<p align= justify >According to a press release dated September 4, 2007, the complaint charges Jones Soda and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Jones Soda is a Seattle based manufacturer and marketer of a variety of beverage products sold through the Company’s national distribution network.</p> <p align= justify > </p>
<p align= justify >Specifically, the complaint alleges that as a result of Jones Soda’s release of its fourth quarter 2006 results after the close of trading on March 8, 2007, and defendants’ very bullish statements to analysts and the investment community after releasing those results, including announcing Jones Soda was expanding the sales channels of its Jones Soda product in 12-ounce cans to major retailers such as Wal-Mart, Kroger, Safeway and Kmart, Jones Soda stock traded up from its closing price of under $14 per share on March 8, 2007 to close above $17 per share on March 9, 2007. Specifically, defendants stated that through Jones Soda’s expanded sales network and advertising activities then underway, Jones Soda was on track to obtain 25% of the $66 billion canned soda market during the first half of 2007. Defendants’ continued bullish statements in subsequent weeks drove the stock price above $32 per share by April 16, 2007.</p>
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<p align= justify >The complaint further alleges that on August 2, 2007, however, the Company reported significantly lower-than-expected canned soda sales and difficulty getting the new canned soda product onto retailers’ shelves. According to the complaint, despite earlier promises to have the new canned product onto retailer shelves in advance of the Memorial Day holiday and to use a huge national advertising blitz to increase brand recognition that weekend to increase sales and market share, defendants would admit they lacked the requisite sales and distribution resources to execute the launch, failed to obtain shelf-space at the national chains and essentially bumbled the launch of Jones Soda 12-ounce cans, forcing them to cancel the advertising campaign. As a result, the Company’s first half 2007 financial performance significantly underperformed the investment community’s expectations. Jones Soda’s stock price plunged 23% to $11.70 per share, down more than 65% from its Class Period high.</p>