What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2026-03-31 compared with 2025-04-01 · 298 added, 585 removed, 189 unchanged (82% of the section changed)

develop, produce, market and distribute premium beverages that we sell and distribute primarily in the United States and Canada through

our network of independent distributors and directly to our national and regional retail accounts.

We also sell products in select international

Our products are sold in grocery stores, convenience and gas stores, on fountain in restaurants, “up and down the street”

in independent accounts such as delicatessens, sandwich shops and burger restaurants, as well as through our national accounts with several

develop, produce, market and distribute premium beverages that we sell and distribute in the United States and Canada through our network

of independent distributors, directly to our national and regional retail accounts and directly to consumers through e-commerce.

products are sold in grocery stores, convenience and gas stores, on fountain in restaurants, “up and down the street” in

independent accounts such as delicatessens, sandwich shops and burger restaurants, as well as through our national accounts with several

large retailers.

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refer to our national and regional accounts who receive shipments directly from us as our direct to retail (“DTR”) channel.

We do not directly manufacture our products, but instead outsource the manufacturing process to third-party contract manufacturers.

also sell various products online, including soda with customized labels, wearables, candy and other items, and we license our trademarks

for use on products sold by other manufacturers.

In addition, during 2022, we developed and began to license THC infused cannabis products

under the “Mary Jones” brand name in various U.S.

states that permitted the sale of THC infused products.

We also have a

royalty-free license in perpetuity to intellectual property related to Mary Jones for us to license Mary Jones products for use only

We also sell products in select international markets.

We do not directly manufacture our products, but instead outsource the manufacturing

process to third-party contract manufacturers.

We also sell various products online, including soda with customized labels and other

items, and we license our trademarks for use on products sold by other manufacturers.

In addition, we license the Mary Jones brand and

formulations for THC infused beverages to MJ Reg Distruptors, a US company, for products sold in select US states and Canadian provinces.

company is a Washington corporation formed in 2000 as a successor to Urban Juice and Soda Company Ltd., a Canadian company formed in

Our principal place of business is located at 4786 1st Avenue South, Suite 103, Seattle, WA 98134.

Our principal place of business is located at 1522 Western Ave, STE 24150, Seattle, WA 98101.

Our telephone number is (206) 624-3357.

strategy is to evolve from a craft soda company (Jones Soda) to a diverse beverage company covering additional growing market segments

including modern soda (Pop Jones and Fiesta Jones) and the alternative adult beverages (Mary Jones).

including modern soda (Pop Jones) and the alternative adult beverages (Mary Jones and Spike Jones).

Our product line-up currently consists

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sugar and natural colors and flavors when possible.

We also sell Jones Soda in more traditional flavors such as Cream Soda, Cola, Root

Beer and Orange & Cream.

Jones and Fiesta Jones (Modern Soda market segment)

continue to see a growing market in in our health focused soda brands, which we consider to be the “modern soda” market.

Recent growth by industry competitors such as Poppi and Olipop have proven out the growing consumer demand for this market segment.

2024, Jones launched its Pop Jones and Fiesta Jones product lines to capitalize on this growing market opportunity.

Jones (Alternative Adult Beverages market segment)

February 2024 we received approval to operate in Ontario, Canada, and have launched, in that province, 10mg Tetrahydrocannabinol

(“THC”) infused sodas in a variety of flavors as well gummies and vapes.

We also launched in British Columbia in 2024

where we launched 10mg Tetrahydrocannabinol (“THC”) infused sodas.

We also recently received approval in the province of

Alberta to launch in June 2025 10mg Tetrahydrocannabinol (“THC”) infused sodas in a variety of flavors as well as

gummies and vapes.

Manufacturing and distribution of Mary Jones products in Canada is intended to be done through Tilray Brands,

The new Mary Jones products will continue Jones Soda’s tradition of using photographs submitted by consumers on their

bottle labels and printing quotes from fans under the bottle caps.

currently intend to expand both the products offered under the Mary Jones brand as well as the number of states and Canadian provinces

we offer such cannabis infused products in.

We also sell Jones Soda in more traditional flavors such as Cream Soda, Berry Lemonade,

Root Beer and Orange & Cream.

Jones (Modern Soda market segment)

continue to see a growing market in our health focused soda brands, which we consider to be the “modern soda” market.

growth by industry competitors such as Poppi and Olipop have proven the growing consumer demand for this market segment.

In 2024, Jones

launched its Pop Jones product lines to capitalize on this growing market opportunity.

Jones and Spike Jones (Alternative Adult Beverages market segment)

started offering its hemp-derived Delta-9 THC products in 2024 through the Mary Jones brand, including with a line of four flavors of

Mary Jones hemp-derived sodas.

Since that time, Mary Jones has expanded its portfolio to include three flavors of 10mg Mary Jones shooters,

four flavors of Mary Jones gummies, and a line of Mary Jones zero sugar sodas.

We further believe Mary Jones is uniquely positioned to

lead in this emerging category.

Backed by over two decades of brand equity from Jones Soda, we believe we offer an instantly recognizable

name, a loyal consumer base, and a proven reputation for flavor innovation and quality.

Although we believe there is currently a growing

market for these products as consumers continue to migrate away from traditional beer and wine products, on November 12, 2025, the federal

spending legislation passed to reopen the U.S.

federal government contained a provision, which when implemented, would materially alter

the federal treatment of hemp-derived products by prohibiting the unregulated sale of intoxicating hemp-based or hemp-derived products

(including HD9 products), while also capping legal hemp products at 0.4 milligrams of total THC (and similar-effect cannabinoids) per

The Company believes that when implemented, this legislation would likely require the Company to significantly reformulate or

ultimately discontinue the Company’s current hemp-derived HD9 product lines.

Additionally, in the third quarter of 2025 we launched

our line of hard craft sodas “spiked” with alcohol under the brand name “Spiked Jones”.

This brand trust allows

us to enter the alcohol market with a built-in advantage, one that we believe most new and existing competitors cannot replicate.

(food services market segment)

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Rounding out the lineup are two of our most popular cane sugar flavors, Berry Lemonade and Green Apple.

have developed other products in select markets that include teas, lemonade, vitamin enhanced waters, hydration beverages, as well as

naturally flavored sparkling waters.

continue to see growing interest from larger quick service restaurants, corporate accounts, retailers, celebrity chefs and a variety

of other outlets looking for differentiated offerings in their fountain soda.

We feel that Jones on fountain enhances the consumer experience,

while appealing to a broad demographic.

We believe our national brand awareness and customer-centric approach make us unique compared

to other craft soda competitors within this category.

continue to see opportunities in this market segment for customers looking for differentiated offerings in their fountain soda.

appealing to a broad demographic, we feel that Jones on fountain enhances the consumer experience.

We believe our national brand awareness

and customer-centric approach make us unique compared to other craft soda competitors within this category.

and Private Label Products

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focus is sales growth through execution of the following key initiatives:

Expand the Jones Soda glass bottle business in existing and new sales channels;

Expand our business in the modern soda category through our Pop Jones and Fiesta Jones brands;

Expand our fountain program in the United States and Canada; and,

Grow the new Mary Jones brand of Tetrahydrocannabinol (THC) and cannabidiol (CBD)-infused beverages, edibles, and other related products through our Mary Jones brand as well as the number of states and Canadian provinces where such products are sold.

the Jones Soda glass bottle business in existing and new sales channels;

our business in the modern soda category through our Pop Jones brand;

our business in the alternative adult beverage market

2025, sales in the United States represented approximately 88% of total sales, while sales in Canada represented approximately 12%.

premium beverage products are sold primarily in grocery stores, convenience and gas stores, on fountain in restaurants and “up

and down the street” in independent accounts such as delicatessens, sandwich shops and burger restaurants as well as through our

national accounts with several large retailers.

Jones (HD9) Branded Products

Company sold our Mary Jones Brand cannabis-infused (THC) business in June 2025.

We now license the Mary Jones brand and product formulations

to MJ Disruptors, the purchaser of this business.

The Company retained the Mary Jones beverage business where the product is derived

from hemp (HD9 products).

While we continue to sell HD9 products, Congress passed legislation late in 2025 which significantly restricts

the amount of THC that can be included in hemp derived HD9 products effectively significantly reducing the market for these products.

Distribution and Sales Strategy

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distributors in select regions across the United States and Canada to provide our premium products and uniquely customized fountain equipment.

the year ended December 31, 2024, DOT Foods Inc.

(“DOT”), one of our independent distributors and our top account by revenue

represented approximately 13% of revenue during 2024.

We intend to continue to expand our distributor network and DTR accounts, which

we hope will result in a decreased dependence on any one or more of our independent distributors (including DOT) or national retail accounts.

the years ended December 31, 2025, and 2024 one customer accounted for approximately 31% and nil% of total revenues.

Revenues from this

customer were generated within the Company’s beverage segment.

the years ended December 31, 2025, and 2024 a second customer accounted for approximately 4% and 13% of total revenues.

Revenues from

this customer were generated within the Company’s beverage segment.

contract with independent trucking companies to have our product shipped from our contract manufacturers to independent warehouses and

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maintain a network of independent distributors across the United States and Canada that sell our portfolio of branded products.

also secured distribution in select international markets and are evaluating other international opportunities for our products.

our distributors based on our perception of their ability to build our brand franchise in convenience stores, grocery stores, on fountain

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we provide any of our products directly to one of our national retailers located in the distributor’s region.

We are also obligated

to pay termination fees for cancellations of most of these written distributor agreements, unless the termination is for “cause.

Unless the termination

is for “cause”, we are also obligated to pay termination fees for cancellations of most of these written distributor agreements.

intend to continue our efforts to reinforce and expand our distribution network by partnering with new distributors and replacing underperforming

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States and Canada to provide our premium products, including our fountain and slush products, and uniquely customized fountain equipment.

premium beverage products are sold throughout the United States and Canada, primarily in grocery stores, convenience and gas stores,

on fountain in restaurants and “up and down the street” in independent accounts such as delicatessens, sandwich shops and

burger restaurants as well as through our national accounts with several large retailers.

In 2024, sales in the United States represented

approximately 83% of total sales, while sales in Canada represented approximately 17% (primarily through our distributor relationship

with Lassonde).

Jones (THC) Branded Products

Mary Jones Brand cannabis-infused line (THC) is currently marketed and licensed through indirect

subsidiaries in California, Michigan, Missouri and Washington in the US and through Mary Jones Beverage (Canada) Inc.

We partner with

different state-licensed co-manufacturing and distribution partners in each respective state,

region, or province in which we license these products.

Premium Soda Brands

have established our brand primarily through our fun and independent image, as well as by offering what we believe to be unique and exciting

flavors that appeal to consumers seeking alternatives to mainstream “corporate” carbonated soft drinks.

This market is largely

driven by young, trendy consumers who are looking for distinctive products with better ingredients.

While we are known for our innovative

flavors, we also offer traditional ones, which broadens our appeal and positions us as a leader in the growing premium craft beverage

the labels on our bottles, we also focus on building brand loyalty and customer engagement by inviting consumers to submit photographs

to be featured on Jones Soda labels.

Throughout the year, we select photos to place on our bottles and cans for distribution.

Additionally,

consumers can create personalized labels to celebrate special occasions and memories through myJones.com, where they can upload a photo

and caption using our proprietary patented process.

aim to “bring our labels to life” with augmented reality (AR) labels, showcasing athletes and artists in action.

builds on our long-time connection with action sports and creators.

Using the Jones Soda app, consumers can scan the “Reel Label”

icon on our bottles to view short videos that bring these creators’ worlds to life—whether it’s a time-lapse of a mural

being painted or an athlete performing a hardflip at the skatepark.

creative labeling, we provide distributors with point-of-sale materials and branded apparel to increase consumer appeal and awareness.

These marketing efforts, combined with our innovative labeling, have helped establish strong connections and loyalty to the Jones Soda

marketing team has developed a strong brand positioning and identity, which we believe is an essential asset that keeps our brand widely

recognized and positively viewed by a large demographic.

We’ve positioned ourselves as an alternative to mainstream soda brands,

often targeting locations where these brands are not sold.

We’ve also sponsored alternative sports athletes to promote our products

in youth-oriented sports, including UFC, auto racing, skateboarding, BMX biking, snowboarding, and skiing.

Additionally, we’ve

sponsored emerging musicians and artists.

This strategy helps us connect with a younger audience that values independence from larger

soft drink brands.

key marketing pillar for us is the open access our consumers have to define the brand via social media and our website, Jonessoda.com .

We engage with our consumers through social media campaigns to better understand their preferences and trends.

Social media has shifted

modern business away from traditional advertising, and we’ve had success creating social hubs on platforms like Facebook, X,

and Instagram.

Our consumers have welcomed us into their social media lives, creating a personal connection that we believe strengthens

their engagement with our brand and products.

Consumer-Submitted

are known for featuring consumer-submitted photos on our labels and cans.

We encourage consumers to send in photos of their lives, which

we select to feature on our labels.

These photos can be submitted through our “Jones Soda Photo Gallery” on our website.

offer Jones Soda customers—whether businesses or individuals—the chance to create personalized 12-packs with custom labels

featuring their own photos.

This program not only provides a unique product offering but also serves as an innovative marketing opportunity

for our brand.

Consumers can upload their photos through our website to create their own myJones labels, which are printed and delivered

believe this personalized approach has increased awareness and consumer interaction with the Jones Soda brand.

of Sale and Consumer Awareness

increase consumer awareness of our products, we use point-of-sale materials such as posters, stickers, hats, and T-shirts.

to consumer demand, we also sell our products and branded apparel on our website.

We participate in grassroots-level community and sporting

events in selected cities to build brand awareness and loyalty.

Our vehicles—painted in Jones colors and logos—help create

excitement and support distributors as they open new retail accounts.

Occasionally,

we partner with companies to manufacture Jones-related products, like the Jones Soda Flavor Booster hard candy, which extends and enhances

We also engage in cross-promotional campaigns with other companies to further our reach.

invest in events that align with our brand and core demographic, including skateboarding events and partnerships with like-minded companies.

These events allow us to display our logo, offer product samples, and encourage purchases at retail locations.

We plan to continue investing

in these events to strengthen the Jones Soda brand.

and Product Development – Premium Soda Beverages

recognize the importance of continually creating new beverages and enhancing existing products to meet evolving consumer tastes.

Jones Cane Sugar Fountain program, which offers our sodas “on tap” at restaurants and grocery stores, is a key part of this

We work with select fountain distributors to provide these innovative products to retail customers.

focus is on developing innovative products that resonate with consumers, retailers, and distributors.

We maintain open communication

with our consumers via our website, blogs, and social media, as well as with our retail and distributor partners to stay current with

industry trends.

majority of our brand and product development occurs in-house, using the same process that launched the Jones Soda brand.

We assess industry segments to identify potential opportunities.

We consider price sensitivity and the ability to meet margin requirements.

We analyze existing and potential distribution channels.

We assess contract packing capacity, strategic production locations, and

quality control.

Based on our evaluations, we develop brand concepts and work with flavor

houses to test and choose flavors.

and Product Development – Mary Jones

Mary Jones brand is inspired by the original Jones Soda flavors.

We believe the popularity of Jones Soda has paved the way for growth

in the Mary Jones line.

Although we differentiate the two brands for safety and compliance reasons, we leverage the equity of the Jones

Soda brand to support and market Mary Jones products.

As the Mary Jones brand grows, we will continue to innovate and develop new products

Beverage Market Segment

Soda has built its brand around distinctive flavors, consumer-generated packaging, and a positioning as an alternative to large mainstream

carbonated soft drink brands.

Our products are designed to appeal to consumers seeking premium beverages with differentiated flavors

and ingredients.

distinctive feature of the Jones Soda brand is the use of consumer-submitted photography on product labels.

We encourage consumers to

submit photographs for use on Jones Soda bottles and cans we distribute in retail channels.

Our marketing and brand teams then select

the photographs they find are best suited for our brand ethos.

In addition, consumers and businesses may create personalized labels through

the Company’s myJones platform, which allows customers to design custom labeled products using their own photos and messages.

brand elements are intended to differentiate Jones Soda products within the premium craft soda category and support consumer engagement

with the brand.

Company also periodically introduces limited-edition products tied to entertainment properties and cultural collaborations as part of

its broader brand and product strategy.

and Consumer Engagement

Company also supports its brand through a combination of digital engagement, retail marketing programs, and participation in community

and industry events.

Soda maintains marketing channels across multiple social media platforms and uses these channels to communicate with consumers, gather

feedback, and promote new products and initiatives.

These platforms provide opportunities for the Company to interact directly with consumers

and monitor emerging consumer preferences and trends.

addition to its social media platforms, the Company supports its retail partners through point-of-sale materials and promotional programs

designed to increase product visibility and consumer awareness.

In addition, Jones Soda participates in selected events and sponsorships

aligned with its brand identity and target customers.

These activities may include product sampling and promotional activations designed

to increase brand awareness and support retail distribution.

Company continually develops new beverages and flavor variations in response to evolving consumer preferences and market trends.

development activities are conducted primarily in-house and involve collaboration with external flavor houses and manufacturing partners.

product development process typically includes the following steps:

Evaluation – Identification of potential product opportunities and consumer trends.

Evaluation – Analysis of pricing, margins, and commercial viability.

Evaluation – Assessment of available distribution channels and retail opportunities.

Evaluation – Review of manufacturing capabilities, contract packing capacity, and quality control requirements.

and Design Development – Creation of product concepts, packaging design, and flavor selection.

Limited-Edition

Product Launches and Strategic Partnerships

Company periodically develops limited-edition beverage products tied to entertainment properties, cultural collaborations, and consumer

These programs are designed to generate consumer engagement, test new product concepts, and drive demand through specific

distribution channels.

example, in 2025 the Company entered into a merchandise license agreement with ZeniMax Media Inc., a Delaware corporation.

the “Fallout” name and all names, art, characters, weapons and audio/visual elements from the Fallout franchise which includes

the video game and related television series.

This license agreement expires on December 31, 2028.

on this merchandise license agreement, the Company introduced a series of beverages inspired by the Fallout video game franchise and

television series.

The product line included a limited-edition in-game soda, collectible four-packs sold through the Company’s

direct-to-consumer website, and a specialty glass bottle format.

Company also introduced a limited-edition 12-pack format for select club-store retailers.

These initial retail allocations sold quickly

which led to additional national shipments to club-store partners.

While initially the ZeniMax agreement had a nominal impact on our

revenue, we experienced a dramatic revenue increase in the fourth quarter resulting from the Fallout video game and television series

these programs, the Company has been exploring a product launch model that includes:

edition product releases targeted to specific retail channels, including direct-to-consumer and club-store formats

with entertainment brands and community-focused creators

promotion and social media engagement to build anticipation prior to launch

product availability designed to concentrate consumer demand

Company believes this approach can provide an efficient method for testing new products, increasing brand visibility, and supporting

retail sell-through in targeted channels.

Jones and Spike Jones Product Lines

Company has expanded its product portfolio to include the Mary Jones brand, which offers hemp-derived beverages inspired by the original

Jones Soda flavors.

The Company differentiates the Mary Jones brand from its traditional soda products in order to comply with regulatory

requirements and to clearly distinguish between product categories.

Soda leverages its existing brand recognition and flavor portfolio to support the development and marketing of Mary Jones products while

continuing to expand product offerings and flavors within this category.

beverage industry is highly competitive.

Our primary competitors include large soft drink manufacturers, regional premium beverage companies,

and private label suppliers.

Competition factors include brand image, distribution, price, product quality, and innovation.

compete not only for consumer acceptance but also for shelf space and marketing focus with our distributors.

While our products are premium

offerings priced similarly or higher than competitors, we believe our quality sets us apart.

we believe that we will be able to continue to create competitive and relevant brands and products to satisfy consumers’ changing

preferences, there can be no assurance that we will be able to do so or that other companies will not be more successful in this regard

over the long term.

of the products is also important.

We believe that our products are priced in the same price range or higher than competitive brands

and products, and compete on quality as they are premium product offerings.

Market Segment

face intense competition in the Cannabis industry from other companies, some of which have longer operating histories and more financial

resources and longer history of the production and marketing of cannabis products than we do.

Competitors are primarily branded and private

label cannabis companies who are operating in multiple states.

We are currently in direct competition with Keef Brands, Cann Social Tonics,

and Tonik Beverages, none of which are national consumer packaged goods brands in the United States.

We are confident that our cannabis

products will be highly competitive.

We seek a competitive advantage over our competitors by applying our Mary Jones brand name recognition

and by offering quality cannabis products to our loyal customer base.

Because of the early stage of the cannabis industry in the United

States and Canada, we also face additional competition from new entrants.

If the number of users of medical and recreational cannabis

increases, the demand for products will increase and we expect that competition will become more intense, as current and future competitors

begin to offer an increasing number of diversified products and pricing strategies.

To remain competitive, we believe we will be required

to make a high level of investment in our planned licenses, partnerships, branding, products and technologies, distribution, research

and development, marketing, sales and client support.

We may not have sufficient resources to maintain its marketing, sales and client

support efforts on a competitive basis which could materially and adversely affect our business, financial condition, and results of

operations of our planned cannabis business.

The Company competes with large global beverage manufacturers, regional beverage companies,

specialty beverage producers, and private label suppliers across several product categories.

Significant competitors include, but are

not limited to, the Coca-Cola Company, PepsiCo, Inc., Nestlé S.A., Keurig Dr Pepper Inc., Danone S.A., Suntory Beverage &

Food Limited, Anheuser-Busch InBev, Kirin Holdings, Heineken N.V., Diageo plc, and Red Bull GmbH.

Competitive products include numerous

nonalcoholic sparkling soft drinks;

water products, including flavored and enhanced waters;

juices, juice drinks and nectars;

(including syrups and powders);

energy drinks;

sports drinks;

milk and other dairy-based drinks;

plant-based beverages;

functional beverages, including vitamin-based products and relaxation beverages;

and various other nonalcoholic beverages.

These competitive

products are sold to consumers in both ready-to-drink and non-ready-to-drink form.

factors impacting our business include, but are not limited to, pricing, advertising, sales promotion programs, in-store displays and

point-of-sale marketing, digital marketing, product and ingredient innovation, availability, increased efficiency in production techniques,

the introduction of new packaging as well as new vending and dispensing equipment, contracting with marketing assets (theaters, sports

arenas, universities, etc.), and brand and trademark development and protection.

Jones Soda competes not only for consumer demand but

also for retail shelf space and distributor attention.

The Company seeks to differentiate its products through flavor innovation, brand

identity, and consumer engagement.

Packing Arrangements

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and independent contract manufacturers (co-packers).

We currently use primary co-packers located in Canada and the United States.

We currently use primary co-packers located in the United States and Canada.

the product is manufactured, the finished products are stored either at the co-packer’s location or in nearby third-party warehouses.

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production commitments with our co-packers.

Our co-packers may terminate their arrangements with us at any time, in which case we could

experience disruptions in our ability to deliver products to our customers.

We continually review our contract packing needs in light

of regulatory compliance and logistical requirements and may add or change co-packers based on those needs.

Our co-packers may terminate their arrangements subject to the terms of their agreements

with us, in which case we could experience disruptions in our ability to supply products to our customers.

We continually review our

contract packing needs in light of regulatory compliance, capacity, and logistical requirements and may add or change co-packers based

on those needs.

We also maintain ongoing operational oversight of our co-packers to support product quality, service levels, and supply

raw materials used in the manufacturing of our premium soda beverage products consist primarily of concentrate, flavors, supplements,

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Substantially all of the raw materials used in the preparation, bottling and

packaging of our bottle and can products are purchased by us or by our contract manufacturers in accordance with our specifications.

These raw materials are purchased from suppliers selected by us or by our contract manufacturers.

We believe that we have adequate sources

of raw materials, which are available from multiple suppliers.

packaging of our bottled and canned products are purchased either directly by us or by our contract manufacturers in accordance with

our specifications.

These raw materials are sourced from suppliers selected by us or approved by our contract manufacturers.

we have adequate sources of raw materials, which are available from multiple suppliers.

purchase flavor concentrate from our suppliers.

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supply agreement with our primary glass supplier which expires at the end of 2028.

The price of glass continues to increase each year

due to the shortage of available glass in the industry; however, our supply agreement with our glass supplier provides us with some

price protection through 2025.

The price of glass continues to increase due to industry

capacity constraints and natural gas cost fluctuations;

however, our supply agreement provides us with price protection through 2028.

cost of cane sugar is subject to market volatility driven by global supply and demand dynamics, weather conditions, and energy costs.

Rather than entering into long-term fixed price contracts, we actively manage this exposure by periodically layering in purchase positions

to maintain forward coverage at competitive market prices.

This procurement approach allows us to secure supply and manage cost risk

while maintaining flexibility to benefit from favorable market conditions.

actively monitor commodity markets and supplier capacity in an effort to maintain continuity of supply and manage input cost volatility.

premium soda beverage products are made from high-quality ingredients and natural and artificial flavors.

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contract manufacturer must transmit all quality control test results to us for reference following each production run.

Our internal quality control specialist selects the flavors we ultimately determine to use.

also includes microbiological checks and other tests to ensure the production facilities meet the standards and specifications of our

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view towards ensuring the high quality of our product through a stringent co-packer selection, training and communication program.

2022, we began to develop, market and license our cannabis-infused beverage brand under the “Mary Jones” brand name in California

to complement our existing soda beverage business.

Similar to the manufacturing process with our premium soda products we outsource the

manufacturing and distribution of our products to state licensed third parties with whom we enter licensing agreements with concerning

our cannabis products being manufactured and sold.

We operate our cannabis operations in California, Michigan, Missouri and Washington

under wholly-owned subsidiaries that are separate from our current soda beverage business.

We currently plan to expand our cannabis operations

into other states that have legalized the recreational use of cannabis using a similar structure to our operations in California.

Beverage Business

production and marketing of our proprietary beverages are subject to the rules and regulations of various federal, provincial, state

and local health agencies, including in particular Health Canada, Agriculture and Agri-Food Canada (the “AAFC”) and the United

States Food and Drug Administration (the “FDA”).

and local health agencies, including in particular the United States Food and Drug Administration (the “FDA”) and Health

Canada, Agriculture and Agri-Food Canada (the “AAFC”).

The FDA and AAFC also regulate labeling of our products.

From time to time,

we may receive notifications of various technical labeling or ingredient reviews with respect to our products.

We believe that we have

a compliance program in place to ensure compliance with production, marketing and labeling regulations.

to time, we may receive notifications of various technical labeling or ingredient reviews with respect to our products.

We believe that

we have a compliance program in place to ensure compliance with production, marketing and labeling regulations.

requirements have been enacted in several jurisdictions in the United States and Canada requiring that deposits or certain eco-taxes

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future at local, state and federal levels, both in the United States and Canada.

of Federal Law

certain states have legalized either medical marijuana or medical and adult use cannabis, at the federal level, cannabis currently remains

a Schedule I drug under the Controlled Substances Act of 1970 (21 U.S.C.

§§ 811 et seq.).

Under United States federal law,

a Schedule I drug or substance has a high potential for abuse, no accepted medical use in the United States, and a lack of accepted safety

for the use of the drug under medical supervision.

As such, cannabis related practices or activities, including without limitation, the

cultivation, manufacture, importation, possession, use, or distribution of cannabis, remain illegal under United States federal law.

federally illegal, the U.S.

Department of Justice (the “DOJ”) has historically exercised enforcement discretion.

that while federal law technically prohibits cannabis, the DOJ has generally not prioritized prosecuting individuals or businesses that

comply with state cannabis regulations, especially in states with robust medical or recreational cannabis programs.

This approach stems

from guidance like the 2013 memorandum issued by the DOJ to all U.S.

Attorney’s Offices to generally direct all U.S.

not to prioritize the enforcement of federal marijuana laws against individuals and businesses that rigorously comply with state regulatory

provisions in states with strictly regulated medical or recreational cannabis programs (the “2013 Cole Memorandum”), which

was later rescinded in 2018 under Attorney General Jeff Sessions.

Despite the rescission, enforcement discretion remains, with U.S.

having the authority to decide whether to prosecute cannabis-related offenses based on factors like the seriousness of the offense and

available resources.

2022, former President Joe Biden announced a three-step approach to reforming federal cannabis policy.

This included pardoning federal

offenders convicted of simple cannabis possession, urging state Governors to take similar actions, and directing the Department of Health

and Human Services (“HHS”) and the Attorney General to review cannabis’s status as a Schedule I substance.

2024, HHS and the FDA recommended rescheduling cannabis, marking a significant step toward potential federal policy change.

These efforts

reflect broader momentum for reform, though cannabis remains a Schedule I drug until official changes are made to federal law.

now, given the change in administration, these actions do not alter the legal status of cannabis but represent steps toward reconsidering

its classification.

Attorney General Pam Bondi, who assumed office in 2025, the DOJ has indicated its focus is refining federal cannabis policy, with an

emphasis on prosecutorial discretion and greater alignment with state-level regulatory frameworks.

Attorney General Bondi has signaled

that her approach will be more tailored to individual jurisdictions, respecting state decisions to regulate cannabis while maintaining

federal oversight over interstate issues and illicit activity.

While the DOJ continues to prioritize resource allocation, it has stated

that state-compliant cannabis businesses operating under rigorous regulatory schemes will generally not be a target for federal prosecution.

However, federal law enforcement remains vigilant in addressing significant concerns such as money laundering, illegal trafficking, and

other criminal activities connected to cannabis.

Additionally,

federal law it may potentially be a violation of federal money laundering statutes for financial institutions to take any

proceeds from marijuana sales or any other Schedule I substance.

Banks and other financial institutions could be prosecuted and possibly

convicted of money laundering for providing services to cannabis businesses.

federal law, banks or other financial institutions

that provide a cannabis business with a checking account, debit or credit card, small business loan, or any other service could be found

guilty of money laundering or conspiracy.

Despite these laws, the U.S.

Department of the Treasury issued a memorandum in February of

2014 (the “FinCEN Memorandum”) outlining the pathways for financial institutions to bank state-sanctioned marijuana businesses.

Under these guidelines, financial institutions must submit a “suspicious activity report” (“SAR”) as required

by federal money laundering laws.

These marijuana related SARs are divided into three categories:

marijuana limited, marijuana priority,

and marijuana terminated, based on the financial institution’s belief that the marijuana business follows state law, is operating

out of compliance with state law, or where the banking relationship has been terminated.

the same day the FinCEN Memorandum was published, the DOJ issued a memorandum (the “2014 Cole Memo”) directing prosecutors

to apply the enforcement priorities of the 2013 Cole Memorandum in determining whether to charge individuals or institutions with crimes

related to financial transactions involving the proceeds of marijuana-related conduct.

The 2014 Cole Memo has been rescinded as of January

4, 2018, along with the 2013 Cole Memorandum, removing guidance that enforcement of applicable

financial crimes was not a DOJ priority.

Attorney General Sessions’ revocation of the 2013 Cole Memorandum and the 2014 Cole

Memo has not affected the status of the FinCEN Memorandum, nor has the Department of the Treasury given any indication that it intends

to rescind the FinCEN Memorandum itself.

Though it was originally intended for the 2014 Cole Memo and the FinCEN Memorandum to work in

tandem, the FinCEN Memorandum can act as a standalone document which explicitly lists the eight enforcement priorities originally cited

in the 2013 Cole Memorandum.

As such, the FinCEN Memorandum remains intact.

this guidance, many financial institutions remain hesitant to engage with the cannabis industry due to the risks of federal prosecution

and regulatory uncertainty.

Additionally, in 2021, some proposals were made to clarify or modify FinCEN’s stance to ease access

to banking services for cannabis businesses, but comprehensive reform has not yet been enacted.

Thus, while FinCEN provides a framework

for financial institutions, the cannabis industry’s access to banking remains limited and subject to ongoing regulatory and legal

Proceedings under Federal Law

the Cole Memorandum and 2014 Cole Memo have been rescinded, the United States Congress has repeatedly enacted legislation to protect

the medical marijuana industry from prosecution.

The United States Congress has passed appropriations bills each of the last three

years that included the Rohrabacher Amendment Title:

H.R.2578 — Commerce, Justice, Science, and Related Agencies

Appropriations Act, 2016, which by its terms does not appropriate any federal funds to the U.S.

DOJ for the prosecution of medical

cannabis offenses of individuals who are in compliance with State medical cannabis laws.

Subsequent to the issuance of the Sessions

Memorandum on January 4, 2018, the United States Congress passed its omnibus appropriations bill, SJ 1662, which for the fourth

consecutive year contained the Rohrabacher-Blumenauer Amendment language (the “Leahy Amendment”) and continued the

protections for the medical cannabis marketplace and its lawful participants from interference by the DOJ up and through the 2018

appropriations deadline of September 30, 2018.

The deadline has passed, but the Leahy Amendment has remained in effect by virtue of

a series of short-term spending bills signed on September 28, 2018, December 7, 2018, January 25, 2019 and February 8, 2019.

February 15 the amendment was renewed through the signing of the fiscal year 2019 omnibus spending bill, effective through September

On May 16, 2019, a House subcommittee released a base appropriations bill with the amendment included.

On September 26,

2019 the Senate Appropriations Committee approved a base appropriations bill with the amendment included.

On September 27, 2019 the

amendment was renewed through a stopgap spending bill, and again on November 21, 2019.

On December 20, 2019 the amendment was

renewed through the signing of the fiscal year 2020 omnibus spending bill, effective through September 30, 2020.

In July 2020, a

House subcommittee introduced a base appropriations bill with the amendment included.

The amendment was then renewed through a

series of stopgap spending bills on October 1, 2020 December 11, 2020, December 18, 2020,

December 20, 2020, and December 22, 2020.

On December 27, 2020, the amendment was renewed through the signing of the fiscal

year 2021 omnibus spending bill, effective through September 30, 2021.

In 2021, former President

Joe Biden became the first president to propose a budget with the Leahy Amendment included.

The amendment was then renewed through a

series of stopgap spending bills on September 30, December 3, February 18, and March 11.

On March 15 the amendment was renewed

through the signing of the FY 2022 omnibus spending bill, effective through September 30, 2022.

The amendment remains

effective in March 2025.

Regulatory Environment

following sections describe the legal and regulatory landscape in California and Washington where we have commenced our cannabis operations.

While we will work to ensure that our operations comply with applicable state laws, regulations, and licensing requirements, for the

reasons described above and the risks further described under the heading “Risk Factors”, there are significant risks associated

with our planned cannabis business.

Readers are strongly encouraged to carefully read and consider all of the risk factors contained

under the heading “Risk Factors” below.

Regulatory Landscape

1996, California was the first state to legalize medical marijuana through Proposition 215, the Compassionate Use Act of 1996.

This legalized

the use, possession and cultivation of medical marijuana by patients with a physician recommendation for treatment of cancer, anorexia,

AIDS, chronic pain, spasticity, glaucoma, arthritis, migraine, or any other illness for which marijuana provides relief.

2003, Senate Bill 420 was signed into law establishing an optional identification card system for medical marijuana patients.

September 2015, the California legislature passed three bills collectively known as the Medical Cannabis Regulation and Safety Act (“MCRSA”).

The MCRSA established a licensing and regulatory framework for medical marijuana businesses in California.

The system created multiple

license types for dispensaries, infused products manufacturers, cultivation facilities, testing laboratories, transportation companies,

and distributors.

Edible infused product manufacturers would require either volatile solvent or non-volatile solvent manufacturing licenses

depending on their specific extraction methodology.

Multiple agencies would oversee different aspects of the program and businesses would

require a state license and local approval to operate.

However, in November 2016, voters in California overwhelmingly passed Proposition

64, the Adult Use of Marijuana Act (“AUMA”) creating an adult-use marijuana program for adults 21 years of age or older.

AUMA had some conflicting provisions with MCRSA, so in June 2017, the California State Legislature passed Senate Bill No.

Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”), which amalgamates MCRSA and AUMA to provide a set

of regulations to govern a medical and adult-use licensing regime for cannabis businesses in the State of California.

The four agencies

that originally regulated marijuana at the state level were the Bureau of Cannabis Control (“BCC”), California Department

of Food and Agriculture (“DFA”), California Department of Public Health (“DPH”), and California Department of

Tax and Fee Administration.

MAUCRSA went into effect on January 1, 2018.

July 1, 2019, California enacted A.B.

In relevant part, the bill authorizes licensing authorities to issue citations and fines to

a licensee or an unlicensed person who violates MAUCRSA.

The maximum fine is $5,000 per violation for licensees and $30,000 per violation

for unlicensed persons.

Each day of a violation constitutes a separate violation.

97 also repeals a prior requirement that an applicant for a provisional license first hold a temporary license.

The bill also requires

applicants for provisional licenses to submit evidence of compliance with the California Environmental Quality Act, limits the validity

of a provisional license to 12 months with subsequent renewals as approved by the relevant licensing authority, and allows licensing

authorities to revoke provisional licenses for failing to diligently pursue final licensure.

Finally, the bill requires the DPH to establish

a certification program for manufactured cannabis products comparable to the National Organic Program and the California Organic Food

and Farming Act.

October 12, 2019, California enacted A.B.

The bill mandates that all cannabis vaping cartridges and cannabis vaporizers must include

a universal symbol identifying the product as a vaping product.

July 12, 2021, California Governor Gavin Newsom signed into law Assembly Bill 141 (AB-141), which creates the Department of Cannabis

Control (“DCC”).

The DCC is in the process of consolidating the state’s cannabis program oversight from three of the

existing agencies – the BCC, the DFA, and the DPH – under a single department in an effort to centralize and simplify regulatory

and licensing oversight in California.

DCC similarly announced its intention to create a single Licensing Division that would be responsible

for licensing of all cannabis businesses.

On or about September 15, 2021, the DCC filed emergency regulations to consolidate, clarify,

and make consistent cannabis regulations to the California Office of Administrative Law.

After a limited comment period, these consolidated

emergency regulations were approved and became effective on or about September 27, 2021.

These regulations created consistent standards

for cannabis licensees across all license types, by aligning application requirements, unifying terminology, and clarifying ownership

and financial interest requirements.

Further consolidated regulations and modifications of existing regulations were issued in March

present, to legally operate a medical or adult-use cannabis business in California, the operator must have both a local and state license.

This requires license holders to operate in cities with marijuana licensing programs.

Therefore, cities in California are allowed to

determine the number of licenses they will issue to marijuana operators or can choose to outright ban marijuana.

Licensing Requirements

medicinal retailer license permits the sale of medicinal cannabis and cannabis products to a medicinal cannabis patient in California

who possesses a physician’s recommendation.

Only certified physicians may provide medicinal marijuana recommendations.

retailer license permits the sale of cannabis and cannabis products to any individual age 21 years of age or older who presents a valid

government-issued photo identification.

adult-use or medicinal cultivation license permits cannabis cultivation activity which means any activity involving the planting, growing,

harvesting, drying, curing, grading or trimming of cannabis.

Such licenses further permit the production of a limited number of non-manufactured

cannabis products and the sales of cannabis to certain licensed entities within the state of California for resale or manufacturing purposes.

adult-use or medical manufacturing license permits the manufacturing of cannabis products.

Manufacturing includes the compounding, blending,

extracting, infusion, packaging or repackaging, labeling or relabeling, or other preparation of a cannabis product.

the state of California, only cannabis that is grown in the state can be sold in the state.

Although California is not a vertically-integrated

system, the state allows licensees to make wholesale purchase of cannabis from, or a distribution of cannabis and cannabis product to,

another licensed entity within the state.

of marijuana licenses in California are subject to a detailed regulatory scheme encompassing:

security, staffing, sales, manufacturing

standards, inspections, inventory, advertising and marketing, product packaging and labeling, records and reporting, and more.

all jurisdictions, the full regulations, as promulgated by each applicable state agency, should be consulted for further information

about any particular operational area.

cannabis businesses may partner with non-licensed business entities pursuant to intellectual property licensing agreements subject to

certain disclosure requirements and approvals by the DCC.

Dispensary Requirements

retailers may only sell cannabis products that were received by the retail licensee from a licensed distributor or licensed microbusiness

authorized to engage in distribution, and the licensed retailer must verify that the cannabis goods have not exceeded their best-by,

sell-by, or expiration date if one is provided.

The goods must have undergone appropriate laboratory testing, and the batch number labeled

on the package of cannabis goods must match the batch number on the corresponding certificate of analysis for regulatory compliance testing.

The packaging and goods must comply with all applicable laws in order for the goods to be sold at the retail location.

In addition to

cannabis goods, a licensed retailer may sell only cannabis accessories and licensee’s branded merchandise.

A licensed retailer

may not provide free cannabis goods except for in certain limited circumstances.

retailers may only display cannabis goods for inspection and sale in the retail area.

Such goods may be removed from their packaging

and placed in containers to allow for customer inspection, so long as the containers are not readily accessible to customers without

assistance of retailer personnel.

A container must be provided to the customer by the licensed retailer or its employees, who must remain

with the customer at all times that the container is being inspected by the customer.

Cannabis goods removed from their packaging in

this way may not be sold or consumed.

They must be destroyed appropriately when they are no longer being used for display.

Reporting Requirements

state of California uses METRC as the state’s track-and-trace (“T&T”) system used to track commercial cannabis

activity and movement across the distribution chain for all state-issued annual licensees.

The system allows for other third-party system

integration via application programming interface.

Only licensees have access to METRC.

Storage, Transportation, and Security Requirements

ensure the safety and security of cannabis business premises and to maintain adequate controls against the diversion, theft, and loss

of cannabis or cannabis products, California’s marijuana businesses are required to do the following:

a fully operational security alarm system;

for security guard services;

a video surveillance system that records continuously 24 hours a day;

that the facility’s outdoor premises have sufficient lighting;

dispense from its premises outside of permissible hours of operation;

cannabis and cannabis product only in areas per the premises diagram submitted to the state

of California during the licensing process;

all cannabis and cannabis products in a secured, locked room or a vault;

to local law enforcement within 24 hours after being notified or becoming aware of the theft,

diversion, or loss of cannabis; and

the safe transport of cannabis and cannabis products between licensed facilities, maintain

a delivery manifest in any vehicle transporting cannabis and cannabis products.

Only vehicles

registered with the DCC that meet DCC distribution requirements are to be used to transport

cannabis and cannabis products.

DCC, and its authorized representatives, shall have full and immediate access to inspect and enter onto any premises licensed by the

Prior notice of an inspection, investigation, review, or audit is not required.

The DCC may also test any vehicle or equipment possessed

by, in control of, or used by a licensee or their agents and employees for the purpose of conducting commercial cannabis activity.

it may test any cannabis goods or cannabis-related materials, or products possessed by, in control of, or used by a licensee or their

agents and employees for the purpose of conducting commercial cannabis activity.

The DCC may also copy any materials, books, or records

of any licensee or their agents and employees.

Failure to cooperate with and participate in any DCC investigation pending against the

licensee may result in a licensing violation subject to discipline.

Regulatory Landscape

State’s cannabis regulatory regime has evolved significantly since the state first legalized cannabis.

In 2012, Washington voters

passed Initiative 502 (I-502), legalizing both medical and recreational cannabis for adults over the age of 21.

This marked a significant

shift in state policy, as Washington became one of the first states in the U.S.

to legalize recreational cannabis.

I-502 established

a framework for regulating the production, distribution, and sale of cannabis, creating a state-controlled system for licensing producers,

processors, and retailers.

The initiative also set strict limits on possession and consumption, ensuring cannabis was treated similarly

to alcohol in terms of regulation and enforcement.

the passage of I-502, the Washington State Liquor and Cannabis Board (the “WSLCB”) was tasked with developing detailed regulations

and implementing the cannabis market.

By 2014, the first legal cannabis stores opened, and the state began to collect significant tax

revenue from cannabis sales.

The WSLCB established rules regarding the licensing process, product testing, packaging, and labeling to

ensure consumer safety and prevent cannabis from being sold to minors.

Additionally, the state implemented robust tracking systems to

monitor cannabis products from cultivation through retail to prevent diversion to the black market.

Washington’s regulatory framework

was designed to maintain strict oversight while promoting a legal market for cannabis.

addition to recreational cannabis, Washington’s medical cannabis system has also undergone considerable changes.

Although medical

cannabis was legal in Washington before I-502, it lacked a clear regulatory structure.

After I-502’s passage, the state worked

to integrate medical cannabis into the new recreational system, ensuring that medical patients had access to regulated, quality products.

In 2015, the Washington State Legislature passed ESHB 2136, which unified the medical and recreational cannabis systems and created a

framework for medical cannabis patients to access cannabis through licensed dispensaries.

Under the new system, medical cannabis patients

benefit from certain tax exemptions and higher purchase limits, while the overall goal was to ensure both the recreational and medical

cannabis markets were properly regulated to protect public health and safety.

Today, Washington State’s cannabis laws continue

to evolve, focusing on further refinement and adjustments to the market as the state navigates challenges related to enforcement, taxation,

and equity in the cannabis industry.

Licensing Requirements

Washington State, cannabis manufacturing is regulated by the Washington State Liquor and Cannabis Board (the “WSLCB”), which

issues licenses for producers and processors involved in the production and manufacture of cannabis products.

The relevant regulatory

framework for cannabis manufacturing is governed primarily by Initiative 502 (I-502) and the rules set forth in Title 314 of the Washington

Administrative Code (the “WAC”).

Under I-502, the WSLCB is responsible for issuing licenses, enforcing compliance with regulations,

and overseeing the legal cannabis market in Washington.

obtain a cannabis manufacturing or retail license, applicants must meet several criteria, including demonstrating that they are 21 years

of age or older, are U.S.

citizens or legal residents, and have no felony convictions within the past 10 years, particularly those related

to controlled substances.

The licensing process involves submitting an application through the WSLCB’s online portal, paying application

fees, and passing a background check.

Manufacturers must also ensure that their operations meet local zoning requirements, as local municipalities

may have additional restrictions or bans on cannabis businesses.

Licenses are available for different types of manufacturing, such as

cannabis processing, which involves the creation of cannabis-infused products, and cannabis extraction, which includes methods of concentrating

cannabinoids like THC and CBD.

a license is granted, cannabis manufacturers and retailers must comply with ongoing regulatory requirements under the WSLCB’s rules.

These include maintaining a secure facility with proper surveillance and alarm systems, conducting regular product testing through state-approved

labs, and adhering to packaging and labeling standards outlined in WAC 314-55.

All participants in the Washington cannabis industry are

also required to use the state’s seed-to-sale tracking system, called the Marijuana Tracking System (the “MTS”), to

monitor the movement of cannabis products from cultivation to sale.

Compliance with these regulations is essential for ensuring the safety,

security, and legality of cannabis manufacturing in Washington State.

Failure to comply with the licensing requirements and regulations

can result in fines, suspension, or revocation of the manufacturer’s license.

Dispensary Requirements

dispensaries in Washington State are permitted to sell a variety of cannabis products, including flower (dried cannabis), pre-rolls,

concentrates, extracts, edibles, tinctures, and topicals.

These products must be sourced from licensed producers and processors who comply

with state regulations regarding testing, labeling, and quality control.

According to WAC 314-55, all cannabis products sold in dispensaries

must undergo testing for potency and contaminants (e.g., pesticides, mold, and residual solvents) at state-certified laboratories to

ensure they meet health and safety standards before they reach consumers.

Additionally, dispensaries can only sell cannabis products

that are appropriately packaged and labeled, following WSLCB rules.

Labels must include information such as product potency (THC/CBD

content), ingredients, serving size, and health warnings.

display of cannabis products within dispensaries is tightly regulated.

Under WAC 314-55-155, cannabis products must be kept behind a

counter or in a secure area that is not accessible to customers without the assistance of a licensed employee.

Retailers are prohibited

from displaying cannabis products in an open manner or allowing customers to handle the products without first engaging with a staff

Edibles and concentrates, in particular, must be stored in child-resistant, tamper-evident packaging, and products must not be

displayed in a way that is attractive to minors.

Additionally, the law prohibits retailers from using advertising or packaging that could

appeal to children, such as cartoon characters or candy-like packaging.

are required to maintain robust security measures to prevent theft and ensure public safety.

According to WAC 314-55-083, dispensaries

must have a security system in place that includes 24/7 surveillance with video cameras covering key areas such as entrances, exits,

cash handling areas, and storage areas.

All video footage must be retained for a minimum of 45 days and be available to law enforcement

upon request.

Dispensaries must also maintain a secure inventory system to track cannabis products from producers and processors to the

final sale, using the state’s MTS.

Furthermore, physical security measures, such as locked storage for cannabis products, safes

for cash, and alarm systems, are required to safeguard both the products and the dispensary’s premises.

Employees must be trained

in security protocols, including how to handle potential theft, customer disputes, and other emergency situations.

rules aim to maintain a controlled, secure, and compliant cannabis retail environment in Washington State, ensuring the legal market

operates safely while protecting public health and preventing unauthorized access to cannabis products.

Non-compliance with these regulations

can result in fines, suspension, or revocation of a dispensary’s license.

Reporting Requirements

participants in the Washington cannabis industry are also required to use the MTS to monitor the movement of cannabis products from cultivation

the Safe Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”) of the state of California, if the state has

determined that a substance causes cancer or harms human reproduction or development, a warning must be provided for any product sold

in the state that exposes consumers to that substance, unless the conditions of an exemption (described below) can be met.

maintains lists of these substances and periodically adds other substances to these lists.

The detection of even a trace amount of a

listed substance can subject an affected product to the requirement of a warning label.

However, Proposition 65 exempts a product from

a warning if the manufacturer can demonstrate that the use of that product exposes consumers to a daily quantity of a listed substance

a “safe harbor” threshold that may be established;

result of necessary cooking;

to another applicable exemption.

or more substances that are currently on the Proposition 65 list can be detected in certain Company products at low levels that are safe.

The Company maintains that the presence of each such substance in Company products is subject to an applicable exemption from the warning

requirement or that the product is otherwise in compliance with Proposition 65.

However, the state of California and other parties have

in the past taken a contrary position and may do so in the future.

Additionally, the state of California may include other substances

on the Proposition 65 list in the future.

We expect continued scrutiny of ingredients or substances present in certain of our products

and/or their packaging, as well as processes used to make them, and it is possible that similar or more restrictive requirements may

be proposed or enacted in the future.

Derived Beverage Business

Delta-9 tetrahydrocannabinol (“HD9”) products operate within a complex regulatory environment shaped by federal hemp legislation,

federal agency oversight, and evolving state laws.

The legal framework governing HD9 products primarily stems from the Agriculture Improvement

Act of 2018 (the “2018 Farm Bill”), which created a legal distinction between hemp and marijuana based on Delta-9 THC concentration.

Under federal law, hemp and hemp-derived cannabinoids—including Delta-9 THC—are lawful provided the product contains no more

than 0.3% Delta-9 THC on a dry-weight basis.

regulatory structure has allowed the development of a national market for intoxicating hemp products, including HD9 beverages, edibles,

tinctures, and other consumer goods.

However, regulatory oversight is divided among several federal agencies and further complicated

by differing state regulations.

Legal Framework

Substances Act

the Controlled Substances Act, marijuana and tetrahydrocannabinols derived from marijuana are classified as Schedule I controlled substances.

I substances are defined as drugs with:

high potential for abuse

currently accepted medical use under federal law.

to 2018, most cannabis extracts containing THC were illegal at the federal level.

Legalization Under the 2018 Farm Bill

2018 Farm Bill fundamentally changed U.S.

cannabis policy by removing hemp from the Controlled Substances Act.

The law defines hemp as:

Cannabis sativa L.

and any part of that plant containing no more than 0.3 percent Delta-9 THC on a dry-weight basis.

legislation also legalized:

hemp extracts;

cannabinoids;

isomers and salts and salts of isomers;

provided they meet the

Delta-9 THC concentration threshold.

statutory language created the legal basis for hemp-derived intoxicating cannabinoids, including HD9 products.

Agency Oversight

federal agencies exercise jurisdiction over hemp-derived cannabinoids.

United States Department of Agriculture (“USDA”) regulates hemp cultivation through the federal hemp production program.

Responsibilities include:

licensing hemp producers;

approving state hemp plans;

establishing THC testing protocols;

and overseeing interstate

hemp transport.

authority applies primarily to agricultural production rather than finished consumer products.

Food and Drug Administration regulates hemp-derived products that are marketed as:

dietary supplements;

FDA has repeatedly stated that cannabinoids marketed with therapeutic claims require formal drug approval.

agency has also raised safety concerns regarding:

inconsistent potency levels;

youth access;

contamination risks;

and lack of clinical

of March 2026, the FDA has not established a comprehensive regulatory pathway for intoxicating hemp products such as HD9.

Drug Enforcement Administration retains authority over controlled substances.

DEA has indicated that:

cannabinoids derived directly from hemp may fall outside the Controlled Substances Act;

and synthetically produced

THC may remain a controlled substance.

distinction between natural extraction and chemical conversion remains an area of regulatory interpretation.

courts have increasingly interpreted the 2018 Farm Bill broadly.

Several appellate rulings have affirmed that hemp-derived cannabinoids

are lawful if they meet the 0.3% Delta-9 THC threshold, even if the resulting products produce intoxicating effects.

rulings have contributed to the expansion of the hemp cannabinoid industry but have also prompted calls from regulators and lawmakers

for legislative clarification.

Regulatory Framework

federal law allows hemp-derived cannabinoids, individual states maintain authority to regulate hemp products sold within their borders.

State approaches generally fall into three categories:

some states allow HD9 products with relatively limited additional restrictions beyond federal law.

Products may be sold through

convenience stores, specialty hemp retailers, and online platforms.

Examples include Florida, Texas, Indiana, Wisconsin, and Georgia.

These states allow hemp-derived Delta-9 products if compliant with the federal THC threshold.

other states have created regulatory frameworks for intoxicating hemp products similar to alcohol or cannabis regulation.

Typical requirements include age restrictions (usually 21+), maximum THC dosage per serving, product testing and labeling, and retail

Examples include:

and North Carolina.

These states impose dosage limits and licensing

requirements.

some states have banned intoxicating hemp cannabinoids entirely or require such products to be sold exclusively through licensed

cannabis dispensaries.

These jurisdictions treat intoxicating hemp products as functionally equivalent to marijuana.

Examples include:

These jurisdictions restrict or prohibit intoxicating hemp-derived THC products.

operating in the HD9 industry face several regulatory risks.

See ITEM 1A RISK FACTORS;

Risks Regulatory Uncertainty for Hemp Derived

Beverage Business.

Flavor Concentrate Trade Secrets and Patent Rights

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and should not be relied upon as any indication of future performance or results expected for the fiscal year.

additional information, refer to Part I, “Item 1A.

Risk Factors” of this Annual Report.

believe the strength of our workforce is one of the significant contributors to our success.

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Internet address is www.jonessoda.com.

Certain information contained on our website is not part of this annual report on Form

Certain information contained on our website is not part of this annual report on Form 10-K.

make available on or through our website at www.jonessoda.com our SEC filings free of charge as soon as reasonably practicable after

3 unchanged sentences

Committee Charter

● Compensation

and Governance Committee Charter

2 unchanged sentences

copy of any of the materials filed with or furnished to the SEC or copies of the corporate governance materials described above are available

free of charge and can be mailed to you upon request to Jones Soda Co., 4786 1st Avenue South, Suite 103, Seattle, Washington 98134.

Harvey, President and Chief Executive Officer

Meadows, Chief Financial Officer

Carimi, Chief Operating Officer

Goldner, Chief Growth Officer

Norman, Chairman

free of charge and can be mailed to you upon request to Jones Soda Co., 1522 Western Ave, STE 24150, Seattle, WA 98101.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business