10-Q - JSDA - Equibles

UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

Washington,

D.C. 20549

Form

10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended

September 30, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For

the transition period from to

Commission

File Number: 000-28820

JONES

SODA CO.

(Exactname of registrant as specified in its charter)

Washington	52-2336602
(State<br> or other jurisdiction of	(I.R.S.<br> Employer
incorporation<br> or organization)	Identification<br> No.)
1522 Western Ave, Suite 24150
Seattle, Washington	98101
(Address<br> of principal executive offices)	(Zip<br> Code)

(206)624-3357

(Registrant’stelephone number, including area code)

Securities

registered pursuant to Section 12(b) of the Act: None

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company. or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large<br> Accelerated Filer ☐	Accelerated<br> Filer ☐
Non-accelerated<br> Filer ☒	Smaller<br> Reporting Company ☒
Emerging<br> Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As

of November 14, 2025, there were 117,671,604 shares of the registrant’s common stock issued and outstanding.

JONES

SODA CO.

FORM

10-Q

FOR

THE QUARTERLY PERIOD ENDED MARCH 31, 2025

TABLE

OF CONTENTS

	Page
Explanatory Note	3
Cautionary Notice Regarding Forward Looking Statements	3
PART I. FINANCIAL INFORMATION	5
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
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3. Quantitative and Qualitative Disclosures about Market Risk	25
Item 4. Controls and Procedures	25
PART II. OTHER INFORMATION	26
Item 1. Legal Proceedings	26
Item 1A. Risk Factors	26
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, ISSUER PURCHASES OF EQUITY SECURITIES	26
Item 5. Other Information	26
Item 6. Exhibits	26

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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 based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions and apply only as of the date of this Report. Our actual results, performance or achievements could differ materially from historical results as well as from the results expressed in, anticipated or implied by these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

In particular, our business, including our financial condition and results of operations may be impacted by a number of factors, including, but not limited to, the following:

●	Our<br> ability to successfully execute on our growth strategy and operating plans;
●	Our<br> ability to continue to raise capital to finance our operations;
●	Our<br> ability to continue to license and market THC/CBD-infused and/or hemp-infused beverages and<br> edibles, and comply with the laws and regulations governing such products;
●	Our<br> revenues from our hemp-derived HD9 products could be negatively impacted if recent federal legislation that would prohibit the unregulated<br> sale of intoxicating hemp-based or hemp derived products (including delta-8/HD9) is enacted into law;
●	Our<br> ability to manage our operating expenses and generate cash flow from operations, along with our ability to secure additional financing<br> if our sales goals take longer to achieve than anticipated;
●	Our<br> ability to create and maintain brand name recognition and acceptance of our products, which is critical to our success in our competitive,<br> brand-conscious industry;
●	Our<br> ability to compete successfully against much larger, well-funded, established companies currently operating in the beverage industry<br> generally, including in the fountain business, particularly from other major beverage companies;
●	Entrance<br> into and increased focus on the craft beverage segment by other major beverage companies;

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| --- | | ● | Our ability to maintain brand image and product quality and avoid risks from product issues such as product recalls; | | --- | --- | | ● | Our ability to establish, maintain and expand distribution arrangements with independent distributors, retailers, brokers and national retail accounts, most of whom sell and distribute competing products, and upon whom we rely to employ sufficient efforts in managing and selling our products, including re-stocking the retail shelves with our products; | | ● | Our ability to manage our inventory levels and to predict the timing and amount of our sales; | | ● | Our reliance on third-party contract manufacturers of our products and the geographic locations of their facilities, which could make management of our distribution efforts inefficient or unprofitable; | | ● | Our ability to secure a continuous supply and availability of raw materials, as well as other factors that may adversely affect our supply chain, including increases in raw material costs, and the potential shortages of glass in the supply chain; | | ● | Our ability to source our flavors on acceptable terms from our key flavor suppliers; | | ● | Our ability to attract and retain key personnel, the loss of whom would directly affect our efficiency and operations and could materially impair our ability to execute our growth strategy; | | ● | Our ability to protect our trademarks and trade secrets, the failure of which may prevent us from successfully marketing our products and competing effectively; | | ● | Litigation or legal proceedings, which could expose us to significant liabilities and damage our reputation; | | ● | Our ability to comply with the many regulations to which our business is subject; | | ● | Our ability to maintain an effective information technology infrastructure; | | ● | Failures or security breaches of our information technology systems could disrupt our operations and negatively impact our business; | | ● | Fluctuations in fuel and freight costs; | | ● | Fluctuations in currency exchange rates, particularly between the United States and Canadian dollars; | | ● | Tariffs affecting raw materials or finished goods transported between the United States and Canada; | | ● | Regional, national or global economic, political, social and other conditions that may adversely impact our business and results of operations; | | ● | Our ability to maintain effective disclosure controls and procedures and internal control over financial reporting; | | ● | Dilutive and other adverse effects on our existing shareholders and our stock price arising from future securities issuances; and | | ● | Our ability to access the capital markets for any future equity financing, and any actual or perceived limitations to our common stock by being traded on the OTCQB Marketplace and the Canadian Stock Exchange, including the level of trading activity, volatility or market liquidity. |

For a discussion of some of the factors that may affect our business, results and prospects, see “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (“SEC”) on April 1, 2025 and in our other reports we file with the SEC, including our periodic reports on Form 10-Q and current reports on Form 8-K. Readers are also urged to carefully review and consider the various disclosures made by us in this Report and in our other reports we file with the SEC, including our periodic reports on Forms 10-Q and current reports on Form 8-K, and those described from time to time in our press releases and other communications, which attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations.

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PART

1 – FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS

JONES

SODA CO.

CONDENSED

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

			December<br> 31,<br><br> <br>2024
ASSETS
Current assets:
Cash	199		$	1,275
Accounts receivable, net of allowance of 29 and 77, respectively	2,852			1,858
Current note receivable	500			-
Current licensing fees receivable	150			-
Inventories, net	3,261			3,364
Prefunded insurance premiums from financing	-			199
Prepaid expenses and other current assets	2,337			614
Current assets of discontinued operations	-			1,070
Total current assets	9,299			8,380
Long-term note receivable	1,140			-
Long-term licensing fees receivable	1,599			-
Fixed assets, net of accumulated depreciation of 410 and 422, respectively	44			108
Non-current assets of discontinued operations	-			35
Total assets	12,082		$	8,523
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	5,589		$	3,279
Accrued expenses	1,246			2,464
Revolving credit facility	1,710			291
Insurance premium financing	-			199
Promissory notes	185			-
Current liabilities of discontinued operations	-			134
Total current liabilities	8,730			6,367
Total liabilities	8,730			6,367
Commitments and contingencies (Note 11)	-			-
Shareholders’ equity:
Common stock, no par value:
Authorized — 800,000,000 . Issued and outstanding shares —<br> 117,674,036 shares and 115,867,659 shares, respectively	95,691			94,883
Common stock, no par value Authorized — 800,000,000 .<br> Issued and outstanding shares — 117,674,036<br> shares and 115,867,659<br> shares, respectively	95,691			94,883
Accumulated other comprehensive income	279			222
Accumulated deficit	(92,618	)		(92,949	)
Total shareholders’ equity	3,352			2,156
Total liabilities and shareholders’ equity	12,082		$	8,523

All values are in US Dollars.

See

accompanying notes to condensed consolidated financial statements.

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JONES

SODA CO.

CONDENSED

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Inthousands, except per share data)

	2025			2024			2025			2024
	Three<br> Months Ended<br><br> <br>September<br> 30,						Nine<br> Months Ended<br><br> <br>September<br> 30,
	2025			2024			2025			2024
Net Revenue	$	4,500		$	3,915		$	13,624		$	15,155
Cost of goods sold		(3,201	)		(3,180	)		(9,302	)		(10,543	)
Gross profit		1,299			735			4,322			4,612
Operating expenses:
Selling and marketing		1,013			1,513			3,186			4,622
General and administrative		1,688			1,841			4,219			5,598
Total operating expenses		(2,701	)		(3,354	)		(7,405	)		(10,220	)
Loss from operations		(1,402	)		(2,619	)		(3,083	)		(5,608	)
Other income (expenses):
Interest income		54			7			60			13
Interest expense		(87	)		(10	)		(235	)		(17	)
Other (expense) income, net		9			(3	)		(264	)		15
Gain on disposition of subsidiaries		-			-			3,663			-
Total other (expenses) income		(24	)		(6	)		3,224			11
Income (loss) before income taxes		(1,426	)		(2,625	)		141			(5,597	)
Income tax expense, net		(2	)		(5	)		(9	)		(26	)
Income from continuing operations		(1,428	)		(2,630	)		132			(5,623	)
Income from discontinued operations		-			2			199			275
Net income (loss)	$	(1,428	)	$	(2,628	)	$	331		$	(5,348	)
Earning (loss) per share – basic and diluted
Income (loss) from continuing operations	$	(0.01	)	$	(0.02	)	$	0.00		$	(0.05	)
Income from discontinued operations	$	-		$	0.00		$	0.00		$	0.00
Total	$	(0.01	)	$	(0.02	)	$	0.00		$	(0.05	)
Weighted average common shares outstanding - basic and diluted		117,313,096			111,244,803			116,459,818			105,015,962

See

accompanying notes to condensed consolidated financial statements.

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JONES

SODA CO.

CONDENSED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(Inthousands, except per share data)

	2025			2024			2025		2024
	Three<br> Months Ended<br><br> <br>September<br> 30,						Nine<br> Months Ended<br><br> <br>September<br> 30,
	2025			2024			2025		2024
Net income (loss)	$	(1,428	)	$	(2,628	)	$	331	$	(5,348	)
Other comprehensive income (loss)
Foreign currency translation adjustment		(29	)		7			46		(60	)
Reclassification of foreign currency translation differences<br> upon disposal of the foreign operation		-			-			11		-
Total comprehensive income (loss)	$	(1,457	)	$	(2,621	)	$	388	$	(5,408	)

See

accompanying notes to condensed consolidated financial statements.

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JONES

SODA CO.

CONDENSED

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(Inthousands, except per share data)

	Number			Amount			Income			Deficit			Equity
	Common Stock						Accumulated<br> <br>Other<br> <br>Comprehensive			Accumulated			Total<br> <br>Shareholders’
	Number			Amount			Income			Deficit			Equity
Balance as of December 31, 2024		115,867,659		$	94,883		$	222		$	(92,949	)	$	2,156
Shares issued for restricted share units		1,806,377			-			-			-			-
Fair value of warrants issued		-			65			-			-			65
Stock-based compensation		-			743			-			-			743
Net Income		-			-			-			331			331
Other comprehensive income		-			-			57			-			57
Balance as of September 30, 2025		117,674,036			95,691			279			(92,618	)		3,352
Balance as of December 31, 2023		101,258,135		$	90,273		$	331		$	(83,054	)	$	7,550
Private Placement Offering		11,010,000			3,661			-			-			3,661
Stock-based compensation		2,698,467			986			-			-			986
Shares withheld for taxes upon RSU vesting		(210,000	)		(93	)		-			-			(93	)
Exercise of Pinestar Warrants		974,808			44			-			-			44
Exercise of Stock Options		136,250			37			-			-			37
Net Loss		-			-			-			(5,348	)		(5,348	)
Other comprehensive loss		-			-			(60	)		-			(60	)
Balance as of September 30, 2024		115,867,660		$	94,908		$	271		$	(88,402	)	$	6,777
	Common Stock						Accumulated<br> <br>Other<br> <br>Comprehensive			Accumulated			Total<br> <br>Shareholders’
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Number			Amount			Income			Deficit			Equity
Balance as of June 30, 2025		116,567,152		$	95,221		$	308		$	(91,190	)	$	4,339
Shares issued for restricted share units		1,106,884			-			-			-			-
Fair value of warrants issued		-			14			-			-			-
Stock-based compensation		-			456			-			-			-
Net loss		-			-			-			(1,428	)		(1,428	)
Other comprehensive loss		-			-			(29	)		-			(29	)
Balance as of September 30, 2025		117,674,036			95,691			279			(92,618	)		3,352
Balance as of June 30, 2024		103,768,173		$	90,973		$	264		$	(85,774	)	$	5,463
Balance		103,768,173		$	90,973		$	264		$	(85,774	)	$	5,463
Private Placement Offering		11,010,000			3,661			-			-			3,661
Stock-based compensation		1,299,487			367			-			-			367
Shares withheld for taxes upon RSU vesting		(210,000	)		(93	)		-			-			(93	)
Net loss		-			-			-			(2,628	)		(2,628	)
Net Income (loss)		-			-			-			(2,628	)		(2,628	)
Other comprehensive income		-			-			7			-			7
Balance as of September 30, 2024		115,867,660		$	94,908		$	271		$	(88,402	)	$	6,777
Balance		115,867,660		$	94,908		$	271		$	(88,402	)	$	6,777

See

accompanying notes to condensed consolidated financial statements.

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JONES

SODA CO.

CONDENSED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Inthousands, except per share data)

	2025			2024
	Nine<br> Months Ended<br><br> <br>September<br> 30,
	2025			2024
OPERATING ACTIVITIES:
Net income (loss)	$	331		$	(5,348	)
Less: Income from discontinued operations		(199	)		(275	)
Net Income (loss) from continuing operations		132			(5,623	)
Adjustments to reconcile net income (loss) to net cash flows used in operating activities:
Accretion of interest of note receivable		(50	)		-
Finance income		(8	)		-
Finance costs		178			-
Licensing fees		(45	)		-
Loss on disposal		10			-
Gain on disposition of subsidiaries		(3,663	)		-
Depreciation		45			41
Stock-based compensation		743			986
Change in allowance for credit losses		(48	)		(206	)
Write-off of obsolete inventory		(38	)		-
Changes in operating assets and liabilities:
Accounts receivable		(819	)		(486	)
Inventories		152			(2,351	)
Prefunded insurance premiums from financing		199			357
Prepaid expenses and other current assets		(1,837	)		(845	)
Other assets		-			206
Accounts payable		2,307			2,009
Accrued expenses		(1,230	)		1,153
Taxes payable		-			2
Net cash used in continuing operations		(3,972	)		(4,757	)
INVESTING ACTIVITIES:
Disposal of a subsidiary, net of cash disposed of		1,003			-
Proceeds from disposal of property, plant and equipment		10			(27	)
Net cash provided by (used in) investing activities		1,013			(27	)
FINANCING ACTIVITIES:
Net Proceeds from Private Placement Offering		-			3,661
Net cash from revolving credit facility		1,342			-
Proceeds on issuance of promissory notes		450			-
Repayment of promissory notes		(300	)		-
Proceeds from the exercise of Pinestar Warrants		-			44
Proceeds from the exercise of stock options		-			37
Payment of taxes on RSU withholding		-			(93	)
Repayments on insurance financing		(199	)		(357	)
Net cash provided by financing activities		1,293			3,292
DISCONTINUED OPERATIONS:
Net cash provided by operating activities of discontinued operations		288			350
Net cash Provided by discontinued operations		288			350
Net change in cash		(1,378	)		(1,142	)
Effect of exchange rate changes on cash		44			(40	)
Cash from continuing operations, beginning of period		1,275			1,748
Cash from discontinued operations, beginning of period		258			2,119
Less: Cash from discontinued operations, end of period		-			(172	)
Cash, end of period	$	199		$	2,513
Supplemental disclosure:
Cash paid during the period for:
Interest	$	63		$	97
Income taxes	$	-		$	-

See

accompanying notes to condensed consolidated financial statements.

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JONES

SODA CO.

NOTES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

**1.Nature of Operations and Summary of Significant Accounting Policies

Jones Soda Co. develops, produces, markets and distributes premium beverages that we sell and distribute primarily in the United States and Canada through our network of independent distributors and directly to our national and regional retail accounts. We also sell products in select international markets. Our products are sold in grocery stores, convenience and gas stores, on fountain in restaurants, “up and down the street” in independent accounts such as delicatessens, sandwich shops and burger restaurants, as well as through our national accounts with several large retailers. We refer to our network of independent distributors as our direct store delivery (“DSD”) channel, and we refer to our national and regional accounts who receive shipments directly from us as our direct to retail (“DTR”) channel. We do not directly manufacture our products, but instead outsource the manufacturing process to third-party contract manufacturers. We also sell various products online, including soda with customized labels, wearables, candy and other items, and we license our trademarks for use on products sold by other manufacturers.

We are a Washington corporation and have the following subsidiaries: Jones Soda Co. (USA) Inc., Jones Soda (Canada) Inc., Pinestar Gold Inc., and Mary Jones Holdco 2, Inc. (collectively, the “Subsidiaries”).

On June 19, 2025, the Company consummated a Share Purchase Agreement (the “SPA”), as amended, with MJ Reg Disrupters LLC (“MJ Reg”) pursuant to which it sold all of the issued and outstanding equity interests in its wholly owned subsidiaries that operate the cannabis (THC) beverage business (the “Cannabis Subsidiaries”) (Note 2).

Basisof presentation, consolidation and use of estimates

The unaudited interim condensed consolidated financial statements as of and for the period ending September 30, 2025, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial reporting. These condensed consolidated financial statements include our accounts and those of our subsidiaries, with all intercompany transactions eliminated in consolidation.

In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all material adjustments necessary for a fair presentation of our financial position, results of operations, and cash flows as of the dates and for the periods presented. These adjustments consist solely of normal and recurring items. The preparation of financial statements requires estimates and assumptions that impact the reported amounts of assets, liabilities, revenues, and expenses. Key areas subject to such estimates and assumptions include, but are not limited to, inventory valuation, depreciation and valuation of capital assets, accounts receivable credit loss reserve, trade promotion liabilities, stock-based compensation expense, valuation allowance for deferred income tax assets, contingencies, and forecasts supporting the going concern assumption and related disclosures. Actual results may differ from these estimates.

The operating results for interim periods are not necessarily indicative of expected results for the full fiscal year. These financial statements should be reviewed in conjunction with the audited financial statements and accompanying notes included in our Annual Report on Form10-K for the fiscal year ended December 31, 2024.

In accordance with ASC 205-20, the Company has classified the Cannabis Subsidiaries as discontinued operations. The results of discontinued operations are presented separately in the condensed consolidated statements of operations for all periods presented and the assets and liabilities of Cannabis Subsidiaries have been reflected as assets and liabilities of discontinued operations in the accompanying unaudited condensed consolidated balance sheets for all periods presented. (Note 2).

Reclassifications

Certain amounts from prior periods have been reclassified to conform with the current period presentation.

Liquidity

As

of September 30, 2025, and December 31, 2024, the Company had cash of approximately $0.2 million and $1.3 million, respectively, and working capital of approximately $0.6 million and $2.0 million, respectively. Net cash used in operating activities for the nine months ended September 30, 2025 and 2024, was approximately $4.0 million and $4.8 million, respectively. The Company reported a net income of approximately $0.3 million for the nine months ended September 30, 2025, compared to a net loss of approximately $5.3 million for the nine months ended September 30, 2024. As of September 30, 2025, the Company’s accumulated deficit decreased to approximately $92.6 million, compared to approximately $92.9 million as of December 31, 2024.

For the nine months ended September 30, 2025, net cash provided by investing activities was approximately $1 million. This amount was primarily attributable to cash proceeds of $1 million received in connection with the disposition of the Cannabis Subsidiaries.

For

the nine months ended September 30, 2025, net cash provided by financing activities was approximately $1.3 million. This amount was primarily attributable to net proceeds of $1.3 million from a new credit facility and repayments of approximately $0.2 million under the Company’s insurance financing agreement. In addition, the Company issued a $0.5 million promissory note to its Chairman of the Board, of which $0.3 million was repaid during the period.

We

have experienced recurring losses from operations and negative cash flows from operating activities. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. To address this issue, in the first quarter of fiscal year 2025, the Company changed its senior leadership and is focusing on reducing its operating expenses while bringing products to market with higher margins and potentially higher customer demand. Additionally, on February 19, 2025, the Company, through a wholly-owned subsidiary (the “Subsidiary”), entered into loan agreement (the “Loan Agreement”) with Two Shores Capital Corp, pursuant to which the Subsidiary may borrow a maximum aggregate amount of up to $5 million, subject to satisfaction of certain conditions. All advances drawn under the Loan Agreement will bear interest at a rate of 13.75% per annum and all present and future obligations of the Subsidiary arising under the Loan Agreement are secured by a first priority security interest in all of the assets of the Company, the Subsidiary and the Company’s other United States subsidiaries. The Loan Agreement replaces the $2 million revolving credit facility entered into by the Company in March 2024 (the “2024 Credit Facility”). The borrowing base under the Loan Agreement expands the assets that can be financed against from only accounts receivable under the 2024 Credit Facility to accounts receivable, inventory and customer purchase orders.

Based on management’s current operating plan, the Company believes its cash on hand, projected cash generated from product sales and funds received from under the Loan Agreement are sufficient to fund the Company’s operations for a period of at least 12 months subsequent to the issuance of the accompanying Condensed Consolidated Financial Statements. There is no assurance that management’s current operating plan will be successful.

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Revenuerecognition

The Company’s contracts have a single performance obligation, which is satisfied at the point in time when title and the significant risks and rewards of ownership of the product transfer to the customer. This transfer is deemed to occur when products are either loaded onto a truck for shipment or at the Free on Board (“FOB”) shipping point. The Company primarily receives fixed consideration for product sales, subject to adjustments as outlined below.

Shipping

and handling costs paid by customers, primarily related to online orders, are included in revenue and totaled approximately $0.06 million and $.02 million for the three months ended September 30, 2025, and 2024, respectively and approximately $0.1 million and $.08 million for the nine months ended September 30, 2025, and 2024, respectively. Sales tax and other similar taxes are excluded from revenue.

For further details on the Company’s revenue recognition policy, refer to Note 1 of the most recently filed Form 10-K, filed on April 1, 2025.

Revenue

is recorded net of provisions for discounts, slotting fees payable by us to retailers to stock our products and promotional allowances. Discounts, slotting fees and promotional allowances vary the consideration we are entitled to in exchange for the sale of products to distributors. We estimate these discounts, slotting fees and promotional allowances in the same period that the revenue is recognized for product sales to customers. These estimates are based on contract terms and our historical experience with similar programs and require management judgement with respect to estimating customer participation and performance levels. Differences between estimated expense and actual costs are normally insignificant and are recognized in earnings in the period such differences are determined. The amount of revenue recognized represents the amount that will not be subject to a significant future reversal of revenue. The liability for promotional allowances is included in accrued expenses on the condensed consolidated balance sheets. Amounts paid for slotting fees are recorded as prepaid expenses on the condensed consolidated balance sheets and amortized over the corresponding term. For the three months ended September 30, 2025 and 2024, our revenue was reduced by $0.7 million and $1.5 million, respectively, and for the nine months ended September 30, 2025 and 2024, our revenue was reduced by $1.6 million and $3.1 million, respectively, in each case for slotting fees and promotion allowances.

Sales to distributors and customers are generally final. However, in limited instances, the Company may accept product returns due to quality issues or distributor terminations, resulting in variable consideration. Customers typically remit payment within 30 days of receiving a valid invoice. The Company offers prompt payment discounts of up to 2% to certain customers, generally for payments made within 15 days. These discounts are recorded as a deduction to revenue in the condensed consolidated statements of operations. As of September 30, 2025 and December 31, 2024, prompt payment discounts extended to these customers were considered immaterial to the related accounts receivable balances presented on the condensed consolidated balance sheets.

AccountsReceivable

The

accounts receivable balance primarily consists of trade receivables from distributors and retail customers. The Company’s allowance for credit losses represents management’s best estimate of probable credit losses in existing accounts receivable, determined primarily based on current trends and historical collection data. To account for potential credit losses, the Company reserves a percentage of trade receivable balances based on collection history and prevailing economic conditions expected to impact credit risk over the life of the receivables. These reserves are regularly re-evaluated and adjusted as necessary. Account balances deemed uncollectible are written off against the allowance after all collection efforts have been exhausted and the likelihood of recovery is considered remote. As of September 30, 2025 and December 31, 2024, allowances for credit losses were approximately $0.03 million and $0.08 million, respectively, and were netted against accounts receivable. Changes in accounts receivable are primarily driven by fluctuations in order volume, the timing of product transfers to distributors, and the timing of cash collections.

As

of September 30, 2025, two of the Company’s independent customers accounted for approximately 25% of outstanding accounts receivable. As of December 31, 2024, a single customer represented approximately 10.2% of the Company’s accounts receivable balance.

Earnings(loss) per share

Basic earnings (loss) per share is calculated using the weighted average number of common shares outstanding during the respective reporting periods. Diluted earnings (loss) per share is computed by adjusting the weighted average number of common shares to reflect the potential impact of dilutive securities, including stock options, warrants, and restricted stock units.

During the three and nine months ended September 30, 2025 and 2024, the following potentially dilutive securities were considered anti-dilutive and were therefore excluded from the computation of diluted earnings (loss) per share:

●	Stock options: approximately 12,873,243 and 12,019,647 shares for the three and nine months ended September 30, 2025 and 2024, respectively
●	Warrants:<br> approximately 6,695,400 and nil shares for the three and nine months ended September 30, 2025 and 2024, respectively
●	Restricted stock units: 1,106,881 and approximately 699,492 shares for the three and nine months ended September 30, 2025 and<br> 2024, respectively

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RecentlyAdopted Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This guidance requires entities to provide more detailed disclosures about income tax expenses (or benefits), including components of the expense (or benefit) and the nature of significant reconciling items. Entities must also disclose information about unrecognized tax benefits, including a tabular reconciliation of beginning and ending balances of unrecognized tax benefits, and details about valuation allowances, including the nature and amount of valuation allowances recorded and released during the period. The guidance is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted. The adoption of ASU 2023-09 did not have a material impact on the Company’s condensed consolidated financial statements.

In March 2024, the FASB issued ASU 2024-01: Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards. This update provides guidance on the scope application of profits interest and similar awards under Topic 718. The amendments improve clarity and understanding of paragraph 718-10-15-3, aiding entities in determining whether a profits interest award should be accounted for as a share-based payment arrangement or similar to a cash bonus or profit-sharing arrangement. For public business entities, the amendments are effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. The adoption of ASU 2024-01 did not have a material impact on the Company’s condensed consolidated financial statements.

RecentAccounting Guidance Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03: Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). This update requires entities to disaggregate income statement expenses. The guidance is effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact of the updated standard on our consolidated financial statements and disclosures.

In December 2024, the FASB issued Accounting Standards Update (ASU) 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. This update provides guidance on accounting for induced conversions of convertible debt instruments, clarifying the criteria for determining whether settlements should be accounted for as an induced conversion. The amendments specify that an inducement offer must provide the debt holder with consideration meeting or exceeding the conversion privileges outlined in the instrument’s original terms. Additionally, the update addresses convertible debt instruments that are not currently convertible but included substantive conversion features at issuance and at the time of the inducement. The guidance is effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted for entities that have adopted ASU 2020-06. We are currently evaluating the impact of adopting this guidance on our consolidated financial statements and disclosures.

**2.Discontinued Operations

As disclosed in Note 1, on June 19, 2025 (the “Date of Disposition”), the Company entered into the SPA to sell of all issued and outstanding equity interests in its cannabis beverage subsidiaries (the “Cannabis Subsidiaries”) pursuant to a share purchase agreement, as amended, with MJ Reg and discontinued the Cannabis-Derived (THC) Beverage. Subsequent to the transaction, the Company’s former VP of Operations was appointed as the CEO of MJ Reg.

As

disclosed in Note 1, on June 19, 2025 (the “Date of Disposition”), the Company entered into the SPA with its cannabis beverage subsidiaries (the “Cannabis Subsidiaries”) and the MJ Reg pursuant to which, on the Date of Disposition, the MJ Reg purchased all of the issued and outstanding shares of the Cannabis Subsidiaries from the Company for the Share Purchase Price of $3.0 million promissory notes and inventory for approximately $0.06 million as set forth in the SPA (the “Sale Transaction”). The Share Purchase Price was paid as follows:

●	A<br> $3.0 million promissory note, payable as follows:
○	$0.5<br> million at the Date of Disposition (received);
---	---
○	$0.5<br> million due on June 27, 2025 (received);
○	$0.5<br> million due on June 19, 2026;
○	$0.75<br> million due on June 19, 2027; and
○	$0.75<br> million due on June 19, 2028.

The promissory note accrues interest at the lower of 3% per annum and the lowest amount permitted by law; provided, however, if MJ Reg satisfies its obligations under the promissory note, in full, pursuant to the terms thereof, any interest accrued pursuant to the promissory note shall be waived. Notwithstanding the foregoing, upon the occurrence of an Event of Default (as defined in the promissory note), the outstanding principal amount of the promissory note together with any accrued and unpaid interest thereon shall accrue interest at a rate of 10% per annum. The promissory note shall mature upon the earlier of (i) June 19, 2028 and (ii) in the event of prepayment of the promissory note, the date that the principal amount of the promissory note together with the interest accrued thereon is paid in full by MJ Reg.

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On

June 19, 2025 (the “License Effective Date”), in connection with the SPA, the Company entered into a trademark license agreement (the “License Agreement”) with MJ Holdings pursuant to which the Company granted MJ Holdings an exclusive, freely-usable and non-transferable, fully sublicensable license to use the Licensed IP (as defined in the License Agreement) during the term of such agreement in connection with the manufacture, sale, distribution, advertising, and promotion of all current and future products (the “Licensed Products”) each consisting of a mutually agreed upon composition, formula, recipe, flavor necessary for the Licensed Products and labeling, container size, and packaging, as applicable, to be made available by MJ Holdings for sale on-site at MJ Holdings’ places of business and/or by means of other distributors of MJ Holdings globally, including in any country or jurisdiction where the sale, marketing, and distribution of the Licensed Products is lawful. Pursuant to the License Agreement, MJ Holdings shall retain the exclusive right to any consumable product containing an emulsion derived from the cannabis plant with a THC concentration greater than 0.3% by dry weight and any Licensed IP in connection therewith. Furthermore, MJ Holdings shall own all Licensee Modified Formulas (as defined in the License Agreement) and such Licensee Modified Formulas may be incorporated and/or otherwise used in connection with a Licensed Product during the term of such agreement and at any time thereafter; provided, however, the Company shall be entitled to license the Licensee Modified Formulas on mutually agreeable terms and conditions. Notwithstanding the foregoing, the Company shall maintain exclusive rights to products containing Hemp (as defined in the SPA). Pursuant to the License Agreement, MJ Holdings shall pay the Company $0.15 million on the one year anniversary of the License Effective Date and $0.255 million on each subsequent anniversary of the License Effective Date (the “Licensing Fee”). The Licensing Fee shall be fixed and non-adjustable during the term of the License.

Pursuant

to ASC 820, the Company utilized its weighted average cost of capital (WACC) of 11.6% to discount future cash flows and determined the fair values as follows:

●	Promissory<br> Note: $2.59 million
●	Licensing<br> Agreement: $1.70 million

Transaction

costs incurred in connection with the disposition totaled $0.05 million. The gain on disposal of subsidiaries was calculated as follows:

Schedule Of Assets And Liabilities Operations Of Discontinued Operations

Carrying value (in thousands) of net assets of the Cannabis Subsidiaries
Cash	$	3
Accounts receivable		233
Inventories		157
Prepaid expenses and other current assets		332
Other assets		22
Accounts payable		(117	)
Net asset<br> and liabilities		630
Total consideration received, net of transaction costs
Cash		61
Fair value of Promissory Note		2,591
Fair value of Licensing Agreement		1,696
Less: Transaction costs		(55	)
		4,293
Gain on disposition	$	3,663

Following is the breakdown of the gain (loss) from discontinued operations:

	2025		2024			2025			2024
	Three<br> Months Ended<br><br> <br>September<br> 30,					Nine<br> Months Ended<br><br> <br>September<br> 30,
	2025		2024			2025			2024
Net Revenue	$	-	$	296		$	498		$	1,212
Cost of goods sold		-		(137	)		(78	)		(477	)
Gross profit		-		159			420			735
Operating expenses:
Selling and marketing		-		131			134			442
General and administrative		-		26			27			38
Total operating expenses		-		(157	)		(161	)		(480	)
Gain (Loss) from discontinued operations		-		2			259			255
Other income (expenses):
Interest income		-		-			-			5
Other income (expense), net		-		-			-			15
Total other income (expense)		-		-			-			20
Tax expenses		-		-			(60	)		-
Net income (loss) from discontinued operations	$	-	$	2		$	199		$	275

**3.Note receivable

As

disclosed in Note 2, in connection with the Sale Transaction, the Company issued a promissory note with an aggregate principal amount of $3.0 million. The note is payable in five installments as follows:

●	$0.5<br> million at the Date of Disposition (received);
●	$0.5<br> million due on June 27, 2025 (received);
●	$0.5<br> million due on June 19, 2026;
●	$0.75<br> million due on June 19, 2027; and
●	$0.75<br> million due on June 19, 2028.

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In

accordance with ASC 820, the Company applied its weighted average cost of capital of 11.6% to discount the future cash flows associated with the note and determined the initial fair value to be $2.59 million. The resulting discount is being amortized over the term of the note using the effective interest method.

For

the nine months ended September 30, 2025, the Company recognized $0.05 million in finance income related to the amortization of the discount.

As

of September 30, 2025, the carrying value of the promissory note was $1.64 million, of which $0.50 million was classified as current.

**4.Licensing fees receivable

As

disclosed in Note 2, in connection with the Sale Transaction, the Company entered into the License Agreement with MJ Holdings pursuant to which the Company granted MJ Holdings an exclusive, freely-usable and non-transferable, fully sublicensable license to use the Licensed IP (as defined in the License Agreement) during the term of such agreement in connection with the manufacture, sale, distribution, advertising, and promotion of all current and future products (the “Licensed Products”) each consisting of a mutually agreed upon composition, formula, recipe, flavor necessary for the Licensed Products and labeling, container size, and packaging, as applicable, to be made available by MJ Holdings for sale on-site at MJ Holdings’ places of business and/or by means of other distributors of MJ Holdings globally, including in any country or jurisdiction where the sale, marketing, and distribution of the Licensed Products is lawful. Pursuant to the License Agreement, MJ Holdings shall retain the exclusive right to any consumable product containing an emulsion derived from the cannabis plant with a THC concentration greater than 0.3% by dry weight and any Licensed IP in connection therewith. Furthermore, MJ Holdings shall own all Licensee Modified Formulas (as defined in the License Agreement) and such Licensee Modified Formulas may be incorporated and/or otherwise used in connection with a Licensed Product during the term of such agreement and at any time thereafter; provided, however, the Company shall be entitled to license the Licensee Modified Formulas on mutually agreeable terms and conditions. Notwithstanding the foregoing, the Company shall maintain exclusive rights to products containing Hemp (as defined in the SPA). Pursuant to the License Agreement, MJ Holdings shall pay the Company $0.15 million on the one-year anniversary of the License Effective Date and $0.255 million on each subsequent anniversary of the License Effective Date (the “Licensing Fee”). The Licensing Fee shall be fixed and non-adjustable during the term of the License.

In

accordance with ASC 820, the Company utilized its weighted average cost of capital of 11.6% to discount the expected future cash flows associated with the Licensing Fee and determined the initial fair value of the License Agreement to be $1.70 million. The resulting discount is being amortized over the term of the License Agreement using the effective interest method.

For

the nine months ended September 30, 2025, the Company recognized $0.04 million in licensing revenue and $0.01 million in finance income related to the amortization of the discount.

As

of September 30, 2025, the carrying value of the License Agreement receivable was $1.75 million, of which $0.15 million was classified as current.

**5.Inventory

Inventory consisted of the following:

Schedule of Inventory

	September 30, 2025<br> <br>(in thousands)		December 31, 2024<br> <br>(in thousands)
Finished goods	$	1,852	$	2,198
Raw materials		1,409		1,166
Inventory, Net	$	3,261	$	3,364

Finished goods primarily consist of products ready for shipment and promotional merchandise held for sale. Raw materials include ingredients, concentrate, and packaging materials. For the three months ended September 30, 2025 and 2024, the Company recorded obsolete inventory expenses (recovery) of approximately $nil million and $.01 million, respectively. For the nine months ended September 30, 2025 and 2024, the Company recorded obsolete inventory expenses of approximately $0.04 million and $.06 million, respectively.

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**6.Fixed Assets, net

Schedule of Fixed Assets, Net

	September 30, 2025<br> <br>(in thousands)			December 31, 2024<br> <br>(in thousands)
Vehicles	$	-		$	65
Equipment		192			203
Office and computer equipment		262			262
Property, plant and equipment, gross		454			530
Accumulated depreciation		(410	)		(422	)
Property, plant and equipment,<br> net	$	44		$	108

**7.Accrued Expenses

Accrued expenses consisted of the following as of September 30, 2025 and December 31, 2024:

Schedule of Accrued Expenses

	September 30, 2025<br> <br>(in thousands)		December 31, 2024<br> <br>(in thousands)
Employee benefits	$	227	$	220
Goods and services tax		102		155
Legal settlement		-		135
Sales and marketing		334		1,309
Other accruals		583		645
Accrued expenses	$	1,246	$	2,464

**8.Revolving Credit Facility

During

the year ended December 31, 2024, the Company entered into a Revolving Financing and Assignment Agreement (“RFAA”), which provided a revolving credit facility of up to $2.0 million (the “Total Credit Facility”) at an interest rate equal to the prime rate plus 3.50% per annum, with a minimum floor rate of 6.00%. This facility was intended to support the Company’s working capital needs and general corporate purposes. On February 24, 2025, the Company made a payment of approximately $0.1 million to fully repay the Total Credit Facility and formally terminated the RFAA. Following this payment, the Company was released from any further obligations under the terms of the agreement.

On

February 5, 2025, the Company, through its Subsidiary, entered into a Loan Agreement with Two Shores Capital Corp., pursuant to which the Subsidiary may borrow up to an aggregate maximum amount of $5.0 million, subject to the satisfaction of certain conditions. Advances under the Loan Agreement bear interest at a rate of 13.75% per annum. All present and future obligations of the Subsidiary under the Loan Agreement are secured by a first-priority security interest in all assets of the Company, the Subsidiary, and the Company’s other U.S. subsidiaries. As of September 30, 2025, the outstanding balance under the Loan Agreement, including accrued interest, was approximately $1.70 million. The Company is obligated to provide periodic financial reporting, reporting of its inventory and accounts receivable listings, maintenance of its subsidiaries in good legal standing, maintenance of its insurance policies and payments of its tax obligations.

In

connection with the Loan Agreement with Two Shores Capital Corp., the Company issued total 1,000,000 warrants to Two Shores Capital Corp., exercisable at a price of $0.45 per share for a period of three years from the date of issuance. The Company estimated the fair value of the warrants at $65,215 on the issuance date. This amount was recognized as finance costs in the condensed consolidated statements of operations. The valuation of the warrants was performed using the Black-Scholes option pricing model, applying the following weighted-average assumptions:

Schedule of Weighted Average Assumptions Using the Black Scholes Valuation of Warrants

●	Stock<br> price	$0.20
●	Risk<br> free interest rate	3.91%
●	Expected<br> volatility	79%
●	Expected<br> life (in years)	3
●	Expected<br> dividend	nil

**9.Promissory Notes

On

May 2, 2025, the Company entered into a Promissory Note (the “Note”) with the Chairman of the Board of the Company (the “Lender”) for a principal amount of $0.45 million. The Note carries a fixed interest rate of 12% per annum and is payable monthly in arrears. The principal, together with accrued interest, is due and payable in full by October 10, 2025.

In

addition to the principal and interest payments, the Company is required to pay a loan origination fee of $22,000, which is due on the date of maturity. The Note permits the Company to make prepayments without penalty, provided there is no default in payment obligations.

During

the three and nine months ended September 30, 2025, the Company repaid $0.13 million and $0.30 million, respectively, on the Notes.

**10.Insurance Premium Financing

Effective

November 15, 2024, the Company entered into a 1one-year financing agreement with IPFS Corporation to fund a portion of its insurance premiums in the amount of $0.2 million. Repayments are made quarterly on January 15, 2025, April 15, 2025, and by July 15, 2025, the entirety of the financing was paid off in full. The interest rate is 8.99% and there are no covenants associated with this agreement.

**11.Membership Agreement Obligation

On

September 1, 2022, the Company entered into a revocable membership and licensing agreement with Saltbox Inc. for shared office and warehouse access in Seattle, WA. This agreement establishes a licensor-licensee relationship rather than a lease, and no lease liability or right-of-use asset is recorded. Initially, the agreement had a 1one-year term with monthly payments of $8,000. Upon renewal, the Company opted for a month-to-month arrangement at $9,000 per month. On February 28, 2025, the Company provided notice of its intent to exit the agreement after securing lower-cost facilities.

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**12.Shareholders’ Equity

On

March 15, 2022, our Board adopted the 2022 Plan, which became effective upon approval by our shareholders on May 16, 2022. Under the 2022 Plan, the sum of (i) 10,000,000 shares of the Company’s common stock, plus (ii) the number of shares of common stock reserved, but unissued under the 2011 Plan, plus (iii) the number of shares of common stock underlying forfeited awards under the 2011 Plan are initially available for issuance of awards under the 2022 Plan. Additionally, the number of shares of the Company’s common stock available reserved under the 2022 Plan is subject to an annual increase on the first day of each calendar year beginning with the first January 1 following the effective date of the 2022 Plan and ending with the last January 1 during the initial ten-year term of the 2022 Plan, equal to the lesser of (A) 4% of the shares of the Company’s common stock outstanding (which shall include shares issuable upon the exercise or conversion of all outstanding securities or rights convertible into or exercisable for shares, including without limitation, preferred stock, warrants and employee options to purchase any shares) on the final day of the immediately preceding calendar year and (B) such lesser number of shares of common stock as determined by our Board. The Company may grant incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock units and other stock-based awards to participants to acquire shares of Company common stock under the 2022 Plan. The 2022 Plan will be administered by the plan administrator (as defined in the 2022 Plan.

The

Board may grant awards to employees, officers, directors, consultants, agents, advisors, and independent contractors. Stock options are issued at the closing price on the grant date and generally have a 10ten-year term. As of September 30, 2025, 4,281,158 shares remained available for future awards under the Plan.

(a)	Stock options:

A summary of our stock option activity is as follows:

Schedule of Stock Option Activity

	Outstanding Options
	September 30, 2025				September 30, 2024
	Number<br> of<br><br> <br>Shares			Weighted<br> Average<br> Exercise<br> Price ()<br> (Per Share)	Number<br> of<br><br> <br>Shares			Weighted<br> Average<br> Exercise<br> Price ()<br> (Per Share))
Opening		8,647,984				11,407,772
Granted		6,495,000				2,200,000
Exercised		-				(136,250	)
Forfeited / Expired		(2,269,741	)			(1,451,875	)
Closing		12,873,243				12,019,647
Exercisable		4,990,483				5,676,126

All values are in US Dollars.

The following table summarizes information about stock options outstanding and exercisable under our stock incentive plans as of September 30, 2025:

Schedule of Stock Options Outstanding And Exercisable

Exercise Price
0.165 to 0.25	5,760,379	8.17	0.20	2,304,755	6.99	0.21
0.251 to 0.40	6,486,290	8.56	0.29	2,086,290	7.08	0.27
0.401 to 0.55	437,500	5.54	0.49	412,239	5.48	0.49
0.551<br> to 0.70	189,074	5.94	0.62	187,199	5.94	0.62
	12,873,243	8.25	0.26	4,990,483	6.87	0.27

All values are in US Dollars.

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Beginning May 13, 2022, the Company’s Board of Directors determined that restricted stock units (RSUs) would be awarded as equity compensation for non-employee directors, replacing stock options, based on the recommendation of the Compensation and Governance Committee. RSUs vest incrementally per the award agreement, with certain awards vesting immediately upon a “Change in Control” as defined in the 2022 Plan.

Previously,

from January 1, 2020, through February 15, 2022, non-employee directors received annual non-qualified stock option grants, which vested on the first anniversary of the grant date, subject to continued service. Grants were determined by dividing $25,000 by the closing share price on the grant date. New directors joining the Board before February 15, 2022, received prorated stock option awards under similar terms. Stock option and RSU awards were governed by the 2011 Plan (prior to the 2022 Plan) and respective grant agreements.

On December 30, 2022, the Company entered into rescission agreements with certain non-employee directors and its Chief Executive Officer and President, rescinding and canceling all RSUs granted during 2022, including shares issued upon RSU vesting in August 2022, without consideration.

During

the three and nine months ended September 30, 2025, the Company issued 1,106,884 and 1,806,377 common shares, respectively, to settle the vested RSUs.

On

July 16, 2025, the Company granted 2,213,765 RSUs to members of its Board of Directors. The aggregate grant-date fair value of the RSUs was $0.4 million, determined in accordance with ASC 718, Compensation—Stock Compensation. Under the terms of the award, 50% of the RSUs vested immediately upon grant. The remaining 50% are scheduled to vest in equal installments on September 30, 2025 and December 31, 2025, subject to continued service.

As of September 30, 2025, and December 31, 2024, the Company had 1,106,881 and nil RSUs outstanding.

(c)	Stock-based compensation expense:

Stock-based compensation expense is recognized using the straight-line attribution method over the employees’ requisite service period. We recognize compensation expense for only the portion of stock options or restricted stock expected to vest. Therefore, we apply estimated forfeiture rates that are derived from historical employee termination behavior. If the actual number of forfeitures differs from those estimated by management, additional adjustments to stock-based compensation expense may be required in future periods.

As

of September 30, 2025, we had unrecognized compensation expense related to stock options of $0.9 million and RSUs of $0.1 million to be recognized over the remaining vesting terms.

The following table summarizes the stock-based compensation expense (in thousands):

Schedule of Stock-based Compensation Expense

	2025		2024		2025		2024
	Three<br> Months Ended<br><br> <br>September<br> 30,				Nine<br> Months Ended<br><br> <br>September<br> 30,
	2025		2024		2025		2024
Stock options	$	154	$	175	$	441	$	523
Warrants		-		18		-		18
Restricted stock		302		174		302		445
Allocated<br> Stock-based compensation	$	456	$	367	$	743	$	986
Consolidated Statements of Operations account:
Selling and marketing		42		31		115		83
General and administrative		414		336		628		903
Stock-based compensation<br> expense	$	456	$	367	$	743	$	986

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We employ the following key weighted-average assumptions in determining the fair value of stock options, using the Black-Scholes option pricing model and the simplified method to estimate the expected term of “plain vanilla” options:

Schedule of Weighted-average Assumptions in Fair Value of Stock Options

	September<br> 30,<br><br> <br>2025			September<br> 30,<br><br> <br>2024
Expected dividend yield		-			-
Expected stock price volatility		76	%		89.3	%
Risk-free interest rate		4.45	%		4.20	%
Expected term (in years)		10			5.9
Weighted-average grant date fair-value	$	0.21		$	0.18

As

of September 30, 2025, the aggregate intrinsic value of outstanding stock options was approximately $23,750, while the intrinsic value of exercisable options was approximately $7,500. Intrinsic value is calculated as the quoted market price of the stock at the balance sheet date less the exercise price of the option.

(d)	Warrants

During

the year ended December 31, 2024, the Company issued 5,505,000 warrants, each with an exercise price of $0.50 per warrant, exercisable for a period of 24 months from the issuance date. Additionally, 440,400 broker’s warrants were issued in connection with private placements completed during the year ended December 31, 2024. As of September 30, 2025 and December 31, 2024, these warrants remained outstanding.

As

discussed in Note 8, in connection with the Loan Agreement with Two Shores Capital Corp., the Company issued 1,000,000 warrants to Two Shores Capital Corp., exercisable at a price of $0.45 per share for a period of three years from the date of issuance.

The following table presents a summary of the Company’s outstanding warrants as of September 30, 2025:

Schedule of Warrants Outstanding

Expiry Date			Exercise<br><br> <br>Price Per<br><br> <br>Share<br><br> <br>(in dollar)
July 26, 2026	3,767,500	0.82	$	0.50	3,767,500
July 31, 2026	800,000	0.83		0.50	800,000
August 21, 2026	1,377,900	0.89		0.50	1,377,900
May 30, 2028	750,000	2.67		0.45	750,000
August 5, 2028	250,000	2.85		0.45	250,000
	6,945,400				6,945,400

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**13.Segment Information

Subsequent to the disposition of the Cannabis-Derived (THC) Beverages segment, the Company’s only operating and reportable segment is beverages. This segment includes both Jones Soda’s traditional craft sodas, known for their unique flavors, pure cane sugar formulation, and consumer-driven branding as well as our modern soda’s such as Pop Jones, Fiesta Jones and hemp derived products such as HD9. The products are distributed through various channels, including retail stores, foodservice outlets, and direct-to-consumer platforms.

The Chief Operating Decision Maker (“CODM”) of the Company, who is also the Chief Executive Officer (“CEO”), is responsible for evaluating the performance of the Company’s operations. The evaluation focuses primarily on key financial metrics such as net operating revenues and operating income (loss). Based on this consolidated approach to assessing performance and allocating resources, the Company does not present additional segment information in its financial disclosures.

Furthermore, in accordance with ASC 280, the Company provides the following entity-wide disclosures for the three months and nine months ended September 30, 2025 and 2024:

NetSales by Geographic Location: The breakdown of the Company’s net sales by geographic location are as follows:

Schedule of Net Sales and Loss from Operations by Geographic Location

(in thousands)	September<br> 30,<br><br> <br>2025		September<br> 30,<br><br> <br>2024
	For the three months ended
(in thousands)	September<br> 30,<br><br> <br>2025		September<br> 30,<br><br> <br>2024
Segment Results – Net sales
United States	$	3,760	$	3,451
Canada		740		464
Total	$	4,500	$	3,915
(in thousands)	September<br> 30,<br><br> <br>2025		September<br> 30,<br><br> <br>2024s
---	---	---	---	---
	For the nine months ended
(in thousands)	September<br> 30,<br><br> <br>2025		September<br> 30,<br><br> <br>2024s
Segment Results – Net sales
United States	$	11,290	$	12,327
Canada		2,334		2,828
Total	$	13,624	$	15,155
Segment Results – Loss from operations	$	13,624	$	15,155

Net sales generated in the United States accounted for 85% and 87% of total revenue during the three months ended September 30, 2025, and 2024, respectively.

Net sales generated in the United States accounted for 84% and 81% of total revenue during the nine months ended September 30, 2025, and 2024, respectively.

Income(loss) from Operations by Geographic Location: The breakdown of the Company’s income (loss) from operations by geographic location is as follows:

(in thousands)	September<br> 30,<br><br> <br>2025			September<br> 30,<br><br> <br>2024
	For the three months ended
(in thousands)	September<br> 30,<br><br> <br>2025			September<br> 30,<br><br> <br>2024
Segment Results – Income (loss) from continuing operations
United States	$	(1,408	)	$	(2,423	)
Canada		(20	)		(207	)
Total	$	(1,428	)	$	(2,630	)
(in thousands)	September<br> 30,<br><br> <br>2025			September<br> 30,<br><br> <br>2024
---	---	---	---	---	---	---
	For the nine months ended
(in thousands)	September<br> 30,<br><br> <br>2025			September<br> 30,<br><br> <br>2024
Segment Results – Income (loss) from continuing operations
United States	$	145		$	(6,083	)
Canada		(13	)		460
Total	$	132		$	(5,623	)
Segment Results – Income (loss) from continuing operations	$	132		$	(5,623	)

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Long-LivedAssets: All of the Company’s long-lived assets are located in the United States.

**14.Commitments and Contingencies

Commitments

As

of September 30, 2025, we continue to have commitments to various suppliers of raw materials. Purchase obligations under these commitments are expected to total $2.3 million.

Legalproceedings

The California Department of Public Health (“CDPH”) issued a cease-and-desist letter to the sale and distribution of Mary Jones hemp infused sodas in California through Jones Soda’s wholly owned subsidiary Mary Jones Michigan, LLC. The state alleged that the Company’s products violated California law by failing to properly label the products and that the products contained hemp-derived THC isolate, which they did not. The Company disputed the CDPH position, however, it voluntarily agreed to cease distribution of its hemp infused soda in California. While CDPH requested additional information from the Company regarding the status of the recall for distributed products, the action appeared to be resolved by September 2024. In April 2025, shortly before the statute of limitations expired for any further action by CDPH relating to Mary Jones sodas, CDPH filed a Complaint, and on June 27, 2025, the CDPH filed an amended compliant, in Los Angeles Superior Court naming Jones Soda and other businesses who were involved in the sale of infused soda in California in the spring of 2024, which the Company intends to dispute.

The

Company has been served with a lawsuit by a supplier on August 11, 2025 concerning an alleged breach of contract and unjust enrichment in the amount of $342,373. The Company intends to file a counterclaim against the plaintiff for an amount in excess of the damages alleged in the complaint. The Company filed a motion to dismiss and on October 27, 2025, the United States Central District Court of California, the Court dismissed the action without prejudice.

We are or may be involved from time to time in various claims and legal actions arising in the ordinary course of business, including proceedings involving employee claims, contract disputes, product liability, other general liability claims and government and regulatory actions, as well as trademark, copyright, and related claims and legal actions. In the opinion of our management, the ultimate disposition of these matters will not have a material adverse effect on our condensed consolidated financial position, results of operations or liquidity.

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Youshould read the following discussion and analysis in conjunction with our unaudited condensed consolidated financial statements and relatednotes included elsewhere in this Report and our audited consolidated financial statements and notes thereto for the year ended December31, 2024 included in our Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission (“SEC”)on April 1, 2025.

ThisReport contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases,you can identify forward-looking statements by terminology such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” “will,” “can,” “plan,” “predict,” “could,” “future,” “continue,” variations of such words, and similar expressions. These statements are only predictions. Actual events or results may differ materially.In evaluating these statements, you should specifically consider various factors, including the risks outlined at the beginning of thisReport under “Cautionary Notice Regarding Forward-Looking Statements” and in Item 1A of our most recent AnnualReport on Form 10-K filed with the SEC, and in our other reports we file with the SEC, including our periodic reports on Form 10-Q andcurrent reports on Form 8-K. These factors may cause our actual results to differ materially from any forward-looking statements. Exceptas required by law, we undertake no obligation to publicly release any revisions to these forward-looking statements that may be madeto reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Overview

We develop, produce, market and distribute premium beverages that we sell and distribute primarily in the United States and Canada through our network of independent distributors and directly to our national and regional retail accounts. We also sell products in select international markets. Our products are sold in grocery stores, convenience and gas stores, on fountain in restaurants, “up and down the street” in independent accounts such as delicatessens, sandwich shops and burger restaurants, as well as through our national accounts with several large retailers. We refer to our network of independent distributors as our direct store delivery (“DSD”) channel, and we refer to our national and regional accounts who receive shipments directly from us as our direct to retail (“DTR”) channel. We do not directly manufacture our products but instead outsource the manufacturing process to third-party contract manufacturers. We also sell various products online, including soda with customized labels, wearables, candy and other items, and we license our trademarks for use on products sold by other manufacturers.

Our company is a Washington corporation formed in 2000 as a successor to Urban Juice and Soda Company Ltd., a Canadian company formed in 1986. Our principal place of business is located at 1522 Western Ave, STE 24150, Seattle, WA 98101. Our telephone number is (206) 624-3357.

Products

Our strategy is to evolve from a craft soda company (Jones Soda) to a diverse beverage company covering additional growing market segments including modern soda (Pop Jones and Fiesta Jones) and the alternative adult beverages. Our product line-up currently consists of the following:

JonesSoda

Jones Soda is our premium carbonated soft drink. We sell Jones Soda in premium glass bottles and cans, with labels featuring photos sent to us by our consumers. Over one million photos have been submitted to us. We believe this unique interaction with our consumers distinguishes our brand and offers a strong competitive advantage for Jones Soda. Additionally, we release various label campaigns that celebrate our consumers and the positive impact such consumers have on the world. Our products are made from high quality ingredients, including cane sugar and natural colors and flavors when possible. We also sell Jones Soda in more traditional flavors such as Cream Soda, Cola, Root Beer and Orange & Cream.

PopJones and Fiesta Jones (Modern Soda market segment)

We continue to see a growing market in our health focused soda brands, which we consider to be the “modern soda” market. We believe that Rrecent growth by industry competitors such as Poppi and Olipop have proven out thedemonstrates that there is growing consumer demand for this market segment. In 2024, Jones launched its Pop Jones and Fiesta Jones product lines, which were intended to capitalize on this growing market opportunity.

MaryJones (Hemp Derived Products) & Spiked Jones (Alternative Adult market segment)

Jones started offering its hemp-derived Delta-9 THC products in 2024 through the Mary Jones brand, including with a line of four flavors of Mary Jones hemp-derived sodas. Since that time, Mary Jones has expanded its portfolio to include four flavors of 10mg Mary Jones shooters, four flavors of Mary Jones gummies, and a line of Mary Jones zero sugar sodas (which we launched in September 2025). Although we believe there is currently a growing market for these products as consumers continue to migrate away from traditional beer and wine products, on November 12, 2025, the federal spending legislation passed to reopen the U.S. federal government contained a provision, which when implemented, would materially alter the federal treatment of hemp-derived products by prohibiting the unregulated sale of intoxicating hemp-based or hemp-derived products (including HD9 products), while also caping legal hemp products at 0.4 milligrams of total THC (and similar-effect cannabinoids) per product. Although, the Company believes that when implemented, this legislation would likely require the Company to significantly reformulate or discontinue the Company’s current hemp-derived HD9 product lines., since this legislation does not become effective until November 2026, the Company does not expect it to have a material effect on the Company’s HD9 product sales in the fourth quarter of 2025.

Additionally, we launched in the third quarter of 2025 our line of hard craft sodas “spiked” with alcohol under the brand name “Spiked Jones”.

Fountain(food services market segment)

Drawing inspiration from our traditional bottles, our fountain equipment and cups are branded with an engaging collage of consumer-submitted photos that are inspired by the business themes of our retail partners and the regions in which they are located. Our fountain offerings include traditional flavors such as Cane Sugar Cola, Sugar Free Cola, as well as cane sugar sweetened Ginger Ale, Orange & Cream, Root Beer and Lemon Lime. Rounding out the lineup are two of our most popular cane sugar flavors, Berry Lemonade and Green Apple. We have developed other products in select markets that include teas, lemonade, vitamin enhanced waters, hydration beverages, as well as naturally flavored sparkling waters.

We continue to see growing interest from larger quick service restaurants, corporate accounts, retailers, celebrity chefs and a variety of other outlets looking for differentiated offerings in their fountain soda. We feel that Jones on fountain enhances the consumer experience, while appealing to a broad demographic. We believe our national brand awareness and customer-centric approach make us unique compared to other craft soda competitors within this category.

OurFocus: Sales Growth

Our focus is sales growth through execution of the following key initiatives:

●	Expand<br> the Jones Soda glass bottle business in existing and new sales channels;
●	Expand<br> our business in the modern soda category through our Pop Jones and Fiesta Jones brands;
●	Expand<br> our fountain program in the United States and Canada; and,
●	Grow<br> our Spiked Jones alcohol infused brand throughout the US.

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Resultsof Operations

The following selected financial and operating data are derived from our condensed consolidated financial statements and should be read in conjunction with our condensed consolidated financial statements.

Threemonths ended September 30, 2025 and 2024

	2025			2024
	(Dollars in thousands)			(Dollars in thousands)			% Change
Revenue	$	4,500		$	3,915			14.9	%
Cost of Goods Sold		(3,201	)		(3,180	)		0.7	%
Gross Profit		1,299			735			76.7	%
% of Revenue		28.9	%		18.8	%

Threemonths ended September 30, 2025 Compared to Three months ended September 30, 2024

Revenue

For the quarter ending September 30, 2025, revenue increased by approximately $0.6 million, or 14.9%, to approximately $4.5 million compared to approximately $3.9 million for the quarter ending September 30, 2024. The increase in revenue was driven by higher sales in its HD9 products ($0.2 Million) , direct to consumer products ($0.2 million), fountain products ($0.1 million), Spiked Jones products ($0.1 million) and lower tradespend ($0.5 million), which was partially offset by loss in core soda sales ($0.5 million). Core soda sales were front end loaded in 2024 with one customer taking a large pipeline fill order in the second quarter of 2024 which did not repeat in 2025. Management expects to see growth in the fourth quarter driven by Core Soda and direct to consumer (DTC), as well as growth in club, food service and convenience store channels.

GrossProfit

For the quarter ending September 30, 2025, gross profit increased by approximately $0.6 million, or, or 76.7%, to approximately $1.3 million compared to approximately $0.7 million for the quarter ending September 30, 2024 mostly driven by lower trade spend, lower product costs for the Company’s products as well as lower freight and warehousing charges. For the quarter ending September 30, 2025, gross margin increased significantly to 28.9% from 18.8% in the quarter ending September 30, 2024. The Company continues to look for opportunities to decrease the cost of goods sold with its co-manufacturers and our warehouse and freight providers.

Sellingand Marketing Expenses

Selling and marketing expenses for the third quarter ending September 30, 2025 were approximately $1 million, a decrease of approximately $0.5 million, or 33%, from approximately $1.5 million for the third quarter ending September 30, 2024. This decrease was primarily a result of decreased online marketing spend and tradeshows and sponsorships for both the Jones Soda and Mary Jones brands in the third quarter of 2025 compared to the same quarter of 2024. Selling and marketing expenses as a percentage of revenue decreased to 22.5% in the third quarter ending September 30, 2025 from 38.6% in the same period in 2024. We intend to continue to look for clear return on investment from our selling and marketing expenses to drive profitable sales. For the three months ending September 30, 2025, and 2024, non-cash expenses included in selling and marketing expenses (stock compensation and depreciation) were approximately $45,000 and $37,000, respectively.

Generaland Administrative Expenses

General and administrative expenses for the third quarter ending September 30, 2025 were approximately $1.7 million compared to $1.8 million in the third quarter ending September 30, 2024 or a reduction of $0.1 million. General and administrative expenses as a percentage of revenue decreased to 38% in the third quarter ending September 30, 2025 from 46% in the same quarter in 2024 or an approximately eight percentage points decrease. We intend to continue to look for additional opportunities to reduce our G&A costs beyond the cost reductions achieved in 2025. For the three months ending September 30, 2025, and 2024, non-cash expenses included in general and administrative expenses (stock compensation and depreciation) were approximately $425,000 and $345,000, respectively.

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IncomeTax Expense

We incurred approximately $2,000 and $5,000 of income tax expense during the quarter ended September 30, 2025 and 2024, respectively. We have not recorded any tax benefit for the loss in our U.S. operations as we have recorded a full valuation allowance on our U.S. net deferred tax assets. We expect to continue to record a full valuation allowance on our U.S. net deferred tax assets until we sustain an appropriate level of taxable income through improved U.S. operations. Our effective tax rate is based on recurring factors, including the forecasted mix of income before taxes in various jurisdictions, estimated permanent differences and the recording of a full valuation allowance on our U.S. net deferred tax assets.

Netincome (loss)

Net Loss for the quarter ended September 30, 2025 was approximately $1.4 million compared to net loss of approximately $2.6 million for the quarter ended September 30, 2024, an improvement of $1.2 million. This decrease in net loss was primarily due to the increase in gross profit and the decreases in selling and marketing expenses and general and administrative expenses in the third quarter of 2025 compared to the third quarter of 2024.

Ninemonths ending September 30, 2025 and 2024

	2025			2024
	(Dollars in thousands)			(Dollars in thousands)			% Change
Revenue	$	13,624		$	15,155			(10.1	)%
Cost of Goods Sold		(9,302	)		(10,543	)		(11.8	)%
Gross Profit		4,322			4,612			(6.3	)%
% of Revenue		31.7	%		30.4	%

Ninemonths ending September 30, 2025 Compared to Nine months ending September 30, 2024

Revenue

For the nine months ending September 30, 2025, revenue decreased by approximately $1.5 million, or 10.1%, to approximately $13.6 million compared to approximately $15.1 million for the nine months ending September 30, 2024. The decrease in sales revenue was driven by lower sales in its core soda business ($3.7 million decrease year over year) and direct to consumer business ($0.1 million), which was partially offset by HD9 products ($0.7 million increase year over year) and lower tradespend ($1.5 million). HD9 grew $0.7 million over the nine months from $1.7 million in the prior year to $2.5 million or 30% growth for the nine months ending September 30, 2025 . Core soda sales were front end loaded in 2024 with one customer taking a large pipeline fill order in the second quarter of 2024 which did not repeat in 2025.

GrossProfit

For the nine months ending September 30, 2025, gross profit decreased by approximately $0.3 million, or 6.3%, to approximately $4.3 million compared to approximately $4.6 million for the nine months ending September 30, 2024 because of lower revenue, being partially offset by lower cost of goods sold. For the nine months ending September 30, 2025, gross margin increased to 31.7% from 30.4% in the comparable period driven by lower product costs for Jones products as well as lower freight and warehousing charges. The Company continues to The Company continues to focus on reducing product costs by negotiating lower co-manufacturing fees along with lower raw material and packaging costs.

Sellingand Marketing Expenses

Selling and marketing expenses for the nine months ending September 30, 2025, were approximately $3.2 million, a decrease of approximately $1.4 million, or 30%, from approximately $4.6 million in the comparable period. This decrease was primarily a result of decreased online marketing spend and tradeshows and sponsorships for both the Jones Soda and Mary Jones brands in the nine months ending September 30, 2025, compared to the same period in 2024. Selling and marketing expenses as a percentage of revenue decreased to 23.5% in the nine months ending September 30, 2025, from 30.4% in the same period in 2024. We intend to continue to look for clear return on investment from our selling and marketing expenses to drive profitable sales. For the nine months ending September 30, 2025, and 2024, non-cash expenses included in selling and marketing expenses (stock compensation and depreciation) were approximately $127,000 and $101,000, respectively.

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Generaland Administrative Expenses

General and administrative expenses for the nine months ending September 30, 2025, were approximately $4.2 million compared to $5.6 million in the first nine months ending September 30, 2024, or a reduction of $1.4 million (25% reduction). General and administrative expenses as a percentage of revenue decreased to 30.9% in the mine months ending September 30, 2025, from 37% in the same period in 2024 or an approximately 6 percentage points decrease. We continue to look for additional opportunities to reduce our G&A costs beyond the cost reductions achieved in the nine months ending September 30, 2025. For the nine months ending September 30, 2025, and 2024, non-cash expenses included in general and administrative expenses (stock compensation and depreciation) were approximately $660,000 and $927,000, respectively.

IncomeTax Expense

We incurred approximately $9,000 and $26,000 of income tax expense during the nine months ending September 30, 2025, and 2024, respectively. We have not recorded any tax benefit for the loss in our U.S. operations as we have recorded a full valuation allowance on our U.S. net deferred tax assets. We expect to continue to record a full valuation allowance on our U.S. net deferred tax assets until we sustain an appropriate level of taxable income through improved U.S. operations. Our effective tax rate is based on recurring factors, including the forecasted mix of income before taxes in various jurisdictions, estimated permanent differences and the recording of a full valuation allowance on our U.S. net deferred tax assets.

NetIncome (loss)

Net Income for the nine months ending September 30, 2025, was approximately $0.3 million compared to net loss of approximately $5.4 million for nine months ending September 30, 2024, or an improvement of $5.7 million. The improvement in income was primarily due to the decreases in selling and marketing expenses and general and administrative expenses in the nine months of 2025 compared to the nine months of 2024 and gain on sale of the Cannabis business which was partially offset by reduced sales revenues and gross profit.

Seasonalityand other fluctuations

Our sales are seasonal and we experience fluctuations in quarterly results as a result of many factors. We historically have generated a greater percentage of our revenues during the warm weather months of April through September. Sales may fluctuate materially on a quarter to quarter basis or an annual basis when we launch a new product or fill the “pipeline” of a new distribution partner or a large retail partner. Sales results may also fluctuate based on the number of stock keeping units (“SKU”) selected or removed by our distributors and retail partners through the normal course of serving consumers in the dynamic, trend-oriented beverage industry. As a result, management believes that period-to-period comparisons of results of operations are not necessarily meaningful and should not be relied upon as any indication of future performance or results expected for the fiscal year.

Liquidityand Capital Resources

As of September 30, 2025, and December 31, 2024, the Company had cash of approximately $0.2 million and $1.3 million, respectively, and working capital of approximately $0.6 million and $2.0 million, respectively. Net cash used in operating activities for the nine months ended September 30, 2025 and 2024, was approximately $4.0 million and $4.8 million, respectively. The Company reported a net income of approximately $0.3 million for the nine months ended September 30, 2025, compared to a net loss of approximately $5.3 million for the nine months ended September 30, 2024. As of September 30, 2025, the Company’s accumulated deficit decreased to approximately $92.6 million, compared to approximately $92.9 million as of December 31, 2024.

For the nine months ended September 30, 2025, net cash provided by financing activities was approximately $1.3 million. This amount was primarily attributable to net proceeds of $1.3 million from a new credit facility and repayments of approximately $0.2 million under the Company’s insurance financing agreement. In addition, the Company issued a $0.5 million promissory note to its Chairman of the Board, of which $0.3 million was repaid during the period.

We have experienced recurring losses from operations and negative cash flows from operating activities. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. To address this issue, in the first quarter of fiscal year 2025, the Company changed its senior leadership and is focusing on reducing its operating expenses while bringing products to market with higher margins and potentially higher customer demand. Additionally, on February 5, 2025, the Company, through a wholly-owned subsidiary (the “Subsidiary”), entered into loan agreement (the “Loan Agreement”) with Two Shores Capital Corp, pursuant to which the Subsidiary may borrow a maximum aggregate amount of up to $5 million, subject to satisfaction of certain conditions. All advances drawn under the Loan Agreement will bear interest at a rate of 13.75% per annum and all present and future obligations of the Subsidiary arising under the Loan Agreement are secured by a first priority security interest in all of the assets of the Company, the Subsidiary and the Company’s other United States subsidiaries. The Loan Agreement replaces the $2 million revolving credit facility entered into by the Company in March 2024 (the “2024 Credit Facility”). The borrowing base under the Loan Agreement expands the assets that can be financed against from only accounts receivable under the 2024 Credit Facility to accounts receivable, inventory and customer purchase orders.

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CriticalAccounting Policies and Estimates

See the information concerning our critical accounting policies and estimates included under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation – Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on April 1, 2025. There have been no material changes in our critical accounting policies during the nine months ended September 30, 2025.

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.	CONTROLS AND PROCEDURES.

(a)Evaluation of disclosure controls and procedures

We maintain disclosure controls and procedures (as such terms are defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of September 30, 2025.

(b)Changes in internal controls over financial reporting

The Company made changes in our internal controls over financial reporting during the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. Based on our evaluation under the COSO framework, management concluded that, as of such date, our internal controls over financial reporting were effective as of the end of the period covered by this interim report on Form 10-Q due to material weaknesses as described herein. Management previously has identified the following material weaknesses:

● The Company had key senior accounting personnel transitioned over the course of the year-end process from the end of 2024 through the beginning of 2025. As a result, adjustments to the year end balances were required to be made. Action: The Company hired an experienced public company Chief Financial Officer in January as well as an additional senior level CPA in June with public company experience.

● During the transition period noted above the Company lacked sufficient resources with respect to the number of people employed in its accounting department and the adequacy of their training in relation to its financial reporting requirements. Action: The Company hired an experienced public company Chief Financial Officer in January as well as an additional senior level CPA in June with public company experience.

● The Company is now through that transition and the new leadership team will ensure previously effective controls are followed by the time we report the third quarter interim results and reinforced adherence to the set of internal controls that Company has previously successfully abided by over the past years.

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PART

II – OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS

We are not currently involved in any material legal proceedings. We may be involved from time to time in various claims and legal actions arising in the ordinary course of business, including proceedings involving employee claims, contract disputes, product liability and other general liability claims, as well as trademark, copyright, and related claims and legal actions. In the opinion of our management, the ultimate disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

ITEM 1A.	RISK FACTORS

If enacted into law, recent federal legislation would prohibit theunregulated sale of intoxicating hemp-based or hemp derived products (including delta-8/HD9), which would negatively impact the Company’srevenues from its hemp-derived HD9 products.

On November 12, 2025, U.S. federal legislation was signed into law that, when implemented, would materially alter the federal treatment of hemp-derived products by narrowing the 2018 Farm Bill’s hemp carveout. This new federal law prohibits the unregulated sale of intoxicating hemp-based or hemp-derived products (including delta-8/HD9 and similar isomers) and redefines legal hemp to apply a total-THC standard across all tetrahydrocannabinols and any cannabinoids with similar effects, as determined by the U.S. Department of Health and Human Services (“HHS”). The legislation also caps legal hemp products at 0.4 milligrams of total THC (and similar-effect cannabinoids) per product, prohibits “intermediate” hemp-derived cannabinoid products marketed directly to consumers, and bars products containing cannabinoids synthesized or manufactured outside of the cannabis plant or not capable of being naturally produced by it. Within 90 days of enactment, the U.S. Food and Drug Administration (“FDA”) and other agencies is required to publish lists of cannabinoids known to be naturally produced by Cannabis sativa L., tetrahydrocannabinol-class cannabinoids naturally occurring in the plant, and other cannabinoids with similar or marketed-similar effects, with the new total-THC framework taking effect within one year. The bill also restricts retail channels by targeting sales in online marketplaces, gas stations, and convenience stores for products deemed intoxicating.

This new law is scheduled to become effective in November 2026, and once implemented would likely require significant reformulation or discontinuation of the Company’s current hemp-derived product lines, accelerate inventory obsolescence and write-downs, disrupt supply chains (including upstream intermediate inputs), and increase the Company’s compliance, testing, labeling, and distribution costs. The total-THC and “similar effects” standards also creates interpretive uncertainty and potential variability in enforcement pending FDA/HHS guidance, as well as raises the risks of litigation, recalls, and uneven state-federal alignment. Limitations on online and convenience retail channels could adversely affect sell-through and customer acquisition, while the prohibition on synthesized or non-naturally occurring cannabinoids may reduce product innovation and margin profiles. Collectively, these factors could materially and adversely impact the Company’s business, financial condition, results of operations, and cash flows.

Other than the above, there have been no material changes in the risk factors set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.

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

None.

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.	MINE SAFETY DISCLOSURES

None.

ITEM 5.	OTHER INFORMATION

None.

ITEM 6.	EXHIBITS
3.1	Articles of Incorporation of Jones Soda Co. (Previously filed as, and incorporated herein by reference to, Exhibit 3.1 to our annual report on Form 10-KSB for the fiscal year ended December 31, 2000, filed on March 30, 2001; File No. 333-75913).
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3.2	Amended and Restated Bylaws of Jones Soda Co. (Previously filed with, and incorporated herein by reference to, Exhibit 3.1 to our quarterly report on Form 10-Q, filed on November 8, 2013; File No. 000-28820).
3.3	Articles of Amendment to Articles of Incorporation of Jones Soda Co. dated May 16, 2022. (Previously filed with, and incorporated herein by reference to, Exhibit 3.3 to our registration statement on Form S-1, filed on June 14, 2022; File No. 333-265598).
31.1	Certification of Chief Executive Officer, pursuant to Rules 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification of Chief Financial Officer, pursuant to Rules 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.2	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
101.INS*	Inline<br> XBRL Instance Document.
101.SCH*	Inline<br> XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline<br> XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline<br> XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline<br> XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline<br> XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover<br> Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

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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 thereunto duly authorized.

	JONES<br> SODA CO.
	(Registrant)
November<br> 14, 2025
	By:	/s/ Brian Meadows
		Brian<br> Meadows
		Chief<br> Financial Officer

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EXHIBIT31.1

CERTIFICATIONOF CHIEF EXECUTIVE OFFICER

PURSUANTTO RULES 13(a)-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Scott Harvey, certify that:

1.	I<br> have reviewed this report on Form 10-Q of Jones Soda Co.;
2.	Based<br> on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary<br> to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to<br> the period covered by this report;
3.	Based<br> on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material<br> respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in<br> this report;
4.	The<br> registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures<br> (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange<br> Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)	Designed<br> such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,<br> to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others<br> within those entities, particularly during the period in which this report is being prepared;
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b)	Designed<br> such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our<br> supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements<br> for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated<br> the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about<br> the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;<br> and
d)	Disclosed<br> in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s<br> most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,<br> or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The<br> registrant’s other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial<br> reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing<br> the equivalent functions):
---	---
a)	All<br> significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are<br> reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;<br> and
---	---
b)	Any<br> fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s<br> internal control over financial reporting.
Date:<br> November 14, 2025
---	---
	/s/ Scott Harvey
	Scott Harvey
	Chief<br> Executive Officer

EXHIBIT31.2

CERTIFICATIONOF CHIEF FINANCIAL OFFICER

PURSUANTTO RULES 13(a)-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934

I, Brian Meadows, certify that:

1.	I<br> have reviewed this report on Form 10-Q of Jones Soda Co.;
2.	Based<br> on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary<br> to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to<br> the period covered by this report;
3.	Based<br> on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material<br> respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in<br> this report;
4.	The<br> registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures<br> (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange<br> Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)	Designed<br> such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,<br> to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others<br> within those entities, particularly during the period in which this report is being prepared;
---	---
b)	Designed<br> such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our<br> supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements<br> for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated<br> the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about<br> the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;<br> and
d)	Disclosed<br> in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s<br> most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,<br> or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The<br> registrant’s other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial<br> reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing<br> the equivalent functions):
---	---
a)	All<br> significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are<br> reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;<br> and
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b)	Any<br> fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s<br> internal control over financial reporting.
Date:<br> November 14, 2025
---	---
	/s/ Brian Meadows
	Brian<br> Meadows
	Chief<br> Financial Officer

EXHIBIT32.1

CERTIFICATIONOF CHIEF EXECUTIVE OFFICER

PURSUANTTO

18U.S.C. SECTION 1350,

ASADOPTED PURSUANT TO

SECTION906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Jones Soda Co. (the “Company”) on Form 10-Q for the quarter ended September 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, Scott Harvey, Chief Executive Officer of the Company, hereby certify that, to my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The<br> Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or<br> 78o(d)); and
(2)	The<br> information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations<br> of the Company.
Date:<br> November 14, 2025
---	---
	/s/ Scott Harvey
	Scott Harvey
	Chief<br> Executive Officer

EXHIBIT32.2

CERTIFICATIONOF CHIEF FINANCIAL OFFICER

PURSUANTTO

18U.S.C. SECTION 1350,

ASADOPTED PURSUANT TO

SECTION906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Jones Soda Co. (the “Company”) on Form 10-Q for the quarter ended September 30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), I, Brian Meadows, Chief Financial Officer of the Company, hereby certify that, to my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002:

(1)	The<br> Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or<br> 78o(d)); and
(2)	The<br> information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations<br> of the Company.
Date:<br> November 14, 2025
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	/s/ Brian Meadows
	Brian<br> Meadows
	Chief<br> Financial Officer