Jones Soda Swings to Profit on Cannabis Business Sale, Revenue Dips

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

Sentiment: mixed

Topics: Beverage Industry, Cannabis Divestiture, Financial Performance, Liquidity Risk, Strategic Restructuring, Operating Expenses, Revenue Decline

Related Tickers: JSDA

TL;DR

**Jones Soda's profit is a one-time sugar rush from selling its cannabis business; the core soda revenue is still flatlining, so don't get too excited.**

AI Summary

JONES SODA CO. (JSDA) reported a net income of $331 thousand for the nine months ended September 30, 2025, a significant improvement from a net loss of $5.348 million in the same period of 2024. This turnaround was primarily driven by a $3.663 million gain on the disposition of subsidiaries, specifically the sale of its cannabis (THC) beverage business on June 19, 2025. Despite this, net revenue for the nine months decreased to $13.624 million in 2025 from $15.155 million in 2024, representing a 10.09% decline. Gross profit also saw a slight decrease from $4.612 million in 2024 to $4.322 million in 2025. The company managed to reduce total operating expenses by 27.54%, from $10.220 million in 2024 to $7.405 million in 2025, largely due to lower selling and marketing expenses, which fell from $4.622 million to $3.186 million. Cash decreased significantly from $1.275 million at December 31, 2024, to $199 thousand at September 30, 2025, indicating ongoing liquidity challenges despite the net income. The company also increased its revolving credit facility from $291 thousand to $1.710 million.

Why It Matters

This filing reveals a critical strategic shift for Jones Soda, exiting the cannabis beverage market to improve its financial position. While the $3.663 million gain on the sale of its cannabis subsidiaries propelled the company to a net income of $331 thousand, a 10.09% drop in net revenue for its core beverage business signals ongoing challenges in a highly competitive market dominated by larger players. Investors should scrutinize whether the cost reductions and focus on traditional beverages can sustain profitability and growth, especially given the significant decline in cash from $1.275 million to $199 thousand. Employees in the traditional beverage segment might see increased focus and resources, while those in the divested cannabis operations are directly impacted. Customers of Jones Soda's traditional products may benefit from a more focused brand, but the competitive landscape remains fierce.

Risk Assessment

Risk Level: high — The company's cash position plummeted from $1.275 million to $199 thousand, and it increased its revolving credit facility from $291 thousand to $1.710 million, indicating significant liquidity strain. Despite a net income of $331 thousand, this was largely due to a one-time gain of $3.663 million from the disposition of subsidiaries, masking a 10.09% decline in net revenue from continuing operations.

Analyst Insight

Investors should exercise caution and thoroughly evaluate Jones Soda's ability to generate sustainable profits from its core beverage business. Monitor future revenue trends and cash flow from operations closely, as the recent net income is primarily an artifact of a one-time asset sale rather than improved operational performance.

Financial Highlights

revenue
$13.624M
net Income
$331K
gross Margin
31.72%
cash Position
$199K
revenue Growth
-10.09%

Key Numbers

Key Players & Entities

FAQ

What was JONES SODA CO.'s net income for the nine months ended September 30, 2025?

JONES SODA CO. reported a net income of $331 thousand for the nine months ended September 30, 2025. This is a significant improvement from a net loss of $5.348 million for the same period in 2024.

How did the sale of the cannabis business impact JONES SODA CO.'s financials?

The sale of the cannabis (THC) beverage business on June 19, 2025, resulted in a $3.663 million gain on the disposition of subsidiaries. This gain was the primary factor in the company's swing to a net income of $331 thousand for the nine months ended September 30, 2025.

What were JONES SODA CO.'s net revenues for the nine months ended September 30, 2025, compared to 2024?

Net revenues for JONES SODA CO. were $13.624 million for the nine months ended September 30, 2025. This represents a decrease from $15.155 million reported for the same period in 2024, a decline of 10.09%.

What is JONES SODA CO.'s current cash position?

As of September 30, 2025, JONES SODA CO.'s cash balance was $199 thousand. This is a substantial decrease from $1.275 million reported at December 31, 2024.

How have JONES SODA CO.'s operating expenses changed?

Total operating expenses for JONES SODA CO. decreased by 27.54%, from $10.220 million for the nine months ended September 30, 2024, to $7.405 million for the same period in 2025. This reduction was largely due to lower selling and marketing expenses.

What are the key risks for JONES SODA CO. identified in the filing?

Key risks include the ability to successfully execute its growth strategy, raise capital, manage operating expenses, compete against larger companies, and maintain brand recognition. The filing also highlights risks related to potential federal legislation impacting hemp-derived products and supply chain issues.

What is the significance of JONES SODA CO. being classified as a 'smaller reporting company'?

Being a 'smaller reporting company' means JONES SODA CO. is subject to scaled disclosure requirements, which can reduce compliance costs. However, it also indicates a smaller market capitalization and potentially less liquidity compared to larger filers.

Does JONES SODA CO. manufacture its own products?

No, JONES SODA CO. does not directly manufacture its products. Instead, it outsources the manufacturing process to third-party contract manufacturers, as stated in the Nature of Operations section.

What channels does JONES SODA CO. use for product distribution?

JONES SODA CO. distributes its products primarily through a network of independent distributors (DSD channel) and directly to national and regional retail accounts (DTR channel). Products are sold in grocery stores, convenience stores, restaurants, and online.

What was the change in JONES SODA CO.'s revolving credit facility?

JONES SODA CO.'s revolving credit facility increased from $291 thousand at December 31, 2024, to $1.710 million at September 30, 2025. This indicates an increased reliance on borrowed funds.

Risk Factors

Industry Context

Jones Soda operates in the highly competitive beverage market, which includes established global brands and numerous niche players. The industry is characterized by evolving consumer preferences, with trends towards healthier options, unique flavors, and functional beverages. Regulatory landscapes, particularly for specialized products like cannabis-infused drinks, add complexity.

Regulatory Implications

The company's past involvement in the cannabis beverage sector exposes it to the complexities and evolving nature of cannabis regulations across different jurisdictions. While divested, any residual regulatory scrutiny or future market re-entry would require strict adherence to diverse and often changing legal frameworks.

What Investors Should Do

  1. Monitor core business revenue trends: The 10.09% decline in net revenue is a key concern. Investors should watch for stabilization or recovery in the core beverage business in future filings.
  2. Assess liquidity management: The sharp decrease in cash to $199K and increased reliance on the credit facility highlight ongoing liquidity challenges. Investors should scrutinize the company's cash burn rate and future financing plans.
  3. Evaluate expense control effectiveness: While operating expenses were reduced by 27.54%, driven by lower marketing spend, investors should assess if this impacts future revenue generation or brand building.
  4. Understand the impact of divestitures: The sale of the cannabis business significantly boosted net income but removed a segment. Investors need to understand the long-term strategic implications of this shift.

Key Dates

Glossary

Disposition of Subsidiaries
The act of selling or transferring ownership of a subsidiary company or business unit. (A $3.663 million gain from this activity was the primary driver of Jones Soda's net income improvement in the nine months ended September 30, 2025.)
Going Concern
An accounting assumption that a company will continue to operate for the foreseeable future. If substantial doubt exists, it must be disclosed. (The company's low cash balance ($199K) and operational performance raise concerns about its ability to continue as a going concern.)
Revolving Credit Facility
A type of credit line that allows a company to borrow, repay, and re-borrow funds up to a certain limit over a specified period. (The increase in the revolving credit facility from $291K to $1.710M suggests increased reliance on debt financing to manage liquidity.)
Net Revenue
The total revenue of a company after deducting returns, allowances, and discounts. (Jones Soda experienced a 10.09% decline in net revenue for the nine months ended September 30, 2025, indicating challenges in its core business operations.)
Operating Expenses
Costs incurred by a business in its normal course of operations, excluding cost of goods sold. (A significant reduction in operating expenses (27.54%) contributed to improved profitability, driven mainly by lower selling and marketing costs.)

Year-Over-Year Comparison

Compared to the prior year's nine-month period, Jones Soda has shown a dramatic swing from a net loss of $5.348 million to a net income of $331 thousand, primarily due to a $3.663 million gain from selling its cannabis business. However, core operations show weakness, with net revenue declining by 10.09% and gross profit slightly decreasing. Operating expenses were significantly reduced by 27.54%, contributing to the improved bottom line. A critical concern is the drastic reduction in cash reserves from $1.275 million at year-end 2024 to $199 thousand, indicating persistent liquidity issues despite the reported profit.

Filing Stats: 4,595 words · 18 min read · ~15 pages · Grade level 17.9 · Accepted 2025-11-14 16:00:57

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 21

Quantitative and Qualitative Disclosures about Market Risk

Item 3. Quantitative and Qualitative Disclosures about Market Risk 25

Controls and Procedures

Item 4. Controls and Procedures 25

OTHER INFORMATION

PART II. OTHER INFORMATION 26

Legal Proceedings

Item 1. Legal Proceedings 26

Risk Factors

Item 1A. Risk Factors 26

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 26

Other Information

Item 5. Other Information 26

Exhibits

Item 6. Exhibits 26 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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