QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification Number) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
share |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
Page |
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PART I. |
2 |
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Item 1 |
CONDENSED FINANCIAL STATEMENTS (UNAUDITED) OF ZEVIA PBC |
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2 |
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3 |
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. |
CONDENSED FINANCIAL STATEMENTS (UNAUDITED) OF ZEVIA LLC |
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6 |
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7 |
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8 |
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9 |
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10 |
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Item 2. |
22 |
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Item 3. |
37 |
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Item 4. |
37 |
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PART II. |
39 |
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Item 1. |
39 |
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Item 1A. |
39 |
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Item 2. |
60 |
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Item 3. |
60 |
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Item 4. |
60 |
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Item 5. |
60 |
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Item 6. |
61 |
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62 |
• |
failure to further develop and maintain our brand; |
• |
change in consumer preferences, perception and spending habits in the beverage industry and on naturally sweetened products, and failure to develop or enrich our product offering or gain market acceptance of our new products; |
• |
product safety and quality concerns including relating to our naturally sweetening system, 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; |
• |
we have a history of losses, and we may be unable to achieve profitability; |
• |
changes in the retail landscape or the loss of key retail customers |
• |
the impact of the COVID-19 pandemic on our business, results of operations and financial condition; |
• |
failure to attract, train or retain qualified employees, manage our future growth effectively or maintain our company culture; |
• |
fluctuation of 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; |
• |
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; and |
• |
other risks, uncertainties and factors set forth in the prospectus dated July 21, 2021 as filed with the U.S. Securities and Exchange Commission (“SEC”) on July 23, 2021 including those set forth under “ Risk Factor s M a nagement’s Discussion and Analysis of Financial Condition and Res u lts of Operation s Bu s i n e s s |
As of June 30, 2021 |
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Assets |
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Other receivables |
$ | |||
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Total assets |
$ | |||
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Shareholder’s equity |
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Common stock, $ shares authorized, issued and outstanding |
$ | |||
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Total stockholder’s equity |
$ | |||
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• |
The Company recapitalized its common and preferred membership interests into a single class of common units and each common unit outstanding after giving effect thereto was reclassified as two Class B units; |
• |
The Company amended and restated its certificate of incorporation in its entirety to, among other things: (i) authorize |
• |
The limited liability company agreement of Zevia LLC was amended and restated (the “Amended and Restated Zevia LLC Agreement”) to, among other things, provide for Class A units and Class B units and appoint the Company as the sole managing member of Zevia LLC; |
• |
The Company assumed all outstanding equity awards of Zevia LLC on a one-to-two basis; |
• | The Amended and Restated Zevia LLC Agreement classified the interests acquired by the Company as Class A units and reclassified the interests held by the continuing members of Zevia LLC as Class B units and permits the continuing members of Zevia LLC to exchange Class B units for shares of Class A common stock on a or, at the election of t he Company, for cash. For each membership unit of Zevia LLC that is reclassified as a Class B unit, the Company issued one corresponding share of its Class B common stock to the continuing members; |
• | The Company issued and sold shares of its Class A common stock to the underwriters at an IPO price of $ per share, for gross proceeds of $ million before deducting underwriting discounts and commissions of $ million; |
• | The Company used approximately $ newly issued Class A units of Zevia LLC at a per-unit price equal to the per-share price paid by the underwriters for shares of Class A common stock in the IPO; |
• | The Company used approximately $ |
• | The Company used approximately $ |
• | The Company formed a new, first-tier merger subsidiary with respect to each blocker company of certain pre-IPO institutional investors (“Direct Zevia Stockholders”), and contemporaneously with the IPO, each respective merger subsidiary merged with and into the respective blocker company, with the blocker company surviving. Immediately thereafter, each blocker company merged with and into the Company, with the Company surviving. As a result of the blocker mergers, the shares of newly issued Class A common stock and received approximately $ million in cash consideration, and the blocker companies ceased to own any Zevia LLC units; |
• | The Company entered into the Tax Receivable Agreement for the benefit of the continuing members of Zevia LLC (not including the Company) and the Direct Zevia Stockholders pursuant to which the will pay C ompany% of the amount of the net cash tax savings, if any, that the Company realizes (or, under certain circumstances, is deemed to realize) as a result of (i) increases in tax basis (and utilization of certain other tax benefits) resulting from the acquisition of a continuing member’s Zevia LLC units in connection with the IPO and in future exchanges, (ii) certain favorable tax attributes the Company acquired from the blocker companies in the blocker mergers and (iii) payments the Company makes under the Tax Receivable Agreement (including tax benefits related to imputed interest); Company’s |
• | The Company entered into an Amended and Restated Registration Rights Agreement with the Class B stockholders to provide for certain rights and restrictions after the IPO; |
• | The underwriters have 30 days after the date of the prospectus, July 21, 2021, to exercise their option to purchase additional shares of Class A common stock, until August 20, 2021. |
(in thousands, except unit and per unit amounts) |
June 30, 2021 |
December 31, 2020 |
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ASSETS |
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Current assets: |
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Cash |
$ | $ | ||||||
Accounts receivable, net |
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Inventories, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Right-of-use |
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Intangible assets, net |
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Other non-current assets |
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Total assets |
$ | $ | ||||||
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LIABILITIES AND REDEEMABLE CONVERTIBLE PREFERRED UNITS AND MEMBERS’ DEFICIT |
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Current liabilities: |
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Accounts payable |
$ | $ | ||||||
Accrued expenses |
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Operating lease liabilities |
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Other current liabilities |
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Total current liabilities |
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Operating lease liabilities, net of current portion |
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Total liabilities |
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Commitments and contingencies (Note 9) |
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Redeemable convertible preferred units: |
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Members’ deficit: |
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Common units: units issued and outstanding as of June 30, 2021 and December 31, 2020, respectively. |
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Additional paid-in capital |
— | |||||||
Accumulated deficit |
( |
) | ( |
) | ||||
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Total members’ deficit |
( |
) | ( |
) | ||||
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Total liabilities, redeemable convertible preferred units and members’ deficit |
$ | $ | ||||||
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For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
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(in thousands, except for per unit and weighted average common units outstanding) |
2021 |
2020 |
2021 |
2020 |
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Net sales |
$ | $ | $ | $ | ||||||||||||
Cost of goods sold |
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Gross profit |
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Operating expenses: |
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Selling and marketing expenses |
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General and administrative expenses |
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Depreciation and amortization |
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Total operating expenses |
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Income (loss) from operations |
( |
) | ( |
) | ||||||||||||
Other expense, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Net income (loss) and comprehensive income (loss) |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
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Net income (loss) attributable to common unit holders |
( |
) | ( |
) | ||||||||||||
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Net income (loss) per unit attributable to common unit holders, basic |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
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Net income (loss) per unit attributable to common unit holders, diluted |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
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Weighted average common units outstanding, basic |
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Weighted average common units outstanding, diluted |
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Redeemable Convertible Preferred Units |
Common Unit |
Additional Paid-In |
Accumulated |
Members’ |
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(in thousands, except unit and per unit amounts) |
Units |
Amount |
Units |
Amount |
Capital |
Deficit |
Deficit |
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Balance at January 1, 2020 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||
Exercise of common units |
— | — | — | — | |||||||||||||||||||||||||||
Unit based compensation expense |
— | — | — | — | — | ||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
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Balance at March 31, 2020 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||
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Exercise of common units |
— | — | — | — | — | — | |||||||||||||||||||||||||
Unit based compensation expense |
— | — | — | — | — | ||||||||||||||||||||||||||
Net loss |
— |
— |
— | — | — | ||||||||||||||||||||||||||
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Balance at June 30, 2020 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||
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Redeemable Convertible Preferred Units |
Common Unit |
Additional Paid-In |
Accumulated |
Members’ |
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(in thousands, except unit and per unit amounts) |
Units |
Amount |
Units |
Amount |
Capital |
Deficit |
Deficit |
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Balance at January 1, 2021 |
$ | $ | — | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||
Exercise of common units |
— | — | — | — | |||||||||||||||||||||||||||
Unit based compensation expense |
— | — | — | — | — | ||||||||||||||||||||||||||
Net income |
— | — | — | — | — | ||||||||||||||||||||||||||
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Balance at March 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||
Unit based compensation expense |
— | — | — | — | — | ||||||||||||||||||||||||||
Distributions to unitholders for tax |
— | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
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Balance at June 30, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||||||||
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For the Six Months Ended June 30, |
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(in thousands) |
2021 |
2020 |
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Operating activities: |
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Net income (loss) |
$ | ( |
) | $ | ||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
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Non-cash lease expense |
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Depreciation and amortization |
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Loss on sale of equipment |
— | |||||||
Amortization of debt issuance cost |
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Unit-based compensation expense |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
( |
) | ( |
) | ||||
Inventories, net |
( |
) | ( |
) | ||||
Prepaid expenses and other current assets |
||||||||
Other non-current assets |
( |
) | ( |
) | ||||
Accounts payable |
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Accrued expenses |
( |
) | ||||||
Operating lease liabilities—current |
( |
) | ||||||
Other current liabilities |
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Operating lease liabilities, net of current portion |
( |
) | ( |
) | ||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
Investing activities: |
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Purchases of property and equipment |
( |
) | ( |
) | ||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Financing activities: |
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Proceeds from exercise of common units |
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Proceeds from revolving line of credit 1 |
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Repayment of revolving line of credit 1 |
( |
) | ( |
) | ||||
Proceeds from PPP Loan |
— | |||||||
Payment of deferred IPO costs |
( |
) | — | |||||
Distribution to unitholders for tax payments |
( |
) | — | |||||
Net cash (used in) provided by financing activities |
( |
) | ||||||
Net change from operating, investing, and financing activities |
( |
) | ||||||
Cash at beginning of period |
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Cash at end of period |
$ | $ | ||||||
Supplemental Disclosure of Cash Flow Information: |
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Cash paid for interest |
$ | $ | ||||||
Unpaid deferred offering costs |
$ | $ | — |
(1) |
Zevia LLC’s revolving line of credit provides for daily drawdowns and repayments of amounts outstanding. As of June 30, 2021, Statement of Cash Flows, Zevia LLC has presented these daily draw downs and repayments under its revolving line of credit with its lender on a gross basis in the statements of cash flows for the periods ended June 30, 2021, and 2020. |
For the three months ended June 30, |
For the six months ended June 30, |
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(in thousands) |
2021 |
2020 |
2021 |
2020 |
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Retail sales |
$ | $ | $ | $ | ||||||||||||
Online/ecommerce |
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Net sales |
$ | $ | $ | $ | ||||||||||||
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(in thousands) |
June 30, 2021 |
December 31, 2020 |
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Raw materials |
$ | $ | ||||||
Finished goods |
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Inventories, net |
$ | $ | ||||||
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(in thousands) |
Useful Life |
June 30, 2021 |
December 31, 2020 |
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Land |
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N/A |
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$ |
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$ |
— |
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Leasehold improvements |
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Computer equipment and software |
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Furniture and equipment |
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Quality control equipment |
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Building |
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— | |||||||
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Less accumulated depreciation |
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( |
) | ( |
) | ||||
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Property and equipment, net |
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$ | $ | ||||||
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June 30, 2021 |
December 31, 2020 |
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(in thousands) |
Useful lives | |||||||||
Customer relationships |
$ | $ | ||||||||
Accumulated amortization |
( |
) | ( |
) | ||||||
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Trademarks |
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$ | $ | |
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(in thousands) |
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Remainder of 2021 |
$ | |||
2022 |
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2023 |
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2024 |
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2025 |
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Expected amortization expense for intangible assets with definite lives |
$ | |||
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For the six months ended June 30, |
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(in thousands) |
2021 |
2020 |
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Income Statement |
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Operating lease cost (1) |
$ | $ | ||||||
Lease income related to operating leases (2) |
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Other Information |
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Operating cash flows from operating leases |
$ | $ | ||||||
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Weighted-average remaining lease term (months) |
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Weighted-average discount rate |
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(1) |
Operating lease cost is recorded within general and administrative expenses in the accompanying condensed statements of operations and comprehensive income (loss). |
(2) |
Lease income related to operating leases is recorded within revenues in the accompanying condensed statements of operations and comprehensive income (loss). |
(in thousands) |
June 30, 2021 |
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Remainder of 2021 |
$ | |||
2022 |
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2023 |
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Total lease payments |
||||
Less Imputed Interest |
( |
) | ||
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Present value of lease liabilities |
$ | |||
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(in thousands) |
June 30, 2021 |
December 31, 2020 |
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Accrued customer paid bottle deposits |
$ | $ | ||||||
Accrued incentive compensation |
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Accrued other |
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Total |
$ | $ | ||||||
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(in thousands) |
June 30, 2021 |
December 31, 2020 |
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Accrued vacation liability |
$ | $ | ||||||
Accrued purchases |
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Other current liabilities |
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Total |
$ | $ | ||||||
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For the three months ended June 30, |
For the six months ended June 30, |
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2021 |
2020 |
2021 |
2020 |
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Customer A |
% | % | % | % | ||||||||||||
Customer B |
% | % | % | % | ||||||||||||
Customer C |
% | % | % | % | ||||||||||||
Customer D |
% | % | % | % |
June 30, |
December 31, |
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Customer A |
% | % | ||||||
Customer B |
% | % | ||||||
Customer E |
% | % | ||||||
Customer F |
% | % | ||||||
Customer G |
% | % |
For the three ended June 30, |
For the six months ended June 30, |
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2021 |
2020 |
2021 |
2020 |
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Vendor A |
% | % | % | % | ||||||||||||
Vendor B |
% | % | % | % | ||||||||||||
Vendor C |
% | % | % | % | ||||||||||||
Vendor D |
% | % | % | % |
Three Months Ended June 30, |
Six Months Ended June 30, |
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2021 |
2020 |
2021 |
2020 |
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(in thousands, except unit and per unit amounts) |
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Net income (loss) per unit: |
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Net income (loss) |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Less: Impact of assumed conversions |
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Income allocated to participating units |
— |
( |
) | — |
( |
) | ||||||||||
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Net income (loss) available to Class A, Class B and Class C common unit members |
( |
) | ( |
) | ||||||||||||
Units used in computation: |
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Weighted-average common units outstanding, Basic |
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Common equivalent units from options to purchase common units, restricted units, and conversion of redeemable convertible preferred units |
— | — | ||||||||||||||
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Weighted average common units outstanding, Diluted |
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Basic net income (loss) per unit |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
Diluted net income (loss) per unit |
$ | ( |
) | $ | $ | ( |
) | $ |
Three months ended June 30, 2021 |
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(in thousands, except unit and per unit amounts) |
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Common Units |
Net loss |
Class A Common Unitholders |
Class B Common Unitholders |
Class C Common Unitholders |
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As reported – basic |
$ | ( |
) | |||||||||||||
Deduct: |
||||||||||||||||
Undistributed earnings allocated to participating securities |
— |
|||||||||||||||
Allocation of net loss to Common Class A, B & C Unit members |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Weighted average common units outstanding, basic |
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|
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Basic net loss per unit |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||||
|
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|
|
|
Three months ended June 30, 2020 |
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(in thousands, except unit and per unit amounts) |
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Common Units |
Net income |
Class A Common Unitholders |
Class B Common Unitholders |
Class C Common Unitholders |
||||||||||||
As reported – basic |
$ | |||||||||||||||
Deduct: |
||||||||||||||||
Undistributed earnings allocated to participating securities |
( |
) | ||||||||||||||
|
|
|||||||||||||||
Allocation of net income to Common Class A, B & C Unit members |
$ | $ | $ | $ | ||||||||||||
Weighted average common units outstanding, basic |
||||||||||||||||
|
|
|
|
|
|
|||||||||||
Basic net income per unit |
$ |
$ |
$ |
|||||||||||||
|
|
|
|
|
|
|||||||||||
Numerator adjustment for diluted Incentive unit options and Restricted Class A common units (“RCCA”)/ RCCC |
$ | $ | $ | |||||||||||||
Options (Dilutive) |
||||||||||||||||
Redeemable convertible preferred units converted to common |
— | — | ||||||||||||||
RCCAs/RCCCs |
— | |||||||||||||||
|
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|
|
|
|
|||||||||||
Total shares – Diluted |
||||||||||||||||
|
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|
|
|
|||||||||||
Diluted net income per unit |
$ |
$ |
$ |
|||||||||||||
|
|
|
|
|
|
Six months ended June 30, 2021 |
||||||||||||||||
(in thousands, except unit and per unit amounts) |
||||||||||||||||
Common Units |
Net loss |
Class A Common Unitholders |
Class B Common Unitholders |
Class C Common Unitholders |
||||||||||||
As reported – basic |
$ | ( |
) | |||||||||||||
Deduct: |
||||||||||||||||
Undistributed earnings allocated to participating securities |
— |
|||||||||||||||
|
|
|||||||||||||||
Allocation of net loss to Common Class A, B & C Unit members |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Weighted average common units outstanding, basic |
||||||||||||||||
|
|
|
|
|
|
|||||||||||
Basic net loss per unit |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||||
|
|
|
|
|
|
Six months ended June 30, 2020 |
||||||||||||||||
Common Units |
Net Income |
Class A Common Unitholders |
Class B Common Unitholders |
Class C Common Unitholders |
||||||||||||
As reported – basic |
$ | |||||||||||||||
Deduct: |
||||||||||||||||
Undistributed earnings allocated to participating sec u rities |
( |
) | ||||||||||||||
|
|
|||||||||||||||
Allocation of net income to Common Class A, B & C Unit members |
$ | $ | $ | $ | ||||||||||||
Weighted average common units outstanding, basic |
||||||||||||||||
|
|
|
|
|
|
|||||||||||
Basic net income per unit |
$ |
$ |
$ |
|||||||||||||
|
|
|
|
|
|
|||||||||||
Numerator adjustment for diluted Incentive unit options and Restricted Class A common units (“RCCA”)/ RCCC |
$ | $ | $ | |||||||||||||
Options (Dilutive) |
||||||||||||||||
Redeemable convertible preferred units converted to common |
— | — | ||||||||||||||
RCCAs and RCCCs (Dilutive) |
— | |||||||||||||||
|
|
|
|
|
|
|||||||||||
Total shares – Diluted |
||||||||||||||||
|
|
|
|
|
|
|||||||||||
Diluted net income per unit |
$ |
$ |
$ |
|||||||||||||
|
|
|
|
|
|
Three Months Ended June 30, |
||||
2021 |
||||
Employee unit options |
||||
Restricted units |
||||
Redeemable convertible preferred units |
Six Months Ended June 30, |
||||
2021 |
||||
Employee unit options |
||||
Restricted units |
||||
Redeemable convertible preferred units |
• |
Zevia LLC recapitalized its common and preferred membership interests into a single class of common units and each common unit outstanding after giving effect thereto was reclassified as two Class B units; |
• |
The Company amended and restated its certificate of incorporation in its entirety to, among other things: (i) authorize |
• |
The limited liability company agreement of Zevia LLC was amended and restated (the “Amended and Restated Zevia LLC Agreement”) to, among other things, provide for Class A units and Class B units and appoint the Company as the sole managing member of Zevia LLC; |
• |
The Company assumed all outstanding equity awards of Zevia LLC on a one-to-two basis; |
• |
The Amended and Restated Zevia LLC Agreement classified the interests acquired by the Company as Class A units and reclassified the interests held by the continuing members of Zevia LLC as Class B units and permits the continuing members of Zevia LLC to exchange Class B units for shares of Class A common stock on a or, at the election of the Company, for cash. For each membership unit of Zevia LLC that is reclassified as a Class B unit, the Company issued one corresponding share of its Class B common stock to the continuing members; |
• |
The Company issued and sold shares of its Class A common stock to the underwriters at an IPO price of $ per share, for gross proceeds of $ million before deducting underwriting discounts and commissions of $ million; |
• |
The Company used approximately $ million of the net proceeds of the IPO to acquire newly issued Class A units of Zevia LLC at a per-unit price equal to the per-share price paid by the underwriters for shares of Class A common stock in the IPO; |
• |
The Company used approximately $ million of the net proceeds of the IPO to purchase Class B units from certain of Zevia LLC’s unitholders, including certain members of senior management, at a per-unit price equal to the per-share price paid by the underwriters for shares of Class A common stock in the IPO. Such units were immediately converted into an equivalent number of Class A units; |
• |
The Company used approximately $ million of the net proceeds of the IPO to cancel and cash-out outstanding options held by certain of Zevia LLC’s option holders, including certain members of senior management, at a per-option price equal to the per-share price paid by the underwriters for shares of Class A common stock in the IPO. The Company received an equivalent number of Class A units from Zevia LLC in exchange for the cancellation of such options; |
• |
The Company formed a new, first-tier merger subsidiary with respect to each blocker company of certain pre-IPO institutional investors (“Direct Zevia Stockholders”), and contemporaneously with the IPO, each respective merger subsidiary merged with and into the respective blocker company, with the blocker company surviving. Immediately thereafter, each blocker company merged with and into the Company, with the Company surviving. As a result of the blocker mergers, the % owners of the blocker companies acquired an aggregate of shares of newly issued Class A common stock and received approximately $ million in cash consideration, and the blocker companies ceased to own any Zevia LLC units; |
• | The Company entered into the Tax Receivable Agreement for the benefit of the continuing members of the Company (not including the Company) and the Direct Zevia Stockholders pursuant to which the Company will pay % of the amount of the net cash tax savings, if any, that the Company realizes (or, under certain circumstances, is deemed to realize) as a result of (i) increases in tax basis (and utilization of certain other tax benefits) resulting from the Company’s acquisition of a continuing member’s Zevia LLC units in co n nection with the IPO and in future exchanges, (ii) certain favorable tax attributes the Company acquired from the blocker companies in the blocker mergers and (iii) payments the Company makes under the Tax Receivable Agreement (including tax benefits related to imputed interest); |
• | The Company entered into an Amended and Restated Registration Rights Agreement with the Class B stockholders to provide for certain rights and restrictions after the IPO; |
• | The underwriters have 30 days after the date of the prospectus, July 21, 2021, to exercise their option to purchase additional shares of Class A common stock, un til August 20, 2021. |
• | leveraging our platform and mission to grow awareness, increase velocity and expand our consumer base; |
• | continuing to grow our strong relationships across our retailer network and expand distribution amongst existing channels, both in-store and online; and |
• | ongoing innovation efforts, including enhancing existing products and introducing additional flavors within existing categories, as well as entering into new categories. |
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(in thousands) |
||||||||||||||||
Net sales |
$ | 34,352 | $ | 27,677 | $ | 65,046 | $ | 50,167 | ||||||||
Cost of goods sold |
18,112 | 13,842 | 34,618 | 27,300 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
16,240 | 13,835 | 30,428 | 22,867 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Selling and marketing expenses |
10,703 | 5,717 | 18,691 | 12,638 | ||||||||||||
General and administrative expenses(1) |
6,014 | 4,643 | 11,727 | 8,976 | ||||||||||||
Depreciation and amortization |
230 | 250 | 474 | 473 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
16,947 | 10,610 | 30,892 | 22,087 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income (loss) from operations |
(707 | ) | 3,225 | (464 | ) | 780 | ||||||||||
Other expense, net |
(42 | ) | (118 | ) | (38 | ) | (267 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) and comprehensive income (loss) |
$ | (749 | ) | $ | 3,107 | $ | (502 | ) | $ | 513 | ||||||
|
|
|
|
|
|
|
|
(1) | General and administrative expenses include equity-based compensation expense of less than $0.1 million for the three months ended June 30, 2021 and 2020, and $0.1 million for the six months ended June 30, 2021 and 2020. |
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Net sales |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Cost of goods sold |
53 | 50 | 53 | 54 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Gross profit |
47 | 50 | 47 | 46 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Selling and marketing expenses |
31 | 21 | 29 | 25 | ||||||||||||
General and administrative expenses |
18 | 17 | 18 | 18 | ||||||||||||
Depreciation and amortization |
1 | 1 | 1 | 1 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
49 | 38 | 47 | 44 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income (loss) from operations |
(2 | )% | 12 | % | (1 | )% | 2 | % | ||||||||
Other expense, net |
0 | 0 | 0 | (1 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) and comprehensive income (loss) |
(2 | )% | 11 | % | (1 | )% | 1 | % | ||||||||
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, |
Change |
|||||||||||||||
(in thousands) |
2021 |
2020 |
Amount |
Percentage |
||||||||||||
Net sales |
$ | 34,352 | $ | 27,677 | $ | 6,675 | 24 | % |
For the Three Months Ended June 30, |
Change |
|||||||||||||||
(in thousands) |
2021 |
2020 |
Amount |
Percentage |
||||||||||||
Cost of goods sold |
$ | 18,112 | $ | 13,842 | $ | 4,270 | 31 | % |
For the Three Months Ended June 30, |
Change |
|||||||||||||||
(in thousands) |
2021 |
2020 |
Amount |
Percentage |
||||||||||||
Gross profit |
$ | 16,240 | $ | 13,835 | $ | 2,405 | 17 | % | ||||||||
Gross margin |
47 | % | 50 | % |
For the Three Months Ended June 30, |
Change |
|||||||||||||||
(in thousands) |
2021 |
2020 |
Amount |
Percentage |
||||||||||||
Selling and marketing expenses |
$ | 10,703 | $ | 5,717 | $ | 4,986 | 87 | % |
For the Three Months Ended June 30, |
Change |
|||||||||||||||
(in thousands) |
2021 |
2020 |
Amount |
Percentage |
||||||||||||
General and administrative expenses |
$ | 6,014 | $ | 4,643 | $ | 1,371 | 30 | % |
For the Six Months Ended June 30, |
Change |
|||||||||||||||
(in thousands) |
2021 |
2020 |
Amount |
Percentage |
||||||||||||
Net sales |
$ | 65,046 | $ | 50,167 | $ | 14,879 | 30 | % |
For the Six Months Ended June 30, |
Change |
|||||||||||||||
(in thousands) |
2021 |
2020 |
Amount |
Percentage |
||||||||||||
Cost of goods sold |
$ | 34,618 | $ | 27,300 | $ | 7,318 | 27 | % |
For the Six Months Ended June 30, |
Change |
|||||||||||||||
(in thousands) |
2021 |
2020 |
Amount |
Percentage |
||||||||||||
Gross profit |
$ | 30,428 | $ | 22,867 | $ | 7,561 | 33 | % | ||||||||
Gross margin |
47 | % | 46 | % |
For the Six Months Ended June 30, |
Change |
|||||||||||||||
(in thousands) |
2021 |
2020 |
Amount |
Percentage |
||||||||||||
Selling and marketing expenses |
$ | 18,691 | $ | 12,638 | $ | 6,053 | 48 | % |
For the Six Months Ended June 30, |
Change |
|||||||||||||||
(in thousands) |
2021 |
2020 |
Amount |
Percentage |
||||||||||||
General and administrative expenses |
$ | 11,727 | $ | 8,976 | $ | 2,751 | 31 | % |
For the Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Cash (used in) provided by: |
||||||||
Operating activities |
$ | (37 | ) | $ | (2,703 | ) | ||
Investing activities |
$ | (2,031 | ) | $ | (489 | ) | ||
Financing activities |
$ | (6,488 | ) | $ | 4,158 |
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(in thousands) |
||||||||||||||||
Net income (loss) and comprehensive income (loss) |
$ | (749 | ) | $ | 3,107 | $ | (502 | ) | $ | 513 | ||||||
Income tax expense (benefit) |
— | — | — | — | ||||||||||||
Depreciation and amortization |
230 | 250 | 474 | 473 | ||||||||||||
Other expense, net |
42 | 118 | 38 | 267 | ||||||||||||
Equity-based compensation expense |
36 | 29 | 73 | 58 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
$ | (441 | ) | $ | 3,504 | $ | 83 | $ | 1,311 | |||||||
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(in thousands) |
||||||||||||||||
Net income (loss) and comprehensive income (loss) |
$ | (749 | ) | $ | 3,107 | $ | (502 | ) | $ | 513 | ||||||
Equity-based compensation expense |
36 | 29 | 73 | 58 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted net income (loss) |
$ | (713 | ) | $ | 3,136 | $ | (429 | ) | $ | 571 | ||||||
|
|
|
|
|
|
|
|
• | failure to further develop and maintain our brand; |
• | change in consumer preferences, perception and spending habits in the beverage industry and on naturally sweetened products, and failure to develop or enrich our product offering or gain market acceptance of our new products; |
• | 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, increasing our operating costs and reducing demand for our product offerings; |
• | inability to compete in our intensely competitive categories; |
• | we have a history of losses, and we may be unable to achieve profitability; |
• | changes in the retail landscape or the loss of key retail customers; |
• | the impact of the COVID-19 pandemic on our business, results of operations and financial condition; |
• | failure to attract, train or retain qualified employees, manage our future growth effectively or maintain our company culture; |
• | fluctuation of 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; |
• | 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; and dependence on distributions from Zevia LLC to pay any taxes and other expenses. |
• | announcements of new products, commercial relationships, acquisitions or other events by us or our competitors; |
• | price and volume fluctuations in the overall stock market from time to time; |
• | significant volatility in the market price and trading volume of food and beverage companies in general and of companies in the beverage industry in particular; |
• | addition or loss of significant customers or other developments with respect to significant customers; |
• | fluctuations in the trading volume of our shares or the size of our public float; |
• | actual or anticipated changes or fluctuations in our operating results; |
• | whether our operating results meet the expectations of securities analysts or investors; |
• | actual or anticipated changes in the expectations of investors or securities analysts; |
• | litigation involving us, our industry, or both; |
• | regulatory developments in the United States, foreign countries, or both applicable to our products; |
• | general economic conditions and trends; |
• | major catastrophic events; |
• | lockup releases or sales of large blocks of our Class A common stock; |
• | departures of key employees; or |
• | an adverse impact on the company from any of the other risks cited in this report. |
• | we may choose to revise our policies in ways that we believe will be beneficial to our stakeholders, including our employees, customers and local communities, even though the changes may be costly; |
• | we may take actions, such as building state-of-the-art |
• | we may be influenced to pursue programs and services to demonstrate our commitment to the communities to which we serve and bringing ethically produced products to customers even though there is no immediate return to our stockholders; or |
• | in responding to a possible proposal to acquire the company, our board of directors may be influenced by the interests of our stakeholders, including our employees, customers and local communities, whose interests may be different from the interests of our stockholders. |
• | our board of directors are classified into three classes of directors with staggered three-year terms. Commencing with the annual meeting of stockholders to be held in 2027, directors of each class the term of which shall then expire shall be elected to hold office for a one-year term; |
• | directors are only able to be removed from office with the affirmative vote of at least 66 2/3% of the voting power of all shares of our common stock then outstanding and, until the annual meeting of stockholders to be held in 2027, only for cause; |
• | authorize the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights plan; |
• | prohibit stockholder action by written consent, which requires stockholder actions to be taken at a meeting of our stockholders; |
• | establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at annual stockholder meetings; |
• | provide the board of directors with sole authorization to establish the number of directors and fill director vacancies; |
• | certain provisions of our amended and restated certificate may only be amended only with the approval of at least 66 2/3% of the voting power of all shares of our common stock then outstanding; |
• | the board of directors is expressly authorized to make, alter, or repeal our amended and restated bylaws and that our stockholders may amend our bylaws only with the approval of at least 66 2/3% of the voting power of all shares of our common stock then outstanding; and |
• | special meetings of the stockholders may only be called by the stockholders upon the written request of one or more stockholders of record that own, or who are acting on behalf of persons who own, shares representing 25% or more of the voting power of the then outstanding shares of capital stock entitled to vote on the matter or matters to be brought before the proposed special meeting. |
* | Filed herewith. |
# | Management contract or compensatory plan or arrangement. |
ZEVIA PBC | ||||||
Dated: August 13, 2021 |
By: |
/s/ Padraic Spence | ||||
Padraic Spence | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) |
Dated: August 13, 2021 |
By: |
/s/ William D. Beech | ||||
William D. Beech | ||||||
Chief Financial Officer | ||||||
(Principal Financial Officer) |
Date: August 13, 2021 | By: | /s/ Hany Mikhail | ||||
Hany Mikhail | ||||||
Chief Accounting Officer | ||||||
(Principal Accounting Officer) |