Zevia PBC

Previous wording

The following discussion contains forward-looking statements that involve risks and uncertainties. The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed accompanying consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in Part II, Item 1A.“Risk Factors”* and other sections of this Quarterly Report and our consolidated financial statements and notes thereto included in our Annual Report. The financial data discussed below reflects the historical results of operations and financial position of the Company. References in this Quarterly Report to*“Zevia,”* the*“Company,”* “we,” “us,” and*“our”* refer (1) prior to the consummation of the Reorganization Transactions, to Zevia LLC, and (2) after the consummation of the Reorganization Transactions, to Zevia PBC and its consolidated subsidiaries unless the context indicates otherwise. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.*

Current wording

The following discussion contains forward-looking statements that involve risks and uncertainties. The following discussion of our financial condition and results of operations should be read in conjunction with our accompanying unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in Part II, Item 1A.“Risk Factors”* and other sections of this Quarterly Report and our consolidated financial statements and notes thereto included in our Annual Report. The financial data discussed below reflects the historical results of operations and financial position of the Company. References in this Quarterly Report to*“Zevia,”* the*“Company,”* “we,” “us,” and*“our”* refer (1) prior to the consummation of the Reorganization Transactions, to Zevia LLC, and (2) after the consummation of the Reorganization Transactions, to Zevia PBC and its consolidated subsidiaries unless the context indicates otherwise. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.*

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. 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.

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 nine months ended September 30, 2026, the Company recognized $1.0 million of costs primarily consisting of contract termination costs and freight costs to transfer inventories. Restructuring charges related to the warehouse operations were completed as of June 30, 2026. The Company expects the restructuring to result in annualized cost savings of approximately $4.0 million.

Previous wording

We continue to monitor macroeconomic trends and uncertainties such as key ingredient inflation, any potential shutdown of the U.S. government, the ongoing conflicts in the Middle East, the effects of tariffs, and the potential imposition of modified or additional tariffs, which may adversely affect our net sales and profitability. As a result of the rapid changes in global trade policies, including tariffs, and potential tariff modifications or the imposition of tariffs, export controls or other retaliatory actions by other countries, we have experienced and anticipate continuing to experience increased supply chain challenges, commodity cost volatility, and consumer and economic uncertainty. This has also created a complex and challenging retail environment for us as consumers reduce discretionary spending. A decline in consumer spending may have an adverse effect on our revenues, margins, and operating results. We, along with our competitors, have increased pricing on a number of products in response to widespread inflation, which could be exacerbated as a result of the tariffs. These pricing increases may result in future reductions in volume.

Current wording

We continue to monitor macroeconomic trends and uncertainties such as key ingredient inflation, any potential shutdown of the U.S. government, the ongoing conflicts in the Middle East, increase in oil prices, the effects of tariffs, and the potential imposition of modified or additional tariffs, which may adversely affect our net sales and profitability. As a result of the rapid changes in global trade policies, including tariffs, and potential tariff modifications or the imposition of tariffs, export controls or other retaliatory actions by other countries, we have experienced and anticipate continuing to experience increased supply chain challenges, commodity cost volatility, and consumer and economic uncertainty. This has also created a complex and challenging retail environment for us as consumers reduce discretionary spending. A decline in consumer spending may have an adverse effect on our revenues, margins, and operating results. We, along with our competitors, have increased pricing on a number of products in response to widespread inflation, which could be exacerbated as a result of the tariffs. These pricing increases may result in future reductions in volume.

Previous wording

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

Current wording

The following summarizes the components of our results of operations for the three and nine months ended September 30, 2026 and 2025.

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 half 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 2026, and expect a continued increase in our cost of goods going forward.

Previous wording

During the three months ended June 30, 2026, we recognized $1.0 million of equity-based compensation expense related to awards granted in connection with endorsement agreement with Cardi B. Excluding the impact of non-employee grants, 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

During the nine months ended September 30, 2026, we recognized $1.0 million of equity-based compensation expense related to awards granted in connection with the brand endorsement agreement with Cardi B. Excluding the impact of non-employee grants, our equity-based compensation expense is expected to remain relatively consistent in absolute dollars but decline as a percentage of net sales over time.

Previous wording

Net sales were $45.0 million for the three months ended June 30, 2026 as compared to $44.5 million for the three months ended June 30, 2025. Equivalized cases sold were 3.4 million during the three months ended June 30, 2026 as compared to 3.5 million during the three months ended June 30, 2025. The increase in net sales was primarily due to pricing actions which increased net sales by $2.2 million, partially offset by a 3.7% decrease in the number of equivalized cases sold, which reduced net sales by $1.7 million. The decrease in volume primarily reflected the comparison against distribution load-ins in the prior-year period. We define an equivalized case as a 288 fluid ounce case.

Current wording

Net sales were $48.3 million for the three months ended September 30, 2026 as compared to $40.8 million for the three months ended September 30, 2025. Equivalized cases sold were 3.7 million during the three months ended September 30, 2026 as compared to 3.3 million during the three months ended September 30, 2025. The increase in net sales was primarily due to a 14.4% increase in the number of equivalized cases sold, which increased net sales by $5.9 million and was largely the result of higher volumes in the club and e-commerce channels. The increase also reflects $1.2 million from pricing actions and a $0.4 million decrease in allowance for incentives and discounts.

Previous 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.

Current wording

Cost of goods sold was $25.9 million for the three months ended September 30, 2026 as compared to $22.2 million for the three months ended September 30, 2025. The increase of $3.7 million, or 16.5%, was largely due to increased volumes which resulted in $3.1 million of higher costs of goods sold and unfavorable unit costs of $1.2 million driven by aluminum tariffs. This increase was partially offset by lower write-downs of excess and obsolete inventory related to the package redesign in the third quarter of 2025 of $0.7 million.

Previous wording

Gross profit was $22.0 million for the three months ended June 30, 2026 as compared to $21.7 million for the three months ended June 30, 2025. The increase in gross profit of $0.3 million, or 1.5%, was primarily attributable to the benefit of pricing actions, partially offset by unfavorable unit costs driven by tariffs.

Current wording

Gross profit was $22.4 million for the three months ended September 30, 2026 as compared to $18.6 million for the three months ended September 30, 2025. The increase in gross profit of $3.8 million, or 20.5%, was primarily due to higher volumes, the benefit of pricing actions, lower spend on promotional activity, and lower write-downs, partially offset by unfavorable unit costs driven by tariffs.

Previous wording

Gross margin for the three months ended June 30, 2026 increased to 48.9% from 48.7% in the prior-year period. The increase was primarily driven by pricing actions, partially offset by unfavorable unit costs driven by tariffs.

Current wording

Gross margin for the three months ended September 30, 2026 increased to 46.4% from 45.6% in the prior-year period. The increase was primarily driven by pricing actions and lower inventory write-downs, partially offset by unfavorable unit costs driven by tariffs.

Previous 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%.

Current wording

Selling and marketing expenses were $15.1 million for the three months ended September 30, 2026 as compared to $12.7 million for the three months ended September 30, 2025. Marketing expenses were $7.2 million for the three months ended September 30, 2026 as compared to $5.0 million for the three months ended September 30, 2025, an increase of $2.2 million, or 44.6%. Selling expenses were $8.0 million for the three months ended September 30, 2026 as compared to $7.7 million for the three months ended September 30, 2025, an increase of $0.3 million, or 3.5%.

Previous wording

The increase in marketing expenses of $0.3 million was driven by increased investments to drive brand awareness.

Current wording

The increase in marketing expenses of $2.2 million was driven by increased investments to drive brand awareness.

Previous 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.

Current wording

The increase in selling expenses of $0.3 million was primarily due to higher freight costs of $0.4 million driven by higher volumes and $0.4 million due to higher fuel rates. These increases were partially offset by lower warehousing costs of $0.5 million and lower freight transfers of $0.1 million, driven by benefits realized from the Productivity Initiative and lower inventory levels.

Previous wording

General and administrative expenses were $8.6 million for the three months ended June 30, 2026 as compared to $8.1 million for the three months ended June 30, 2025. The increase of $0.5 million, or 5.8%, was primarily driven by higher personnel-related costs of $0.3 million due to increased headcount, higher outside services of $0.2 million, higher donated inventory of $0.1 million, and higher information technology and software costs of $0.1 million. These increases were partially offset by a $0.3 million decrease in accrued variable compensation expense.

Current wording

General and administrative expenses were $8.3 million for the three months ended September 30, 2026 as compared to $7.7 million for the three months ended September 30, 2025. The increase of $0.6 million, or 7.6%, was primarily driven by higher personnel-related costs of $0.5 million due to increased headcount and higher accrued variable compensation expense and higher donated inventory of $0.1 million. These increases were partially offset by lower professional services expenses of $0.1 million.

Previous 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.

Current wording

Equity-based compensation expenses were $1.0 million for the three months ended September 30, 2026 as compared to $0.9 million for the three months ended September 30, 2025, primarily related to outstanding equity-based awards being recognized over the remaining service periods of the awards.

Previous wording

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Current wording

Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025

Previous 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.

Current wording

Net sales were $139.4 million for the nine months ended September 30, 2026 as compared to $123.4 million for the nine months ended September 30, 2025. Equivalized cases sold were 10.7 million during the nine months ended September 30, 2026 as compared to 9.7 million during the nine months ended September 30, 2025. The increase in net sales was primarily attributable to a 9.7% increase in the number of equivalized cases sold, which resulted in $11.9 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 $3.0 million from pricing actions and a $1.1 million decrease in allowance for incentives and discounts.

Previous wording

Cost of goods sold was $46.8 million for the six months ended June 30, 2026 as compared to $41.8 million for the six months ended June 30, 2025. The increase of $5.0 million, or 11.9%, was largely due to increased volumes which resulted in $3.0 million of higher costs of goods sold and unfavorable unit costs of $1.9 million driven by tariffs. The impact of tariffs was partially mitigated by unit cost improvements resulting from the Productivity Initiative.

Current wording

Cost of goods sold was $72.7 million for the nine months ended September 30, 2026 as compared to $64.0 million for the nine months ended September 30, 2025. The increase of $8.6 million, or 13.5%, was largely due to increased volumes which resulted in $6.1 million of higher costs of goods sold and unfavorable unit costs of $3.1 million driven by tariffs. The impact of tariffs was partially mitigated by unit cost improvements resulting from the Productivity Initiative, as well as lower inventory write-downs of $0.6 million.

Previous 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.

Current wording

Gross profit was $66.8 million for the nine months ended September 30, 2026 as compared to $59.3 million for the nine months ended September 30, 2025. The increase in gross profit of $7.4 million, or 12.5%, was primarily due to higher volumes, the benefit of pricing actions, and lower spend on promotional activity, partially offset by unfavorable unit costs driven by tariffs.

Previous 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.

Current wording

Gross margin for the nine months ended September 30, 2026 decreased to 47.9% from 48.1% 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

Selling and marketing expenses were $27.6 million for the six months ended June 30, 2026 as compared to $28.7 million for the six months ended June 30, 2025. Marketing expenses were $10.2 million for the six months ended June 30, 2026 as compared to $10.9 million for the six months ended June 30, 2025, a decrease of $0.7 million, or 6.9%. Selling expenses were $17.4 million for the six months ended June 30, 2026 as compared to $17.8 million for the six months ended June 30, 2025, a decrease of $0.4 million, or 2.0%.

Current wording

Selling and marketing expenses were $42.7 million for the nine months ended September 30, 2026 as compared to $41.4 million for the nine months ended September 30, 2025. Marketing expenses were $17.3 million for the nine months ended September 30, 2026 as compared to $15.9 million for the nine months ended September 30, 2025, an increase of $1.5 million, or 9.2%. Selling expenses were $25.4 million for the nine months ended September 30, 2026 as compared to $25.5 million for the nine months ended September 30, 2025, a decrease of $0.1 million, or 0.3%.

Previous wording

The decrease in selling expenses of $0.4 million was primarily due to reduced repackaging costs of $0.7 million resulting from the automation of certain processes, lower warehousing costs of $0.6 million driven by benefits realized from the Productivity Initiative and lower inventory levels, lower distribution fees of $0.5 million, and lower other direct selling costs of $0.3 million. These decreases were partially offset by higher freight costs of $1.7 million, primarily due to higher fuel rates.

Current wording

The decrease in selling expenses of $0.1 million was primarily due to lower warehousing costs of $1.0 million resulting from benefits realized from the Productivity Initiative and lower inventory levels, reduced repackaging costs of $0.6 million resulting from process automation, lower distribution fees of $0.7 million and lower other direct selling costs of $0.2 million. These decreases were substantially offset by $2.5 million of higher freight costs, primarily attributable to higher fuel rates of $1.3 million, increased volume of $0.9 million and higher freight-transfer costs of $0.3 million.

Previous 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.

Current wording

General and administrative expenses were $25.9 million for the nine months ended September 30, 2026 as compared to $22.7 million for the nine months ended September 30, 2025. The increase of $3.1 million, or 13.8%, was primarily driven by $2.4 million of expenses recognized associated with the settlement of litigation, higher personnel-related costs of $0.6 million due to increased headcount, higher donated inventory of $0.3 million, and higher information technology and software costs of $0.2 million. These increases were partially offset by lower accrued variable compensation expense of $0.3 million and lower outside legal spend of $0.3 million.

Previous wording

Equity-based compensation expenses were $3.0 million for the six months ended June 30, 2026 as compared to $1.7 million for the six 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 $1.3 million was primarily attributable to $1.0 million of equity awards granted in connection with the Company's brand endorsement agreement with Cardi B.

Current wording

Equity-based compensation expenses were $4.0 million for the nine months ended September 30, 2026 as compared to $2.7 million for the nine months ended September 30, 2025, primarily related to outstanding equity-based awards being recognized over the remaining service periods of the awards. The increase of $1.3 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

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.

Current wording

Restructuring expenses were $1.0 million for the nine months ended September 30, 2026, as compared to $2.2 million for the nine months ended September 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 nine months ended September 30, 2026, would be included within selling and marketing expenses if not presented as a separate line item in the unaudited condensed consolidated statements of operations and comprehensive loss. The restructuring expenses in the prior period primarily included employee related severance costs.

Previous 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.

Current wording

As of September 30, 2026, we had $29.5 million in cash and cash equivalents. We believe that our cash and cash equivalents as of September 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

Our principal sources of liquidity are our existing cash and cash equivalents, cash generated from sales of our products, and borrowing capacity currently available under our Secured Revolving Line of Credit. Our primary cash needs are for operating expenses, working capital, and capital expenditures to support the growth in our business.

Current wording

Our principal sources of liquidity are our existing cash and cash equivalents, cash generated from sales of our products, cash proceeds from the issuance of stock and borrowing capacity currently available under our Secured Revolving Line of Credit. Our primary cash needs are for operating expenses, working capital, and capital expenditures to support the growth in our business.

Previous wording

Future capital requirements will depend on many factors, including our rate of revenue growth, gross margin and the level of expenditures in all areas of the Company. In future years, we may experience an increase in operating and capital expenditures from time to time, as needed, as we expand business activities. To the extent that existing capital resources and sales growth are not sufficient to fund future activities, we may seek alternative financing through additional equity or debt financing transactions. Additional funds may not be available on terms favorable to us or at all. Also, we will continue to assess our liquidity needs in light of current and future global health emergencies, inflationary pressures, tariffs as well as changes in tariff or U.S. foreign trade policies, relatively high interest rates, volatility in the financial markets, recession fears, financial institution instability, any potential shutdown of the U.S. government, current and future global hostilities, including the ongoing conflicts in the Middle East, and political tensions between the U.S. and China that may continue to disrupt and impact the global and national economies and global financial markets. If any disruption continues into the future, we may not be able to access the financial markets and could experience an inability to access additional capital, which could negatively affect our operations in the future. Failure to raise additional capital, if and when needed, could have a material adverse effect on our financial position, results of operations, and cash flows.

Current wording

Future capital requirements will depend on many factors, including our rate of revenue growth, gross margin and the level of expenditures in all areas of the Company. In future years, we may experience an increase in operating and capital expenditures from time to time, as needed, as we expand business activities. To the extent that existing capital resources and sales growth are not sufficient to fund future activities, we may seek alternative financing through additional equity or debt financing transactions. Additional funds may not be available on terms favorable to us or at all. Also, we will continue to assess our liquidity needs in light of current and future global health emergencies, inflationary pressures, tariffs as well as changes in tariff or U.S. foreign trade policies, increased oil prices, relatively high interest rates, volatility in the financial markets, recession fears, financial institution instability, any potential shutdown of the U.S. government, current and future global hostilities, including the ongoing conflicts in the Middle East, and political tensions between the U.S. and China that may continue to disrupt and impact the global and national economies and global financial markets. If any disruption continues into the future, we may not be able to access the financial markets and could experience an inability to access additional capital, which could negatively affect our operations in the future. Failure to raise additional capital, if and when needed, could have a material adverse effect on our financial position, results of operations, and cash flows.

Previous 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.

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. 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 from February 22, 2027. As of September 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

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.

Current wording

Net cash provided by operating activities of $5.5 million for the nine months ended September 30, 2026 was primarily driven by a net increase in cash related to changes in operating assets and liabilities of $7.9 million and non-cash expenses of $5.0 million primarily related to equity-based compensation and depreciation and amortization expense, partially offset by a net loss of $7.4 million. Changes in cash flows related to operating assets and liabilities were primarily due to a $5.3 million decrease in inventories resulting from inventory management initiatives, increased accounts payable, accrued expenses, and other current liabilities of $2.6 million due to timing of purchases and inventory production, decreased accounts receivable of $1.0 million driven by timing of collections, partially offset by increased prepaid expenses and other assets of $0.5 million driven by timing of payments and decreased operating lease liabilities of $0.5 million.

Previous 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.

Current wording

Net cash used in operating activities of $4.2 million for the nine months ended September 30, 2025 was primarily driven by a net loss of $9.9 million, partially offset by non-cash expenses of $3.8 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 $1.8 million. Changes in cash flows related to operating assets and liabilities were primarily due to a decrease in inventories of $4.5 million due to decreased production of inventory as inventory levels are managed, partially offset by an increase in accounts receivable of $1.8 million largely due to the increase in net sales, a net decrease in accounts payable, accrued expenses and other current liabilities of $0.4 million due to timing of purchases and decreased production of inventory, and lower lease liability of $0.5 million.

Previous 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.

Current wording

Net cash used in investing activities of $0.6 million for the nine months ended September 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 six months ended June 30, 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 $0.2 million for the nine months ended September 30, 2025 was primarily due to purchases of software used in ongoing operations.

Previous 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.

Current wording

Net cash used in financing activities of $0.7 million for the nine months ended September 30, 2026 was primarily due to equity financing costs paid of $0.5 million and payments of debt issuance costs of $0.2 million.

Previous wording

Net cash provided by financing activities of less than $0.1 million for the six months ended June 30, 2025 was primarily due to proceeds from the exercise of stock options offset by financing costs paid.

Current wording

Net cash used in financing activities of $0.2 million for the nine months ended September 30, 2025 was primarily due to financing costs paid, partially offset by proceeds from the exercise of stock options.

Previous wording

We calculate Adjusted EBITDA as net loss adjusted to exclude: (1) other income (expense), net, which includes interest (income) expense and foreign currency (gains) losses, (2) (benefit) provision for income taxes, (3) depreciation and amortization, (4) equity-based compensation, (5) restructuring expenses, and (6) certain litigation expenses. Also, Adjusted EBITDA may in the future be adjusted for amounts impacting net income related to the TRA liability and other infrequent and unusual transactions.

Current wording

We calculate Adjusted EBITDA as net loss adjusted to exclude: (1) other expense (income), net, which includes interest (income) expense and foreign currency (gains) losses, (2) (benefit from) provision for income taxes, (3) depreciation and amortization, (4) equity-based compensation, (5) restructuring expenses, and (6) certain litigation expenses. Also, Adjusted EBITDA may in the future be adjusted for amounts impacting net income related to the TRA liability and other infrequent and unusual transactions.

Previous wording

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” We may take advantage of these exemptions until we are no longer an “emerging growth company.” Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of the IPO which is December 31, 2026 or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if any of the following events occur: (i) we have more than $1.235 billion in annual revenue, (ii) we have more than $700.0 million in market value of our Class A common stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one annual report on Form 10-K) or (iii) we issue more than $1.0 billion of non-convertible debt securities over a three-year period.

Current wording

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” We may take advantage of these exemptions until we are no longer an “emerging growth company.” Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of the IPO which is December 31, 2026 or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if any of the following events occur: (i) we have more than $1.235 billion in annual revenue, (ii) we have more than$700.0 million in market value of our Class A common stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one annual report on Form 10-K) or (iii) we issue more than $1.0 billion of non-convertible debt securities over a three-year period.