Jones Soda Co. Announces Second Quarter Financial Results — Profitable Second Quarter and Profitable Year-to-Date Results

Business Wire, August 1, 2001

    Business Editors

    SEATTLE--(BUSINESS WIRE)--Aug. 1, 2001--

               -- Net Income Increases 48% to $293,086,
                Reports Earnings Per Share of $0.01 --

      Jones Soda Co. (the "Company" or "Jones")(CDNX:JSD)(OTCBB:JSDA),
today announced financial results for the second quarter ended June
30, 2001.
      Net sales for the second quarter of fiscal 2001 increased 30% to
$7,691,235 from $5,962,990 for the second quarter of fiscal 2000. Net
income increased to $293,086, or $0.01 per diluted share during the
quarter versus net income of $197,560 or $0.01 per diluted share for
the same period last year.
      For the six months ended June 30, 2001, net sales rose 42% to
$13,024,528 versus $9,160,952 for the same period last year. The
Company reported net income of $32,596 or $0.00 per diluted share,
during the first six months of fiscal 2001 versus a net loss of
$(128,086), or $(0.01) per diluted share for the corresponding period
last year.
      Gross margin for the second quarter of fiscal 2001 was 37.3%
compared to 41.3% for the second quarter of fiscal 2000. Operating
expenses as a percentage of sales improved to 34.0% for the second
quarter of 2001 compared to 37.2% in the corresponding period a year
ago.
      Peter van Stolk, President and C.E.O. stated, "We are pleased with
our performance during the quarter, which represents our 13th
consecutive quarter of strong revenue growth. More importantly, we
were able to translate these sales increases into a more than 48% gain
in net income. Our mandate to grow profitability is starting to be
realized."
      "We are beginning to effectively leverage the costs associated
with our larger infrastructure and believe this will continue to add
to our bottom line growth going forward," Mr. van Stolk continued.
"After a year of transition, highlighted by our relocation to the
United States and settlement of litigation, we are beginning to see
the benefits from our hard work and the results of a refocused
company."
      Mr. van Stolk continued, "Over the past several months we have
continued to take the steps towards positioning the company for
long-term growth and profitability. We significantly strengthened our
management team with the appointment of Matt Hughes as Chief Operating
Officer. Matt is a 20-year beverage industry veteran, and his
knowledge and experience will be invaluable as we take this company to
the next level. Additionally, during the quarter we introduced Jones
Juice in the United States and Canada, a non-carbonated beverage that
will compete in the much larger ready-to-drink fruit and tea category;
we continued to expand our Jones Soda line with the introduction of
two new flavors; and stepped up our advertising campaign, with local
radio test spots in Seattle and a cooler promotion in Michigan, two of
our largest markets."
      Mr. van Stolk concluded, "Today our company is more focused than
ever on profitably developing our three brands; Jones Soda, Whoop Ass
and Jones Juice into major players in their respective spaces, while
increasing our market share of the $12 billion new age beverage
industry. At the same time, we will maintain our tight control on
costs, as we are dedicated to long-term growth and increased
shareholder value."
      Headquartered in Seattle, Washington, Jones Soda Co., manufactures
its Jones Soda, Jones Soda Whoopass and Jones Juice brands and sells
it through its distribution network in select markets across North
America. A leader in the premium soda category, Jones is known for its
innovative labeling technique that incorporates always-changing photos
sent in from its consumers. Jones Soda is sold through traditional
beverage retailers and everywhere you'd never expect to find a soda.

      Statements in this press release, and elsewhere, that look forward
in time or include anything other than historical information involve
risks and uncertainties that may affect the Company's actual results
of operations. Statements contained in this release regarding the
Company's anticipated future results of operations, and on the
Company's ability to expand its Jones Soda and Jones Soda Whoopass
brands are "forward-looking statements" as the phrase is defined by
the Private Securities Litigation Reform Act of 1995. Forward-looking
statements by the Company are subject to certain risks, including
future demand for Jones Soda and Jones Soda Whoopass, competition from
other businesses providing similar products and the Company's ability
to successfully execute its business strategy. Those risks and
uncertainties are discussed in more detail in the Company's periodic
reports filed with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended.

                       (See attached Exhibits)

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                            JONES SODA CO.
                 CONSOLIDATED STATEMENT OF OPERATIONS
                                 ($US)



----------------------------------------------------------------------
                    Three Months Ended         Six Months Ended
($US)                    June 30,                  June 30,
                 ------------------------   --------------------------
                       (Unaudited)               (Unaudited)

                    2001          2000         2001           2000
                 -----------  -----------   -----------    ----------


Net Sales        $ 7,691,235  $ 5,962,990   $13,024,528   $ 9,160,952


Cost of Goods
 Sold              4,823,969    3,498,263     8,135,393     5,506,757

    Gross Profit   2,867,266    2,464,727     4,889,135     3,654,205

    Gross Margin       37.3%        41.3%         37.5%         39.9%


Operating Expenses:

 Promotion and
  Selling          1,881,746    1,557,340     3,574,168     2,586,551
 General & Admin.    675,131      623,643     1,255,241     1,027,789
 Dep'n &
  Amortization        57,610       38,475       127,477       116,007

Total operating
 expenses          2,614,487    2,219,458     4,956,886     3,730,347


Operating income
 (loss)              252,779      245,269       (67,751)      (76,142)


 Other income
 (expense)            40,307      (47,709)      100,347       (52,187)



Net income (loss)   $293,086     $197,560       $32,596     ($128,329)
                   =========    =========    ==========    ==========

Basic Income (Loss)
 per share             $0.01        $0.01         $0.00        ($0.01)
                       =====        =====         =====        =======
Diluted Income
 (Loss) per share      $0.01        $0.01         $0.00        ($0.01)
                       =====        =====         =====        =======

----------------------------------------------------------------------

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                            JONES SODA CO.
                      CONSOLIDATED BALANCE SHEET
                           (Unaudited -US$)



----------------------------------------------------------------------
($US)


                       June 30, 2001             June 30, 2000
                       -------------             -------------


ASSETS


Current Assets         $10,555,496              $ 6,769,966

Capital Assets             711,033                  632,894

Intangible Assets          116,480                  118,251


                       $11,383,009              $ 7,521,111
                       ===========              ===========



LIABILITIES AND SHAREHOLDERS' EQUITY


Current Liabilities    $ 6,535,877              $ 5,175,860

Capital Lease
 Obligations                79,727                  101,338

Shareholders' Equity     4,767,405                2,243,913


                       $11,383,009              $ 7,521,111
                       ===========              ===========


----------------------------------------------------------------------

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      The Canadian Venture Exchange has not reviewed and does not accept
responsibility for the adequacy of the content of the information
herein.

    --30--brm/se*

    CONTACT: Jones Soda Co.
             Jennifer Cue, 206/624-3357
             jencue@jonessoda.com

    KEYWORD: WASHINGTON MICHIGAN INTERNATIONAL CANADA
    INDUSTRY KEYWORD: FOODS/BEVERAGES EARNINGS
    SOURCE: Jones Soda Co.