,our zero calorie offering;
 
    
    Jones 24C®, an enhanced water beverage;
    
    Jones GABA®, a functional tea juice blend launched in February 2009; and
    
    WhoopAss Energy Drink®, a citrus energy 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
    9




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##### Table of Contents



2. Inventory
  June 30, 2010
    
    
    December 31, 2009Finished goods
    
    $
    2,527
    
    
    $
    2,794Raw materials
    
    
    856
    
    
    
    917$
    3,383
    
    
    $
    3,711
 Jones GABA Jones GABA
 3. Equity Financing
   10




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##### Table of Contents



4. Other Assets
  June 30, 2010
    
    
    December 31, 2009Certificate of deposit
    
    $
    
    
    
    $
    376GABA raw materials
    
    
    
    
    
    
    239GABA finished goods
    
    
    
    
    
    
    64Other
    
    
    281
    
    
    
    356$
    281
    
    
    $
    1,035
  Jones GABA
 5. Note Payable
  11




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##### Table of Contents



6. Stock-Based Compensation
  (a) Stock options:
  Outstanding OptionsWeighted AverageNumber of
    
    
    ExerciseShares
    
    
    PriceBalance at January 1, 2010
    
    
    1,389,496
    
    
    $
    2.96Option granted
    
    
    712,000
    
    
    
    0.81Options exercised
    
    
    (67,083
    )
    
    
    0.76Options cancelled/expired
    
    
    (309,432
    )
    
    
    2.37Balance at June 30, 2010
    
    
    1,724,981
    
    
    $
    2.20Exercisable, June 30, 2010
    
    
    914,165
    
    
    $
    3.14Vested and expected to vest
    
    
    1,620,843
    
    
    $
    2.27
 (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
    
    
    
    
    
    
    Vested
    
    
    (7,224
    )
    
    
    6.29Cancelled/expired
    
    
    (8,573
    )
    
    
    5.83Non-vested restricted stock at June 30, 2010
    
    
    18,036
    
    
    $
    5.91
    
    
    7.55 yrs
  (c) Stock-based compensation expense:
   12




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##### Table of Contents





Three months ended June 30,
    
    
    Six months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Type of awards:Stock options
    
    $
    213
    
    
    $
    138
    
    
    $
    348
    
    
    $
    364Restricted stock
    
    
    21
    
    
    
    7
    
    
    
    53
    
    
    
    77$
    234
    
    
    $
    145
    
    
    $
    401
    
    
    $
    441Income statement account:Promotion and selling
    
    $
    25
    
    
    $
    (13
    )
    
    $
    58
    
    
    $
    98General and administrative
    
    
    209
    
    
    
    158
    
    
    
    343
    
    
    
    343$
    234
    
    
    $
    145
    
    
    $
    401
    
    
    $
    441
  Six months ended June 30,2010
    
    
    2009Expected dividend yield
    
    
    
    
    
    
    Expected stock price volatility
    
    
    91.9
    %
    
    
    87.4
    %Risk-free interest rate
    
    
    2.8
    %
    
    
    2.2
    %Expected term (in years)
    
    5.6 years
        

    5.9  yearsWeighted-average grant date fair-value
    
    $
    0.60
    
    
    $
    0.59
  7. Commitments and contingencies
 Commitments
   2015 andTotal
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    ThereafterSponsorships
    
    
    7,405
    
    
    
    235
    
    
    
    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.
   Gharabikou v. Jones Soda Co., et al. Bates v. Jones Soda Co., et al. Beasley v. Jones Soda Co., et al.
   14




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##### Table of Contents



8. Segment Information
  Three months ended June 30,
    
    
    Six months ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009United States
    
    $
    3,784
    
    
    $
    5,488
    
    
    $
    6,484
    
    
    $
    11,359Canada
    
    
    1,322
    
    
    
    1,727
    
    
    
    2,335
    
    
    
    2,816Other Countries
    
    
    259
    
    
    
    267
    
    
    
    439
    
    
    
    379Total revenue
    
    $
    5,365
    
    
    $
    7,482
    
    
    $
    9,258
    
    
    $
    14,554
  9. 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, 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.
 15




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Overview
  
    
    Jones Pure Cane Soda®, a premium carbonated soft drink with three new
extensions launched in targeted markets during 2009:
 
    
    Jones Refresco De Caña Pura,
    
    Our seasonal soda (Jones Jumble),and
    
    Jones Zilch,our zero calorie offering;
 
    
    Jones 24C®, an enhanced water beverage;
    
    Jones GABA®,a functional tea juice blend; and
    
    WhoopAss Energy Drink®,a citrus energy drink.
  Jones Soda Jones Pure Cane Soda
   Refresco De Caña Pura
  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 GABA Jones GABA Jones GABA
    17




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##### Table of Contents



Results of Operations
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,%
    
    
    
    
    
    
    %
    
    
    
    
    
    
    %
    
    
    
    
    
    
    %2010
    
    
    of Revenue
    
    
    2009
    
    
    of Revenue
    
    
    2010
    
    
    of Revenue
    
    
    2009
    
    
    of Revenue(Dollars in thousands, except share data)Consolidated statements of 
operation data:Revenue
    
    $
    5,365
    
    
    
    100.00
    
    
    $
    7,482
    
    
    
    100.00
    
    
    $
    9,258
    
    
    
    100.00
    
    
    $
    14,554
    
    
    
    100.00Cost of goods sold
    
    
    (3,894
    )
    
    
    (72.6
    )
    
    
    (5,426
    )
    
    
    (72.5
    )
    
    
    (6,979
    )
    
    
    (75.4
    )
    
    
    (11,053
    )
    
    
    (75.9
    )Write-down of excess GABA inventory
    
    
    (178
    )
    
    
    (3.3
    )
    
    
    
    
    
    
    (0.0
    )
    
    
    (178
    )
    
    
    (1.9
    )
    
    
    
    
    
    
    (0.0
    )Gross profit
    
    
    1,293
    
    
    
    24.1
    
    
    
    2,056
    
    
    
    27.5
    
    
    
    2,101
    
    
    
    22.7
    
    
    
    3,501
    
    
    
    24.1Licensing revenue
    
    
    8
    
    
    
    0.1
    
    
    
    23
    
    
    
    0.3
    
    
    
    18
    
    
    
    0.2
    
    
    
    51
    
    
    
    0.4Promotion and selling expenses
    
    
    (1,078
    )
    
    
    (20.1
    )
    
    
    (2,241
    )
    
    
    (30.0
    )
    
    
    (2,302
    )
    
    
    (24.9
    )
    
    
    (4,561
    )
    
    
    (31.3
    )General and administrative expenses
    
    
    (1,745
    )
    
    
    (32.5
    )
    
    
    (1,759
    )
    
    
    (23.5
    )
    
    
    (3,428
    )
    
    
    (37.0
    )
    
    
    (3,560
    )
    
    
    (24.5
    )Loss from operations
    
    
    (1,522
    )
    
    
    (28.4
    )
    
    
    (1,921
    )
    
    
    (25.7
    )
    
    
    (3,611
    )
    
    
    (39.0
    )
    
    
    (4,569
    )
    
    
    (31.3
    )Other expense, net
    
    
    (3
    )
    
    
    (0.1
    )
    
    
    (21
    )
    
    
    (0.3
    )
    
    
    (8
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.0
    )Loss before income taxes
    
    
    (1,525
    )
    
    
    (28.5
    )
    
    
    (1,942
    )
    
    
    (26.0
    )
    
    
    (3,619
    )
    
    
    (39.1
    )
    
    
    (4,569
    )
    
    
    (31.3
    )Income tax (expense) benefit
    
    
    (29
    )
    
    
    (0.5
    )
    
    
    (25
    )
    
    
    (0.3
    )
    
    
    (67
    )
    
    
    (0.7
    )
    
    
    1
    
    
    
    (0.1
    )Net loss
    
    $
    (1,554
    )
    
    
    (29.0
    )
    
    $
    (1,967
    )
    
    
    (26.3
    )
    
    $
    (3,686
    )
    
    
    (39.8
    )
    
    $
    (4,568
    )
    
    
    (31.4
    )Basic and diluted net loss per share
    
    $
    (0.06
    )
    
    
    
    
    
    $
    (0.07
    )
    
    
    
    
    
    $
    (0.14
    )
    
    
    
    
    
    $
    (0.17
    )
 18




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##### Table of Contents



As ofJune 30, 2010
    
    
    December 31, 2009(Dollars in thousands)Balance sheet data:Cash and cash equivalents and accounts receivable
    
    $
    5,923
    
    
    $
    7,483Fixed assets, net
    
    
    439
    
    
    
    807Total assets
    
    
    10,590
    
    
    
    13,534Long-term liabilities
    
    
    2
    
    
    
    219Working capital
    
    
    6,260
    
    
    
    8,530
 Three months Ended June 30,
    
    
    Six months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Case Sale Data (288-ounce equivalent):Finished products cases
    
    
    390,500
    
    
    
    611,600
    
    
    
    701,100
    
    
    
    1,153,400Concentrate cases
    
    
    84,000
    
    
    
    204,800
    
    
    
    110,800
    
    
    
    368,100Total cases
    
    
    474,500
    
    
    
    816,400
    
    
    
    811,900
    
    
    
    1,521,500
 Quarter Ended June 30, 2010 Compared to Quarter Ended June 30, 2009
 Revenue
 Jones Soda 24C Jones Organics tm Jones Naturals ® Jones
Pure Cane Soda Jones
Zilch tm
  Gross Profit
 Jones Soda Jones
Organics tm Jones Naturals ®
 Licensing Revenue
 Jones Soda
 19




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##### Table of Contents



Promotion and Selling Expenses
  General and Administrative Expenses
  Income Tax (Expense) Benefit
  Net Loss
 Jones Soda
 Six Month Period Ended June 30, 2010 and 2009
 Revenue
 Jones Soda Jones GABA Jones Organics tm Jones
Naturals ®
 20




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##### Table of Contents



Jones Pure Cane Soda Jones Zilch tm
  Gross Profit
 Jones GABA Jones Soda Jones
Organics tm Jones Naturals ®
 Licensing Revenue
 Jones Soda
 Promotion and Selling Expenses
  General and Administrative Expenses
  21




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##### Table of Contents



Income Tax (Expense) Benefit
  Net Loss
 Jones Soda
 Liquidity and Capital Resources
 Liquidity
   Jones Pure Cane Soda
 22




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##### Table of Contents



Contractual Obligations
   2015 andTotal
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    ThereafterSponsorships
    
    
    7,405
    
    
    
    235
    
    
    
    320
    
    
    
    1,550
    
    
    
    1,595
    
    
    
    1,641
    
    
    
    2,064
 23




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##### Table of Contents



Off-Balance Sheet Arrangements
  Seasonality
  Critical Accounting Policies
  Subsequent Event
  
 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
  24




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##### Table of Contents



Saltzman v. Jones Soda Company, et al. In re Jones Soda Company Securities
Litigation
 Cramer v. van Stolk, et al.
   Gharabikou v. Jones Soda Co., et al. Bates v. Jones Soda Co., et al. Beasley v. Jones Soda Co., et al.
 25




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##### Table of Contents



ITEM 1A.
    
    RISK FACTORS
  Any future equity or debt issuances by us may have dilutive or adverse effects on our existing
shareholders.
  
 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)April 1 to April 30, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    May 1 to May 31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    June 1 to June 30, 2010 (2)
    
    
    808
    
    
    $
    2.03
    
    
    
    
    
    
    
    Total
    
    
    808
    
    
    $
    2.03
    
    
    
    
    
    
    
    
 
 (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.(2)
    
    The following shares were repurchased during the first quarter of 2010 for the same purposes
as is described in footnote (1) above. Fiscal Period
    
    Total Number of Shares Purchased
    
    
    Average Price Paid per ShareFebruary 1 to February 28, 2010
    
    
    145
    
    
    
    2.19March 1 to March 31, 2010
    
    
    663
    
    
    
    1.99Total
    
    
    808
    
    
    
    2.03
 26




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##### Table of Contents



ITEM 6.
    
    EXHIBITS
 10.1*
    
    Employment Offer Letter between William R. Meissner and Jones Soda Co., dated April 6, 2010
(Previously filed with, and incorporated herein by reference to, Exhibit 10.1 to our current
report on Form 8-K, filed April 9, 2010; File No. 000-28820.)10.2
    
    Common Stock Purchase Agreement between the Company and Glengrove Small Cap Value, Ltd. dated as
of June 11, 2010 (Previously filed with, and incorporated herein by reference to, Exhibit 10.1 to
our current report on Form 8-K, filed June 14, 2010; File No. 000-28820.)31.1
    
    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