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Bill Meissner President and CEO. Use Jones Cover slide. Welcome to the 2011 Annual Meeting of the Shareholders of JONES SODA CO. Michael O’Brien CFO. Financial Overview.
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Use Jones Cover slide Welcome to the 2011 Annual Meeting of the Shareholders of JONES SODA CO.
Financial Overview “MEN WANTED FOR HAZARDOUS JOURNEY. Small wages, bitter cold, long months of complete darkness, safe return doubtful. Honor and recognition in case of success.”— Ernest Shackleton, Advertisement for the Antarctic Expedition. Quote from Shackleton: “It seemed as though all the men in Great Britain were determined to accompany me, the response was so overwhelming.”
Net Loss by Quarter 2008 – Current Q1 2011: $1.7 MM loss 22% Improvement 2010: $6.1 MM loss 42% improvement 2009: $10.5 MM loss 31% improvement 2008: $15.2 MM loss
Inventory – 2008 to current 22% Decrease 63% decrease
Operating Expenses by Quarter 2008 - Current 2008: $23.0 million 37% Decrease 2009: $14.4 million 26% Decrease 2010: $10.7 million
Equity Financing Summary 5/6/10: S-3 Shelf Registration Filed 6/11/10: $10 million Equity Line of Credit (with Glengrove Small Cap Value) 7/14/10 1st draw - $1.1 million 10/28/10: 2nd draw - $1.0 million 12/28/10: 3rd draw - $2.0 million 1/31/11: 4th draw - $2.3 million 1/31/11: Equity Line of Credit closed Totals: 5,228,893 shares @ $1.214/share = $6,350,284
Cash by Quarter 2006 – Current Cash Used in Operations (millions) 2008 2009 2010 12/31/06: $30.2 MM $14.5 $7.3 $3.5 12/31/07: $27.8 MM 3/31/11: $5.6 MM 12/31/08: $12.6 MM 12/31/10: $5.5 MM 12/31/09: $5.0 MM
Keeping up with the Joneses 2011: June 9thPiper Jaffray 31st Annual Consumer Conference presentation in New York June 29th Oppenheimer 11th Annual Consumer Conference presentation in Boston August 11th Live earnings call for Q2 2011 * November 10th Live earnings call for Q3 2011 * 2012: January 11th Jones to present at the 14th Annual ICR XchangeInvestor Conference in Miami. March 15th Live earnings call for Q4 2011 * * estimated
First Quarter-on-Quarter Growth Since 2008 Quarterly Revenue vs. YAG -25% +5% -45%
Today’s Discussion • Our company is growing again • After 1 year we believe our strategic decisions were the correct ones • We believe that our upside is significant • We’re showing progress already
Missed Upside in Our Own Categories Execution Gap AC Nielsen, Grocery, last 52 weeks December 2010
Missed Opportunity on Energy C-Store LRB Category Performance 2010
Missed Opportunity on Energy C-Store LRB Category Performance 2010 + > 20.2
Missed Opportunity To Be Early In Energy Beverage Digest April 21, 2011
Growing our core product Line Jones 12 oz. Glass • Cola ($37B), lemon-lime ($7.3B), citrus ($7B) and pepper ($5B) represent the largest flavor opportunities in CSDs. Jones is not present at retail in any of these flavor platforms* • Of the top 9 flavors that consumers choose, Jones ACV is between 1% and 5% in those flavors *Beverage Digest 26-March-2010
Depleted Sales Resources National Field Sales Force 2007 2008 2009
Our Four Key Initiatives 1. Growing our core business - Cane Soda 2. Participating at a high-level in 2 to 3 other product lines that are in high-growth categories • Building a great management team • Establishing stable financials with a profit plan designed to increase long-term sustained shareholder value
Growing Our Core Jones Soda Business • Reinstatement of Volume-Oriented Pricing Strategies • New pricing matrix that utilizes periods of Trade Spend as a partner to our retailers. • Focus on flavors that consumers are looking for • Jones will always be about unique innovative flavors but we will emphasize and feature our flavors that have greater consumer appeal. • Overhaul of our sales force • Sales team was depleted in early 2010, lacking leadership and direction. Bring leadership into the group and add accountability and bodies. • Move toward hybrid distribution system • Our distribution decisions going forward will be what works best for the retailer, which means a mix between DSD and direct distribution of our Products.
Price Increase October 2010 • From $13.50 to $14.24 • Allows for improved margin capture • Allows for TPR and trial driving pulse pricing • Allows for distributor incentives • Nielsen showing velocity increases on Jones key 4-pack and singles SKUs
Why JONES Pure Cane Cola • We are going to challenge consumers to Change their Cola… • Pure Cane Sugar is HOT!!! • "Some consumers prefer sucrose (sugar) or taste reasons, others for nostalgia reasons or because they think of it as a more natural sweetener option," …Pepsi Rep to Consumerist (Oct. 2010) • HFCS is NOT!!! • A study from Princeton published in the February issue of the journal Pharmacology, Biochemistry and Behavior (PDF) shows that high fructose corn syrup (HFCS), used as a cheap sweetener in everything from Coke to Progresso soup, is not the same as table sugar, namely for the way that it makes you gain 48% more weight…The Consumerist (March 2011) • Men’s Health Magazine calls HFCS “The Devil’s Candy” • Food companies are adding an evil ingredient to their products that may turn your body into a fat-storing machine • Pure Cane Coke sales have increased 84.6% vs YAG per Nielsen • True Cola lovers appreciate the clean taste of Pure Cane Cola
Old Kicking The Can Retail Price: $3.79 8 pack Retail Price: $4.79 8 pack
Alaska Yukon Territory Nunavut Northwest Territories Newfoundland & Labrador Newfoundland US Distributor Coverage as of April 2010 Alaska Washington North Dakota Montana Maine VT Minnesota NH Oregon Idaho South Dakota Wisconsin MA New York Michigan CT Wyoming RI Pennsylvania Nebraska NJ Nevada Iowa Ohio MD Illinois Indiana DE West Virginia Utah Colorado Virginia Kansas California Missouri Kentucky North Carolina Tennessee Oklahoma New Mexico Arkansas South Carolina Arizona Alabama Hawaii Georgia Mississippi Hawaii Texas Louisiana 0-25% Distributor Coverage 25-50% Distributor Coverage HI not to scale 50-75% Distributor Coverage Florida 75-100% Distributor Coverage
Alaska Yukon Territory Nunavut Northwest Territories Newfoundland & Labrador Newfoundland US Distributor Coverage as of December 2010 Alaska Washington Ova cotia North Dakota Montana Maine VT Minnesota NH Oregon Idaho South Dakota Wisconsin MA New York Michigan CT Wyoming RI Pennsylvania Nebraska NJ Nevada Iowa Ohio MD Illinois Indiana DE West Virginia Utah Colorado Virginia Kansas California Missouri Kentucky North Carolina Tennessee Oklahoma New Mexico South Carolina Arkansas Arizona Alabama Hawaii Georgia Mississippi Hawaii Texas Louisiana 0-25% Distributor Coverage 25-50% Distributor Coverage HI not to scale 50-75% Distributor Coverage Florida 75-100% Distributor Coverage
Alaska Yukon Territory Nunavut Northwest Territories Newfoundland & Labrador Newfoundland US Distributor Coverage as of May 2011 Alaska Washington North Dakota Montana Maine VT Minnesota NH Oregon Idaho South Dakota Wisconsin MA New York Michigan CT Wyoming RI Pennsylvania Nebraska NJ Nevada Iowa Ohio MD Illinois Indiana DE West Virginia Utah Colorado Virginia Kansas California Missouri Kentucky North Carolina Tennessee Oklahoma New Mexico Arkansas South Carolina Arizona Alabama Hawaii Georgia Mississippi Hawaii Texas Louisiana 0-25% Distributor Coverage 25-50% Distributor Coverage HI not to scale 50-75% Distributor Coverage Florida 75-100% Distributor Coverage
DSD Channel – Profitable Growth Opportunity GM% lower higher lower lower higher higher Income Statement 2009
Strategic Direction to Focus on Sparkling Categories Combined products were negative GP (-$44,100) in Q1 2010 Not only has total revenue grown vs. Q1 YAG but doing so with our core products
Energy Category Provides Large Upside Beverage Digest April 21, 2011
WhoopAss 2.0: POS • Coolers • Cooler Barrels • Vehicle Graphics • Sell Sheet • Static • Wearables
WhoopAss Update • First crack at large national chains will come throughout the summer for 2012 resets • How is the volume so far on WhoopAss? • Pre-launch: 2009, + 9Mos. 2010 (Total 21 Months) = 6,095 • Post-launch Oct-Dec 2010 + YTD 011 (Total 8 mos) = 13,479 • Accelerating rapidly • Chain business already achieved: • Gas America, QFC, Plaid Pantry, Albertsons
All Natural Beverages More to Come
Reduced Admin, Added Sales & Marketing Professionals Admin Personnel Q4 2009 Q4 2010 Sales and Marketing Personnel Q4 2009 Q4 2010
Better Than Budgeted Gross Profit +4.6% +22.9% 23% Improvement vs YAG on Gross Profit
Chain Grocery & Convenience Growth Opportunity Percentage of Chain Grocery Penetration Jones Glass
Brand Health • Velocity increases at retail on 6 of 7 of Jones top SKUs • Total dollar sales increases at retail across all SKUs that were not removed from 4 packs in 2009/2010 sets • Still leading the category in brand velocity per outlet (see AC Nielsen Handout)
Today’s Discussion • Our company is growing again • After 1 year we believe our strategic decisions were the correct ones • We believe that our upside is significant • We’re showing progress already