DEF: Jones Soda Co. Details 2025 Annual Meeting Agenda, Executive Compensation, and Governance Updates Amidst Continued Net Losses

Jones Soda Co. has released its definitive proxy statement for the 2025 Annual Meeting, outlining proposals for director elections, an advisory vote on executive compensation, and auditor ratification, while disclosing ongoing net losses and compliance issues with executive stock filings.

Summary

• Jones Soda Co. will hold its Annual Meeting of Shareholders virtually on July 18, 2025, at 9:00 A.M. Seattle time, with May 21, 2025, as the record date for voting.
• Shareholders will vote on three key proposals: the election of five directors for a one-year term, an advisory vote on the 2024 named executive officer compensation, and the ratification of Berkowitz Pollack Brant Advisors + CPAs as the independent registered public accounting firm for fiscal year 2025.
• The Board of Directors recommends voting FOR all proposed matters.
• The company reported net losses of $9,895,000 in 2024, $4,854,000 in 2023, and $6,404,000 in 2022.
• Total Shareholder Return (TSR) based on an initial $100 investment was $108 in 2024, $55 in 2023, and $36 in 2022.
• Several directors and a major shareholder, SOL Global Investments Corp., had delinquent Section 16(a) reports for stock transactions and RSU vestings in 2024.
• Former CEO David Knight and current Chief Growth Officer Jerry Goldner did not receive annual bonuses in 2023 or 2024 due to the company not meeting established revenue and adjusted EBITDA targets.
• The company entered into a loan agreement with its Chairman of the Board, Paul Norman, on May 7, 2025, for $450,000 at 12% interest, due October 10, 2025, with a $22,000 loan fee.

Sentiment

Score: 3

Explanation: The sentiment is negative due to consistent net losses, failure to meet executive performance targets, and a notable number of delinquent Section 16(a) filings by key personnel and a major shareholder. While corporate governance structures appear standard, the compliance issues and financial underperformance weigh heavily on the overall outlook.

Positives

• The Board of Directors has an independent Chairman, ensuring a greater role for independent directors in company oversight.
• The company maintains a robust corporate governance framework, including an Audit Committee, Compensation and Governance Committee, and a Mergers and Acquisitions and Investments Committee.
• Ronald Dissinger, a member of the Audit Committee, is qualified as an audit committee financial expert under SEC rules.
• The company has adopted a Code of Ethics and a Code of Conduct applicable to all directors, officers, and employees, and an Insider Trading Policy prohibiting short sales, hedging, and pledging of company securities.
• There are no family relationships among the company's directors and executive officers, and no directors or officers have been involved in significant legal proceedings (other than minor traffic offenses) in the past ten years.

Negatives

• The company reported consistent net losses for the fiscal years 2024 ($9,895,000), 2023 ($4,854,000), and 2022 ($6,404,000), indicating ongoing financial challenges.
• Multiple directors (Ronald Dissinger, Paul Norman, Clive Sirkin, Gregg Reichman, Mark Murray) and a significant shareholder (SOL Global Investments Corp.) failed to file required Section 16(a) reports on a timely basis for fiscal year 2024, indicating compliance deficiencies.
• Former President and CEO David Knight and Chief Growth Officer Jerry Goldner did not receive their annual cash bonuses in 2023 or 2024 because the company did not achieve its established annual revenue and adjusted EBITDA targets.
• The company's Total Shareholder Return (TSR) declined from $108 in 2024 to $55 in 2023, based on an initial $100 investment, suggesting a decrease in shareholder value over the period.

Risks

• Ongoing net losses pose a significant financial risk to the company's sustainability and future operations.
• Delinquent Section 16(a) filings by multiple directors and a major shareholder indicate potential compliance and regulatory risks.
• The company's inability to meet revenue and EBITDA targets for executive bonuses suggests challenges in achieving financial performance goals.
• The related party loan from the Chairman of the Board, while disclosed, could raise questions regarding corporate governance and potential conflicts of interest if not managed with utmost transparency and adherence to best practices.

Future Outlook

The document primarily focuses on past performance, executive compensation, and corporate governance for the upcoming annual meeting. It does not provide explicit forward-looking statements or financial guidance regarding future revenues, profitability, or strategic initiatives beyond the general objectives of attracting and retaining talent.

Management Comments

• "We have adopted a virtual format for our Annual Meeting to provide a consistent experience to all shareholders regardless of location."
• "The Board of Directors recommends that you vote FOR the Company nominated directors described in the proxy statement, FOR approval, on an advisory basis, of the compensation paid to the Company's 2024 named executive officers, and FOR ratification of the appointment of Berkowitz Pollack Brant Advisors + CPAs as the Company's independent registered public accounting firm."
• "We have evaluated the risks arising from our compensation policies and practices for our employees and concluded that such risks are not reasonably likely to have a material adverse effect on the Company."

Industry Context

This proxy statement provides limited direct industry context, focusing instead on internal corporate governance and compensation matters. However, the biographical information for executive officers and directors highlights their extensive experience in the food and beverage industry, consumer packaged goods, and plant-based/wellness consumer product categories, suggesting the company operates within these sectors. The appointment of a new CEO and CFO with backgrounds in coffee, bakery, and clean technology indicates a potential strategic shift or diversification within the broader consumer goods space.

Comparison to Industry Standards

• The company's corporate governance structure, including independent directors and established committees (Audit, Compensation & Governance, M&A & Investment), aligns with standard practices for publicly traded companies.
• The advisory vote on executive compensation (Say-on-Pay) is a standard practice mandated by the Dodd-Frank Act, demonstrating compliance with regulatory requirements.
• The disclosure of net losses for three consecutive years (2022-2024) and the failure to meet executive bonus targets suggest underperformance relative to typical industry expectations for growth and profitability in the consumer beverage sector, though no specific comparable companies or financial benchmarks are provided in the document to make a direct comparison.

Management Changes

Corporate Governance

Legal Proceedings

• Ronald Dissinger, Paul Norman, Clive Sirkin, Gregg Reichman, and Mark Murray each failed to file multiple Form 4 reports on a timely basis in 2024 to report the vesting of Restricted Stock Units (RSUs) into common stock.
• SOL Global Investments Corp. filed two late Form 4 reports in March 2024 concerning the sale of an aggregate of 1,139,647 shares of common stock in February and March 2024.
• The company's former independent registered public accounting firm, Armanino LLP, advised the company of a reportable event in connection with management's conclusion that the company did not design appropriate controls to identify and reconcile prepaid assets and associated short-term liabilities, which resulted in a material error and restatement of 2021 financial statements and correction of 2022 unaudited quarterly information.

Related Party Transactions

• On May 7, 2025, Jones Soda Co. entered into a loan agreement with Paul Norman, the Chairman of its Board of Directors, for $450,000. The loan bears an interest rate of 12% per annum, and the principal, accrued interest, and a $22,000 loan fee are due by October 10, 2025.

Stakeholder Impact

• **Shareholders**: Will vote on key governance matters, including director elections, executive compensation, and auditor ratification. The company's ongoing net losses and the related party loan may impact shareholder confidence and stock valuation. Delinquent Section 16(a) filings by insiders could raise concerns about transparency and compliance.
• **Employees**: Executive compensation practices are detailed, with some executives not receiving bonuses due to unmet company performance targets, which could affect morale. The company's compensation practices are evaluated to discourage inappropriate risk-taking and align with long-term interests.
• **Management**: New CEO and CFO appointments signal a leadership transition. Executive compensation is tied to company performance, with bonuses contingent on achieving revenue and EBITDA targets, directly impacting their earnings.
• **Auditors**: Berkowitz Pollack Brant's appointment and fees are subject to shareholder ratification, and their role is critical for financial statement integrity. The prior auditor's finding of a material error highlights the importance of robust internal controls.

Next Steps

• Shareholders are urged to vote by telephone, Internet, or mail for the Annual Meeting on July 18, 2025.
• The company expects to file a Current Report on Form 8-K with the SEC within four business days after the Annual Meeting to disclose preliminary or final voting results.
• Eligible shareholders wishing to present proposals for the 2026 annual meeting must submit them by February 5, 2026, for inclusion in the proxy statement, or between March 21, 2026, and April 20, 2026, for other proposals under company bylaws.

Key Dates

Recommendation

Keywords

Jones Soda Co., DEF 14A, Proxy Statement, Annual Meeting, Corporate Governance, Executive Compensation, Director Election, Auditor Ratification, SEC Filing, Shareholder Vote, Risk Management, Related Party Transactions, Financial Reporting, Net Loss, Total Shareholder Return, Compliance Issues