What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-26 compared with 2024-03-06 · 105 added, 137 removed, 595 unchanged (29% of the section changed)

15 unchanged sentences

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

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

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

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Los Angeles, California

March 6, 2024

February 26, 2025

We have served as the Company’s auditor since 2020.

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Operating lease liabilities, net of current portion

Other non-current liabilities

Total liabilities

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Depreciation and amortization

Restructuring

Total operating expenses

Loss from operations

Other income, net

Other (expense) income, net

Loss before income taxes

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Exchange of Class B common stock for Class A common stock

Disposition of cost method investment in redemption of Class B common stock

Exercise of stock options

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Exchange of Class B common stock for Class A common stock

Disposition of cost method investment in redemption of Class B common stock

Exercise of stock options

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Non-cash lease expense

Sublease impairment loss

Depreciation and amortization

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Operating lease liabilities

Other non-current liabilities

Net cash used in operating activities

Investing activities:

Proceeds from maturities of short-term investments

Purchases of property, equipment and software

Proceeds from sales of property and equipment

Net cash provided by investing activities

Proceeds from sales of property, equipment and software

Net cash (used in) provided by investing activities

Financing activities:

Payment of debt issuance costs

Minimum tax withholding paid on behalf of employees for net share settlement

Proceeds from revolving line of credit

Repayment of revolving line of credit

Proceeds from exercise of stock options

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Net change from operating, investing, and financing activities

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Organization and operations

Zevia PBC (the “Company,” “we,” “us,” “our”), is a growth beverage company that develops, markets, sells, and distributes great tasting, zero sugar beverages made with simple, plant-based ingredients.

Zevia PBC (the “Company,” “we,” “us,” “our”), is a better-for-you beverage company that develops, markets, sells, and distributes naturally delicious, zero sugar beverages.

We are a Delaware public benefit corporation and have been designated as a “Certified B Corporation,” and are focused on addressing the global health challenges resulting from excess sugar consumption by offering a broad portfolio of zero sugar, zero calorie, naturally sweetened beverages.

All Zevia® beverages are Non-GMO Project verified, gluten-free, Kosher, vegan and zero sodium and include a variety of flavors across Soda, Energy Drinks, Organic Tea, and Kids drinks.

Our products are distributed and sold principally across the United States (“U.S.”) and Canada through a diverse network of major retailers in the food, drug, warehouse club, mass, natural and e-commerce channels and in grocery and natural product stores and specialty outlets.

All Zevia® beverages are Non-GMO Project verified, gluten-free, Kosher, and vegan, and include a variety of flavors across Soda, Energy Drinks and Organic Tea drinks.

Our products are distributed and sold principally across the United States (“U.S.”) and Canada through a diverse network of major retailers in the grocery, drug, warehouse club, mass, natural, convenience and e-commerce channels and in natural product stores and specialty outlets.

The Company’s products are manufactured and maintained at third-party beverage production and warehousing facilities located in both the U.S.

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Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiary, Zevia LLC, that it controls due to ownership of a majority equity interest.

The accompanying consolidated financial statements include the accounts of the Company and its subsidiary, Zevia LLC, that it controls due to ownership of a majority equity interest.

All intercompany transactions and balances have been eliminated in consolidation.

The Company owns a majority economic interest in, and operates and controls all of the businesses and affairs of, Zevia LLC.

Accordingly, the Company has prepared these consolidated financial statements in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation .

Accordingly, the Company has prepared these accompanying consolidated financial statements in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation .

On January 1, 2022, the Company and Zevia LLC entered into a service agreement to transfer the services of all employees of the Company to Zevia LLC.

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Use of estimates

The preparation of the consolidated financial statements in accordance with U.S.

The preparation of the accompanying consolidated financial statements in accordance with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the reported amount of net sales and expenses during the reporting period.

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the incremental borrowing rate for lease liabilities;

allowance for doubtful accounts;

allowance for credit losses;

the useful lives assigned to and the recoverability of intangible assets;

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On an ongoing basis, the Company evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of its assets and liabilities.

At December 31, 2023 , the Company’s operations continued to be impacted by higher manufacturing, freight, and labor costs as a result of the short-term supply chain logistics challenges during 2023, which the Company does not expect to continue in 2024, as well as increased operating costs as a result of the global economy and political and economic uncertainties, which the Company expects to continue in 2024.

The Company will continue to monitor the economic environment, including any impact from current and future global events, and their effects on its business and operations.

Cash, cash equivalents and investments

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The nature of the Company’s operations does not give rise to consequential other comprehensive loss.

Accounts receivable and allowance for doubtful accounts

Trade receivables are recorded at net realizable value, which includes an appropriate allowance for doubtful accounts.

Accounts receivable and allowance for credit losses

Trade receivables are recorded at net realizable value, which includes an appropriate allowance for credit losses.

Credit is extended to customers based on an evaluation of their financial condition, credit rating, and trade references.

The Company monitors exposure to credit losses and maintains an allowance for anticipated losses based on each customer’s credit condition and payment behavior.

The Company’s accounts receivable balance is net of an allowance for doubtful accounts.

The allowance for doubtful accounts was not material at December 31, 2023 and 2022 .

Changes in the Allowance for Doubtful Accounts were as follows:

Year Ended December 31,

Balance, beginning of the year

Recovery of bad debt

Balance, end of the year

The Company’s accounts receivable balance is net of an allowance for credit losses.

The allowance for credit losses was not material at December 31, 2024 and 2023 .

Changes in the allowance for credit losses were not material for the years ended December 31, 2024 and 2023.

Inventories consist of raw materials and finished goods.

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Quality control equipment

Buildings and improvements

The Company periodically reviews long-lived assets for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

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Measurement of an impairment loss is based on the excess of the carrying amount of the group of assets over the long-lived asset’s fair value.

The Company did no t recognize any impairment charges associated with long-lived assets during the years ended December 31, 2023 and 2022 .

The Company recognized an impairment charge associated with long-lived assets of $ 0.1 million and zero during the years ended December 31, 2024 and 2023 , respectively.

The impairment charge of $ 0.1 million was the result of sublease arrangement entered by the Company during the year ended December 31, 2024 and included in restructuring expense on the consolidated statement of operations and comprehensive loss.

The Company leases office space.

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The Company evaluates ROU assets for impairment consistent under the impairment of long-lived assets policy.

See Note 8, Leases for discussion on impairment.

The Company had no material finance leases as of December 31, 2024 and 2023 .

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The Company maintains an allowance representing the estimated cost of certain customer incentives incurred but not yet realized as of the end of each respective year, which is recorded as an offset against customer accounts receivable, and is included under Accounts receivable, net in the accompanying consolidated balance sheets.

The customer incentives and allowances were $ 4.1 million and $ 5.6 million as of December 31, 2023 and 2022 , respectively.

The accrual for customer incentives and allowances were $ 5.7 million and $ 4.1 million as of December 31, 2024 and 2023 , respectively.

Revenue recognition

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Selling and marketing expenses in the accompanying consolidated statements of operations and comprehensive loss include warehousing and distribution costs, shipping and handling costs, advertising, and marketing costs, which generally are expensed as incurred.

Warehousing and distribution costs include storage, transfer, repacking and handling fees, and out-bound freight and delivery charges.

Selling expenses consist mainly of warehousing and distribution costs which include storage, transfer, repacking and handling fees, and out-bound freight and delivery charges.

The Company has elected to classify shipping and handling costs for salable product outside of cost of goods sold, in selling and marketing expenses in the accompanying consolidated statements of operations and comprehensive loss.

Such costs amounted to approximately $ 12.7 million and $ 14.2 million for the years ended December 31, 2024 and 2023, respectively.

The Company expenses sales and marketing costs as incurred.

Advertising and marketing expenses represent costs associated with the promotion of the Zevia® brand and products as outlined in ASC Topic 730-25, Other Expenses – Advertising Costs , such as those for digital and other forms of advertising.

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and in foreign countries.

Restructuring

The Company can initiate management-approved restructuring activities to achieve cost savings and to position the Company strategically in the market in response to prevailing economic conditions and associated customer demand.

Costs associated with r estructuring activities can include employee severance and benefit costs to terminate a specified number of employees as well as costs for restructuring consulting services, impairment loss of certain assets, contract termination costs and other related charges.

Foreign currency transactions

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dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for net sales and expenses.

Foreign currency transaction losses for the years ended December 31, 2023 and 2022 amounted to approximately $ 0.0 million and $ 0.2 million, respectively, and are included under other income, net in the accompanying consolidated statements of operations and comprehensive loss.

Foreign currency transaction losses for the years ended December 31, 2024 and 2023 amounted to approximately $ 0.7 million and $ 0.0 mil lion, respectively, and are included under other (expense) income, net in the accompanying consolidated statements of operations and comprehensive loss.

The Company is the managing member of Zevia LLC and, as a result, consolidates the financial results of Zevia LLC in the consolidated financial statements.

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Recently Issued Accounting Pronouncements – Recently Adopted

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

This ASU provides for a new impairment model that requires measurement and recognition of expected credit losses for most financial assets held.

The ASU is effective for private companies for annual periods, and interim periods within those annual periods, beginning after December 15, 2022.

The Company adopted ASU No.

2016-13 as of January 1, 2023.

The adoption of ASU No.

2016-13 did not have a significant impact on the Company’s financial statements.

In April 2021, the FASB issued ASU No.

2021-04, which included Topic 260, Earnings Per Share and Topic 718, Compensation - Stock Compensation .

This guidance clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options due to a lack of explicit guidance in the FASB Codification.

This ASU is effective for all entities for fiscal years beginning after December 15, 2021.

Early adoption is permitted.

The Company adopted ASU 2021-04 as of January 1, 2022.

The adoption of ASU 2021-04 did not have a significant impact on the Company’s financial statements as the Company does not have freestanding equity-classified written call options.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes .

This ASU improves areas of U.S.

GAAP and reduces cost and complexity while maintaining usefulness.

The main provisions remove certain exceptions, including the exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.

In addition, the amendments simplify income tax accounting in the areas such as income based franchise taxes, eliminating the requirements to allocate consolidated current and deferred tax expense in certain instances and a requirement that an entity reflects the effect of enacted changes in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date.

This ASU is effective for private companies for annual reporting periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022.

The Company adopted ASU 2019-12 as of January 1, 2022.

The adoption of ASU 2019-12 did not have a significant impact on the Company’s financial statements.

Recently Issued Accounting Pronouncements – Not Yet Adopted

In November 2023, the FASB issues ASU No.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

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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 this guidance.

The Company adopted ASU 2023-07 during the year ended December 31, 2024.

See Note 13, Segment Reporting for more information on the adoption of this guidance.

Recently Issued Accounting Pronouncements – Not Yet Adopted

In December 2023, the FASB issued ASU No.

2023-09 Income Taxes (Topic 740) Improvements to Income Tax Disclosures .

2023-09 Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The guidance requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

The guidance is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions.

The ASU is effective for private companies for annual periods beginning after December 15, 2025.

The ASU 2023-09 is effective for private companies for annual periods beginning after December 15, 2025, with early adoption permitted.

The guidance will be applied on a prospective basis with the option to apply the standard retrospectively.

The Company is currently evaluating the impact of adopting this guidance while early adoption is permitted.

The Company elected not to early adopt this guidance.

The Company is currently evaluating the impact of adopting this guidance.

In November 2024, the FASB issued ASU No.

2024-03, Disaggregation of Income Statement Expenses .

The new guidance requires disclosures about specific types of expenses included in the expense captions presented on the face of income statement as well as disclosures about selling expenses.

This guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted.

The requirements will be applied prospectively with the option for retrospective application.

The Company is currently evaluating the impact of adopting this guidance.

Any other recently issued accounting pronouncements are neither relevant, nor expected to have a material impact on the Company’s financial statements.

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and Canada through a diverse network of major retailers, including:

grocery stores, natural products stores, specialty outlets, and warehouse clubs;

and through online/e-commerce channels.

grocery stores, drug stores, warehouse clubs, mass stores, natural product stores, convenience, and online/e-commerce channels.

The following table disaggregates the Company’s sales by channel:

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Online/e-commerce

The following table disaggregates the Company’s sales by geographic location of the respective customers:

The following table disaggregates the Company’s sales by geographic location of the respective customers based on ship to location:

Year Ended December 31,

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Leasehold improvements

Computer equipment and software

Computer equipment

Furniture and equipment

Quality control and marketing equipment

Buildings and improvements

Assets not yet placed in service

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For the years ended December 31, 2024 and 2023, total amortization expense amounted to $ 0.3 million and $ 0.6 million, respectively, including $ 0.1 million and $ 0.4 million, respectively, of amortization expense related to software.

No impairment losses have been recorded on any of the Company’s intangible assets for the years ended December 31, 2023 and 2022.

No impairment losses have been recorded on any of the Company’s intangible assets for the years ended December 31, 2024 and 2023, respectively.

Amortization expense for intangible assets with definite lives is expected to be as follows:

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The Secured Revolving Line of Credit matures on February 22, 2027.

As of December 31, 2023, no amounts were drawn under the Secured Revolving Line of Credit.

During the first quarter of 2024, the Company drew $ 8 million on the Secured Revolving Line of Credit which was subsequently repaid in the same period.

As of December 31, 2024, there was no amount outstanding on the Secured Revolving Line of Credit.

The Secured Revolving Line of Credit is secured by a first priority security interest in substantially all of the Company’s assets.

Loans under the Secured Revolving Line of Credit bear interest based on either, at the Borrower’s option, the Bloomberg Short-Term Bank Yield Index rate plus an applicable margin between 1.50 % to 2.00 % or the Base Rate (customarily defined) plus an applicable margin between 0.50 % to 1.00 % with margin, in each case, determined by the average daily availability under the Secured Revolving Line of Credit.

Under the Secured Revolving Line of Credit, the Borrower is required to comply with certain covenants, including, among others, by maintaining Liquidity (as defined therein) of $ 7 million at all times until December 31, 2023.

Thereafter, the Borrower must satisfy a financial covenant requiring a minimum fixed charge coverage ratio of 1.00 to 1.00 as of the last day of any fiscal quarter following the occurrence of certain events of default that are continuing or any day on which availability under the Secured Revolving Line of Credit is less than the greater of $ 3 million and 17.5 % of the borrowing base, and must again satisfy such financial covenant as of the last day of each fiscal quarter thereafter until such time as there are no events of default and availability has been above such threshold for 30 consecutive days.

As of December 31, 2023 , the Company was in compliance with its liquidity covenant.

The Company leases its office space which has a remaining lease term of 36 months.

In January 2023, the Company entered into an amendment to the lease for its corporate headquarters offices to extend the term through December 31, 2026.

The Loan and Security Agreement was amended on September 30, 2024 to replace the Bloomberg Short-Term Bank Yield Index, which was discontinued on November 15, 2024, with the Term Secured Overnight Financing rate, effective November 20, 2024.

Under the Secured Revolving Line of Credit, the Borrower must satisfy a financial covenant requiring a minimum fixed charge coverage ratio of 1.00 to 1.00 as of the last day of any fiscal quarter following the occurrence of certain events of default that are continuing or any day on which availability under the Secured Revolving Line of Credit is less than the greater of $ 3 million and 17.5 % of the borrowing base, and must again satisfy such financial covenant as of the last day of each fiscal quarter thereafter until such time as there are no events of default and availability has been above such threshold for 30 consecutive days.

As of December 31, 2024 , the Company was in compliance with its financial covenant.

The Company leases its office space for its corporate headquarters which has a remaining lease term of 24 months.

In September 2024, the Company entered into an agreement to sublease 8,468 square feet of the 20,185 square feet of leased office space.

The sublease term is from October 8, 2024 to December 31, 2026 .

The sublease arrangement resulted in impairment of ROU asset and leasehold improvement of $ 0.3 million and $ 0.1 million, respectively for the year ended December 31, 2024 and is in cluded in restructuring expense on the consolidated statement of operations and comprehensive loss.

The Company determined the impairment using the discounted cash flow of expected receipts from sublease which is considered a level 2 fair value measurement.

The level 3 inputs in the calculation were insignificant.

The calculated fair value of the sublease was $ 0.5 million.

The Company’s recognized lease costs include:

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(1) Operating lease cost is recorded within general and administrative expenses in the accompanying consolidated statements of operations and comprehensive loss.

Year Ended December 31,

December 31, 2024

December 31, 2023

Weighted-average remaining lease term (months)

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Accrued customer paid bottle deposits

Accrued marketing expenses

Accrued other

Prior year amounts of accrued marketing expenses and accrued other in the table above have been reclassified to conform with the current year presentation.

These reclassifications had no effect on the reported balance sheet, results of operations or cash flows.

EQUITY-BASED COMPENSATION

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In October and November 2021, the Company’s Board of Directors approved an amendment to its equity-based compensation plans for a certain number of employees to allow immediate vesting upon retirement of all outstanding RSUs and stock options, and to extend the exercisability of outstanding stock options up to five years after retirement, if they meet certain conditions, including a resignation after the holder has reached 50 years of age with at least 10 years of service to the Company, so long as the holder provides advance notice of his or her resignation to the Company’s Board of Directors.

During the year ended December 31, 2022, three employees, retired from the Company and all outstanding awards and related stock compensation expense of $ 8.2 million, respectively, were accelerated through their retirement dates.

As of December 31, 2024, the 2021 Plan provides for future grants and/or issuances of up to approximately 2.8 million shares of our common stock.

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The Company uses a Black-Scholes valuation model to measure stock option expense as of each respective grant date.

Generally, stock option grants vest ratably over four years, have a ten-year term, and have an exercise price equal to the fair market value as of the grant date.

Generally, stock option grants vest ratably over four years, have a 10-year term, and have an exercise price equal to the fair market value as of the grant date.

The fair value of stock options is amortized to expense over the vesting period.

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As of December 31, 2024, total unrecognized compensation expense related to unvested stock options was $ 2.0 million, which is expected to be recognized over a weighted-average period of 2.1 years.

Restricted Phantom Units and Restricted Stock Units

In July 2021, the Company’s Board of Directors approved an amendment to 2,422,644 restricted phantom units (the “Restricted Phantom Units”) previously granted by Zevia LLC (the “Phantom Unit Amendment”).

The Phantom Unit Amendment changed the settlement feature of all outstanding Restricted Phantom Units so that following vesting, each award of Restricted Phantom Units would be settled in shares of Class A common stock having a fair market value equal to (i) the number of Restricted Phantom Units subject to such award, multiplied by (ii) the difference between the fair market value of a share of Class A common stock and the grant date price per Restricted Phantom Unit.

All other terms related to the Restricted Phantom Units remained unchanged.

As a result of the Phantom Unit Amendment, the estimated fair value of the modified awards was $ 33.9 million and was recognized as an expense over the vesting period through January 2022 subsequent to the performance condition being met.

In March 2021, the Company’s Board of Directors also approved an amendment to the RSUs granted by Zevia LLC in August 2020 (“the RSU Amendment”).

Restricted Stock Units

In March 2021, the Company’s Board of Directors approved an amendment to the RSUs granted by Zevia LLC in August 2020 (“the RSU Amendment”).

The RSU Amendment changed the vesting of such RSUs to occur as follows:

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As a result of the RSU Amendment, the estimated fair value of the modified awards was $ 48.9 million and are being recognized as expense over the vesting period subsequent to the performance condition being met.

As of December 31, 2023 , the remaining service period of the awards is 13 months.

As of December 31, 2024 , the remaining service period of the awards is 1 month.

The following is a summary of RSU activity for the year ended December 31, 2024:

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As of December 31, 2024, total unrecognized compensation expense related to unvested RSUs was $ 4.3 million, which is expected to be recognized over a weighted-average period of 2.5 years.

As of December 31, 2023 and 2022, there wer e 593,672 and 1,345,800 , respectively, of RSUs outstanding which vested in 2022 but are subjected to a deferred settlement provision over the next two years and therefore have not been released.

As of December 31, 2024 and 2023, there were 214,410 and 593,672 , respectively, of RSUs outstanding which vested in 2022 but are subjected to a deferred settlement provision over two years and therefore have not been released.

As a result, these RSUs are not included in the table above.

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The Company has a common management team across all product lines and does not manage these products as individual businesses, and as a result, cash flows are not distinct.

The CODM assesses the Company’s performance by using net loss as shown in the consolidated statements of operations and comprehensive loss.

The CODM uses net loss in the annual operating plan.

The CODM considers budget-to-actual variances on monthly basis for both profit measures when making decisions about the allocation of operating and capital resources, evaluating pricing strategy and to assess performance of the Company.

Since the Company operates as a single operating segment, the consolidated statements of operations and comprehensive loss present the significant expenses.

Significant expenses also include direct selling expenses of $ 40.0 million and $ 51.8 million, and marketing expenses of $ 17.1 million and $ 10.5 million for the years ended December 31, 2024 and 2023, respectively, presented as selling and marketing expenses in the statements of operations and comprehensive loss.

The Company has no intra-entity transfers or sales.

The other information required under ASC 280, Segment Reporting, is provided in the notes to consolidated financial statements including the Company’s products in Note 1, Description of Business and Note 3, Revenues.

In addition, interest income for the years ended December 31, 2024 and 2023 was $ 0.8 million and $ 1.3 million, respectively.

MAJOR CUSTOMERS, ACCOUNTS RECEIVABLE AND VENDOR CONCENTRATION

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December 31, 2023

The table below represents raw material vendors that accounted for more than 10 % of all raw material purchases for the periods:

The table below represents raw material and finished goods vendors that accounted for more than 10 % of all raw material and finished goods purchases for the following periods:

Year Ended December 31,

* Less than 10 % of total net sales, accounts receivable, net or raw material purchases in the respective periods.

The change in vendor concentration during 2024 was driven by the changes made in our supply chain whereby our contract manufacturers are responsible for the procurement of raw materials to produce our products, which are then sold to us as finished goods.

* Less than 10 % of total net sales, accounts receivable, net or raw material and finished goods purchases in the respective periods.

LOSS PER SHARE

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Diluted loss per share of Class A common stock is computed by dividing net loss attributable to the Company by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities and assumed conversion of Class B common stock into shares of Class A common stock on a one-for-one basis using the if-converted method.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted loss per share of Class A common stock:

Year Ended December 31,

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Year Ended December 31,

Zevia LLC Class B Common Units exchangeable to shares of Class A common stock

Zevia LLC Class B units exchangeable to shares of Class A common stock

Stock options

Restricted stock units

RESTRUCTURING

In May 2024, the Company initiated certain restructuring actions designed to reduce costs and improve efficiency while continuing to invest in our brand and related initiatives (the “Productivity Initiative”).

As a result, the Company recognized $ 2.1 million of costs primarily related to employee termination expenses, restructuring consulting services, impairment loss of certain assets from sublease arrangement and costs to exit two of our third-party warehouse and distribution facilities during the year ended December 31, 2024.

These amounts are included under restructuring in the accompanying consolidated statements of operations and comprehensive loss.

Additional restructuring charges or cash expenditures may be incurred as the Company makes further progress on this Productivity Initiative, which we expect to be substantially completed by the first half of 2025.

As of December 31, 2024, accrued restructuring costs of $ 0.4 million are included under accrued expenses and other current liabilities in the consolidated balance sheets.

These expenses are expected to be substantially paid at the end of the first quarter of 2025.

As part of the ongoing Productivity Initiative, in January 2025, the Company approved a reduction in workforce and will incur additional restructuring costs of approximately $ 1.5 million for employee termination, benefits and related taxes.

INCOME TAXES AND TAX RECEIVABLE AGREEMENT

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The Company is taxed as a C corporation and pays corporate federal, state and local taxes with respect to income allocated from Zevia LLC based on Zevia PBC’s economic interest in Zevia LLC, which was 84.2 % and 75.8 % , as of December 31, 2024 and 2023, respectively.

Income tax expense consists of the following:

The provision for income taxes consists of the following:

Year Ended December 31,

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and various states.

The Company is currently under the audit examinations by Texas for taxable years 2019-2021.

As of December 31, 2023, the Company believes there will be no change of significance in its recorded tax positions and accordingly, no liability for uncertain tax benefits has been recorded.

The Company is not currently under examination by any other taxing authorities.

The Company is not currently under examination by any taxing authorities.

Due to the carryover of tax attributes, the statute of limitations is currently open for tax years since inception for Zevia PBC.

On March 27, 2020, the U.S.

enacted the CARES Act.

The Cares Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the U.S.

economy and fund a nationwide effort to curtail the effect of COVID-19.

The CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions are amending certain provisions of the previously enacted Tax Cuts and Jobs Act related to depreciable property and net operating losses, deferral of payroll taxes, and the Paycheck Protection program.

At December 31, 2023 , the Company has no t booked any income tax provision or benefit for the impact for the CARES Act due to its recent incorporation and the pass-through treatment of Zevia, LLC.

On June 27, 2024, California enacted Senate Bill 167.

SB 167 suspended the net operating loss deduction for tax years beginning on or after January 1, 2024, and before January 1, 2027.

The suspension applies to taxpayers with greater than $ 1 million in net income for the tax year.

There was no material impact from the provisions of SB 167 during the year ended December 31, 2024.

On August 16, 2022, the U.S.

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They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

In connection with the IPO, the Company entered into a Tax Receivable Agreement (“TRA” ) with continuing members of Zevia LLC and the Direct Zevia Stockholders.

In the event that such parties exchange any or all of their Class B units for Class A common stock, the TRA requires the Company to make payments to such holders for 85 % of the tax benefits realized, or in some cases deemed to be realized, by the Company by such exchange as a result of (i) certain favorable tax attributes acquired from the Blocker Companies in the Mergers (including net operating losses and the Blocker Companies’ allocable share of existing tax basis), (ii) increases in tax basis resulting from Zevia PBC’s acquisition of continuing member’s Zevia LLC units in connection with the IPO and in future exchanges and, (iii) tax basis increases attributable to payments made under the TRA (including tax benefits related to imputed interest).

In connection with the IPO, the Company entered into a Tax Receivable Agreement (“TRA”) with continuing members of Zevia LLC and the shareholders of blocker companies (“Blocker Companies”) of certain pre-IPO institutional investors (“the Direct Zevia Stockholders”).

In the event that such parties exchange any or all of their Class B units for Class A common stock, the TRA requires the Company to make payments to such holders for 85 % of the tax benefits realized, or in some cases deemed to be realized, by the Company by such exchange as a result of (i) certain favorable tax attributes acquired from the Blocker Companies in certain mergers (including net operating losses and the Blocker Companies’ allocable share of existing tax basis), (ii) increases in tax basis resulting from Zevia PBC’s acquisition of continuing member’s Zevia LLC units in connection with the IPO and in future exchanges and, (iii) tax basis increases attributable to payments made under the TRA (including tax benefits related to imputed interest).

The annual tax benefits are computed by calculating the income taxes due, including such tax benefits, and the income taxes due without such benefits.

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If utilization of the DTAs subject to the TRA becomes more likely than not in the future, the Company will record a liability related to the TRA which will be recognized as expense within its consolidated statements of operations.

UNAUDITED QUARTERLY INFORMATION

The following summarizes selected unaudited quarterly financial data for the year ended December 31, 2023 (amounts may not sum due to rounding):

(in thousands, except share and per share amounts)

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Loss from operations

Loss before income taxes

Net loss and comprehensive loss

Net loss attributable to Zevia PBC

Basic earnings per share

Diluted earnings per share

Weighted-average shares of Class A Common Stock - basic

Weighted-average shares of Class A Common Stock - diluted

(1) Net loss in the third quarter of 2023 increased primarily due to short-term supply chain logistics challenges w hich hindered fulfillment and impacted net sales results and selling and marketing expenses.

(2) Gross profit decreased in the fourth quarter of 2023 primarily due to a decrease in volumes and higher inventory losses as a result of the brand refresh, SKU optimization, and procurement changes.

(3) Net loss in the fourth quarter of 2023 increased primarily due to short-term supply chain logistics challenges w hich hindered fulfillment and impacted net sales results and selling and marketing expenses, as well as higher inventory losses as a result of the brand refresh, SKU optimization, and procurement changes.

The following summarizes selected unaudited quarterly financial data for the year ended December 31, 2022 (amounts may not sum due to rounding):

(in thousands, except share and per share amounts)

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Loss from operations

Loss before income taxes

Net loss and comprehensive loss

Net loss attributable to Zevia PBC

Basic earnings per share

Diluted earnings per share

Weighted-average shares of Class A Common Stock - basic

Weighted-average shares of Class A Common Stock - diluted

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