Jones Soda Swings to Profit on Cannabis Business Sale

Ticker: JSDA · Form: 10-Q · Filed: Aug 14, 2025 · CIK: 1083522

Sentiment: mixed

Topics: Beverage Industry, Strategic Divestiture, Financial Turnaround, Revenue Decline, Cannabis Business, Cash Flow, SEC Filing

TL;DR

**Jones Soda's Q2 profit is a mirage from selling off its cannabis venture; the core soda business is still struggling, so don't get fizzed up.**

AI Summary

JONES SODA CO. (JSDA) reported a significant turnaround in the second quarter of 2025, achieving a net income of $2.611 million for the three months ended June 30, 2025, compared to a net loss of $1.568 million in the same period of 2024. This positive shift was primarily driven by a $3.663 million gain on the disposition of its cannabis (THC) beverage business subsidiaries on June 19, 2025. Despite this, net revenue for the three months ended June 30, 2025, decreased to $4.894 million from $6.659 million in the prior year, a 26.5% decline. For the six months ended June 30, 2025, net income was $1.759 million, a substantial improvement from a $2.720 million net loss in the first half of 2024. Total assets increased to $11.941 million as of June 30, 2025, from $8.523 million at December 31, 2024, while total liabilities rose to $7.602 million from $6.367 million. The company's strategic outlook now focuses on its premium beverage business after divesting its cannabis operations, aiming to improve cash flow from continuing operations, which still showed a net cash outflow of $2.591 million for the six months ended June 30, 2025.

Why It Matters

This filing reveals a critical strategic pivot for Jones Soda, as the divestiture of its cannabis business significantly impacts its financial health and future direction. For investors, the $3.663 million gain on disposition is a one-time boost, but the underlying decline in net revenue for continuing operations (down 26.5% in Q2 2025 year-over-year) signals ongoing challenges in its core beverage market. Employees and customers of the cannabis segment will be directly affected by the sale to MJ Reg Disrupters LLC. In a competitive beverage market dominated by larger players, Jones Soda's ability to grow its premium soda brand post-cannabis exit will be crucial for long-term viability and market positioning.

Risk Assessment

Risk Level: medium — While the company reported a net income of $2.611 million for Q2 2025, this was largely due to a one-time gain of $3.663 million from the disposition of subsidiaries. Net revenue from continuing operations declined significantly by 26.5% to $4.894 million in Q2 2025 compared to Q2 2024, and net cash used in continuing operations was $2.591 million for the six months ended June 30, 2025, indicating ongoing operational cash burn despite the divestiture.

Analyst Insight

Investors should view the reported net income with caution, recognizing it's primarily from a one-time asset sale. Focus on the declining net revenue from continuing operations and the ongoing cash burn. Await further filings to assess the company's ability to stabilize and grow its core premium beverage business post-divestiture before considering any long-term investment.

Financial Highlights

debt To Equity
N/A
revenue
$4.894M
operating Margin
N/A
total Assets
$11.941M
total Debt
N/A
net Income
$2.611M
eps
N/A
gross Margin
N/A
cash Position
N/A
revenue Growth
-26.5%

Revenue Breakdown

SegmentRevenueGrowth
Total Net Revenue$4.894M-26.5%

Key Numbers

Key Players & Entities

FAQ

What was Jones Soda Co.'s net income for the second quarter of 2025?

Jones Soda Co. reported a net income of $2.611 million for the three months ended June 30, 2025, a significant improvement from a net loss of $1.568 million in the same period of 2024.

Why did Jones Soda Co. report a net income in Q2 2025?

The net income in Q2 2025 was primarily driven by a $3.663 million gain on the disposition of its cannabis (THC) beverage business subsidiaries on June 19, 2025.

How did Jones Soda Co.'s net revenue change in Q2 2025?

Net revenue for the three months ended June 30, 2025, decreased to $4.894 million, down 26.5% from $6.659 million in the prior year's second quarter.

What was the impact of discontinued operations on Jones Soda Co.'s financial results?

The company classified its cannabis subsidiaries as discontinued operations, resulting in a loss from discontinued operations of $41 thousand for the three months ended June 30, 2025, and income of $199 thousand for the six months ended June 30, 2025.

Who acquired Jones Soda Co.'s cannabis beverage business?

Jones Soda Co. sold all of the issued and outstanding equity interests in its cannabis (THC) beverage business subsidiaries to MJ Reg Disrupters LLC on June 19, 2025.

What are the key risks for Jones Soda Co. after this filing?

Key risks include the ability to successfully execute its growth strategy, manage operating expenses, generate cash flow from continuing operations, and compete in the highly competitive beverage industry, especially given the 26.5% decline in Q2 2025 net revenue.

How much cash did Jones Soda Co. have at the end of Q2 2025?

As of June 30, 2025, Jones Soda Co. reported cash of $650 thousand, a decrease from $1.275 million at December 31, 2024.

What is Jones Soda Co.'s strategic outlook after divesting its cannabis business?

The company's strategic outlook is now focused on its premium beverage business, aiming to improve operational efficiency and cash flow from continuing operations after exiting the cannabis market.

How many shares of common stock did Jones Soda Co. have outstanding as of August 14, 2025?

As of August 14, 2025, there were 117,671,604 shares of Jones Soda Co.'s common stock issued and outstanding.

What does 'disposition of subsidiaries' mean for Jones Soda Co.?

The 'disposition of subsidiaries' refers to Jones Soda Co. selling its cannabis (THC) beverage business, which resulted in a one-time gain of $3.663 million and the reclassification of these operations as 'discontinued operations' in its financial statements.

Risk Factors

Industry Context

Jones Soda Co. operates in the highly competitive beverage industry. Following its divestiture of the THC beverage business, the company is now focused on its premium beverage segment. This market is characterized by established players and a constant demand for innovation and differentiation to capture consumer attention and market share.

Regulatory Implications

The divestiture of the cannabis (THC) beverage business removes direct exposure to the complex and evolving regulatory landscape surrounding cannabis products. However, the company must remain vigilant regarding general beverage industry regulations, including labeling, marketing, and potential health-related compliance.

What Investors Should Do

  1. Monitor the performance of the core premium beverage business closely to assess its ability to drive revenue growth and profitability without the contribution of the divested cannabis operations.
  2. Analyze the company's cash flow from continuing operations to determine the sustainability of its business model and identify potential needs for future capital raises.
  3. Evaluate the strategic rationale and execution of the divestiture, considering its long-term impact on shareholder value and the company's future direction.

Key Dates

Glossary

Disposition
The act of selling or otherwise getting rid of an asset or business unit. (Crucial to understanding the $3.663 million gain that significantly boosted Jones Soda's Q2 2025 net income, stemming from the sale of its cannabis business.)
Continuing Operations
The revenue and expenses generated from a company's primary, ongoing business activities, excluding discontinued operations or divested segments. (Highlights that despite the gain from the cannabis sale, the core beverage business still consumed $2.591 million in cash during the first half of 2025.)
Net Revenue
The total revenue of a company after deducting returns, allowances, and discounts. (The 26.5% decrease in net revenue for Q2 2025 ($4.894M) indicates a contraction in the core business, separate from the impact of the asset sale.)

Year-Over-Year Comparison

Compared to the prior year's second quarter, Jones Soda Co. has achieved a significant turnaround in profitability, reporting a net income of $2.611 million versus a net loss of $1.568 million. This was primarily driven by a gain on the disposition of its cannabis business. However, net revenue from continuing operations declined by 26.5% to $4.894 million, indicating challenges in the core beverage business. Total assets have increased to $11.941 million, while liabilities also rose to $7.602 million, reflecting changes post-divestiture.

Filing Stats: 4,573 words · 18 min read · ~15 pages · Grade level 17.6 · Accepted 2025-08-14 17:15:05

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 5

Financial Statements (Unaudited)

Item 1. Financial Statements (Unaudited) 5 a) Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 5 b) Condensed Consolidated Statements of Operations – three and six months ended June 30, 2025 and 2024 6 c) Condensed Consolidated Statements of Comprehensive Loss – six months ended June 30, 2025 and 2024 7 d) Condensed Consolidated Statements of Shareholders' Equity for the six months ended June 30, 2025 and 2024 8 e) Condensed Consolidated Statements of Cash Flows – six months ended June 30, 2025 and 2024 9 f) Notes to Condensed Consolidated Financial Statements 10

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 19

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 24

Controls and Procedures

Item 4. Controls and Procedures 24

OTHER INFORMATION

PART II. OTHER INFORMATION 25

Legal Proceedings

Item 1. Legal Proceedings 25

Risk Factors

Item 1A. Risk Factors 25

UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, ISSUER PURCHASES OF EQUITY SECURITIES

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, ISSUER PURCHASES OF EQUITY SECURITIES 25

Other Information

Item 5. Other Information 25

Exhibits

Item 6. Exhibits 25 2 Table of Contents EXPLANATORY NOTE Unless otherwise indicated or the context otherwise requires, all references in this Quarterly Report on Form 10-Q (this "Report") to "we," "us," "our," "Jones," and the "Company" are to Jones Soda Co., a Washington corporation, and our wholly-owned subsidiaries. In addition, unless otherwise indicated or the context otherwise requires, all references in this Report to "Jones Soda" refer to our premium beverages, including Jones Soda sold under the trademarked brand name "Jones Soda Co." CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS We desire to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. This Report contains a number of forward-looking statements that reflect management's current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this Report other than statements of historical fact, including statements that address operating performance, the economy, events or developments that management expects or anticipates will or may occur in the future, including statements related to case sales, revenues, profitability, distributor channels, new products or markets, adequacy of funds from operations, cash flows and financing, potential strategic transactions, statements regarding future operating results and non-historical information, are forward-looking statements. In particular, the words such as "believe," "expect," "intend," "anticipate," "estimate," "may," "will," "can," "plan," "predict," "could," "future," "continue," variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements and their absence does not mean that the statement is not forward-looking. Readers should not place undue reliance on these forward-looking statements, which are b

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