10-Q: Jones Soda Co. Reports Q1 2025 Results: Revenue Declines Amid Strategic Shift

Jones Soda Co. experienced a revenue decrease in Q1 2025, but is focusing on cost reduction and new product lines to improve financial performance.

Summary

• Jones Soda Co. reported a net revenue of $4.608 million for the quarter ended March 31, 2025, a decrease of 7.8% compared to $4.999 million in the same period last year.
• The company's gross profit decreased by 9.2% to $1.717 million, with a gross margin of 37.3%.
• Operating expenses decreased, with selling and marketing expenses down 20% to $1.209 million and general and administrative expenses also down 20% to $1.189 million.
• The net loss for the quarter was $852,000, an improvement from the $1.152 million loss in Q1 2024.
• The company's focus is on sales growth through expanding its Jones Soda glass bottle business, modern soda category, fountain program, and THC/CBD-infused beverage lines.
• The company has a new $5 million loan agreement with Two Shores Capital Corp. to support operations.
• There is substantial doubt regarding the company's ability to continue as a going concern.

Sentiment

Score: 4

Explanation: The report shows a mixed picture. While the company is taking steps to reduce costs and explore new markets, the revenue decline and concerns about its ability to continue as a going concern weigh negatively on the sentiment.

Positives

• Net loss improved by $0.3 million compared to the same quarter last year.
• Selling and marketing expenses decreased by approximately $0.3 million, or 20%.
• General and administrative expenses decreased by approximately $0.3 million, or 20%.
• The company secured a new $5 million loan agreement to support operations.
• The company is focusing on reducing operating expenses and bringing new products to market with higher margins.

Negatives

• Revenue decreased by 7.8% compared to the same quarter last year.
• Gross profit decreased by 9.2% compared to the same quarter last year.
• The company has experienced recurring losses from operations and negative cash flows from operating activities.
• There is substantial doubt regarding the company's ability to continue as a going concern.
• The company's accumulated deficit increased to approximately $93.8 million as of March 31, 2025.

Risks

• The company's ability to successfully execute its growth strategy and operating plans is uncertain.
• The company's ability to continue to raise capital to finance its operations is a concern.
• The company's ability to manage operating expenses and generate cash flow from operations is critical.
• The company faces risks related to competition, consumer preferences, and regulatory compliance.
• The company's reliance on third-party contract manufacturers and suppliers poses supply chain risks.
• The company's ability to maintain effective disclosure controls and procedures and internal control over financial reporting is a concern.

Future Outlook

The company aims to achieve sales growth by expanding its Jones Soda glass bottle business, modern soda category, fountain program, and THC/CBD-infused beverage lines, while also focusing on reducing operating expenses.

Management Comments

• The Company continues to look for opportunities to decrease its cost of goods sold with its co-manufacturers and our warehouse and freight providers.
• We intend to continue to look for clear return on investment from our selling and marketing expenses to drive profitable sales.
• We intend to continue to look for additional opportunities to reduce our G&A costs beyond the cost reductions achieved in the first quarter of 2025.

Industry Context

The company is operating in a competitive beverage industry and is trying to evolve from a craft soda company to a diverse beverage company covering additional growing market segments including modern soda and the alternative adult beverages.

Comparison to Industry Standards

• The report mentions competitors in the modern soda market such as Poppi and Olipop, indicating that Jones Soda is trying to capitalize on the growing consumer demand for this market segment.
• The company's strategy to expand into the THC/CBD-infused beverage market aligns with the broader industry trend of beverage companies exploring cannabis-related products.
• The company's focus on fountain offerings is similar to other beverage companies that are trying to diversify their distribution channels.

Related Party Transactions

• 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 $450,000.

Stakeholder Impact

• Shareholders face potential dilution and stock price volatility due to future securities issuances.
• Employees may be affected by cost reduction measures and organizational changes.
• Customers may see changes in product offerings and distribution channels.
• Suppliers and creditors face risks related to the company's financial stability.

Next Steps

• Expand the Jones Soda glass bottle business in existing and new sales channels.
• Expand the business in the modern soda category through Pop Jones and Fiesta Jones brands.
• Expand the fountain program in the United States and Canada.
• Grow the new Mary Jones brand of Tetrahydrocannabinol (THC) and cannabidiol (CBD)-infused beverages, edibles, and other related products through the Mary Jones brand as well as the number of states and Canadian provinces where such products are sold.

Key Dates

Keywords

Jones Soda, financial results, Q1 2025, revenue, net loss, operating expenses, loan agreement, THC beverages, cannabis, going concern