Jones Soda Co. Reports $2.8 Million Financing Transaction And Fiscal 2017 Results

SEATTLE--Jones Soda Co. (the “Company”), a leader in the craft soda category and known for its unique branding and innovative marketing, announced the close of a $2.8 million dollar financing and the results for the year ended December 31, 2017. 

$2,800,000 Convertible Note Financing 

On March 23, 2018, Jones Soda Co. closed a private placement of $2.8 million aggregate principal amount of convertible subordinated promissory notes bearing interest at 6% per annum, with a four-year term and a fixed $0.32 conversion rate, to select institutional and individual accredited investors, including Jennifer Cue, the Company’s CEO. Max Schroedl, the Company’s CFO, added, “This financing represents the first outside capital raised by the Company since Jennifer began as the CEO. Now is the time to accelerate our initiatives and capitalize on the promise shown by our product portfolio.” The proceeds of the financing will be used to fund the Company’s Lemoncocco and Fountain initiatives and for other general working capital purposes. 

“My participation in this financing reflects my confidence in Jones and conviction to delivering shareholder value. This capital allows us to invest in our Lemoncocco and Fountain initiatives, which have the broad demographic appeal and higher margins to return value to our shareholders,” stated Cue. 

Full Year Review - Comparison of Years Ended December 31, 2017 and 2016 

• Revenue was approximately $13.3 million compared to $15.7 million for the prior year. 
• Gross margin was 22.7% of revenue, compared to 26.2% last year primarily due to $275,000 of obsolete inventory write-downs reflecting our current assessment of market conditions. 
• Net loss was $1,271,000 or ($0.03) per share, compared to a net loss of $183,000 or ($0.00) per share, last year. 

For the year, the revenue decline was primarily attributable to the second quarter de-listing of our Jones 12-ounce cans by a major retailer, increased competition for craft shelf space and downward pressure on the CSD industry. Growth in our Lemoncocco and Fountain initiatives, which combined now represent 6.5% of our revenue, offset the declines. During 2017, Fountain revenue increased by 197% and Lemoncocco revenue increased by 37%. 

Fourth Quarter Review - Comparison of Quarters Ended December 31, 2017 and 2016 

• Revenue was approximately $2.2 million compared to $3.0 million for fourth quarter of 2016. 
• Gross margin was 9.5% of revenue, compared to 24.6% last year due to write-offs during the fourth quarter of 2017. 
• Net loss was $808,000 or ($0.02) per share, compared to a net loss of $236,000 or ($0.01) per share in the fourth quarter of 2016. 

For the fourth quarter, the revenue decline was primarily attributable to the quarter over quarter timing of our 7-Select pipeline fill (Q4’16), as well as the de-listing of our Jones 12-ounce cans by a major retailer. 

Company Announces New Board Member 

On March 23, 2018, in connection with the financing transaction, the Company appointed Christopher Beach to serve as a member of the Board of Directors. The authorized size of the Board increased by one, from six to seven. 

Mr. Beach has 25 years of small company governance, investment and strategy experience, with a concentration in the consumer and business services sectors. Most recently, Mr. Beach served as a director of Kleinfeld Bridal, a luxury retailer, from 2012 to 2014. Mr. Beach also served as Director of Business Development for Dycom Industries, Inc., an engineering and construction company, where Mr. Beach was responsible for intellectual property commercialization and other new business opportunities. 

Full report.