UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): August 3, 2017
(Exact Name of Registrant as Specified in Its Charter)
Washington
(State or Other Jurisdiction of Incorporation)
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0-28820 |
52-2336602 |
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(Commission File Number) |
(IRS Employer Identification No.) |
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66 South Hanford Street, Suite 150, Seattle, Washington |
98134 |
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(Address of Principal Executive Offices) |
(Zip Code) |
(206) 624-3357
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below) :
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On August 3, 2017, Jones Soda Co. (the “ Company ”) issued a press release announcing its financial results for the second quarter ended June 30, 2017. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The Company will discuss its results for the quarter ended June 30, 2017 on its scheduled conference call today, August 3, 2017 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). This call will be webcast and can be accessed by visiting our website at www.jonessoda.com or www.jonessoda.com/company/jones-press/webcasts . Investors may also listen to the call via telephone by dialing (719) 785-9448 (confirmation code: 1965708). In addition, a telephone replay will be available by dialing (412) 317-6671 (confirmation code: 1965708) through August 10, 2017, at 11:59 p.m. Eastern Time.
The information in this Current Report in Item 2.02 and Exhibit 99.1 is being furnished to the Securities and Exchange Commission and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, except as shall be expressly set forth by specific reference in such a filing.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements with Certain Officers
Appointment of New Director
On August 1, 2017, the Board of Directors (the “ Board ”) of the Company appointed Jeff Anderson to serve as a director the Board with a term expiring at the Company’s 2018 annual meeting of shareholders. Pursuant to the Company’s standard board compensation policy for directors and in consideration for his partial year of service, Mr. Anderson will receive (a) a cash retainer of $2,375, and (b) a nonqualified stock option to purchase 39,583 shares of the Company’s common stock, to vest and become exercisable in full on January 3, 2018, subject to Mr. Anderson’s continued service with the Company as of such date.
Mr. Anderson has over 30 years of consumer product experience, of which 20 years was as a CEO and business owner. Mr. Anderson currently works as a board member and Senior VP to Harbor Wholesale, a Pacific Northwest Distribution company.
There is no arrangement or understanding with any person pursuant to which Mr. Anderson was appointed as a director, and there are no family relationships between Mr. Anderson and any director or executive officer of the Company. Additionally, there are no transactions between Mr. Anderson and the Company that would be required to be reported under Item 404(a) of Regulation S-K.
A copy of the Company’s press release related to the matter described above is attached as Exhibit 99.01 to this Current Report on Form 8-K and is incorporated herein by reference.
Board Committee Assignments
On August 1, the Board appointed directors to the following Board committees:
Audit Committee
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Susan A. Schreter, Chair |
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Richard V. Cautero |
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Jeff Anderson |
Compensation and Governance Committee
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Michael M. Fleming, Chair |
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Jeff Anderson |
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Susan A. Schreter |
Nominating Committee
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Matthew K. Kellogg, Chair |
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Michael M. Fleming |
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Richard V. Cautero |
Director Compensation Arrangements
On August 1, 2017, the Board approved the amended compensation plan for directors of the Company (“ Amended Plan ”) that were recommended by the Compensation and Governance Committee (the “ Committee ”), to become effective as of January 1, 2018.
The Amended Plan includes the following key modifications:
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increasing the amount of the annual retainer for Board service from $3,000 to $5,500 and making such amount payable either in cash or in restricted stock units, at the option of the recipient; |
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replacing the annual grant of a nonqualified stock option to purchase 50,000 shares of Company common stock with a grant of $15,000 of restricted stock units, ; |
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instituting a policy which awards new members of the Board pro-rata board compensation based on the date such new Board member is appointed to the Board, provided that a grant to any member serving less than six months would require the approval of the Compensation Committee; |
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extending the exercise period of any Company stock options for members of the Board who have served as a director of the Company for at least three years from three months following their date of termination of service to one year following the their date of termination of service; and |
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revising the Company’s Insider Trading Compliance Program (the “Policy”) to prohibit Insiders (as defined in the Policy) from trading in the Company’s securities until the later of either (i) 90 calendar days, or (ii) the date when such Insider no longer possesses material nonpublic information as determined by the Committee and the Company’s Insider Trading Compliance Officer (as defined in the Policy). |
The Amended Plan is filed as Exhibit 10.01 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing summary is qualified in its entirety by the terms of the actual Amended Plan.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
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Exhibit No. |
Description |
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10.01 |
Amended Compensation for Directors of Jones Soda Co. |
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99.01 |
Press Release dated August 3, 2017. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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JONES SODA CO. |
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(Registrant) |
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August 3, 2017 |
By: |
/s/ Max Schroedl |
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Max Schroedl, Chief Financial Officer |
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Exhibit Index
| Exhibit No. | Description |
| 10.01 | Amended Compensation for Directors of Jones Soda Co. |
| 99.01 | Press Release dated August 3, 2017 |
Exhibit 10.01
SUMMARY OF THE AMENDED NON-EMPLOYEE DIRECTOR COMPENSATION
Effective January 1, 2018, except as otherwise disclosed by the Jones Soda Co. (the “ Company ”), non-employee directors receive the following compensation for their service on the Board of Directors (the “ Board ”) and committees of the Board:
Cash Compensation
| Position | Amount | |||
| Non-employee (“NE”) Director Annual Retainer | $ | 5,500 | ||
| NE Director Board Meeting Attendance Fee (telephonic) | 1,000 (500) | |||
| NE Director Committee Meeting Attendance Fee - live or telephonic | 500 | |||
| Chair of Board of Directors Annual Retainer | 2,500 | |||
| Chair of Audit Committee Annual Retainer | 1,000 | |||
| Chair of Compensation and Governance Committee Annual Retainer | 750 | |||
| Chair of Nominating Committee Annual Retainer | 750 | |||
Restricted Stock Units
Each non-employee director receives an annual grant of $15,000 restricted stock units, with an exercise price equal to the fair market value of the common stock on the date of grant and a term of ten years. The restricted stock unit grants vest in full one year from the date of grant.
The NE Director Annual Retainer of $5,500 may be payable in cash or restricted stock units at the option of the recipient.
Exercise Period for Board Stock Options
The exercise period of any Company stock options awarded to members of the Board who have served as a director of the Company for at least three years are exercisable for one year following the date of their termination of service.
The exercise period of any Company stock options awarded to members of the Board who have served as a director of the Company for less than three years are exercisable for three months follow the date of their termination of service.
Pro-Rata Award
New members of the Board who are not elected at an annual shareholder meeting will be awarded pro-rata board compensation based on the date such new member is appointed to the Board. Any board compensation granted to a new member of the Board who will serve less than six months requires the approval of the Company’s Compensation and Governance Committee.
Expense Reimbursement
In addition to cash and stock-based compensation, non-employee directors are reimbursed for their out-of-pocket expenses, including travel, meals and accommodation expenses, incurred in attending meetings of the Board, committee meetings, and conferences with the Company’s management.
Insider Trading Policy
The Company’s Insider Trading Compliance Program (the “ Policy ”) shall prohibit Insiders (as defined in the Policy) from trading in the Company’s securities until the later of either (i) 90 calendar days, or (ii) the date when such Insider no longer possesses material nonpublic information as determined by both the Company’s Compensation and Governance Committee and the Company’s Insider Trading Compliance Officer (as defined in the Policy).
Exhibit 99.01
Jones Soda Co. Reports Fiscal 2017 Second Quarter Results
SEATTLE--(BUSINESS WIRE)--August 3, 2017--Jones Soda Co. (the Company) (OTCQB: JSDA), a leader in the craft soda category and known for its unique branding and innovative marketing, today announced results for the second quarter ended June 30, 2017.
“Sales of Lemoncocco and Jones on Fountain, two higher margin initiatives, grew during the quarter. As mainstream soda consumption decreases, we are investing more resources in these on-trend products and opportunities that can deliver revenue growth and value for shareholders,” stated Jennifer Cue, the Company’s CEO.
For the second quarter of 2017, the Company reported revenue of $3.9 million, compared to the prior year’s second quarter revenue of $4.3 million. The Company reported a net loss for the second quarter of 2017 of $55,000 or ($0.00) per share, compared to a net loss of $65,000 or ($0.00) per share, for the second quarter of 2016.
Commenting on other major initiatives, Eric Chastain, the Company’s COO, added, “Our partnership with 7-Eleven USA is stronger than ever. Sell-through of our co-branded private label offerings is up year-over-year, and we continue to expand our relationships within their organization. Our success with 7-Eleven demonstrates that we have the operating capacity and service orientation to serve large partnerships.”
Second Quarter Review - Comparison of Quarters Ended June 30, 2017 and 2016
Year-to-date Review - Comparison of Six Months Ended June 30, 2017 and 2016
The declines in revenue are attributable to increased competition in the craft soda segment at grocery, as well as the de-listing of our Jones 12-ounce cans by a major retailer in favor of their own competing private label product.
Company Announces New Board Member
At the Company’s board meeting held on Tuesday, August 1, 2017, the Board of Directors of Jones Soda Co. authorized the appointment of Mr. Jeff Anderson as a new board member of the Company. Mr. Anderson has over 30 years of consumer product experience, of which 20 years was as a CEO and business owner. Mr. Anderson currently works as a board member and Senior VP to Harbor Wholesale, a Pacific Northwest Distribution company.
Conference Call
The Company will discuss its results for the quarter ended June 30, 2017 on its scheduled conference call today, August 3, 2017 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). This call will be webcast and can be accessed by visiting our website at www.jonessoda.com or www.jonessoda.com/company/jones-press/webcasts . Investors may also listen to the call via telephone by dialing (719) 785-9448 (confirmation code: 1965708). In addition, a telephone replay will be available by dialing (412) 317-6671 (confirmation code: 1965708) through August 10, 2017, at 11:59 p.m. Eastern Time.
Presentation of Non-GAAP Information
This press release contains disclosure of the Company's Adjusted EBITDA, which is a not a United States Generally Accepted Accounting Principle (“GAAP”) financial measure. The difference between Adjusted EBITDA (a non-GAAP measure) and Net Loss (the most comparable GAAP financial measure) is the exclusion of interest expense, income tax expense, depreciation and amortization expense and stock-based compensation. We have included a reconciliation of Adjusted EBITDA to Net Loss in our Non-GAAP Reconciliation in this press release. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP. Adjusted EBITDA has certain limitations in that it does not take into account the impact of certain expenses to our consolidated statements of operations. In addition, because Adjusted EBITDA may not be calculated identically by all companies, the presentation here may not be comparable to other similarly titled measures of other companies. We believe that Adjusted EBITDA provides useful information to investors about the Company's results attributable to operations, in particular by eliminating the impact of non-cash charges related to stock-based compensation, amortization and depreciation that is consistent with the manner in which we evaluate the Company's performance. These adjustments to the Company's GAAP results are made with the intent of providing a more complete understanding of the Company's underlying operational results and provide supplemental information regarding our current ability to generate cash flow. This non-GAAP financial measure and is not intended to be considered in isolation or as a replacement for, or superior to net (loss) as an indicator of the Company's operating performance, or cash flow, as a measure of its liquidity. Adjusted EBITDA should be reviewed in conjunction with Net Loss as calculated in accordance with GAAP.
About Jones Soda Co.
Headquartered in Seattle, Washington, Jones Soda Co. ® (OTCQB: JSDA) markets and distributes premium beverages under the Jones ® Soda, Jones Zilch ® , Jones Stripped ™ and Lemoncocco ® brands. A leader in the premium soda category, Jones Soda is known for its variety of flavors, made with cane sugar and other high quality ingredients and incorporating always-changing photos sent in from its consumers. The diverse product line of Jones offers something for everyone – pure cane sugar soda, zero-calorie soda and an all-naturally sweetened sparkling beverage with only 30 calories, and Lemoncocco ® non-carbonated premium refreshment. Jones Soda is sold across North America in glass bottles, cans and on fountain through traditional beverage outlets, restaurants and alternative accounts. For more information, visit www.jonessoda.com or www.myjones.com or www.drinklemoncocco.com .
Forward-Looking Statements Disclosure
Certain statements in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing words such as “will,” “aims,” “anticipates,” “becoming,” “believes,” “continue,” “estimates,” “expects,” “future,” “intends,” “plans,” “predicts,” “projects,” “targets,” or “upcoming.” Forward-looking statements also include any other passages that are primarily relevant to expected future events or that can only be evaluated by events that will occur in the future. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Factors that could affect the Company's actual results include, among others: its ability to successfully execute on its operating plans for 2017; consumer response to and market acceptance of 7-Select ® ,the Company’s cobranded product with 7-Eleven, and the Company’s new product, Lemoncocco; the timing and amount of reorders for 7-Select ® ; competition in the fountain business, particularly from Coke and Pepsi; the Company’s ability to maintain and expand distribution arrangements with distributors, independent accounts, retailers or national retail accounts; its ability to manage operating expenses and generate sufficient cash flow from operations; its ability to increase revenues and achieve case sales goals on reduced operating expenses; its ability to effectively manage and grow international distribution and sales; its ability to develop and introduce new products to satisfy customer preferences; its ability to market and distribute brands on a national basis; changes in consumer demand or market acceptance for its products; its ability to increase demand and points of distribution for its products or to successfully innovate new products and product extensions; changes in pricing and SKUs of its products;its ability to maintain relationships with co-packers; its ability to maintain a consistent and cost-effective supply of raw materials; its ability to maintain brand image and product quality; its ability to attract, retain and motivate key personnel; the impact of currency rate fluctuations; its ability to protect its intellectual property; the impact of future litigation; the impact of intense competition from other beverage suppliers; and its ability to access the capital markets for any future equity financing, and any actual or perceived limitations by being traded on the OTCQB Marketplace. More information about factors that potentially could affect the Company’s operations or financial results is included in its most recent annual report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission on March 23, 2017. Readers are cautioned not to place undue reliance upon these forward-looking statements that speak only as to the date of this release. Except as required by law, the Company undertakes no obligation to update any forward-looking or other statements in this press release, whether as a result of new information, future events or otherwise.
| JONES SODA CO. | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| (Unaudited) | ||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||
| (In thousands, except share data) | ||||||||||||
| Revenue | $ | 3,933 | $ | 4,304 | $ | 7,468 | $ | 8,578 | ||||
| Cost of goods sold | 2,872 | 3,218 | 5,554 | 6,320 | ||||||||
| Gross profit | 1,061 | 1,086 | 1,914 | 2,258 | ||||||||
| Gross profit % | 27.0% | 25.2% | 25.6% | 26.3% | ||||||||
| Operating expenses: | ||||||||||||
| Selling and marketing | 548 | 505 | 1,092 | 1,047 | ||||||||
| General and administrative | 548 | 587 | 1,031 | 1,151 | ||||||||
| 1,096 | 1,092 | 2,123 | 2,198 | |||||||||
| Income (loss) from operations | (35) | (6) | (209) | 60 | ||||||||
| Interest expense | (20) | (21) | (35) | (43) | ||||||||
| Other income (expense), net | 8 | (29) | 7 | (17) | ||||||||
| Loss before income taxes | (47) | (56) | (237) | - | ||||||||
| Income tax expense, net | (8) | (9) | (15) | (16) | ||||||||
| Net loss | $ | (55) | $ | (65) | $ | (252) | $ | (16) | ||||
| Net loss per share - basic and diluted | $ | (0.00) | $ | (0.00) | $ | (0.01) | $ | (0.00) | ||||
| Weighted average basic and diluted common shares outstanding | 41,410,142 | 41,315,727 | 41,389,138 | 41,315,308 | ||||||||
| JONES SODA CO. | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| June 30, 2017 | December 31, 2016 | |||||
| (Unaudited) | ||||||
| (In thousands, except share data) | ||||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 745 | $ | 733 | ||
| Accounts receivable, net of allowance of $21 and $13 | 2,669 | 2,174 | ||||
| Inventory | 2,100 | 1,850 | ||||
| Prepaid expenses and other current assets | 144 | 142 | ||||
| Total current assets | 5,658 | 4,899 | ||||
| Fixed assets, net of accumulated depreciation of $560 and $922 | 35 | 25 | ||||
| Other assets | 8 | 8 | ||||
| Total assets | $ | 5,701 | $ | 4,932 | ||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 1,695 | $ | 1,049 | ||
| Line of credit | 1,464 | 1,205 | ||||
| Accrued expenses | 796 | 835 | ||||
| Taxes payable | 17 | 26 | ||||
| Total current liabilities | 3,972 | 3,115 | ||||
| Deferred rent | 12 | 12 | ||||
| Shareholders’ equity: | ||||||
| Common stock, no par value: | ||||||
| Authorized — 100,000,000; issued and outstanding shares — 41,449,373 shares and 41,340,727 shares, respectively | 53,818 | 53,772 | ||||
| Additional paid-in capital | 8,753 | 8,674 | ||||
| Accumulated other comprehensive income | 258 | 219 | ||||
| Accumulated deficit | (61,112) | (60,860) | ||||
| Total shareholders’ equity | 1,717 | 1,805 | ||||
| Total liabilities and shareholders’ equity | $ | 5,701 | $ | 4,932 | ||
CONTACT:
Jones Soda Co.
Max Schroedl, 206-624-3357
Chief Financial Officer
finance@jonessoda.com