8-K: Jones Soda Sells Promissory Note, Raises $1.4M

Jones Soda Co. assigned a $2 million promissory note for $1.4 million cash and issued warrants to Two Shores Capital Corp. for general working capital.

Summary

• Jones Soda Co. entered into an Assignment and Assumption of Debt Agreement on January 16, 2026, with Two Shores Capital Corp. (Assignee) and MJ Reg Disrupters, LLC (Debtor).
• The agreement involved Jones Soda Co. assigning a secured promissory note, originally issued by MJ Reg Disrupters, LLC, to Two Shores Capital Corp.
• The promissory note had an original principal amount of $2,510,601.30, and its remaining balance as of December 31, 2025, was $2,000,000, due by June 2028 in installments.
• In exchange for the assignment, Jones Soda Co. received a cash payment of $1,400,000.
• Additionally, Jones Soda Co. agreed to issue warrants to Two Shores Capital Corp. to purchase 550,000 shares of the company's common stock at an exercise price of $0.40 per share, exercisable for three years.
• The proceeds from this transaction are intended for general working capital.

Sentiment

Score: 4

Explanation: While the company secured immediate working capital, it did so at a significant discount on the note and by issuing potentially dilutive warrants. This suggests a need for liquidity that came at a cost, indicating a moderately negative financial event despite the positive impact on immediate cash flow.

Positives

• Secured $1,400,000 in immediate cash for general working capital, enhancing liquidity.
• Eliminated the future collection risk and administrative burden associated with the promissory note.

Negatives

• Sold a promissory note with a remaining balance of $2,000,000 for $1,400,000, representing a $600,000 discount on the principal.
• Issued warrants to purchase 550,000 shares of common stock at $0.40 per share, which could lead to dilution for existing shareholders if exercised.

Risks

• Potential dilution of existing shareholders' equity if the 550,000 warrants are exercised.
• The $600,000 discount on the note sale represents a direct reduction in the company's asset value.

Future Outlook

The company intends to use the $1,400,000 proceeds for general working capital, which should support ongoing operations. The warrants are exercisable for three years, potentially leading to future capital infusion or dilution.

Management Comments

• The Company intends to use the proceeds for general working capital.

Industry Context

This transaction reflects a common strategy for companies to accelerate cash flow by selling off receivables or notes, often at a discount, especially when immediate liquidity is prioritized over long-term collection. For a beverage company like Jones Soda, securing working capital is crucial for operations, marketing, and distribution in a competitive market.

Comparison to Industry Standards

• Selling a promissory note at a discount to secure immediate liquidity is a common financial maneuver, particularly for smaller companies or those needing to optimize working capital. The 30% discount ($600,000 on $2,000,000) is significant but not unheard of, depending on the debtor's creditworthiness, the note's terms, and the urgency of the seller's cash needs.
• Issuing warrants as part of such a deal is also standard practice, offering the assignee potential upside in the company's stock in exchange for the discounted purchase. The exercise price of $0.40 per share should be compared to the company's current stock price to assess the immediate dilutive potential and attractiveness to the assignee.

Stakeholder Impact

• Shareholders: Potential dilution from the issuance and future exercise of 550,000 warrants. The immediate cash infusion could stabilize operations, but the discount on the note represents a loss of asset value.
• Creditors: Improved liquidity from the cash proceeds could enhance the company's ability to meet short-term obligations.
• Employees/Operations: The use of proceeds for general working capital supports ongoing business operations and stability.

Next Steps

• Utilize the $1,400,000 proceeds for general working capital.
• Manage potential future dilution if the 550,000 warrants are exercised.

Key Dates

Recommendation

The transaction provides immediate liquidity for general working capital, which is a positive for short-term operational stability. However, the significant discount on the promissory note and the issuance of dilutive warrants represent a cost to shareholders. While the cash infusion is beneficial, the terms suggest a need for capital that came at a price. Investors should hold to observe how the company utilizes this capital and if it translates into improved financial performance, weighing the immediate benefit against the long-term dilution potential.

Keywords

Jones Soda Co., promissory note, debt assignment, warrants, working capital, Two Shores Capital Corp., MJ Reg Disrupters, SEC filing, 8-K