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

Indicate by check mark whether the ~~registrant~~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~~Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ~~Yes~~ YES☒ No 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~~YES ☒ No NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, ~~anon-accelerated~~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.

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~~ YES ☐ No NO ☒

~~The number~~As of ~~shares outstanding of registrant’s common stock, as of the last practicable date~~November 1, 2022, there were ~~34,456,463~~44,865,807 shares and ~~30,113,152~~24,010,216 sh~~ares~~shares outstanding of the ~~registrant’s~~Registrant’s Class A and Class B common stock, respectively, $0.001 par value per ~~share, as of November 8, 2021.~~share.

This Quarterly Report on Form 10-Q for the period ended September 30, 2022 ("Quarterly Report") contains “forward-looking statements” ~~(within~~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”)~~"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, ~~on Form 10-Q~~ 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 ~~on Form 10-Q~~ 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, ~~on Form 10-Q~~ including, but not limited to, the following:

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 on Form 10-Q.~~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, ~~on Form 10-Q~~ 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 ~~on Form 10-Q~~ 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 ~~on Form 10-Q~~ to reflect events or circumstances after the date of this Quarterly Report ~~on Form 10-Q~~ 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.

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE ~~INCOME (LOSS)~~LOSS (Unaudited)

(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~~Reorganization Transactions and ~~initial public offering~~IPO (see Note ~~14)~~

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

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

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

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

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

As of September 30, ~~2021,~~2022, total unrecognized compensation expense related to unvested stock options was $~~1.5~~3.7 million, which is expected to be recognized over a weighted-average period of ~~2.74~~3.4 years.

In July 2021, the Company’s Board of Directors approved an amendment to 2,422,644 restricted phantom units (the ~~“Restricted~~"Restricted Phantom ~~Units”~~Units") previously granted by Zevia LLC (the “Phantom Unit ~~Amendment”~~Amendment"). The Phantom Unit Amendment changed the settlement feature of all outstanding Restricted Phantom Units so that following vesting, each award Restricted Phantom Units would be settled in shares of Class A common stock having a fair market value equal to (i) the number of Restricted Phantom Units subject to such award, multiplied by (ii) the difference between the fair market value of a share of Class A common stock and the grant date price per Restricted Phantom ~~Unit~~.Unit. All other terms related to the Restricted Phantom Units remained unchanged. As a result of the ~~change in~~Phantom Unit Amendment, the ~~settlement provision,~~estimated fair value of the ~~Company will recognize a charge of approximately~~modified awards was $33.9 million and was recognized as an expense over the vesting period through January 2022 subsequent to the performance condition being ~~met, resulting from the fair value of the awards as remeasured at the amendment date.~~met.

In March 2021, the Company's Board of Directors ~~also~~ approved an amendment to the RSUs granted in August 2020 (“("the RSU ~~Amendment”~~Amendment"). The RSU Amendment ~~changes~~changed the vesting of such RSUs to occur as follows: (i) in the event of a change of control, the RSUs shall vest effective as of such change of control or (ii) in the event of an IPO, the RSUs ~~units granted in August 2020~~ shall vest in equal monthly installments over a 36-month period following the termination of any lockup period and shall be subject to the participant’s continued employment through such vesting date. Additionally, settlement shall occur within 30 days following the vesting of the RSUs and the participant shall be entitled to receive one share of Class A common stock for each vested RSU. All other terms remained unchanged. As a result of the ~~modification of the~~ RSU Amendment, the ~~Company will recognize an incremental charge~~estimated fair value of ~~approximately~~the modified awards was $48.9 million and are being recognized as expense over the vesting period subsequent to the performance condition being met.

~~14.~~15. LOSS PER SHARE

Basic earnings per share of Class A common stock is computed by dividing net ~~income~~loss attributable to ~~Zevia PBC~~the Company for the period ~~from July 22, 2021 through September 30, 2021, the period following the Reorganization Transactions and IPO,~~ by the weighted-average number of shares of Class A common stock outstanding during the same period. Diluted earnings per share of Class A common stock is computed by dividing net ~~income~~loss attributable to ~~Zevia PBC~~the Company by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities. There were no shares of Class A or Class B common stock outstanding prior to July 22, 2021, and therefore, no earnings per share information has been presented for any period prior to that date.

Shares of the Company’s Class B common stock do not share in the earnings or losses attributable to Zevia PBC and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been presented. Shares of the Company’s Class B common stock are, however, considered potentially dilutive shares of Class A common stock because shares of Class B common stock, together with the related Zevia LLC Class B Common Units, are exchangeable into shares of Class A common stock on a one-for-one basis.

Prior to the IPO, the Zevia LLC membership structure included various classes of ~~Preferred Units and Common~~preferred units. The Company analyzed the calculation of earnings per unit for periods prior to the IPO and determined that it resulted in values that would not be meaningful to the users of these ~~unaudited~~condensed consolidated financial statements. Therefore, earnings per share information has not been presented for any period prior to the ~~three and nine months ended September 30, 2020.~~IPO.

The following table sets forth reconciliations of the numerators and denominators used to compute basic and diluted earnings per share of Class A common stock:


	Three Months Ended September 30,							Nine Months Ended September 30,
	2022			2021				2022			2021
(in thousands, except for share and per share amounts)
Net loss per share:
Numerator:
Net loss and comprehensive loss	$	(9,196	)	$	(49,761	)		$	(41,477	)	$	(50,263	)
Less: net loss attributable to Zevia LLC prior to the Reorganization Transactions		—		$	1,411				—		$	1,913
Less: net loss attributable to non-controlling interests		1,712			22,527				12,005			22,527
Net loss to Zevia PBC	$	(7,484	)	$	(25,823	)		$	(29,472	)	$	(25,823	)

Denominator:
Weighted-average shares of Class A common stock outstanding – basic		44,072,985			34,440,982				40,393,978			34,440,982
Weighted-average shares of Class A common stock outstanding – diluted		44,072,985			34,440,982				40,393,978			34,440,982
Loss per share of Class A common stock – basic	$	(0.17	)	$	(0.75	)	(1)	$	(0.73	)	$	(0.75	)	(1)
Loss per share of Class A common stock – diluted	$	(0.17	)	$	(0.75	)	(1)	$	(0.73	)	$	(0.75	)	(1)

(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.	~~July 22 Through September 30, 2021~~
~~(in thousands, except for share and per share amounts)~~
~~Net loss per share:~~
~~Numerator:~~
~~Net loss~~	$	(~~48,350~~	)
~~Less: net loss attributable to non-controlling interests~~		~~22,527~~
~~Net loss to Zevia PBC~~	$	(~~25,823~~	)

~~Denominator:~~
~~Weighted-average shares of Class A common stock outstanding - basic~~		~~34,440,982~~
~~Weighted-average shares of Class A common stock outstanding - diluted~~		~~34,440,982~~
~~Loss per share of Class A common stock - basic~~	$	(~~0.75~~	)
~~Loss per share of Class A common stock - diluted~~	$	(~~0.75~~	)

~~Stock~~Zevia LLC Class B Common Units, stock options and restricted stock units were evaluated under the treasury stock method for potential dilutive effects and were determined to be anti-dilutive.The following weighted average outstanding shares were excluded from the computation of diluted net loss per share available to common stockholders:


	~~Three Months Ended September 30,~~
	~~2021~~
~~Zevia LLC Class B Common Units exchangeable to shares of Class A common Stock~~		~~30,113,152~~
~~Stock options~~		~~1,433,264~~
~~Restricted stock units~~		~~7,993,444~~


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Zevia LLC Class B Common Units exchangeable to shares of Class A common Stock		24,394,109		30,113,152		26,936,871		30,113,152
Stock Options		2,637,539		1,433,264		2,044,472		1,433,264
Restricted stock units		2,911,356		7,993,444		3,742,307		7,993,444
Restricted stock units vested but unsettled		1,865,507		—		1,761,485		—

~~15.~~16. INCOME TAXES AND TAX RECEIVABLE AGREEMENT

Income Taxes

The Company is the managing member of Zevia LLC and as a result, consolidates the financial results of Zevia LLC in the unaudited condensed consolidated financial statements of Zevia PBC. Zevia LLC is a pass-through entity for U.S. federal and most applicable state and local income tax purposes following the Reorganization Transactions effected in connection with ~~our initial public offering.~~the IPO. As an entity classified as a partnership for tax purposes, Zevia LLC is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Zevia LLC is passed through to its members, including ~~us.~~the Company. 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 ~~53.3~~% economic interest in Zevia ~~LLC.~~LLC, which was 65.1% as of September 30, 2022.

The provision for income taxes differs from the amount of income tax computed by applying the applicable U.S. statutory federal income tax rate of 21% to income before provision of income taxes due to Zevia LLC’s pass-through structure for U.S. income tax purposes, pass-through permanent differences, state franchise taxes, tax effects of stock-based compensation, and the valuation allowance against the deferred tax assets. Except for state franchise taxes, Zevia PBC did not recognize an income tax ~~expense/~~expense (benefit) on its share of pre-tax book ~~income (loss),~~loss, exclusive of the noncontrolling interest of ~~46.7~~34.9%, due to the full valuation allowance against its deferred tax assets.

As of September 30, 2021, management believes based on applicable accounting standards and the weight of all available evidence, it is not more likely than not ("MLTN") that the Company will generate sufficient taxable income to realize our DTAs including the difference in our tax basis in excess of the financial reporting value for our investment in Zevia LLC. Consequently, we have established a full valuation allowance against our deferred tax assets as of September 30, 2021 and determined that it was MLTN that its deferred tax assets subject to the Tax Receivable Agreement ("TRA") would not be realized as of September 30, 2021. The Company has not recognized a liability related to the tax savings it may realize from utilization of such DTAs. As of September 30, 2021, the total unrecorded TRA liability is approximately $~~46.2~~ million. If utilization of the DTAs subject to the TRA becomes more likely than not in the future, the Company will record a liability related to the TRA, to the extent probable at that time, which will be recognized as an expense within its condensed consolidated statements of operations.

Tax Receivable Agreement

The Company expects to obtain an increase in its share of tax basis in the net assets of Zevia LLC when Class B units are exchanged by the holders of Class B units for shares of Class A common stock of the Company and upon other qualifying transactions. Each change in outstanding shares of Class A common stock of the Company results in a corresponding increase or decrease in the Company's ownership of Class A units of Zevia LLC. The Company intends to treat any exchanges of Class B units as direct purchases of LLC interests for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that Zevia PBC would otherwise pay in the future to various taxing authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

In connection with the IPO, the Company entered into athe Tax Receivable Agreement ~~(“TRA”~~("TRA") with continuing members of Zevia LLC and the ~~holders~~shareholders of ~~Class B units~~blocker companies of certain pre-IPO institutional investors (the "Direct Zevia ~~LLC (the “Members”~~Stockholders"). In the event that such parties exchange any or all of their Class B units for Class A common stock, the TRA requires the Company to make payments to such holders for 85% of the tax benefits realized, or in some cases deemed to be realized, by the Company by such exchange as a result of (i) certain favorable tax attributes acquired from the blocker companies in the course of mergers related to the IPO (including net operating losses and the blocker companies’ allocable share of existing tax basis), (ii) increases in ~~the Company’s~~ tax basis resulting from Zevia PBC's acquisition of ~~its ownership interest in the net assets of~~continuing members' Zevia LLC ~~resulting from any redemptions~~

orunits in connection with the IPO and in future exchanges ~~of noncontrolling interest, (ii)~~and, (iii) tax basis increases attributable to payments made under the TRA ~~and (iii) deductions attributable~~(including tax benefits related to imputed ~~interest pursuant to the TRA (the “TRA Payments”)~~interest). The annual tax benefits are computed by calculating the income taxes due, including such tax benefits, and the income taxes due without such benefits. The Company expects to benefit from the remaining 15% of any tax benefits that it may actually realize. The TRA ~~Payments~~payments are not conditioned upon any continued ownership interest in Zevia LLC or the Company. To the extent that the Company is unable to timely make payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid.

The timing and amount of aggregate payments due under the TRA may vary based on a number of factors, including the amount and timing of the taxable income the Company generates each year and the tax rate then applicable. The Company calculates the liability under the TRA using a complex TRA model, which includes an assumption related to the fair market value of assets. ~~The payment obligations under the TRA are obligations of Zevia PBC and not of Zevia LLC.~~ Payments are generally due under the TRA within a specified period of time following the filing of ~~Zevia PBC’s~~the Company’s tax return for the taxable year with respect to which the payment obligation arises, although interest on such payments will begin to accrue at a rate of the Secured Overnight Financing Rate ~~(“SOFR”)~~ plus 300 basis points from the due date (without extensions) of such tax return.

The TRA provides that if (i) certain mergers, asset sales, other forms of business combinations, or other changes of control were to ~~occur,~~occur; (ii) there is a material uncured breach of any obligations under the TRA; or (iii) the Company elects an early termination of the TRA, then the TRA will terminate and the Company's obligations, or the Company's successor’s obligations, under the TRA will accelerate and become due and payable, based on certain assumptions, including an assumption that the Company would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the TRA and that any Class B units that have not been exchanged are deemed exchanged for the fair market value of the Company's Class A common stock at the time of termination.

~~16. SUBSEQUENT EVENTS~~

~~On November 10, 2021,~~As of September 30, 2022, management believes based on applicable accounting standards and the ~~Company’s Board~~weight of ~~Directors approved (i) an amendment~~all available evidence, it is not more likely than not that the Company will generate sufficient taxable income to realize the Company's deferred tax assets ("DTAs") including the difference in the Company's tax basis in excess of the financial reporting value for the Company's investment in Zevia LLC. Consequently, management has established a full valuation allowance against the Company's DTAs as of September 30, 2022 and determined that it was more likely than not that its DTAs subject to the ~~outstanding stock option awards held by Robert Gay and Harry “Hank” Margolis and (ii) an amendment~~TRA would not be realized as of September 30, 2022. The Company has not recognized a liability related to the RSUs granted to Messrs. Gay and Margolis in August 2020 (items (i) and (ii) collectively, the “Retirement Amendments”). The Retirement Amendments provide that upon the holder’s “retirement” on or after January 17,tax savings it may realize from utilization of such DTAs. As of September 30, 2022, the ~~unvested stock options and RSUs will become fully vested. As used~~total unrecorded TRA liability is approximately $55.3 million. If utilization of the DTAs subject to the TRA becomes more likely than not in the ~~Retirement Amendments, “retirement” generally includes~~future, the Company will record a ~~resignation after the holder has reached 50 years of age with at least 10 years of service~~liability related to the ~~Company, so long~~TRA, to the extent probable at that time, which will be recognized as ~~the holder provides one year advance notice~~an expense within its condensed consolidated statements of ~~such retirement unless waived by the Company.~~operations and comprehensive loss.

Item 2. 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 condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in Part II, Item 1A. “Risk Factors” and ~~“Note Regarding Forward-Looking Statements” included elsewhere in~~other sections of this report. The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and the related notes and other financial information included elsewhere in this quarterly reportQuarterly Report and our ~~audited~~consolidated financial statements and notes thereto included in our ~~prospectus dated July 21, 2021 (the “Prospectus”) as filed with the SEC on July 23, 2021.~~Annual Report. The financial data discussed below ~~reflect~~reflects the historical results of operations and financial position of the Company. References in this ~~Form 10-Q~~Quarterly Report to “Zevia,” the “Company,” “we,” “us,” and “our” refer (1) prior to the consummation of the Reorganization Transactions, to Zevia LLC, and (2) after the consummation of the Reorganization Transactions, to Zevia PBC and its consolidated subsidiaries unless the context indicates otherwise. Our historical results are not necessarily indicative of the results that may be expected for any period in the future.

Overview

We are a high-growth beverage company that ~~is disrupting the liquid refreshment beverage industry through delicious~~develops, markets, sells, and ~~refreshing, zero calorie,~~distributes great tasting, zero sugar ~~naturally sweetened~~ beverages ~~that are all Non-GMO Project Verified.~~made with simple, plant-based ingredients. We are a ~~pioneering beverage brand,~~Delaware public benefit corporation designated as a “Certified B Corporation,” and are focused on addressing the global health challenges resulting from excess sugar consumption by offering a ~~platform~~broad portfolio of ~~products that~~zero sugar, zero calorie, naturally sweetened beverages. All Zevia® beverages are Non-GMO Project verified, gluten-free, Kosher, vegan and zero sodium and include a ~~broad~~ variety of flavors across Soda, Energy Drinks, Organic Tea, Mixers, Kidz drinks and Sparkling Water. ~~All of our beverages are made with only a handful of plant-based ingredients that most consumers can easily pronounce.~~ Our products are distributed across the U.S. and Canada through a diverse network of major retailers in the food, drug, warehouse club, mass, natural and ~~ecommerce~~e-commerce channels. We believe that consumers increasingly select beverage products based on taste, ingredients and fit with today’s consumer preferences, which has benefited the ~~Zevia~~Zevia® brand and resulted in over one billion cans of Zevia sold to date.

Consumers can purchase our products in both ~~brick~~brick-and-mortar and ~~mortar and ecommerce~~e-commerce channels. Zevia was initially distributed in the U.S. natural products retail channel, where we still maintain the leading position. Fueled by a loyal and growing consumer base, we expanded our presence online and into conventional food, drug, warehouse club and mass retailers. In ~~2020,~~the third quarter of 2022, Zevia ~~was~~continued as the highest selling carbonated soft drink brand on Amazon according to ~~Stackline,~~1010data, which we believe is representative of an online product discovery and education-oriented purchasing process that is gaining traction among shoppers.

IPO and Reorganization Transactions

On July 26, 2021, we completed our IPO of Class A common stock, in which we sold 10,700,000 shares to the ~~Underwriters.~~underwriters. Shares of Class A common stock began trading on the New York Stock Exchange under the ticker symbol “ZVIA” on July 22, 2021. These shares were sold at an IPO price of $14.00 per share for net proceeds of approximately $139.7 million, after deducting underwriting discounts and commissions of $10.1 million. ~~Upon~~

Immediately following the closing of the IPO ~~we used (i) $25.5 million~~on July 26, 2021, Zevia LLC became the predecessor of Zevia PBC for financial reporting purposes. Zevia PBC is a holding company, and its sole material asset is its controlling equity interest in Zevia LLC. As the sole managing member of Zevia LLC, Zevia PBC operates and controls all of the business and affairs of Zevia LLC. This reorganization is accounted for as a reorganization of entities under common control. As a result, the condensed consolidated financial statements of Zevia PBC will recognize the assets and liabilities received in the reorganization at their historical carrying amounts, as reflected in the historical financial statements of Zevia LLC. Zevia PBC has consolidated Zevia LLC in its financial statements and records a noncontrolling interest related to ~~purchase~~the Class B units ~~and corresponding shares of~~held by the Class B ~~common stock~~stockholders on its condensed consolidated balance sheet and statement of operations. As of September 30, 2022, Zevia PBC holds an economic interest of 65.1% in Zevia LLC and the remaining 34.9% represents the non-controlling interest.

Factors Affecting the Comparability of Our Results of Operations

As a result of a number of factors, our historical results of operations are not comparable from ~~certain Zevia LLC’s unitholders, including certain members~~period to period and may not be comparable to our financial results of operations in future periods. Set forth below is a brief discussion of the key factors impacting the comparability of our ~~senior management,~~results of operations.

Impact of the Reorganization Transactions

The Company is classified as a corporation for U.S. federal and state income tax purposes. Our accounting predecessor, Zevia LLC, was and is a flow-through entity for U.S. federal and most applicable state and local income tax purposes. As an entity classified as a partnership for tax purposes, Zevia LLC is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Zevia LLC is passed through to its members, including the Company. Zevia PBC is taxed as a C corporation and pays corporate federal, state and local taxes with respect to income allocated from Zevia LLC based on the Company's economic ownership interest in Zevia LLC, which was 65.1% as of September 30, 2022. Accordingly, the historical results of operations and other financial information set forth in this Quarterly Report do not include a provision for U.S. federal income taxes. Following the completion of the Reorganization Transactions, the Company is taxed as a corporation and pays corporate federal, state and local taxes with respect to income allocated from Zevia LLC based on the Company's 65.1% economic interest in Zevia LLC.

Zevia LLC is the predecessor of the Company for financial reporting purposes. As a result, the condensed consolidated financial statements of the Company recognize the assets and liabilities received in the reorganization at ~~a per-unit price equal to~~their historical carrying amounts, as reflected in the ~~per-share price paid by~~historical condensed consolidated financial statements of Zevia LLC, the underwriters for shares of Class A common stock, (ii) $0.4 million to cancel and cash-out outstanding options held by certain option holders, including certain members of our senior management, at a per-option price equal to the per-share price paid by the underwriters for shares of Class A common stock, and (iii) $23.7 million to pay the cash consideration to certain pre-IPO institutional investorsaccounting predecessor.

In addition, in connection with the ~~merger~~Reorganization Transactions and the IPO, we entered into the tax receivable agreement described in Note 16, - Income Taxes and Tax Receivable Agreement in the Notes to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

Initial Public Offering

In July 2021, the Company completed its IPO, which significantly impacted our cash, debt, and equity balances. Concurrent with the IPO, the Company also terminated its previous credit facility, which reduced our outstanding debt to zero, and our interest expense was significantly reduced in the second half of 2021 and in 2022 relative to historical results.

Equity-Based Compensation

In March 2021, Zevia LLC modified certain outstanding RSU awards originally granted in August 2020 to provide for vesting as follows: (i) in the event of a change of control, the RSUs shall vest effective as of such change of control, or (ii) in the event of an IPO, the RSUs shall vest in equal monthly installments over a 36-month period following the termination of any lockup period and shall be subject to the participant’s continued employment through such vesting date. In July 2021, Zevia modified all outstanding restricted phantom unit awards to permit settlement into shares, eliminating the existing cash-settlement provision. These modifications resulted in the revaluation of the ~~blocker corporations into the Zevia PBC~~awards in accordance with ~~the Zevia PBC surviving. Accordingly, we have not retained any of those portions~~US GAAP. No equity-based compensation had been recognized for all of the ~~proceeds. The remaining net proceeds~~RSUs and restricted phantom awards as the qualifying vesting event (i.e., the IPO) was not probable. From completion of the IPO through September 30, 2022, the Company recognized $100.0 million of ~~$90.1 million were used~~compensation expense attributable to ~~acquire 6,900,000 newly~~these RSUs and restricted phantom unit awards, as well as other outstanding RSUs issued ~~Class A units of Zevia LLC at a per-unit price equal~~prior to ~~the per-share price paid by the underwriters for shares of Class A common stock in~~ the IPO. The ~~Company retained $82.0 million~~remaining unamortized fair value of the ~~total IPO proceeds after~~RSU awards will be recognized as equity-based compensation over the ~~payment~~remaining service period of ~~$8.1 million~~the awards, which vest over a 36-month period following the termination of the lockup period in January 2022. Refer to Note 11 - Equity-based Compensation in the Notes to our Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report for ~~the IPO offering costs. The retained proceeds will ultimately be used by the Company for working capital and other general corporate purposes.~~unamortized equity-based compensation costs related to each type of equity-based incentive award.

Other Factors Affecting Our Performance

COVID-19 UPDATE

The ongoing COVID-19 pandemic, continued to have significant adverse impacts on the national and global economy during the third quarter of 2021. From the beginning of the COVID-19 pandemic, we have remained committed to making the health and wellness of our employees and customers a priority. Based upon the guidance of the U.S. Centers for Disease Control (“CDC”) and local health authorities, we maintain appropriate measures to help reduce the spread of infection to our employees, suppliers and customers, including the ~~institution~~emergence of ~~social distancing protocols~~new variants and ~~increased frequency of cleaning and sanitizing in our third-party facilities. Our corporate headquarters remains closed and most of our employees continue to work from home.~~

Although we encountered closures and delays at some of our third-party facilities due to confirmed cases in the workforce or due to government mandate during the course of the pandemic, these closures and delays did not have a material impact on our operations or our ability to serve customer needs. While at this time we are working to manage and mitigate potential disruptions to our supply chain, and we have not experienced decreases in demand or material financialits resulting impacts as compared to prior periods, the fluid nature of the COVID-19 pandemic and uncertainties regarding the related economic impact are likely to result in sustained market turmoil with continued supply chain risk. The impact of COVID-19 on any of our suppliers, third-party manufacturers, distributors or transportation or logistics providers may negatively affect the price and availability of our ingredients and/or packaging materials and impact our supply chain. Our operational and financial performance is dependent on future developments, including the duration of the pandemic, variants of mutations of the virus, actions that may be taken by governmental authorities, the speed at which effective vaccines will continue to be administered to a sufficient number of people to enable cessation of the virus and the related length of its impact on the global economy, ~~all~~including supply chain challenges and labor shortages, have led to broad-based inflation in input costs, logistics, manufacturing and labor costs. During the nine months ended September 30, 2022, we have experienced supply chain constraints and a significant inflationary impact compared to the prior year. These impacts have created headwinds for our products that we expect to continue through the rest of ~~which~~2022 and into 2023. These inflationary pressures have and are ~~uncertain~~expected to continue to impact our margins and ~~difficult~~operating results. We, along with our competitors, have increased pricing on a number of products in response to ~~predict at this time.~~widespread inflation. These pricing increases may result in future reductions in volume.

The following summarizes the components of our results of operations for the three and nine months ended September 30, 2022 and 2021, ~~and 2020,~~ respectively.

Components of Our Results of Operations

Net Sales

We generate net sales from sales of our products, including Soda, Energy Drinks, Organic Tea, Mixers, Kidz beverages and Sparkling Water, to our customers, which include grocery distributors, national retailers, natural products retailers, warehouse club and e-commerce channels, in the U.S. and Canada.

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. The amounts for these incentives are deducted from gross sales to arrive at our net sales.

We have experienced substantial growth in net sales in the past three years. The following factors and trends in our business have driven net sales growth over this period and are expected to continue to be key drivers of our net sales growth for the foreseeable future:

•


	•		~~leveraging our platform and mission to grow awareness, increase velocity and expand our consumer base;~~

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 expand distribution amongst existing channels, both in-store and online; and~~

continuing to grow our strong relationships across our retailer network and expand distribution amongst new and 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.~~

continuous innovation efforts, enhancement of existing products, and introduction of additional flavors within existing categories, as well as entering into new categories.

We ~~also~~ expect ~~expansion of~~both new distribution ~~into new channels~~and increased organic sales from existing outlets and pricing strategies to contribute to our growth going forward, however sales levels in any given period may be ~~a key driver of our future sales growth. We expect that our sales directly~~impacted by seasonality and customers efforts to ~~retailers will increase as a percentage of our net sales over time.~~manage inventory.

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~~long- term sales commitments with our customers.

Cost of Goods Sold

Cost of goods sold consists of all costs to acquire and manufacture our products, including the cost of ~~the various~~ ingredients, raw materials, packaging, in-bound freight and logistics and third-party production fees. ~~Our cost of goods sold also includes other costs incurred to bring the product to saleable condition.~~ Our cost of goods sold is subject to price fluctuations in the marketplace, particularly in the price of aluminum and other raw materials, as well as in the cost of production, packaging, in-bound freight and logistics. ~~Our cost of goods sold is generally higher for products sold through our ecommerce channel than through our retail store channel due to additional packaging requirements.~~ Our results of operations depend on our ability to arrange for the purchase of raw materials and the production of our products in sufficient quantities at competitive prices. We have ~~long term~~long-term contracts with certain suppliers of stevia and aluminum cans. We expect over the long term that, as the scale of our business increases, we will purchase a greater percentage of our aluminum cans directly rather than through third-party ~~manufacturers~~.manufacturers. We have ~~long term~~long-term contracts with certain manufacturers governing pricing and other terms and minimum commitments on our part, but these contracts generally do not guarantee any minimum production volumes on the part of the manufacturers.

We expect our cost of goods sold to increase in absolute dollars as our volume ~~increases~~increases.

We elected to classify shipping and handling costs for salable product outside of cost of goods sold, in selling and marketing expenses in our ~~mix shifts~~condensed consolidated statements of operations and comprehensive loss. As a result, our gross profit and profit margin may not be comparable to ~~higher selling price~~other entities that present shipping and ~~high margin products.~~handling costs as a component of cost of goods sold.

Gross Profit

Gross profit consists of our net sales less costs of goods sold. Our gross profit and gross margin are affected by the mix of distribution channels of our net sales in each period, as well as the level of discounts and promotions offered during the period. ~~We expect our gross margin to improve over time as we continue to leverage~~Gross profit may be favorably impacted by leveraging our asset-light business model and ~~realize margin expansion~~ through increased distribution direct to retailers, the increased scale of our business and our continued focus on cost improvements, particularly in our supply chain.

Operating Expenses

Selling and Marketing Expenses

Selling and marketing expenses consist primarily of warehousing and distribution costs and advertising and marketing expenses. Warehousing and distribution costs include storage, transfer, repacking and handling fees and out-bound freight and delivery charges. Advertising and marketing expenses consist of variable costs associated with production and media buying of marketing programs and trade events. Selling and marketing expenses also includes the incremental costs of obtaining contracts, such as sales commissions.

Our selling and marketing expenses are expected to increase ~~both~~ in absolute dollars, ~~and as a percentage of net sales,~~ both as a result of the increased warehousing and distribution costs resulting from increased net sales, which we expect to be partially offset by our continued focus on cost improvements in our supply chain, and as a result of increased focus on ~~marketing.~~marketing programs/spend.

General and Administrative Expenses

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, ITinformation technology and other functions. Our general and administrative expenses are expected to ~~increase in absolute dollars, but to decrease as~~grow at a lower percentage of net sales over ~~time as we increase our headcount to support our growth and as we increase personnel in legal, accounting, IT and compliance-related expenses to support our obligations as a public company.~~time.

Equity-Based Compensation Expense

Equity-based compensation expense consists of the recorded expense of equity-based compensation for our employees and for certain consultants and service providers who are non-employees. We record equity-based compensation expense for employee grants using grant date fair value for ~~Restricted Stock Units ("RSUs")~~RSUs or a ~~Black-Scholes-Merton option pricing~~Black-Scholes valuation model to calculate the fair value of stock options by date granted. We record compensation expense for non-employee stock options based on the estimated fair value of the options as of the earlier of (1) the date at which a commitment for performance by the non-employee to earn the stock option is reached or (2) the date at which the non-employee’s performance is complete, using the Black-Scholes Merton option pricing model. Equity-based compensation cost for ~~restricted unit~~RSU awards is measured based on the closing fair market value of ~~our~~the Zevia LLC Class B unit or the Zevia PBC Class A common ~~unit at~~stock, as applicable, on the date of grant. IfOver time, we ~~have the option and intent to settle a restricted unit award in cash, the award is classified as a liability and revalued at each balance sheet date. We~~ expect our equity-based compensation expense to significantly decrease ~~after~~compared to the year ended December 31, 2021 as a result of the expiration of the lockup period ~~as defined below,~~ in ~~absolute dollars~~

InJanuary 2022, which coincided with the end of the vesting period for the majority of the awards and acceleration of expense in connection with the ~~IPO 4,413,444~~retirement of our RSUs and phantom stock units will vest over the 180 days following the IPO (the lockup period). As a result, we are recognizing approximately $61.1 million of equity-based compensation ratably through December 31, 2021.certain employees.

In connection with the closing of our Series E Financing in December 2020, Zevia LLC used approximately $175 million of the proceeds to repurchase outstanding preferred and common units. The majority of the units repurchased were units that had been purchased by the holders in connection with financing transactions, and a minority of units purchased were units that holders owned as a result of equity awards granted by us.21

Depreciation and Amortization

Depreciation is primarily related to building and related improvements, software applications, computer equipment, quality control and marketing equipment, and leasehold improvements. Intangible assets subject to amortization consist of customer relationships. Non-amortizable intangible assets consist of trademarks, which ~~represent~~represents the Company’s exclusive ownership of the ~~Zevia~~Zevia® brand used in connection with the ~~manufacture,~~manufacturing, marketing, and distribution of its ~~carbonated~~ beverages. 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, which we do not expect to be material, given our asset-light business model.~~grows.

Other ~~Income (Expense),~~(expense) income, net

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

Results of Operations

The following table sets forth selected items in our condensed consolidated statements of operations and comprehensive ~~income (loss)~~loss for the periods presented:

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2021

2020

2021

2020

(in thousands, except for per share amounts)

Net sales

$
38,956

$
32,035

$
104,002

$
82,202

Cost of goods sold

21,952

17,109

56,570

44,409

Gross profit

17,004

14,926

47,432

37,793

Selling and marketing expenses

12,834

6,973

31,525

19,611

General and administrative expenses

7,698

4,935

19,352

13,853

Equity-based compensation

45,731

28

45,804

86

Depreciation and amortization

239

256

713

729

Total operating expenses

66,502

12,192

97,394

34,279

Income (loss) from operations

(49,498
)

2,734

(49,962
)

3,514

Other expense, net

(213
)

(276
)

(251
)

(543
)
Income (loss) before Income Taxes

(49,711
)

2,458

(50,213
)

2,971

Provision for income taxes

(50
)

—

(50
)

—

Net Income (loss) and Comprehensive Income (loss)

(49,761
)

2,458

(50,263
)

2,971

Net income (loss) attributable to Zevia LLC prior to the Reorganization Transactions

(1,411
)

2,458

(1,913
)

2,971

Loss attributable to noncontrolling interest

22,527

—

22,527

—

Net loss attributable to Zevia PBC

$
(25,823
)

$
—

$
(25,823
)

$
—

Net loss per share attributable to common stockholders (1)

Basic

$
(0.75
)

N/A

$
(0.75
)

N/A

Diluted

$
(0.75
)

N/A

$
(0.75
)

N/A


	Three Months Ended September 30,							Nine Months Ended September 30,
	2022			2021				2022			2021
(in thousands, except per share amounts)
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)

IPO.

The following table presents selected items in our condensed consolidated statements of operations and comprehensive ~~income (loss)~~loss as a percentage of net sales for the respective periods presented. Percentages may not sum due to rounding:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net sales		100	%		100	%		100	%		100	%
Cost of goods sold		57	%		54	%		57	%		53	%
Gross profit		43	%		46	%		43	%		47	%
Operating expenses:
Selling and marketing		29	%		35	%		34	%		32	%
General and administrative		19	%		20	%		22	%		19	%
Equity-based compensation		15	%		117	%		19	%		44	%
Depreciation and amortization		1	%		1	%		1	%		1	%
Total operating expenses		64	%		173	%		75	%		95	%
Loss from operations		(21	)%		(127	)%		(32	)%		(48	)%
Other (expense) income, net		0	%		(1	)%		0	%		(0	)%
Loss before income taxes		(21	)%		(128	)%		(32	)%		(48	)%
Provision for income taxes		(0	)%		(0	)		(0	)%		(0	)
Net loss and comprehensive loss		(21	)%		(128	)%		(32	)%		(48	)%
Net loss attributable to Zevia LLC prior to the Reorganization Transactions		0	%		4	%		0	%		2	%
Loss attributable to noncontrolling interest		4	%		58	%		9	%		22	%
Net loss attributable to Zevia PBC		(17	)%		(66	)%		(23	)%		(25	)%

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2021

2020

2021

2020

Net sales

100
%

100
%

100
%

100
%
Cost of goods sold

56
%

53
%

54
%

54
%
Gross profit

44
%

47
%

46
%

46
%
Selling and marketing expenses

33
%

22
%

30
%

24
%
General and administrative expenses

20
%

15
%

19
%

17
%
Equity-based compensation

117
%

0
%

44
%

0
%
Depreciation and amortization

1
%

1
%

1
%

1
%
Total operating expenses

171
%

38
%

94
%

42
%
Income (loss) from operations

(127
)%

9
%

(48
)%

4
%
Other expense, net

(1
)%

(1
)%

(0
)%

(1
)%
Income (loss) before Income Taxes

(128
)%

8
%

(48
)%

4
%
Provision for income taxes

(0
)%

0
%

(0
)%

0
%
Net Income (loss) and Comprehensive Income (loss)

(128
)%

8
%

(48
)%

4
%
Net income (loss) attributable to Zevia LLC prior to the Reorganization Transactions

(4
)%

8
%

(2
)%

4
%
Loss attributable to noncontrolling interest

58
%

0
%

22
%

0
%
Net loss attributable to Zevia PBC

(66
)%

0
%

(25
)%

0
%

Three Months Ended September 30, ~~2021~~2022 Compared to Three Months Ended September 30, ~~2020~~2021

Net ~~sales~~Sales

For the Three Months
Ended September 30,

Change

(in thousands)

2021

2020

Amount

Percentage

Net sales

$
38,956

$
32,035

$
6,921

22
%


	Three Months Ended September 30,				Change
(in thousands)	2022		2021		Amount		Percentage
Net sales	$	44,239	$	38,956	$	5,283		13.6	%

Net sales were $44.2 million for the three months ended September 30, 2022 as compared to $39.0 million for the three months ended September 30, ~~2021 as compared to $32.0~~2021. Equivalized cases sold were 3.6 million for the three months ended September 30, ~~2020.~~2022 as compared to 3.5 million for the three months ended September 30, 2021. Net sales ~~increased due to an approximately 26%~~growth was driven by the 2.3% increase in the number of equivalized cases sold and the impact of product mix resulting in $3.1 million higher net sales. Pricing increases also contributed to ~~3.5 million cases, partially offset by a 4% decrease in~~higher net ~~average price per equivalized case due to trade promotions to drive consumer trial and repeat purchasing during the three months ended September 30, 2021.~~sales of $2.2 million. We define an equivalized case as a 288 fluid ounce case.

Cost of Goods Sold

For the Three Months
Ended September 30,

Change

(in thousands)

2021

2020

Amount

Percentage

Cost of goods sold

$
21,952

$
17,109

$
4,843

28
%


	Three Months Ended September 30,				Change
(in thousands)	2022		2021		Amount		Percentage
Cost of goods sold	$	25,071	$	21,189	$	3,882		18.3	%

Cost of goods sold was ~~$22.0~~$25.1 million for the three months ended September 30, ~~2021~~2022 as compared to ~~$17.1~~$21.2 million for the three months ended September 30, ~~2020.~~2021. The increase of ~~$4.8~~$3.9 million or ~~28%~~18.3%, was primarily due to ~~volume increases.~~a 2.3% increase in the shipment of equivalized cases resulting in $0.5 million higher costs of goods sold, and $3.4 million higher cost of goods sold due to broad-based inflation.

Gross Profit and Gross Margin

For the Three Months
Ended September 30,

Change

(in thousands)

2021

2020

Amount

Percentage

Gross profit

$
17,004

$
14,926

$
2,078

14
%
Gross margin

44
%

47
%


	Three Months Ended September 30,						Change
(in thousands)	2022			2021			Amount		Percentage
Gross profit	$	19,168		$	17,767		$	1,401		7.9	%
Gross margin		43.3	%		45.6	%

Gross profit was ~~$17.0~~$19.2 million for the three months ended September 30, ~~2021~~2022 as compared to ~~$14.9~~$17.8 million for the three months ended September 30, ~~2020.~~2021. The increase in gross profit of ~~$2.1~~$1.4 million, or ~~14%~~7.9%, was primarily driven by higher net ~~sales.~~

sales, offset by higher cost of goods sold.

Gross margin infor the three months ended September 30, ~~2021~~2022 declined to ~~44%~~43.3% from ~~47%~~45.6% in the prior-year period. The decline was primarily due to ~~lower net~~the impact of inflationary pressures partially offset by price ~~realization as a result of trade promotions to drive consumer trial and repeat purchasing in 2021.~~

~~As disclosed in Note 2,~~ ~~Basis Of Presentation And Summary Of Significant Accounting Policies~~, in the Notes to Audited Financial Statements for the years ended December 31, 2020 and 2019 included in the Prospectus, we elected to classify shipping and handling costs for salable product outside of cost of goods sold, in selling and marketing expenses in the accompanying condensed statements of operations and comprehensive income (loss). As a result, our gross profit and profit margin may not be comparable to other entities that present shipping and handling costs as a component of cost of goods sold.

~~Operating Expenses~~increases.

Selling and Marketing Expenses

For the Three Months
Ended September 30,

Change

(in thousands)

2021

2020

Amount

Percentage

Selling and marketing expenses

$
12,834

$
6,973

$
5,861

84
%


	Three Months Ended September 30,				Change
(in thousands)	2022		2021		Amount			Percentage
Selling and marketing expenses	$	12,916	$	13,597	$	(681	)		(5.0	)%

Selling and marketing expenses were ~~$12.8~~$12.9 million for the three months ended September 30, ~~2021~~2022 as compared to ~~$7.0~~$13.6 million for the three months ended September 30, ~~2020.~~2021. The ~~increase~~decrease of ~~$5.9~~$0.7 million, or ~~84%~~5.0%, was primarily due to ~~overall net sales growth~~lower freight and ~~higher freight~~warehousing costs ~~amidst~~of $0.2 million driven by pricing and efficiencies and a ~~challenging transportation market in the US and Canada as well as $2.7 million~~reduction of ~~increased~~non-working marketing ~~spend to continue to invest and grow the Zevia brand.~~costs of $0.5 million.

General and Administrative Expenses

For the Three Months
Ended September 30,

Change

(in thousands)

2021

2020

Amount

Percentage

General and administrative expenses

$
7,698

$
4,935

$
2,763

56
%


	Three Months Ended September 30,				Change
(in thousands)	2022		2021		Amount		Percentage
General and administrative expenses	$	8,310	$	7,698	$	612		8.0	%

General and administrative expenses were $8.3 million for the three months ended September 30, 2022 as compared to $7.7 million for the three months ended September 30, ~~2021~~2021. The increase of $0.6 million, or 8.0%, was primarily driven by a $1.1 million increase in headcount and ~~$4.9~~personnel costs to support our growth, partially offset by a $0.5 million decrease in public company costs due to expense optimization initiatives.

Equity-Based Compensation Expenses


	Three Months Ended September 30,				Change
(in thousands)	2022		2021		Amount			Percentage
Equity-based compensation	$	6,837	$	45,731	$	(38,894	)	N/M

Equity-based compensation expense was $6.8 million for the three months ended September 30, ~~2020. The increase~~2022, of ~~$2.8~~which $3.8 million ~~or 56%, was driven by $1.7 million increase in costs~~ related to ~~being~~RSU awards that were accelerated upon retirement of a ~~public company including insurance, accounting, legal~~legacy senior management employee, and ~~other professional fees and other costs including those~~the remaining $3.0 million related to ~~legal matters and $1.1 million in employee salary and related costs primarily due to an overall increase in employee headcount to support our growth.~~

~~Equity-Based Compensation Expenses~~

For the Three Months
Ended September 30,

Change

(in thousands)

2021

2020

Amount

Percentage

Equity-Based Compensation

$
45,731

$
28

$
45,703

163225
%

~~Equity-based compensation expense was $45.7 million for~~outstanding equity-based awards being recognized over the ~~three months ended September 30, 2021 and $28,000 for~~remaining service periods of the ~~three months ended September 30, 2020.~~awards. The ~~increase~~decrease of ~~$45.7~~$38.9 million was primarily driven by ~~new RSU awards and~~ RSU and restricted phantom stock awards ~~previously granted by Zevia LLC, modified in March and July 2021,~~ that ~~generally vest~~vested over six months following the ~~IPO.~~IPO in the prior year.

~~First~~23

Nine Months Ended September 30, 2022, Compared to Nine Months Ended September 30, 2021 ~~Compared to First Nine Months Ended September 30, 2020~~

Net ~~sales~~Sales

For the Nine Months
Ended September 30,

Change

(in thousands)

2021

2020

Amount

Percentage

Net sales

$
104,002

$
82,202

$
21,800

27
%


	Nine Months Ended September 30,				Change
(in thousands)	2022		2021		Amount		Percentage
Net sales	$	127,815	$	104,002	$	23,813		22.9	%

Net sales were $127.8 million for the nine months ended September 30, 2022 as compared to $104.0 million for the nine months ended September 30, ~~2021 as compared to $82.2~~2021. Equivalized cases sold were 10.9 million for the nine months ended September 30, ~~2020.~~2022 as compared to 9.3 million for the nine months ended September 30, 2021. Net sales ~~increased due to an approximately 26%~~growth was driven by the 16.9% increase in the number of equivalized cases sold, ~~as net average price per equivalized case~~ ~~was essentially flat on a per case basis~~.primarily from distribution expansion of $14.1 million, and $9.7 million from organic growth, product mix, and pricing increases. We define an equivalized case as a 288 fluid ounce case.

Cost of Goods Sold

For the Nine Months
Ended September 30,

Change

(in thousands)

2021

2020

Amount

Percentage

Cost of goods sold

$
56,570

$
44,409

$
12,161

27
%


	Nine Months Ended September 30,				Change
(in thousands)	2022		2021		Amount		Percentage
Cost of goods sold	$	73,445	$	54,858	$	18,587		33.9	%

Cost of goods sold was ~~$56.6~~$73.4 million for the nine months ended September 30, ~~2021~~2022 as compared to ~~$44.4~~$54.9 million for the nine months ended September 30, ~~2020.~~2021. The increase of ~~$12.2~~$18.6 million, or ~~27%~~33.9%, was primarily due to ~~volume increases.~~a 16.9% increase in the shipment of equivalized cases resulting in $9.3 million higher cost of goods sold, and $9.3 million higher cost of goods sold primarily due to broad-based inflation.

Gross Profit and Gross Margin

For the Nine Months
Ended September 30,

Change

(in thousands)

2021

2020

Amount

Percentage

Gross profit

$
47,432

$
37,793

$
9,639

26
%
Gross margin

46
%

46
%


	Nine Months Ended September 30,						Change
(in thousands)	2022			2021			Amount		Percentage
Gross profit	$	54,370		$	49,144		$	5,226		10.6	%
Gross margin		42.5	%		47.3	%

Gross profit was ~~$47.4~~$54.4 million for the nine months ended September 30, ~~2021~~2022 as compared to ~~$37.8~~$49.1 million for the nine months ended September 30, ~~2020.~~2021. The increase in gross profit of ~~$9.6~~$5.2 million, or ~~26%~~10.6%, was primarily driven by higher net ~~sales.~~sales, partially offset by higher cost of goods sold.

Gross margin infor the nine months ended September 30, ~~2021 remained flat at 46%~~2022 declined to 42.5% from 47.3% in the prior-year period.

~~As disclosed in Note 2,~~ ~~Basis Of Presentation And Summary Of Significant Accounting Policies, in~~ The decline was primarily due to the ~~Notes to Audited Financial Statements for the years ended December 31, 2020 and 2019 included in the Prospectus, we elected to classify shipping and handling costs for salable product outside~~impact of cost of goods sold, in selling and marketing expenses in the accompanying condensed statements of operations and comprehensive income (loss). As a result, our gross profit and profit margin may not be comparable to other entities that present shipping and handling costs as a component of cost of goods sold.inflationary pressures partially offset by price increases.

Selling and Marketing Expenses

For the Nine Months
Ended September 30,

Change

(in thousands)

2021

2020

Amount

Percentage

Selling and marketing expenses

$
31,525

$
19,611

$
11,914

61
%


	Nine Months Ended September 30,				Change
(in thousands)	2022		2021		Amount		Percentage
Selling and marketing expenses	$	42,845	$	33,237	$	9,608		28.9	%

Selling and marketing expenses were ~~$31.5~~$42.8 million for the nine months ended September 30, ~~2021~~2022 as compared to ~~$19.6~~$33.2 million for the nine months ended September 30, ~~2020.~~2021. The increase of ~~$11.9~~$9.6 million or ~~61%~~28.9%, was ~~primarily~~largely due to ~~due to overall net sales growth~~$3.5 million higher freight and warehousing costs as a result of increases in equivalized cases produced and sold, increases in repacking fees of $2.6 million, and higher freight costs ~~amidst a challenging transportation market in the US and Canada as well as $4.7~~amounting to $3.7 million ~~of increased marketing spend~~due to ~~continue to invest and grow the Zevia brand.~~inflation.

General and Administrative Expenses

For the Nine Months
Ended September 30,

Change

(in thousands)

2021

2020

Amount

Percentage

General and administrative expenses

$
19,352

$
13,853

$
5,499

40
%


	Nine Months Ended September 30,				Change
(in thousands)	2022		2021		Amount		Percentage
General and administrative expenses	$	28,257	$	19,352	$	8,905		46.0	%

General and administrative expenses were $28.3 million for the nine months ended September 30, 2022 as compared to $19.4 million for the nine months ended September 30, ~~2021 and $13.9 million for the nine months ended September 30, 2020.~~2021. The increase of ~~$5.5~~$8.9 million, or ~~40%~~46.0%, was primarily driven by ~~$2.7~~a $6.4 million ~~in employee salary and related costs primarily due to an overall~~ increase in ~~employee~~ headcount and personnel costs to support our growth, and ~~$2.5~~a $2.6 million increase in costs related to being a public company, including insurance, accounting, and legal and other professional ~~fees and other costs including those related to legal matters.~~fees.

Equity-Based Compensation ~~Expenses~~Expense


	Nine Months Ended September 30,				Change
(in thousands)	2022		2021		Amount			Percentage
Equity-based compensation	$	23,781	$	45,804	$	(22,023	)	N/M

For the Nine Months
Ended September 30,

Change

(in thousands)

2021

2020

Amount

Percentage

Equity-Based Compensation

$
45,804

$
86

$
45,718

53160
%

Equity-based compensation expense was ~~$45.8~~$23.8 million for the nine months ended September 30, ~~2021 and $0.1~~2022, of which $3.1 million ~~for the nine months ended September 30, 2020. The increase of $45.7 million was primarily driven by new~~related to RSU awards and ~~RSU and~~restricted phantom stock awards ~~previously granted by Zevia LLC, modified~~that vested as of the expiration of the IPO lock-up period in ~~March~~January 2022, $7.8 million related to RSU awards that were accelerated upon retirement of certain senior management employees, and ~~July 2021, that generally vest~~the remaining $12.9 million related to outstanding equity-based awards being recognized over ~~six months following~~ the ~~IPO.~~remaining service periods of the awards.

Seasonality

Generally, we experience greater demand for our products during the second and third fiscal quarters of the year, which correspond to the warmer months of the year in our major markets. 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.

Liquidity and Capital Resources

As of September 30, 2022, we had $49.2 million in cash and cash equivalents. We believe that our cash and cash equivalents as of September 30, 2022, together with our operating activities and available borrowings under the Secured Revolving Line of Credit, will provide adequate liquidity for ongoing operations, planned capital expenditures and other investments beyond the next 12 months.

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

Future capital requirements will depend on many factors, including our rate of revenue growth, gross margin and the level of expenditures in all areas of the Company. We expect operating and capital expenditures to increase in the future as we expand business activities and increase headcount to promote growth. To the extent that existing capital resources and sales growth are not sufficient to fund future activities, we may seek alternative financing through additional equity or debt transactions. Additional funds may not be available on terms favorable to us or at all. Also, we will continue to assess our liquidity needs as the effects of the COVID-19 pandemic, global health emergencies, inflationary pressures, and the hostilities in Eastern Europe continue to disrupt and impact the global and national economies and global financial markets. If the disruption continues into the future, we may not be able to access the financial markets and could experience an inability to access additional capital, which could negatively affect our operations in the future. Failure to raise additional capital, if and when needed, could have a material adverse effect on our financial position, results of operations, and cash flows.

Prior to our IPO, we ~~have~~had financed our operations through private sales of equity securities and through sales of our products. In connection with our IPO, which was completed on July 26, 2021, we sold an aggregate of 10,700,000 shares of our Class A common stock at an IPO price of $14.00 per share and retained approximately $90.1 million in net proceeds, after deducting underwriting discounts and commissions and giving effect to the use of proceeds thereto. In addition, ~~the Company~~we incurred ~~and paid $8.1~~$8.4 million of offering costs in connection with the IPO.

As of September 30, 2021, we had $78.7 million in cash. We believe that our cash and cash equivalents as of September 30, 2021, together with our operating activities will provide adequate liquidity for ongoing operations, planned capital expenditures and other investments for at least the next 12 months.

Future capital requirements will depend on many factors, including our rate of revenue growth, gross margin and the level of expenditures in all areas of the Company. To the extent that existing capital resources and sales growth are not sufficient to fund future activities, we will need to raise capital through additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all. In addition, the COVID-19 pandemic continues to rapidly evolve and has already resulted in a significant disruption of global financial markets. If the disruption persists and deepens, we could experience an inability to access additional capital, which could negatively affect our operations in the future. Failure to raise additional capital, if and when needed, could have a material adverse effect on our financial position, results of operations, and cash flows.

Upon consummation of the IPO, the Company became a holding company with no operations of its own. Accordingly, the Company will be dependent on distributions from Zevia LLC to pay its taxes, its obligations under the ~~Tax Receivable Agreement~~TRA and other expenses. Any future credit facilities may impose limitations on the ability of Zevia LLC to pay dividends to the Company.

In connection with the IPO and the Reorganization Transactions, the Direct Zevia Stockholders and certain continuing members of Zevia LLC received the right to receive future payments pursuant to the ~~Tax Receivable Agreement.~~TRA. The amount payable under the ~~Tax Receivable Agreement~~TRA will be based on an annual calculation of the reduction in our U.S. federal, state and local taxes resulting from the utilization of certain pre-IPO tax attributes and tax benefits resulting from sales and exchanges by continuing members of Zevia LLC. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement” included in ~~our Prospectus~~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 ~~Tax Receivable Agreement~~TRA may be substantial. 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 ~~Tax Receivable Agreement,~~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 ~~$54.4~~$65.1 million through ~~2036.~~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 ~~$46.2~~$55.3 million through ~~2036.~~2037.

The actual amounts may materially differ from these hypothetical amounts, as potential future reductions in tax payments for us and ~~tax receivable agreement~~TRA payments by us will be calculated using prevailing tax rates applicable to us over the life of the ~~Tax Receivable Agreements~~TRA and will be dependent on us generating sufficient future taxable income to realize the benefit.

We cannot reasonably estimate future annual payments under the ~~Tax Receivable Agreement~~TRA given the difficulty in determining those estimates as they are dependent on a number of factors, including the extent of exchanges by continuing Zevia LLC unitholders, the associated fair value of the underlying Zevia LLC units at the time of those exchanges, the tax rates applicable, our future income, and the associated tax benefits that might be realized that would trigger a ~~Tax Receivable Agreement~~TRA payment requirement.

However, a significant portion of any potential future payments under the ~~Tax Receivable Agreement~~TRA is anticipated to be payable over 15 years, consistent with the period over which the associated tax deductions would be realized by us, assuming Zevia LLC generates sufficient income to utilize the deductions. If sufficient income is not generated by Zevia LLC, the associated taxable income of Zevia will be impacted and the associated tax benefits to be realized will be limited, thereby similarly reducing the associated ~~Tax Receivable Agreement~~TRA payments to be made. Given the length of time over which payments would be payable, the impact to liquidity in any single year is greatly reduced.

Although the timing and extent of future payments could vary significantly under the ~~Tax Receivable Agreement~~TRA for the factors discussed above, we anticipate funding payments from the ~~Tax Receivable Agreement~~TRA from cash flows generated from operations.

~~Credit Facility~~25

Credit Facility

~~In 2019,~~ABL Credit Facility

On February 22, 2022, we ~~entered~~obtained a revolving credit facility (the “Secured Revolving Line of Credit") by entering into a ~~loan agreement providing for~~Loan and Security Agreement with Bank of America, N.A. Under the Secured Revolving Line of Credit, we may draw funds up to an amount not to exceed the lesser of (i) a ~~$9.0~~$20 million revolving ~~line~~commitment and (ii) a borrowing base which is comprised of inventory and receivables. Up to $2 million of the Secured Revolving Line of Credit may be used for letter of credit ~~(the “Credit Facility”)~~issuances with ~~Stonegate, with a maturity date in April 2022. Borrowings~~the option to increase the commitment under the ~~revolving line are secured~~Secured Revolving Line of Credit by ~~accounts receivable and inventory. In June 2020, we amended~~up to $10 million, subject to certain conditions. The Secured Revolving Line of Credit matures on February 22, 2027. There have been no amounts drawn from the ~~Credit Facility and increased it to $12.0 million. As~~Secured Revolving Line of June 30, 2021 and December 31, 2020, the revolving line interest rate was 7.5% annual percentage rate and there was no outstanding balance. On June 1, 2021, we extended the Credit Facility through April 2023 and there were no other modifications made to theCredit.

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.

~~terms and conditions. In July 2021 and subsequent~~We are required under the Secured Revolving Line of Credit to comply with certain covenants, including, among others, by maintaining Liquidity (as defined therein) of $7 million at all times until December 31, 2023. Thereafter, we must satisfy a financial covenant requiring a minimum fixed charge coverage ratio of 1.00 to 1.00 as of the ~~IPO, Zevia terminated~~last day of any fiscal quarter following the ~~Credit Facility. There were no material early-termination fees~~occurrence of certain events of default that are continuing or any ~~other penalties associated with~~day on which availability under the ~~termination~~Secured Revolving Line of Credit is less than the greater of $3 million and 17.5% of the ~~Credit Facility.~~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.

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.

For the Nine Months
Ended September 30,

(in thousands)

2021

2020

Cash (used in) provided by:

Operating activities

$
(13,094
)

$
(2,121
)
Investing activities

$
(2,308
)

$
(781
)
Financing activities

$
79,186

$
4,142


	Nine Months Ended September 30,
(in thousands)	2022			2021
Cash (used in) provided by:
Operating activities	$	(19,346	)	$	(13,094	)
Investing activities	$	27,818		$	(2,308	)
Financing activities	$	(2,346	)	$	79,186

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 $19.3 million for the nine months ended September 30, 2022 was primarily driven by a net loss of $41.5 million and by a net decrease in cash related to changes in operating assets and liabilities of $3.2 million, partially offset by non-cash expenses of $25.3 million primarily related to equity-based compensation and depreciation and amortization expense. Changes in cash flows related to operating assets and liabilities were primarily due to an increase in accounts receivable of $4.5 million due to increases in net sales, an increase in inventories of $5.8 million in anticipation of future sales, offset by a $0.1 million decrease in prepaid expenses and other assets, primarily due to amortization of prepaid insurance policies, and a $7.5 million increase in accounts payable, accrued expenses and other current liabilities due to our overall growth.

Net cash used in operating activities of $13.1 million for the nine months ended September 30, 2021 was primarily driven by a net loss of $50.3 million and by a net decrease in cash related to changes in operating assets and liabilities of $9.9 million, partially offset by non-cash expenses of $47.0 million primarily related to equity-based compensation. Changes in cash flows related to operating assets and liabilities ~~were~~primarily consisted of a $7.6 million increase in accounts receivable due to ~~increases~~increase in net sales, ~~and anticipated future growth~~a $4.1 million increase in inventory due to the timing of inventory purchases, and a $3.6 million increase in prepaid expenses primarily related to prepaid insurance ~~expenses~~ as a result of becoming a public ~~company.~~

Net cash used in operating activities of $2.1 million for the nine months ended September 30, 2020 was primarily driven by a net decrease in cash related to changes in operating assets and liabilities of $6.3 million partiallycompany, offset by a net income of $3.0 million and non-cash expenses of $1.2 million primarily related to depreciation and amortization. Changes in cash flows related to operating assets and liabilities primarily consisted of a $9.7 million increase in inventories as a precaution to ensure bolster supplies in the midst of a pandemic and $3.4 million in accounts receivable due to increases in net sales, partially offset by a $7.4$5.9 million increase in accounts payable, accrued expenses and other current ~~liabilities.~~liabilities due to our overall growth.

Net Cash ~~Used~~Provided by (Used in) Investing Activities

Net cash provided by investing activities of $27.8 million for the nine months ended September 30, 2022 was primarily due to proceeds from maturities of short-term investments of $30.0 million, offset by purchases of property and equipment of $2.2 million for marketing fixtures, software applications and computer equipment used in ~~Investing Activities~~ongoing operations.

Net cash used in investing activities of $2.3 million for the nine months ended September 30, 2021 was primarily due to the purchase of a warehouse facility used in ongoing operations.

Net Cash Used in Financing Activities

Net cash used in ~~investing~~financing activities of ~~$0.8~~$2.3 million for the nine months ended September 30, ~~2020~~2022 was primarily due to ~~purchases~~minimum tax withholdings paid on behalf of ~~software applications~~employees for net share settlements of $2.1 million and ~~computer equipment used~~payment of debt issuance costs of $0.3 million in ~~ongoing operations.~~connection with the Secured Revolving Line of Credit.

~~Net Cash Provided by Financing Activities~~26

Net cash ~~provided by~~used in financing activities of $79.2 million for the nine months ended September 30, 2021 was due to our IPO of Class A common stock, in which we sold 10,700,000 shares to the Underwriters. Shares of Class A common stock began trading on the New York Stock Exchange under the ticker symbol “ZVIA” on July 22, 2021. These shares were sold at an IPO price of $14.00 per share forreceived net proceeds of $139.7 million, after deducting underwriting discounts and commissions of $10.1 ~~million but before~~million. We paid offering expenses ofrelated to the IPO and the Reorganization Transactions of $8.1 million. Upon the closing of the IPO, we used (i) approximately $25.5 million to purchase Class B units and corresponding shares of Class B common stock from certain Zevia LLC’s unitholders, including certain members of our senior management, at a per-unit price equal to the per-share price paid by the underwriters for shares of Class A common stock, (ii) approximately $0.4 million to cancel and cash-out outstanding options held by certain option holders, including certain members of our senior management, at a per-option price equal to the per-share price paid by the underwriters for shares of Class A common stock, and (iii) approximately $23.7 million to pay the cash consideration to certain pre-IPO institutional investors in connection with the merger of the blocker corporations into Zevia PBC with Zevia PBC ~~surviving.~~continuing as the surviving entity. The IPO related amounts were partially offset by distribution to unitholders for tax payments of $2.7 million.

Net cash provided by financing activities of $4.1 million in the nine months ended September 30, 2020 was due to borrowings net of repayments under the Company’s Credit Facility and the Paycheck Protection Program.

Non-GAAP Financial Measures

We report our financial results in accordance with US GAAP. However, management believes that Adjusted EBITDA, ~~and Adjusted Net Income (Loss),~~a non-GAAP financial ~~measures, provide~~measure, provides investors with additional useful information in evaluating our operating performance.

We calculate Adjusted EBITDA as net ~~(loss) income~~loss adjusted to exclude: (1) ~~income tax expense, (2) depreciation and amortization, (3)~~ 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) ~~interest expense, and (5)~~ equity-based ~~compensation expense.~~compensation. Adjusted EBITDA may in the future also be adjusted for amounts impacting net income related to the ~~Tax Receivable Agreement~~TRA liability and other infrequent and unusual transactions. ~~We calculate Adjusted Net Income (Loss) as net (loss) income adjusted to exclude equity-based compensation expense.~~

Adjusted EBITDA ~~and Adjusted Net Income (Loss) are~~is a financial ~~measures~~measure that ~~are~~is not required by, or presented in accordance with US GAAP. We believe that Adjusted EBITDA, ~~and Adjusted Net Income (Loss),~~ when taken together with our financial results presented in accordance with US GAAP,

~~provide~~ provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of Adjusted EBITDA ~~and Adjusted Net Income (Loss) are~~is helpful to our investors as ~~they are measures~~it is a measure used by management in assessing the health of our business, determining incentive compensation and evaluating our operating performance, as well as for internal planning and forecasting purposes.

Adjusted EBITDA ~~and Adjusted Net Income (Loss) are~~is presented for supplemental informational purposes only, ~~have~~has limitations as an analytical ~~tools~~tool and should not be considered in isolation or as a substitute for financial information presented in accordance with US 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 ~~expense. A limitation~~(income) expense, foreign currency (gains)/losses and (gains)/losses on disposal of ~~Adjusted Net Income (Loss) is that it does not consider the impact of equity-based compensation expense, including the potential dilutive impact thereof.~~fixed assets. In addition, our use of Adjusted EBITDA ~~and Adjusted Net Income (Loss)~~ may not be comparable to ~~similarly titled~~similarly-titled measures of other companies because they may not calculate Adjusted EBITDA ~~or Adjusted Net Income (Loss)~~ in the same manner, limiting ~~their~~its usefulness as a comparative ~~measures.~~measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA ~~and Adjusted Net Income (Loss)~~ alongside other financial measures, including our net ~~loss or~~ income (loss) and other results stated in accordance with US GAAP.

The following table presents a reconciliation of net ~~income (loss),~~loss, the most directly comparable financial measure stated in accordance with US GAAP, to ~~adjusted~~Adjusted EBITDA for the periods presented:


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2022			2021			2022			2021
Net loss and comprehensive loss	$	(9,196	)	$	(49,761	)	$	(41,477	)	$	(50,263	)
Other expense (income), net*		(26	)		213			(64	)		251
Provision for income taxes		1			50			23			50
Depreciation and amortization		326			239			1,005			713
Equity-based compensation		6,837			45,731			23,781			45,804
Adjusted EBITDA	$	(2,058	)	$	(3,528	)	$	(16,732	)	$	(3,445	)

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

(in thousands)

2021

2020

2021

2020

Net income (loss) and comprehensive income (loss)

$
(49,761
)

$
2,458

$
(50,263
)

$
2,971

Income tax expense (benefit)

50

—

50

—

Depreciation and amortization

239

256

713

729

Other expense, net

213

276

251

543

Equity-based compensation expense

45,731

28

45,804

86

Adjusted EBITDA

$
(3,528
)

$
3,018

$
(3,445
)

$
4,329

~~The following table presents a reconciliation~~* Includes interest (income) expense, foreign currency (gains) losses, and (gains) losses on disposal of ~~net income (loss), the most directly comparable financial measure stated in accordance with US GAAP, to adjusted net income (loss) for the periods presented:~~

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

(in thousands)

2021

2020

2021

2020

Net income (loss) and comprehensive income (loss)

$
(49,761
)

$
2,458

$
(50,263
)

$
2,971

Equity-based compensation expense

45,731

28

45,804

86

Adjusted net income (loss)

$
(4,030
)

$
2,486

$
(4,459
)

$
3,057

~~Off-Balance Sheet Arrangements~~

~~We do not have any off-balance sheet arrangements or any holdings in variable interest entities.~~fixed assets.

Commitments

~~There have been no significant changes during the three months ended~~Our leases generally consist of long-term operating leases, which are payable monthly and relate to our office space and vehicles. For a further discussion on our debt and operating lease commitments as of September 30, ~~2021~~2022, see the sections above as well as Note 7, Debt, and Note 8, Leases, included in the condensed consolidated financial statements of this Quarterly Report.

On March 25, 2022, the Company entered into an amendment to the ~~contractual obligations disclosed~~lease for our corporate headquarters offices to extend the term through December 31, 2023 and expand the total square footage from 17,923 square feet to 20,185 square feet commencing on May 1, 2022.

Our inventory purchase commitments are generally short-term in ~~Management’s Discussion~~nature and ~~Analysis~~have ordinary commercial terms. We did not have any material long-term inventory purchase commitments as of ~~Financial Condition and Results of Operations set forth in the Prospectus.~~September 30, 2022.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report ~~on Form 10-Q~~ are prepared in accordance with US 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 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. 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.

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” in the Prospectus and the notes to the audited financial statements appearing elsewhere in the Prospectus. During the three and nine months ended September 30, 2021, there were27

There have been no material changes to our critical accounting policies from those discussed in our ~~Prospectus.~~Annual Report.

Recent Accounting Pronouncements

Refer to Note 2, ~~to our~~ Summary of Significant Accounting Policies, included in the condensed consolidated financial statements ~~included in~~of this Quarterly Report ~~on Form 10-Q~~ for a discussion of recently issued accounting pronouncements not yet adopted.

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 have elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of the IPO or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if any of the following events occur; (i) we have more than $1.07 billion in annual revenue, (ii) we have more than $700.0 million in market value of our Class A common stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one annual report on ~~Form10-K)~~Form 10-K) or (iii) we issue more than $1.0 billion of non-convertible debt securities over a three- year period.

~~Use of Proceeds~~

On July 26, 2021, we completed our IPO, pursuant to which we issued and sold an aggregate of 10,700,000 shares of Class A common stock at the IPO price of $14.00 per share. The aggregate gross proceeds to the Company from our IPO were $149.8 million and the net proceeds were $139.7 million after deducting underwriting discounts and commissions of $10.1 million. The offer and sale of the shares of Class A common stock in the IPO were registered pursuant to registration statements on Form S-1 (File No. 333-257378), which the SEC declared effective on July 21, 2021. No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning 10% or more of any class of our equity securities or to any other affiliates. The underwriters for our IPO were Goldman Sachs & Co. LLC, BofA Securities, Inc., Morgan Stanley & Co. LLC, Stephens Inc., BMO Capital Markets Corp., Wells Fargo Securities, LLC, Telsey Advisory Group LLC, Loop Capital Markets LLC, Academy Securities, Inc., AmeriVet Securities, Inc. and Samuel A. Ramirez & Company, Inc.

Upon the closing of the IPO, we used (i) approximately $25.5 million to purchase Class B units and corresponding shares of Class B common stock from certain Zevia LLC unitholders, including certain members of our senior management, at a per-unit price equal to the per-share price paid by the underwriters for shares of Class A common stock, (ii) approximately $0.4 million to cancel and cash-out outstanding options held by certain of Zevia LLC’s option holders, including certain members of our senior management, at a per-option price equal to the per-share price paid by the underwriters for shares of Class A common stock, and (iii) approximately $23.7 million to pay the cash consideration to certain pre-IPO institutional investors in connection with the merger of the blocker corporations into the Company. Accordingly, we have not retained any of those portions of the proceeds. The Company used the remaining net proceeds of $90.1 million 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 which was retained by the Company before the payment of $8.1 million for the IPO offering costs. The net retained proceeds of $82.0 million will ultimately be used by the Company for working capital and other general corporate purposes.

Item 3. ~~Quantitative and Qualitative Disclosures About Market Risk.~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to certain market risks in the ordinary course of our business. These risks primarily consist of raw material prices, foreign exchange, and inflation as follows:

Raw Material Risk

Our profitability is dependent on, among other things, our ability to anticipate and react to raw material costs. Currently, a key ingredient in our products is stevia extract. We ~~recently signed~~have a ~~new~~ two-year agreement effective June 1, 2021 with a large multi-national ingredient company for the supply of stevia on similar terms as our prior ~~Agreement~~agreement with the same ingredient company, including fixed pricing for the duration of the term. The prices of stevia and other ingredients we use are subject to many factors beyond our control, such as ~~marketing~~market conditions, climate change, supply chain challenges, and adverse weather conditions.

The price for aluminum cans also fluctuates depending on market conditions. There is currently ~~a global~~an ongoing North American shortage of aluminum cans. We have contracts with certain suppliers of aluminum cans, but such contracts do not cover all of our expected future needs for aluminum cans. We might not be able to source enough aluminum cans in the future to meet our consumers’ demand. Our ability to continue to procure enough aluminum cans at reasonable prices will depend on future developments that are highly uncertain. For the nine months ended September 30, ~~2021,~~2022, a hypothetical 10% increase or 10% decrease in the weighted average cost of aluminum would have resulted in an increase of approximately ~~$0.8~~$1.2 million or a decrease of ~~$0.8~~$1.2 million, respectively, to cost of goods sold.

We 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.

Foreign Exchange Risk

The majority of our sales and costs are denominated in ~~United States~~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. We sell and distribute our products to Canadian customers, who are invoiced and remit payment in Canadian dollars. All Canadian dollar transactions are translated into ~~United~~

~~States~~U.S. dollars using period-end rates of exchange for assets and liabilities, and average rates of exchange for the period for sales and expenses. To the extent we increase sourcing from outside the United States or increase net sales outside of the United States 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 nine months ended September 30, 2022 and 2021.

Inflation Risk

We ~~do not~~ believe that inflation has had a material effect on our business, results of operations, orand 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. 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. Our principal commodities risks relate to our purchases of aluminum, diesel fuel, cartons and corrugate.

Item 4. ~~Controls and Procedures.~~CONTROLS AND PROCEDURES.

~~Evaluation of~~ Disclosure Controls and ~~Procedures.~~Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under ~~the Securities Exchange Act of 1934, as amended, or~~ the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures ~~as of September 30, 2021. Based on the foregoing evaluation,~~ and ~~in light of the material weaknesses in internal controls described below, our Chief Executive Officer and our Chief Financial Officer concluded~~determined that ~~as of the end of the period covered by this Quarterly Report on Form 10-Q~~ our disclosure controls and procedures were ~~not~~ effective ~~in timely alerting them to material information to be included in our reports filed or submitted under~~at the ~~Exchange Act.~~

~~In light~~reasonable assurance level as of the material weaknesses described below, we performed additional analyses and other procedures to ensure that our condensed financial statements included in this Quarterly Report were prepared in accordance with US GAAP. These measures included, among other things, expansion of our quarter-end closing procedures, including the dedication of significant internal resources and external consultants to scrutinize account analyses, reserve estimates, asset valuations, proper accounting treatment for revenues and expenses and account reconciliations at a detailed level.

As previously disclosed in the section titled “Risk Factors” in Part II, Item 1A of our quarterly report on Form 10-Q for the quarter ended June 30, 2021 as filed with the SEC on August 13, 2021 and “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q, we previously identified material weaknesses in our internal control over financial reporting that we are currently working to remediate, which relate to (a) a lack of sufficient accounting resources, (b) inadequate segregation of duties, including access security to our IT systems, related to the preparation, review and posting of journal entries, and (c) the sufficiency of review over accounting analyses used in the classification of promotional activities and the accounting for equity transactions. A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements would not be prevented or detected on a timely basis. These deficiencies could result in additional material misstatements to our financial statements that could not be prevented or detected on a timely basis.

Our management has concluded that these material weaknesses in our internal control over financial reporting were due to the fact that we were a private company with limited resources and did not have the necessary business processes and related internal controls formally designed and implemented coupled with the appropriate resources and personnel with the appropriate level of experience and technical expertise to oversee our business processes and controls.

~~Remediation Plans~~

~~We have commenced measures to remediate the identified material weaknesse~~s. These measures included adding additional accounting and financial personnel with industry experience during the quarter ended June 30, 2021, including a Chief Accounting Officer to oversee internal controls and procedures and implement a formal closing process. In addition, we hired a Director of Financial Planning and Analysis, and Director of Tax. We also engaged a nationally recognized accounting firm to work with us to establish, document and test our key internal controls in order for management to effectively assess the internal control environment and all its related aspects and significant processes.~~During the quarter ended~~ September 30, 2021, we implemented a formal journal entry approval workflow process, the review and approval of monthly accounts reconciliations with support to validate account balances, quarterly reviews by chief accounting officer or controller of the Company’s trial balance, dual authorization for wire transfers, tightened security around IT systems and established a whistleblower hotline for internal and external parties to anonymously report potential misconduct or other non-compliance with laws, formal accounting policies and memos.We intend to continue to take steps to remediate the material weaknesses described above and further evolving our accounting processes. We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time.

While we believe that these efforts will improve our internal control over financial reporting, the implementation of our remediation is ongoing and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period of financial reporting cycles.

We believe we are making progress toward achieving the effectiveness of our internal controls and disclosure controls. The actions that we are taking are subject to ongoing senior management review, as well as audit committee oversight. We will not be able to conclude whether the steps we are taking will fully remediate the material weaknesses in our internal control over financial reporting until we have completed our remediation efforts and subsequent evaluation of their effectiveness. We may also conclude that additional measures may be required to remediate the material weaknesses in2022.

~~our internal control over financial reporting. The Company will continue its efforts to strengthen its accounting and finance departments and aggressively pursue remediation~~Management determined that as of ~~all material weaknesses.~~

~~Changes in Internal Control over Financial Reporting.~~

~~There were~~September 30, 2022, no changes in our internal control over financial reporting had occurred during the fiscal quarter then ended ~~September 30, 2021~~ that ~~have~~ materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART ~~II—~~II - OTHER INFORMATION

Item 1. Legal ~~Proceedings.~~Proceedings

~~From time to time, we may become involved in legal proceedings or be subject to claims and litigation arising in the ordinary course of our business.~~ We are not ~~currently party~~subject to any material legal proceedings. Regardless of outcome, such proceedings or claims can have an adverse impact on us because of defense and settlement costs, diversion of resources and other factors and there can be no assurances that favorable outcomes will be obtained. Although the outcome of these and other claims cannot be predicted with certainty, we do not believe the ultimate resolution of the current matters will have a material adverse effect on our business, financial condition, results of operations or cash flows.

Item 1A. Risk ~~Factors.~~

Factors

Our business is subject to various risks, including those described in the section titled “Risk Factors” in Part ~~II,~~I, Item 1A of our ~~quarterly report on Form 10-Q for the quarter ended June 30, 2021 as filed with the SEC on August 13, 2021.~~Annual Report. There have been no material changes from the risk factors disclosed in Item 1A of our ~~quarterly report on Form 10-Q for the quarter ended June 30, 2021.~~Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~Use of Proceeds~~None.

~~See~~ ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations—Use of Proceeds~~.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other ~~Information.~~Information

~~Stockholder Proposals~~None.

As provided in Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the Exchange Act), stockholders may present proper proposals for inclusion in our proxy statement and form of proxy and for consideration at next year's annual meeting of stockholders by submitting their proposals in writing to our Secretary in a timely manner. For a stockholder proposal to be considered for inclusion in our proxy statement for the 2022 annual meeting of stockholders, our Secretary must receive the written proposal at our principal executive offices, 15821 Ventura Blvd., Suite 145, Encino, CA 91436,not later than December 17, 2021, which the Company believes to be a reasonable time before it expects to begin to print and send its proxy materials for the 2022 annual meeting. Any proposal received after such date will be considered untimely. All Rule 14a-8 proposals must be in compliance with applicable laws and regulations in order to be considered for inclusion in the Company’s proxy materials for the 2022 annual meeting.

~~Amendment to Outstanding Equity Awards~~

On November 10, 2021, the Company’s Board of Directors approved (i) an amendment to the outstanding stock option awards held by Robert Gay and Harry “Hank” Margolis and (ii) an amendment to the RSUs granted to Messrs. Gay and Margolis in August 2020 (items (i) and (ii) collectively, the “Retirement Amendments”). The Retirement Amendments provide that upon the holder’s “retirement” on or after January 17, 2022, the unvested stock options and RSUs will become fully vested. As used in the Retirement Amendments, “retirement” generally includes a resignation after the holder has reached 50 years of age with at least 10 years of service to the Company, so long as the holder provides one year advance notice of such retirement unless waived by the Company.

3130

EXHIBIT INDEX


Exhibit No.		Description of Exhibit

3.1		Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 26, 2021).

3.2		Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on July 26, 2021).

~~10.1~~		Thirteenth Amended and Restated Limited Liability Company Agreement of Zevia LLC Agreement dated as of July 21, 2021 (incorporated by reference to Exhibit 10.1 of the Registrant’s Periodic Report on Form 10-Q, filed August 13, 2021).

~~10.2~~		~~Tax Receivable Agreement dated as of July 21, 2021 (incorporated by reference to Exhibit 10.2 of the Registrant’s Periodic Report on Form 10-Q, filed August 13, 2021).~~

~~10.3~~		Zevia PBC Eleventh Amended and Restated Registration Rights Agreement dated July 21, 2021 (incorporated by reference to Exhibit 10.3 of the Registrant’s Periodic Report on Form 10-Q, filed August 13, 2021).

~~10.4~~4.1		~~Form~~Description of Indemnification Agreement entered into with Directors and Executive Officers (incorporated by reference to Exhibit 10.4 of the Registrant’s Registration Statement on Form S-1/A, filed on July 12, 2021).

~~10.8#~~		~~Zevia PBC 2021 Equity Incentive Plan~~Securities (incorporated herein by reference to Exhibit ~~99.1~~4.1 to the Company’s ~~Registration Statement~~Annual Report on Form ~~S-8~~10-K filed with the SEC on ~~July 26, 2021)~~March 11, 2022).

~~10.9#~~		Form of Restricted Stock Unit Award Grant Notice and Standard Terms and Conditions under the Zevia PBC 2021 Equity Incentive Plan (incorporated herein by reference to Exhibit 99.2 to the Company’s Registration Statement on Form S-8 filed with the SEC on July 26, 2021).

~~10.10#~~10.1#		Form of Nonqualified Stock Options Grant Notice and Standard Terms and Conditions under the Zevia PBC 2021 Equity Incentive Plan (incorporated herein by reference to Exhibit 99.3 to the Company’s Registration Statement on Form S-8 filed with the SEC on July 26, 2021).

~~10.11#~~		~~Zevia 2020 Incentive Plan (incorporated herein by reference to Exhibit 10.6 of the Registrant’s Registration Statement on Form S-1, filed on June 25, 2021).~~

~~10.12#~~		Form of Zevia LLC Notice of Restricted Class C Common Unit Award and Restricted Class C Common Unit Agreement (2020) (incorporated herein by reference to Exhibit 10.7 of the Registrant’s Registration Statement on Form S-1, filed on June 25, 2021).

~~10.13#~~		Form of Zevia LLC Notice of Restricted Class C Common Unit Award and Restricted Class C Common Unit Agreement (2021) (incorporated herein by reference to Exhibit 10.8 of the Registrant’s Registration Statement on Form S-1, filed on June 25, 2021).

~~10.14#~~		Form of Zevia LLC First Amendment to Notice of Restricted Class C Common Unit Award and Restricted Class C Common Unit Agreement (incorporated herein by reference to Exhibit 10.9 of the Registrant’s Registration Statement on Form S-1, filed on June 25, 2021).

~~10.15#~~		Zevia LLC 2011 Unit Incentive Plan, as amended, and the Form of Unit Option Agreement (incorporated herein by reference to Exhibit 10.10 of the Registrant’s Registration Statement on Form S-1, filed on June 25, 2021).

~~10.16#~~		Form of Zevia LLC Notice of Restricted Phantom Class C Common Unit Award and Restricted Phantom Class C Common Unit Agreement (incorporated herein by reference to Exhibit 10.11 of the Registrant’s Registration Statement on Form S-1, filed on June 25, 2021).

~~10.17#~~		Form of Zevia LLC First Amendment to Notice of Restricted Phantom Class C Common Unit Award and Restricted Phantom Class C Common Unit Agreement (incorporated by reference to Exhibit 10.12 of the Registrant’s Registration Statement on Form S-1/A, filed on July 12, 2021).

~~10.18#~~		~~Offer Letter dated June 9, 2021 between Zevia LLC and Amy Taylor (incorporated by reference to Exhibit 10.13 of the Registrant’s Registration Statement on Form S-1/A, filed on July 12, 2021).~~

~~10.19#~~		Severance Agreement dated as of July 26, 2021 by and between Zevia LLC and Harry Margolis (incorporated herein by reference to Exhibit 10.5 of the Registrant’s Quarterly Report on Form 10-Q, filed on August 13, 2021).

~~10.20#~~		Severance Agreement dated as of July 26, 2021 by and between Zevia LLC and Robert Gay (incorporated herein by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q, filed on August 13, 2021).

~~10.21#~~		Severance Agreement dated as of July 26, 2021 by and between Zevia LLC and Padraic Spence (incorporated herein by reference to Exhibit 10.6 of the Registrant's Quarterly Report on Form 10-Q, filed on August 13, 2021)

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32**		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		Inline XBRL Instance Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


*	Filed herewith.
**	Furnished herewith.


#	Management contract or compensatory plan or arrangement.

3331

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this ~~report~~Quarterly Report to be signed on its behalf by the undersigned ~~hereunto~~thereunto duly authorized.

~~ZEVIA PBC~~

~~Dated: November 12, 2021~~

Zevia PBC

By:

/s/ ~~Padraic Spence~~Amy E. Taylor

Name:

Amy E. Taylor

Title:

President and Chief Executive Officer

~~Padraic Spence~~

~~Chief Executive Officer~~

(Principal Executive Officer)

Date:

November 10, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


~~Dated: November 12, 2021~~			By:				/s/ ~~William D. Beech~~
Amy E. Taylor
		Name:		Amy E. Taylor		~~William D. Beech~~
		Title:		President and Chief Executive Officer
	~~Chief Financial Officer~~
					(Principal ~~Financial~~Executive Officer)
		Date:		November 10, 2022


~~Date: November 12, 2021~~		By:		/s/ ~~Hany Mikhail~~
Denise D. Beckles
	Name:		Denise D. Beckles
	Title:		Chief Financial Officer
			(Principal Financial Officer)
	Date:		November 10, 2022


By:			/s/ Hany Mikhail
	Name:		Hany Mikhail
		Title:		Chief Accounting Officer
				(Principal Accounting Officer)
	Date:		November 10, 2022

3432



Delaware		86-2862492
(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
Class A common stock, par value $0.001 per share	ZVIA	New York Stock Exchange


(in thousands, except unit and per share amounts)	September 30, 2021			December 31, 2020
ASSETS
Current assets:
Cash	$	78,720		$	14,936
Accounts receivable, net		14,507			6,944
Inventories		24,927			20,800
Prepaid expenses and other current assets		5,101			1,492
Total current assets		123,255			44,172
Property and equipment, net		2,740			991
Right-of-use assets under operating leases, net		356			773
Intangible assets, net		3,788			3,939
Other non-current assets		3			81
Total assets	$	130,142		$	49,956
LIABILITIES AND REDEEMABLE CONVERTIBLE PREFERRED UNITS AND MEMBERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	11,925			7,770
Accrued expenses		4,454			3,429
Operating lease liabilities		396			623
Other current liabilities		2,991			2,251
Total current liabilities		19,766			14,073
Operating lease liabilities, net of current portion		4			238
Total liabilities		19,770			14,311
Commitments and contingencies (Note 9)
Redeemable convertible preferred units:
NaN par values. NaN authorized and outstanding as of September 30, 2021. Authorized units of 34,410,379, 26,322,803 units issued and outstanding as of December 31, 2020; and aggregate liquidation preference $329,753 as of December 31, 2020.		0			232,457
Permanent Equity (Deficit)
Members’ deficit		0			(196,812	)
Preferred Stock, $0.001 par value. 10,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2021. NaN shares authorized, issued and outstanding as of December 31, 2020.		0			0
Class A common stock, $0.001 par value. 550,000,000 shares authorized, 34,453,247 shares issued and outstanding as of September 30, 2021. NaN shares authorized, issued and outstanding as of December 31, 2020.		34			0
Class B common stock, $0.001 par value. 250,000,000 shares authorized, 30,113,152 shares issued and outstanding as of September 30, 2021. NaN shares authorized, issued and outstanding as of December 31, 2020.		30			0
Additional paid-in capital		142,813			0
Accumulated deficit		(25,823	)		0
Total Zevia’s Equity / members’ (deficit)		117,054			(196,812	)
Noncontrolling Interests		(6,682	)		0
Total Equity		110,372			(196,812	)
Total liabilities, redeemable convertible preferred units and equity	$	130,142		$	49,956


(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


	Redeemable Convertible Preferred Units					Members’ Deficit
(in thousands, except unit amounts)	Units		Amount			Amount
Balance at January 1, 2020		22,558,386	$	58,037		$	(39,969	)
Exercise of common units		—		—			5
Unit-based compensation expense		—		—			29
Net Loss		—		—			(2,594	)
Balance at March 31, 2020		22,558,386		58,037			(42,529	)
Unit-based compensation expense		—		—			29
Net Income		—		—			3,107
Balance at June 30, 2020		22,558,386		58,037			(39,393	)
Series E Preferred units issuance cost		—		(85	)		—
Exercise of common units		—		—			11
Unit-based compensation expense		—		—			28
Net Income		—		—			2,458
Balance at September 30, 2020		22,558,386	$	57,952		$	(36,896	)


☒	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



Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☒



					Page
PART I.I		~~FINANCIAL INFORMATION~~Financial Information			4
Item 11.	Condensed Consolidated Financial Statements (Unaudited)	~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) OF ZEVIA PBC~~4
		Condensed Consolidated Balance Sheets (Unaudited)			4
		Condensed Consolidated Statements of Operations and Comprehensive ~~Income (Loss)~~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
	8Notes 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.	~~Notes to Condensed Consolidated Unaudited Financial Statements~~Other Information	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors		30	9
Item 2.		~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Unregistered Sales of Equity Securities and Use of Proceeds	30		19
Item 3.		~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~Defaults Upon Senior Securities	30		28
Item 4.		~~CONTROLS AND PROCEDURES~~Mine Safety Disclosures	30		29
~~PART II.~~		~~OTHER INFORMATION~~			31
~~Item 1.~~		~~LEGAL PROCEEDINGS~~			31
~~Item 1A.~~		~~RISK FACTORS~~			31
~~Item 2.~~		~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~			31
~~Item 3.~~		~~DEFAULTS UPON SENIOR SECURITIES~~			31
~~Item 4.~~		~~MINE SAFETY DISCLOSURES~~			31
Item 5.		~~OTHER INFORMATION~~Other Information	30		31
Item 6.		~~EXHIBITS~~Exhibits, Financial Statement Schedules	31		32
		~~SIGNATURES~~Signatures	32		34


	For the Three Months Ended September 30,						For the Nine Months September 30,
(in thousands, except for share amounts)	2021			2020			2021			2020
Net sales	$	38,956		$	32,035		$	104,002		$	82,202
Cost of goods sold		21,952			17,109			56,570			44,409
Gross profit		17,004			14,926			47,432			37,793
Operating expenses:
Selling and marketing expenses		12,834			6,973			31,525			19,611
General and administrative expenses		7,698			4,935			19,352			13,853
Equity-based compensation		45,731			28			45,804			86
Depreciation and amortization		239			256			713			729
Total operating expenses		66,502			12,192			97,394			34,279
Income (loss) from operations		(49,498	)		2,734			(49,962	)		3,514
Other expense, net		(213	)		(276	)		(251	)		(543	)
Income (loss) before Income Taxes		(49,711	)		2,458			(50,213	)		2,971
Provision for income taxes		(50	)		0			(50	)		—
Net Income (loss) and Comprehensive Income (loss)		(49,761	)		2,458			(50,263	)		2,971
Net income (loss) attributable to Zevia LLC prior to the Reorganization Transactions		(1,411	)		2,458			(1,913	)		2,971
Loss attributable to noncontrolling interest		22,527			0			22,527			0
Net loss attributable to Zevia PBC	$	(25,823	)	$	0		$	(25,823	)	$	0

Net loss per share attributable to common stockholders (1)
Basic	$	(0.75	)	N/A			$	(0.75	)	N/A
Diluted	$	(0.75	)	N/A			$	(0.75	)	N/A

Weighted average common shares outstanding
Basic		34,440,982		N/A				34,440,982		N/A
Diluted		34,440,982		N/A				34,440,982		N/A


	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


	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			—		—		—			—		—			—			—			37
Net income prior to the Reorganization Transactions		—			—			247			—		—		—			—		—			—			—			247
Balance at March 31, 2021		26,322,803			232,457			(196,518	)		—	$	—		—		$	—	$	—		$	—		$	—		$	(196,518	)
Equity-based compensation prior to the Reorganization Transactions		—			—			36			—		—		—			—		—			—			—			36
Net loss prior to the Reorganization Transactions		—			—			(749	)		—		—		—			—		—			—			—			(749	)
Distributions to unitholders for tax payments		—			—			(2,669	)		—		—		—			—		—			—			—			(2,669	)
Balance at June 30, 2021		26,322,803			232,457			(199,900	)		—	$	—		—		$	—	$	—		$	—		$	—		$	(199,900	)
Net loss prior to the Reorganization Transactions		—			—			(1,411	)		—		—		—			—		—			—			—			(1,411	)
Impact of Reorganization Transactions and IPO		—			—			—			—		—		—			—		—			—			—			—
Effect of the Reorganization Transactions		(26,322,803	)		(232,457	)		219,633			23,716,450		24		—			—		12,800			—			—			232,457
Issuance of Class A common stock in IPO, net of commission		—			—			—			6,900,000		7		—			—		90,073			—			—			90,080
Issuance of Class B units to Zevia LLC unitholders		—			—			—			—		—		30,114,488			30		(30	)		—			—			—
Purchases of Zevia LLC units in connection with IPO		—			—			(2,037	)		3,767,440		3		—			—		2,034			—			—			—
Cancellation of options in connection with IPO		—			—			(423	)		32,560		—		—			—		425			—			—			2
Cancellation of options		—			—			—			—		—		—			—		(4	)		—			—			(4	)
Offering costs		—			—			—			—		—		—			—		(8,101	)		—			—			(8,101	)
Repurchase and cancellation of Zevia LLC units		—			—			(17	)		—		—		(1,336	)		—		—			—			—			(17	)
Allocation of equity to noncontrolling interest		—			—			(15,845	)		—		—		—			—		—			—			15,845			—
Exercise of stock options		—			—			—			36,797		—		—			—		(115	)		—			—			(115	)
Equity-based compensation		—			—			—			—		—		—			—		45,731			—			—			45,731
Net loss post-Reorganization Transactions		—			—			—			—		—		—			—		—			(25,823	)		(22,527	)		(48,350	)
Balance at September 30, 2021		—		$	—		$	—			34,453,247	$	34		30,113,152		$	30	$	142,813		$	(25,823	)	$	(6,682	)	$	110,372


	For the Nine Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2021			2020			2022			2021
Operating activities:
Net income (loss)	$	(50,263	)	$	2,971
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Net loss							$	(41,477	)	$	(50,263	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash lease expense		417			389			483			417
Depreciation and amortization		713			703			1,005			713
Loss on sale of equipment		9			0			3			9
Amortization of debt issuance cost		94			39			45			94
Equity-based compensation		45,804			86			23,781			45,804
Changes in operating assets and liabilities:
Accounts receivable, net		(7,563	)		(3,428	)		(4,491	)		(7,563	)
Inventories		(4,127	)		(9,688	)		(5,782	)		(4,127	)
Prepaid expenses and other current assets		(3,609	)		(237	)
Other non-current assets		(28	)		(22	)
Prepaid expenses and other assets								97			(3,637	)
Accounts payable		4,155			3,901			6,248			4,010
Accrued expenses		1,025			1,575
Accrued expenses and other current liabilities								1,245			1,910
Operating lease liabilities		(461	)		(284	)		(503	)		(461	)
Other current liabilities		740			1,874
Net cash used in operating activities		(13,094	)		(2,121	)		(19,346	)		(13,094	)
Investing activities:
Proceeds from maturities of securities								30,000			—
Purchases of property and equipment		(2,308	)		(781	)		(2,182	)		(2,308	)
Net cash used in investing activities		(2,308	)		(781	)
Net cash provided by (used in) investing activities								27,818			(2,308	)
Financing activities:
Proceeds from revolving line of credit (1)		74,721			82,989			—			74,721
Repayment of revolving line of credit (1)		(74,721	)		(80,207	)		—			(74,721	)
Proceeds from Paycheck Protection Program Loan		-			1,429
Payment of debt issuance costs								(334	)		—
Minimum tax withholding paid on behalf of employees for net share settlement								(2,130	)		—
Proceeds from exercise of stock options								118			—
Proceeds from exercise of common units								—			10
Exercise of stock options								—			(115	)
Repurchase of Zevia LLC units								—			(17	)
Distribution to unitholders for tax payments		(2,669	)		0			—			(2,669	)
Equity financing cost		0			(85	)
Proceeds from exercise of common units		10			16
Proceeds from issuance of Class A common stock sold in initial public offering, net of underwriting discounts and commissions		139,689			0
Proceeds from issuance of Class A common stock sold in IPO, net of underwriting discounts and commissions								—			139,689
Use of proceeds from issuance of Class A common stock to purchase Zevia LLC Units		(49,609	)		0			—			(49,609	)
Proceeds from the cancellation of options in IPO		2			0
Payment for cancellation of options		(4	)		0
Payment of Offering Costs		(8,101	)		0
Repurchase of Zevia LLC units		(17	)		0
Exercise of stock options		(115	)		0
Net cash provided by financing activities		79,186			4,142
Cancellation of options in IPO								—			2
Cancellation of options								—			(4	)
Payment of IPO costs								—			(8,101	)
Net cash (used in) provided by financing activities								(2,346	)		79,186
Net change from operating, investing, and financing activities		63,784			1,240			6,126			63,784
Cash at beginning of period		14,936			3,243
Cash at end of period	$	78,720		$	4,483
Cash and cash equivalents at beginning of period								43,110			14,936
Cash and cash equivalents at end of period							$	49,236		$	78,720

Non-cash investing and financing activities
Capital expenditures included in accounts payable							$	70		$	—
Conversion of Class B common stock to Class A common stock							$	6,742		$	—
Operating lease right-of-use assets obtained in exchange for lease liabilities							$	1,150		$	—

Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	148		$	201		$	—		$	148


(in thousands)	Three Months Ended September 30, 2021 (as reported)		Reclassification			Three Months Ended September 30, 2021 (adjusted)		Nine Months Ended September 30, 2021 (as reported)		Reclassification			Nine Months Ended September 30, 2021 (adjusted)
Cost of goods sold	$	21,952	$	(763	)	$	21,189	$	56,570	$	(1,712	)	$	54,858
Gross profit		17,004		763			17,767		47,432		1,712			49,144
Selling and marketing expenses		12,834		763			13,597		31,525		1,712			33,237


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021
Retail sales	$	33,728	$	28,169	$	90,561	$	71,573
Online/ecommerce		5,228		3,866		13,441		10,629
United States									$	39,385	$	35,952	$	113,696	$	94,073
Canada										4,854		3,004		14,119		9,929
Net sales	$	38,956	$	32,035	$	104,002	$	82,202	$	44,239	$	38,956	$	127,815	$	104,002


(in thousands)	Useful Life	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021
Land	N/A	$	336		$	—		$	336		$	336
Leasehold improvements	1-2		463			468			463			463
Computer equipment and software	3		1,800			1,454			3,067			2,254
Furniture and equipment	3-6		517			473			544			521
Vehicle Purchases	8		38			0
Quality control equipment	6		385			340
Building	30		1,347			—
Vehicles									177			38
Quality control and marketing equipment									1,269			532
Buildings and improvements									1,603			1,443
Assets not yet placed in service									680			456
			4,886			2,735			8,139			6,043
Less accumulated depreciation			(2,146	)		(1,744	)		(3,206	)		(2,379	)
Property and equipment, net		$	2,740		$	991		$	4,933		$	3,664


(in thousands)
Remainder of 2021	$	51
2022	200
Remainder of 2022			$	50
2023	200			200
2024	200			200
2025	134			138
Thereafter	3
Expected amortization expense for intangible assets with definite lives	$	788	$	588


Stock price	$	14
Exercise Price	$	14
Expected term (years)(1)		6.06
Expected volatility (2)		47.5	%
Risk-Free interest rate (3)		0.9	%
Dividend yield (4)		0.0	%



(in thousands)	Useful lives	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021
Customer relationships	15 years	$	3,007		$	3,007		$	3,007		$	3,007
Accumulated amortization			(2,219	)		(2,068	)		(2,419	)		(2,269	)
			788			939			588			738
Trademarks	Indefinite		3,000			3,000			3,000			3,000
		$	3,788		$	3,939
Intangible assets, net								$	3,588		$	3,738


	Three Months Ended September 30,				For the Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020
Income Statement
Operating lease cost(1)	$	151	$	151	$	454	$	453
Lease income related to operating leases(2)		96		0		128		0


	Shares			Weighted average exercise price		Weighted average remaining life		Intrinsic value (in thousands)
Outstanding Balance as of January 1, 2022		1,409,693		$	2.30
Granted		1,681,560		$	3.91
Exercised		(189,559	)	$	0.62
Forfeited and expired		(78,897	)	$	3.73
Balance as of September 30, 2022		2,822,797		$	3.32		8.1	$	5,245
Exercisable at the end of the period		967,780		$	1.24		5.5	$	3,619
Vested and expected to vest		2,822,797		$	3.32		8.1	$	5,245


	Shares			Weighted average grant date fair value		Aggregate Intrinsic Value (in thousands)
Balance nonvested shares at January 1, 2021		6,002,644		$	2.58
Granted		2,017,300		$	13.70
Vested		—		$	—
Forfeited		(26,500	)	$	13.65
Balance non vested at September 30, 2021		7,993,444		$	5.35		92,005
Vested and expected to vest at September 30, 2021		7,993,444		$	5.35		92,005