0000950170-22-024519.txt : 20221110 0000950170-22-024519.hdr.sgml : 20221110 20221110162746 ACCESSION NUMBER: 0000950170-22-024519 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 78 CONFORMED PERIOD OF REPORT: 20220930 FILED AS OF DATE: 20221110 DATE AS OF CHANGE: 20221110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Zevia PBC CENTRAL INDEX KEY: 0001854139 STANDARD INDUSTRIAL CLASSIFICATION: BOTTLED & CANNED SOFT DRINKS CARBONATED WATERS [2086] IRS NUMBER: 862862492 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-40630 FILM NUMBER: 221377704 BUSINESS ADDRESS: STREET 1: 15821 VENTURA BLVD. STREET 2: SUITE 145 CITY: ENCINO STATE: CA ZIP: 91436 BUSINESS PHONE: (310) 202-7000 MAIL ADDRESS: STREET 1: 15821 VENTURA BLVD. STREET 2: SUITE 145 CITY: ENCINO STATE: CA ZIP: 91436 10-Q 1 zvia-20220930.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2022

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

Commission File Number: 001-40630

 

Zevia PBC

(Exact Name of Registrant as Specified in its Charter)

 

 

 

 

 

Delaware

 

86-2862492

(State or Other Jurisdiction of
Incorporation or Organization)

 

(I.R.S. Employer

Identification Number)

 

15821 Ventura Blvd., Suite 145

 

Encino, CA 91436

(855) 469-3842

(Address including zip code, and telephone number including area code, of registrant’s principal executive offices)

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Class A common stock, par value $0.001 per
share

 

ZVIA

 

New York Stock Exchange

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO

As of November 1, 2022, there were 44,865,807 shares and 24,010,216 shares outstanding of the Registrant’s Class A and Class B common stock, respectively, $0.001 par value per share.

 


 

Table of Contents

 

 

 

Page

PART I

Financial Information

4

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

4

 

Condensed Consolidated Balance Sheets (Unaudited)

4

 

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)

5

 

Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Units and Equity (Deficit) (Unaudited)

6

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

8

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

29

 

 

 

Part II.

Other Information

30

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

Item 3.

Defaults Upon Senior Securities

30

Item 4.

Mine Safety Disclosures

30

Item 5.

Other Information

30

Item 6.

Exhibits, Financial Statement Schedules

31

 

Signatures

32

 

 

2


 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q for the period ended September 30, 2022 ("Quarterly Report") contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “consider,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under Risk Factors in Part I, Item 1A of our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC") on March 11, 2022 for the period ended December 31, 2021 ("Annual Report"), as well as our subsequent filings with the SEC. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report, including, but not limited to, the following:

failure to further develop and maintain our brand;
change in consumer preferences, perception and spending habits, particularly due to impacts of inflation, in the 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;
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;
inability to compete in our intensely competitive categories;
our history of losses and potential inability to achieve or maintain profitability;
changes in the retail landscape or the loss of key retail customers;
fluctuation in our net sales and earnings as a result of price concessions, promotional activities and chargebacks;
the impact of the COVID-19 pandemic on our business, results of operations and financial condition;
the impact of adverse global macroeconomic conditions, including rising interest rates, recession fears and inflationary pressures, and geopolitical events or conflicts;
failure to attract, hire, train or retain qualified personnel, manage our future growth effectively or maintain our company culture;
failure to introduce new products or successfully improve existing products;
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;
extensive governmental regulation and enforcement if we are not in compliance with applicable requirements;
dependence on distributions from Zevia LLC to pay any taxes and other expenses; and
other risks, uncertainties and factors set forth under "Item 1A. Risk Factors." of our Annual Report.
 

Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report, and while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report to reflect events or circumstances after the date of this Quarterly Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.
 

3


 

PART I - FINANCIAL INFORMATION

ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ZEVIA PBC

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

 

(in thousands, except share and per share amounts)

 

September 30, 2022

 

 

December 31, 2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

49,236

 

 

$

43,110

 

Short-term investments

 

 

 

 

 

30,000

 

Accounts receivable, net

 

 

13,538

 

 

 

9,047

 

Inventories

 

 

37,283

 

 

 

31,501

 

Prepaid expenses and other current assets

 

 

3,356

 

 

 

3,421

 

Total current assets

 

 

103,413

 

 

 

117,079

 

Property and equipment, net

 

 

4,933

 

 

 

3,664

 

Right-of-use assets under operating leases, net

 

 

878

 

 

 

211

 

Intangible assets, net

 

 

3,588

 

 

 

3,738

 

Other non-current assets

 

 

558

 

 

 

301

 

Total assets

 

$

113,370

 

 

$

124,993

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

19,685

 

 

$

13,492

 

Accrued expenses and other current liabilities

 

 

7,950

 

 

 

6,705

 

Current portion of operating lease liabilities

 

 

698

 

 

 

236

 

Total current liabilities

 

 

28,333

 

 

 

20,433

 

Operating lease liabilities, net of current portion

 

 

186

 

 

 

1

 

Total liabilities

 

 

28,519

 

 

 

20,434

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Preferred Stock, $0.001 par value. 10,000,000 shares authorized, no shares issued and outstanding as of September 30, 2022 and December 31, 2021.

 

 

 

 

 

 

Class A common stock, $0.001 par value. 550,000,000 shares authorized, 44,794,236 and 34,463,417 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.

 

 

45

 

 

 

34

 

Class B common stock, $0.001 par value. 250,000,000 shares authorized, 24,010,216 and 30,113,152 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.

 

 

24

 

 

 

30

 

Additional paid-in capital

 

 

189,426

 

 

 

174,404

 

Accumulated deficit

 

 

(75,458

)

 

 

(45,986

)

Total Zevia PBC stockholder's equity

 

 

114,037

 

 

 

128,482

 

Noncontrolling interests

 

 

(29,186

)

 

 

(23,923

)

Total equity

 

 

84,851

 

 

 

104,559

 

Total liabilities and equity

 

$

113,370

 

 

$

124,993

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 

ZEVIA PBC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

(in thousands, except share and per share amounts)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

Net sales

 

$

44,239

 

 

$

38,956

 

 

$

127,815

 

 

$

104,002

 

 

Cost of goods sold

 

 

25,071

 

 

 

21,189

 

 

 

73,445

 

 

 

54,858

 

 

Gross profit

 

 

19,168

 

 

 

17,767

 

 

 

54,370

 

 

 

49,144

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

 

12,916

 

 

 

13,597

 

 

 

42,845

 

 

 

33,237

 

 

General and administrative

 

 

8,310

 

 

 

7,698

 

 

 

28,257

 

 

 

19,352

 

 

Equity-based compensation

 

 

6,837

 

 

 

45,731

 

 

 

23,781

 

 

 

45,804

 

 

Depreciation and amortization

 

 

326

 

 

 

239

 

 

 

1,005

 

 

 

713

 

 

Total operating expenses

 

 

28,389

 

 

 

67,265

 

 

 

95,888

 

 

 

99,106

 

 

Loss from operations

 

 

(9,221

)

 

 

(49,498

)

 

 

(41,518

)

 

 

(49,962

)

 

Other (expense) income, net

 

 

26

 

 

 

(213

)

 

 

64

 

 

 

(251

)

 

Loss before income taxes

 

 

(9,195

)

 

 

(49,711

)

 

 

(41,454

)

 

 

(50,213

)

 

Provision for income taxes

 

 

(1

)

 

 

(50

)

 

 

(23

)

 

 

(50

)

 

Net loss and comprehensive loss

 

 

(9,196

)

 

 

(49,761

)

 

 

(41,477

)

 

 

(50,263

)

 

Net loss attributable to Zevia LLC prior to the Reorganization Transactions

 

 

 

 

 

1,411

 

 

 

 

 

 

1,913

 

 

Loss attributable to noncontrolling interest

 

 

1,712

 

 

 

22,527

 

 

 

12,005

 

 

 

22,527

 

 

Net loss attributable to Zevia PBC

 

$

(7,484

)

 

$

(25,823

)

 

$

(29,472

)

 

$

(25,823

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.17

)

 

$

(0.75

)

 (1)

$

(0.73

)

 

$

(0.75

)

 (1)

Diluted

 

$

(0.17

)

 

$

(0.75

)

 (1)

$

(0.73

)

 

$

(0.75

)

 (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

44,072,985

 

 

 

34,440,982

 

 

 

40,393,978

 

 

 

34,440,982

 

 

Diluted

 

 

44,072,985

 

 

 

34,440,982

 

 

 

40,393,978

 

 

 

34,440,982

 

 

(1) Represents earnings per share of Class A common stock and weighted-average shares of Class A common stock outstanding for the period from July 22,2021 through September 30, 2021, the period following the Reorganization Transactions and IPO (see Note 15).

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


 

ZEVIA PBC

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED UNITS AND EQUITY (DEFICIT) (Unaudited)

 

 

Class A Common Stock

 

 

Class B Common Stock

 

 

Additional

 

 

 

 

 

 

 

 

 

 

(in thousands, except for share amounts)

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid in
Capital

 

 

Accumulated
Deficit

 

 

Noncontrolling interest

 

 

Total
Equity

 

Balance at January 1, 2022

 

 

34,463,417

 

 

$

34

 

 

 

30,113,152

 

 

$

30

 

 

$

174,404

 

 

$

(45,986

)

 

$

(23,923

)

 

$

104,559

 

Vesting and release of common stock under equity incentive plans, net

 

 

2,298,547

 

 

 

3

 

 

 

 

 

 

 

 

 

(2,133

)

 

 

 

 

 

 

 

 

(2,130

)

Exchange of Class B common stock for Class A common stock

 

 

1,970,802

 

 

 

2

 

 

 

(1,970,802

)

 

 

(2

)

 

 

(1,929

)

 

 

 

 

 

1,929

 

 

 

 

Exercise of stock options

 

 

56,659

 

 

 

 

 

 

 

 

 

 

 

 

16

 

 

 

 

 

 

 

 

 

16

 

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,901

 

 

 

 

 

 

 

 

 

8,901

 

Net loss post-Reorganization Transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,898

)

 

 

(6,587

)

 

 

(17,485

)

Balance at March 31, 2022

 

 

38,789,425

 

 

$

39

 

 

 

28,142,350

 

 

$

28

 

 

$

179,259

 

 

$

(56,884

)

 

$

(28,581

)

 

$

93,861

 

Vesting and release of common stock under equity incentive plans, net

 

 

917,664

 

 

 

1

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Exchange of Class B common stock for Class A common stock

 

 

3,580,288

 

 

 

3

 

 

 

(3,580,288

)

 

 

(3

)

 

 

(4,153

)

 

 

 

 

 

4,153

 

 

 

 

Exercise of stock options

 

 

119,381

 

 

 

 

 

 

 

 

 

 

 

 

91

 

 

 

 

 

 

 

 

 

91

 

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,043

 

 

 

 

 

 

 

 

 

8,043

 

Net loss post-Reorganization Transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,090

)

 

 

(3,706

)

 

 

(14,796

)

Balance at June 30, 2022

 

 

43,406,758

 

 

$

43

 

 

 

24,562,062

 

 

$

25

 

 

$

183,239

 

 

$

(67,974

)

 

$

(28,134

)

 

$

87,199

 

Vesting and release of common stock under equity incentive plans, net

 

 

822,113

 

 

 

1

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Exchange of Class B common stock for Class A common stock

 

 

551,846

 

 

 

1

 

 

 

(551,846

)

 

 

(1

)

 

 

(660

)

 

 

 

 

 

660

 

 

 

 

Exercise of stock options

 

 

13,519

 

 

 

 

 

 

 

 

 

 

 

 

11

 

 

 

 

 

 

 

 

 

11

 

Equity-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,837

 

 

 

 

 

 

 

 

 

6,837

 

Net loss post-Reorganization Transactions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7,484

)

 

 

(1,712

)

 

 

(9,196

)

Balance at September 30, 2022

 

 

44,794,236

 

 

$

45

 

 

 

24,010,216

 

 

$

24

 

 

$

189,426

 

 

$

(75,458

)

 

$

(29,186

)

 

$

84,851

 

 

6


 

 

 

Redeemable Convertible Preferred Units and Members' Deficit

 

 

Class A Common Stock

 

 

Class B Common Stock

 

 

Additional

 

 

 

 

 

 

 

 

 

 

(in thousands, except for share amounts)

 

Units

 

 

Amount

 

 

Members'
Deficit

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid in
Capital

 

 

Accumulated
Deficit

 

 

Noncontrolling interest

 

 

Total
Equity

 

Balance at January 1, 2021

 

 

26,322,803

 

 

$

232,457

 

 

$

(196,812

)

 

 

 

 

$

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

(196,812

)

Exercise of common units prior to the Reorganization Transactions

 

 

 

 

 

 

 

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

Equity-based compensation prior to the Reorganization Transactions

 

 

 

 

 

 

 

 

37