What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-29 compared with 2023-03-14 · 375 added, 336 removed, 941 unchanged (43% of the section changed)

4 unchanged sentences

Audited Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Reports of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets as of December 31, 2023 and 2022

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To the stockholders and the Board of Directors of The Vita Coco Company, Inc.

New York, New York

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of The Vita Coco Company, Inc.

and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 29, 2024 , expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

New York, New York

February 29, 2024

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of The Vita Coco Company, Inc.:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of The Vita Coco Company, Inc.

and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, non-controlling interests and stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements").

and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 29, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Trade Promotion Accrual — Refer to Note 2 to the financial statement s

Critical Audit Matter Description

The Company’s contracts with customers include variable consideration, including trade promotions.

Variable consideration is treated as a reduction in revenue when the related revenue is recognized, and is recorded using the expected value method, with updates to estimates and related accruals of variable consideration occurring each period based on historical experience and changes in circumstances.

As disclosed by management in Note 9, the Company’s trade promotion accrual was $22.9 million as of December 31, 2023.

We identified the estimation of trade promotion accruals by management as a critical audit matter.

These accruals are based on contract terms and the Company’s historical experience with similar programs and requires management judgment with respect to estimating customer and consumer participation and performance results.

Consequently, auditing these assumptions require subjective auditor judgment

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to trade promotion accruals included the following, among others:

• We tested the effectiveness of management’s controls over the calculation of the trade promotion accruals, including management’s controls over the review of the period-end accrual.

• We selected a sample of individual customers and promotional periods included in management’s detail of the recorded trade promotion accruals, and evaluated inputs relevant to recorded amounts, including contractual pricing and rebate arrangements with customers and customer claims received subsequent to the accrual period, which were compared to source documents.

• We selected a sample of subsequent credits submitted by customers and inspected relevant source documents.

• We tested the trade promotion accrual at year-end by developing an expectation of the amount by applying the ratio of gross sales and trade promotion accrual balances at interim periods to gross sales in the fourth quarter and compared it to the balance recorded by management.

/s/ Deloitte & Touche LLP

New York, New York

March 14, 2023

February 29, 2024

We have served as the Company’s auditor since 2012.

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Inventory 50,757 84,115

Supplier advances 1,534 1,170

Supplier advances, Current 1,521 1,534

Derivative assets 3,876 3,606

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Goodwill 7,791 7,791

Intangible assets, net — 7,934

Supplier advances 4,360 2,808

Supplier advances, long-term 2,820 4,360

Deferred tax assets, net 6,749 4,256

Right-of-use asset 2,679 —

Right-of-use assets, net 1,406 2,679

Other assets 1,843 1,677

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Total current liabilities 82,585 54,346

Credit facility — —

Notes payable 25 48

Notes payable, long-term 13 25

Other long-term liabilities 647 2,293

Total liabilities $ 83,245 $ 56,664

Contingencies (See Note 11)

Stockholders’ equity:

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500,000,000 shares authorized;

and 62,225,250 shares and 61,764,582 shares issued at December 31, 2022 and 2021, respectively;

56,019,050 and 55,558,382 shares outstanding at December 31, 2022 and 2021, respectively.

63,135,453 and 62,225,250 shares issued at December 31, 2023 and December 31, 2022, respectively;

56,899,253 and 56,019,050 Shares Outstanding at December 31, 2023 and December 31, 2022, respectively.

Additional paid-in capital 161,414 145,210

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Accumulated other comprehensive loss ( 649 ) ( 994 )

Treasury stock, 6,206,200 shares at cost as of December 31, 2022, and December 31, 2021

Treasury stock, 6,236,200 shares at cost as of December 31, 2023, and 6,206,200 as of December 31, 2022.

( 59,701 ) ( 58,928 )

1 unchanged sentence

$ 202,437 $ 141,093

Noncontrolling interests — —

Total stockholders' equity $ 141,093 $ 123,173

Total liabilities and stockholders’ equity $ 285,682 $ 197,757

12 unchanged sentences

Selling, general and administrative 124,236 100,306 88,559

Change in fair value of contingent consideration — — ( 16,400 )

Total operating expenses 124,236 100,306 88,559

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Shares $Amount Shares $Amount Shares $Amount Shares Amount

Balance at January 1, 2020 50,793,470 508 8,113,105 81 58,906,575 589 98,450 ( 17,700 ) ( 4,306 ) ( 1,295 ) 211,575 ( 1,985 ) 73,753 46 73,799

Net income — — — — — — — — 32,660 — — — 32,660 27 32,687

Purchase of treasury stock — — — — — — — — — — 802,620 ( 6,940 ) ( 6,940 ) — ( 6,940 )

Stock-based compensation — — — — — — 1,517 — — — — — 1,517 — 1,517

Exercise of stock options 177,450 2 — — 177,450 2 882 — — — — — 884 — 884

Exercise of service warrants 116,025 1 — — 116,025 1 — — — — — — 1 — 1

Foreign currency translation adjustment — — — — — — — — — 346 — — 346 5 351

Balance at December 31, 2020 51,086,945 511 8,113,105 81 59,200,050 592 100,849 ( 17,700 ) 28,354 ( 949 ) 1,014,195 ( 8,925 ) 102,221 78 102,299

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Stock-based compensation — — — — — — 3,380 — — — — — 3,380 — 3,380

Exercise of stock options 20,930 — — — 20,930 — 178 — — — — — 178 — 178

Exercise of stock awards 20,930 — — — 20,930 — 178 — — — — — 178 — 178

Acquisition of non-controlling interest 43,602 1 — — 43,602 1 ( 8 ) — — 13 — — 6 ( 59 ) ( 53 )

Foreign currency translation adjustment — — — — — — — — — 320 — — 320 4 324

Balance at Balance at December 31, 2021 53,651,477 $ 537 8,113,105 $ 81 61,764,582 $ 618 $ 134,730 $ — $ 47,369 $ ( 616 ) 6,206,200 $ ( 58,928 ) $ 123,173 $ — $ 123,173

Balance at December 31, 2021 53,651,477 $ 537 8,113,105 $ 81 61,764,582 $ 618 $ 134,730 $ — $ 47,369 $ ( 616 ) 6,206,200 $ ( 58,928 ) $ 123,173 $ — $ 123,173

Net income — — — — — — — — 7,814 — — — 7,814 — 7,814

Stock-based compensation — — — — — — 7,384 — — — — — 7,384 — 7,384

Exercise of stock options 460,668 4 — — 460,668 4 3,096 — — — — — 3,100 — 3,100

Exercise of stock awards 460,668 4 — — 460,668 4 3,096 — — — — — 3,100 — 3,100

Foreign currency translation adjustment — — — — — — — — — ( 378 ) — — ( 378 ) — ( 378 )

Balance at December 31, 2022 54,112,145 $ 541 8,113,105 $ 81 62,225,250 $ 622 $ 145,210 $ — $ 55,183 $ ( 994 ) 6,206,200 $ ( 58,928 ) $ 141,093 $ — $ 141,093

Net income — — — — — — — — 46,629 — — — 46,629 — 46,629

Cumulative-effect adjustment related to the adoption of accounting guidance for credit losses — — — — — — — — ( 1,070 ) — — — ( 1,070 ) — ( 1,070 )

Purchase of treasury stock — — — — — — — — — — 30,000 ( 773 ) ( 773 ) — ( 773 )

Stock-based compensation — — — — — — 9,128 — — — — — 9,128 — 9,128

Exercise of stock awards 910,203 9 — — 910,203 9 7,076 — — — — — 7,085 — 7,085

Foreign currency translation adjustment — — — — — — — — — 345 — — 345 — 345

Balance at December 31, 2023 55,022,348 $ 550 8,113,105 $ 81 63,135,453 $ 631 $ 161,414 $ — $ 100,742 $ ( 649 ) 6,236,200 $ ( 59,701 ) $ 202,437 $ — $ 202,437

See accompanying notes to the consolidated financial statements.

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Impairment of intangible assets — 6,714 —

Deferred tax expense/(benefit) ( 3,081 ) ( 1,644 ) 6,282

Noncash lease expense 1,288 1,058 —

Change in fair value of contingent consideration — — ( 16,400 )

Deferred tax expense ( 2,382 ) ( 3,081 ) ( 1,644 )

Loss on extinguishment of debt — — 132

3 unchanged sentences

Prepaid expenses, net supplier advances, and other assets ( 622 ) ( 3,592 ) 2,725

Accounts payable, accrued expenses, and other long-term liabilities ( 16,776 ) 20,503 12,708

Accounts payable, accrued expenses, and other liabilities

24,340 ( 16,776 ) 20,503

Net cash provided by (used in) operating activities 107,155 ( 10,935 ) ( 16,166 )

5 unchanged sentences

Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and offering costs — — 30,356

Proceeds from exercise of stock options/warrants 3,062 177 885

Proceeds from settlement of loan to stockholder — 17,700 —

Proceeds from exercise of stock awards

7,086 3,062 177

Borrowings on credit facility — 22,000 —

2 unchanged sentences

Repayments of the term loan — — ( 30,000 )

Proceeds from settlement of loan to stockholder — — 17,700

Cash received (paid) on notes payable ( 23 ) ( 28 ) 21

1 unchanged sentence

Cash paid to acquire portion of non-controlling interest — — ( 54 )

Net cash (used in) provided by financing activities 3,034 ( 26,803 ) 2,050

Net cash provided (used in) by financing activities

6,290 3,034 ( 26,803 )

Effects of exchange rate changes on cash and cash equivalents 387 ( 178 ) 35

1 unchanged sentence

Cash and cash equivalents at beginning of the period 19,629 28,690 72,181

Cash and cash equivalents at end of the period $ 19,629 28,690 72,181

Cash, cash equivalents and restricted cash at end of the period (1)

$ 132,867 19,629 28,690

Supplemental disclosures of cash flow information:

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Cash paid for interest $ 75 217 349

(1) Includes $ 330 , $ 0 and $ 0 of restricted cash as of December 31, 2023, 2022, and 2021 respectively, that were included in other current assets.

See accompanying notes to the consolidated financial statements.

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and subsidiaries (the “Company”) develops, markets, and distributes various coconut water products under the brand name Vita Coco and for retailers' own brands, predominantly in the United States.

Other products include coconut milk, natural energy drinks (under the brand name Runa ), coconut oil, water (under the brand name Ever & Ever ), protein infused fitness drinks (under the brand name PWR LIFT) and coconut as a commodity.

Other products include coconut milk, coconut oil, water (under the brand name Ever & Ever ), protein infused fitness drinks (under the brand name PWR LIFT), coconut as a commodity and natural energy drinks (under the brand name Runa ),.

The Company was incorporated in Delaware as All Market Inc.

on January 17 th , 2007.

on January 17, 2007.

On September 9, 2021, we changed our name to The Vita Coco Company, Inc.

In 2018, the Company purchased certain assets and liabilities of Runa , which is marketed and distributed primarily in the United States.

In 2018, the Company purchased certain assets and liabilities of Runa , which was marketed and distributed primarily in the United States until the Company ceased selling the brand in December 2023.

We are a public benefit corporation under Section 362 of the Delaware General Corporation Law.

As a public benefit corporation, our Board of Directors is required by the Delaware General Corporation Law to manage or direct our business and affairs in a manner that balances the pecuniary interests of our stockholders, the best interests of those materially affected by our conduct and the specific public benefits identified in our certificate of incorporation.

The Company has nine wholly-owned subsidiaries including four wholly-owned Asian subsidiaries established between fiscal years 2012 and 2015, one North American subsidiary established in 2015, as well as majority ownership in All Market Europe, Ltd.

("AME") in the United Kingdom until the Company reacquired the minority stockholders' shares and became wholly-owned as of December 31, 2021.

The noncontrolling interest in AME represented minority stockholders’ proportionate share of the equity in AME.

The noncontrolling interest is presented in the equity section of the Company’s consolidated balance sheets.

The Company has nine wholly-owned subsidiaries including four wholly-owned Asian subsidiaries established between fiscal 2012 and 2015, four North American subsidiaries established between 2012 and 2018, as well as All Market Europe, Ltd.

(“AME”) in the United Kingdom of which the Company became the sole shareholder as of December 31, 2021.

Basis of Presentation

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All intercompany accounts and transactions have been eliminated in consolidation;

the noncontrolling interest in consolidated subsidiaries presented in the accompanying consolidated financial statements represents the portion of AME stockholders’ equity, which is not directly owned by the Company.

the noncontrolling interest in consolidated subsidiaries presented in the accompanying consolidated financial statements in the year ended December 31, 2021 represents the portion of AME stockholders’ equity, which was not directly owned by the Company.

Initial Public Offering (“IPO”)

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See Note 10 for additional information on the repayment of the 2021 Term Loan.

Concurrent with the IPO, various agreements were amended or newly effective, which are further described in our Prospectus, which include:

• The Registration Rights agreement;

• The Investor Rights agreement;

Impact of Global Events Causing Macroeconomic Uncertainty

Uncertainty in the macroeconomic environment resulting from current geopolitical and economic instability (including the effects of current wars and other international conflicts) and the high interest rate and inflationary cost environment may affect our business.

It is not currently possible to ascertain the overall impact of these macroeconomic uncertainties on the Company’s business, results of operations, financial condition or liquidity.

Future events and effects related to these macroeconomic uncertainties cannot be determined with precision and actual results could significantly differ from estimates or forecasts.

THE VITA COCO COMPANY, INC.

3 unchanged sentences

(Amounts in thousands, except for share and per share data)

• Amendments to the employment agreements for the Executive Chairman, Mike Kirban and CEO, Martin Roper;

• Adoption of the new 2021 Stock Incentive Award Plan and new grants of awards to employees and directors;

• Adoption of a new 2021 Employee Stock Purchase Plan.

Impact of the COVID-19 Pandemic and Current Geopolitical Instability

Disruptions in the worldwide economy may affect our business, and the macroeconomic environment continues to be affected by the COVID-19 pandemic and the current geopolitical instability (including the effects of the conflict between Ukraine and Russia).

As a result, the Company has seen significant cost inflation to domestic and international shipping costs and some inflationary pressures on other cost elements;

only some of which have been covered by pricing actions to date.

The Company is continuing to monitor the situation carefully to understand any future potential impact on its people and business.

As a result, it is not currently possible to ascertain the overall impact of COVID-19 or the ongoing economic and geopolitical instability on the Company’s business, results of operations, financial condition or liquidity.

Future events and effects related to COVID-19 or the ongoing geopolitical instability cannot be determined with precision and actual results could significantly differ from estimates or forecasts.

The Company has also seen greater volatility on foreign exchange rates.

A strong dollar generally benefits the Company's supply chain activities while negatively impacting our reported international revenues.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 unchanged sentences

The estimation process often may yield a range of reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates.

The most significant estimates in the consolidated financial statements relate to share-based compensation, assessing long-lived assets for impairment, estimating the net realizable value of inventories, the determination of accounts receivables reserve, assessing goodwill for impairment, the determination of the value of trade promotions and assessing the realizability of deferred income taxes.

The most significant estimates in the consolidated financial statements relate to share-based compensation, assessing long-lived assets for impairment, estimating the net realizable value of inventories, the determination of the current expected credit losses allowance, assessing goodwill for impairment, the determination of the value of trade promotions and assessing the realizability of deferred income taxes.

Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606").

The Company recognizes revenue in accordance with ASC 606.

ASC 606 defines a five-step model that requires entities exercise judgment when considering the terms of contract(s), which include (1) identifying the contract or agreement with a customer, (2) identifying the performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied.

1 unchanged sentence

Each contract includes a single performance obligation to transfer control of the product to the customer.

Our revenue is recognized net of allowances for returns, discounts, credits and any taxes collected from consumers.

For the Company’s various products in the Vita Coco Coconut Water and Other product categories (refer to Note 3, Revenue Recognition ), control is transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue.

1 unchanged sentence

The Company’s performance obligations are satisfied at that time.

The Company does not have any significant contracts with customers requiring performance beyond delivery, and contracts

The Company does not have any significant contracts with customers requiring performance beyond delivery, and contracts with customers contain no incentives or discounts that would meet the criteria for a distinct good or service that could cause revenue to be allocated or adjusted over time.

Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent fulfillment costs, which are included in cost of goods sold, rather than revenue.

Additionally, the Company determined the production and distribution of Private Label products represents a distinct performance obligation.

Since there is no alternative use for these products and the Company has the right to payment for performance completed to date, the Company recognizes the revenue for the production of these Private Label products over time as the production for open purchase orders is completed, which may be prior to any shipment.

The resulting contract assets are recorded in prepaid expenses and other current assets.

The Company provides trade promotions and sales discounts to its customers and distributors.

Since these sales promotions and sales discounts do not meet the criteria for a distinct good or service, they are primarily accounted for as a reduction of revenue and include payments to customers and distributors for performing activities on our behalf, such as payments for in-store displays, payments to gain distribution of new products, payments for shelf space and discounts to promote lower retail prices.

These consolidated financial statements include accruals for these promotion and discounts.

The accruals are made for invoices that have not yet been received as of year-end and are recorded as a reduction of sales, and are based on contract terms and our historical experience with similar programs and require management judgement with respect to estimating customer and consumer participation and performance levels.

THE VITA COCO COMPANY, INC.

3 unchanged sentences

(Amounts in thousands, except for share and per share data)

with customers contain no incentives or discounts that would meet the criteria for a distinct good or service that could cause revenue to be allocated or adjusted over time.

Additionally, the Company determined the production and distribution of Private Label products represents a distinct performance obligation.

The resulting contract assets are recorded in prepaid expenses and other current assets.

The Company provides trade promotions to its customers.

These discounts do not meet the criteria for a distinct good or service and therefore, the Company reduces revenue for the discounts associated with meeting this obligation based on the expected value method.

These consolidated financial statements include trade promotion accruals.

Trade promotion accruals are made for invoices that have not yet been received as of year-end and are recorded as a reduction of sales.

This promotion accrual is a management estimate based upon the known price of retail promotions and estimates of the sales volume during the promotion period.

Cost of Goods Sold

10 unchanged sentences

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC Topic 718, Compensation — Stock Compensation ("ASC 718") for awards issued under the 2014 Stock Option and Restricted Stock Plan and the 2021 Stock Incentive Award Plan.

The Company accounts for stock-based compensation in accordance with ASC 718 for awards issued under the 2014 Stock Option and Restricted Stock Plan and the 2021 Stock Incentive Award Plan.

The Company measures all awards based on their fair value on the date of the grant and recognizes compensation expense for those awards over the requisite service period of each stock award grant, which is generally the vesting period of the respective award by using the accelerated attribution method.

3 unchanged sentences

The Company recognizes expense for performance-based awards when it becomes probable that such awards will be earned over a requisite service period.

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

(Amounts in thousands, except for share and per share data)

The Company defers the recognition of compensation expense for the stock awards that vest upon qualifying liquidity events until the qualifying events are probable of occurrence.

6 unchanged sentences

The Company accounts for income taxes under ASC 740, which requires an asset and liability approach to financial accounting and reporting for income taxes.

Deferred income tax assets and liabilities are computed annually for differences between the consolidated financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future.

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021

(Amounts in thousands, except for share and per share data)

amounts in the future.

Such deferred income tax assets and liabilities computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to affect taxable income.

18 unchanged sentences

The Company reserves for finished goods that are close to the date of expiration.

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

(Amounts in thousands, except for share and per share data)

Deferred Offering Costs

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The estimated useful lives of the Company’s property and equipment are as follows:

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021

(Amounts in thousands, except for share and per share data)

• Equipment and computer software and hardware – 3 - 7 years

6 unchanged sentences

The Company evaluates each of its acquisitions under the accounting framework in Accounting Standards Codification Topic 805, Business Combinations ("ASC 805").

ASC 805 requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable tangible and intangible assets acquired, the liabilities assumed and any non-controlling interest in the acquired entity, and recognize and measure goodwill or a gain from the purchase.

The acquiree’s results are included in the consolidated financial statements from the date of the acquisition.

2 unchanged sentences

Contingent consideration payable in cash or a fixed dollar amount settleable in a variable number of shares is classified as a liability and recorded at fair value, with changes in fair value recorded as a component of operating expenses in the accompanying consolidated statements of operations.

Transaction costs associated with business combinations are expensed as incurred and are included in selling, general and administrative expense in the consolidated statements of operations.

Transaction costs associated with business combinations are expensed as incurred and are included in selling, general and administrative expenses in the consolidated statements of operations.

The Company performs valuations of assets acquired, liabilities assumed, and contingent consideration and allocates the purchase price to its respective assets and liabilities.

Determining the fair value of assets acquired, liabilities assumed, and contingent consideration requires the use of significant judgment and estimates including the selection of valuation methodologies, estimates of future revenue, costs and cash flows, discount rates, the probability of the achievement of specified milestones, and selection of comparable companies.

The Company engages the assistance of

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

(Amounts in thousands, except for share and per share data)

valuation specialists in concluding on fair value measurements in connection with determining fair values of assets acquired, liabilities assumed, and contingent consideration in a business combination.

The Company engages the assistance of valuation specialists in concluding on fair value measurements in connection with determining fair values of assets acquired, liabilities assumed, and contingent consideration in a business combination.

Intangible assets

7 unchanged sentences

The fair value of the distributor relationships is determined through an income approach using the excess earnings method.

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021

(Amounts in thousands, except for share and per share data)

Goodwill represents the excess of the purchase price paid in excess of the fair value of net identifiable tangible and intangible assets acquired in a business combination and is measured in accordance with the provisions of ASC 350, Intangibles – Goodwill and Other ("ASC 350").

19 unchanged sentences

There was no allowance recorded as of December 31, 2023 and December 31, 2022.

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

(Amounts in thousands, except for share and per share data)

Foreign Currency

9 unchanged sentences

The Company periodically enters into forward foreign currency exchange contracts to hedge its foreign currency exposure.

The fair value of these contracts is recorded in the consolidated balance sheets with a corresponding adjustment to the consolidated statements of operations for the change in fair value of the derivative instruments, as the contracts have not been designated as a hedge instrument.

The fair value of these contracts is recorded in the consolidated balance sheets with a corresponding adjustment

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021

(Amounts in thousands, except for share and per share data)

to the consolidated statements of operations for the change in fair value of the derivative instruments, as the contracts have not been designated as a hedge instrument.

Refer to Note 12, Derivative Instruments, for more information.

18 unchanged sentences

Recently Adopted Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board ("FASB") issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40).

The update is associated with customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract.

The standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

The amendments in this update require that a customer in a hosting arrangement that is a service contract follow the guidance in Subtopic 350-40 to determine which implementation costs should be capitalized as an asset and which costs should be expensed and

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

(Amounts in thousands, except for share and per share data)

states that any capitalized implementation costs should be expensed over the term of the hosting arrangement.

The guidance is effective for the Company for fiscal years beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021.

The Company adopted the guidance in this amendment using a prospective approach effective January 1, 2021 for the fiscal year ended December 31, 2021.

The adoption of ASU 2018-15 did not have a material impact on the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), (“ASU 2019-12”) that simplify the accounting for income taxes by removing certain exceptions for recognizing deferred taxes for investments, performing intra-period allocation and calculating incomes taxes in interim periods.

ASU 2019-12 also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax goodwill and allocating taxes to members of consolidated group.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2021.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance , which requires disclosure about certain government assistance they receive.

ASU 2021-10 is effective for all entities for annual periods beginning after December 15, 2021.

The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers.

This ASU should be applied prospectively to acquisitions occurring on or after the effective date of December 15, 2022, and early adoption is permitted.

The Company adopted this standard for all prospective acquisitions after the effective date.

In February 2016, the FASB issued ASC 842 , ASU 2016-02 , Leases (Topic 842), which was amended by subsequent Accounting Standard Updates ("ASUs"), to enhance the comparability and usefulness of financial reporting around leasing activity.

The Company leases certain office space and machinery and equipment, which are primarily classified as operating leases.

These leases expire at various dates through 2025.

The Company's lease agreements do not contain any material restrictive covenants.

Operating leases are included within right-of-use assets, net, accrued expenses, and other long-term liabilities within our Consolidated Balance Sheets.

Finance leases are included within Property, Plant and Equipment, net, accrued expenses, and other long term liabilities.

Leases with an initial term of 12 months or less are not recognized on the Consolidated Balance Sheets.

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASC 842 , ASU 2016-02 , Leases (Topic 842), which was amended by subsequent Accounting Standard Updates ("ASUs"), to enhance the comparability and usefulness of financial reporting around leasing activity.

The new standard supersedes the existing authoritative literature for lease accounting under ASC 840 , with a focus on applying a “right-of-use model.” The guidance for leases under ASC 842 results in a right-of-use asset (“ROU asset”) and lease liability being reported on the balance sheet for leases with a lease term greater than twelve months.

1 unchanged sentence

Effective Dates for certain entities, which deferred the effective date of ASU 2016-02 for certain entities.

ASC 842 is effective for the Company, as an Emerging Growth Company (“EGC”), for annual reporting periods beginning after December 15, 2021 and for interim periods beginning after December 15, 2022.

ASC 842 was effective for the Company, as an Emerging Growth Company (“EGC”), for annual reporting periods beginning after December 15, 2021 and for interim periods beginning after December 15, 2022.

The Company adopted the standard on January 1, 2022 using the alternative modified retrospective transition approach in accordance with ASU 2018-11 , Leases (Topic 842):

Targeted Improvements, where the adoption date represents the initial date of application.

As part of its adoption, the Company elected to apply the package of practical expedients requiring no reassessment of whether any expired or existing contracts are or contain leases, the lease classification of any expired or existing leases, or the capitalization of initial direct costs for any existing leases.

As part of its adoption, the Company elected to apply the package of practical expedients requiring no reassessment of whether any expired or existing contracts are or contain leases, the lease

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021

(Amounts in thousands, except for share and per share data)

classification of any expired or existing leases, or the capitalization of initial direct costs for any existing leases.

Additionally, the Company elected the practical expedient that permits the exclusion of leases considered to be short-term.

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The adoption of the standard did not have a material impact on the Company’s consolidated statements of operations, or consolidated statements of cash flows.

Current Expected Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments ("ASU 2016-13").

The new accounting standard introduced the current expected credit losses methodology ("CECL") for estimating allowances for credit losses.

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized costs, including loans and trade receivables.

ASU 2016-13 was effective for the Company, as an Emerging Growth Company ("EGC"), for annual and interim reporting periods beginning after December 15, 2022.

The Company adopted the standard on January 1, 2023 using the modified retrospective method for all financial assets in scope.

The amounts for reporting periods beginning after January 1, 2023 are presented under ASC 326 methodology, while prior period amounts continue to be reported in accordance with previously applicable U.S.

As a part of the adoption, the Company selected to apply roll-rate method to estimate current expected credit losses for its accounts receivable population and weighted average remaining maturity ("WARM") method for supplier advances.

The difference of $ 1,070 between the incurred credit loss estimate and current expected credit loss estimate was recorded as cumulative effect adjustment to the Company’s opening retained earnings and reflected on the consolidated balance sheet as of January 1, 2023 as a result of the ASC 326 adoption.

The adoption of the standard did not have a material impact on the Company’s consolidated statements of operations, or consolidated statements of cash flows.

The following table illustrates the impact of ASC 326.

As of January 1, 2023

As reported under ASC 326 Pre-ASC 326 adoption Impact of ASC 326 adoption

Allowance for credit losses on accounts receivables $ 3,552 $ 2,898 $ 654

Allowance for credit losses on supplier advances 416 — 416

Total $ 3,968 $ 2,898 $ 1,070

Recently Issued Accounting Pronouncements

As a company with less than $1.07 billion of revenue during the last fiscal year, the Company qualifies as an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act.

This classification allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies.

The Company has elected to use the adoption dates applicable to private companies.

As a result, the Company’s financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective date for new or revised accounting standards that are applicable to public companies.

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2023-07.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate

THE VITA COCO COMPANY, INC.

3 unchanged sentences

(Amounts in thousands, except for share and per share data)

In June 2016, the FASB issued ASU 2016-13 Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), to replace the current incurred loss impairment methodology for financial assets measured at amortized cost with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasted information, to develop credit loss estimates.

ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods with those fiscal years, for nonpublic entities.

Early adoption is permitted.

This standard will be effective for the Company in the first quarter of its fiscal year ending December 31, 2023.

The Company is assessing the impact of adoption on the consolidated financial statements, but does not expect the adoption of this standard to have a material impact on the Company's consolidated financial statements.

reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2023-09.

REVENUE RECOGNITION

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For these products, control is transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue.

• Private Label – This product category consists of all private label product offerings, which includes coconut water and oil.

• Private Label – This product category consists of all private label product offerings, which includes coconut water and coconut oil.

The Company determined the production and distribution of private label products represents a distinct performance obligation.

Since there is no alternative use for these products and the Company has the right to payment for performance completed to date, the Company recognizes the revenue for the production of these private label products over time as the production for open purchase orders occurs, which may be prior to any shipment.

• Other – This product category consists of all other products, which includes Runa, Ever & Ever and PWR LIFT product offerings, Vita Coco product extensions beyond coconut water, such as Vita Coco Sparkling , coconut milk products, and other revenue transactions (e.g., bulk product sales).

• Other – This product category consists of all other products, which includes Runa (until we ceased selling it in December 2023), Ever & Ever and PWR LIFT product offerings and Vita Coco product extensions beyond coconut water, coconut milk products, and other revenue transactions (e.g., bulk product sales).

For these products, control is transferred upon customer receipt, at which point the Company recognizes the transaction price for the product as revenue.

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Total $ 430,245 $ 63,367 $ 493,612

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

(Amounts in thousands, except for share and per share data)

December 31, 2022

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Total $ 373,622 $ 54,165 $ 427,787

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021

(Amounts in thousands, except for share and per share data)

December 31, 2021

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Accounts receivable, net was $ 50,086 and $ 43,350 as of December 31, 2023 and 2022, respectively.

The Company recorded an allowance for doubtful accounts of $ 2,898 and $ 1,301 as of December 31, 2022 and 2021, respectively.

Changes in the allowance for doubtful accounts for the periods presented were as follows:

The Company recorded an allowance for current expected credit losses of $ 2,486 and $ 2,898 as of December 31, 2023 and 2022, respectively.

Changes in the allowance for current expected credit losses for the periods presented were as follows:

Balance at January 1, 2022 $ 1,301

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Balance as of December 31, 2022 $ 2,898

Impact of ASC 326 adoption

Balance as of January 1, 2023 $ 3,552

Provision charged to operating results 3,135

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Equipment and computer software and hardware $ 5,567 $ 5,137

Leasehold improvement 339 503

Leasehold improvements 393 339

Vehicles 685 784

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Furniture and fixtures 469 401

Total Property Plant & Equipment 6,661 6,754

Total Property and equipment 7,254 6,661

Less accumulated depreciation and amortization ( 5,118 ) ( 4,585 )

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GOODWILL AND INTANGIBLE ASSETS

Goodwill and Intangible Assets, net consist of the following:

Goodwill consists of the following:

Goodwill $ 7,791 $ 7,791

Annual Goodwill Impairment Testing

All of the Company’s goodwill is associated with an acquisition in June 2018.

The goodwill is allocated to the Americas reporting unit and is tax deductible.

In assessing whether goodwill was impaired in connection with its annual impairment testing performed at December 31, 2020, the Company elected to bypass the qualitative assessment and, performed a quantitative assessment in accordance with ASC 350.

Refer to Note 2, Summary of Significant Accounting Policies, for further discussion of the quantitative analysis.

In December 31, 2023, the Company performed the qualitative assessment only, which did not indicate that it is more likely than not that the carrying value of each of the reporting units exceeds their fair value, resulting in no further quantitative testing.

Based on the results of the annual impairment test, the Company concluded that no impairment to goodwill existed as of December 31, 2023, 2022 and 2021.

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021

(Amounts in thousands, except for share and per share data)

Intangible Assets, ne t

The intangible assets, net associated with the acquisition of Runa was $ 0 as of December 31, 2023 and 2022, respectively.

December 31, 2023 December 31, 2022

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Amount Accumulated

Amortization Impairment

Net Gross Carrying

Amortization Net Gross Carrying

Amount Accumulated

Amortization Net

Amortization Impairment

Intangible assets, net

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Other — — $ — 38 — ( 38 ) —

Total Intangible assets subject to amortization & impairment $ 12,238 $ ( 5,524 ) $ ( 6,714 ) $ — 12,238 $ ( 4,304 ) $ 7,934

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

(Amounts in thousands, except for share and per share data)

Annual Goodwill Impairment Testing

All of the Company’s goodwill is associated with the acquisition of Runa , which was acquired in June 2018.

The goodwill is allocated to the Americas reporting unit and is tax deductible.

Refer to Note 2, Summary of Significant Accounting Policies, for further discussion of the quantitative analysis.

In December 31, 2022, the Company performed the qualitative assessment only, which did not indicate that it is more likely than not that the carrying value of each of the reporting units exceeds their fair value, resulting in no further quantitative testing.

Based on the results of the annual impairment test, the Company concluded that no impairment to goodwill existed as of December 31, 2022, 2021 and 2020.

Intangible Assets, net

The intangible assets, net associated with the acquisition of Runa was $ 0 and $ 7,934 as of December 31, 2022 and 2021, respectively.

Total intangible assets subject to amortization $ — $ — $ — 12,238 $ ( 5,524 ) $ ( 6,714 ) $ —

All the intangible assets are amortized over their useful life.

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For both trade names and distributor relationships, the Company applied step 2, by determining the fair value of these intangible assets, which concluded that the fair value was significantly below the carrying amount.

Accordingly, the Company recorded an impairment charge of $ 6,714 for the year ended December 31, 2022, which is recorded in selling, general and administrative expense on the Company’s consolidated statements of operations.

Amortization expense of $ 1,220 for the years ended December 31, 2022, 2021 and 2020 were included in selling, general and administrative expenses on the consolidated statements of operations.

Accordingly, the Company recorded an impairment charge of $( 6,714 ) for the year ended December 31, 2022, which is recorded in selling, general and administrative expenses on the Company’s consolidated statements of operations.

Amortization expense of $ 0 , $ 1,220 , and $ 1,220 for the years ended December 31, 2023, 2022 and 2021 were included in selling, general and administrative expenses on the consolidated statements of operations.

As of December 31, 2022, all amortizable intangible assets were impaired and no future amortization expense will be recognized in the Company's consolidated statements of operations.

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The table below details the outstanding balances on the Company’s credit facility and notes payable as of December 31, 2023 and 2022:

2020 Credit facility $ — $ —

Notes payable

3 unchanged sentences

2020 Credit Facility

In May 2020, the Company entered into the five-year credit facility, the 2020 Credit Facility with Wells Fargo consisting of a revolving line of credit.

The 2020 Credit Facility was further amended in May 2021 and October 2021, and currently provides for committed borrowings of $ 60 million.

Borrowings on the 2020 Credit Facility bear interest at rates based on either:

1) LIBOR or 2) a specified base rate (determined by reference to the greatest of the prime rate published by Wells Fargo, the federal funds effective rate plus 1.5 % and one-month LIBOR plus 1.5 %), as selected periodically by the Company.

The LIBOR-based loans bear interest at LIBOR plus a spread ranging from 1.00 % to 1.75 % per annum, with the spread in each case being based on the Company’s leverage ratio (as defined in the credit agreement) for the immediately preceding fiscal quarter as defined in the credit agreement.

In addition, the Company is currently subject to an unused commitment fee ranging from 0.05 % and 0.20 % on the unused amount of the line of credit, with the rate being based on the Company’s leverage ratio (as defined in the credit agreement).

In May 2020, the Company entered into the five-year credit facility (the "2020 Credit Facility") with Wells Fargo Bank, National Association consisting of a revolving line of credit, which currently provides for committed borrowings of $ 60 million.

The maturity date on the 2020 Credit Facility is May 12, 2026.

In December 2022, the Company amended the 2020 Credit Facility to transition the interest rate from reference to LIBOR to the SOFR.

The borrowings made after the amendment bear interest at rates based on either 1) a fluctuating rate per annum determined to be the sum of Daily Simple SOFR plus the same spread discussed above or 2) a fixed rate per annum determined to be the sum of the Term SOFR plus the same spread discussed.

The spread and the commitment fees did not change as a result of this amendment.

Starting in December 2022, borrowings on the 2020 Credit Facility bear interest at rates based on either:

1) a fluctuating rate per annum determined to be the sum of Daily Simple Secured Overnight Financing Rate ("SOFR") plus a spread defined in the credit agreement (the "Spread");

or 2) a fixed rate per annum determined to be the sum of the Term SOFR plus the Spread.

The Spread ranges from 1.00 % to 1.75 %, which is based on the Company’s leverage ratio (as defined in the credit agreement) for the immediately preceding fiscal quarter as defined in the credit agreement.

In addition, the Company is currently subject to an unused commitment fee ranging from 0.10 % and 0.20 % on the unused amount of the line of credit, with the rate being based on the Company’s leverage ratio (as defined in the credit agreement).

The borrowings made before December 2022 bore interest at rates based on either:

1) London Interbank Offered Rate ("LIBOR");

or 2) a specified base rate (determined by reference to the greatest of the prime rate published by Wells Fargo, the federal funds effective rate plus 1.5 % and one-month LIBOR plus 1.50 %), as selected periodically by the Company.

The LIBOR-based loans bore interest at LIBOR plus the Spread.

The unused commitment fee prior to the December 2022 amendment was the same.

As of December 31, 2023 and December 31, 2022, the Company had no outstanding balance and $ 60,000 undrawn and available under its amended 2020 Credit Facility.

Interest expense and unused commitment fee for the 2020 Credit Facility amounted to $ 14 and $ 46 for the year ended December 31, 2023.

Interest expense and unused commitment

THE VITA COCO COMPANY, INC.

3 unchanged sentences

(Amounts in thousands, except for share and per share data)

fee for the 2020 Credit Facility amounted to $ 255 and $ 51 , respectively, for the year ended December 31, 2022.

Interest expense and unused commitment fee for the 2020 Credit Facility amounted to $ 176 and $ 39 , respectively, for the year ended December 31, 2021.

Interest expense and unused commitment fee for the 2020 Credit Facility amounted to $ 176 and $ 39 , respectively, for the year ended December 31, 2021.The effective interest rate was 2.53 % and 0.97 %, respectively, as of December 31, 2022 and 2021.

The effective interest rate was 0.1 %, 2.53 %, and 0.97 %, respectively, as of December 31, 2023, 2022, and 2021.

The 2020 Credit Facility is collateralized by substantially all of the Company’s assets.

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On October 27, 2021, the Company repaid the outstanding balance on the 2021 Term Loan using the net proceeds from the IPO as discussed in Note 1.

In accordance with ASC 470, the Company recognized a loss of $ 132 related primarily to the write-off of deferred financing costs, which was recorded in the "Loss on extinguishment of debt" line in the accompanying consolidated statements of operations.

Prior to entering into the 2021 Term Loan, the Company held two other Term Loans, which were paid off in connection with entering into the 2020 Credit Facility in May 2020:

• 2016 Term Loan—On August 9, 2016, the Company entered into a five-year term loan with JPMorgan Chase, N.A.

(“2016 Term Loan”).

The total amount of the term loan was $ 10,000 which matured in August 2021.

Principal payments were based on an increasing percentage of the initial loan amount varying from 2.5 % to 5 % and were made at the end of each quarter.

• 2017 Term Loan—On April 25, 2017, the Company entered into a five-year term loan with JPMorgan Chase, N.A.

(“2017 Term Loan 2017”).

The total amount of the term loan was $ 15,000 which matured in April 2022.

Principal payments were based on an increasing percentage of the initial loan amount varying from 2.5 % to 5 % and were made at the end of each quarter.

The 2016 Term Loan and the 2017 Term Loan bear interest at LIBOR plus 1.50 % and were collateralized by substantially all of the Company’s assets.

The 2016 Term Loan and 2017 Term Loan contained certain affirmative and negative covenants that, among other things, limited the Company’s ability to, subject to various exceptions and qualifications:

(i) incur liens;

(ii) incur additional debt;

(iii) sell, transfer or dispose of assets;

(iv) merge with or acquire other companies, (v) make loans, advances or guarantees;

(vi) make investments;

and (vii) enter into certain transactions with affiliates.

The 2016 Term Loan and 2017 Term Loan also required the Company to maintain certain financial covenants including a maximum leverage ratio and a minimum fixed charge coverage ratio.

Interest expense related to the 2021, 2017, and 2016 Term Loans amounted to $ 141 and $ 188 for the years ended December 31, 2021 and 2020, respectively.

In accordance with ASC 470, the Company recognized a loss of $ 132 in the year ended December 31, 2021 related primarily to the write-off of deferred financing costs, which was recorded in the "Loss on extinguishment of debt" line in the accompanying consolidated statements of operations.

Interest expense related to the 2021 Term Loan amounted to $ 141 for the year ended December 31, 2021.

Vehicle Loans

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

(Amounts in thousands, except for share and per share data)

The Company periodically enters into vehicle loans.

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The Company intends to vigorously defend itself in such matters and management, based upon the advice of legal counsel, is of the opinion that the resolution of these matters will not have a material effect on the consolidated financial statements.

For the cases for which management believes that it is more likely than not that it will lose the case, a provision for legal settlements has been recorded.

As of December 31, 2022 and 2021, the Company has no t recorded any liabilities relating to legal settlements.

The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable.

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021

(Amounts in thousands, except for share and per share data)

Company also discloses when it is reasonably possible that a material loss may be incurred.

As of December 31, 2023 and 2022, the Company has not recorded any liabilities relating to such legal matters.

Business Risk —The Company imports finished goods predominantly from manufacturers located in South American and Southeast Asian countries.

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One of the customers acquired less than 5% ownership in the Company upon consummation of the IPO.

The same customer also vested in 100,000 restricted stock awards during the period ended March 31, 2023 as discussed in Note 10, Stockholders' Equity.

The customer continues to hold less than 5% ownership in the Company as of December 31, 2023.

In 2023, we agreed to start to discontinue the private label coconut water and coconut oil supply relationship with one of our significant customers as the terms required to retain the business were contrary to our long term margin targets.

However, at the request of this customer, we expect to continue the supply relationship through 2024 for a significant portion of their private label coconut water needs.

Major Suppliers — The Company’s suppliers that accounted for 10% or more of the Company’s purchases were as follows:

2 unchanged sentences

Supplier B 13 % 13 %

Supplier C 10 % 6 %

Supplier D 10 % 6 %

DERIVATIVE INSTRUMENTS

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These principles require that all derivative instruments be recognized at fair value on each balance sheet date unless they qualify for a scope exclusion as a normal purchase or sale transaction, which is accounted for under the accrual method of accounting.

In addition, these principles permit derivative instruments that qualify for hedge accounting to

In addition, these principles permit derivative instruments that qualify for hedge accounting to reflect the changes in the fair value of the derivative instruments through earnings or stockholders’ equity as other comprehensive income on a net basis until the hedged item is settled and recognized in earnings, depending on whether the derivative is being used to hedge changes in fair value or cash flows.

The ineffective portion of a derivative instrument’s change in fair value is immediately recognized in earnings.

As of December 31, 2023 and December 31, 2022, the Company did not have any derivative instruments that it had designated as fair value or cash flow hedges, and therefore all changes in fair value were immediately recognized in earnings.

The Company is subject to the following currency risks:

Inventory purchases from Brazilian, Thai and Malaysian manufacturers— In order to mitigate the currency risk on inventory purchases from its Brazilian, Malaysian and Thai manufacturers, which are settled in Brazilian real ("BRL"),

THE VITA COCO COMPANY, INC.

3 unchanged sentences

(Amounts in thousands, except for share and per share data)

reflect the changes in the fair value of the derivative instruments through earnings or stockholders’ equity as other comprehensive income on a net basis until the hedged item is settled and recognized in earnings, depending on whether the derivative is being used to hedge changes in fair value or cash flows.

The ineffective portion of a derivative instrument’s change in fair value is immediately recognized in earnings.

As of December 31, 2022 and December 31, 2021, the Company did not have any derivative instruments that it had designated as fair value or cash flow hedges.

The Company is subject to the following currency risks:

Inventory purchases from Brazilian and Malaysian manufacturers— In order to mitigate the currency risk on inventory purchases from its Brazilian and Malaysian manufacturers, which are settled in Brazilian Real ("BRL") and Thai Bhatt ("THB"), the AMS subsidiary enters into a series of forward currency swaps to buy BRL and THB.

Intercompany transactions between AME and AMS— In order to mitigate the currency risk on intercompany transactions between AME and AMS, AMS enters into foreign currency swaps to sell GBP.

Commercial transactions with Canadian customer and vendors— In order to mitigate the currency risk on transactions with Canadian customer and vendors, the Company enters into foreign currency swaps to sell Canadian Dollars ("CAD").

Malaysian ringgit ("MYR") and Thai baht ("THB"), the Company's subsidiary, All Market Singapore Pte.

("AMS"), enters a series of forward currency swaps to buy BRL, MYR and THB.

Intercompany transactions between AME and AMS— In order to mitigate the currency risk on intercompany transactions between AME and AMS, AMS enters into foreign currency swaps to sell British pound ("GBP").

Intercompany Transactions with Canadian Customer and Vendors— In order to mitigate the currency risk on transactions with Canadian customer and vendors, the Company enters into foreign currency swaps to sell Canadian dollars ("CAD").

The notional amount and fair value of all outstanding derivative instruments in the consolidated balance sheets consist of the following at:

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Foreign currency exchange contracts

Receive USD/pay GBP $ 23,702 $ 1,104 Derivative assets

Receive BRL/sell USD $ 62,253 $ 3,876 Derivative assets

Receive USD/pay CAD $ 4,819 $ 188 Derivative assets

Foreign currency exchange contracts

Receive USD/pay EUR $ 604 $ ( 7 ) Derivative liabilities

Receive THB/sell USD $ 21,971 $ ( 285 ) Derivative liabilities

Receive USD/pay EUR 5,627 ( 90 ) Derivative liabilities

Receive USD/pay GBP 23,512 ( 749 ) Derivative liabilities

Receive USD/pay CAD 7,666 ( 89 ) Derivative liabilities

December 31, 2022

4 unchanged sentences

Receive USD/pay GBP $ 23,702 $ 1,104 Derivative assets

Receive MYR/sell USD $ 392 $ 1 Derivative assets

Receive BRL/sell USD $ 46,301 $ 2,314 Derivative assets

Receive USD/pay CAD $ 4,819 $ 188 Derivative assets

Foreign currency exchange contracts

Receive BRL/sell USD $ 43,174 $ ( 2,389 ) Derivative liabilities

Receive USD/pay CAD 4,731 ( 57 ) Derivative liabilities

Receive USD/pay EUR $ 604 $ ( 7 ) Derivative liabilities

Receive THB/sell USD 21,990 ( 64 ) Derivative liabilities

The amount of realized and unrealized gains and losses and consolidated statements of operations and comprehensive income location of the derivative instruments as of December 31, 2023 and 2022 are as follows:

THE VITA COCO COMPANY, INC.

3 unchanged sentences

(Amounts in thousands, except for share and per share data)

2023 2022 2021

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This includes internally developed models and methodologies utilizing significant unobservable inputs.

Forward currency swap contracts— The Company’s valuation methodology for forward currency swap contracts is based upon third-party institution data.

Contingent consideration liability— The Company utilized a probability weighted scenario-based model to determine the fair value of the contingent consideration.

Forward currency swap contracts— See Note 12, Derivative Instruments, for a description of these contracts.

The Company’s valuation methodology for forward currency swap contracts is based upon third-party institution data.

Contingent consideration liability— In connection with the Company’s acquisition of the entity currently known as AMI Runa USA LLC ("Runa"), the Company was obligated to pay contingent payments to Runa’s former shareholders only if a certain growth rate is achieved.

Assuming the revenue growth was achieved, the former shareholders could elect for payment to be calculated based on quarterly data available between December 2021 and December 2022, as follows:

49 % of the product of (a) the net revenue for the trailing 12 calendar months and (b) a specified multiple, which is contingent on the revenue growth achieved since December 31, 2017.

Per the acquisition agreement, the contingent payment cannot exceed $ 51,500 .

If a certain revenue growth rate was not achieved during the remeasurement period, the Company is not required to pay any contingent payment.

The term of the remeasurement period under the agreement ended in December 2022.

Based on the revenue performance expectation during the earn-out period for Runa, the contingent consideration was zero as of December 31, 2022.

The Company utilized a probability weighted scenario-based model to determine the fair value of the contingent consideration.

The contingent consideration liability was considered a Level 3 liability, as the fair value was determined based on significant inputs not observable in the market.

The Company’s fair value hierarchy for those assets (liabilities) measured at fair value on a recurring basis at December 31, 2023 and 2022, is as follows:

Level 1 Level 2

Forward Currency

Swaps/Contracts Level 3

Contingent consideration liability Total

2022 $ — $ 3,535 $ — $ 3,535

2021 $ — $ ( 3,071 ) $ — $ ( 3,071 )

In connection with the Company’s acquisition of the entity currently known as AMI Runa USA LLC ("Runa") , the Company was obligated to pay contingent payments to Runa’s former shareholders only if a certain growth rate is

THE VITA COCO COMPANY, INC.

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(Amounts in thousands, except for share and per share data)

Assuming the revenue growth is achieved, the former shareholders could elect for payment to be calculated based on quarterly data available between December 2021 and December 2022, as follows:

49 % of the product of (a) the net revenue for the trailing 12 calendar months and (b) a specified multiple, which is contingent on the revenue growth achieved since December 31, 2017.

Per the acquisition agreement, the contingent payment cannot exceed $ 51,500 .

If a certain revenue growth rate is not achieved during the remeasurement period, the Company is not required to pay any contingent payment.

The term of the remeasurement period under the agreement ended in December 2022.

The fair value of contingent consideration of $ 15,700 determined on the acquisition date in 2018 was initially recognized as a liability and then subsequently remeasured to fair value at each reporting date with changes in fair value recognized as a component of operating expenses in the accompanying consolidated statements of operations.

The contingent consideration liability related to the acquisition of Runa was considered a Level 3 liability, as the fair value was determined based on significant inputs not observable in the market, and recorded within other long-term liabilities in the accompanying consolidated balance sheets.

The Company estimated the fair value of the contingent consideration liability based on a probability-weighted present value of various future cash payment outcomes using a Monte Carlo simulation.

The technique considered the following unobservable inputs as of each valuation date:

• The probability and timing of achieving the specified milestones,

• Revenue performance expectations, and

• Market-based discount rates.

Based on updated revenue performance expectations during the earn-out period for Runa, the Company remeasured the contingent consideration to zero at December 31, 2021 and at December 31, 2022.

Level 1 Level 2

Forward Currency

Swaps/Contracts Level 3

Contingent consideration liability Total

December 31, 2023 $ — $ 2,663 $ — $ 2,663

December 31, 2022 $ — $ 3,535 $ — $ 3,535

There were no transfers between any levels of the fair value hierarchy for any of the Company’s fair value measurements.

STOCKHOLDERS’ EQUITY

Common and Treasury Stock — Each share of common stock entitles its holder to one vote on matters required to be voted on by the stockholders of the Company and to receive dividends, when and if declared by the Company’s board of directors.

As of December 31, 2022 and 2021, the Company held 6,206,200 shares in treasury stock and had 2,898,930 and 3,434,312 shares, respectively, of common stock reserved for future issuance upon the conversion of outstanding warrants and stock options.

Common Stock — Each share of common stock entitles its holder to one vote on matters required to be voted on by the stockholders of the Company and to receive dividends, when and if declared by the Company’s board of directors.

As of December 31, 2023 and 2022, the Company had 3,124,326 and 2,898,930 shares, respectively, of common stock reserved for future issuance upon the conversion of outstanding warrants and stock options.

On May 23, 2023, the Company entered into an underwriting agreement (the "May Underwriting Agreement") with BofA Securities, Inc., Evercore Group L.L.C.

and Goldman Sachs & Co.

LLC, as the representative of the underwriters named in Schedule I thereto (collectively, the "Underwriters"), and a stockholder of the Company, Verlinvest Beverages SA (the "Selling Stockholder"), relating to an underwritten public offering of 5,000,000 shares (the "Offering") of Common Stock at a price to the public of $ 23.00 per share, before deducting underwriting discounts.

Pursuant to the May Underwriting Agreement, all 5,000,000 shares of Common Stock were sold by the Selling Stockholder.

Under the terms of the May Underwriting Agreement, the Selling Stockholder granted the Underwriters an option exercisable for 30 days to purchase up to an additional 750,000 shares of Common Stock from the Selling Stockholder at the public offering price, less underwriting discounts and commissions, which option was exercised in full prior to the closing of the Offering.

The closing of the Offering occurred on May 26, 2023.

On November 6, 2023, the Company entered into another underwriting agreement (the “November Underwriting Agreement”) with BofA Securities, Inc.

and Verlinvest Beverages SA, relating to an offering of 4,000,000 shares of the Company’s common stock, par value $ 0.01 per share.

Pursuant to the November Underwriting Agreement, all 4,000,000 shares of Common Stock were sold by the Selling Stockholder.

The closing of the offering occurred on November 9, 2023.

The Company did not receive any of the proceeds from the sale of the shares.

Additionally, the Company incurred $ 1,525 of administrative expenses related to these offerings, which were expensed in SG&A for the year ended December 31, 2023.

Treasury Stock - As of December 31, 2023 and 2022, the Company held 6,236,200 and 6,206,200 shares in treasury stock.

In January 2021, the Company entered into a Stock Purchase Agreement with RW VC S.a.r.l, f/k/a Vita Coco S.a.r.l (the “Seller”).

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The purchase price per share approximated the most recent third-party common stock valuation prepared in conjunction with the accounting of stock-based compensation discussed within this Note.

On October 30, 2023, the Company's Board of Directors approved a share repurchase program ("Program") authorizing the Company to repurchase up to $ 40,000 of Common Stock.

Shares of Common Stock may be repurchased under the Program from time to time through open market purchases, block trades, private transactions or accelerated or other structured share repurchase programs.

To the extent not retired, shares of Common Stock repurchased under the Program will be placed in the Company's treasury shares.

The extent to which the Company repurchases shares of Common Stock, and the timing of such repurchases, will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations, as determined by the Company.

The Program has no time limits and may be suspended or discontinued at any time.

The Company repurchased 30,000 shares under this program at a cost of $ 773 during the year ended December 31, 2023.

Non-controlling Interest —On August 17, 2021, the Company’s ownership interest in AME increased as a result of the subsidiary AME repurchasing AME shares from certain minority stockholders.

As a result, the noncontrolling interest in AME representing minority stockholders’ proportionate share of the equity in AME was reduced from 1.3 % to 0.71 %.

On December 31, 2021, the Company purchased the remaining outstanding AME shares directly from minority stockholders by exchanging shares in the Company on the basis of 5.485 Vita Coco shares being allotted for every 1 AME share.

The share ratio exchange reflects a mutually agreed valuation of AME shares relative to Vita Coco shares.

Since the Company continued to retain a controlling financial interest in AME, the change in ownership interest was accounted for as an equity transaction.

Warrants — All service warrants were exercised and exit warrants were expired as of December 31, 2021.

As such, there was no warrant activity for the year ended December 31, 2022.

On December 31, 2021, the Company purchased the remaining outstanding AME shares directly from minority

THE VITA COCO COMPANY, INC.

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stockholders by exchanging shares in the Company on the basis of 5.485 Vita Coco shares being allotted for every 1 AME share.

The share ratio exchange reflects a mutually agreed valuation of AME shares relative to Vita Coco shares.

Since the Company continued to retain a controlling financial interest in AME, the change in ownership interest was accounted for as an equity transaction.

Warrants — All service warrants were exercised and exit warrants were expired as of December 31, 2021.

As such, there was no warrant activity for the year ended December 31, 2023.

Stock-based Compensation — The stockholders of the Company approved the adoption of the Company’s 2014 Stock Option and Restricted Stock Plan (the “2014 Plan”).

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The stock options awarded to the employees have different vesting schedules as specified in each grant agreement.

Generally, the majority of the outstanding stock options vest 50 % over the two years and 50 % vest over the four years .

The following table summarizes the service-based stock option activity during the year ended December 31, 2023:

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Exercisable—December 31, 2023 1,607,477 $ 10.34 5.8 24,613

The weighted average grant-date fair value of the service-based stock option awards granted during the years ended December 31, 2022 and 2021 was $ 6.98 per option and $ 5.62 per option, respectively.

The aggregate intrinsic value of service-based stock options exercised was $ 2,026 and $ 66 for the years ended December 31, 2022 and 2021, respectively.

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for all stock options that had exercise prices lower than the fair value of the Company’s common stock.

THE VITA COCO COMPANY, INC.

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In December 2019, the board of directors of the Company approved a one-time repricing of 1,877,785 outstanding service-based stock options for 53 grantees.

In addition, the Company extended the expiration date of the modified stock options with the contractual term being 10 years from the date of the modification, while all other modified option terms remained the same.

The fair value of the service-based stock options granted in 2022 and 2021 pursuant to the Stock Option Plan as well as the fair value of the modified in 2019 stock options was estimated on a grant or on a modification date using the Black-Scholes option-pricing model.

The weighted average grant-date fair value of the service-based stock option awards granted during the years ended December 31, 2023 and 2022 was $ 7.29 per option and $ 6.98 per option, respectively.

The aggregate intrinsic value of service-based stock options exercised was $ 10,826 and $ 2,026 for the years ended December 31, 2023 and 2022, respectively.

The fair value of the service-based stock options granted in 2023 and 2022 pursuant to the Stock Option Plan was estimated on a grant or on a modification date using the Black-Scholes option-pricing model.

The weighted average assumptions used in the Black-Scholes option-pricing model were as follows:

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Stock Option Awards with Performance and Market-based Vesting Conditions

During the year ended December 31, 2021, the Company awarded options for the purchase 262,990 shares of common stock of the Company containing a performance-based vesting condition, subject to achievement of various performance goals by the end of 2027, including revenue and gross margin targets.

In addition, during the year ended December 31, 2021, the Company awarded options to purchase 68,250 shares of common stock of the Company containing

There are also stock option awards containing performance-based vesting conditions, subject to achievement of various performance goals by a future period, such as revenue and adjusted EBITDA targets.

There are also stock option

THE VITA COCO COMPANY, INC.

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performance and market vesting conditions, such as option vesting upon occurrence of an initial public offering or other qualifying liquidity event and upon achieving predetermined equity value of the Company at a time of the initial public offering or other qualifying liquidity event.

awards containing performance and market vesting conditions, such as options vesting upon occurrence of an IPO or other qualifying liquidity event and upon achieving a predetermined equity value of the Company.

This award was granted to the current CEO in 2019 that vest upon occurrence of an IPO or other qualifying liquidity event and upon achieving a predetermined equity value of the Company.

As of July 31, 2023, the performance and market vesting conditions were achieved and the remaining stock compensation expense of $ 762 for this award was accelerated and recognized in the year ended December 31, 2023.

During the year ended December 31, 2023, there were no modifications to these awards.

During the year ended December 31, 2022, certain awards that contained a performance-based vesting condition were modified.

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Exercised — —

Forfeited 9,100 10.18

Forfeited or expired 76,440 11.69

Outstanding—December 31, 2023 1,144,436 $ 12.60 7.1 $ 14,931

No ne of the stock options included in the table above are exercisable at December 31, 2022.

The fair value of the awards with performance-based vesting condition was estimated using the Black-Scholes option-pricing model used for the Company’s service-based stock options and assumed that performance goals will be achieved.

Exercisable—December 31, 2023 635,408 $ 10.18 5.8 $ 9,831

The fair value of the awards with performance-based vesting conditions was estimated using the Black-Scholes option-pricing model used for the Company’s service-based stock options and assumed that performance goals will be achieved.

If such performance conditions are not met, no compensation cost is recognized and any recognized compensation cost is reversed.

The grant-date fair value of the stock options with performance-based vesting condition granted during the years ended December 31, 2021 and 2020 was $ 4.38 per option and $ 4.56 per option, respectively.

The Company has not granted any performance based options for the year ended December 31, 2022 other than the modified awards noted above.

In December 2020, the board of directors of the Company approved a one-time modification of the options to purchase 579,670 shares of common stock containing both a performance and market vesting conditions to reduce the equity value required to be achieved at the time of the IPO or other qualifying liquidity event.

All other option terms remained the same.

In connection with the modification, the Company revalued the options using a Barrier option valuation model which resulted in a fair value of $ 2.11 per option.

There was no incremental compensation expense recognized in connection with the modification during the year ended December 31, 2021, as the attainment of the performance and market vesting conditions was not probable.

The assumptions used to revalue the performance and market-based stock option grants were as follows:

The Company did not grant any performance based options for the year ended December 31, 2022 other than the modified awards noted above.

The fair value of the awards with performance-based vesting conditions granted in 2023 pursuant to the 2021 Plan was estimated on the grant date using the Black-Scholes option-pricing model.

The weighted average assumptions used in the Black-Scholes option-pricing model were as follows:

Weighted average expected term 6.40 years

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Weighted average expected dividend yield 0 %

Expected Term:

The period of time for which the stock option awards are expected to be outstanding until exercise and considers time until expected liquidity event.

Expected Volatility :

The Company has historically been a private company and lacks company-specific historical and implied volatility information for its stock.

Therefore, the Company estimated volatility for option grants by evaluating

As of December 31, 2023, total unrecognized compensation cost related to the unvested stock option awards containing performance conditions was $ 2,606 , which is expected to be recognized over the period of approximately 2.06 years.

The awards containing performance and market conditions to the CEO were all vested during the year ended December 31, 2023.

As of December 31, 2022, total unrecognized compensation cost related to the unvested stock option awards containing performance and market vesting conditions was $ 1,606 , which was expected to be recognized over the period of approximately 4.22 years.

THE VITA COCO COMPANY, INC.

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the average historical volatility of a peer group of companies for the period immediately preceding the option grant for a term that is approximately equal to the expected term of the options.

Risk-free Interest Rate:

The risk-free interest rate is based on the yield, as of the option valuation date, by reference to the U.S.

Treasury yield curve in effect at the time of the grant or the modification of the award for time periods equal to the expected term of the award.

Dividend Yield —The Company does not anticipate declaring a dividend over the expected term.

As such, the dividend yield has been estimated to be zero .

As of December 31, 2022, total unrecognized compensation cost related to the unvested stock option awards containing performance and market vesting conditions was $ 1,606 , which is expected to be recognized over the period of approximately 4.22 years.

As of December 31, 2021, the unrecognized stock-based compensation cost related to the stock options for which performance-based vesting conditions are probable of being achieved was $ 403 , which is expected to be recognized over the period of approximately 3.18 years.

As of December 31, 2021, total unrecognized compensation cost related to the unvested stock option awards containing performance and market vesting conditions was $ 1,599 , which will be recognized when attainment of the performance and market vesting conditions becomes probable.

Restricted Stock and Restricted Stock Unit Awards ("RSUs")

Service & Performance based Restricted Stock and RSUs

Restricted stock and RSUs were granted under the 2021 Plan and primarily vest based on continuous service.

Currently, there is no restricted stock or RSUs that contain any performance or market conditions.

The RSUs awarded to the employees have different vesting schedules as specified in each grant agreement.

The RSUs granted to non-employee directors vested in full on the earlier of (i) the day immediately preceding the date of the first Annual Meeting following the date of grant and (ii) the first anniversary of the date of grant.

The RSUs with service-based vesting conditions awarded to the employees have differing vesting schedules as specified in each grant agreement.

The RSUs granted to non-employee directors vest in full on the earlier of:

(i) the day immediately preceding the date of the first Annual Shareholders Meeting following the date of grant;

or (ii) the first anniversary of the date of grant.

During the twelve months ended December 31, 2023, the Company also granted RSUs that contained performance-based vesting conditions, subject to achievement of various performance goals by the end of 2025 or 2026, specifically net sales growth and Adjusted EBITDA targets.

The following table summarizes the restricted stock and RSU activity for the year ended December 31, 2023:

Number of Restricted Stock or RSU Awards Weighted Average Grant Date Fair Value

Number of service based Restricted Stock or RSU Awards Weighted Average Grant Date Fair Value (service based) Number of performance based Restricted Stock or RSU Awards Weighted Average Grant Date Fair Value (performance based)

Non-vested - December 31, 2022 666,177 $ 14.08 — $ —

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Non-vested - December 31, 2023 628,129 $ 13.89 17,742 $ 16.91

Also included in these awards are $ 3 million of shares of restricted common stock granted to entities affiliated with a significant customer, at a price per share granted at the initial public offering price per share of $ 15.00 , or 200,000 restricted shares, in exchange for an amendment to extend the distributor agreement term to June 10, 2026.

Assuming the distribution agreement has not been terminated by either party for cause, 50 % of the shares are released on October 11, 2023 and the remaining 50 % are released on October 11, 2024.

Also included in these awards are $ 3 million of shares of restricted common stock granted to entities affiliated with a significant customer, granted at the IPO price per share of $ 15.00 , or 200,000 restricted shares, in exchange for an amendment to extend the distributor agreement term to June 10, 2026.

Since the distribution agreement has not been terminated by either party for cause as of March 31, 2023, 50 % of the shares were released on March 31, 2023.

Assuming the distribution agreement is not terminated by either party for cause, the remaining 50 % will be released on March 31, 2024.

The grant was accounted for as a stock-based sales incentive based on guidance in ASC 606 and is reflected as a reduction in the transaction price of revenue on the basis of the grant-date fair-value measure in accordance with the stock compensation guidance in ASC 718.

The aggregate grant date fair value of RSUs granted during 2022 and 2021 was $ 4,445 and $ 3,837 , respectively.

At December 31, 2022, there was $ 5,035 of unrecognized stock compensation expense related to non-vested RSUs, which is expected to be recognized over a weighted average period of 2.7 years.

At December 31, 2021, there was $ 3,261 of unrecognized stock compensation expense related to non-vested RSUs, which is expected to be recognized over a weighted average period of 2.1 years.

The aggregate grant date fair value of all RSUs granted during 2023 and 2022 was $ 4,169 and $ 4,445 , respectively.

At December 31, 2023, there was $ 5,259 of unrecognized stock compensation expense related to non-vested service-based RSUs, which is expected to be recognized over a weighted average period of 2.0 years.

At December 31, 2023, there was $ 219 of unrecognized stock compensation expense related to non-vested performance based RSUs, which is expected to be recognized over a weighted average period of 2.2 years.

At December 31, 2022, there was $ 5,035 of unrecognized stock compensation expense related to non-vested service-based RSUs, which is expected to be recognized over a weighted average period of 2.7 years.

The domestic and foreign components of the Company’s income before income taxes are as follows:

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

(Amounts in thousands, except for share and per share data)

Year Ended December 31,

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The income tax expense for the years ended December 31, 2023, 2022, and 2021 consist of the following:

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021

(Amounts in thousands, except for share and per share data)

Year Ended December 31,

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Officer's compensation limitation 1.1 % 4.4 % — %

Tax attribute expiration — % — % 1.5 %

Permanent differences 0.5 % 0.3 % 0.4 %

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Beginning balance as of January 1, 2023 $ 144

Additions based on tax positions related to prior years 144

Reductions based on tax positions related to prior years ( 38 )

Additions based on tax positions related to current year —

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The Finance Act increases the corporate income tax rate from 19% to 25% effective April 1, 2023 and enhances the first-year capital allowance on qualifying new plant and machinery assets effective April 1, 2021.

The effects on the Company’s existing deferred tax balances have been recorded and is offset by the valuation allowance maintained against the Company’s U.K.

net deferred tax assets.

The effects on the Company’s existing deferred tax balances have been recorded.

Over the past few years, there has been significant discussion with regard to tax legislation by both the Biden Administration and the Organization for Economic Cooperation and Development (“OECD”).

On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law by the Biden Administration, with tax provisions primarily focused on implementing a 15% corporate alternative minimum tax on global adjusted financial statement income ("CAMT").

On December 12, 2022, the European Union member states also reached agreement to implement the OECD’s reform of international taxation known as Pillar Two Global Anti-Base Erosion ("GloBE") Rules, which broadly mirror the Inflation Reduction Act by imposing a 15% global minimum tax on multinational companies.

The CAMT and GloBE are anticipated to be effective beginning in fiscal 2024 and fiscal 2025, respectively.

The US Treasury and the OECD continue to seek input and release guidance on the CAMT and GloBE legislation and how the two will interact, so it is unclear at this time what, if any, impact either will have on the Company’s tax rate and financial results.

We will continue to evaluate their impact as further information becomes available.

Earnings Per Share

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The following potentially dilutive securities, prior to the use of the treasury stock method, have been excluded from the computation of diluted weighted-average number of common shares outstanding, as they would be anti-dilutive:

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021

(Amounts in thousands, except for share and per share data)

Year Ended December 31,

2023 2022 2021

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Matching contributions were $ 616 , $ 592 and $ 475 for the years ended December 31, 2023, 2022 and 2021, respectively.

THE VITA COCO COMPANY, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

(Amounts in thousands, except for share and per share data)

Segment Reporting

The Company has two operating and reportable segments:

• Americas—The Americas segment is comprised primarily of US and Canada and derives its revenues from the marketing and distribution of various coconut water and non-coconut water products (e.g., oil and milk).

The Company’s Guayusa leaf products ( Runa ), aluminum bottle canned water ( Ever & Ever ) and protein infused water ( PWR LIFT ) are marketed only in the Americas segment.

• International—The International segment is comprised primarily of Europe, Middle East, Africa and Asia Pacific, which includes the Company’s procurement arm, and derives its revenues from the marketing and distribution of various coconut water and non-coconut water products.

• Americas—The Americas segment is comprised primarily of the U.S.

and Canada, and derives its revenues from the marketing and distribution of various coconut water and non-coconut water products (e.g., coconut oil and milk).

The Company’s Guayusa leaf products ( Runa ), aluminum bottle canned water ( Ever & Ever ), and protein infused fitness drink ( PWR LIFT ) are marketed only in the Americas segment.

As of December 2023, we ceased offering the Runa brand.

• International—The International segment is comprised primarily of Europe, Middle East, and Asia Pacific, which includes the Company’s procurement arm and derives its revenues from the marketing and distribution of various coconut water and non-coconut water products.

The Company’s CEO is the chief operating decision maker and evaluates segment performance primarily based on net sales and gross profit.

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Selling, general, and administrative expenses 124,236 100,306 88,559

Change in fair value of contingent consideration — — ( 16,400 )

Income from operations 56,493 3,055 24,589

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The following table provides information related to the Company’s net revenues by country, which is presented on the basis of the location that revenue from customers is recorded:

Year Ended December 31, 2022 2021 2020

Twelve Months Ended December 31, 2023 2022 2021

United States $ 401,974 $ 352,731 $ 323,891

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The following table provides information related to the Company’s property and equipment, net by country:

Year Ended December 31, 2022 2021

December 31, 2023 December 31, 2022

United States $ 729 $ 683

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For the year ended December 31, 2021, the Company had amounts due in accounts payable of $ 227 for the portion of the year prior to the execution of the new Investor Rights Agreement.

Director Nominee Agreements - On May 24, 2022, two members of the board of directors appointed as nominees under the Investor Rights Agreement by Verlinvest Beverages SA, a stockholder of the Company, entered into nominee agreements instructing the Company to pay all cash compensation earned in connection with their board of director services to Verlinvest Beverages SA.

Director Nominee Agreements - On May 24, 2022, two members of the board of directors appointed as nominees under the Investor Rights Agreement by Verlinvest Beverages SA, a stockholder of the Company, entered into nominee agreements instructing the Company to pay all cash and equity compensation earned in connection with their board of director services to Verlinvest Beverages SA.

Based on the aforementioned nominee agreements, RSUs granted to these two directors will be held by them as nominees for Verlinvest Beverages SA and, upon vesting of the RSUs, the shares will be transferred to Verlinvest Beverages SA.

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As of December 31, 2023, there is only one active member of the board of directors that is subject to this nominee agreement.

Loan to Employee —On September 18, 2019 the Company extended a five year promissory note of $ 17,700 to its newly appointed President, in order for him to buy 1,739,010 shares of The Vita Coco Company, Inc.’s common stock in conjunction with his employment agreement.

The interest on the note accrued annually at a rate of 1.78 % with principal balance due at maturity.

The purchase of the Company's shares occurred simultaneously with the commencement of the loan, as a result no funds were actually disbursed by the Company.

The purchased shares were pledged as collateral to the loan until full repayment of the principal balance.

On May 18, 2020, the Company amended the interest rate on the note to 0.58 %.

On September 16, 2021, Martin Roper, the CEO of the Company, repaid the outstanding principal balance and accrued interest in full satisfaction of the promissory note.

Distribution Agreement with Shareholder – On October 1, 2019 the Company entered into a distribution agreement with one of its stockholders, which currently extends through December 31, 2022.

Registration Rights and Underwriting Agreements - Under the Registration Rights agreement by and among the Company, Verlinvest Beverages SA ("Verlinvest") and certain other investors, in connection with each demand registration, piggyback or shelf offering, the Company agreed to reimburse the holders of registrable securities for the reasonable fees and disbursements of not more than one law firm.

As part of the two secondary offerings during 2023, the Company also entered into underwriting agreements, to which Verlinvest was a party.

In connection with the secondary share offering by Verlinvest in May 2023, Verlinvest agreed to waive its right to reimbursement of legal fees for its counsel, and those expenses, in the amount of $ 140 , were not reimbursed by the Company.

Distribution Agreement with Shareholder – On October 1, 2019 the Company entered into a distribution agreement with one of its stockholders, which extended through December 31, 2022 and has been continued upon the mutual agreement of each party.

The distribution agreement grants the stockholder the right to sell, resell and distribute designated products supplied by the Company within a specified territory.

During the year ended December 31, 2023, the stockholder's ownership in the Company became less than 5%.

The amount of revenue recognized related to this distribution agreement was $ 4,048 , $ 6,375 , and $ 6,247 for the years ended December 31, 2023, 2022 and 2021, respectively.

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Related to this distribution arrangement, the Company and the stockholder have a service agreement where the Company shares in the compensation costs of the stockholder’s employee managing the China market.

The Company recorded $ 234 , $ 215 and $ 132 for the years ended December 31, 2022, 2021 and 2020, respectively, in selling, general, and administrative expense for this service agreement.

The Company recorded $ 151 , $ 234 and $ 215 for the years ended December 31, 2023, 2022 and 2021, respectively, in selling, general, and administrative expenses for this service agreement .

THE VITA COCO COMPANY, INC.

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The Company performed a fair value assessment on the asset group held for sale consisting of land, a production plant, equipment and inventory.

The Company obtained a valuation of the assets and adjusted the carrying amount down to their fair value less costs to sell, which resulted in a $ 619 impairment loss recorded in selling, general and administrative expenses.

The remaining carrying amount is listed below.

These assets held for sale do not qualify for discontinued operations reporting.

Asset held for sale Amount

The Company obtained a valuation of the assets and adjusted the carrying amount down to their fair value less costs to sell, which resulted in a $ 619 impairment loss recorded in SG&A during the third quarter of 2022.

The remaining carrying amount as of December 31, 2023 and December 31, 2022 is listed below.

These assets held for sale did not qualify for discontinued operations reporting.

As of September 30, 2023, since the asset has been held for sale beyond one year, the Company has reclassified it as held and used within property, plant and equipment and remeasured it at its fair value of $ 140 , which resulted in an additional $ 363 impairment loss.

2023 December 31,

Asset held for sale - land $ — $ 503

THE VITA COCO COMPANY, INC.

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(Amounts in thousands, except for share and per share data)

The Company leases certain office space and machinery and equipment.

Leases with an initial term of 12 months or less are not recognized on the Consolidated Balance Sheets.

In January 2016, the Company entered into an operating lease for office space in New York, New York, which was set to expire in January 2023.

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Any variable lease costs are immaterial.

Year Ended December 31, 2022

Year Ended December 31, 2023 Year Ended December 31, 2022

Operating lease cost

$ 1,102 $ 1,124

The following table summarizes supplemental balance sheet information for the Company’s operating leases:

Line Item in Balance Sheet As of December 31, 2023

As of December 31, 2022

Noncurrent assets:

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As of December 31, 2023

Weighted-average remaining lease terms 2.4 years

Weighted-average remaining lease terms 1.36

Weighted average discount rate 2.2 %

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Total lease liabilities $ 1,627

The aggregate minimum commitments for renting the office spaces under non-cancellable operating leases as of December 31, 2021 are summarized in the following table.

This table was populated in accordance with the prior guidance under ASC 840, Leases .

Years Ending December 31, Minimum Commitment

THE VITA COCO COMPANY, INC.

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Subsequent Events

On March 7, 2023, the Company announced that the board of directors of the Company approved the appointment of Corey Baker as the Company’s Chief Financial Officer.

Baker joins the Company as Executive Vice President of Finance, and he will succeed to the position of Chief Financial Officer and assume the designation of Principal Financial Officer immediately following the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 with the SEC.

Baker will succeed Rowena Ricalde, who has served as the Company’s Interim Chief Financial Officer since September 2022.

Ricalde will be appointed Chief Accounting Officer and continue as the Principal Accounting Officer.

On October 30, 2023, the Company's Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $ 40,000 of Common Stock.

As of December 31, 2023, the Company repurchased 30,000 shares at a cost of $ 773 under this program as discussed in Note 14, Stockholders' Equity .

During January 2024, the Company acquired an additional 391,544 shares at a aggregate cost of $ 9,235 , with an average share price of $ 23.59 .

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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 8. Financial Statements and Supplementary Data