##### 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, 2009
 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
    
    91-1696175(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 þ
    
    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 SEPTEMBER 30, 2009
TABLE OF CONTENTS
 PageExplanatory Note
    
    
    3Cautionary Notice Regarding Forward Looking Statements
    
    
    3PART I. FINANCIAL INFORMATIONItem 1. Financial Statementsa) Condensed Consolidated Balance Sheets as of September 30, 2009 and December 31, 2008
    
    
    5b) Condensed Consolidated Statements of Operations  three and nine months ended September 30, 2009
and 2008
    
    
    6c) Condensed Consolidated Statements of Cash Flows  nine months ended September 30, 2009 and 2008
    
    
    7d) Notes to Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14Item 4. Controls and Procedures
    
    
    22PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    23Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    25Item 6. Exhibits
    
    
    25EX-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 achieve levels of revenue and cost reductions that are adequate to support
our capital and operating requirements in order to continue as a going concern;
 
    
    Our inability to generate sufficient cash flow from operations, or to obtain funds
through additional financing, to support our business plan, which may force us to delay,
curtail or eliminate some or all of our product development, marketing or distribution
programs or to pursue various other strategies and strategic alternatives to secure
additional financing;
 
    
    Our ability to manage our resources and successfully execute our business plan;
 
    
    Our ability to implement our business plan in the current global economic crisis, which
could adversely affect demand for our products and make it more difficult for us to secure
additional financing, if necessary;
 
    
    Our inability to increase points of distribution for our existing Jones GABA product or
to successfully innovate new GABA products and product extensions, which could adversely
affect the valuation of our GABA raw materials inventory;
 
    
    Our inability to regain compliance with the continued listing requirements of The Nasdaq
Capital Market, including the $1 minimum bid price requirement, which could result in
delisting of our common stock and adversely affect its market price and liquidity;
 
    
    Our ability to carefully manage our inventory levels and to predict the timing and amount
of our sales;
 
    
    Our ability to establish and maintain distribution arrangements with distributors,
retailers and national retail accounts, on which our business plan and future growth are
dependent in part;
 
    
    The inability of our exclusive manufacturer and distributor (National Beverage Corp.) of
Jones Soda8-ounce and 12-ounce cans and 1-liter PET bottles in the grocery and mass
merchant channel to perform adequately, which could impair our ability to meet demand in the
CSD industry;
 3




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
    
    Our ability to realize the benefits expected from our sponsorship agreements, to which we
have dedicated, and expect to continue to dedicate, significant resources;
 
    
    Our reliance on third-party packers of our products, which could make management of our
marketing and distribution efforts inefficient or unprofitable;
 
    
    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, patents 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 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; and
 
    
    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,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    6,081
    
    
    $
    11,736Restricted cash and cash equivalents
    
    
    125
    
    
    
    Short-term investments
    
    
    
    
    
    
    890Accounts receivable, net of allowance of $123 and $330
    
    
    3,622
    
    
    
    2,428Inventory
    
    
    3,929
    
    
    
    5,654Prepaid expenses and other current assets
    
    
    974
    
    
    
    1,410Total current asset
    
    
    14,731
    
    
    
    22,118Deferred income tax asset
    
    
    112
    
    
    
    98Fixed assets, net of accumulated depreciation of $3,894 and $3,364
    
    
    1,443
    
    
    
    2,099Other assets
    
    
    1,884
    
    
    
    Total assets
    
    $
    18,170
    
    
    $
    24,315LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,183
    
    
    $
    1,469Accrued liabilities
    
    
    2,034
    
    
    
    2,788Taxes payable
    
    
    60
    
    
    
    34Note payable, current portion
    
    
    125
    
    
    
    Capital lease obligations, current portion
    
    
    
    
    
    
    153Total current liabilities
    
    
    3,402
    
    
    
    4,444Note payable
    
    
    235
    
    
    
    Capital lease obligations
    
    
    
    
    
    
    321Long term liabilities  other
    
    
    59
    
    
    
    75Commitments and contingenciesShareholders equity:Common stock, no par value:Authorized - 100,000,000 issued and outstanding
shares  26,454,949 and 26,460,409 at September 30,
2009 and December 31, 2008, respectively
    
    
    43,925
    
    
    
    43,924Additional paid-in capital
    
    
    5,631
    
    
    
    5,044Accumulated other comprehensive income (loss)
    
    
    382
    
    
    
    (79
    )Accumulated deficit
    
    
    (35,464
    )
    
    
    (29,414
    )Total shareholders equity
    
    
    14,474
    
    
    
    19,475Total liabilities and shareholders equity
    
    $
    18,170
    
    
    $
    24,315
  5




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JONES
SODA CO.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share data)
 Three Month Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue
    
    $
    7,156
    
    
    $
    8,684
    
    
    $
    21,710
    
    
    $
    29,787Cost of goods sold
    
    
    5,643
    
    
    
    7,718
    
    
    
    16,696
    
    
    
    23,918Gross profit
    
    
    1,513
    
    
    
    966
    
    
    
    5,014
    
    
    
    5,869Licensing revenue
    
    
    19
    
    
    
    43
    
    
    
    70
    
    
    
    152Operating expenses:Promotion and selling
    
    
    1,590
    
    
    
    3,481
    
    
    
    6,151
    
    
    
    9,967General and administrative
    
    
    1,446
    
    
    
    2,724
    
    
    
    5,006
    
    
    
    7,8093,036
    
    
    
    6,205
    
    
    
    11,157
    
    
    
    17,776Loss from operations
    
    
    (1,504
    )
    
    
    (5,196
    )
    
    
    (6,073
    )
    
    
    (11,755
    )Other (expense) income, net:
    
    
    (65
    )
    
    
    66
    
    
    
    (65
    )
    
    
    301Loss before income tax
    
    
    (1,569
    )
    
    
    (5,130
    )
    
    
    (6,138
    )
    
    
    (11,454
    )Income tax benefit (expense)
    
    
    87
    
    
    
    (130
    )
    
    
    88
    
    
    
    (392
    )Net loss
    
    $
    (1,482
    )
    
    $
    (5,260
    )
    
    $
    (6,050
    )
    
    $
    (11,846
    )Net loss per share:Basic and diluted
    
    $
    (0.06
    )
    
    $
    (0.20
    )
    
    $
    (0.23
    )
    
    $
    (0.45
    )Weighted average basic and
diluted common shares
outstanding:
    
    
    26,454,729
    
    
    
    26,354,177
    
    
    
    26,455,293
    
    
    
    26,324,270
  6




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JONES
SODA CO.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 Nine months ended September 30,2009
    
    
    2008OPERATING ACTIVITIES:Net loss
    
    $
    (6,050
    )
    
    $
    (11,846
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    621
    
    
    
    531Stock-based compensation
    
    
    587
    
    
    
    673Change in allowance for doubtful accounts
    
    
    (207
    )
    
    
    (78
    )Loss on disposal of fixed assets
    
    
    127
    
    
    
    Deferred income tax
    
    
    34
    
    
    
    Other
    
    
    39
    
    
    
    278Changes in operating assets & liabilities:Accounts receivable
    
    
    (732
    )
    
    
    (119
    )Inventory
    
    
    1,791
    
    
    
    (1,077
    )Prepaid expenses and other current assets
    
    
    415
    
    
    
    (39
    )Other assets
    
    
    (1,649
    )
    
    
    Accounts payable
    
    
    (381
    )
    
    
    (165
    )Accrued liabilities
    
    
    (768
    )
    
    
    500Taxes payable
    
    
    23
    
    
    
    (203
    )Net cash used in operating activities
    
    
    (6,150
    )
    
    
    (11,545
    )INVESTING ACTIVITIES:Purchase of certificates of deposit, restricted
    
    
    (360
    )
    
    
    Sales of investments
    
    
    890
    
    
    
    9,914Purchase of fixed assets
    
    
    (97
    )
    
    
    (528
    )Sales of fixed assets
    
    
    5
    
    
    
    Net cash provided by investing activities
    
    
    438
    
    
    
    9,386FINANCING ACTIVITIES:Proceeds from note payable
    
    
    360
    
    
    
    Payment of capital lease obligations
    
    
    (474
    )
    
    
    (120
    )Proceeds from exercise of options
    
    
    1
    
    
    
    69Net cash used in financing activities
    
    
    (113
    )
    
    
    (51
    )Net decrease in cash and cash equivalents
    
    
    (5,825
    )
    
    
    (2,210
    )Effect of exchange rate changes on cash
    
    
    170
    
    
    
    Cash and cash equivalents, beginning of period
    
    
    11,736
    
    
    
    17,858Cash and cash equivalents, end of period
    
    $
    6,081
    
    
    $
    15,648Supplemental disclosure:Cash paid (received) during period for:Interest
    
    $
    (5
    )
    
    $
    (430
    )Income taxes
    
    $
    1
    
    
    $
    327
  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 ; Jones 24C, Jones
GABA ® Jones Organics Jones Naturals ® , WhoopAss Energy Drink ®
 Basis of presentation and consolidation
   Use of estimates
  Seasonality
  Recently issued accounting pronouncements
 The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles Generally Accepted Accounting Principles
 Liquidity
  8




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Jones GABA Jones GABA Jones GABA
 Jones Pure Cane Soda Jones GABA.
    9




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##### Table of Contents



Reclassifications
  2.
Restricted Cash and Cash equivalents
  3. Inventory
  September 30,
    
    
    December 31,2009
    
    
    2008Finished goods
    
    $
    2,587
    
    
    $
    3,709Raw materials
    
    
    1,342
    
    
    
    1,945$
    3,929
    
    
    $
    5,654
 4. Other Assets
  5. Note Payable
   2009


$  322010


1252011


1252012


94$376
 6.
    
    Stock-Based Compensation
  10




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(a) Stock options:
  Weighted-averageWeighted-Average
    
    
    remainingNumber of
    
    
    exercise
    
    
    contractualshares
    
    
    price
    
    
    life (years)Outstanding balance at December 31, 2008
    
    
    1,459,358
    
    
    $
    4.90Options granted
    
    
    744,250
    
    
    
    0.80Options exercised
    
    
    (1,786
    )
    
    
    0.37Options cancelled/expired
    
    
    (904,559
    )
    
    
    4.24Outstanding balance at September 30, 2009
    
    
    1,297,263
    
    
    $
    3.18
    
    
    
    7.44Exercisable, September 30, 2009
    
    
    486,611
    
    
    $
    5.50
    
    
    
    4.82Vested and expected to vest
    
    
    1,192,216
    
    
    $
    3.30
  (b) Restricted stock awards:
  Weighted-Weighted-Average
    
    
    AverageRestricted
    
    
    Grant Date
    
    
    ContractualShares
    
    
    Fair Value
    
    
    LifeNon-vested restricted stock at December 31, 2008
    
    
    80,978
    
    
    $
    6.48
    
    
    8.97 yrsGranted
    
    
    
    
    
    
    Vested
    
    
    (16,447
    )
    
    
    6.92Cancelled/forfeited
    
    
    (28,197
    )
    
    
    6.65Non-vested restricted stock at September 30, 2009
    
    
    36,334
    
    
    $
    6.02
    
    
    8.28 yrs
  (c) Stock-based compensation expense:
   Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Type of awards:Stock options
    
    $
    115
    
    
    $
    208
    
    
    $
    479
    
    
    $
    572Restricted stock
    
    
    31
    
    
    
    135
    
    
    
    108
    
    
    
    101$
    146
    
    
    $
    343
    
    
    $
    587
    
    
    $
    673Income statement account:Promotion and selling
    
    $
    44
    
    
    $
    105
    
    
    $
    142
    
    
    $
    222General and administrative
    
    
    102
    
    
    
    238
    
    
    
    445
    
    
    
    451$
    146
    
    
    $
    343
    
    
    $
    587
    
    
    $
    673
 11




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Nine months ended September 30,2009
    
    2008Expected stock price volatility
    
    
    87.4
    %
    
    
    71.1
    %Risk free interest rate
    
    
    2.2
    %
    
    
    2.7
    %Expected term (in years)
    
    
    5.9
    
    
    
    4.5Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Weighted-average grant date fair value
    
    $
    0.59
    
    
    $
    1.97
   7. Commitments and contingencies
 Legal proceedings
  12




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13




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8. Segment Information
  Three months ended September 30,
    
    
    Nine months ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008United States
    
    $
    5,533
    
    
    $
    6,746
    
    
    $
    17,325
    
    
    $
    24,655Canada
    
    
    1,461
    
    
    
    1,768
    
    
    
    3,844
    
    
    
    4,717Other countries
    
    
    162
    
    
    
    170
    
    
    
    541
    
    
    
    415Total revenue
    
    $
    7,156
    
    
    $
    8,684
    
    
    $
    21,710
    
    
    $
    29,787
  
 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 2008 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 16, 2009.
 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.
 Overview
 Jones GABA ®
 
    
    Jones Pure Cane Soda, a premium carbonated soft drink;
 
    
    Jones 24C, an enhanced water beverage;
 
    
    Jones GABA®,a functional tea juice blend;
 
    
    Jones Organics, a ready-to-drink organic tea;
 
    
    Jones Naturals®, a non-carbonated juice & tea; and
 
    
    WhoopAss Energy Drink® a citrus energy drink.
  Jones Soda Jones Pure Cane Soda Jones Soda Jones Pure Cane Soda
 14




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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;
 
    
    licensing our brand equity for the creation of other beverage or non-beverage products;
and
 
    
    exploring opportunities to license our patented custom-label process to non-competitive
products.
 Jones Pure Cane Soda
 Jones Pure Cane Soda Jones Refresco De Caña Pura Jones Jumble ones Soda
 Jones GABA, Jones GABA Jones GABA Jones GABA Jones GABA
  15




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Results of Operations
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,% of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    
    
    
    
    % of2009
    
    
    Revenue
    
    
    2008
    
    
    Revenue
    
    
    2009
    
    
    Revenue
    
    
    2008
    
    
    Revenue(Dollars in thousands, except per share data)Consolidated statements of operation data:Revenue
    
    $
    7,156
    
    
    
    100.0
    
    
    $
    8,684
    
    
    
    100.0
    
    
    $
    21,710
    
    
    
    100.0
    
    
    $
    29,787
    
    
    
    100.0Cost of goods sold
    
    
    (5,643
    )
    
    
    (78.9
    )
    
    
    (7,718
    )
    
    
    (88.9
    )
    
    
    (16,696
    )
    
    
    (76.9
    )
    
    
    (23,918
    )
    
    
    (80.3
    )Gross profit
    
    
    1,513
    
    
    
    21.1
    
    
    
    966
    
    
    
    11.1
    
    
    
    5,014
    
    
    
    23.1
    
    
    
    5,869
    
    
    
    19.7Licensing revenue
    
    
    19
    
    
    
    0.3
    
    
    
    43
    
    
    
    0.5
    
    
    
    70
    
    
    
    0.3
    
    
    
    152
    
    
    
    0.5Promotion and selling expenses
    
    
    (1,590
    )
    
    
    (22.2
    )
    
    
    (3,481
    )
    
    
    (40.0
    )
    
    
    (6,151
    )
    
    
    (28.3
    )
    
    
    (9,967
    )
    
    
    (33.5
    )General and administrative expenses
    
    
    (1,446
    )
    
    
    (20.2
    )
    
    
    (2,724
    )
    
    
    (31.4
    )
    
    
    (5,006
    )
    
    
    (23.1
    )
    
    
    (7,809
    )
    
    
    (26.2
    )Operating loss
    
    
    (1,504
    )
    
    
    (21.0
    )
    
    
    (5,196
    )
    
    
    (59.8
    )
    
    
    (6,073
    )
    
    
    (28.0
    )
    
    
    (11,755
    )
    
    
    (39.5
    )Other (expense) income, net
    
    
    (65
    )
    
    
    (0.9
    )
    
    
    66
    
    
    
    0.7
    
    
    
    (65
    )
    
    
    (0.3
    )
    
    
    301
    
    
    
    1.0Loss before income taxes
    
    
    (1,569
    )
    
    
    (21.9
    )
    
    
    (5,130
    )
    
    
    (59.1
    )
    
    
    (6,138
    )
    
    
    (28.3
    )
    
    
    (11,454
    )
    
    
    (38.5
    )Income tax benefit (expense)
    
    
    87
    
    
    
    1.2
    
    
    
    (130
    )
    
    
    (1.5
    )
    
    
    88
    
    
    
    0.4
    
    
    
    (392
    )
    
    
    (1.3
    )Net loss
    
    $
    (1,482
    )
    
    
    (20.7
    )
    
    $
    (5,260
    )
    
    
    (60.6
    )
    
    $
    (6,050
    )
    
    
    (27.9
    )
    
    $
    (11,846
    )
    
    
    (39.8
    )Basic and diluted net loss per share
    
    $
    (0.06
    )
    
    
    
    
    
    $
    (0.20
    )
    
    
    
    
    
    $
    (0.23
    )
    
    
    
    
    
    $
    (0.45
    )
 16




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##### Table of Contents



As ofSeptember 30, 2009
    
    December 31, 2008(Dollars in thousands)Balance sheet data:Cash and cash equivalents, short term investments and accounts receivable
    
    $
    9,703
    
    
    $
    15,054Fixed assets, net
    
    
    1,443
    
    
    
    2,099Total assets
    
    
    18,170
    
    
    
    24,315Long-term liabilities
    
    
    294
    
    
    
    396Working capital
    
    
    11,329
    
    
    
    17,674
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    

2008
    
    
    2009
    
    
    2008288-ounce equivalent case sales:Finished products case sales
    
    
    538,500
    
    
    
    712,300
    
    
    
    1,691,800
    
    
    
    2,416,200Concentrate case sales
    
    
    317,600
    
    
    
    314,700
    
    
    
    685,800
    
    
    
    1,365,800Total case sales
    
    
    856,100
    
    
    
    1,027,000
    
    
    
    2,377,600
    
    
    
    3,782,000
 Quarter Ended September 30, 2009 Compared to Quarter Ended September 30, 2008
 Revenue
 Jones Soda Jones Soda 24C 24C Jones Pure Cane Soda
 24C Jones GABA
 Gross Profit
  17




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##### Table of Contents



Licensing Revenue
 Jones Soda
 Promotion and Selling Expenses
  General and Administrative Expenses
  Other (Expense) Income, Net
  Income Tax Benefit (Expense)
  Net Loss
  18




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##### Table of Contents



Nine Month Period Ended September 30, 2009 and 2008
 Revenue
 Jones Soda Jones Soda 24C 24C Jones Pure Cane Soda
 24C Jones GABA
 Gross Profit
 Jones Soda
 Licensing Revenue
 Jones Soda
 Promotion and Selling Expenses
  19




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##### Table of Contents



General and Administrative Expenses
  Other (Expense) Income, Net
  Income tax Benefit (Expense)
  Net Loss
 Jones Soda
 Liquidity and Capital Resources
   20




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##### Table of Contents



Jones GABA Jones GABA Jones GABA
 Jones Pure Cane Soda Jones GABA
     21




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##### Table of Contents



Off-Balance Sheet Arrangements
  Seasonality
  Critical Accounting Policies
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
 Procedures
 (a) Evaluation of disclosure controls and procedures
  (b) Changes in internal controls
  22




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##### Table of Contents



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.
     23




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##### Table of Contents



ITEM 1A.
    
    RISK FACTORS
 2008 10-K
 If we are not able to successfully execute on our revised operating plan, and without the
ability to further implement meaningful cost containment measures beyond those we undertook in the
third quarter of 2009, our financial condition and results of operation could be materially
adversely affected, and we may not be able to continue as a going concern.
   The valuation of our GABA raw materials inventory is dependent on our ability to increase
points of distribution for our existing Jones GABA product and our ability to successfully innovate
new GABA products and product extensions. If we are unable to successfully implement this
strategy, we may be required to adjust the value of our GABA raw materials inventory, which could
adversely affect our results of operations and financial condition.
 Jones GABA Jones GABA Jones
GABA GABA
 24




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##### Table of Contents



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, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    August 1 to August 31, 2009
    
    
    1,459
    
    
    $
    2.87
    
    
    
    
    
    
    
    September 1 to September 30, 2009
    
    
    1,218
    
    
    $
    2.77
    
    
    
    
    
    
    
    Total
    
    
    2,677
    
    
    $
    2.82
    
    
    
    
    
    
    
    
 
 (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. 
 ITEM 6.
    
    EXHIBITS
 ++10.1
    
    Seattle Seahawks Amended Sponsorship Agreement, dated July 15, 2009. (Filed
herewith.)31.1
    
    Section 302 Certification of CEO  Jonathan J. Ricci, 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  Jonathan J. Ricci, 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.)
 
 ++
    
    Portions of the marked exhibit have been omitted and filed separately with the SEC pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended. 25




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##### Table of Contents



SIGNATURES
   JONES SODA CO.By:
    /s/ JONATHAN J. RICCIJonathan J. RicciPresident and Chief Executive OfficerBy:
    /s/ MICHAEL R. OBRIENMichael R. OBrienChief Financial Officer 26