Company: JSDA
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-011093
Chunk: 2

Company: JONES SODA CO.
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 2
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 credit facility, partially offset by approximately a $0.3 million
payment related to the termination of a prior credit facility and $0.1 million,
reflecting repayments under the Company’s insurance financing agreement.

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, the Company recently 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.

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.

    10
    Table of Contents

Revenue
recognition

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