Company: JSDA
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001641172-25-024179
Chunk: 31

Company: JONES SODA CO.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 31
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 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
of 2025, the Company changed its senior leadership and is focusing on reducing its operating expenses while bringing new 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.

Additionally,
on May 7, 2025, the Company entered into a loan agreement with the Chairman of the Company’s Board of Directors in the amount of
$450,000. The interest rate on this loan is 12% per annum. The principal, together with accrued interest and a loan fee of $22,000, is
due and payable in full by October 10, 2025. A $22,000 loan fee is also due upon repayment. The proceeds from this loan are expected
to be used for general working capital purposes.

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.

Critical
Accounting Policies and Estimates

See
the information concerning our critical accounting policies and estimates included under “Item 7. Management’s