Filed Pursuant to Rule
424(b)(3)
Registration No. 333-225049
Prospectus Supplement
(to Prospectus dated July 23, 2018)
Jones Soda Co.
Up to 11,315,000 Shares
of Common Stock
This prospectus supplement
supplements the prospectus, dated July 23, 2018 (the “Prospectus”), which forms a part of our Amendment No. 1 to our
Registration Statement on Form S-3 on Form S-1 (Registration No. 333-225049). This prospectus supplement is being filed to update,
amend and supplement the information included or incorporated by reference in the Prospectus with the information contained in
our Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “Commission”) on November 7,
2019 (the “Current Report”). Accordingly, we have attached the Current Report (including exhibits) to this prospectus
supplement.
The Prospectus
and this prospectus supplement relates to the sale of up to 11,315,000 shares of our common stock which may be resold from time
to time by the selling shareholders identified in the Prospectus. The shares of common stock covered by the Prospectus and this
prospectus supplement are issuable upon the conversion of a portion or all of the
convertible subordinated promissory notes (the “Convertible Notes”) issued pursuant to that certain Note Purchase Agreement
dated as of March 23, 2018 among the Company and the purchasers of the Convertible Notes.
We are not selling any common stock under the Prospectus and this prospectus supplement and will not receive any of the proceeds
from the sale or other disposition of shares by the selling shareholders.
This prospectus supplement
should be read in conjunction with the Prospectus. This prospectus supplement updates, amends and supplements the information included
or incorporated by reference in the Prospectus. If there is any inconsistency between the information in the Prospectus and this
prospectus supplement, you should rely on the information in this prospectus supplement.
Our common stock is listed
for quotation on the OTCQB quotation system under the symbol “JSDA.” The last bid price of our common stock on November
6, 2019 was $0.40 per share.
Investing
in our common stock involves a high degree of risk. You should review carefully the risks and uncertainties described under the
heading “Risk Factors” of the Prospectus, and under similar headings in any amendment or
supplements to the Prospectus.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of the Prospectus or this prospectus supplement. Any representation to the contrary is a criminal offense.
The date of this prospectus
supplement is November 7, 2019.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
Form 8-K
_____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): November 5, 2019
Jones Soda Co.
(Exact Name of Registrant as Specified in Charter)
Washington
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0-28820
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52-2336602
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(State or Other Jurisdiction of Incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification Number)
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66 South Hanford Street, Suite 150, Seattle, Washington 98134
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(Address of Principal Executive Offices) (Zip Code)
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(206) 624-3357
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
|
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[ ]
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
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[ ]
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
|
[ ]
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
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[ ]
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
Item 2.02. Results of Operations and Financial Condition.
On November 7, 2019, Jones Soda Co. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2019. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The Company will discuss its results for the quarter ended September 30, 2019 on its scheduled conference call today, November 7, 2019, at 4:30 p.m. Eastern time (1:30 p.m. Pacific time). This call will be webcast and can be accessed by visiting http://public.viavid.com/player/index.php?id=136803 or our website at www.jonessoda.com. Investors may also listen to the call via telephone by dialing (888) 599-8686 (confirmation code: 7411783). In addition, a telephone replay will be available by dialing (844) 512-2921 (confirmation code: 7411783) through November 14, 2019, at 7:30 p.m. Eastern Time.
The information in this Current Report in Item 2.02 and Exhibit 99.1 is being furnished to the Securities and Exchange Commission and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 8.01. Other Events.
On November 5, 2019, the Company’s Board of Directors (the “Board”) appointed directors to the standing Board committees, and appointed chairpersons thereto, as follows:
Audit Committee
- Jeffrey D. Anderson (Chair)
- Michael M. Fleming
- Clive Sirkin
Compensation and Governance Committee
- Jeffrey D. Anderson (Chair)
- Michael M. Fleming
- Paul Norman
Nominating Committee
- Michael Fleming (Chair)
- Jeffrey D. Anderson
- Clive Sirkin
For more information about our Board committees and the duties and responsibilities of members of our Board committees, see the “Board of Directors and Corporate Governance” section of the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on March 26, 2019.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.
|
|
Description
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99.1
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Press Release dated November 7, 2019
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Jones Soda Co.
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Date: November 7, 2019
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By:
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/s/ Jennifer L. Cue
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Jennifer L. Cue
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President, Chief Executive Officer and Acting Principal Financial Officer
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EXHIBIT 99.1
Jones Soda Reports Third Quarter 2019 Results
SEATTLE, Nov. 07, 2019 (GLOBE NEWSWIRE) -- Jones Soda Co. (the
“Company”) (OTCQB: JSDA), a leader in the craft soda category and known for its unique branding and authentic connection
to its consumers, announced results for the third quarter ended September 30, 2019.
Third Quarter 2019 Financial Summary vs. Year-Ago Quarter
-
Revenue was $3.0 million compared to $3.5 million.
-
Gross profit as a percentage of sales was 21.7% compared to 22.8%.
-
Net loss was $476,000, or $(0.01) per share, compared to a net loss of $425,000,
or $(0.01) per share.
-
Adjusted EBITDA1 was $(352,000) compared to $(279,000).
Management Commentary
“The third quarter was a challenging period as we experienced fewer promotions
from 7-Eleven compared to last year, difficult comparisons in our fountain business and production issues with Lemoncocco in the
early part of the quarter,” said Jennifer Cue, CEO of Jones Soda. “Despite these headwinds, our organization is energized
by a revamped sales and marketing plan supported by our new VP of marketing and our strategic partnership with HeavenlyRx. With
this new plan in place, we are going to be focused on growing our core markets, while driving increased awareness and consumption
of our products through unique and innovative marketing strategies.
“Looking to the remainder of this year and into 2020, we feel that we have
much to be optimistic about. Our Lemoncocco brand is now fully back on store shelves and gaining momentum, we have an innovative
marketing plan to reinvigorate sales and new product development is underway to enhance our portfolio. We believe 2020 will be
a pivotal year and that we have the necessary foundation in place to capitalize on the opportunities in front of us.”
Third Quarter 2019 Financial Results
Revenue in the third quarter of 2019 was $3.0 million compared to $3.5 million for
the same quarter a year ago. This was primarily the result of a 48% decrease in 7-Select revenue due to a decline in 7-Eleven store
counts, along with an 18% decrease in fountain revenue resulting from limited time offerings for a customer chain in 2018 that
did not repeat in 2019.
Gross profit as a percentage of sales was 21.7% for the third quarter of 2019 compared
to 22.8% in the same quarter a year ago. The decrease was primarily driven by increased raw material costs for natural ingredients,
along with increased slotting fees and trade promotions.
Net loss for the third quarter of 2019 was $476,000, or $(0.01) per share, compared
to a net loss of $425,000, or $(0.01) per share, in the same quarter a year ago.
Adjusted EBITDA1 in the third quarter of 2019 was $(352,000) compared
to $(279,000) in the same quarter a year ago.
At September 30, 2019, cash and cash equivalents totaled $7.0 million compared to
$1.0 million at December 31, 2018. The significant increase was a result of the strategic financing agreement the Company entered
into with HeavenlyRx on July 11, 2019. The Company utilized a portion of the proceeds from the financing to pay down its line of
credit balance, and did not have a balance on such line of credit at the end of the third quarter compared to $428,000 at December
31, 2018.
1 Adjusted EBITDA is defined as net loss from operations before interest,
taxes, depreciation, amortization and stock-based compensation and is a non-GAAP measure (reconciliation provided below).
Conference Call
Jones Soda will hold a conference call today at 4:30 p.m. Eastern time to discuss
its results for the third quarter ended September 30, 2019.
Date: Thursday, November 7, 2019
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Toll-free dial-in number: 1-888-599-8686
International dial-in number: 1-323-794-2575
Conference ID: 7411783
Please call the conference telephone number 5-10 minutes prior to the start time.
An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact
Gateway Investor Relations at 1-949-574-3860.
The conference call will be broadcast live and available for replay here
and via the investor relations section of the Company’s website at www.jonessoda.com.
A replay of the conference call will be available after 7:30 p.m. Eastern time on
the same day through November 14, 2019.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 7411783
Presentation of Non-GAAP Information
This press release contains disclosure of the Company's Adjusted
EBITDA, which is a not a United States Generally Accepted Accounting Principle (“GAAP”) financial measure. The difference
between Adjusted EBITDA (a non-GAAP measure) and Net Loss (the most comparable GAAP financial measure) is the exclusion of interest
expense, income tax expense, depreciation and amortization expense and stock-based compensation. We have included a reconciliation
of Adjusted EBITDA to Net Loss in our Non-GAAP Reconciliation in this press release. This non-GAAP measure should be considered
in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP. Adjusted
EBITDA has certain limitations in that it does not take into account the impact of certain expenses to our consolidated statements
of operations. In addition, because Adjusted EBITDA may not be calculated identically by all companies, the presentation here may
not be comparable to other similarly titled measures of other companies. We believe that Adjusted EBITDA provides useful information
to investors about the Company's results attributable to operations, in particular by eliminating the impact of non-cash charges
related to stock-based compensation, amortization and depreciation that is consistent with the manner in which we evaluate the
Company's performance. These adjustments to the Company's GAAP results are made with the intent of providing a more complete understanding
of the Company's underlying operational results and provide supplemental information regarding our current ability to generate
cash flow. This non-GAAP financial measure is not intended to be considered in isolation or as a replacement for, or superior to
net loss as an indicator of the Company's operating performance, or cash flow, as a measure of its liquidity. Adjusted EBITDA should
be reviewed in conjunction with Net Loss as calculated in accordance with GAAP.
About Jones Soda Co.
Headquartered in Seattle, Washington, Jones Soda Co.® (OTCQB: JSDA) markets
and distributes premium beverages under the Jones® Soda and Lemoncocco® brands. A leader in the premium soda category,
Jones Soda is made with pure cane sugar and other high-quality ingredients, and is known for packaging that incorporates ever-changing
photos sent in from its consumers. Jones’ diverse product line offers something for everyone – pure cane sugar soda,
zero-calorie soda and Lemoncocco non-carbonated premium refreshment. Jones is sold across North America in glass bottles, cans
and on fountain through traditional beverage outlets, restaurants and alternative accounts. For more information, visit www.jonessoda.com
or www.myjones.com or www.drinklemoncocco.com.
Forward-Looking Statements Disclosure
Certain statements in this press release are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all passages containing
words such as “will,” “aims,” “anticipates,” “becoming,” “believes,”
“continue,” “estimates,” “expects,” “future,” “intends,” “plans,”
“predicts,” “projects,” “targets,” or “upcoming.” Forward-looking statements also
include any other passages that are primarily relevant to expected future events or that can only be evaluated by events that will
occur in the future. Forward-looking statements are based on the opinions and estimates of management at the time the statements
are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated
or implied in the forward-looking statements. Factors that could affect the Company's actual results include, among others: its
ability to successfully execute on its growth strategies and operating plans for the future; the Company’s ability to effectively
utilize the proceeds from its recent strategic financing from HeavenlyRx; the Company’s ability to develop and introduce
new products to satisfy customer preferences and respond to changes in consumer demand or market acceptance for its products; the
Company’s ability to manage operating expenses and generate sufficient cash flow from operations; the Company’s ability
to maintain and expand distribution arrangements with distributors, independent accounts, retailers or national retail accounts;
consumer response to and market acceptance of the Company’s new products; competition in the Company’s industry, particularly
from Coke and Pepsi as well as other producers of craft beverages; imposition of new taxes, including potential taxes on sugar-sweetened
beverages; changes in pricing and SKUs of its products; its ability to maintain relationships with manufacturers of its products;
its ability to maintain a consistent and cost-effective supply of raw materials and flavors; its ability to maintain brand image
and product quality; its ability to attract, retain and motivate key personnel; fluctuations in freight and fuel costs; the impact
of currency rate fluctuations; its ability to protect its intellectual property; the impact of future litigation; the Company’s
ability to develop CBD-infused beverages; its ability to access the capital markets for any future equity financing, and any actual
or perceived limitations by being traded on the OTCQB Marketplace. More information about factors that potentially could affect
the Company’s operations or financial results is included in its most recent annual report on Form 10-K for the year ended
December 31, 2018 filed with the Securities and Exchange Commission (“SEC”) on March 22, 2019 and in the other reports
filed with the SEC since that that date. Readers are cautioned not to place undue reliance upon these forward-looking statements
that speak only as to the date of this release. Except as required by law, the Company undertakes no obligation to update any forward-looking
or other statements in this press release, whether as a result of new information, future events or otherwise.
Investor Relations Contact
Cody Slach
Gateway Investor Relations
1-949-574-3860
JSDA@gatewayir.com
finance@jonessoda.com
JONES SODA CO.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
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2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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(Unaudited)
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(Unaudited)
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|
|
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Revenue
|
$
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3,032
|
|
|
$
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3,454
|
|
|
$
|
9,345
|
|
|
$
|
10,218
|
|
|
Cost of goods sold
|
|
2,374
|
|
|
|
2,667
|
|
|
|
7,333
|
|
|
|
7,902
|
|
|
Gross profit
|
|
658
|
|
|
|
787
|
|
|
|
2,012
|
|
|
|
2,316
|
|
|
Gross profit %
|
|
21.7%
|
|
|
|
22.8%
|
|
|
|
21.5%
|
|
|
|
22.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing
|
|
539
|
|
|
|
644
|
|
|
|
1,792
|
|
|
|
1,859
|
|
|
General and administrative
|
|
491
|
|
|
|
477
|
|
|
|
1,699
|
|
|
|
1,550
|
|
|
|
|
1,030
|
|
|
|
1,121
|
|
|
|
3,491
|
|
|
|
3,409
|
|
|
Loss from operations
|
|
(372
|
)
|
|
|
(334
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)
|
|
|
(1,479
|
)
|
|
|
(1,093
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)
|
|
Interest income
|
|
22
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|
|
|
-
|
|
|
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22
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|
|
|
-
|
|
|
Interest expense
|
|
(113
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)
|
|
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(87
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)
|
|
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(353
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)
|
|
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(185
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)
|
|
Other income (expense), net
|
|
(8
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)
|
|
|
2
|
|
|
|
1
|
|
|
|
42
|
|
|
Loss before income taxes
|
|
(471
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)
|
|
|
(419
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)
|
|
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(1,809
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)
|
|
|
(1,236
|
)
|
|
Income tax expense, net
|
|
(5
|
)
|
|
|
(6
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)
|
|
|
(17
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)
|
|
|
(21
|
)
|
|
Net loss
|
$
|
(476
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)
|
|
$
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(425
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)
|
|
$
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(1,826
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)
|
|
$
|
(1,257
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share - basic and diluted
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$
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(0.01
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)
|
|
$
|
(0.01
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)
|
|
$
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(0.04
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)
|
|
$
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(0.03
|
)
|
|
Weighted average basic and diluted common shares outstanding
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|
58,777,185
|
|
|
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41,464,373
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|
|
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47,651,245
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|
|
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41,464,373
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|
|
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|
|
|
|
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JONES SODA CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
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September 30, 2019
|
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December 31, 2018
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|
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(Unaudited)
|
|
|
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ASSETS
|
|
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Current assets:
|
|
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|
|
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Cash and cash equivalents
|
|
$
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6,971
|
|
|
$
|
991
|
|
Accounts receivable, net of allowance of $43 and $40
|
|
|
1,877
|
|
|
|
1,362
|
|
Inventory
|
|
|
1,929
|
|
|
|
1,349
|
|
Prepaid expenses and other current assets
|
|
|
175
|
|
|
|
245
|
|
Total current assets
|
|
|
10,952
|
|
|
|
3,947
|
|
Fixed assets, net of accumulated depreciation of $470 and $489
|
|
|
176
|
|
|
|
88
|
|
Other assets
|
|
|
33
|
|
|
|
33
|
|
Right of use lease asset
|
|
|
41
|
|
|
|
-
|
|
Total assets
|
|
$
|
11,202
|
|
|
$
|
4,068
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
999
|
|
|
$
|
1,058
|
|
Line of credit
|
|
|
-
|
|
|
|
428
|
|
Accrued expenses
|
|
|
890
|
|
|
|
614
|
|
Lease liability
|
|
|
44
|
|
|
|
-
|
|
Taxes payable
|
|
|
4
|
|
|
|
-
|
|
Total current liabilities
|
|
|
1,937
|
|
|
|
2,100
|
|
Convertible subordinated notes payable, net
|
|
|
1,394
|
|
|
|
2,528
|
|
Deferred rent
|
|
|
-
|
|
|
|
8
|
|
Accrued interest expense
|
|
|
157
|
|
|
|
135
|
|
Shareholders’ equity (deficit):
|
|
|
|
|
|
|
Common stock, no par value:
|
|
|
|
|
|
|
Authorized — 100,000,000; issued and outstanding shares — 60,708,225 shares and 41,464,373 shares, respectively
|
|
|
61,916
|
|
|
|
53,822
|
|
Additional paid-in capital
|
|
|
11,527
|
|
|
|
9,389
|
|
Accumulated other comprehensive income
|
|
|
329
|
|
|
|
296
|
|
Accumulated deficit
|
|
|
(66,058)
|
|
|
|
(64,210)
|
|
Total shareholders’ equity (deficit)
|
|
|
7,714
|
|
|
|
(703)
|
|
Total liabilities and shareholders’ equity
|
|
$
|
11,202
|
|
|
$
|
4,068
|
|
|
|
|
|
|
|
|
JONES SODA CO.
NON-GAAP RECONCILIATION
(Unaudited, In thousands)
|
|
|
|
|
|
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
GAAP net loss
|
$
|
(476
|
)
|
$
|
|
(425
|
)
|
|
$
|
(1,826
|
)
|
$
|
|
(1,257
|
)
|
|
Stock based compensation
|
|
14
|
|
|
|
45
|
|
|
|
103
|
|
|
|
128
|
|
|
Interest income
|
|
22
|
|
|
|
-
|
|
|
|
22
|
|
|
|
-
|
|
|
Interest expense
|
|
113
|
|
|
|
87
|
|
|
|
375
|
|
|
|
185
|
|
|
Income tax expense, net
|
|
5
|
|
|
|
6
|
|
|
|
17
|
|
|
|
21
|
|
|
Depreciation and Amortization
|
|
14
|
|
|
|
8
|
|
|
|
33
|
|
|
|
19
|
|
|
Non-GAAP Adjusted EBITDA
|
$
|
(308
|
)
|
|
$
|
(279
|
)
|
|
$
|
(1,276
|
)
|
|
$
|
(904
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jones Soda (QB) (USOTC:JSDA)
Historical Stock Chart
From Aug 2024 to Sep 2024
Jones Soda (QB) (USOTC:JSDA)
Historical Stock Chart
From Sep 2023 to Sep 2024