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What changed in Zevia PBC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Zevia PBC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+323 added−296 removedSource: 10-K (2025-02-26) vs 10-K (2024-03-06)

Top changes in Zevia PBC's 2024 10-K

323 paragraphs added · 296 removed · 245 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

68 edited+17 added−20 removed50 unchanged
Biggest changeIn addition to helping Zevia remain one of the top-selling carbonated soft drink brands on Amazon in 2023, our e-commerce buyers are also heavily engaged with the brand offline. According to Numerator more than half of Zevia shoppers who purchased us online in 2023 also purchased Zevia in brick-and-mortar retailers.
Biggest changeOur online platforms serve as trial generating and transaction intensification opportunities, allowing for full Zevia portfolio offerings, including our best selling variety packs, which are intended to stimulate significant consumer engagement. In addition to helping Zevia remain one of the top-selling carbonated soft drink brands on Amazon in 2024, our e-commerce buyers are also heavily engaged with the brand offline.
We believe that by consistently offering great tasting products that are all zero calorie and naturally sweetened, with sustainable packaging under one brand, we can attract consumers to our new flavors and categories.
We believe that by consistently offering great tasting products that are all zero calorie, zero sugar and naturally sweetened, with sustainable packaging under one brand, we can attract consumers to our new flavors and categories.
We are an omnichannel brand found in more than 34,000 retailer locations across the traditional grocery, natural grocery, specialty outlets, warehouse club, drug and convenience channels, and on e-commerce platforms. ESG and Social Impact Our focus on ESG is core to how we conduct our business, and we believe this focus makes us a more successful company.
We are an omnichannel brand found in more than 37,000 retailer locations across the traditional grocery, natural grocery, specialty outlets, warehouse club, drug and convenience channels, and on e-commerce platforms. ESG and Social Impact Our focus on ESG is core to how we conduct our business, and we believe this focus makes us a more successful company.
Our stevia leaf extract is procured by our contract manufacturers and sourced from a large multi-national ingredient company with whom we have a long-standing relationship through a two-year agreement that was entered into October 15, 2023, which includes fixed pricing for the duration of the term.
Our stevia leaf extract is procured by our contract manufacturers and was previously sourced from a single large multi-national ingredient company with whom we have a long-standing relationship through a two-year agreement that was entered into October 15, 2023, which includes fixed pricing for the duration of the term.
We aggressively protect our intellectual property rights by relying on trademark laws and other laws related to proprietary rights around the world. Our domain name is https://www.zevia.com. Government Regulation In the normal course of our business, we are subject to a variety of federal, state, provincial and local laws and regulations in the countries in which we do business.
We seek to protect our intellectual property rights by relying on trademark laws and other laws related to proprietary rights around the world. Our domain name is https://www.zevia.com. Government Regulation In the normal course of our business, we are subject to a variety of federal, state, provincial and local laws and regulations in the countries in which we do business.
We maintain a website at https://www.zevia.com, which serves as the most comprehensive source of information regarding our products. Our website is used as a platform to introduce our entire brand portfolio, promote and sell our products, provide news, share recipes, highlight nutritional facts and provide general information on where to purchase our products.
We maintain a website at https://www.zevia.com, which serves as the most comprehensive source of information regarding our products. Our website is used as a platform to introduce our entire brand portfolio, promote and sell our products, provide news, highlight nutritional facts and provide general information on where to purchase our products.
Our product development team provides ongoing sensory and cost evaluation of competing stevia extract products as well as other plant-based sweeteners as a means of planning alternate sources of supply that meet or exceed our sensory expectations. Flavors are developed in collaboration with our product development team and our flavor ingredient suppliers.
Our product development team provides ongoing sensory and cost evaluation of competing stevia extract products as well as other sweeteners as a means of planning alternate sources of supply that meet or exceed our sensory expectations. Flavors are developed in collaboration with our product development team and our flavor ingredient suppliers.
Since our founding in 2007, we have never sold a beverage in a plastic bottle. Through only using aluminum cans, we estimate that we have saved over 26,000 metric tons of plastic and consumption of our products has resulted in the avoidance of over one billion plastic bottles since 2011.
Since our founding in 2007, we have never sold a beverage in a plastic bottle. Through only using aluminum cans, we estimate that we have saved over 30,000 metric tons of plastic and consumption of our products has resulted in the avoidance of over one billion plastic bottles since 2011.
Zevia also offers a Fortune-500 style benefits package that incorporates a robust contribution for all tiers of coverage to include: medical, health savings account employer contribution, dental, vision, group and voluntary life & AD&D, critical illness, hospital indemnity, accident, short-term and long-term disability insurance, flexible spending accounts, pet insurance, legal access, and individual disability (ID) protection.
Zevia also offers a Fortune-500 style benefits package that incorporates a robust contribution for all tiers of coverage to include: medical, health savings account employer contribution, dental, vision, group and voluntary life & AD&D, critical illness, hospital indemnity, accident, short-term and long-term disability insurance, flexible spending accounts, pet insurance and legal access.
We also intend to use certain social media channels as a means of disclosing information about us and our products to consumers, our customers, investors and the public (such as @Zevia and #Zevia on Facebook and Instagram).
We also intend to use certain social media channels as a means of disclosing information about us and our products to consumers, our customers, investors and the public (such as @Zevia and #Zevia on LinkedIn, Facebook, TikTok and Instagram).
Zevia promotes equity through consistency and fairness with our people policies and practices that are designed to offer access, opportunity, and career growth for all team members equally. We have best practice standards across various stages of the employee lifecycle, including performance standards. We strive to make promotions, compensation, and growth opportunities impartial, just, and transparent.
Zevia promotes equity through consistency and fairness with our people policies and practices that are designed to offer access, opportunity, and career growth for all team members equally across various stages of the employee lifecycle, including performance standards. We strive to make promotions, compensation, and growth opportunities impartial, just, and transparent.
Our Board of Directors provides oversight on certain human capital management matters, including through its Compensation Committee, which is responsible for governance over policies regarding human capital and compensation practices, including executive compensation, diversity, inclusion, pay equity, recruiting, retention, training and development, safety, and creating a working environment consistent with our culture, objectives and strategy.
Our Board of Directors provides oversight on certain human capital management matters, including through its Compensation Committee, which is responsible for governance over policies regarding human capital and compensation practices, including executive compensation, performance, pay equity, recruiting, retention, training and development, safety, representation and creating a working environment consistent with our culture, objectives and strategy.
We believe consumers are becoming more health conscious and focused on reducing sugar in their diets and are increasingly averse to added sugars. Many consumers are making choices with sustainability in mind, including plastic waste reduction.
We believe consumers continue to be more health conscious and focused on reducing sugar in their diets and are increasingly averse to added sugars. Many consumers are making choices with sustainability in mind, including plastic waste reduction.
Our competitors in the beverage market include category leaders such as The Coca-Cola Company, Keurig Dr. Pepper, PepsiCo, Inc., National Beverage Corp., Monster Energy, and Red Bull, as well as established naturally positioned soda brands like Virgils and Reeds and emerging better-for-you functional soda brands like Poppi and Olipop.
Our competitors in the beverage market include category leaders such as The Coca-Cola Company, Keurig Dr. Pepper, PepsiCo, Inc., National Beverage Corp., Monster Energy, and Red Bull, as well as established naturally positioned soda brands like Virgils and Reeds and functional soda brands like Poppi and Olipop.
Our People team manages themes for contests, celebrations across diverse interests through the year, mental health resources, open surveys, team communication platforms, and training on resource access. To meet our human capital objectives, we frequently utilize internal employee surveys to understand the effectiveness of our people programs and where we can improve across the organization.
Our People team manages celebrations across varied interests through the year, themes for contest, mental health resources, open surveys, team communication platforms, and training on resource access. To meet our human capital objectives, we utilize internal employee surveys to understand the effectiveness of our people programs and where we can improve across the organization.
In addition, continuous improvement is a Zevia core value, and as such we strategically reformulate our products from time to time to further enhance taste and simplify ingredients. Soda. Soda, our flagship product released in 2008, is the better-for-you alternative to conventional sodas and diet sodas with no artificial ingredients.
In addition, continued improvement is a Zevia core value, and as such we strategically reformulate our products and develop new flavors from time to time to further enhance taste and simplify ingredients. Soda. Soda, our flagship product with no artificial ingredients released in 2008, is the better-for-you alternative to conventional sodas and diet sodas.
We maintain a consistent compensation policy across base salary, bonus, equity in the form of Restricted Stock Units (“RSUs”) and stock options, and benefit contributions. We believe everyone is an owner at Zevia, and we work together as one team to deliver results and achieve performance.
We maintain a consistent compensation policy across base salary, bonus, equity in the form of Restricted Stock Units (“RSUs”) and stock options, all of which are based upon performance, and benefit contributions. We believe everyone is an owner at Zevia, and we work together as one team to deliver results and achieve performance.
We find candidates through a wide variety of sources to expand diversity, we offer flexible education requirements by role, and structure interviews with consistent processes to promote equal employment opportunities and minimize bias. We conduct transparent, collaborative and panel interviews for group input on all hires.
We find candidates through a wide variety of sources to expand the talent pool of potential candidates, we offer flexible education requirements by role, and structure interviews with consistent processes to promote equal employment opportunities and minimize bias. We conduct transparent, collaborative and panel interviews for group input on all hires.
As part of our DEI initiative, we have implemented recruitment practices designed to remove bias in the selection process and we reflect our values to candidates through job description language using gender-neutral pronouns, no video calls during the first interview, and standard assessments for applicable roles.
We have implemented recruitment practices designed to remove bias in the selection process and we reflect our values to candidates through job description language using gender-neutral pronouns, no video calls during the first interview, and standard assessments for applicable roles.
Our robust pipeline of new category innovations is expected to allow us to continue to thoughtfully and strategically innovate within the beverage space and maximize share of stomach by offering flavors and beverages that can appeal to a variety of usage occasions. Our product development team is also working to improve our ingredients and packaging.
Our robust pipeline of new category innovations is expected to allow us to continue to thoughtfully and strategically innovate within the beverage space and maximize share of stomach by offering flavors and beverages that can drive appeal. Our product development team is also working to improve our ingredients.
We have been designated as a “Certified B Corporation” by B Lab, an independent non-profit organization, in addition to being a Delaware public benefit corporation. We 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.
We are a Delaware public benefit corporation and have been designated as a “Certified B Corporation,” by B Lab, an independent non-profit organization, 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.
This is evidenced by our ranking among the top carbonated soft drink brands in the Natural Channel and on Amazon according to syndicated data sources SPINS and 1010data for 2023. Our brand has grown significantly over the past decade, which has been largely tied to an engaged and growing consumer base, broadening distribution across retail channels.
This is evidenced by our ranking among the top carbonated soft drink brands across multiple retail channels and on Amazon according to syndicated data sources SPINS and Circana for 2024. Our brand has grown significantly over the past decade, which has been largely tied to an engaged and growing consumer base, broadening distribution across retail channels.
In 2023, close to 7 million U.S. households purchased Zevia products across more than 34,000 retail locations. 5 Our consumers are our best advocates, and their loyalty is rooted in their alignment with our messaging and mission. Our consumer base over-indexes to Gen Z and Millennials, particularly among Millennial parents.
In 2024, more than 6.6 million U.S. households purchased Zevia products across more than 37,000 retail locations. 5 Our consumers are our best advocates, and their loyalty is rooted in their alignment with our messaging and mission. Our consumer base over-indexes to Millennials and Gen X, particularly among Millennial parents.
We estimate that by choosing Zevia, our consumers have avoided over 79,000 metric tons of sugar in their diets since 2011. Sustainable packaging is one of our top priorities and we actively seek to minimize our environmental impact. We take pride in reducing plastic waste by using only aluminum cans as beverage containers.
We estimate that by choosing Zevia, our consumers have avoided over 79,000 metric tons of sugar in their diets since 2011. Sustainable packaging remains a key priority and we continue to seek to minimize our environmental impact. We take pride in reducing plastic waste by using only aluminum cans as beverage containers.
We believe that consumers increasingly select beverage products based on taste, ingredients and fit with today’s consumer preferences, which has benefited the Zevia® brand and resulted in over 1.9 billion cans of Zevia sold to date. Our Brand The Zevia® brand promise is to offer delicious beverages that are better-for-you and better for the environment.
We believe that consumers increasingly select beverage products based on a variety of factors including taste, ingredients and fit with today’s consumer preferences, which has benefited the Zevia® brand and resulted in over 2.2 billion cans of Zevia sold to date. Our Brand The Zevia® brand promise is to offer zero-sugar, naturally delicious beverages that are better-for-you.
All Zevia products are solely sweetened with highly purified stevia leaf extract. Zevia products do not contain erythritol. All Zevia beverages are zero sugar and naturally sweetened with plant-based ingredients that are Non-GMO Project verified.
Zevia products do not contain erythritol. All Zevia beverages are zero sugar and naturally sweetened with plant-based ingredients that are Non-GMO Project verified.
Users may automatically receive email alerts and other information about the Company when enrolling an email address by visiting “Request Email Alerts” in the “Investors” section of Zevia’s website at https://investors.zevia.com/. Our Business We are a growth beverage company that develops, markets, sells, and distributes great tasting, naturally sweetened, zero sugar beverages made with simple, plant-based ingredients.
Users may automatically receive email alerts and other information about the Company when enrolling an email address by visiting “Request Email Alerts” in the “Investors” section of Zevia’s website at https://investors.zevia.com/. Our Business We are a better-for-you beverage company that develops, markets, sells, and distributes naturally delicious, zero sugar beverages.
According to Numerator data through December 31, 2023, Zevia finished 2023 with U.S. household penetration of 5.3% for the full year of 2023 compared to 40% - 70% penetration, respectively, of more mainstream full and zero sugar category brand leaders over the same period.
According to Numerator data through December 31, 2024, Zevia products finished 2024 with U.S. household penetration of 5% compared to 40% - 70% penetration, respectively, of more mainstream full and zero sugar category brand leaders with higher brand awareness and time in market over the same period.
Benefits and Compensation Strategies We strive to attract and retain diverse, high caliber individuals who raise the talent bar by offering competitive compensation and benefit packages, regardless of their gender, race, or other personal characteristics. Our compensation program is designed to ensure our talented team is paid fairly and equitably, and well rewarded for performance.
Benefits and Compensation Strategies We strive to attract and retain high caliber individuals who raise the talent bar by offering competitive compensation and benefit packages. Our compensation program is designed so that our talented team is paid fairly and equitably, and well rewarded for performance.
Organic Tea. Our Organic Tea is a pioneer in the zero calorie, naturally sweetened ready-to-drink tea segment, and was released in 2018. Zevia Organic Tea is USDA Organic and brewed with Fair Trade Certified Tea. We offer Organic Tea in eight flavors, including two caffeine-free options. Kids.
Our Organic Tea is a pioneer in the zero calorie, naturally sweetened ready-to-drink tea segment, and was released in 2018. Zevia Organic Tea is USDA Organic and brewed with Fair Trade Certified Tea. We offer Organic Tea in eight flavors, including one caffeine-free option. We benefit from sustained shifts across the liquid refreshment beverage market.
We promote diversity, equity, inclusion, and belonging across our organization, via framework that is centered on providing equal opportunities and minimizing subjectivity via data-driven decisions to reduce the risk of bias and help ensure that everyone owns responsibility for inclusive behaviors and actions across the organization.
We promote representation across our organization as a matter of bolstering performance, via a framework that is centered on providing equal opportunities and minimizing subjectivity via data-driven decisions to reduce the risk of bias and help promote culture where everyone owns responsibility for inclusive behaviors and high performance across the organization.
We have refined certain formulas of our products to help appeal to and meet our consumers’ evolving taste profile and have launched line and flavor extensions within existing categories to further fulfill consumer needs.
Our product development team coordinates the creation, testing, launch and improvement of our products in collaboration with our suppliers. We have refined certain formulas of our products to help appeal to and meet our consumers’ evolving taste profile and have launched line and flavor extensions within existing categories to further fulfill consumer needs.
In addition, we are subject to federal and state laws and regulations related to cybersecurity, privacy and data protection, including the California Consumer Privacy Act (effective as of January 1, 2020), by the California Privacy Rights Act (effective as of January 1, 2023), the Virginia Consumer Data Protection Act, (effective as of January 1, 2023), the Colorado Privacy Act (effective as of July 1, 2023), the Connecticut Data Privacy Act (effective as of July 1, 2023), and the Utah Consumer Privacy Act (effective as of December 31, 2023).
We are subject to federal and state laws and regulations related to cybersecurity, privacy and data protection, including the California Consumer Privacy Act, by the California Privacy Rights Act, the Virginia Consumer Data Protection Act, the Colorado Privacy Act, the Connecticut Data Privacy Act, and the Utah Consumer Privacy Act.
We also onboarded a new global transportation management company in the first quarter of 2024 to support the optimization of the procurement of freight and associated freight management activities to improve our cost management.
We also onboarded a global transportation management company to support optimizing freight procurement and associated freight management activities to improve our cost management.
Sales As of December 31, 2023, our sales team is comprised of 27 people. The team works in close coordination with a national network of broker and distributor sales teams that gives us access to accounts across the U.S. Innovation Innovation is an integral part of what we do.
Sales Our sales team is comprised of key accounts, distribution and insights professionals. The team works in close coordination with a national network of broker and distributor sales teams that gives us access to accounts across multiple channels throughout the U.S. and Canada. Innovation Delivering a product that consumers love is an integral part of what we do.
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, convenience and e-commerce channels and in grocery and natural product stores and specialty outlets.
Our products are distributed and sold principally across the 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. Our products are manufactured and maintained at third-party beverage production and warehousing facilities located in both the U.S. and Canada.
Human Capital Resources Zevia’s passion to democratize healthier lifestyles – by providing affordable, better-for-you, naturally sweetened beverages without sugar or calories and never in plastic containers – is reflected in the organization’s people and culture. We offer a diverse, inclusive, and challenging work environment comprised of team members who are representative of the communities we serve.
Human Capital Resources Zevia’s passion to democratize healthier lifestyles – by providing affordable, better-for-you, naturally sweetened beverages without sugar or calories and never in plastic containers – is reflected in the organization’s people and culture.
We believe this consumer base favors better-for-you options that support a balanced lifestyle and that they are driven less by discounts than some other demographic groups.
We believe this consumer base favors better-for-you options that support a balanced lifestyle and that they tend to be more affluent and less price sensitive than some other consumer groups.
We believe that our brick-and-mortar retailers value Zevia’s continued sales growth and higher margin profile, giving us confidence that we can expand our presence over time in terms of store count and number of items carried.
We believe that our brick-and-mortar retailers value Zevia’s continued sales growth and higher margin profile, giving us confidence that we can expand our presence over time in terms of store count and number of items carried. For example, we recently expanded our presence at one retailer from 800 to more than 4,300 locations in the U.S.
We have valuable, long-standing relationships across our supply chain, and we work closely with our external supply chain partners to try to maximize forward-looking capacity and take a thoughtful approach to how we can leverage our existing relationships with our innovation efforts. During the fourth quarter of 2023, we made a strategic change in how our products are manufactured.
We have valuable, long-standing relationships across our supply chain, and we work closely with our external supply chain partners to try to maximize forward-looking capacity and take a thoughtful approach to how we can leverage our existing relationships with our innovation efforts. At the beginning of 2024, we transitioned our procurement strategy to partner with our contract manufacturers.
Diversity, Equity, Inclusion & Belonging Our commitment to diversity, equity, inclusion and belonging is focused on promoting equal employment opportunities and starts at the top with a highly skilled, diverse executive leadership team and Board of Directors in terms of both gender and race.
Our commitment is focused on promoting equal employment opportunities and performance, and starts at the top with a highly skilled representative executive leadership team and Board of Directors that is representative of our consumers.
We aim for equal pay for equal work and make conscious efforts to close the pay equity gap through market adjustments and new-hire offers considered via thorough and transparent analysis. 9 Every full-time team member is eligible to receive equity-based compensation, which provides a sense of ownership and next-level engagement among employees at all levels.
We aim for equal pay for equal work and adapt accordingly to close any existing pay equity gaps. Every full-time team member is eligible to receive equity-based compensation, which provides a sense of ownership and next-level engagement among employees at all levels.
We believe both of these changes will better optimize our supply chain in order to help support future growth and drive increasing returns as we scale the business. 7 Ingredients and Ingredient Suppliers The principal ingredients of our beverages, aside from carbonated water, are stevia sweetener, flavors, and citric acid.
These changes better optimized our supply chain, helped position us for future growth, and will drive increasing returns as we scale the business. 7 Ingredients and Ingredient Suppliers The principal ingredients of our beverages, aside from carbonated water, are stevia sweetener, flavors, and citric acid. All Zevia products are solely sweetened with highly purified stevia leaf extract.
We regularly look for ways to improve product taste, expand our offerings across categories and usage occasions, and improve the sustainability of our packaging formats. Our product development team collaborates across our organization and supplier base to identify areas to improve our existing offerings and create new offerings.
We regularly look for ways to improve product taste and innovate to drive excitement, growth, brand awareness and trial. Our product development team collaborates across our organization and supplier base to identify areas to improve our existing offerings and create new offerings.
These suppliers produce and supply the unique flavor ingredients to our contract manufacturers, and as our contract manufacturers procure these ingredients, we do not have long-term supply agreements with these ingredient suppliers. For flavors and stevia leaf extract, we continue to seek to diversify our approved sources in order to de-risk potential ingredient supply interruptions.
These suppliers produce and supply the unique flavor ingredients to our contract manufacturers, and as our contract manufacturers procure these ingredients, we do not have long-term supply agreements with these ingredient suppliers.
Specifically, we implement custom Injury and Illness Prevention Programs for our headquarters including safety training for our innovation lab, medical emergencies, power failure, bomb threat, fire safety, earthquake, and evacuation prevention practices.
Specifically, we implement custom Injury and Illness Prevention Programs for our headquarters including safety training for our innovation lab, medical emergencies, power failure, bomb threat, fire safety, earthquake, and evacuation prevention practices. In 2024, we launched a customized Workplace Violence Prevention plan designed to address the hazards associated with various types of workplace violence.
Our main ingredient, after carbonated water, is stevia sweetener, which is extracted from the leaves of the stevia rebaudiana plant, containing many different naturally occurring sweet compounds called steviol glycosides (“SG”).
In addition, we reduce our use of packaging materials where feasible. Within our mission is the initiative to provide products that are better for the planet. Our main ingredient, after carbonated water, is stevia sweetener, which is extracted from the leaves of the stevia rebaudiana plant, containing many different naturally occurring sweet compounds called steviol glycosides (“SG”).
Distribution We believe we have created a meaningful flywheel for consumer acquisition in which shoppers are able to discover, learn about and purchase our brand online and offline across multiple channels and platforms. Our online platforms serve as trial generating and transaction intensification opportunities, allowing for full Zevia portfolio offerings, including our bestselling variety packs, which stimulate significant consumer engagement.
Distribution We believe we have created a meaningful flywheel for consumer acquisition in which shoppers are able to discover, learn about and purchase our beverages online and offline across multiple channels and platforms.
Additional U.S. privacy laws continue to be proposed. We continue to monitor the U.S. privacy and data protection law landscape, evaluate the potential impact on our business, and develop strategies to maintain our privacy and data protection compliance programs and policies.
We continue to monitor the U.S. privacy and data protection law landscape, evaluate the potential impact on our business, and develop strategies to maintain our privacy and data protection compliance programs and policies. However, the patchwork approach to regulation and pace at which it changes causes implementation of these requirements to be more complex.
Our suppliers are required to comply with the high standards set forth in our vendor code of conduct, including prohibiting child labor, human trafficking, and discrimination, and promoting diversity, safe and healthy workplaces, and business integrity. 6 Sales and Marketing and Consumer Outreach Our marketing strategy from launch has been to drive product trial and customer conversion, targeting consumers as close to the point of purchase as possible, as we believe that many purchasing decisions are made in-store during the shopping experience.
Our suppliers are required to comply with the high standards set forth in our vendor code of conduct, including prohibiting child labor, human trafficking, and discrimination, and promoting diversity, safe and healthy workplaces, and business integrity. 6 Sales and Marketing and Consumer Outreach Our historical marketing strategy relied heavily on driving trial and conversion at the point of purchase in retail outlets.
We are also restricted from making certain claims about our products, including health claims, claims that our products treat, cure, mitigate or prevent disease or claims regarding the effects of our products on the structure or function of the body except under certain limited circumstances. 10 We are required to comply with federal, state, and local environmental laws and regulations such as restrictions on certain packaging containing per- and polyfluoroalkyl substances (PFAS), and bottle deposit ordinances.
We are also restricted from making certain claims about our products, including health claims, claims that our products treat, cure, mitigate or prevent disease or claims regarding the effects of our products on the structure or function of the body except under certain limited circumstances.
All Zevia® beverages are Non-GMO Project verified, gluten-free, Kosher, vegan and zero sodium, We offer a variety of flavors across Soda, Energy Drinks, Organic Tea, and Kids drinks.
All Zevia® beverages are made with a handful of simple ingredients which come from plants, contain no artificial sweeteners, and are Non-GMO Project verified, gluten-free, Kosher and vegan, and include a variety of flavors across Soda, Energy Drinks, and Organic Tea drinks.
Team members participate in the DEI&B Taskforce for twelve-months and regularly report on its work, priorities, and accomplishments to the overall organization, to foster transparency and trust. Culture and Engagement Our team drives the success of our brand, and every leadership or full team engagement features a conscious effort to engage and communicate with a focus on our values.
Culture and Engagement Our team drives the success of our brand, and every leadership or full team engagement features a conscious effort to engage and communicate with a focus on our values and on high performance.
We also utilize independent contractors and temporary personnel to supplement our workforce. None of our team members is represented by a labor union. We maintain a strong relationship with our team members and have never experienced a labor-related work stoppage.
As of December 31, 2024, we had 104 full-time team members in the U.S, and 4 full-time team members in Canada. We also utilize independent contractors for freelance work and project-based work. None of our team members are represented by a labor union. We maintain a strong relationship with our team members and have never experienced a labor-related work stoppage.
Each of our product lines has been carefully crafted for consumer enjoyment, with the goal of ensuring that flavor is not sacrificed in the process of eliminating sugar and artificial ingredients, including coloring and flavors.
We believe Zevia has a meaningful opportunity to increase brand trial to capture more share in this growth leading segment of beverage over time. Our Products Each of our product lines has been carefully crafted for consumer enjoyment, with the goal of not sacrificing flavor in the process of eliminating sugar and artificial ingredients, including coloring and flavors.
Beginning in the first quarter of 2024, our contract manufacturers are responsible for the procurement of raw materials to produce our products, which are then sold to us as finished goods.
This change allowed our contract manufacturers to be responsible for the procurement of raw materials to produce our products, which are then sold to us as finished goods. This change allowed us to leverage the purchasing power of our contract manufacturers and further diversify, as well as enable us to have the flexibility to scale the business.
We are also subject to labor and employment laws, laws governing advertising, safety regulations and other laws, including consumer protection regulations that regulate retailers.
Similar legislation or regulations may be proposed in the future at local, state, provincial and federal levels, both in the U.S. and elsewhere. 10 We are also subject to labor and employment laws, laws governing advertising, safety regulations and other laws, including consumer protection regulations that regulate retailers.
Our core values – passion, respect, gratitude, learning, a positive attitude, teamwork, continuous improvement, and living our best, – are at the foundation of our strategies to drive our mission and business.
Our core values – passion, respect, gratitude, learning, a positive attitude, teamwork and continuous improvement – are at the foundation of our strategies to drive our mission and business. 8 We have an inclusive, strategic, and well-defined human capital planning process and a management approach that aligns to our business needs and mission, and is designed to help us attract, retain and maximize the best talent.
During 2023, we also tested and approved the use of another stevia leaf extract supplier, whose stevia leaf is derived from a region different than the above supplier. Although we do not view our stevia blend as a commodity ingredient, we continue to seek to diversify sourcing to help de-risk supply and cost shocks from potential global disruptions.
Although we do not view our stevia blend or flavor ingredients as commodity ingredients, we continue to seek to diversify sourcing to help de-risk supply or cost shocks from potential supply disruptions.
Moreover, shoppers who bought Zevia products online spend 2.5x more on our brand across all channels on average. Offline, we have strong, long-standing relationships with grocery, drug, warehouse club, mass, natural, and specialty retailers with whom we can grow distribution and sales through increased store penetration and shelf space.
We have strong, long-standing relationships with grocery, drug, warehouse club, mass, natural, and specialty retailers with whom we can grow distribution and sales through increased store penetration and shelf space. We sold in more than 37,000 retail locations in 2024 according to SPINS, Circana and Nielsen data.
We offer a 401(k) Safe Harbor Retirement savings plan with Company matching contributions and no vesting schedule. We have comprehensive paid time off and sick policies, paid bereavement, holidays, flexible schedules, remote and hybrid work, employee assistance programs, and a generous parental leave policy.
We offer a 401(k) Safe Harbor Retirement savings plan with Company matching contributions and no vesting schedule.
Various states, provinces and other authorities require deposits, eco-taxes or fees on certain products or packaging. Similar legislation or regulations may be proposed in the future at local, state, provincial and federal levels, both in the U.S. and elsewhere.
Various states, provinces and other authorities require deposits, eco-taxes or fees on certain products or packaging.
In 2023, we launched a semi-annual engagement survey and monitored employee feedback for continuous improvements in culture with a focus on high-performance and people-centric initiatives.
In 2024, we conducted two semi-annual engagement surveys and monitored employee feedback for continued improvements in culture with a focus on high-performance and people-centric initiatives. Talent Acquisition We hired 25 new team members in 2024, 87.5% of which were sourced by internal recruitment.
According to Numerator data for 2023, Zevia households increased their spend on Zevia for the year versus 2022. Those households who made multiple purchases across package lines were even more engaged, more than doubling their spend on the brand versus the total average Zevia households in the year.
Those households who made multiple purchases across package lines were even more engaged, more than doubling their spending on the brand versus the total average Zevia households in the year. We believe Zevia is positioned well within the total Zero Sugar/Diet Soda segment of total Carbonated Soft Drinks as an affordable naturally sweetened, better-for-you option.
We believe Zevia is positioned well within the total Zero Sugar/Diet Soda segment of total Carbonated Soft Drinks as an affordable naturally sweetened, better-for-you option. Zero Sugar/Diet sodas were a $10.3 billion dollar segment, growing +14% across Grocery, Mass, Drug, Club, and Natural Channels in 2023 according to Spins/Circana data through December 31, 2023.
Zero Sugar/Diet sodas were a $11.6 billion dollar segment, growing +12% across Grocery, Mass, Drug, Club, and Natural Channels in 2024 according to Spins/Circana data through December 29, 2024.
Our Soda is available in 14 flavors across multiple packs, variety packs, and in limited time-offer flavors to drive excitement. Our Soda sales constituted approximately 91% of our net sales in 2023. Energy. Energy drinks are zero sugar energy drinks that contain 120 mg of organic caffeine. We offer Energy in eight flavors. We released our Energy drinks in 2016.
Our Soda is available in 18 flavors across multiple packs, variety packs, and in limited time-offer flavors to drive excitement. Our Soda sales constituted approximately 93% of our net sales in 2024 and remains our primary focus as we see significant opportunities for growth in this product line. Energy.
In Canada, the manufacture, distribution, marketing and sale of our products are also subject to compliance with similar laws, rules and regulations. 11
In Canada, the manufacture, distribution, marketing and sale of our products are also subject to compliance with similar laws, rules and regulations. We are actively monitoring trade policy and tariff announcements including the recent executive orders issued by the new U.S. federal administration in February 2025 regarding new tariffs on imports from Canada, Mexico and China.
We market Zevia under one unified brand across multiple beverage categories, including Soda, Energy Drinks, Organic Teas, and Kids drinks.
We believe that the foundation for our long-term success lies in creating a brand that consumers love and is known for delivering a great product with an exciting pipeline of innovation. We market Zevia under one unified brand across multiple beverage categories, including Soda, Energy Drinks and Organic Teas.
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We believe Zevia has a meaningful opportunity to increase brand trial to capture more share in this growth leading segment of beverage over time. Our Products Since our founding in 2007, we have grown from three flavors of soda to a platform brand with multiple product lines that each have several flavor variations.
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Yet Zevia is far more affordable than many or even most better-for-you beverage options, making it more accessible and appealing to more households across North America. According to Numerator data for 2024, Zevia households increased their spending on Zevia for the year versus 2023.
Removed
Kids is our product line for kids, packaged in smaller cans for smaller hands, and the right size for lunch boxes and afternoon snacks. Our Kids drinks are available in four kid-friendly flavors and were released in 2020. We benefit from sustained shifts across the liquid refreshment beverage market.
Added
Energy drinks are zero sugar energy drinks that contain 120 mg of organic caffeine. We offer Energy in eight flavors. We released our Energy drinks in 2016 and this product line is focused mostly in natural and e-commerce channels today. We believe this product line reflects a significant opportunity to expand across multiple channels in the future. Organic Tea.
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In addition, we reduce our use of packaging materials where possible. For example, we no longer produce any of our products with plastic rings, replacing them with a recyclable cardboard overwrap. Within our mission is the initiative to provide products that are better for the planet.
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In 2024, we shifted resources to complement our retail efforts and strategically made investments in the second half of the year to amplify our brand and to clarify our points of differentiation on taste and ingredients to help drive trial and grow customer conversions.
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As such, we seek to deploy funding to enhance our presence at shelf, including shelf tags, product displays and other means to build consumer awareness and consideration. We also deploy marketing funds in-store, through advertising and couponing vehicles, and around the store via geotargeted digital advertising and offers.
Added
Our brand strategy is to position Zevia as the best alternative to artificial soda, highlighting both our product benefits (zero sugar, zero artificial sweeteners, zero artificial colors) and our differentiated brand position, celebrating “real” in an increasingly “artificial” world.
Removed
In addition, we seek to raise awareness of the Zevia® brand through advertising programs targeted to key lifestyle segments such as families and healthy lifestyle enthusiasts. In 2024, we expect to invest in marketing out of store to drive awareness and consideration of the Zevia brand, purchase intent, and subsequently conversion.
Added
In line with our brand building efforts, our marketing ecosystem continues to scale with increased positive results in social media engagement, reaching consumers through influencers, and effective digital and audio advertising, that we expect to help drive purchase intent as well as conversion at the point of purchase. Our ecosystem will be leveraged for future Brand content and product launches.
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We aim to create authentic content that focuses on Zevia’s taste experience—flavor, sweetness, bubbles and enjoyment—without drinking sugary or artificially sweetened beverages.
Added
From an in-store perspective, we also deployed funding to enhance our presence at shelf, including shelf tags, product displays and other means to build consumer awareness and consideration. Given our competitive repeat rates, we believe these efforts to drive customer conversion with new users will be beneficial and subsequently grow our base of loyal customers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe following is a summary of the principal factors that make an investment in the Company speculative or risky: • failure to further develop, maintain, and promote our brand; • changes in the retail landscape or the loss of key retail customers; • product safety and quality concerns, including those relating to our plant-based sweetening system, which could negatively affect our business by exposing us to lawsuits, product recalls or regulatory enforcement actions, increasing our operating costs and reducing demand for our product offerings; • change in consumer preferences, perception and spending habits, particularly due to impacts of inflation, in the commercial beverage industry and on zero sugar, naturally sweetened products, and failure to develop or enrich our product offerings or gain market acceptance of our products, including new offerings; • inability to compete in our intensely competitive industry; • fluctuation in our net sales and earnings as a result of price concessions, promotional activities and chargebacks; • failure to introduce new products or successfully improve existing products; • inaccurate or misleading marketing claims, whether or not substantiated; • loss of any registered trademark or other intellectual property or actual or alleged claims of infringement of intellectual property rights; • our history of losses and potential inability to achieve or maintain profitability; • failure to attract, hire, train or retain qualified personnel, manage our future growth effectively or maintain our company culture; • the impact of adverse global macroeconomic conditions, including relatively high interest rates, recession fears and inflationary pressures, and geopolitical events or conflicts; • climate change, adverse weather conditions, natural disasters and other natural conditions; • difficulties and challenges associated with expansion into new markets; • inability to obtain raw materials on a timely basis or in sufficient quantities to produce our products or meet the demand for our products due to reliance on a limited number of third-party suppliers and trade tensions between the U.S. and China; • substantial disruption within our supply chain or distribution channels, including disruption at our contract manufacturers, warehouse and distribution facilities, failure by our transportation providers to facilitate on-time deliveries, or our own failure to accurately forecast; • extensive governmental regulation and enforcement if we are not in compliance with applicable requirements; • changes in laws and regulations relating to beverage containers and packaging as well as marketing and labeling; • dependence on distributions from Zevia LLC to pay any taxes and other expenses; • impact from our status, duty and liability exposure as a public benefit corporation; • inadequacy, failure, interruption or security breaches of our information technology systems and failure to comply with data privacy and information security laws and regulations. • the impact of any future pandemics, epidemics, or other disease outbreaks on our business, results of operations and financial condition; Risks Relating to Our Business, Our Industry and Macroeconomic Conditions If we fail to further develop, maintain and promote our brand, our business could suffer.
Biggest changeThe following is a summary of the principal factors that make an investment in the Company speculative or risky: • inability to compete in our intensely competitive industry; • failure to further develop, maintain, and promote our brand; • changes in the retail landscape or the loss of key retail customers; • change in consumer preferences, perception and spending habits, particularly due to impacts of inflation, in the commercial beverage industry and on zero sugar, naturally sweetened products, and failure to develop or enrich our product offerings or gain market acceptance of our products, including new offerings; • inaccurate or misleading marketing claims, whether or not substantiated; • failure to introduce new products or successfully improve existing products; • product safety and quality concerns, including those relating to our sweetening system, which could negatively affect our business by exposing us to lawsuits, product recalls or regulatory enforcement actions, increasing our operating costs and reducing demand for our product offerings; • fluctuation in our net sales and earnings as a result of price concessions, promotional activities and chargebacks; • loss of any registered trademark or other intellectual property or actual or alleged claims of infringement of intellectual property rights; • our history of losses and potential inability to achieve or maintain profitability; • failure to attract, hire, train or retain qualified personnel, manage our future growth effectively or maintain our company culture; • the impact of adverse global macroeconomic conditions, including relatively high interest rates, recession fears and inflationary pressures, changes to foreign trade policies, and geopolitical events or conflicts; • climate change, adverse weather conditions, natural disasters and other natural conditions; • difficulties and challenges associated with expansion into new markets; • inability to obtain raw materials on a timely basis or in sufficient quantities to produce our products or meet the demand for our products due to reliance on a limited number of third-party suppliers; • trade tensions between the U.S. and China, and changes in U.S. foreign trade policies; • substantial disruption within our supply chain or distribution channels, including disruption at our contract manufacturers, warehouse and distribution facilities, failure by our transportation providers to facilitate on-time deliveries, or our own failure to accurately forecast; • extensive governmental regulation and enforcement if we are not in compliance with applicable requirements; • changes in laws and regulations relating to beverage containers and packaging as well as marketing and labeling; • dependence on distributions from Zevia LLC to pay any taxes and other expenses; • failure to maintain compliance with the continued listing standards on the New York Stock Exchange (“NYSE”), which could result in the delisting of our securities, limit stockholders’ and investors’ ability to make transactions in our securities and subject us to additional trading restrictions; • impact from our status, duty and liability exposure as a public benefit corporation; • inadequacy, failure, interruption or security breaches of our information technology systems and failure to comply with data privacy and information security laws and regulations; and • the impact of any future pandemics, epidemics, or other disease outbreaks on our business, results of operations and financial condition. 12 Risks Relating to Our Business, Our Industry and Macroeconomic Conditions If we are unable to compete in our intensely competitive industry, our business may not grow or succeed.
To the extent such distributions or our cash resources are insufficient to meet our obligations under the TRA as a result of timing discrepancies or otherwise, such payments may be deferred for up to six months and would accrue interest until paid. 21 The actual increase in tax basis, as well as the amount and timing of any payments under the TRA, will vary depending on a number of factors, including the price of our Class A common stock at the time of the exchange; the timing of future exchanges; the extent to which exchanges are taxable; the amount and timing of the utilization of tax attributes; the amount, timing and character of the Company’s income; the U.S. federal, state and local tax rates then applicable; the amount of each exchanging unitholder’s tax basis in its units at the time of the relevant exchange; the depreciation and amortization periods that apply to the increases in tax basis; the timing and amount of any earlier payments that the Company may have made under the TRA and the portion of the Company’s payments under the TRA that constitute imputed interest or give rise to depreciable or amortizable tax basis.
To the extent such distributions or our cash resources are insufficient to meet our obligations under the TRA as a result of timing discrepancies or otherwise, such payments may be deferred for up to six months and would accrue interest until paid. 22 The actual increase in tax basis, as well as the amount and timing of any payments under the TRA, will vary depending on a number of factors, including the price of our Class A common stock at the time of the exchange; the timing of future exchanges; the extent to which exchanges are taxable; the amount and timing of the utilization of tax attributes; the amount, timing and character of the Company’s income; the U.S. federal, state and local tax rates then applicable; the amount of each exchanging unitholder’s tax basis in its units at the time of the relevant exchange; the depreciation and amortization periods that apply to the increases in tax basis; the timing and amount of any earlier payments that the Company may have made under the TRA and the portion of the Company’s payments under the TRA that constitute imputed interest or give rise to depreciable or amortizable tax basis.
Additionally, we may need to continue to update and expand our systems to manage these warehouse/fulfillment locations and related systems to support our business growth and increasing complexity. Substantial disruption at our independent contract manufacturing and distribution facilities could occur. We do not directly manufacture our products, but instead use established contract manufacturing companies to produce our products.
Additionally, we may need to continue to update and expand our systems to manage these warehouse/fulfillment locations and related systems to support our business growth and increasing complexity. 18 Substantial disruption at our independent contract manufacturing and distribution facilities could occur. We do not directly manufacture our products, but instead use established contract manufacturing companies to produce our products.
For more information regarding contract terms, see the section of this Annual Report captioned “ Business—Our Supply Chain .” Our business’ success depends on third party logistics. We currently work with contract manufacturers to store, ship, and otherwise support our distribution of products to our customers and retail partners.
For more information regarding contract terms, see the section of this Annual Report captioned “ Business—Our Supply Chain .” 17 Our business’ success depends on third party logistics. We currently work with contract manufacturers to store, ship, and otherwise support our distribution of products to our customers and retail partners.
Any negative publicity, regardless of its accuracy, could materially adversely affect our business. Brand value is based on perceptions of subjective qualities, and any incident that erodes the loyalty of our customers, suppliers or manufacturers, including adverse publicity or a governmental investigation or litigation, could significantly reduce the value of our brand and significantly damage our business.
Any negative publicity, regardless of its accuracy, could materially adversely affect our business. Brand value is based on perceptions of subjective qualities, and any incident that erodes the loyalty of our customers, suppliers or manufacturers, including adverse publicity, negative brand associations, or a governmental investigation or litigation, could significantly reduce the value of our brand and significantly damage our business.
The consolidation of retail customers may reduce the number of branded products they offer in order to accommodate private label products and increase the risk that a significant adverse impact on their business could have a corresponding material adverse impact on our business. We sell a substantial portion of our products to specific customers.
The consolidation of retail customers may reduce the number of branded products they offer in order to accommodate private label products and increase the risk that a significant adverse impact on their business could have a corresponding material adverse impact on our business. 13 We sell a substantial portion of our products to specific customers.
Based on certain assumptions, including no material changes in the relevant tax law and that we earn sufficient taxable income to realize the full tax benefit of the increased amortization of our assets and the net operating losses (and similar items), we expect that future payments to the continuing members of Zevia LLC (not including the Company) in respect of the IPO will be approximately $56.2 million in the aggregate, although the actual future payments to the continuing members of Zevia LLC will vary based on the factors discussed below, and estimating the amount and timing of payments that may be made under the TRA is by its nature imprecise, as the calculation of amounts payable depends on a variety of factors and future events.
Based on certain assumptions, including no material changes in the relevant tax law and that we earn sufficient taxable income to realize the full tax benefit of the increased amortization of our assets and the net operating losses (and similar items), we expect that future payments to the continuing members of Zevia LLC (not including the Company) in respect of the IPO will be approximately $56.5 million in the aggregate, although the actual future payments to the continuing members of Zevia LLC will vary based on the factors discussed below, and estimating the amount and timing of payments that may be made under the TRA is by its nature imprecise, as the calculation of amounts payable depends on a variety of factors and future events.
If Zevia LLC or an entity in which Zevia LLC directly or indirectly invests does not make this election, the then-current members of Zevia LLC (including Zevia PBC) could economically bear the burden of the understatement. 23 If Zevia LLC were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, Zevia PBC and Zevia LLC might be subject to potentially significant tax inefficiencies, and Zevia PBC would not be able to recover payments previously made by it under the TRA, even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status.
If Zevia LLC or an entity in which Zevia LLC directly or indirectly invests does not make this election, the then-current members of Zevia LLC (including Zevia PBC) could economically bear the burden of the understatement. 24 If Zevia LLC were to become a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, Zevia PBC and Zevia LLC might be subject to potentially significant tax inefficiencies, and Zevia PBC would not be able to recover payments previously made by it under the TRA, even if the corresponding tax benefits were subsequently determined to have been unavailable due to such status.
Our use of social media influencers for product promotion and marketing may expose us to risk that such content could contain problematic, inaccurate, or misleading product or marketing claims. These influencers could also engage in behavior that reflects poorly on our brand.
Our use of social media influencers and celebrities for product promotion and marketing may expose us to risk that such content could contain problematic, inaccurate, or misleading product or marketing claims. These influencers and celebrities could also engage in behavior that reflects poorly on our brand.
Because tax distributions will be determined based on the member who is allocated the largest amount of taxable income on a per unit basis and on an assumed tax rate that is the highest possible rate applicable to any member, but will be made pro rata based on ownership of Zevia LLC units, Zevia LLC will be required to make tax distributions that, in the aggregate, will likely exceed the aggregate amount of taxes payable by its members with respect to the allocation of Zevia LLC income. 22 Funds used by Zevia LLC to satisfy its tax distribution obligations will not be available for reinvestment in our business.
Because tax distributions will be determined based on the member who is allocated the largest amount of taxable income on a per unit basis and on an assumed tax rate that is the highest possible rate applicable to any member, but will be made pro rata based on ownership of Zevia LLC units, Zevia LLC will be required to make tax distributions that, in the aggregate, will likely exceed the aggregate amount of taxes payable by its members with respect to the allocation of Zevia LLC income. 23 Funds used by Zevia LLC to satisfy its tax distribution obligations will not be available for reinvestment in our business.
In addition to the impact on our distributors, contract manufacturers and their suppliers, any future pandemics, epidemics, or other disease outbreaks and related public health measures could impact consumer preferences and demand for our products, government regulations and restrictions, transportation and route to market, and availability of raw materials and thus may have a material impact on our business, results of operations and financial condition and such impact remains uncertain and unpredictable.
In addition to the impact on our distributors, contract manufacturers and their suppliers, any future pandemics, epidemics, disease outbreaks or public health emergencies and related public health measures could impact consumer preferences and demand for our products, government regulations and restrictions, transportation and route to market, and availability of raw materials and thus may have a material impact on our business, results of operations and financial condition and such impact remains uncertain and unpredictable.
If our contract manufacturers and suppliers do not comply with our set standards and specifications, we may also be forced to seek alternative partners which could disrupt our operations and adversely affect our business. 18 Our results of operations could be harmed if we are unable to accurately forecast demand for our products, revenue and costs, including maintaining adequate inventory levels.
If our contract manufacturers and suppliers do not comply with our set standards and specifications, we may also be forced to seek alternative partners which could disrupt our operations and adversely affect our business. 19 Our results of operations could be harmed if we are unable to accurately forecast demand for our products, revenue and costs, including maintaining adequate inventory levels.
These obligations and added scrutiny require significant attention from our management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, operating results and financial condition. Reduced reporting and disclosure requirements applicable to us as an emerging growth company ("EGC") could make our Class A common stock less attractive to investors.
These obligations and added scrutiny require significant attention from our management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, operating results and financial condition. Reduced reporting and disclosure requirements applicable to us as an emerging growth company (“EGC”) could make our Class A common stock less attractive to investors.
If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business. 24 As a public benefit corporation, our duty to balance a variety of interests may result in actions that do not maximize stockholder value.
If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business. 26 As a public benefit corporation, our duty to balance a variety of interests may result in actions that do not maximize stockholder value.
Any such damage or interruption could have a material adverse effect on our business. 28 If we or any of our customers, suppliers, or vendors incur a security breach, data protection breach, or cyberattack, this could disrupt our internal operations and negatively impact our revenue and cash flows, result in increased expenses, damage our reputation, and adversely affect our stock price.
Any such damage or interruption could have a material adverse effect on our business. 30 If we or any of our customers, suppliers, or vendors incur a security breach, data protection breach, or cyberattack, this could disrupt our internal operations and negatively impact our revenue and cash flows, result in increased expenses, damage our reputation, and adversely affect our stock price.
We have elected to be classified as a public benefit corporation under the Delaware General Corporation Law ("DGCL"). As a public benefit corporation, our board of directors has a duty to balance (i) the pecuniary interest of our stockholders, (ii) the best interests of those materially affected by our conduct and (iii) specific public benefits identified in our charter documents.
We have elected to be classified as a public benefit corporation under the Delaware General Corporation Law (“DGCL”). As a public benefit corporation, our board of directors has a duty to balance (i) the pecuniary interest of our stockholders, (ii) the best interests of those materially affected by our conduct and (iii) specific public benefits identified in our charter documents.
The impact of an earthquake, fire or tsunami, or both, or other natural disasters in the Los Angeles area on our facilities and overall operations is difficult to predict, but such a natural disaster could seriously disrupt our entire business. Our insurance may not adequately cover our losses and expenses in the event of such a natural disaster.
The impact of an earthquake, fire, mudslide or tsunami, or other natural disasters in the Los Angeles area on our facilities and overall operations is difficult to predict, but such a natural disaster could seriously disrupt our entire business. Our insurance may not adequately cover our losses and expenses in the event of such a natural disaster.
Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. 25 Our charter documents and the DGCL could discourage takeover attempts and other corporate governance changes.
Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments. 27 Our charter documents and the DGCL could discourage takeover attempts and other corporate governance changes.
We have expended significant resources in order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting. 27 As a public company, we are required to document and test our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the effectiveness of our internal control over financial reporting.
We have expended significant resources in order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting. 29 As a public company, we are required to document and test our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the effectiveness of our internal control over financial reporting.
We intend to cause Zevia LLC to make distributions to each of its members, including the Company, in an amount intended to enable each member to pay all applicable taxes on taxable income allocable to such member and to allow the Company to make payments under the Tax Receivable Agreement ("TRA").
We intend to cause Zevia LLC to make distributions to each of its members, including the Company, in an amount intended to enable each member to pay all applicable taxes on taxable income allocable to such member and to allow the Company to make payments under the Tax Receivable Agreement (“TRA”).
Department of Justice, state and local governments, and by comparable entities in foreign countries, as well as applicable trade, labor, sanitation, safety, environmental, labeling, anti-bribery and corruption and merchandise laws. 19 Changes in laws and regulations, or the adoption of new laws or regulations, relating to beverage containers and packaging could increase our costs, reduce demand for our products, and otherwise adversely affect our business, results of operations and financial condition.
Department of Justice, state and local governments, and by comparable entities in foreign countries, as well as applicable trade, labor, sanitation, safety, environmental, labeling, anti-bribery and corruption and merchandise laws. 20 Changes in laws and regulations, or the adoption of new laws or regulations, relating to beverage containers, ingredients and packaging could increase our costs, reduce demand for our products, and otherwise adversely affect our business, results of operations and financial condition.
Product safety and quality concerns, including relating to our plant-based sweetening system, could negatively affect our business by exposing us to lawsuits, product recalls or regulatory enforcement actions, or our brand dilution, which could increase our operating costs and reduce demand for our product offerings.
Product safety and quality concerns, including relating to our sweetening system, could negatively affect our business by exposing us to lawsuits, product recalls or regulatory enforcement actions, or our brand dilution, which could increase our operating costs and reduce demand for our product offerings.
The success of our business depends in part on our ability to maintain consumer confidence in the safety and quality of all of our products, including relating to our plant-based sweetening system. The sale of products for human use and consumption involves the risk of injury or illness to consumers.
The success of our business depends in part on our ability to maintain consumer confidence in the safety and quality of all of our products, including relating to our sweetening system. The sale of products for human use and consumption involves the risk of injury or illness to consumers.
We are subject to numerous federal, state, local and international laws and regulations regarding privacy, data protection, information security and the storing, sharing, use, processing, transfer, disclosure and protection of personal information and other content and data, which we refer to collectively as privacy laws, the scope of which is changing, subject to differing interpretations and may be inconsistent among US states, countries, or conflict with other laws, regulations or other obligations.
We are subject to numerous federal, state, local and international laws and regulations regarding privacy, data protection, information security and the storing, sharing, use, processing, transfer, disclosure and protection of personal information and other content and data, which we refer to collectively as privacy laws, the scope of which is changing, subject to differing interpretations and may be inconsistent among U.S. states, countries, or conflict with other laws, regulations or other obligations.
Media coverage regarding the safety or quality of, or diet or health issues relating to, our products or the raw materials, ingredients (particularly stevia or other plant-based sweeteners) or processes involved in their manufacturing may damage consumer confidence in our products.
Media coverage regarding the safety or quality of, or diet or health issues relating to, our products or the raw materials, ingredients (particularly stevia or other sweeteners) or processes involved in their manufacturing may damage consumer confidence in our products.
Although we take measures to ensure that public information about our company and brand is accurate, compliant with regulations and substantiated by factual analysis and research, we may be subject to claims that such information is false or misleading.
Although we take measures to confirm that public information about our company and brand is accurate, compliant with regulations and substantiated by factual analysis and research, we may be subject to claims that such information is false or misleading.
Covenants in our credit facility could adversely impact our operations Our asset-based credit facility contains a liquidity covenant that required us to maintain liquidity of $7.0 million at all times until December 31, 2023.
Covenants in our credit facility could adversely impact our operations Our asset-based credit facility contains a liquidity covenant that required us to maintain liquidity of $7.0 million at all times until December 31, 2024.
For example, we are also subject to the privacy laws discussed under the section of this Annual Report captioned “Business—Government Regulation” and various other state laws where we sell our products.
For example, we are also subject to the privacy laws discussed under the section of this Annual Report captioned “Business—Government Regulation” and various other U.S. state laws where we sell our products.
A majority of the stevia extract used in our products is currently sourced from one supplier, which we have selected because they meet our specific requirements for a particular blend of leaf compounds. General trade tensions between the U.S. and China, which began escalating in 2018, could have a negative impact on our business.
A majority of the stevia extract used in our products is currently sourced from two suppliers, which we have selected because they meet our specific requirements for a particular blend of leaf compounds. General trade tensions between the U.S. and China, which began escalating in 2018, could have a negative impact on our business.
With laws and regulations such as the CCPA/CPRA imposing new and relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other laws and regulations, there is a risk that the requirements of these or other laws and regulations, or of contractual or other obligations relating to privacy, data protection or information security, are interpreted or applied in a manner that is, or is alleged to be, inconsistent with our management and processing practices, our policies or procedures, or the features of our products and services.
With laws and regulations such as the California Consumer Privacy Act imposing new or relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other laws and regulations, there is a risk that the requirements of these or other laws and regulations, or of contractual or other obligations relating to privacy, data protection or information security, are interpreted or applied in a manner that is, or is alleged to be, inconsistent with our management and processing practices, our policies or procedures, or the features of our products and services.
In addition, the Jumpstart Our Business Startups Act (the "JOBS Act") provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. We have elected to take advantage of the extended transition period.
In addition, the Jumpstart Our Business Startups Act (the “JOBS Act”) provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. We have elected to take advantage of the extended transition period.
The Company is a holding company and, its only business is to act as the managing member of Zevia LLC, and its only material assets are Class A units representing approximately 75.8% of the membership interests of Zevia LLC. The Company does not have any independent means of generating revenue.
The Company is a holding company and, its only business is to act as the managing member of Zevia LLC, and its only material assets are Class A units representing approximately 84.2% of the membership interests of Zevia LLC. The Company does not have any independent means of generating revenue.
Significant resources and management oversight will be required to maintain and, if required, improve our disclosure controls and procedures and internal controls over financial reporting to meet this standard. As a result, management’s attention may be diverted from other business concerns, which could harm our business and operating results.
Significant resources and management oversight will be required to maintain and, if required, improve our disclosure controls and procedures and internal controls over financial reporting to meet these evolving requirements. As a result, management’s attention may be diverted from other business concerns, which could harm our business and operating results.
We cannot be sure the same growth rates and trends are meaningful predictors of future growth.
We cannot be sure the current growth rates and trends are meaningful predictors of future growth.
The Company entered into the TRA with continuing members of Zevia LLC (not including the Company) and certain pre-IPO institutional investors ("the Direct Zevia Stockholders").
The Company entered into the TRA with continuing members of Zevia LLC (not including the Company) and certain pre-IPO institutional investors (“the Direct Zevia Stockholders”).
This past year, inflationary pressures raised overall supply chain costs and manufacturing and labor costs, which impacted our margins. Prolonged unfavorable economic conditions may have an adverse effect on our sales and profitability. Climate change may negatively affect our business and operations.
In the past, inflationary pressures raised overall supply chain costs and manufacturing and labor costs, which impacted our margins. Prolonged unfavorable economic conditions may have an adverse effect on our sales and profitability. 16 Climate change may negatively affect our business and operations.
Any future pandemics, epidemics, or other disease outbreaks could have a material adverse impact on our business, results of operations and financial condition. Any future pandemics or epidemics may have an adverse impact on the global society, economies, financial markets and consumer and business spending.
Any future pandemics, epidemics, or other disease outbreaks could have a material adverse impact on our business, results of operations and financial condition. Any future pandemics, epidemics disease outbreaks or actual or threatened public health emergencies may have an adverse impact on the global society, economies, financial markets and consumer and business spending.
Accordingly, we may not be able to achieve profitability, and we may continue to incur significant losses in the future. If we fail to attract, hire, train and retain qualified personnel, manage our future growth effectively or maintain our company culture, our business could be materially adversely affected.
In addition, some of our expenses are fixed. Accordingly, we may not be able to achieve profitability, and we may continue to incur significant losses in the future. If we fail to attract, hire, train and retain qualified personnel, manage our future growth effectively or maintain our company culture, our business could be materially adversely affected.
We do not intend to pay any cash dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors.
We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our board of directors.
As a public benefit corporation, we are required to balance the pecuniary interests of the stockholders, the best interests of those materially affected by the corporation’s conduct and the specific public benefit or public benefits identified in our amended and restated certificate of incorporation.
We have elected to be classified as a public benefit corporation under the DGCL. As a public benefit corporation, we are required to balance the pecuniary interests of the stockholders, the best interests of those materially affected by the corporation’s conduct and the specific public benefit or public benefits identified in our amended and restated certificate of incorporation.
We have positioned our brand to capitalize on growing consumer interest in plant-based, clean label, ethically produced and great-tasting beverages, particularly those sweetened with stevia extract or other plant-based sweeteners as an alternative to sugar or artificial sweeteners. Our products are solely sweetened by highly purified stevia extract and do not contain Erythritol.
We have positioned our brand to capitalize on growing consumer interest in better-for-you, ethically produced and great-tasting beverages, particularly those sweetened with stevia extract or other sweeteners as an alternative to sugar or artificial sweeteners. Our products are solely sweetened by highly purified stevia extract and do not contain Erythritol or Aspartame.
Increasing governmental and societal attention to ESG matters has resulted and could continue to result in new laws and requirements, including expanded disclosure requirements that are expected to continue to expand the nature, scope and complexity on which we are required to report.
Increasing governmental and societal attention to ESG matters has resulted and could continue to result in new laws and requirements, including disclosure requirements that may expand the nature, scope and complexity of information which we are required to report.
In 2023, our largest customer represented 13% of our net sales and our second largest customer represented 10% of our net sales, and our largest ten customers represented 73% of our net sales. No other customers represented more than 10% of our net sales in 2023. In 2023, the e-commerce channel represented approximately 11% of our net sales.
In 2024, our largest customer represented 13% of our net sales and our second largest customer represented 11% of our net sales, and our largest ten customers represented 71% of our net sales. No other customers represented more than 10% of our net sales in 2024. In 2024, the e-commerce channel represented approximately 12% of our net sales.
Key third-party, cloud-based systems include NetSuite, an enterprise resource planning system used for executing purchase orders and other key operational and accounting transactions; Microsoft Office 365 for document storing, sharing and collaboration; as well as other platforms, including Paylocity, to manage activities including, but not limited to, payroll and personnel data.
We rely on key third-party, cloud-based systems for critical business operations, such as NetSuite, an enterprise resource planning system used for executing purchase orders and other key operational and accounting transactions; Microsoft 365 for document storing, sharing and collaboration; as well as other platforms, including Paylocity, to manage activities including, but not limited to, payroll and personnel data.
As a result, natural disasters, such as an earthquake, fire or tsunami in the Los Angeles area or in areas where our contract manufacturers are located, could lead to substantial losses. We may face difficulties as we expand our operations into countries in which we have no prior operating experience.
As a result, natural disasters in the Los Angeles area or in areas where our contract manufacturers are located, could lead to substantial losses. We may face difficulties as we expand our operations into new markets in which we have no prior operating experience.
Any such derivative litigation may be costly and have an adverse impact on our financial condition and results of operations. Our status as a public benefit corporation and a Certified B Corporation may not result in the benefits that we anticipate. We have elected to be classified as a public benefit corporation under the DGCL.
Any such derivative litigation may be costly and have an adverse impact on our financial condition and results of operations. Our status as a public benefit corporation and a Certified B Corporation may not result in the benefits that we anticipate and may subject us to increased scrutiny.
We have a history of losses, and we may be unable to achieve profitability. We have experienced net losses in each year since our inception. We incurred net losses of $28.3 million in 2023 and of $47.6 million in 2022.
We have a history of losses, and we may be unable to achieve profitability. We have experienced net losses in each year since our inception. We incurred net losses of $23.8 million in 2024 and of $28.3 million in 2023.
Any or all of these events may lead to a loss of consumer confidence and trust, could damage the goodwill associated with our brand, cause consumers to choose other products, and negatively affect our business and financial performance.
Any or all of these events may lead to a loss of consumer confidence and trust, could damage the goodwill associated with our brand, cause consumers to choose other products, and negatively affect our business and financial performance. Our net sales and earnings may fluctuate as a result of price concessions, promotional activities and chargebacks.
In addition, enforcement of existing laws and regulations, changes in legal requirements and/or evolving interpretations of existing regulatory requirements may result in increased compliance costs and create other obligations, financial or otherwise, that could adversely affect our business, financial condition or operating results.
In addition, enforcement of existing laws and regulations, changes in legal requirements and/or evolving interpretations of existing regulatory requirements may result in increased compliance costs and create other obligations, financial or otherwise, that could adversely affect our business, financial condition or operating results. 21 In addition, if we expand our international operations, we could be adversely affected by violations of the U.S.
These increases in tax basis are expected to increase (for tax purposes) the Company’s depreciation and amortization and, together with other tax benefits, reduce the amount of tax that the Company would otherwise be required to pay, although it is possible that the IRS might challenge all or part of these tax basis increases or other tax benefits, and a court might sustain such a challenge. the Company’s ability to achieve benefits from any tax basis increases or other tax benefits will depend upon a number of factors, as discussed below, including the timing and amount of our future income.
These increases in tax basis are expected to increase (for tax purposes) the Company’s depreciation and amortization and, together with other tax benefits, reduce the amount of tax that the Company would otherwise be required to pay, although it is possible that the IRS might challenge all or part of these tax basis increases or other tax benefits, and a court might sustain such a challenge.
If we fail to address changes in consumer product and shopping preferences, or do not successfully anticipate and prepare for future changes in such preferences, our share of sales, revenue growth and overall financial results could be negatively affected. If we are unable to compete in our intensely competitive industry, our business may not grow or succeed.
If we fail to address changes in consumer product and shopping preferences, or do not successfully anticipate and prepare for future changes in such preferences, our share of sales, revenue growth and overall financial results could be negatively affected. Inaccurate or misleading marketing claims may harm our brand and business.
In addition, if we expand our international operations, we could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws, which generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials or other third parties for the purpose of obtaining or retaining business.
Foreign Corrupt Practices Act and similar worldwide anti-bribery laws, which generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials or other third parties for the purpose of obtaining or retaining business.
Moreover, negative publicity also could be generated from false, unfounded or nominal liability claims or limited recalls. 13 Negative publicity surrounding the health effects of our plant-based sweetening system or other ingredients in our products could have an adverse effect on our business including reports that stevia extract or plant-based sweeteners (or another ingredient) cause adverse effects on consumer health, whether founded or unfounded.
Negative publicity surrounding the health effects of our sweetening system or other ingredients in our products could have an adverse effect on our business including reports that stevia extract or sweeteners (or another ingredient) cause adverse effects on consumer health, whether founded or unfounded.
On the other hand, failure to attempt to market and sell our innovative products could limit the potential incremental revenue those products might provide. Inaccurate or misleading marketing claims may harm our brand and business.
On the other hand, failure to attempt to market and sell our innovative products could limit the potential incremental revenue those products might provide.
Any claims or behavior by such influencers may be attributed to us and expose us to fines, monetary liabilities, or could harm our brand reputation all of which could have an adverse impact on our business and operations.
Any claims or behavior by such influencers or celebrities may be attributed to us and expose us to fines, monetary liabilities, or could harm our brand reputation all of which could have an adverse impact on our business and operations. 14 Failure to introduce new products or successfully improve existing products may adversely affect our ability to continue to grow.
Our confidentiality agreements with our employees and certain of our consultants, contract employees, suppliers and independent contractors, including some of our contract manufacturers who use our formulations to manufacture our products, generally require that all information made known to them be kept strictly confidential. Further, some of our formulations have been developed by or with our suppliers and contract manufacturers.
We rely on confidentiality agreements and trademark law to protect our intellectual property rights. Our confidentiality agreements with our employees and certain of our consultants, contract employees, suppliers and independent contractors, including some of our contract manufacturers who use our formulations to manufacture our products, generally require that all information made known to them be kept strictly confidential.
Our net sales and earnings may fluctuate as a result of price concessions, promotional activities and chargebacks. We are often required to grant retailers price concessions that negatively impact our margins and our profitability in order to compete with our larger competitors with significantly greater financial resources.
We are often required to grant retailers price concessions that negatively impact our margins and our profitability in order to compete with our larger competitors with significantly greater financial resources.
Our expansion efforts may prove more expensive than we anticipate, and there is no guarantee that these efforts will translate into sufficient sales to cover our expenses and result in profits. We incur significant expenses in developing our innovative products and obtaining, storing, and marketing our products. In addition, many of our expenses are fixed.
Our expansion efforts may prove more expensive than we anticipate, and there is no guarantee that these efforts will translate into sufficient sales to cover our expenses and result in profits.
Forecasts may be particularly challenging as we expand into new markets and geographies and develop and market new products. We depend on our forecasts of demand for various products to make purchase decisions and to manage our inventory. We need to maintain adequate levels of certain products in order to be able to deliver our beverages on time.
Forecasts may be particularly challenging as we expand into new markets and geographies in the U.S. and Canada and develop and market new products. We depend on our forecasts of demand for various products to make purchase decisions and to manage our inventory.
Likewise, our reputation could be harmed if our publicly reported Certified B Corporation score declines. We do not intend to pay dividends for the foreseeable future and, as a result, stockholders' ability to achieve a return on their investment will depend on appreciation in the price of our Class A common stock.
We do not intend to pay dividends for the foreseeable future and, as a result, stockholders’ ability to achieve a return on their investment will depend on appreciation in the price of our Class A common stock. We do not intend to pay any cash dividends in the foreseeable future.
We intend to expand our global footprint in order to enter into new markets, including expanding into countries other than those in which we currently operate.
As we work to grow our brand, we intend to enter into new markets, including eventually expanding into countries other than those in which we currently operate.
Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations and policies that are applicable to the businesses of our customers may limit the adoption and use of, and reduce the overall demand for, our products and services. 29 Additionally, if third parties we work with, such as vendors or developers, violate applicable laws or regulations or our contracts and policies, such violations may also put our customers’, suppliers or other third parties’ content and personal information at risk and could in turn have an adverse effect on our business.
Additionally, if third parties we work with, such as vendors or developers, violate applicable laws or regulations or our contracts and policies, such violations may also put our customers’, suppliers or other third parties’ content and personal information at risk and could in turn have an adverse effect on our business.
We have a limited operating history at our current scale, which may make it difficult to evaluate our business and future prospects. We began commercial operations in 2011 and went public on July 21, 2021.
The exclusive forum clause may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us. 28 General Risk Factors We have a limited operating history at our current scale, which may make it difficult to evaluate our business and future prospects. We began commercial operations in 2011 and went public on July 21, 2021.
These competitors can use their resources and scale to rapidly respond to competitive pressures and changes in consumer preferences by introducing new products, changing their route to market, reducing prices or increasing promotional activities. We also compete with a range of emerging brands, including a number of smaller brands and a variety of smaller, regional and private label manufacturers.
These competitors can use their resources and scale to rapidly respond to competitive pressures and changes in consumer preferences by introducing new products, changing their route to market, reducing prices or increasing promotional activities.
Consumers may shift purchases to lower-priced or other perceived value offerings during economic downturns and periods of high inflation. In addition, consumers may choose to purchase private label products rather than branded products because they are generally less expensive. Distributors and retailers may become more conservative in response to these conditions and seek to reduce their inventories.
In addition, our ability to manage normal commercial relationships with our suppliers, contract manufacturers, distributors, retailers and creditors may suffer. Consumers may shift purchases to lower-priced or other perceived value offerings during economic downturns and periods of high inflation. In addition, consumers may choose to purchase private label products rather than branded products because they are generally less expensive.
Any significant change to applicable privacy laws or relevant industry practices could increase our costs and require us to modify our platform, applications and features, possibly in a material manner, which we may be unable to complete and may limit our ability to store and process customer data or develop new applications and features.
Any significant change to applicable privacy laws or relevant industry practices could increase our costs and require us to modify our platform, applications and features, possibly in a material manner, which we may be unable to complete and may limit our ability to store and process customer data or develop new applications and features. 31 There is no assurance that our current or any new security controls over personal data, the training of employees and vendors on data privacy and data security, and the policies, procedures and practices we implemented or may implement in the future will prevent the improper disclosure of personal data.
We rely on information technology systems and any inadequacy, failure, interruption, outage, or integration issue of those systems may harm our ability to effectively operate our business. We are dependent on various information technology systems, including, but not limited to, networks, applications and outsourced services in connection with the operation of our business.
We rely on information technology systems and any inadequacy, failure, interruption, outage, or integration issue of those systems may harm our ability to effectively operate our business.
The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products and our costs and could have an adverse effect on our business and brand. 16 Risks Relating to Our Relationships with Third Parties Because we rely on a limited number of third-party suppliers to supply our contract manufacturers, raw materials may not be able to be obtained on a timely basis or in sufficient quantities for such contract manufacturers to produce our products and we may not be able to then meet demand for our products.
Risks Relating to Our Relationships with Third Parties Because we rely on a limited number of third-party suppliers to supply our contract manufacturers, raw materials may not be able to be obtained on a timely basis or in sufficient quantities for such contract manufacturers to produce our products and we may not be able to then meet demand for our products.
In addition, the increase in certain of our employees working remotely has resulted in increased demand on our information technology infrastructure, which can be subject to failure, disruption or unavailability, and increased vulnerability to cyberattacks and other cyber incidents.
In addition, the increase in certain of our employees working remotely has resulted in increased utilization of network and information technology infrastructure outside our control leading to increased vulnerability to cyberattacks and other cyber incidents.
Furthermore, as existing ecommerce and media platforms continue to rapidly evolve and new platforms develop, we must continue to maintain a presence on these platforms and establish presences on new or emerging platforms to maintain our brand.
Furthermore, as existing ecommerce and media platforms continue to rapidly evolve, new platforms develop, and laws or regulations regarding the use and operations of such platforms change, we must effectively maintain a presence on these platforms, establish a presence on new or emerging platforms or transition to other platforms should a platform become unavailable to maintain our brand.
It is also costly to establish, develop and maintain international operations and develop and promote our brands in international markets and we may face adverse tax consequences, tariffs, and barriers to trade. Our expansion may involve expanding into less developed countries, which may have less political, social or economic stability and less developed infrastructure and legal systems.
It is also costly to establish, develop and maintain international operations and develop and promote our brands in international markets and we may face adverse tax consequences, tariffs, and barriers to trade.
Disruptions in the worldwide economy may adversely affect our business, results of operations and financial condition. Adverse and uncertain economic conditions, including the impacts of inflation, may impact distributor, retailer and consumer demand for our products. In addition, our ability to manage normal commercial relationships with our suppliers, contract manufacturers, distributors, retailers and creditors may suffer.
Disruptions in the worldwide economy, including changes to foreign trade policies, may adversely affect our business, results of operations and financial condition. Adverse and uncertain economic conditions, including the impacts of inflation, changes in U.S. foreign trade policies, and governmental tariffs, may impact distributor, retailer and consumer demand for our products.
Because our products are comprised of a handful of simple ingredients that are readily available in the market and we do not depend on a particular flavor as we are continually reformulating and remodifying flavors, we are particularly dependent on maintaining the success of our brand and reputation. 12 Maintaining, promoting and positioning our brand and reputation will depend on, among other factors, the success of our plant-based product offerings, food safety, quality assurance, marketing and merchandising efforts and our ability to provide a consistent, high-quality customer experience.
Because our products are comprised of a handful of simple ingredients that are readily available in the market and we do not depend on a particular flavor as we are continually reformulating and remodifying flavors, we are particularly dependent on maintaining the success of our brand and reputation.
As a result, we may not be able to prevent others from independently developing and using similar formulations.
Further, some of our formulations have been developed by or with our suppliers and contract manufacturers. As a result, we may not be able to prevent others from independently developing and using similar formulations.
The continued work on our culture is necessary for our continued success as we build our employer brand. If we fail to maintain our company culture or focus on our employer brand while developing our current employees and integrating new employees, our business and competitive position could be materially harmed.
If we fail to maintain our company culture or focus on our employer brand while developing our current employees and integrating new employees, our business and competitive position could be materially harmed. Any of our employees may terminate his or her employment with us at any time.
We have invested a significant amount of money in establishing and promoting our trademarked brands. Our continued success depends, to a significant degree, upon our ability to protect and preserve our intellectual property. We rely on confidentiality agreements and trademark law to protect our intellectual property rights.
We utilize intellectual property in our business. Our trademarks are valuable assets that reinforce our brand and consumers’ favorable perception of our products. We have invested a significant amount of money in establishing and promoting our trademarked brands. Our continued success depends, to a significant degree, upon our ability to protect and preserve our intellectual property.
No operational applications are physically hosted on our premises, although we do manage internal file servers. Most of our applications are operated in the cloud, either as Software as a Service (SaaS) platforms or hosted services.
All of our applications are operated in the cloud, either as Software as a Service (SaaS) platforms or hosted services.
We could also incur significantly higher costs and longer lead times associated with distributing inventory during the time it takes for our third-party providers to reopen, replace or bring the capacity back to normal levels for their warehouses/fulfillment locations and logistics capabilities after a disruption. 17 An increase in costs, a sustained interruption in the supply, or a shortage of some of the ingredients or other raw materials used in our products, supplier quality and reliability issues, trade disruptions, and changes in supply chain could in the future negatively impact our net sales, gross margins, selling expenses, and results of operations.
We could also incur significantly higher costs and longer lead times associated with distributing inventory during the time it takes for our third-party providers to reopen, replace or bring the capacity back to normal levels for their warehouses/fulfillment locations and logistics capabilities after a disruption.
Additionally, unforeseen issues with the workforce of our supply chain or retailers failing to execute on the proposed timeline for the promotions could prohibit us from executing planned promotions and programs and have an adverse effect on our planned volume performance. 14 Failure to introduce new products or successfully improve existing products may adversely affect our ability to continue to grow.
Additionally, unforeseen issues with the workforce of our supply chain or retailers failing to execute on the proposed timeline for the promotions could prohibit us from executing planned promotions and programs and have an adverse effect on our planned volume performance. 15 The loss of any registered trademark or other intellectual property or actual or alleged claims of infringement or violation of intellectual property rights could hurt our business.
Violations of these laws, or allegations of such violations, could disrupt our business, impact our reputation, and result in a material adverse effect on our results of operations, cash flows and financial condition. 20 Risks Relating to Tax Matters The Company is dependent on distributions from Zevia LLC to pay any taxes and other expenses, including payments under the Tax Receivable Agreement.
Violations of these laws, or allegations of such violations, could disrupt our business, impact our reputation, and result in a material adverse effect on our results of operations, cash flows and financial condition.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThese resources are designed to detect and respond to cyber incidents that may result in unauthorized access to, ransomware, damages, or destruction of, our information and systems. 30 Risk Management and Strategy Cybersecurity risk is a direct responsibility of management and the Company’s information technology (“IT”) team.
Biggest changeThese resources are designed to detect and respond to cyber incidents that may result in unauthorized access to, ransomware, damages, or destruction of, our information systems. 32 Risk Management and Strategy Cybersecurity risk is a direct responsibility of management and the Company’s information technology (“IT”) team, including our Director, IT who has over 15 years of experience building, implementing, and managing information systems, developing cybersecurity programs, and deploying risk mitigation strategies for such systems.
Working cross-functionally with Legal, our SVP, Operations oversees the IT team that regularly monitors and assesses cybersecurity risks, implements measures designed to mitigate such risks and their associated effects on the Company and personal data collected, stored, and processed in our systems, and manages our information security training and cybersecurity awareness program.
Working cross-functionally with our Legal team, our SVP, Operations oversees the IT team that regularly monitors and assesses cybersecurity risks, implements measures designed to mitigate such risks and their associated effects on the Company and personal data collected, stored, and processed in our systems, and manages our information security training and cybersecurity awareness program.
We also periodically use our internal audit partner to conduct additional reviews and assessments. • Insider Threats – We maintain organizational controls such as limited access, and access removal for terminated employees, designed to minimize insider threats, and address potential risks from within our Company.
We also periodically use third-parties to conduct additional reviews and assessments. • Insider Threats – We maintain organizational controls such as limited access, and access removal for terminated employees, designed to minimize insider threats, and address potential risks from within our Company.
To date we have not identified any cybersecurity threat or incident that has materially affected the Company or our financial position, results of operations and/or cash flows, but we face certain ongoing cybersecurity risk threats that, if realized, are reasonably likely to materially affect us.
Since the beginning of the last fiscal year, we have not identified any cybersecurity threat or incident that has materially affected the Company or our financial position, results of operations and/or cash flows, but we face certain ongoing cybersecurity risk threats that, if realized, are reasonably likely to materially affect us.
Item 1C. Cybersecurity We recognize the critical importance of maintaining the safety and security of our systems and data and have a holistic process for assessing, identifying, and managing material risks from cybersecurity threats. This process is supported by both management and our Board of Directors.
Item 1C. Cybersecurity We recognize the critical importance of maintaining the safety and security of our systems and data and have a holistic process designed to assess, identify, and manage material risks from cybersecurity threats. This process is supported by both management and our Board of Directors.
We have invested, and expect to continue to invest, in resources for the protection and safeguarding of our information technology systems, including, but not limited to, networks, applications, and outsourced technology services in connection with the operation of our business.
The SVP, Operations works with the Company’s Legal team on cybersecurity strategy, policy, training, standards, architecture, and processes. We have invested, and expect to continue to invest, in resources for the protection and safeguarding of our information technology systems, including, but not limited to, networks, applications, and outsourced technology services in connection with the operation of our business.
To prevent, detect, mitigate, and remediate information security threats, including a cybersecurity incident and/or threat, we maintain a cyber risk management process managed by our Senior Vice President, Operations (“SVP, Operations”) who reports to our CEO. The SVP, Operations works with the Vice President, Deputy General Counsel (“Legal”) on cybersecurity strategy, policy, training, standards, architecture, and processes.
To prevent, detect, mitigate, and remediate information security threats, including a cybersecurity incident and/or threat, we maintain a cyber risk management process managed by our Senior Vice President, Operations (“SVP, Operations”) who reports to our CEO and has seven years of experience overseeing information technology processes and procedures, including cybersecurity matters.
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We have implemented cybersecurity systems and controls based on industry best practices and the U.S. National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”).
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This does not imply that we meet any particular technical standards, specifications or requirements, only that we use such standards as a guide to help us identify, assess and manage cybersecurity risks relevant to our business.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe continue to evaluate opportunities to support our future plans for growth and cost reduction. We believe that additional or alternative space to support future use and expansion will be available on reasonable commercial terms. Item 3. Legal Proceedings We are not subject to any material legal proceedings. Item 4. Mine Safety Disclosures. Not applicable. 31 PART II
Biggest changeWe believe that our current facilities are suitable and adequate to meet our current needs. We continue to evaluate opportunities to support our future plans for growth and cost reduction. We believe that additional or alternative space to support future use and expansion will be available on reasonable commercial terms. Item 3.
Item 2. Properties Our corporate headquarters offices are located in Encino, California and consists of approximately 20,185 square feet of leased space pursuant to a lease that expires on December 31, 2026. We utilize third-party distribution networks. We believe that our current facilities are suitable and adequate to meet our current needs.
Item 2. Properties Our corporate headquarters offices are located in Encino, California and consists of approximately 20,185 square feet of leased space pursuant to a lease that expires on December 31, 2026. In September 2024, we entered into an agreement to sublease 8,468 square feet of leased space until December 31, 2026. We utilize third-party distribution networks.
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Legal Proceedings We are not subject to any material legal proceedings. Item 4. Mine Safety Disclosures. Not applicable. 33 PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 31 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 32 Item 6. Reserved 32 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 43 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 33 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 34 Item 6. Reserved 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 35 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 45 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. As of February 29, 2024, there were 42 holders of record of our Class B common stock.
Biggest changeThe actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. As of February 15, 2025, there were 25 holders of record of our Class B common stock.
Prior to that date, there was no public trading market for our Class A common stock. Our Class B common stock is neither listed nor traded. Holders of Record As of February 29, 2024, there were 18 holders of record of our Class A common stock.
Prior to that date, there was no public trading market for our Class A common stock. Our Class B common stock is neither listed nor traded. Holders of Record As of February 15, 2025, there were 15 holders of record of our Class A common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeChanges in cash flows related to operating assets and liabilities were primarily due to an increase in accounts receivable of $2.0 million due to increases in net sales and a decrease in accounts in accounts payable and accrued expenses and other current liabilities of $4.1 million, primarily due to timing of inventory purchases, partially offset by decrease in inventories of $3.9 million due to timing of inventory purchases and a $0.8 million decrease in prepaid expenses and other assets, primarily insurance expenses as a result of becoming a public company.
Biggest changeChanges in cash flows related to operating assets and liabilities were primarily due to a decrease in inventories of $15.9 million due to decreased production of inventory as inventory levels are managed and the sale of raw materials to contract manufacturers, decreased prepaid expenses and other assets of $3.2 million largely due to a decrease in receivables related to the sale of raw materials, and a decrease in accounts receivable of $0.3 million due to timing of payments, partially offset by a net decrease in accounts payable, accrued expenses and other current liabilities of $3.5 million due to timing of purchases and decreased production of inventory, and decreased operating lease liabilities of $0.6 million due to payments made.
Thereafter, 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.
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.
Net Cash Provided by Investing Activities Net cash provided by investing activities of $0.8 million for the year ended December 31, 2023 was due to proceeds from sales of property, equipment, and software of $2.4 million, primarily the sale of our warehouse and related assets for $2.3 million, partially offset by capital expenditures of $1.6 million for the purchase of marketing fixtures, software applications and computer equipment used in ongoing operations.
Net cash provided by investing activities of $0.8 million for the year ended December 31, 2023 was due to proceeds from sales of property, equipment, and software of $2.4 million, primarily the sale of our warehouse and related assets for $2.3 million, partially offset by capital expenditures of $1.6 million for the purchase of marketing fixtures, software applications and computer equipment used in ongoing operations.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 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 consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 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 consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report.
Cost of Goods Sold Cost of goods sold consists of all costs to acquire and manufacture our products, including the cost of ingredients, raw materials, packaging, in-bound freight and logistics and third-party production fees.
Cost of Goods Sold Historically, cost of goods sold consists of all costs to acquire and manufacture our products, including the cost of ingredients, raw materials, packaging, in-bound freight and logistics and third-party production fees.
We elected to classify shipping and handling costs for salable product outside of cost of goods sold, in selling and marketing expenses in our consolidated statements of operations and comprehensive loss.
We elected to classify shipping and handling costs for salable product outside of cost of goods sold, in selling and marketing expenses in our accompanying consolidated statements of operations and comprehensive loss.
Recent Accounting Pronouncements Refer to Note 2 - Summary of Significant Accounting Policies in the Notes to our Consolidated Financial Statements included in this Annual Report for a discussion of recently issued accounting pronouncements not yet adopted. 42 Emerging Growth Company Status 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.
Recent Accounting Pronouncements Refer to Note 2 - Summary of Significant Accounting Policies in the accompanying Notes to our Consolidated Financial Statements included in this Annual Report for a discussion of recently issued accounting pronouncements not yet adopted. 44 Emerging Growth Company Status 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 believe that our cash and cash equivalents as of December 31, 2023, 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.
We believe that our cash and cash equivalents as of December 31, 2024, 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.
A 10% change in the accrual for customer incentives and allowances would have affected our income from operations by $0.4 million and $0.6 million for the years ended December 31, 2023 and 2022, respectively. Inventories Inventories consist of raw materials and finished goods. Raw materials include costs for the Company’s ingredients and packaging inventories.
A 10% change in the accrual for customer incentives and allowances would have affected our income from operations by $0.6 million and $0.4 million for the years ended December 31, 2024 and 2023, respectively. Inventories Inventories consist of raw materials and finished goods. Raw materials include costs for the Company’s ingredients and packaging inventories.
As of December 31, 2023, the Company believes based on applicable accounting standards, that it was more likely than not that its DTAs subject to the TRA would not be realized as of December 31, 2023; therefore, the Company has not recorded a liability related to the tax savings it may realize from utilization of such DTAs.
As of December 31, 2024, the Company believes based on applicable accounting standards, that it was more likely than not that its DTAs subject to the TRA would not be realized as of December 31, 2024; therefore, the Company has not recorded a liability related to the tax savings it may realize from utilization of such DTAs.
Components of Our Results of Operations Net Sales We generate net sales from the sales of our products, including Soda, Energy Drinks, Organic Tea, and Kids drinks, to our customers, which include grocery distributors, national retailers, natural products retailers, warehouse club retailers and retailers with e-commerce channels, in the U.S. and Canada.
Components of Our Results of Operations Net Sales We generate net sales from the sales of our products, including Soda, Energy Drinks, and Organic Tea drinks, to our customers, which include grocery distributors, national retailers, convenience retailers, natural products retailers, warehouse club retailers and retailers with e-commerce channels, in the U.S. and Canada.
Gross profit may be favorably impacted by leveraging our asset-light business model and through increased distribution direct to retailers, the increased scale of our business and our continued focus on cost and efficiency improvements. Operating Expenses Selling and Marketing Expenses Selling and marketing expenses consist primarily of warehousing and distribution costs and advertising and marketing expenses.
Gross profit may be favorably impacted by leveraging our asset-light business model and through increased distribution direct to retailers, the increased scale of our business, our Productivity Initiative, and our continued focus on cost and efficiency improvements. Operating Expenses Selling and Marketing Expenses Selling and marketing expenses consist primarily of warehousing and distribution costs and advertising and marketing expenses.
All tax positions are periodically analyzed and adjusted as a result of events, such as the resolution of tax audits, issuance of new regulations or new case law, negotiations with tax authorities, and expiration of statutes of limitations. We did not record any unrecognized tax benefit as of December 31, 2023.
All tax positions are periodically analyzed and adjusted as a result of events, such as the resolution of tax audits, issuance of new regulations or new case law, negotiations with tax authorities, and expiration of statutes of limitations. We did not record any unrecognized tax benefit as of December 31, 2024.
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. 39 Adjusted EBITDA is a financial measure that is not required by, or presented in accordance with U.S. GAAP.
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. 41 Adjusted EBITDA is a financial measure that is not required by, or presented in accordance with U.S. GAAP.
Some of the limitations of Adjusted EBITDA include that (1) it does not properly reflect capital commitments to be paid in the future, (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures, (3) it does not consider the impact of equity-based compensation expense, including the potential dilutive impact thereof, and (4) it does not reflect other non-operating expenses, including interest (income) expense, foreign currency (gains)/losses and (gains)/losses on disposal of fixed assets.
Some of the limitations of Adjusted EBITDA include that (1) it does not properly reflect capital commitments to be paid in the future, (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures, (3) it does not consider the impact of equity-based compensation expense, including the potential dilutive impact thereof, and (4) it does not reflect other non-operating expenses, including interest (income) expense, foreign currency (gains)/losses, and restructuring.
While management believes that inventory is appropriately stated at the lower of average cost or net realizable value, judgment is involved in determining the net realizable value of inventory. The lower of average cost or net realizable value adjustments were not material at December 31, 2023 or December 31, 2022.
While management believes that inventory is appropriately stated at the lower of average cost or net realizable value, judgment is involved in determining the net realizable value of inventory. The lower of average cost or net realizable value adjustments were not material at December 31, 2024 or December 31, 2023.
For a further discussion on our debt and operating lease commitments as of December 31, 2023, see the sections above as well as Note 7 - Debt , and Note 8 - Leases , in the Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
For a further discussion on our debt and operating lease commitments as of December 31, 2024, see the sections above as well as Note 7 - Debt , and Note 8 - Leases , in the accompanying Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the TRA, we expect that the reduction in tax payments for us associated with the federal, state and local tax benefits described above would aggregate to approximately $66.1 million through 2037.
Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the TRA, we expect that the reduction in tax payments for us associated with the federal, state and local tax benefits described above would aggregate to approximately $66.5 million through 2038.
Also, we will continue to assess our liquidity needs in light of current and future global health emergencies, inflationary pressures, 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, 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.
Also, we will continue to assess our liquidity needs in light of current and future global health emergencies, inflationary pressures, 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, 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.
The TRA liability that would be recognized if the associated tax benefits were determined to be fully realizable totaled $56.2 million and $55.8 million at December 31, 2023 and 2022, respectively. The increase in the TRA liability is primarily related to Class B to Class A exchanges during the year ended December 31, 2023.
The TRA liability that would be recognized if the associated tax benefits were determined to be fully realizable totaled $56.5 million and $56.2 million at December 31, 2024 and 2023, respectively. The increase in the TRA liability is primarily related to Class B to Class A exchanges during the year ended December 31, 2024.
The amounts for these incentives are deducted from gross sales to arrive at our net sales. 33 The following factors and trends in our business have driven net sales over the past two years and are expected to continue to be key drivers of our net sales for the foreseeable future: • leveraging our platform and mission to grow brand awareness, increase velocity and expand our consumer base; • continuing to grow our strong relationships across our retailer network and retain and expand distribution amongst new and existing channels, both in-store and online; and • continuous innovation efforts, enhancement of existing products, and introduction of additional flavors within existing categories, as well as entering into new categories.
The amounts for these incentives are deducted from gross sales to arrive at our net sales. 35 The following factors and trends in our business are expected to be key drivers of our net sales for the foreseeable future: • leveraging our platform and mission to grow brand awareness, increase velocity and expand our consumer base; • continuing to grow our strong relationships across our retailer network and retain and expand distribution amongst new and existing channels, both in-store and online; and • continuous innovation efforts, enhancement of existing products, and introduction of additional flavors within existing categories, as well as entering into new categories.
See “ Certain Relationships and Related Party Transactions—Tax Receivable Agreement ” included in the prospectus dated July 21, 2021 and filed with the SEC on July 23, 2021. We expect that the payments that we may be required to make under the TRA may be substantial.
See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement” included in the prospectus dated July 21, 2021 and filed with the SEC on July 23, 2021. We expect that the payments that we may be required to make under the TRA may be substantial.
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 75.8% and 68.7% as of December 31, 2023 and 2022, respectively.
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.
Under such scenario we would be required to pay the Direct Zevia Stockholders and certain continuing members of Zevia LLC 85% of such amount, or $56.2 million through 2037.
Under such scenario we would be required to pay the Direct Zevia Stockholders and certain continuing members of Zevia LLC 85% of such amount, or $56.5 million, through 2038.
We may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of the IPO or such earlier time that we are no longer an emerging growth company.
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.
Changes in cash flows related to operating assets and liabilities were primarily due to a net increase of $11.2 million in accounts payable, accrued expenses and other current liabilities due to timing of purchases/payments and increased production of inventory, partially offset by an increase in inventories of $7.0 million due to increased production of inventory as a result of the supply chain logistics challenges discussed in the Key Events During 2023, and an increase in prepaid expenses and other assets of $2.6 million, primarily due to an increase in prepaid deposits related to the sale of raw materials.
Changes in cash flows related to operating assets and liabilities were primarily due to a net increase of $11.2 million in accounts payable, accrued expenses and other current liabilities due to timing of purchases/payments and increased production of inventory, partially offset by an increase in inventories of $7.0 million due to increased production of inventory as a result of the supply chain logistics challenges in 2023, an increase in prepaid expenses and other assets of $2.6 million, primarily due to an increase in receivables related to the sale of raw materials, and decreased operating lease liabilities of $0.6 million due to payments made.
Our critical accounting estimates are described below. 40 Revenue Recognition We recognize revenue when performance obligations under the terms of a contract with the customer are satisfied. Accruals for customer incentives and allowances, sales returns and marketing programs are established for the expected payout based on contractual terms, volume-based metrics and/or historical trends.
Revenue Recognition We recognize revenue when performance obligations under the terms of a contract with the customer are satisfied. Accruals for customer incentives and allowances, sales returns and marketing programs are established for the expected payout based on contractual terms, volume-based metrics and/or historical trends.
Factors Affecting Our Performance Macroeconomic Environment In addition to the supply chain challenges discussed above, a number of external factors, including the global economy, global health emergencies, inflationary pressures, relatively high interest rates, volatility in the financial markets, recession fears, financial institution instability, any potential shutdown of the U.S. government, global hostilities, including the military conflicts in Ukraine and Israel and the surrounding areas, and political tensions between the U.S. and China have impacted and may continue to impact transportation, labor, and commodity costs.
Factors Affecting Our Performance Macroeconomic Environment A number of external factors, including the global economy, global health emergencies, inflationary pressures, relatively high interest rates, volatility in the financial markets, tariff threats, recession fears, financial institution instability, any potential shutdown of the U.S. government, changes in U.S. foreign trade policies, global hostilities, including the military conflicts in Ukraine and Israel and the surrounding areas, and political tensions between the U.S. and China, have impacted and may continue to impact transportation, labor, and commodity costs.
As our business continues to grow, we expect to see continued seasonality effects, with net sales tending to be greater in the second and third quarters of the year. 37 Liquidity and Capital Resources Liquidity and Capital Resources As of December 31, 2023, we had $32.0 million in cash and cash equivalents.
As our business continues to grow, we expect to see continued seasonality effects, with net sales tending to be greater in the second and third quarters of the year. 39 Liquidity and Capital Resources Liquidity and Capital Resources As of December 31, 2024, we had $30.7 million in cash and cash equivalents.
As of December 31, 2023, the Company was in compliance with its liquidity covenant. Cash Flows The following table presents the major components of net cash flows from and used in operating, investing and financing activities for the periods indicated.
As of December 31, 2024, the Company was in compliance with its financial covenant. Cash Flows The following table presents the major components of net cash flows provided by and used in operating, investing and financing activities for the periods indicated.
We calculate Adjusted EBITDA as net loss adjusted to exclude: (1) other income (expense), net, which includes interest (income) expense, foreign currency (gains) losses, and (gains) losses on disposal of fixed assets, (2) provision (benefit) for income taxes, (3) depreciation and amortization, and (4) equity-based compensation.
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, and (5) restructuring expenses.
As of December 31, 2023, we have a full valuation allowance against DTAs totaling $75.5 million. 41 In accordance with ASC 740, Income Taxes we perform a comprehensive review of uncertain tax positions regularly.
As of December 31, 2024, we have a full valuation allowance against DTAs totaling $78.9 million. 43 In accordance with ASC 740, Income Taxes we perform a comprehensive review of uncertain tax positions regularly.
Equivalized cases sold were 12.7 million for the year ended December 31, 2023 as compared to 13.6 million for the year ended December 31, 2022.
Equivalized cases sold were 12.1 million for the year ended December 31, 2024 as compared to 12.7 million for the year ended December 31, 2023.
We also own several other trademarks in both the U.S. and in foreign countries. Depreciation and amortization expense is expected to increase in-line with ongoing capital expenditures as our business grows. Other income, net Other income, net consists primarily of interest income (expense), and foreign currency (loss) gains.
We also own several other trademarks in both the U.S. and in foreign countries. Depreciation and amortization expense is expected to increase in-line with ongoing capital expenditures as our business grows.
Summary of Significant Accounting Policies , in the Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report, for information about these policies as well as a description of our other accounting policies.
See Note 2. Summary of Significant Accounting Policies , in the accompanying Notes to our Consolidated Financial Statements included in Part II, Item 8 of this Annual Report, for information about these policies as well as a description of our other accounting policies. Our critical accounting estimates are described below.
Percentages may not sum due to rounding: Year Ended December 31, 2023 2022 Net sales 100 % 100 % Cost of goods sold 55 % 57 % Gross profit 45 % 43 % Operating expenses: Selling and marketing 37 % 32 % General and administrative 19 % 23 % Equity-based compensation 5 % 16 % Depreciation and amortization 1 % 1 % Total operating expenses 62 % 72 % Loss from operations (17 )% (29 )% Other income, net 0 % 0 % Loss before income taxes (17 )% (29 )% Provision for income taxes 0 % 0 Net loss and comprehensive loss (17 )% (29 )% Loss attributable to noncontrolling interest 4 % 8 % Net loss attributable to Zevia PBC (13 )% (21 )% Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net Sales Year Ended December 31, Change (in thousands) 2023 2022 Amount Percentage Net sales $ 166,424 $ 163,181 $ 3,243 2.0 % Net sales were $166.4 million for the year ended December 31, 2023 as compared to $163.2 million for the year ended December 31, 2022.
Percentages may not sum due to rounding: Year Ended December 31, 2024 2023 Net sales 100 % 100 % Cost of goods sold 54 % 55 % Gross profit 46 % 45 % Operating expenses: Selling and marketing 37 % 37 % General and administrative 19 % 19 % Equity-based compensation 3 % 5 % Depreciation and amortization 1 % 1 % Restructuring 1 % 0 % Total operating expenses 62 % 62 % Loss from operations (15 )% (17 )% Other (expense) income, net (0 )% 0 % Loss before income taxes (15 )% (17 )% Provision for income taxes 0 % 0 % Net loss and comprehensive loss (15 )% (17 )% Loss attributable to noncontrolling interest 2 % 4 % Net loss attributable to Zevia PBC (13 )% (13 )% Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Net Sales Year Ended December 31, Change (in thousands) 2024 2023 Amount Percentage Net sales $ 155,049 $ 166,424 $ (11,375 ) (6.8 )% Net sales were $155.0 million for the year ended December 31, 2024 as compared to $166.4 million for the year ended December 31, 2023.
Non-GAAP Financial Measures We report our financial results in accordance with U.S. GAAP. However, management believes that Adjusted EBITDA, a non-GAAP financial measure, provides investors with additional useful information in evaluating our operating performance.
However, management believes that Adjusted EBITDA, a non-GAAP financial measure, provides investors with additional useful information in evaluating our operating performance.
Our general and administrative expenses are expected to grow in absolute dollars but decline as a percentage of net sales over time. 34 Equity-Based Compensation Expense 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.
Our ongoing general and administrative expenses are expected to remain relatively flat as a percentage of net sales over time. Equity-Based Compensation Expenses 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 expect both new distribution and increased organic sales from existing outlets and pricing strategies to contribute to our future growth; however, sales levels in any given period may continue to be impacted by seasonality, increased level of competition, customers efforts to manage inventory, and our ability to fulfill customer demands.
We expect our future growth to be driven by a combination of new distribution, increased organic sales from existing outlets, package and product innovation, and continued pricing strength; however, sales levels in any given period may continue to be impacted by seasonality, increased level of competition, customers’ efforts to manage inventory, and our ability to fulfill customer demands.
We did not have any material long-term inventory purchase commitments as of December 31, 2023. Our contract manufacturers are obligated to fulfill against purchase orders that are aligned with our forecast based on terms and conditions of the contract. Our forecasts provided to our contract manufacturers are short term in nature and at no time extend beyond a year.
Our inventory purchase commitments are generally short-term in nature and have ordinary commercial terms. We did not have any material long-term inventory purchase commitments as of December 31, 2024. Our contract manufacturers are obligated to fulfill against purchase orders that are aligned with our forecast based on terms and conditions of the contract.
Twelve Months Ended December 31, (in thousands) 2023 2022 Cash (used in) provided by: Operating activities $ (16,274 ) $ (20,778 ) Investing activities $ 805 $ 27,407 Financing activities $ 25 $ (2,340 ) Net Cash Used in Operating Activities Our cash flows used in operating activities are primarily influenced by working capital requirements.
Twelve Months Ended December 31, (in thousands) 2024 2023 Cash (used in) provided by: Operating activities $ (1,019 ) $ (16,274 ) Investing activities $ (283 ) $ 805 Financing activities $ — $ 25 Net Cash Used in Operating Activities Our cash flows used in operating activities are primarily influenced by working capital requirements.
Net cash used in operating activities of $20.8 million for the year ended December 31, 2022 was primarily driven by a net loss of $47.6 million and by a net decrease in cash related to changes in operating assets and liabilities of $2.1 million, partially offset by non-cash expenses of $28.9 million primarily related to equity-based compensation and depreciation and amortization expense.
Net cash used in operating activities of $1.0 million for the year ended December 31, 2024 was primarily driven by a net loss of $23.8 million, partially offset by non-cash expenses of $7.4 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 $15.4 million.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Overview We are a growth beverage company that develops, markets, sells, and distributes great tasting, zero sugar beverages made with simple, plant-based ingredients.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Overview We are a better-for-you beverage company that develops, markets, sells, and distributes naturally delicious, zero sugar beverages.
Critical accounting estimates are those that we consider the most important to the portrayal of our financial condition and operating results because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. See Note 2.
To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. 42 Critical accounting estimates are those that we consider the most important to the portrayal of our financial condition and operating results because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Equity-Based Compensation Expense Year Ended December 31, Change (in thousands) 2023 2022 Amount Percentage Equity-based compensation $ 8,279 $ 26,880 $ (18,601 ) (69.2 )% Equity-based compensation expense was $8.3 million for the year ended December 31, 2023 as compared to $26.9 million for the year ended December 31, 2022 primarily related to outstanding equity-based awards being recognized over the remaining service periods of the awards.
Equity-Based Compensation Expense Year Ended December 31, Change (in thousands) 2024 2023 Amount Percentage Equity-based compensation expenses $ 4,961 $ 8,279 $ (3,318 ) (40.1 )% Equity-based compensation expense was $5.0 million for the year ended December 31, 2024 as compared to $8.3 million for the year ended December 31, 2023 primarily related to outstanding equity-based awards being recognized over the remaining service periods of the awards.
Cost of Goods Sold Year Ended December 31, Change (in thousands) 2023 2022 Amount Percentage Cost of goods sold $ 91,666 $ 93,160 $ (1,494 ) (1.6 )% Cost of goods sold was $91.7 million for the year ended December 31, 2023 as compared to $93.2 million for the year ended December 31, 2022.
Cost of Goods Sold Year Ended December 31, Change (in thousands) 2024 2023 Amount Percentage Cost of goods sold $ 83,120 $ 91,666 $ (8,546 ) (9.3 )% Cost of goods sold was $83.1 million for the year ended December 31, 2024 as compared to $91.7 million for the year ended December 31, 2023.
Our products are distributed and sold principally across the 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.
Our products are distributed and sold principally across the U.S. and Canada through a wide-ranging 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. and Canada.
Gross Profit and Gross Margin Year Ended December 31, Change (in thousands) 2023 2022 Amount Percentage Gross profit $ 74,758 $ 70,021 $ 4,737 6.8 % Gross margin 44.9 % 42.9 % 2.0 Gross profit was $74.8 million for the year ended December 31, 2023 as compared to $70.0 million for the year ended December 31, 2022.
Gross Profit and Gross Margin Year Ended December 31, Change (in thousands) 2024 2023 Amount Percentage Gross profit $ 71,929 $ 74,758 $ (2,829 ) (3.8 )% Gross margin 46.4 % 44.9 % 1.5 % Gross profit was $71.9 million for the year ended December 31, 2024 as compared to $74.8 million for the year ended December 31, 2023.
General and Administrative Expenses Year Ended December 31, Change (in thousands) 2023 2022 Amount Percentage General and administrative expenses $ 31,495 $ 36,793 $ (5,298 ) (14.4 )% General and administrative expenses were $31.5 million for the year ended December 31, 2023 as compared to $36.8 million for the year ended December 31, 2022.
General and Administrative Expenses Year Ended December 31, Change (in thousands) 2024 2023 Amount Percentage General and administrative expenses $ 30,024 $ 31,495 $ (1,471 ) (4.7 )% General and administrative expenses were $30.0 million for the year ended December 31, 2024 as compared to $31.5 million for the year ended December 31, 2023.
Beginning the first quarter of 2024, our third-party contract manufacturers procure packaging and ingredient materials to manufacture our products according to our submitted rolling forecasts, with the initial three months of each forecast generally constituting our purchase commitment. We expect our cost of goods sold to increase in absolute dollars as our volume increases.
Our third-party contract manufacturers procure packaging and ingredient materials to manufacture our products according to our submitted rolling forecasts, with the initial three months of each forecast generally constituting our purchase commitment.
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.
All Zevia® beverages are made with a handful of simple, plant-based ingredients, contain no artificial sweeteners, and are Non-GMO Project verified, gluten-free, Kosher, and vegan, and include a variety of flavors across Soda, Energy Drinks, and Organic Tea drinks.
We offer our customers sales incentives that are designed to support the distribution of our products to consumers. These incentives include discounts, trade promotions, price allowances and product placement fees.
We offer our customers sales incentives that are designed to support the distribution of our products to consumers. These incentives and discounts include cash discounts, price allowances, volume-based rebates, product placement fees and certain other financial support for items such as trade promotions, displays, new products, consumer incentives and advertising assistance.
GAAP, to Adjusted EBITDA for the periods presented: Year Ended December 31, (in thousands) 2023 2022 Net loss and comprehensive loss $ (28,322 ) $ (47,647 ) Other income, net* (673 ) (286 ) Provision for income taxes 52 65 Depreciation and amortization 1,615 1,347 Equity-based compensation 8,279 26,880 Adjusted EBITDA $ (19,049 ) $ (19,641 ) * Includes interest (income) expense, foreign currency (gains) losses, and (gains) losses on disposal of fixed assets.
GAAP, to Adjusted EBITDA for the periods presented: Year Ended December 31, (in thousands) 2024 2023 Net loss and comprehensive loss $ (23,783 ) $ (28,322 ) Other expense (income), net* 63 (673 ) Provision for income taxes 66 52 Depreciation and amortization 1,329 1,615 Equity-based compensation 4,961 8,279 Restructuring 2,137 — Adjusted EBITDA $ (15,227 ) $ (19,049 ) * Includes interest (income) expense and foreign currency (gains) losses.
Results of Operations The following table sets forth selected items in our consolidated statements of operations and comprehensive loss for the periods presented: Year Ended December 31, 2023 2022 (in thousands, except per share amounts) Net sales $ 166,424 $ 163,181 Cost of goods sold 91,666 93,160 Gross profit 74,758 70,021 Operating expenses: Selling and marketing 62,312 52,869 General and administrative 31,495 36,793 Equity-based compensation 8,279 26,880 Depreciation and amortization 1,615 1,347 Total operating expenses 103,701 117,889 Loss from operations (28,943 ) (47,868 ) Other income, net 673 286 Loss before income taxes (28,270 ) (47,582 ) Provision for income taxes 52 65 Net loss and comprehensive loss (28,322 ) (47,647 ) Loss attributable to noncontrolling interest 6,828 13,790 Net loss attributable to Zevia PBC $ (21,494 ) $ (33,857 ) Net loss per share attributable to common stockholders Basic $ (0.41 ) $ (0.81 ) Diluted $ (0.41 ) $ (0.81 ) 35 The following table presents selected items in our consolidated statements of operations and comprehensive loss as a percentage of net sales for the respective periods presented.
Results of Operations The following table sets forth selected items in our accompanying consolidated statements of operations and comprehensive loss for the periods presented: Year Ended December 31, 2024 2023 (in thousands, except per share amounts) Net sales $ 155,049 $ 166,424 Cost of goods sold 83,120 91,666 Gross profit 71,929 74,758 Operating expenses: Selling and marketing 57,132 62,312 General and administrative 30,024 31,495 Equity-based compensation 4,961 8,279 Depreciation and amortization 1,329 1,615 Restructuring 2,137 — Total operating expenses 95,583 103,701 Loss from operations (23,654 ) (28,943 ) Other (expense) income, net (63 ) 673 Loss before income taxes (23,717 ) (28,270 ) Provision for income taxes 66 52 Net loss and comprehensive loss (23,783 ) (28,322 ) Loss attributable to noncontrolling interest 3,778 6,828 Net loss attributable to Zevia PBC $ (20,005 ) $ (21,494 ) Net loss per share attributable to common stockholders Basic $ (0.34 ) $ (0.41 ) Diluted $ (0.34 ) $ (0.41 ) 37 The following table presents selected items in our accompanying consolidated statements of operations and comprehensive loss as a percentage of net sales for the respective periods presented.
Loans under the Secured Revolving Line of Credit bear interest based on either, at our 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. 38 Under the Secured Revolving Line of Credit, we are 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.
The Secured Revolving Line of Credit is secured by a first priority security interest in substantially all of the Company’s assets. 40 Loans under the Secured Revolving Line of Credit bear interest based on either, at our 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.
The preparation of financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates.
We, along with our competitors, have increased pricing on a number of products in response to widespread inflation. These pricing increases may result in future reductions in volume. The following summarizes the components of our results of operations for the years ended December 31, 2023 and 2022, respectively.
These pressures have impacted, and are expected to continue to impact our margins and operating results. We, along with our competitors, have increased pricing on a number of products in response to widespread inflation. These pricing increases may result in future reductions in volume.
The following table summarizes our significant contractual obligations as of December 31, 2023: Payments Due by Period Total Less Than One Year 1-3 Years 3-5 Years More Than Five Years (in thousands) Rent obligations (1) $ 2,187 $ 702 $ 1,485 $ — $ — Total $ 2,187 $ 702 $ 1,485 $ — $ — (1) Real estate lease payments Our inventory purchase commitments are generally short-term in nature and have ordinary commercial terms.
The following table summarizes our significant contractual obligations as of December 31, 2024: Payments Due by Period Total Less Than One Year 1-3 Years 3-5 Years More Than Five Years (in thousands) Rent obligations (1) $ 1,424 $ 668 $ 756 $ — $ — (1) Real estate lease payments Our leases generally consist of long-term operating leases, which are payable monthly and relate to our office space.
General and Administrative Expenses General and administrative expenses include all salary and other personnel expenses (other than equity-based compensation expense) for our employees, including employees related to management, marketing, sales, product development, quality control, accounting, information technology and other functions.
In particular, we expect to significantly increase our investment in marketing in 2025, primarily in the first and third quarters, to help build our brand, with a focus on driving trial and customer conversions. 36 General and Administrative Expenses General and administrative expenses include all salary and other personnel expenses (other than equity-based compensation expense) for our employees, including employees related to management, marketing, sales, product development, quality control, accounting, information technology and other functions.
Net cash provided by investing activities of $27.4 million for the year ended December 31, 2022 was due to proceeds from maturities of short-term investments of $30.0 million, offset by capital expenditures of $2.6 million for the purchase of marketing fixtures, software applications and computer equipment used in ongoing operations.
Net Cash (Used in) Provided by Investing Activities Net cash used in investing activities of $0.3 million for the year ended December 31, 2024 was primarily due to purchase of property, equipment, and software of $0.3 million for leasehold improvements, computer equipment, furniture and equipment, software applications, and marketing equipment for use in ongoing operations.
We expect to satisfy these commitments through a combination of cash on hand and cash generated from sales of our products. Critical Accounting Policies and Estimates Our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with U.S. GAAP.
Critical Accounting Policies and Estimates Our accompanying consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with U.S. GAAP. The preparation of financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, costs and expenses and related disclosures.
We sell our products in the U.S. and Canada, direct to retailers and also through distributors. We do not have short- or long- term sales commitments with our customers.
We are focused on building distribution in our key accounts and concurrently evolving our route-to-market; however, we expect it will take time to regain lost distribution in an increasingly competitive environment. We sell our products in the U.S. and Canada, direct to retailers and also through distributors. We do not have short- or long-term sales commitments with our customers.
Net Cash Provided by (Used in) Financing Activities Net cash provided by financing activities of $25 thousand for the year ended December 31, 2023 was due to proceeds from the exercise of stock options.
Net Cash Provided by Financing Activities Net cash provided by financing activities of less than $0.1 million for the year ended December 31, 2024 was due to proceeds from the Secured Revolving Line of Credit of $8 million which was repaid in the same period, and proceeds from the exercise of stock options.
Our results of operations depend on our contract manufacturers ability to arrange for the purchase of raw materials and the production of our products in sufficient quantities at competitive prices.
Due to the recent implementation of a 25% import tax on all steel and aluminum entering the U.S., we could see an increase in our cost of goods. Our results of operations depend on our contract manufacturers’ ability to arrange for the purchase of raw materials and the production of our products in sufficient quantities at competitive prices.
During the fourth quarter of 2023, we made a strategic change in how our products are manufactured. Beginning in the first quarter of 2024, our contract manufacturers are responsible for the procurement of raw materials to produce our products, which are then sold to us as finished goods.
Beginning in 2024, our contract manufacturers are responsible for the procurement of raw materials to produce our products, which are then sold to us as finished goods; therefore, cost of goods sold for the year ended December 31, 2024 consists of all costs to purchase our product from our contract manufacturers as a finished good.
The increase in gross profit of $4.7 million, or 6.8%, was primarily driven by pricing increases taken in 2022 and 2023, partially offset by lower volumes and higher inventory losses. Gross margin for the year ended December 31, 2023 improved to 44.9% from 42.9% in the prior-year period.
The decrease in gross profit of $2.8 million, or 3.8%, was primarily due to lower volumes, unfavorable unit costs, and increased spend on promotional activity, partially offset by lower inventory write-downs and favorable product mix. Gross margin for the year ended December 31, 2024 improved to 46.4% from 44.9% in the prior-year period.
The decrease of $18.6 million was primarily driven by $11.2 million of lower equity-based compensation expense due to the acceleration of vesting of RSU awards upon retirement of senior management employees during 2022, $5.9 million of expense related to the accelerated method of expense recognition on certain equity awards issued in connection with the Company’s IPO in 2021, and $2.7 million related to RSU and restricted phantom stock awards that vested over six months following the IPO in the prior year, partially offset by $1.2 million of equity-based compensation expense related to new equity awards granted.
The decrease of $3.3 million was primarily due to a $3.7 million decrease related to the accelerated method of expense recognition on certain equity awards issued in connection with the Company’s IPO in 2021, partially offset by equity-based compensation expenses related to new equity awards granted.
The improvement was primarily due to pricing increases taken in 2022 and 2023, partially offset by higher inventory losses. 36 Selling and Marketing Expenses Year Ended December 31, Change (in thousands) 2023 2022 Amount Percentage Selling and marketing expenses $ 62,312 $ 52,869 $ 9,443 17.9 % Selling and marketing expenses were $62.3 million for the year ended December 31, 2023 as compared to $52.9 million for the year ended December 31, 2022.
The increase was primarily due to lower inventory write-downs and favorable product mix, partially offset by unfavorable unit costs and increased spend on promotional activity. 38 Selling and Marketing Expenses Year Ended December 31, Change (in thousands) 2024 2023 Amount Percentage Selling and marketing expenses $ 57,132 $ 62,312 $ (5,180 ) (8.3 )% Selling and marketing expenses were $57.1 million for the year ended December 31, 2024 as compared to $62.3 million for the year ended December 31, 2023.
Selling and marketing expenses also includes the incremental costs of obtaining contracts, such as sales commissions.
Selling and marketing expenses also include the incremental costs of obtaining contracts, such as sales commissions. 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.
The decrease of $1.5 million, or 1.6%, was primarily due to a 6.9%, or $6.4 million decrease in the shipment of equivalized cases and $0.4 million lower cost of goods sold as a result of product mix and manufacturing costs, partially offset by higher inventory losses of $5.3 million generally related to raw materials as a result of the brand refresh rollout timing, discontinuation of certain SKUs as a result of portfolio management optimization, and the procurement change with our contract manufacturers discussed in the Key Events During 2023 section above.
The decrease of $8.5 million, or 9.3% was primarily due to lower write-downs related to excess and obsolete inventory of $4.6 million, a 4.8% decrease in the shipment of equivalized cases, resulting in $4.1 million lower costs of goods sold, and favorable product mix of $2.7 million, partially offset by unfavorable unit costs of $2.9 million primarily due to investments in enhanced package-specific designs to improve on-shelf visibility and drive brand awareness.
Our selling and marketing expenses are expected to increase in absolute dollars in the long-term, both as a result of the increased warehousing and distribution costs resulting from increased net sales and as a result of increased focus on marketing programs/spend, which we expect to be partially offset by our continued focus on cost improvements in our supply chain.
We expect our cost of goods sold to increase in absolute dollars as our volume increases, but decrease over time as a percentage of net sales as a result of the Productivity Initiative, our continued focus on cost and efficiency improvements, and as we realize the benefit of scale.
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We believe that consumers increasingly select beverage products based on taste, ingredients and fit with today’s consumer preferences, which has benefited the Zevia® brand and resulted in over 1.9 billion cans of Zevia sold to date.
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Key Events During 2024 Productivity Initiative In the second quarter of 2024, we began executing a multi-year, broad-based Productivity Initiative designed to realign our cost structure in order to accelerate our route-to-market evolution and continue to build the Zevia Brand.
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Key Events During 2023 During 2023, we implemented certain initiatives designed to transform our operations in order to help support our continued growth, enhance our customer service, and drive efficiencies.
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This Productivity Initiative is designed to focus on our most critical initiatives including driving growth and innovation in our highest margin carbonated better-for-you beverages, re-align our cost structure to support greater investments in the Zevia Brand and improve operational excellence while simplifying processes across the organization.
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During the second, third, and fourth quarters, in connection with those initiatives, we faced short-term supply chain logistics challenges which hindered fulfillment and adversely impacted net sales results and selling and marketing expenses in these quarters, specifically freight and warehousing costs as a result of increased inventory production levels, leading to higher storage and production costs.
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The Productivity Initiative has resulted in the following: • Costs associated with the Productivity Initiative, including restructuring costs, were $2.1 million in 2024, which primarily includes employee related severance costs, restructuring consulting services, impairment loss of certain assets as a result of sublease agreement and costs related to exiting two of our third-party warehouse and distribution facilities. • The Productivity Initiative is expected to result in estimated annualized benefits of approximately $15.0 million, and we began seeing these benefits in the second half of 2024, and expect the savings to be more fully realized over the next year.
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We implemented measures that addressed these challenges and restored service levels to previous levels, including changes in the supply chain organization and leadership, pausing certain actions of our supply chain transition, and further automation of inventory reporting and processing for greater visibility.
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These benefits include reduction in costs of goods sold and reduction in operating expenses, including due to the recent reduction in workforce in January. We have reinvested the majority of these costs savings thus far into brand marketing and promotional activity to drive future growth.
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We also introduced a brand refresh during the year, bringing a new logo and brand identity, in order to improve on-shelf visibility and continue to support our growth. This initiative included the optimization of the brand portfolio and the discontinuation of selected SKUs as we continue to drive focus on our highest potential products.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur contract manufacturers ability to continue to procure enough aluminum cans at reasonable prices will depend on future developments that are highly uncertain. We, along with our contract manufacturers, are working to diversify our sources of supply and intend to enter into additional long-term contracts to better ensure stability of prices of our raw materials.
Biggest changeThe recent implementation of a 25% import tax by the new presidential administration on all steel and aluminum entering the U.S. could increase our operating costs. Our contract manufacturers’ ability to continue to procure enough aluminum cans at reasonable prices will depend on future developments that are highly uncertain.
Currently, a key ingredient in our products is stevia extract. Our stevia leaf extract is procured by our contract manufacturers and sourced from a large multi-national ingredient company with whom we have a long-standing relationship through a two-year agreement that was entered into effective October 15, 2023 which includes fixed pricing for the duration of the term.
Currently, a key ingredient in our products is stevia extract. Our stevia leaf extract is procured by our contract manufacturers and was previously sourced from a single large multi-national ingredient company with whom we have a long-standing relationship through a two-year agreement that was entered into effective October 15, 2023, which includes fixed pricing for the duration of the term.
Additionally, the prices of stevia and other ingredients we use are subject to many factors beyond our control, such as market conditions, climate change, supply chain challenges, and adverse weather conditions. Our aluminum cans are procured by our contract manufacturers through various can manufacturers. The price for aluminum cans also fluctuates depending on market conditions.
Additionally, the prices of stevia and other ingredients we use are subject to many factors beyond our control, such as market conditions, climate change, supply chain challenges, and adverse weather conditions. Our aluminum cans are procured by our contract manufacturers through various can manufacturers. The price for aluminum cans also fluctuates depending on market conditions and U.S. foreign trade policies.
Foreign Exchange Risk The majority of our sales and costs are denominated in U.S. dollars and are not subject to foreign exchange risk. As we source some ingredients and packaging materials from international sources, our results of operations could be impacted by changes in exchange rates.
Foreign Exchange Risk The majority of our sales and costs are denominated in U.S. dollars and are not subject to foreign exchange risk. Our contract manufacturers source some ingredients and packaging materials from international sources, and as a result our results of operations could be impacted by changes in exchange rates.
To the extent we increase sourcing from outside the U.S. or increase net sales outside of the U.S. that are denominated in currencies other than the U.S. dollar, the impact of changes in exchange rates on our results of operations would increase. Foreign exchange gains and losses were not material for the years ended December 31, 2023 and 2022.
To the extent our contract manufacturers increase sourcing from outside the U.S. or we increase net sales outside of the U.S. that are denominated in currencies other than the U.S. dollar, the impact of changes in exchange rates on our results of operations would increase.
Inflation Risk We believe that inflation has had a material effect on our business, results of operations, and financial condition. If our costs were to become subject to further and prolonged significant inflationary pressures, we may not be able to fully offset such higher costs through price increases.
If our costs were to become subject to further and prolonged significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, results of operations and financial condition.
Our inability or failure to do so could harm our business, results of operations and financial condition. Commodity Risk We are subject to market risks with respect to commodities because our ability to recover increased costs through higher pricing may be limited by the competitive environment in which we operate.
Commodity Risk We are subject to market risks with respect to commodities because our ability to recover increased costs through higher pricing may be limited by the competitive environment in which we operate. Our principal commodities risks relate to purchases of aluminum, diesel fuel, cartons and corrugate. 45
During 2023, we also tested and approved the use of another stevia leaf extract supplier, whose stevia leaf is derived from a region different than the above supplier. We continue to seek to diversity alternative sources of supply to mitigate potential supply disruptions. However, there can be no assurance that we will be able to secure alternative sources of supply.
During 2024, we approved and began sourcing from a second multi-national ingredient company to supply stevia leaf extract in order to diversify our source of stevia leaf extract, with the aim of mitigating price and supply disruptions. However, there can be no assurance that we will be able to secure alternative sources of supply.
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Our principal commodities risks relate to purchases of aluminum, diesel fuel, cartons and corrugate. 43
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We are seeking to diversify our sources of supply and intend to enter into arrangements to better ensure stability of prices of our raw materials. Due to a change in supply chain processes during 2024, our contract manufacturers are now responsible for the procurement of raw materials to produce our products, which are then sold to us as finished goods.
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As a result, during the year ended December 31, 2024, we had three vendors accounting for approximately 89% of our total raw material and finished goods purchases. Refer to Note 14, Major Customers, Accounts Receivable and Vendor Concentration , included in the accompanying consolidated financial statements.
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Foreign currency transaction losses for the years ended December 31, 2024 and 2023 amounted to approximately $0.7 million and $0.0 million, respectively. Inflation Risk We believe that inflation has had a material effect on our business, results of operations, and financial condition.

Other ZVIA 10-K year-over-year comparisons