Zevia PBC

Previous wording

Key Events During the First Quarter of 2026

Current wording

Key Events During the First Half of 2026

Previous wording

In the second quarter of 2026, the Company initiated a restructuring plan aimed at improving the efficiency of its warehouse operations and optimizing its warehouse footprint. The plan includes transitioning to a more efficient warehouse location and streamlining related logistics activities. The Company estimates that total costs associated with this restructuring will be approximately $0.9 million, primarily consisting of contract termination costs and freight costs to transfer inventories. Once the transition is complete, the Company expects the restructuring to result in annualized cost savings of approximately $2.4 million.

Current wording

In the second quarter of 2026, the Company initiated a restructuring plan aimed at improving the efficiency of its warehouse operations and optimizing its warehouse footprint. The plan includes transitioning to a more efficient warehouse location and streamlining related logistics activities. For the three and six months ended June 30, 2026, the Company recognized $1.0 million of costs primarily consisting of contract termination costs and freight costs to transfer inventories. Additional restructuring charges or cash expenditures may be incurred as the Company makes further progress on this initiative, which we expect to be substantially completed by the third quarter of 2026. Once the transition is complete, the Company expects the restructuring to result in annualized cost savings of approximately $4.1 million.

Previous wording

The following summarizes the components of our results of operations for the three months ended March 31, 2026 and 2025, respectively.

Current wording

The following summarizes the components of our results of operations for the three and six months ended June 30, 2026 and 2025, respectively.

Previous wording

Our cost of goods sold is subject to price fluctuations in the marketplace, particularly in the price of aluminum and other raw materials, as well as in the cost of production, packaging, in-bound freight and logistics. Due to the implementation of tariffs, we saw an increase in our cost of goods sold throughout 2025 and in the first quarter of 2026, and expect a continued increase in our cost of goods going forward.

Current wording

Our cost of goods sold is subject to price fluctuations in the marketplace, particularly in the price of aluminum and other raw materials, as well as in the cost of production, packaging, in-bound freight and logistics. Due to the implementation of tariffs, we saw an increase in our cost of goods sold throughout 2025 and in the first half of 2026, and expect a continued increase in our cost of goods going forward.

Previous wording

Our selling expenses are expected to increase in the short-term due to the effect of the ongoing conflicts in the Middle East. Excluding the effect of conflicts in the Middle East, our selling expenses are expected to decrease as a percentage of sales over time as a result of our Productivity Initiative and our continued focus on cost improvements in our supply chain.

Current wording

Our selling expenses are expected to increase in the short-term due to higher freight costs driven by increased fuel rates, which have been affected by the ongoing conflicts in the Middle East. Over time, we expect selling expenses to decrease as a percentage of net sales as a result of our Productivity Initiative and continued focus on supply chain cost improvements, including the warehouse restructuring plan, although fluctuations in fuel rates may affect the timing and extent of these anticipated savings.

Previous wording

Equity-based compensation expense consists of the recorded expense of equity-based compensation for our employees and, if any, for certain consultants and service providers who are non-employees. We record equity-based compensation expense for employee grants using grant date fair value for RSUs and PSUs or a Black-Scholes valuation model to calculate the fair value of stock options by date granted. Equity-based compensation cost for RSU and PSU awards is measured based on the closing fair market value of the Zevia PBC Class A common stock, on the date of grant. Our equity-based compensation expense is expected to remain relatively consistent in absolute dollars but decline as a percentage of net sales over time.

Current wording

Equity-based compensation expense consists of the recorded expense of equity-based compensation for our employees and, if any, for certain consultants and service providers who are non-employees. We record equity-based compensation expense for employee grants using grant date fair value for RSUs and PSUs or a Black-Scholes valuation model to calculate the fair value of stock options by date granted. Equity-based compensation cost for RSU and PSU awards is measured based on the closing fair market value of the Zevia PBC Class A common stock, on the date of grant.

Previous wording

Other income, net consists primarily of interest income (expense), and foreign currency (loss) gains.

Current wording

Other (expense) income, net consists primarily of interest income (expense), and foreign currency (loss) gains.

Previous wording

Cost of goods sold was $23.8 million for the three months ended March 31, 2026 as compared to $19.0 million for the three months ended March 31, 2025. The increase of $4.8 million, or 25.3%, was largely due to increased volumes which resulted in $3.9 million of higher costs of goods sold, unfavorable unit costs of $0.8 million driven by tariffs, which was slightly offset by improvements in unit costs related to the Productivity Initiative, and higher write-downs related to excess and obsolete inventory of $0.2 million, mainly related to new packaging design.

Current wording

Cost of goods sold was $23.0 million for the three months ended June 30, 2026 as compared to $22.8 million for the three months ended June 30, 2025. The increase of $0.1 million, or 0.6%, was largely due to unfavorable unit costs of $1.0 million driven by aluminum tariffs. This increase was partially offset by improvements in unit costs related to the Productivity Initiative and decreased volumes which resulted in $0.9 million of lower costs of goods sold.

Previous wording

Selling and marketing expenses were $14.5 million for the three months ended March 31, 2026 as compared to $15.3 million for the three months ended March 31, 2025. Marketing expenses were $5.1 million for the three months ended March 31, 2026 as compared to $6.2 million for the three months ended March 31, 2025, a decrease of $1.1 million, or 17.7%. Selling expenses were $9.4 million for the three months ended March 31, 2026 as compared to $9.1 million for the three months ended March 31, 2025, an increase of $0.3 million, or 3.3%.

Current wording

Selling and marketing expenses were $13.1 million for the three months ended June 30, 2026 as compared to $13.4 million for the three months ended June 30, 2025. Marketing expenses were $5.0 million for the three months ended June 30, 2026 as compared to $4.7 million for the three months ended June 30, 2025, an increase of $0.3 million, or 5.5%. Selling expenses were $8.1 million for the three months ended June 30, 2026 as compared to $8.7 million for the three months ended June 30, 2025, a decrease of $0.6 million, or 6.6%.

Previous wording

The increase in selling expenses of $0.3 million was primarily due to higher freight and warehousing costs of $1.4 million, driven by increased volumes, partially offset by decreases in repackaging costs of $0.5 million due to the automation of certain processes, and lower warehousing costs of $0.6 million, largely driven by the Productivity Initiative and lower inventory levels.

Current wording

The decrease in selling expenses of $0.6 million was primarily due to lower warehousing costs of $0.5 million, driven by benefits realized from the Productivity Initiative and lower inventory levels, reduced repackaging costs of $0.3 million resulting from the automation of certain processes, lower distribution fees of $0.3 million, and lower other direct selling costs of $0.3 million. These decreases were partially offset by higher freight costs of $0.8 million, primarily due to higher fuel rates.

Previous wording

Equity-based compensation expenses were $0.9 million for the three months ended March 31, 2026 as compared to $0.7 million for the three months ended March 31, 2025, primarily related to outstanding equity-based awards being recognized over the remaining service periods of the awards. The increase of $0.2 million was primarily driven by forfeitures during the three months ended March 31, 2025 related to the reduction in workforce and new equity awards during the three months ended March 31, 2026.

Current wording

Equity-based compensation expenses were $2.1 million for the three months ended June 30, 2026 as compared to $1.0 million for the three months ended June 30, 2025, primarily related to outstanding equity-based awards being recognized over the remaining service periods of the awards. The increase of $1.1 million was primarily attributable to $1.0 million of equity awards granted in connection with the Company's brand endorsement agreement with Cardi B.

Previous wording

Net sales were $46.1 million for the three months ended March 31, 2026 as compared to $38.0 million for the three months ended March 31, 2025. Equivalized cases sold were 3.6 million during the three months ended March 31, 2026 as compared to 3.0 million during the three months ended March 31, 2025. The increase in net sales was primarily due to a 20.4% increase in the number of equivalized cases sold, which resulted in $7.8 million higher net sales, which was largely the result of expanded distribution at one customer in the club channel as well as higher volumes in the mass and e-commerce channels, and lower allowance for incentives and discounts of $0.7 million, partially offset by pricing declines as a result of channel mix of $0.4 million. We define an equivalized case as a 288 fluid ounce case.

Current wording

Net sales were $91.1 million for the six months ended June 30, 2026 as compared to $82.5 million for the six months ended June 30, 2025. Equivalized cases sold were 6.9 million during the six months ended June 30, 2026 as compared to 6.5 million during the six months ended June 30, 2025. The increase in net sales was primarily attributable to a 7.3% increase in the number of equivalized cases sold, which resulted in $6.0 million higher net sales and was largely the result of expanded distribution at one customer in the club channel as well as higher volumes in the e-commerce channel. The increase also reflects $1.9 million from pricing actions and a $0.6 million decrease in allowance for incentives and discounts.

Previous wording

Gross profit was $22.3 million for the three months ended March 31, 2026 as compared to $19.0 million for the three months ended March 31, 2025. The increase in gross profit of $3.3 million, or 17.1%, was primarily due to higher volumes and lower spend on promotional activity, partially offset by unfavorable unit costs, higher inventory write-downs, and channel mix.

Current wording

Gross profit was $44.3 million for the six months ended June 30, 2026 as compared to $40.7 million for the six months ended June 30, 2025. The increase in gross profit of $3.6 million, or 8.8%, was primarily due to higher volumes and lower spend on promotional activity, partially offset by unfavorable unit costs.

Previous wording

Gross margin for the three months ended March 31, 2026 decreased to 48.4% from 50.1% in the prior-year period. The decrease was primarily due to unfavorable unit costs, higher inventory write-downs, and channel mix, partially offset by lower spend on promotional activity.

Current wording

Gross margin for the six months ended June 30, 2026 decreased to 48.6% from 49.3% in the prior-year period. The decrease was primarily due to unfavorable unit costs, partially offset by the benefits of pricing actions and lower promotional activity.

Previous wording

The decrease in marketing expenses of $1.1 million was due to the timing of marketing campaigns.

Current wording

The decrease in marketing expenses of $0.7 million was due to the timing of marketing campaigns.

Previous wording

General and administrative expenses were $9.1 million for the three months ended March 31, 2026 as compared to $7.0 million for the three months ended March 31, 2025. The increase of $2.1 million, or 29.9%, was primarily driven by $2.3 million of expenses recognized associated with the settlement of litigation.

Current wording

General and administrative expenses were $17.6 million for the six months ended June 30, 2026 as compared to $15.1 million for the six months ended June 30, 2025. The increase of $2.6 million, or 17.0%, was primarily driven by $2.4 million of expenses recognized associated with the settlement of litigation.

Previous wording

Restructuring expenses were zero for the three months ended March 31, 2026, as compared to $2.1 million for the three months ended March 31, 2025. The restructuring expenses in the prior year period primarily included employee related severance costs.

Current wording

Restructuring expenses were $1.0 million for the six months ended June 30, 2026, as compared to $2.2 million for the six months ended June 30, 2025. Restructuring expenses in the current-year period primarily consisted of contract termination costs and freight costs incurred to transfer inventory as part of the Company's restructuring plan. Restructuring charges for the six months ended June 30, 2026, would be included within selling and marketing expenses if not presented as a separate line item in the unaudited consolidated statements of operations and comprehensive loss. The restructuring expenses in the prior period primarily included employee related severance costs.

Previous wording

As of March 31, 2026, we had $26.6 million in cash and cash equivalents. We believe that our cash and cash equivalents as of March 31, 2026, together with our operating activities and available borrowings under the Secured Revolving Line of Credit (as defined below), will provide adequate liquidity for ongoing operations, planned capital expenditures and other investments beyond the next 12 months.

Current wording

As of June 30, 2026, we had $28.5 million in cash and cash equivalents. We believe that our cash and cash equivalents as of June 30, 2026, together with our operating activities and available borrowings under the Secured Revolving Line of Credit (as defined below), will provide adequate liquidity for ongoing operations, planned capital expenditures and other investments beyond the next 12 months.

Previous wording

On February 22, 2022, we obtained a revolving credit facility (the “Secured Revolving Line of Credit”) by entering into a Loan and Security Agreement with Bank of America, N.A (the “Loan and Security Agreement”). Under the Secured Revolving Line of Credit, we may draw funds up to an amount not to exceed the lesser of (i) a $20 million revolving commitment and (ii) a borrowing base which is comprised of inventory and receivables. Up to $2 million of the Secured Revolving Line of Credit may be used for letter of credit issuances with the option to increase the commitment under the Secured Revolving Line of Credit by up to $10 million, subject to certain conditions. The Secured Revolving Line of Credit matures on February 22, 2027. As of March 31, 2026, 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.

Current wording

On February 22, 2022, Zevia LLC (the “Borrower”) obtained a revolving credit facility (the “Secured Revolving Line of Credit”) by entering into a Loan and Security Agreement with Bank of America, N.A. (the “Loan and Security Agreement”). The Borrower may draw funds under the Secured Revolving Line of Credit up to an amount not to exceed the lesser of (i) a $20 million revolving commitment and (ii) a borrowing base which is comprised of inventory and receivables. Up to $2 million of the Secured Revolving Line of Credit may be used for letter of credit issuances and the Borrower has the option to increase the commitment under the Secured Revolving Line of Credit by up to $10 million, subject to certain conditions. The Secured Revolving Line of Credit matures on February 22, 2027. On May 15, 2026, the Borrower entered into a First Amendment to the Loan and Security Agreement which extended the maturity date to February 22, 2030. As of June 30, 2026, 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.

Previous wording

Loans under the Secured Revolving Line of Credit bear interest based on either, at our option, the Term Secured Overnight Financing 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.

Current wording

Loans under the Secured Revolving Line of Credit, as amended, bear interest based on either, at the Borrower's option, the Term Secured Overnight Financing 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.

Previous wording

Under the Secured Revolving Line of Credit we 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 March 31, 2026, the Company was in compliance with its financial covenant.

Current wording

Under the Secured Revolving Line of Credit, as amended, the Borrower must satisfy the following financial covenants: (i) until the Borrower has achieved a fixed charge coverage ratio of at least 1.00 to 1.00 for two consecutive fiscal quarters (or six consecutive months, as applicable), a minimum liquidity requirement of at least $7 million, at all times, and (ii) a minimum fixed charge coverage ratio of 1.00 to 1.00 as of the last day of any 12 month period 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 12 month period thereafter until such time as there are no events of default and availability has been above such threshold for 30 consecutive days. As of June 30, 2026, the Borrower was in compliance with these financial covenants.

Previous wording

Net cash provided by operating activities of $1.6 million for the three months ended March 31, 2026 was primarily driven by a net increase in cash related to changes in operating assets and liabilities of $2.8 million and non-cash expenses of $1.2 million primarily related to equity-based compensation and depreciation and amortization expense, partially offset by net loss of $2.4 million. Changes in cash flows related to operating assets and liabilities were primarily due to a decrease in inventories of $5.2 million due to sales and decreased production of inventory as inventory levels are managed and decreased accounts receivable of $2.0 million driven by timing of collections, partially offset by a net decrease in accounts payable, accrued expenses and other current liabilities of $3.8 million due to timing of purchases and decreased production of inventory and increased prepaid expenses and other assets of $0.4 million driven by timing of payments.

Current wording

Net cash provided by operating activities of $4.0 million for the six months ended June 30, 2026 was primarily driven by a net increase in cash related to changes in operating assets and liabilities of $5.6 million and non-cash expenses of $3.6 million primarily related to equity-based compensation and depreciation and amortization expense, partially offset by a net loss of $5.3 million. Changes in cash flows related to operating assets and liabilities were primarily due to a $2.9 million decrease in inventories resulting from inventory management initiatives, decreased accounts receivable of $1.1 million driven by timing of collections, increased accounts payable, accrued expenses, and other current liabilities of $3.2 million due to timing of purchases and inventory production, partially offset by increased prepaid expenses and other assets of $1.2 million driven by timing of payments and decreased operating lease liabilities of $0.4 million.

Previous wording

Net cash used in operating activities of $2.9 million for the three months ended March 31, 2025 was primarily driven by a net loss of $6.4 million, partially offset by non-cash expenses of $1.1 million primarily related to equity-based compensation and depreciation and amortization expense, and a net increase in cash related to changes in operating assets and liabilities of $2.3 million. Changes in cash flows related to operating assets and liabilities were primarily due to a decrease in accounts receivable of $2.0 million largely due to timing of payments and a decrease in inventories of $1.5 million due to decreased production of inventory as inventory levels are managed, partially offset by increased prepaid expenses and other assets of $0.9 million driven by timing of payments, and a net decrease in accounts payable, accrued expenses and other current liabilities of $0.3 million due to timing of purchases and decreased production of inventory.

Current wording

Net cash used in operating activities of $4.3 million for the six months ended June 30, 2025 was primarily driven by a net loss of $7.0 million, partially offset by non-cash expenses of $2.5 million primarily related to equity-based compensation and depreciation and amortization expense, and a net increase in cash related to changes in operating assets and liabilities of $0.2 million. Changes in cash flows related to operating assets and liabilities were primarily due to a decrease in inventories of $2.9 million due to decreased production of inventory as inventory levels are managed, partially offset by an increase in accounts receivable of $2.3 million largely due to the increase in net sales, a net decrease in accounts payable, accrued expenses and other current liabilities of $0.2 million due to timing of purchases and decreased production of inventory.

Previous wording

Net cash used in investing activities of $0.3 million for the three months ended March 31, 2026 was primarily due to purchases of quality control equipment for use in ongoing operations.

Current wording

Net cash used in investing activities of $0.4 million for the six months ended June 30, 2026 was primarily due to purchases of quality control equipment for use in ongoing operations.

Previous wording

Net cash used in investing activities of less than $0.1 million for the three months ended March 31, 2025 was primarily due to purchases of computer equipment and quality control equipment for use in ongoing operations.

Current wording

Net cash used in investing activities of less than $0.1 million for the six months ended June 30, 2025 was primarily due to purchases of computer equipment and quality control equipment for use in ongoing operations.

Previous wording

Net cash used in financing activities of $0.1 million for the three months ended March 31, 2026 was primarily due to financing costs paid.

Current wording

Net cash used in financing activities of $0.4 million for the six months ended June 30, 2026 was primarily due to equity financing costs paid of $0.2 million and payments of debt issuance costs of $0.2 million.

Previous wording

On April 16, 2026, the Company entered into a new lease for its corporate headquarters office with total square footage of 10,045 square feet with anticipated commencement date of December 28, 2026 for 64 full calendar months. Total rent obligations under the new lease are expected to be approximately $2.2 million.

Current wording

On April 16, 2026, the Company entered into a new lease for its corporate headquarters office with total square footage of 10,045 square feet. The lease has a term of 64 full calendar months commencing on the lease commencement date, which is expected to occur in the fourth quarter of 2026. Total rent obligations under the new lease are expected to be approximately $2.2 million.