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What changed in BRC Inc.'s 10-K — 2023 vs 2024

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

+364 added−450 removedSource: 10-K (2025-03-03) vs 10-K (2024-03-06)

Top changes in BRC Inc.'s 2024 10-K

364 paragraphs added · 450 removed · 284 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur DTC platform has been the core of our business from day one starting with www.blackriflecoffee.com. It has enabled us to quickly become a large, recognizable, and fast-growing beverage brand in the United States, while also allowing us to better understand our consumers and their preferences. Our Wholesale channel complements our DTC sales.
Biggest changeEach channel plays a vital role in reaching our customers, building our community, and growing our brand. 8 Table of Contents Our DTC platform has been the foundation of our business since the inception of the company and launch of www.blackriflecoffee.com. This channel enabled us to quickly establish ourselves as a recognizable beverage brand in the United States.
Government Regulations We are subject to extensive federal, state, and local government regulation, including those relating to, among others, public health and safety, food labeling and advertising, food safety and manufacturing, zoning and fire codes, and franchising. Failure to comply with these regulations would adversely affect our activities manufacturing and selling food.
Government Regulations We are subject to extensive federal, state, and local government regulation, including those relating to, among others, public health and safety, food labeling and advertising, food safety and manufacturing, zoning and fire codes, and franchising. Failure to comply with these regulations would adversely affect our activities, including manufacturing and selling food.
We are also subject to the Americans with Disabilities Act (“ADA”), which prohibits discrimination on the basis of a disability and public accommodations in employment, which may require us to design or modify our facilities to make reasonable accommodations for disabled persons. See Item 1A. Risk Factors. Risks Related to Regulation and Litigation for further information.
We are also subject to the Americans with Disabilities Act (“ADA”), which prohibits discrimination on the basis of a disability and public accommodations in employment, which may require us to design or modify our facilities to make reasonable accommodations for disabled persons. See Item 1A. Risk Factors. Risks Related to Regulation, Litigation and Taxation for further information.
We are also subject to the Fair Labor Standards Act, the Immigration Reform and Control Act of 1986 and various federal and state laws governing such matters such as minimum wage, overtime, employment tax rates, workers compensation rates, citizenship requirements, and other working conditions.
We are also subject to the Fair Labor Standards Act, the Immigration Reform and Control Act of 1986 and various federal and state laws governing such matters such as minimum wage, overtime, employment tax rates, workers compensation rates, citizenship requirements, and other working conditions. A significant number of our personnel are paid at rates related to the federal minimum wage.
We are Veteran-controlled, and approximately 42% of our employees are Veterans or military spouses. Our goal is to maintain our current level of Veteran hires as we expand our operations and further develop our omni-channel business model. As of December 31, 2023, we employed 630 employees across locations in the United States.
Our goal is to maintain our current level of Veteran hires as we expand our operations and further develop our omni-channel business model. As of December 31, 2024, we employed 551 employees across locations in the United States.
Product Supply The majority of our green coffee beans come from Colombia, Nicaragua, and Brazil, but since 2020, we have also sourced green coffee beans from over ten countries in Latin America, Africa, and Asia to diversify our supply chain and offer our customers specialty and limited-time-only roasts.
Product Supply The majority of our green coffee beans come from Colombia, Brazil, and Nicaragua. We also source green coffee beans from over ten countries in Latin America, Africa, and Asia to diversify our supply chain and offer our customers specialty and limited-time-only roasts. Quality control is also a critically important part of our manufacturing and supply chain operations.
Our most important trademark might be our “BRCC” logo, which immediately identifies the brand. We believe that the Black Rifle Coffee Company name and all of its associated marks are of significant value and importance to our business. As a general policy, we pursue registration and monitor the use of our marks in the United States and challenge unauthorized users.
We own a more limited subset of registered trademarks in jurisdictions outside the United States. Our most important trademark might be our “BRCC” logo, which immediately identifies the brand. We believe that the Black Rifle Coffee Company name and all of its associated marks are of significant value and importance to our business.
We own a variety of copyrighted materials, chiefly in the form of original artwork presented on our bagged coffee. We rely on the protection of the United States Copyright Act for the protection of our copyrighted works, and challenge unauthorized users both within and outside of the U.S.
We rely on the protection of the United States Copyright Act for the protection of our copyrighted works, and challenge unauthorized users both within and outside of the U.S.
We will continue to focus on hiring Veterans and first responders and training our employees to provide the authentic Black Rifle Coffee Company experience in our Outpost locations. 10 Table of Contents Employee Wellness We promote health, wellness, and safety through a variety of means which include, but are not limited to, onsite employee training modules, external support such as employee assistance programs and crisis counseling, and universal escalation procedures as it pertains to safety protocols.
Employee Wellness We promote health, wellness, and safety through a variety of means which include, but are not limited to, onsite employee training modules, external support such as employee assistance programs and crisis counseling, and universal escalation procedures as it pertains to safety protocols.
Employee Development and Training We believe that employee development and training is a shared relationship between the employee, their leadership team, and their HR business partner. As this is typically not a one-size fits all approach, training and development plans are unique to the employee and their overall business unit.
Employee Development and Training We believe that employee development and training is a shared relationship between the employee, their leadership team, and their HR business partner.
Intellectual Property We own many registered trademarks and service marks in the United States, including the trademark for “Black Rifle Coffee Company,” and our word marks have been registered in multiple classes of goods and services. We own a more limited subset of registered trademarks in jurisdictions outside the United States.
Those rewards include but are not limited to medical, dental, vision, and voluntary coverages, as well as a variety of compensation rewards. Intellectual Property We own many registered trademarks and service marks in the United States, including the “Black Rifle Coffee Company” trademark, and our word marks have been registered in multiple classes of goods and services.
We license the use of our marks to franchise partners, third-party vendors, and others through franchise agreements, vendor agreements, and licensing agreements. These agreements typically restrict third parties’ activities with respect to use of the marks and impose brand standards requirements. We require licensees to inform us of any potential infringement of the marks.
These agreements typically restrict third parties’ activities with respect to use of the marks and impose brand standards requirements. We require licensees to inform us of any potential infringement of the marks. We own a variety of copyrighted materials, chiefly in the form of original artwork presented on our bagged coffee.
Environmental We believe federal and state environmental regulations have not had a material effect on operations, but more stringent and varied requirements of local government bodies with respect to zoning land use and environmental factors could delay construction and increase development costs for new facilities.
Environmental We believe federal and state environmental regulations have not had a material effect on operations, but more stringent and varied requirements of local government bodies with respect to zoning land use and environmental factors could delay construction and increase development costs for new facilities. 11 Table of Contents Business Combination and Organizational Structure On February 9, 2022, we consummated a business combination (the “Business Combination”) by which BRC Inc. became the parent company of Authentic Brands, pursuant to a business combination agreement dated November 21, 2021 and amended January 4, 2022 (the “Business Combination Agreement”).
Results for any quarter will not necessarily be indicative of the results for a full fiscal year. Human Capital We have built a strong and cohesive culture centered around our mission of serving coffee and content, and our culture to active military, Veterans, first responders, and those who love America.
Human Capital We have built a strong and cohesive culture centered around our mission of serving coffee and content, and our culture to active military, Veterans, first responders, and all who love America. We are Veteran-controlled, and approximately 32% of our employees are Veterans or military spouses.
In our Wholesale channel, we sell packaged coffee at Walmart and FDM and RTD coffee in leading convenience, grocery, and FDM merchandise retailers including Casey’s General Store, Circle K, Kum & Go, Speedway, 7-Eleven, Publix, HEB, Walmart, and Sam’s Club.
In our Wholesale channel, we sell packaged coffee and our RTD beverages through leading Food, Drug, and Mass (“FDM”) retailers such as Walmart, Sam’s Club, regional and national grocery chains, and convenience stores, such as 7-Eleven, Casey’s General Store, and Circle K.
Our Business Black Rifle Coffee Company is a rapidly growing Veteran-controlled and led, coffee and media company that operates through three channels: Wholesale, DTC, and our Outposts. Evan Hafer founded the Company in 2014 with a one-pound roaster in his garage, roasting, packaging, and shipping bagged coffee direct to consumers.
Company Overview Black Rifle Coffee Company is a Veteran-founded and led premium coffee, energy drink, and media company operating through three primary channels: Wholesale, DTC, and Outposts. Founded in 2014 by U.S. Army Veteran Evan Hafer, Black Rifle Coffee began with a one-pound coffee roaster in a garage, where Hafer personally roasted, packaged, and shipped coffee directly to consumers.
This drives an attractive average order value of approximately $12 to $13 at our Outposts. Seasonality Our business is subject to moderate seasonal fluctuations. The first quarter typically will experience lower revenues. In our DTC and Outpost revenue channels, we tend to have higher revenues and cash flow during the holiday season in the fourth quarter.
The first quarter typically will experience lower revenues. In our DTC and Outpost revenue channels, we tend to have higher revenues and cash flow during the holiday season in the fourth quarter. Results for any quarter will not necessarily be indicative of the results for a full fiscal year.
Our customers consistently buy our branded merchandise in addition to coffee, proudly wear Black Rifle Coffee apparel, display Black Rifle Coffee banners and decals and proactively recommend us to their friends, family, and others through social media and by word-of-mouth.
Beyond coffee and Black Rifle Energy, our highly engaged customers consistently purchase branded merchandise, proudly wear Black Rifle Coffee apparel, display decals and banners, and actively recommend our brand through social media and by word-of-mouth. This emotional connection and advocacy drive our growth and open opportunities to expand our product portfolio.
Total Rewards Package Our Total Rewards Package is comprehensive in the fact that it addresses each milestone of the employee life cycle. Those rewards include but are not limited to medical, dental, vision, and voluntary coverages, as well as a variety of compensation rewards.
As this is typically not a one-size fits all approach, training and development plans are unique to the employee and their overall business unit. 10 Table of Contents Total Rewards Package Our Total Rewards Package is comprehensive in the fact that it addresses each milestone of the employee life cycle.
Of the 630 employees, 19 are focused in manufacturing, 345 are in corporate or other administrative roles, and 266 are in roles at Outposts. In addition, we employ part-time and seasonal workers.
Of the 551 employees, 39 are focused in manufacturing, 259 are in corporate or other administrative roles, and 253 are in roles at Outposts. In addition, we employ part-time and seasonal workers. We will continue to focus on hiring Veterans and first responders and training our employees to provide the authentic Black Rifle Coffee Company experience in our Outpost locations.
We also sell coffee, apparel, and gear through leading outdoor, DIY, and lifestyle retailers, including Bass Pro Shops, Scheels, and Ace Hardware, as well as other specialty retailers. Our Wholesale channel generated $225.1 million of sales for the year ended December 31, 2023, compared to $119.4 million over the corresponding period in 2022, representing an increase of 88.6%.
Additionally, our coffee, apparel, and gear are sold through specialty retailers like Bass Pro Shops, Scheels, and Ace Hardware. In 2024, the Wholesale channel generated $245.0 million in sales, compared to $225.1 million in 2023.
We also continue to expand by adding a number of partnership programs, including partnerships with social media influencers and sports teams. In July 2022, we announced a partnership with the Dallas Cowboys that includes product placement at AT&T Stadium and in February 2024, we announced a three-year marketing partnership with UFC.
These initiatives include partnerships with social media influencers and high-profile sports organizations to connect with new and existing audiences. For instance, in July 2022, we announced a partnership with the Dallas Cowboys, featuring product placement at AT&T Stadium.
A large part of Black Rifle Coffee’s success is due to the outstanding work ethic and discipline of our Veteran employees. As a Veteran-founded and Veteran-controlled company, we are committed to hiring Veterans and military spouses. We strive to provide opportunities to the military community that helped build us.
A significant factor in our success is the work ethic and discipline of our Veteran employees. We are committed to hiring Veterans and military spouses, supporting their transition from military service to private industry.
In order to support such a broad public benefit purpose, we established several objectives: create meaningful post-service career opportunities for Veterans, first responders and their families; donate resources to charities that support the needs of active military, Veterans, and first-responders; donate to charities focusing on mental health issues in the Veteran community; inspire Veterans to become entrepreneurs through various programs and donations; and provide quality products and media relating to these communities.
We achieve this through objectives such as: • Creating meaningful post-service career opportunities for Veterans, first responders, and their families. • Supporting charities focused on mental health and other critical needs within these communities. • Inspiring Veterans to pursue entrepreneurship through targeted programs and donations. • Providing quality products and media that resonate with these audiences.
At BRCC, our public benefit purpose is to support the underserved active military, Veteran and first-responder communities.
This dedication is reflected in our direct hiring practices, charitable donations, and storytelling through our media channels. As a public benefit corporation, Black Rifle Coffee Company balances profitability with purpose. Our public benefit purpose is to support the underserved active military, Veteran, and first-responder communities.
Our Mission and Community Our mission at BRCC is to serve premium coffee and content to active military, Veterans, first responders, and those who love America.
Our Mission and Community Our mission at Black Rifle Coffee Company is to serve premium coffee beverages and content to active-duty military, Veterans, first responders, and all who love America. Founded and led by combat Veterans of the Global War on Terror, we are a mission-driven company committed to delivering quality products while giving back to the communities we serve.
We offer a subscription service, our Coffee Club, through which DTC consumers can receive ground, whole bean, single serve, or apparel shipped to their home or office as frequently as every fourteen days. Our Coffee Club subscribers have grown over the past five years to 225,800 as of December 31, 2023.
This channel allows us to engage directly with our customers and gain valuable insight into their preferences. The DTC channel includes our subscription-based Coffee Club, through which customers can receive ground, whole bean, single-serve coffee, or apparel delivered to their home or office on a customizable schedule. As of December 31, 2024, the Coffee Club served approximately 190,400 active subscribers.
This objective is intended to help other service-members successfully transition from the military into private industry and in turn, contributes to a strong and cohesive culture at Black Rifle Coffee Company dedicated to our people. Our aim is to have half of our new hires be Veterans and military spouses as we continue to expand our operations.
This dedication fosters a strong, cohesive culture at Black Rifle Coffee Company, and we aim for half of our new hires to be Veterans and military spouses. Our corporate giving is strengthened through direct donations to charities aligned with our public benefit purpose and through The BRCC Fund, our 501(c)(3) nonprofit organization.
Quality control is also a critically important part of our manufacturing and supply chain operations. Our coffee beans are primarily roasted in-house and 100% is roasted in the United States. A licensed, Coffee Quality Institute-certified grader and former Green Beret leads cupping, grading, scoring, and sourcing of our coffees.
Our licensed, Coffee Quality Institute-certified grader and former Green Beret leads cupping, grading, scoring, and sourcing of our coffees. We rely on co-manufacturers to support a portion of our production capacity for roast coffee and exclusively utilize co-manufacturers for the production of our RTD product lines.
Competition We are uniquely positioned to compete in the $45.0 billion coffee market across our at-home, RTD, and out-of-home coffee products and channels and against other high-growth consumer businesses. Competition in our markets is based on factors such as product quality, roasting methods, brand recognition, and technology.
Competition in the coffee market is influenced by factors such as product quality, roasting methods, brand recognition, and technology. A key competitive advantage is our in-house roasting for nearly half of our bagged coffee products, which we consider essential to delivering the exceptional quality our customers expect.
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Company Overview Black Rifle Coffee Company is a rapidly growing Veteran-controlled and led coffee and media company that operates through three channels: Wholesale, Direct to Consumer, and our Outposts.
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Today, the Company has grown into a widely recognized and nationally distributed brand steadfast in its commitment to supporting active-duty military, Veterans, first responders, and all who love America. Black Rifle Coffee operates out of offices in Salt Lake City, Utah; San Antonio, Texas; and Nashville, Tennessee, with a manufacturing facility in Manchester, Tennessee.
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Our business started with a loyal and quickly expanding community of consumers through our DTC channel and we now have more than 225,800 active Coffee Club subscribers as of December 31, 2023. We are now experiencing rapid growth in our Wholesale channel as we have continued our expansion into grocery stores, specialty stores, and other intermediaries.
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Our product offerings have expanded beyond roast coffee to include single-serve coffee, RTD coffee, and, as of late 2024, Black Rifle Energy, a ready-to-drink energy beverage. Additionally, we offer Black Rifle branded apparel, coffee brewing equipment, and outdoor and lifestyle gear that our customers proudly wear and use to showcase their connection to our brand.
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We have also experienced growth in our Outpost channel as we opened additional company owned stores and franchises in 2023. At Black Rifle Coffee, we develop our roast profiles with the same mission focus we learned as military members serving our country. We produce creative and engaging cause-related media content to inform, inspire, entertain, and build our community.
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The fund focuses on Veteran-related causes, enabling us to provide direct support to individuals, charities, and organizations aligned with our mission to serve those who serve. Our Business We are a digitally native brand with an established omnichannel business model, operating through one reportable segment that comprises three primary channels: DTC, Wholesale, and Outposts.
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We also sell Black Rifle Coffee-brand apparel, coffee brewing equipment, and outdoor and lifestyle gear that our consumers proudly wear and use to showcase our brand. At the heart of everything we do is our commitment to supporting active duty military, Veterans, first responders, and those who love America.
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In 2024, DTC sales totaled $123.8 million, compared to $143.2 million in 2023, reflecting a 14% decline as consumer purchasing behavior shifted toward retail channels and resources were reallocated to growing the Wholesale channel.
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We utilize a three-pronged approach to craft a unique brand that resonates with our customer base and enhances brand loyalty: Inform, Inspire, and Entertain. We want our audience to love coffee as much as we do, so we strive to inform them on all the awesome facets of coffee.
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We have prioritized growth in this channel by expanding distribution in grocery stores, club stores, convenience stores, and specialty retailers, positioning the Wholesale channel as a key driver of future revenue. Our Outposts offer a reimagined coffee shop experience, featuring freshly brewed coffee, Black Rifle Coffee merchandise, and a welcoming environment for community connection.
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Every day we work to inspire our customers; we take pride in the coffee we roast, the Veterans we employ and the causes we support. We give back to the community and are committed to support those who serve. To support our premium quality product, we own one roasting facility focused on large and small batch roasting.
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Since opening the first Outpost in San Antonio, Texas, in 2020, we have expanded to operate eighteen company-owned Outposts and nineteen franchised locations across ten states, including Texas, Utah, and Tennessee. In 2024, Outpost sales totaled $22.7 million, a decline from $27.3 million in 2023.
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Our coffee beans are primarily roasted in-house and 100% in the United States to ensure consistency and quality of product. Our coffee beans are sourced only from the highest quality suppliers. Our state-of-the-art equipment guarantees freshness and offers significant capacity for expansion. We continue to experience strong revenue growth.
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While new unit growth in this channel is currently limited, we plan to resume investments in Outposts in the coming years as we refine our strategy and continue prioritizing capital allocation toward growth in the Wholesale channel. We create dynamic, cause-driven media content designed to strengthen our connection with the Black Rifle Coffee community.
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Revenue increased to $395.6 million for the year ended December 31, 2023, from $301.3 million for the year ended December 31, 2022, and from $233.1 million for the year ended December 31, 2021, representing growth of 31.3% and 29.3%, respectively.
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Guided by a three-pronged strategy—Inform, Inspire, and Entertain—we educate our audience on the craft of coffee, sharing insights into our meticulous roasting processes and premium products. Through compelling storytelling, we highlight the experiences of Veterans, first responders, and everyday heroes who embody our mission.
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Growth in 2023 was primarily driven by expansion of our customer base, which was primarily due to increasing points of distribution in Wholesale, and new Outpost openings.
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At the same time, we captivate and entertain with humor, creativity, and engaging formats that resonate deeply with our loyal and passionate customer base. This comprehensive approach reflects our core values while fostering lasting brand loyalty and recognition. In addition to media content, we continue to grow through strategic partnerships and collaborations that amplify our brand and extend our reach.
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Our entry into the Food, Drug and Mass (“FDM”) market in collaboration with Walmart unlocks significant incremental opportunity to build brand awareness and ensures customers can purchase our products in more places where they shop. We are a digitally native brand with an established omnichannel business model, reaching our customers through one reportable segment that is comprised of three channels.
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In February 2024, we entered into a three-year marketing partnership with the UFC, further elevating our presence in the sports and entertainment landscape. These partnerships, combined with our distinctive media strategy, help us build strong connections with our customers, drive brand loyalty, and ensure Black Rifle Coffee stands out in a competitive market.
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Our Wholesale channel includes products sold to an intermediary such as grocery stores, including the FDM customer set, such as Walmart, Specialty Retailers, such as Bass Pro, and convenience stores which primarily sell our Ready-to-Drink (“RTD”) products, such as 7-Eleven. Our DTC channel includes our e-commerce business, through which consumers order our products online and products are shipped to them.
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These partnerships allow us to efficiently scale production to meet consumer demand while maintaining the quality standards our customers expect. 9 Table of Contents Competition We operate in a highly competitive environment across all our product categories, with competition driven by factors such as price, flavor, packaging, innovation, variety, shelf space, channel distribution, and marketing and promotional strategies.
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Our Outpost channel includes revenue from our Company-operated and franchised Black Rifle Coffee retail coffee shop locations. To meet the increasing popularity of our RTD, rounds, and bagged coffee, we rely on co-manufacturers to provide us with a portion of our production capacity. Maintaining these relationships enables us to quickly scale the production of our products to meet consumer demands.
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Our competitors include large international food and beverage companies like Nestlé, Starbucks, Monster, and Pepsi, as well as private-label brands and smaller high-growth food and beverage companies. Many of these competitors possess substantially greater financial, marketing, and distribution resources than we do.
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We began with a simple premise — to provide a quality product while giving back to the Veteran, active military, and first responder communities through direct hiring, inspiring stories told through our media channels 8 Table of Contents and charitable donations.
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Despite these challenges, we are uniquely positioned to compete in the U.S. coffee market and the U.S. energy drink market. Our differentiation lies in superior product offerings, a powerful media platform, a mission-driven lifestyle brand, a loyal and engaged customer base, and a scalable omnichannel strategy supported by a large subscriber base.
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As a business founded and led by combat Veterans of the Global War on Terror, we are mission-driven: everything we do, every decision we make, is in service of our mission which is intrinsically entwined with growth and maintenance of shareholder value.
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In the RTD coffee, retort dairy, and energy drink categories, we face competition from established brands along with significant barriers to entry, such as production and distribution capabilities. However, our unique positioning and loyal customer base allow us to carve out a distinct space in these markets.
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BRCC was founded with a commitment to give back, which guided our decision to convert into a public benefit corporation.
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In the out-of-home coffee category, we compete with both nationally recognized brands and smaller local coffee shops. While long-established competitors benefit from greater brand recognition and significantly larger financial, technological, roasting, sales, and distribution resources, our expansion into the FDM market has unlocked new opportunities to increase brand awareness and make our products more accessible to consumers.
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Unlike a traditional corporation, which focuses upon maximizing shareholder value above all else, a public benefit corporation balances the shareholder interests for profit, against both the intended public benefit purpose, and the interests of any stakeholders that are materially affected by the corporation’s conduct (i.e. employees, customers, and suppliers).
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Additionally, our customers exhibit higher spending than the typical coffee buyer, frequently purchasing merchandise alongside coffee and driving an attractive average order value of approximately $12 to $13 at our Outposts. Our ability to engage customers across multiple categories uniquely positions us for growth in a competitive market landscape. Seasonality Our business is subject to moderate seasonal fluctuations.
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Our corporate giving is bolstered by our ability to donate directly to charities aligned with our public benefit purpose, coupled with our ability to donate directly from The BRCC Fund to individuals and other organizations. The BRCC Fund is our 501(c)(3) nonprofit organization and its focus is on Veteran-related causes important to Black Rifle Coffee.
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As a general policy, we pursue registration and monitor the use of our marks in the United States and challenge unauthorized users. We license the use of our marks to franchise partners, third-party vendors, and others through franchise agreements, vendor agreements, and licensing agreements.
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Today, Black Rifle Coffee operates out of facilities and offices in Salt Lake City, Utah; Manchester, Tennessee; and San Antonio, Texas, and offers over 20 varieties of roasted whole bean and ground coffee, in addition to our RTD, single-serve, and instant coffee. Our historical performance reflects the scale and growth of our Company.
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At Black Rifle Coffee, we develop our roast profiles with the same mission focus we learned as military members serving our country. We produce creative and engaging, cause-related media content to inform, inspire, entertain, and build our community.
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We also sell BRCC-brand apparel, coffee brewing equipment, and outdoor and lifestyle gear that our consumers proudly wear and use to showcase our brand. At the heart of everything we do is commitment to supporting active-duty military, Veterans, first responders, and those who love America.
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We also sell coffee, apparel, instant and RTD coffee, and gear online for individual purchase on a non-subscription basis. Our DTC channel generated $143.2 million of sales for the year ended December 31, 2023, compared to $159.0 million over the corresponding period in 2022, representing a decrease of 9.9%.
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More than 60% of our 2023 DTC channel revenue came from recurring subscriptions. 9 Table of Contents We also operate and franchise Outposts.
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We believe our Outposts redefine the typical coffee shop experience, offering consumers an immersive environment in which to enjoy a freshly brewed cup of high-quality coffee, stock up on Black Rifle Coffee merchandise and bagged coffee, and connect with members of the local community. We opened our first Company-operated Outpost in 2020 in San Antonio, Texas.
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We are in the early stages of our nationwide growth, with thirty-six Outposts, of which eighteen were Company-operated and eighteen were franchised across ten states, including Texas, Utah, Tennessee, Georgia, Virginia, Arizona, Oklahoma, Florida, South Carolina, and Louisiana as of December 31, 2023.
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Our Outpost channel generated $27.3 million of sales for the year ended December 31, 2023, compared to $22.9 million over the corresponding period in 2022 representing an increase of 19.2%.
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We believe that we have been able to compete successfully on the basis of our superior product, powerful media platform, emphasis on a mission-led lifestyle, a loyal customer base, and scalable omnichannel strategy with a strong subscriber base. We roast the majority of our coffee beans in-house, and we consider our roasting methods essential to the quality of our products.
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We believe that we serve a more attractive customer base than the broader coffee market, as our customers are more engaged with our brand.
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We believe the emotional connection and brand advocacy of our consumers helps fuel our growth and grants us the opportunity to expand our product offering. In the RTD category we compete against established, well-known brands like Monster, private-label brands like Orinoco, and high-growth food and beverage companies such as Celsius.
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The RTD and retort dairy businesses are highly competitive, with high barriers to entry, such as production and distribution. In the out-of-home coffee category we compete against both well-known brands and also small local coffee shops. Longer-established out-of-home coffee competitors may have greater brand recognition, and have substantially greater financial, technological, roasting, sale, distribution, and other resources.
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However, our entry into the FDM market unlocks significant incremental opportunity to build brand awareness and ensures customers can purchase our products in more places where they shop. Our customers spend more than the typical coffee buyer on a per-purchase basis due to merchandise and bagged coffee sales.
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A significant number of our personnel are paid 11 Table of Contents at rates related to the federal minimum wage.
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Business Combination and Organizational Structure On February 9, 2022, we consummated a business combination (the “Business Combination”) by which BRC Inc. became the parent company of Authentic Brands, pursuant to a business combination agreement dated November 21, 2021 and amended January 4, 2022 (the “Business Combination Agreement”).

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe rely on information technology networks and systems and data processing (some of which are managed by third party service providers) to market, sell and deliver our products and services, to fulfill orders, to collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of and share (“Process” or “Processing”) personal information, confidential or proprietary information, financial information and other information, to manage a variety of business processes and activities, for financial reporting purposes, to operate our business, to process orders, for legal and marketing purposes, and to comply with regulatory, legal and tax requirements (“Business Functions”).
Biggest changeWe rely heavily on information technology systems, networks and data processing (some of which are managed by third party service providers), including the Internet, third-party services and artificial intelligence, to operate our business and to manage a variety of business processes and activities, including product design, production, forecasting, ordering, manufacturing, transportation, sales and distribution of our products, retail operations, financial reporting, legal and marketing, to comply with regulatory, legal and tax requirements (“Business Functions”), and to collect, receive, store, process, generate, use, transfer, transmit, disclose, make accessible, protect, secure, dispose of and share (“Process” or “Processing”) personal information, intellectual property, trade secrets, confidential or proprietary information, financial information and other information.
Any actions or any public statements or social media posts about us or our products by non-employees that are contrary to our values, are critical of our brand, or create public controversy could negatively affect consumer perception of our brand and adversely affect our business.
Any actions, public statements, or social media posts about us or our products by non-employees that are contrary to our values, are critical of our brand, or create public controversy could negatively affect consumer perception of our brand and adversely affect our business.
If the DTC revenue trends continue to slow or decline or if the Wholesale channel revenue trends slow or decline, our other sources of revenues may be unable to make up any significant shortfall and our business and financial results could be adversely affected.
If the DTC revenue trends continue to decline or if the Wholesale channel revenue trends slow or decline, our other sources of revenues may be unable to make up any significant shortfall and our business and financial results could be adversely affected.
The terms of our co-manufacturing agreements vary, and some of these arrangements are short-term or based on purchase orders, while others do and will in the future commit us to significant purchases over a number of years.
The terms of our co-manufacturing agreements vary, and some of these arrangements are short-term or based on purchase orders, while others do or will in the future commit us to significant purchases over a number of years.
Further, the purchasing power of current or potential large Wholesale channel partners is significant, and they have the ability to command concessions, which have and may in the future reduce our profitability substantially and expose us to greater liability under the terms of our agreements with such partners.
Further, the purchasing power of current or potential large Wholesale channel partners is significant, and they have the ability to command concessions, which have and may in the future substantially reduce our profitability and expose us to greater liability under the terms of our agreements with such partners.
Outposts we open in new markets may take longer to reach expected sales and profit levels on a consistent basis and may have higher construction, occupancy and operating costs than existing Outposts, thereby affecting our overall profitability. Any failure on our part to recognize or respond to these challenges may adversely affect the success of any new Outposts.
Outposts we open in new markets may take longer to reach expected sales and profit levels on a consistent basis and may have higher construction, occupancy and operating costs than existing Outposts, thereby affecting our overall profitability. Any failure on our part to recognize or respond to these challenges may adversely affect the success of any new or existing Outposts.
Notably, California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”) permits private enforcement against companies for allegedly failing to provide adequate health hazard warnings in the sale of consumer products containing certain chemicals, including contaminants. We have previously received, and may receive in the future, notice of alleged violation threats of private enforcement.
Notably, California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (“Proposition 65”) permits private enforcement against companies for allegedly failing to provide adequate health hazard warnings in the sale of consumer products containing certain chemicals, including contaminants. We have previously received, and may receive in the future, notice of alleged violation and threats of private enforcement.
We are subject to compliance obligations of the Federal Food, Drug, and Cosmetic Act (“FFDCA”), including Food Safety Modernization Act (“FSMA”) for our coffee roasting and beverage manufacturing activities. FDA enforces regulations under FSMA that require us to implement, review, and assess new manufacturing and safety compliance programs, including development of a Food Safety Plan.
We are subject to compliance obligations of the Federal Food, Drug, and Cosmetic Act (the “FFDCA”), including Food Safety Modernization Act (“FSMA”) for our coffee roasting and beverage manufacturing activities. FDA enforces regulations under FSMA that require us to implement, review, and assess new manufacturing and safety compliance programs, including development of a Food Safety Plan.
We may be subject to and suffer an Adverse Data Protection Impact if we fail (or are perceived to have failed) to comply with applicable Data Protection Laws, Privacy Policies, and Data Protection Obligations, if our Privacy Policies are, in whole or part, found to be inaccurate, incomplete, deceptive, unfair, or misrepresentative of our actual practices.
We may be subject to and suffer an Adverse Data Protection Impact if we fail (or are perceived to have failed) to comply with applicable Data Protection Laws, Privacy Policies, and Data Protection Obligations, or if our Privacy Policies are, in whole or part, found to be inaccurate, incomplete, deceptive, unfair, or misrepresentative of our actual practices.
In the United States, these include rules and regulations promulgated under the authority of the FTC, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act (“CCPA”) and other state and federal laws relating to privacy and data security.
In the United States, these include rules and regulations promulgated under the authority of the FTC, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act (the “CCPA”) and other state and federal laws relating to privacy and data security.
For example, Virginia enacted the Consumer Data Protection Act (“CDPA”) that may impose obligations similar to or more stringent than those we may face under other Data Protection Laws.
For example, Virginia enacted the Consumer Data Protection Act (the “CDPA”) that may impose obligations similar to or more stringent than those we may face under other Data Protection Laws.
By requiring that board of directors of public benefit corporations consider additional constituencies other than maximizing stockholder value, Delaware public benefit corporation law could potentially make it easier for our Board to reject a hostile bid, even where the takeover would maximize the financial return to stockholders.
By requiring that the board of directors of public benefit corporations consider additional constituencies other than maximizing stockholder value, Delaware public benefit corporation law could potentially make it easier for our Board to reject a hostile bid, even where the takeover would maximize the financial return to stockholders.
The supply and price of coffee we purchase can also be affected by multiple factors in the producing countries, such as weather (including the potential effects of climate change), natural disasters, crop disease, general increase in farm inputs and costs of production, inventory levels, political and economic conditions, and the actions of certain organizations and associations that have historically attempted to influence prices of green coffee through agreements establishing export quotas or by restricting coffee supplies.
The supply and price of coffee we purchase can also be affected by multiple factors in the producing countries, such as weather (including the potential effects of climate change), natural disasters, crop disease, general increase in farm inputs and costs of production, inventory levels, political and economic conditions, tariffs, and the actions of certain organizations and associations that have historically attempted to influence prices of green coffee through agreements establishing export quotas or by restricting coffee supplies.
Among other things, the Charter and Bylaws include provisions regarding: • a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our Board; • the ability of our Board to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the limitation of the liability of, and the indemnification of, our directors and officers; • the right of our Board to elect a director to fill a vacancy created by the expansion of our Board or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board; • the requirement that directors may only be removed from our Board for cause, upon the affirmative vote of the holders of at least 66-2/3% of the voting power of all of then outstanding shares of the voting stock, voting together as a single class; • the requirement that a special meeting of stockholders may be called only by our Board, the chairman of our Board or our chief executive officer, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; • controlling the procedures for the conduct and scheduling of our Board and stockholder meetings; • the requirement for the affirmative vote of holders of (i) (a) at least 66-2/3%, in case of certain provisions or (b) a majority, in case of other provisions, of the voting power of all of then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal certain provisions of the Charter; and (ii) (a) at least 66-2/3%, in case of certain provisions, or (b) a majority, in case of other provisions, of the voting power of all of then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal certain provisions of the Bylaws, which could preclude stockholders from bringing matters before annual or 40 Table of Contents special meetings of stockholders and delay changes in our Board and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt; • the ability of our Board to amend the Bylaws, which may allow our Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company.
Among other things, the Charter and Bylaws include provisions regarding: • a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our Board; • the ability of our Board to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the limitation of the liability of, and the indemnification of, our directors and officers; • the right of our Board to elect a director to fill a vacancy created by the expansion of our Board or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our Board; • the requirement that directors may only be removed from our Board for cause, upon the affirmative vote of the holders of at least 66-2/3% of the voting power of all of then outstanding shares of the voting stock, voting together as a single class; • the requirement that a special meeting of stockholders may be called only by our Board, the chairman of our Board or our chief executive officer, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; • controlling the procedures for the conduct and scheduling of our Board and stockholder meetings; • the requirement for the affirmative vote of holders of (i) (a) at least 66-2/3%, in case of certain provisions or (b) a majority, in case of other provisions, of the voting power of all of then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal certain provisions of the Charter; and (ii) (a) at least 66-2/3%, in case of certain provisions, or (b) a majority, in case of other provisions, of the voting power of all of then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal certain provisions of the Bylaws, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our Board and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt; • the ability of our Board to amend the Bylaws, which may allow our Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt; and • advance notice procedures with which stockholders must comply to nominate candidates to our Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in our Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company.
In particular, a growing number of states have, and continue to pass, laws regarding chemical contamination of consumer products, including food and food packaging. These include state laws restricting the presence of PFAS in food packaging, as well as laws regarding recyclability of packaging and extended producer responsibility (“EPR”) programs for manufacturers of packaged foods and beverages.
In particular, a growing number of states have, and continue to pass, laws regarding chemical contamination of consumer products, including food and food packaging. These include state laws restricting the presence of PFAS in food packaging, as well as laws regarding recyclability of packaging and extended producer responsibility programs for manufacturers of packaged foods and beverages.
Our ability to open new Outposts is dependent upon a number of factors, many of which are beyond our control, including ou r and our franchise partners’ ability to: • identify available and suitable sites, specifically for drive-thru locations; • compete for such sites; • reach acceptable agreements regarding the lease of locations; • obtain or have available the financing required to acquire and operate an Outpost, including construction and opening costs, which includes access to build-to-suit leases and ground lease construction arrangements; • respond to unforeseen engineering or environmental problems with leased premises; • avoid the impact of inclement weather, natural disasters and other calamities; • hire, train and retain the skilled management and other employees necessary to meet staffing needs; • obtain, in a timely manner and for an acceptable cost, required licenses, permits and regulatory approvals and respond effectively to any changes in local, state or federal law and regulations that adversely affect our and our franchise partners’ costs or ability to open new Outposts; and • control construction and equipment cost increases for new Outposts and secure the services of qualified contractors and subcontractors in an increasingly competitive environment.
Our ability to open new Outposts is dependent upon a number of factors, many of which are beyond our control, including ou r and our franchise partners’ ability to: • identify available and suitable sites; • compete for such sites; • reach acceptable agreements regarding the lease of locations; • obtain or have available the financing required to acquire and operate an Outpost, including construction and opening costs, which includes access to build-to-suit leases and ground lease construction arrangements; • respond to unforeseen engineering or environmental problems with leased premises; • avoid the impact of inclement weather, natural disasters and other calamities; • hire, train and retain the skilled management and other employees necessary to meet staffing needs; • obtain, in a timely manner and for an acceptable cost, required licenses, permits and regulatory approvals and respond effectively to any changes in local, state or federal law and regulations that adversely affect our and our franchise partners’ costs or ability to open new Outposts; and • control construction and equipment cost increases for new Outposts and secure the services of qualified contractors and subcontractors in an increasingly competitive environment.
We promote our brand via media content and active participation in the Veteran community through events, donations, and hiring commitments, but the continued success of such promotions cannot be guaranteed.
We promote our brand through media content and active participation in the Veteran community through events, donations, and hiring commitments, but the continued success of such promotions cannot be guaranteed.
We have entered into certain forward purchase contracts for coffee beans, which include fixed price arrangements with set time periods for market-based increases. By entering into these commercial contracts, we attempt to mitigate the adverse effects of unexpected market-price increases. For example, we agreed to rates in 2023 that are lower than the current future prices of green coffee beans.
We have entered into certain forward purchase contracts for coffee beans, which include fixed price arrangements with set time periods for market-based increases. By entering into these commercial contracts, we attempt to mitigate the adverse effects of unexpected market-price increases. For example, we agreed to rates in 2025 that are lower than the current future prices of green coffee beans.
There can be no assurance that the distributors and retailers will purchase our products or provide our products with adequate levels of promotional and merchandising support.
There can be no assurance that distributors and retailers will purchase our products or provide our products with adequate levels of promotional and merchandising support.
Moreover, Veterans generally experience mental health issues, such as post-traumatic stress disorder, at a higher rate than the average population, which could pose unique challenges in our workplace environment. We maintain a policy of permitting employees and customers to carry firearms in the workplace and at our Outposts, subject to certain policy requirements.
Moreover, Veterans generally experience mental health issues, such as post-traumatic stress disorder, at a higher rate than the average population, which could pose unique challenges in our workplace environment. We maintain a policy of permitting employees and customers to carry firearms in the workplace at certain locations, subject to certain policy requirements.
These information technology systems are critical to many of our operating activities and our business processes and may be negatively impacted by any service interruption or shutdown. For example, our ability to effectively manage and maintain our inventory and to ship products to customers on a timely basis depends significantly on the reliability of these systems.
These information technology systems are critical to many of our operating activities and Business Functions and may be negatively impacted by any service interruption or shutdown. For example, our ability to effectively manage and maintain our inventory and to ship products to customers on a timely basis depends significantly on the reliability of these systems.
If, for any reason, our co-manufacturer or raw material suppliers cannot fulfill their obligations, our co-manufacturer faces an enforcement action by FDA or is otherwise unable to manufacture our products, or a contract with a co-manufacturer is terminated, or if our needs are less than we have contracted for, our business may suffer.
If, for any reason, our co-manufacturers or raw material suppliers cannot fulfill their obligations, any of our co-manufacturer faces an enforcement action by FDA or is otherwise unable to manufacture our products, or a contract with a co-manufacturer is terminated, or if our needs are less than we have contracted for, our business may suffer.
We experienced a decrease in revenue from our DTC channel in 2023 compared to 2022 as customer acquisition costs significantly increased and we shifted marketing investments into other channels with greater returns. Revenue from our DTC channel may continue to decline as customer acquisition costs remain high and locations to purchase our products increase from the expansion in other channels.
We experienced a decrease in revenue from our DTC channel in 2024 compared to 2023 as customer acquisition costs significantly increased and we shifted marketing investments into other channels with greater returns. Revenue from our DTC channel may continue to decline as customer acquisition costs remain high and locations to purchase our products increase from the expansion in other channels.
Even if we believe a claim is covered by insurance, insurers may dispute our entitlement to recovery for a variety of potential reasons, which may affect the timing and, if the insurers prevail, the amount of our recovery. We are subject to many federal, state, and local laws with which compliance is both costly and complex.
Even if we believe a claim is covered by insurance, insurers may dispute our entitlement to recovery for a variety of potential reasons, which may affect the timing and, if the insurers prevail, the amount of our recovery. We are subject to numerous federal, state, and local laws with which compliance is both costly and complex.
In connection with the consummation of our initial public offering, we entered into a Tax Receivable Agreement with the Unitholders of Authentic Brands.
In connection with the consummation of our initial public offering, we entered into a Tax Receivable Agreement (the “TRA”) with the Unitholders of Authentic Brands.
Any significant slowdown or decline in our DTC business could result in reduced cash flows. Our business and revenue growth is dependent on our ability to continuously attract and retain subscribers, and we cannot be sure that we will be successful in these efforts, or that subscriber retention levels will not materially decline.
Any significant slowdown or decline in our DTC business could result in reduced cash flows. Our DTC business and revenue growth are dependent on our ability to continuously attract and retain subscribers, and we cannot be sure that we will be successful in these efforts, or that subscriber retention levels will not materially decline.
Any significant change to Data Protection Laws and Data Protection Obligations, including without limitation, how the express or implied consent of customers for Processing is obtained, 34 Table of Contents could increase our costs and require us to modify our operations, possibly in a material manner, which we may be unable to complete and may limit our ability to store and Process customer data and operate our business.
Any significant change to Data Protection Laws and Data Protection Obligations, including without limitation, how the express or implied consent of customers for Processing is obtained, could increase our costs and require us to modify our operations, possibly in a material manner, which we may be unable to complete and may limit our ability to store and Process customer data and operate our business.
In addition, if we are not able to purchase sufficient quantities of green coffee due to any of the 19 Table of Contents above factors or to a worldwide or regional shortage, our ability to find other green coffee with the same profiles that deliver the same experience to our consumers may be impacted, which could have a material adverse impact on our profitability.
In addition, if we are not able to purchase sufficient quantities of green coffee due to any of the above factors or to a worldwide or regional shortage, our ability to find other green coffee with the same profiles that deliver the same experience to our consumers may be impacted, which could have a material adverse impact on our profitability.
There is increasing consumer awareness of health risks that are attributed to caffeine and other ingredients we use, 26 Table of Contents particularly in the United States, including obesity, increased blood pressure and heart rate, anxiety and insomnia, as well as increased consumer litigation based on alleged adverse health impacts of consumption of various food and beverage products.
There is increasing consumer awareness of health risks that are attributed to caffeine and other ingredients we use, particularly in the United States, including obesity, increased blood pressure and heart rate, anxiety and insomnia, as well as increased consumer litigation based on alleged adverse health impacts of consumption of various food and beverage products.
We depend on cash generated from our operations to support our growth, and we may need to raise additional capital, which may not always be available on acceptable terms or at all. 28 Table of Contents In addition, as we expand our business, it is important that we continue to maintain a high level of customer service and satisfaction.
We depend on cash generated from our operations to support our growth, and we may need to raise additional capital, which may not always be available on acceptable terms or at all. In addition, as we expand our business, it is important that we continue to maintain a high level of customer service and satisfaction.
A component of our growth strategy is opening new Outposts and operating them on a profitable basis. We opened our first Company-operated Outpost in 2020, with the remainder opening in 2021 through 2023.
A component of our growth strategy is opening new Outposts and operating them on a profitable basis. We opened our first Company-operated Outpost in 2020, with the remainder opening in 2021 through 2024.
We cannot provide assurance, however, that the measures we take to secure and enhance these systems will be sufficient to protect our information technology systems and prevent cyber-attacks, system failures or data or information loss. Cyber-attacks, malicious internet-based activity and online and offline fraud are prevalent and continue to increase.
We cannot provide assurance, however, that the measures we take to secure and enhance these systems will be sufficient to protect our information technology systems and prevent cyber-attacks, system failures or data or information loss. Cyber-attacks, malicious internet-based activity and online and offline fraud are prevalent and continue to increase in frequency and magnitude.
A decrease in customer consumption as a result of these health concerns or negative publicity could significantly reduce the demand for our products and could harm our business. Food safety and quality concerns may negatively impact our brand, business, and profitability, our internal operational controls and standards may not always be met.
A decrease in customer consumption as a result of these health concerns or negative publicity could significantly reduce the demand for our products and could harm our business. 26 Table of Contents Food safety and quality concerns may negatively impact our brand, business, and profitability, and our internal operational controls and standards may not always be met.
They also engage in outdoor recreational activities that have known risks, such as bear hunting and mountain sports. These activities could put our founders at risk and cause potential harm to our business. If the services of Mr. Hafer, Mr. Best, Mr. Mondzelewski or Mr.
They also engage in outdoor recreational activities that have known risks, such as bear hunting and mountain sports. These activities could put our founders at risk and cause potential harm to our business. If the services of Mr. Hafer, Mr. Best, our Chief Executive Officer, Mr. Mondzelewski or Mr.
For example, controlled companies: • are not required to have a board that is composed of a majority of “independent directors,” as defined under the NYSE rules; • are not required to have a compensation committee that is composed entirely of independent directors; and • are not required to have director nominations be made, or recommended to the full board of directors, by its independent directors or by a nominations committee that is composed entirely of independent directors.
For example, controlled companies: 43 Table of Contents • are not required to have a board that is composed of a majority of “independent directors,” as defined under the NYSE rules; • are not required to have a compensation committee that is composed entirely of independent directors; and • are not required to have director nominations be made, or recommended to the full board of directors, by its independent directors or by a nominations committee that is composed entirely of independent directors.
Due to brand recognition and logistical synergies, as part of our growth strategy, we also intend to open new Outposts in areas where we have existing Outposts. The operating results and comparable Outpost sales could be adversely affected due to close proximity with our other Outposts and market saturation.
Due to brand recognition and logistical synergies, as part of our growth strategy, we may open new Outposts in areas where we have existing Outposts. The operating results and comparable Outpost sales could be adversely affected due to close proximity with our other Outposts and market saturation.
The results of litigation and other legal proceedings are inherently uncertain, and adverse judgments or settlements in some of these legal disputes may result in adverse monetary damages, penalties or injunctive relief against us, which could negatively impact our financial position, cash 32 Table of Contents flows or results of operations.
The results of litigation and other legal proceedings are inherently uncertain, and adverse judgments or settlements in some of these legal disputes may result in adverse monetary damages, penalties or injunctive relief against us, which could negatively impact our financial position, cash flows or results of operations.
Under these corporate governance standards, a company of which more than 50% of the voting power in the election of 43 Table of Contents directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements.
Under these corporate governance standards, a company of which more than 50% of the voting power in the election of directors is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our Board or management. In addition, as a Delaware public benefit corporation, we are generally subject to provisions of Delaware law, including the DGCL.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our Board or management. 40 Table of Contents In addition, as a Delaware public benefit corporation, we are generally subject to provisions of Delaware law, including the DGCL.
Furthermore, if non-employees cease publishing content supporting us on their social media platforms for any reason, our online presence may decrease and our operating results may suffer. Additionally, we rely on third party social media platforms, such as Facebook, Instagram, YouTube, Google, and others, to generate new customers and to engage with existing customers.
Furthermore, if non-employees cease publishing content supporting us on their social media platforms for any reason, our online presence may decrease and our operating results may suffer. 16 Table of Contents Additionally, we rely on third party social media platforms, such as Facebook, Instagram, YouTube, Google, and others, to generate new customers and to engage with existing customers.
The ADA prohibits discrimination in employment and public accommodations on the basis of disability. Under the ADA, we could be required to expend funds to modify our Outposts to provide service to, or make 33 Table of Contents reasonable accommodations for the employment of, disabled persons.
The ADA prohibits discrimination in employment and public accommodations on the basis of disability. Under the ADA, we could be required to expend funds to modify our Outposts to provide service to, or make reasonable accommodations for the employment of, disabled persons.
See also “ We depend on our founder, executive officers, and other key employees, and the loss of one or more of these employees or an inability to attract and retain other highly skilled employees could harm our business .” Additionally, there has been a marked increase in the use of social media platforms and similar devices, including blogs, social media websites, and other forms of internet-based communications that provide individuals with access to a broad audience of consumers and other interested persons.
See also “ We depend on our founder, executive officers, and other key employees, and the loss of one or more of these employees, the failure of one or more of these employees to dedicate adequate time to the Company’s affairs, or an inability to attract and retain other highly skilled employees could harm our business .” Additionally, there has been a marked increase in the use of social media platforms and similar devices, including blogs, social media websites, and other forms of internet-based communications that provide individuals with access to a broad audience of consumers and other interested persons.
In addition, a decision by one or more of our primary Wholesale partners to terminate its relationship with us or to reduce its purchases, whether motivated by competitive considerations, a change in desired product assortment, quality issues, financial difficulties, economic conditions or otherwise, could also adversely affect our business.
In addition, a decision by one or more of our primary Wholesale partners to terminate its relationship with us or to reduce its purchases, whether motivated by competitive considerations, a change in desired product assortment, quality issues, financial difficulties, economic conditions or otherwise, could also adversely affect our business. Our Wholesale relationships are important to our operations.
We rely on co-manufacturers to provide us with a significant portion of our production capacity, in particular with our RTD products, and certain suppliers to supply various components of co-manufactured products, such as dairy and aluminum cans, and to a lesser extent our at-home coffee products, such as whole bean and ground bagged coffee.
We rely on co-manufacturers to provide us with a significant portion of our production capacity, in particular with our RTD coffee, Black Rifle Energy, rounds, and certain suppliers to supply various components of co-manufactured products, such as dairy and aluminum cans, and to a lesser extent our at-home coffee products, such as whole bean and ground bagged coffee.
If an existing or future Outpost is not profitable, and we decide to close it, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term, or until the lease is either assigned by us to a third party, or the site is relet by the landlord.
If an existing or future Outpost is not profitable and we decide to close it, or if we fail to open an Outpost in a location subject to a lease, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term, or until the lease is either assigned by us to a third party, or the site is relet by the landlord.
The need to make significant concessions to retain one or more such Wholesale channel partners or the failure to maintain or further develop these business relationships could result in harm to our business and results of operations. Additionally, we may not be able to fully control the actions of our Wholesale channel partners.
The need to make significant concessions to retain one or more such Wholesale channel partners or the failure to maintain or further develop these business relationships could result in harm to our business and results of operations. Additionally, we do not fully control the actions of our Wholesale channel partners.
We may need to incur debt to finance payments under the TRA to the extent our cash resources are insufficient to meet our obligations under the TRA 38 Table of Contents as a result of timing discrepancies or otherwise.
We may need to incur debt to finance payments under the TRA to the extent our cash resources are insufficient to meet our obligations under the TRA as a result of timing discrepancies or otherwise.
Such holders may potentially make a significant profit with the sale of their shares of common stock depending on the trading price of the Company’s common stock at the time of a sale and the purchase price of such 42 Table of Contents common stock by such holders.
Such holders may potentially make a significant profit with the sale of their shares of common stock depending on the trading price of the Company’s common stock at the time of a sale and the purchase price of such common stock by such holders.
Failure to comply with state laws could adversely affect our business through state enforcement actions or, in some instances, form the basis of a claim by a private litigant. We are subject to the ADA, which, among other things, requires our Outposts to meet federally mandated requirements for the disabled.
Failure to comply with state laws could adversely affect our business through state enforcement actions or, in some instances, form the basis of a claim by a private litigant. We are subject to the Americans with Disabilities Act (“ADA”), which, among other things, requires our Outposts to meet federally mandated requirements for the disabled.
As federal, state, or other applicable minimum wage rates increase, we may be required to 31 Table of Contents increase not only the wage rates of minimum wage employees, but also the wages paid to other hourly employees.
As federal, state, or other applicable minimum wage rates increase, we may be required to increase not only the wage rates of minimum wage employees, but also the wages paid to other hourly employees.
The negative publicity and our reaction and communication related to such events has in the past resulted in losses to our direct-to-consumer subscription service, the loss of investors, and the loss of Wholesale channel partners.
The negative publicity and our reaction and communication related to such events has in the past resulted in losses to our DTC subscription service, the loss of investors, and the loss of Wholesale channel partners.
The amounts that we may be required to pay under the Tax Receivable Agreement may be accelerated in certain circumstances and may also significantly exceed the actual tax savings that it ultimately realizes.
The amounts that we may be required to pay under the TRA may be accelerated in certain circumstances and may also significantly exceed the actual tax savings that it ultimately realizes.
Due to our customer base, online presence, and reputation, among other factors, our Class A Common Stock may be subject to similar market volatility in the future not necessarily related to the performance of our business. We may not be able to compete successfully with other producers and retailers of coffee.
Due to our customer base, online presence, and reputation, among other factors, our Class A Common Stock may be subject to similar market volatility in the future not necessarily related to the performance of our business. 20 Table of Contents We may not be able to compete successfully with other producers and retailers of coffee and energy drinks.
Increasingly, consumers are using mobile-based devices and applications to shop online with us and with our competitors, and to do comparison shopping, as well as to 23 Table of Contents engage with us and our competitors through digital services and experiences that are offered on mobile platforms.
Increasingly, consumers are using mobile-based devices and applications to shop online with us and with our competitors, and to do comparison shopping, as well as to engage with us and our competitors through digital services and experiences that are offered on mobile platforms.
While we generally believe our pursuit of our PBC Purpose creates value for our brand as well as the individuals and organizations we serve, there is no assurance that we will be able to achieve the PBC Purpose or that the expected positive impact from being a public benefit corporation will be realized, which could have a material adverse effect on our reputation, which in turn may have a material adverse effect on our business, results of operations and financial condition.
Accordingly, being a public benefit corporation could have a material adverse effect on our business, results of operations and financial condition, which in turn could cause the price of our stock to decline. 38 Table of Contents While we generally believe our pursuit of our PBC Purpose creates value for our brand as well as the individuals and organizations we serve, there is no assurance that we will be able to achieve the PBC Purpose or that the expected positive impact from being a public benefit corporation will be realized, which could have a material adverse effect on our reputation, which in turn may have a material adverse effect on our business, results of operations and financial condition.
The growth and expansion of our business and products may place a significant strain on our management, operational and financial resources. As we expand our business, it is important that we continue to maintain a high level of customer service and satisfaction which may place a significant strain on our management, sales and marketing, administrative, financial, and other resources.
As we expand our business, it is important that we continue to maintain a high level of customer service and satisfaction which may place a significant strain on our management, sales and marketing, administrative, financial, and other resources.
Other such incidents that could adversely affect our business 13 Table of Contents include actual or perceived breaches of privacy, contaminated products, employees or customers infected with communicable diseases such as COVID-19, product recalls, controversial actions of persons identified with the brand, or other potential incidents discussed in this risk factors section.
Other such incidents that could adversely affect our business include actual or perceived breaches of privacy, contaminated products, employees or customers infected with communicable diseases, product recalls, controversial actions of persons identified with the brand, or other potential incidents discussed in this risk factors section.
There is no guarantee that a sufficient number of suitable sites for new Outposts will be available in desirable areas or on terms that are acceptable to us in order to achieve our growth plan, and competition for high quality sites is significant.
There is no guarantee that a sufficient number of suitable sites for new Outposts will be available in desirable areas or on terms that are acceptable to us, and competition for high quality sites is significant.
Our business could also be adversely impacted if we fail to grow sales of our RTD, coffee, and merchandise products through Wholesale channels, including flat or declining number of outlets and retailers offering our products, flat or declining sales velocity in these channels, and failure to expand through new retail partnerships and outlets selling our products or newly launched products.
Our business could also be adversely impacted if we fail to grow sales of our RTD coffee, Black Rifle Energy, and merchandise products through Wholesale channels, including flat or declining number of outlets and retailers offering our products, flat or declining sales velocity in these channels, and failure to expand sales of our products through new retail partnerships and outlets.
These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes, gains or losses may differ materially from our assessments and estimates.
Based on these assessments and estimates, we may establish reserves, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes, gains or losses may differ materially from our assessments and estimates.
Our largest primary Wholesale partner represented 26% of our consolidated net sales in 2023, and the failure to increase or maintain our sales with this primary Wholesale partner would have a negative impact on our growth prospects and any decrease or loss of this primary Wholesale partner’s business could result in a decrease in our net sales and operating income if we are unable to capture these sales through our DTC operations or other Wholesale accounts.
Our largest primary Wholesale partner represented 28% of our consolidated net sales in 2024, and the failure to increase or maintain our sales with our primary Wholesale partners would have a negative impact on our growth prospects and any decrease or loss of any of our primary Wholesale partners’ business could result in a decrease in our net sales and operating income if we are unable to capture these sales through our DTC operations or other Wholesale accounts.
Specifically, the PPACA amended the Federal Food, Drug, and Cosmetic Act to require certain chain restaurants to publish the total number of calories of standard menu items on menus and menu boards, along with a statement that puts this calorie information in the context of a total daily calorie intake.
Specifically, the PPACA amended the FFDCA to require certain chain restaurants to publish the total number of calories of standard menu items on menus and menu boards, along with a statement that puts this calorie information in the context of a total daily calorie intake.
Our unique workplace atmosphere may produce specific challenges. We have regularly articulated our goal to maintain current Veteran hiring levels. Failure to meet this goal, or perception that we have strayed from this goal in our hiring practices, may adversely affect our employee relationships and our reputation towards our customers.
We have regularly articulated our goal to maintain current Veteran hiring levels. Failure to meet this goal, or perception that we have strayed from this goal in our hiring practices, may adversely affect our employee relationships and our reputation towards our customers.
Unlike traditional corporations, which have a fiduciary duty to focus exclusively on maximizing stockholder value, our directors have a fiduciary duty to balance the pecuniary interests of stockholders, the best interests of those materially affected by our conduct and our public benefit company purpose (the “PBC Purpose”).
Unlike traditional corporations, which have a fiduciary duty to focus exclusively on maximizing stockholder value, our directors have a fiduciary duty to balance the pecuniary interests of stockholders, the best interests of those materially affected by our conduct and our PBC Purpose.
Such substantial indebtedness has important consequences for us, including: • a significant portion of our cash flow will be used to service such indebtedness, thereby limiting the availability of our cash flow to fund future growth, capital expenditures, working capital, business activities and other general corporate requirements; • restrictive covenants in the debt agreements could prevent us from borrowing additional funds for working capital, capital expenditures, and debt service requirements, which could result in an inability to fund our growth or result in a default under the debt agreements; • an increase in interest rates, as experienced since 2022 or as we may experience in the future, could significantly increase the cost of the variable rate debt under the debt agreements; • any inability to service or refinance such indebtedness or the acceleration of such indebtedness could result in default which could result in all of the outstanding indebtedness becoming due and payable, an inability to access the revolving credit facility (in whole or in part), foreclosure against the borrowers’ assets, and bankruptcy or liquidation; • such indebtedness increases our vulnerability to economic downturns and adverse industry conditions and reduces our flexibility to plan for, or react to, changes in our business or industry; and • our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors with less indebtedness, may be compromised due to the indebtedness and the restrictive covenants in the debt agreements.
Such substantial indebtedness has important consequences for us, including: • a significant portion of our cash flow will be used to service such indebtedness, thereby limiting the availability of our cash flow to fund future growth, capital expenditures, working capital, business activities and other general corporate requirements; • restrictive covenants in the debt agreements could prevent us from borrowing additional funds for working capital, capital expenditures, and debt service requirements, which could result in an inability to fund our growth or result in a default under the debt agreements; • an increase in interest rates, as experienced since 2022 or as we may experience in the future, could significantly increase the cost of the variable rate debt under the debt agreements; • any inability to service or refinance such indebtedness or the acceleration of such indebtedness could result in default which could result in all of the outstanding indebtedness becoming due and payable, an inability to access the revolving credit facility (in whole or in part), foreclosure against the borrowers’ assets, and bankruptcy or liquidation; • such indebtedness increases our vulnerability to economic downturns and adverse industry conditions and reduces our flexibility to plan for, or react to, changes in our business or industry; and • our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors with less indebtedness, may be compromised due to the indebtedness and the restrictive covenants in the debt agreements. 29 Table of Contents We can provide no assurance that our business will generate sufficient cash flow from operations to service or repay the debt obligations, or that we will have the ability to issue new debt, draw on the revolving credit facility, or find other alternative sources of funds to satisfy our obligations and working capital needs.
Additionally, we have historically prioritized, and may in the future continue to prioritize, growth over profitability.
Additionally, we have historically prioritized growth over profitability and may continue to do so in the future.
The specialty coffee market is intensely competitive, including with respect to product quality, innovation, service, convenience, such as store location, delivery service, mobile ordering, and price. We face significant and increasing competition in all these areas in each of our channels and markets.
The specialty coffee and energy drink markets are intensely competitive, including with respect to product quality, innovation, service, convenience, store location, delivery service, mobile ordering, and price. We face significant and increasing competition in all these areas in each of our channels and markets.
If the adoption of new revenue models adversely impacts our subscriber relationships, then subscriber growth, subscriber engagement, and our business, financial condition, and operating results could be harmed. Our DTC and Wholesale business’ success depends on third party logistics.
If the adoption of new revenue models adversely impacts our subscriber relationships, then subscriber growth, subscriber engagement, and our business, financial condition, and operating results could be harmed. 17 Table of Contents Our DTC and Wholesale business’ success depends on third party logistics and a network of brokers and distributors.
We rely on our deposits with the bank and access to our senior credit facility to fund substantially all of our operations. Any disruption in the bank’s ability to process payments, maintain our deposits, or satisfy its obligations under our senior credit facility, would significantly disrupt our business and could materially affect our operations and financial performance.
Any disruption in the bank’s ability to process payments, maintain our deposits, or satisfy its obligations under our senior credit facility, would significantly disrupt our business and could materially affect our operations and financial performance. In addition, under the terms of our senior credit facility, we are required to maintain substantially all our deposits with the bank.
In addition, the increased use of employee-owned devices for communications as well as work-from-home arrangements, such as those implemented in response to the COVID-19 pandemic, present additional operational risks to our information technology systems, including, but not limited to, increased risks of cyber-attacks.
In addition, the increased use of employee-owned devices for communications as well as work-from-home arrangements present additional operational risks to our information technology systems, including, but not limited to, increased risks of cyber-attacks.
Additionally, the growth of our business can make it increasingly difficult to locate and hire sufficient numbers of key employees, to maintain an effective system of internal controls for a dispersed chain, and to train employees to deliver consistently high-quality products and customer experiences, which could materially harm our business and results of operations.
Additionally, the growth of our business can make it increasingly difficult to locate and hire sufficient numbers of key employees, to maintain an effective system of internal controls for a dispersed chain, and to train employees to deliver consistently high-quality products and customer experiences, which could materially harm our business and results of operations. 31 Table of Contents Our unique workplace atmosphere may produce specific challenges.
Additionally, the pricing actions we may take could negatively impact our customer engagement, including our subscriber base, and decrease our market share, and certain of our competitors, particularly our larger, more established competitors, may manage inflationary pressures better than we are able.
Additionally, the pricing actions we may take could negatively impact our customer engagement, including our subscriber base, and decrease our market share, and certain of our competitors, particularly our larger, more established competitors, may manage inflationary pressures better than we are able. Authentic Brands’ debt obligations could impair our financial condition and negatively impact our business.
Our growth strategy depends in part on opening new Outposts in existing and new markets. We may be unsuccessful in opening new Outposts or establishing new markets, which could adversely affect our growth. As of December 31, 2023, we have thirty-six Outposts across ten states, of which eighteen were Company-operated and eighteen were franchised.
Our long-term growth strategy depends in part on opening and operating new Outposts in existing and new markets. We may be unsuccessful in opening or profitably operating new Outposts or establishing new markets, which could adversely affect our growth. As of December 31, 2024, we have thirty-seven Outposts across ten states, of which eighteen were Company-operated and nineteen were franchised.
If we cannot compete successfully with other entities in the market, we could lose customers and our revenue could decline.
If we cannot compete successfully with other entities in these markets, we could lose customers and our revenue could decline.
To the extent that we are not able to effectively gauge the direction of our key markets and successfully identify, develop, and promote new or improved products in the changing market, our operating results could suffer.
To the extent that we are not able to effectively gauge the direction of our key markets and successfully identify, develop, and promote new or improved products in the changing market, our operating results could suffer. These risks extend to the implementation of new lines of business or product categories.
Any material interruption in our supply chain, such as material interruption of the supply of coffee beans, coffee machines and other restaurant equipment, merchandise, apparel, or packaging for our proprietary products could have a negative material impact on our business and our profitability.
Any significant interruption in our supply chain, including interruptions in the supply of coffee beans, coffee machines, restaurant equipment, merchandise, apparel, extract, other product ingredients, or packaging for our proprietary products could have a material negative impact on our business and our profitability.
Noncompliance could result in Adverse Data Protection Impact, including proceedings against us by governmental and regulatory entities, collaborators, individuals, or others. 35 Table of Contents We rely on a variety of marketing techniques and practices, including email and social media marketing, online targeted advertising, and cookie-based processing, to sell our products and services and to attract new customers, and we, and our vendors, are subject to various current and future Data Protection Laws and Data Protection Obligations that govern marketing and advertising practices.
Noncompliance could result in Adverse Data Protection Impact, including proceedings against us by governmental and regulatory entities, collaborators, individuals, or others. 35 Table of Contents We rely on a variety of marketing techniques and practices, including email and social media marketing, online targeted advertising, and cookie-based processing, to sell our products and services and to attract new customers, and we, and our vendors, are subject to various current and future Data Protection Laws and Data Protection Obligations that govern marketing and advertising practices, including recent developments for the regulation of “opt-in” and “opt-out” options regarding direct marketing to consumers through the use of emails and text messaging.
We also may need to expend significant resources to protect against, respond to and/or redress problems caused by any breach. 24 Table of Contents The failure of these systems to operate effectively, including as a result of the threats described above as well as a result of natural disasters, vendor business interruptions or other causes, failure to properly maintain, protect, repair or upgrade systems, or problems with transitioning to upgraded or replacement systems could cause delays in product fulfillment and reduced efficiency of our operations, could require significant capital investments to remediate the problem which may not be sufficient to cover all eventualities, and may have an adverse effect on our reputation, results of operations and financial condition.
Further, the failure of these systems to operate effectively, including as a result of the threats described above or as a result of natural disasters, vendor business interruptions or other causes, failure to properly maintain, protect, repair or upgrade systems, or problems with transitioning to upgraded or replacement systems could cause delays in product fulfillment and reduced efficiency of our operations, could require significant capital investments to remediate such problems which may not be sufficient to cover all eventualities, and may have an adverse effect on our reputation, results of operations and financial condition.
Moreover, the risk of unauthorized circumvention of our security measures or those of third parties on whom we rely has been heightened by advances in computer and software capabilities and the increasing sophistication of hackers who employ complex techniques, including, without limitation, “phishing” or social engineering incidents, ransomware, extortion, account takeover attacks, denial or degradation of service attacks and malware.
Moreover, the risk of unauthorized circumvention of our security measures or those of third parties on whom we rely has been heightened by advances in computer and software capabilities and the increasing sophistication of hackers who employ complex techniques, including, without limitation, “phishing” or social engineering incidents, malicious code (such as viruses and worms), account takeover attacks, software bugs, denial or degradation of service attacks and malware (including as a result of advanced persistent threat intrusions).
If our new Outposts do not perform as planned or close, our business and future prospects could be harmed. In addition, an inability to achieve our expected average Outpost revenue could harm our business. Our failure to manage our growth effectively could harm our business and operating results. We have experienced rapid growth and increased demand for our products.
If our new Outposts do not perform as planned or close, our business and future prospects could be harmed. In addition, an inability to achieve our expected average Outpost revenue could harm our business. 22 Table of Contents Failure to effectively manage growth could harm our business and operating results.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRisk Management and Strategy As one of the critical elements of the Company’s strategy, the Company’s cybersecurity program is focused on the following key areas: • Governance: As discussed in more detail under the heading “Governance,” the Board’s oversight of cybersecurity risk management is supported by the Audit Committee of the Board, which regularly interacts with members of senior management tasked with various risk management functions. • Collaborative Approach: The Company has implemented a comprehensive, cross-functional approach to identifying, preventing, and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management promptly. 44 Table of Contents • Technical Safeguards: The Company deploys technical safeguards that are designed to protect the Company’s information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality, and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence. • Incident Response and Recovery Planning: The Company has established and maintains comprehensive incident response and recovery plans that fully address the Company’s response to a cybersecurity incident, and such plans are tested and evaluated regularly. • Education and Awareness: The Company provides regular, mandatory training for personnel regarding cybersecurity threats as a means to equip the Company’s personnel with effective tools to address cybersecurity threats, and to communicate the Company’s evolving information security policies, standards, processes, and practices.
Biggest changeRisk Management and Strategy As one of the critical elements of the Company’s strategy, the Company’s cybersecurity program is focused on the following key areas: • Governance: As discussed in more detail under the heading “Governance,” the Board’s oversight of cybersecurity risk management is supported by the Audit Committee of the Board, which regularly interacts with members of senior management tasked with various risk management functions. • Collaborative Approach: The Company has implemented a comprehensive, cross-functional approach to identifying, preventing, and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management promptly. • Technical Safeguards: The Company deploys technical safeguards that are designed to protect the Company’s information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality, and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence. • Incident Response and Recovery Planning: The Company has established and maintains comprehensive incident response and recovery plans that fully address the Company’s response to a cybersecurity incident, and such plans are tested and evaluated regularly. • Education and Awareness: The Company provides regular, mandatory training for personnel regarding cybersecurity threats as a means to equip the Company’s personnel with effective tools to address cybersecurity threats, and to communicate the Company’s evolving information security policies, standards, processes, and practices. 44 Table of Contents The Company engages in the periodic assessment and testing of the Company’s policies, standards, processes, and practices that are designed to address cybersecurity threats and incidents.
The Company also engages third parties to perform assessments on our cybersecurity measures. Governance The Board, in coordination with the Audit Committee, oversees the Company’s management of risks arising from cybersecurity threats.
These efforts include a wide range of activities, including assessments, tabletop exercises, vulnerability testing, and other exercises focused on evaluating the effectiveness of our cybersecurity measures and planning. The Company also engages third parties to perform assessments on our cybersecurity measures. Governance The Board, in coordination with the Audit Committee, oversees the Company’s management of risks arising from cybersecurity threats.
Removed
The Company engages in the periodic assessment and testing of the Company’s policies, standards, processes, and practices that are designed to address cybersecurity threats and incidents. These efforts include a wide range of activities, including assessments, tabletop exercises, vulnerability testing, and other exercises focused on evaluating the effectiveness of our cybersecurity measures and planning.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties The material properties used by the Company in connection with its roasting, manufacturing, warehousing, distribution and corporate administrative operations are as follows: Property Location Approximate Size (sq. ft.) Function Owned/Leased Salt Lake City, UT 30,295 HQ and Corporate Owned Manchester, TN 65,000 Corporate and Manufacturing Owned As of December 31, 2023, the Company had 18 Company-operated stores, most of which are leased.
Biggest changeProperties The material properties used by the Company in connection with its roasting, manufacturing, warehousing, distribution and corporate administrative operations are as follows: Property Location Approximate Size (sq. ft.) Function Owned/Leased Salt Lake City, UT 30,295 HQ and Corporate Owned Manchester, TN 65,000 Manufacturing Owned San Antonio, TX 9,106 Corporate Leased Nashville, TN 13,203 Corporate Leased As of December 31, 2024, the Company had eighteen Company-operated stores, all of which are leased.
In addition to the locations listed above, we hold inventory at various locations managed by third-party warehouses. We believe our existing facilities, both owned and leased, are in good condition and suitable for the conduct of our business. 45 Table of Contents
In addition to the locations listed above, we hold inventory at various locations managed by third-party warehouses. We believe our existing facilities, both owned and leased, are in good condition and suitable for the conduct of our business.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe complaint alleges that the Tang Capital suffered damages arising from the Company’s refusal on two alleged occasions to permit Tang Capital to exercise warrants. On March 8, 2023, the court granted the Company’s motion to dismiss a claim for declaratory judgment but denied the Company’s motion to dismiss a breach of contract claim.
Biggest changeBRC Inc., Case 22-CV-3476 (RWL) (Southern District of New York). The complaint alleges that Tang Capital suffered damages arising from the Company’s refusal on two alleged occasions to permit Tang Capital to exercise warrants.
On June 22, 2023, John Brian Clark, JBC Structured Products LLC, and Marathon Capital LLC (collectively, “Clark”) filed a complaint against BRC Inc. and Black Rifle Coffee Company LLC: John Brian Clark, et al. v. BRC Inc., et al., Case 1:23-CV-5340 (RWL) (Southern District of New York). Clark alleges a breach of contract and is seeking a declaratory judgment.
On June 22, 2023, John Brian Clark, JBC Structured Products LLC, and Marathon Capital LLC (collectively, “Clark”) filed a complaint against BRC Inc. and Black Rifle Coffee Company LLC: John Brian Clark, et al. v. BRC Inc., et al., Case 1:23-CV-5340 (RWL) (Southern District of New York). Clark alleges breach of contract and is seeking a declaratory judgment.
("SEI") filed a lawsuit in federal district court in Texas against one of the Company's wholly owned subsidiaries: Strategy and Execution, Inc. v. Black Rifle Coffee Company LLC, Case 23-CV-00135 (FB) (Western District of Texas). The complaint alleges that SEI, a former consultant to the Company, is owed certain disputed royalties from the Company.
("SEI") filed a lawsuit in federal district court in Texas against one of the Company's wholly owned subsidiaries, Strategy and Execution, Inc., v. Black Rifle Coffee Company LLC, Case 23-CV-00135 (FB) (Western District of Texas). The complaint alleges that SEI, a former consultant to the Company, is owed certain disputed royalties and expense reimbursements from the Company.
The Company believes that it has meritorious defenses to the claim asserted against it and will defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts.
The Company believes that it has meritorious defenses to the claims asserted against it and will defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts.
The Company believes that it has meritorious defenses to the causes of action asserted against it and will defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts.
The case is currently set for trial in July 2025. The Company believes that it has meritorious defenses to the damage claims asserted against it and will defend itself vigorously in these proceedings and potentially on appeal; however, there can be no assurances that it will be successful in its efforts.
Except as described below, our management believes that there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our results of operations, financial condition or cash flows.
Except as described below, our management believes that there are currently no claims or actions pending against us, the ultimate disposition of which could have a material adverse effect on our results of operations, financial condition or cash flows. 45 Table of Contents On April 28, 2022, Tang Capital Partners, LP (“Tang Capital”) filed a lawsuit in federal district court in the Southern District of New York against the Company, Tang Capital Partners, LP v.
On April 28, 2022, Tang Capital Partners, LP (“Tang Capital”) filed a lawsuit in federal district court in New York against the Company, Tang Capital Partners, LP v. BRC Inc. , Case 22-CV-3476 (RWL) (Southern District of New York).
On May 15, 2024, Alta Partners, LLC (“Alta”) filed a lawsuit in the federal district court in the Southern District of New York against the Company: Alta Partners, LLC v. BRC Inc., Case 24-CV-03741 (AT) (RWL) (Southern District of New York).
On April 4, 2023, the Company filed a partial motion to dismiss several of the claims which is currently pending. The Company maintains all royalties expire upon expiration of the parties’ contract on December 31, 2023, and prior to such expiration, only SKUs manufactured at co-manufacturers SEI introduced the Company to, are subject to such royalty.
On April 4, 2023, the Company filed a partial motion to dismiss several of the claims which was granted with prejudice with respect to the Company's position that all royalties expired upon expiration of the parties' contract on December 31, 2023.
Removed
Through December 31, 2023, the Company has expensed all royalties for co-manufacturers which SEI introduced.
Added
On March 8, 2023, the court granted the Company’s motion to dismiss a claim for declaratory judgment but denied the Company’s motion to dismiss Tang Capital's breach of contract claim. Each party filed respective motions for summary judgment and completed the briefing of these motions on May 31, 2024.
Added
Tang Capital's motion for summary judgment sought $10.5 million in compensatory damages, plus prejudgment interest.
Added
On November 8, 2024, the court granted in part, and denied in part, the respective motions for summary judgment, holding that the Company breached the warrant agreement by not allowing Tang Capital to exercise warrants, but determining that there were fact issues that need to be resolved at trial on the issue of Tang Capital’s alleged damages, including whether Tang could have mitigated its alleged damages.
Added
On May 8, 2024, SEI filed a motion for reconsideration of the order granting the partial motion to dismiss, and on May 14, 2024, SEI filed a motion for leave to amend its complaint. These motions are currently pending. On October 3, 2024, SEI and the Company held a mediation, at which no agreement was reached.
Added
On January 28, 2025, the parties settled all remaining claims not subject of the pending motions.
Added
The Company believes that it has meritorious defenses to the claims asserted against it in the pending motions and will continue to defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts. $0.4 million has been included in accrued liabilities related to this matter and this amount was paid to the counterparty in the first quarter of 2025.
Added
The Company is not able at this time to determine or predict the ultimate outcome of this lawsuit or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in this matter.
Added
The complaint alleges breach of contract and that Alta suffered damages arising from the Company’s refusal to permit Alta to exercise warrants between March 11 and May 4, 2022. The lawsuit seeks unspecified general and compensatory damages, attorneys’ fees, and other costs and disbursements.
Added
On July 11, 2024, the Company filed a pre-motion with the court, posing certain arguments in its defense and requesting permission to move to dismiss.
Added
The Company believes that it has meritorious defenses to the claims asserted against it and will defend itself in these proceedings; however, the Company is not able at this time to determine or predict the ultimate outcome of this lawsuit or provide a reasonable estimate or range of estimates of the possible outcome or loss, if any, in this matter.
Added
On May 20, 2024, one of our co-manufacturers filed a complaint in the district court of Riley County, Kansas against one of the Company's wholly owned subsidiaries, Black Rifle Coffee Company LLC, Case RL-2024-CV-000119.
Added
The complaint alleges breach of contract and anticipatory breach of contract with respect to certain fees and order volume pursuant to the parties' drink manufacturing agreement, amongst other allegations. On July 18, 2024, the Company filed a partial motion to dismiss relating to certain of these allegations.
Added
On November 13, 2024, the court denied the Company’s motion to dismiss other than for the co-manufacturer’s claim of fraudulent inducement, for which the court has granted leave to amend.
Added
The Company believes that it has meritorious defenses to the claims asserted against it and will defend itself in these proceedings. $2.7 million has been included in accrued liabilities related to this matter. 46 Table of Contents Item 4. Mine Safety Disclosures Not applicable. Part II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A Common Stock began trading on the NYSE under the symbol “BRCC” on February 10, 2022, in connection with the Closing.
Biggest changeItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A Common Stock is currently listed on the NYSE under the symbol “BRCC”.
The payment of cash 47 Table of Contents dividends in the future will be dependent upon the Company’s revenues and earnings, if any, capital requirements and general financial condition. The payment of any cash dividends is within the discretion of the Board.
The payment of cash dividends in the future will be dependent upon the Company’s revenues and earnings, if any, capital requirements and general financial condition. The payment of any cash dividends is within the discretion of the Board.
T he number of record holders does not include persons who held our securities in nominee or “street name” form, whose shares of record are held by banks, brokers, and other financial institutions.
The number of record holders does not include persons who held our securities in nominee or “street name” form, w hose shares of record are held by banks, brokers, and other financial institutions.
Holders As of February 29, 2024, there were 60 holders of record of our Class A Common Stock, 63 holders of record of our Class B Common Stock and no holders of record of our Class C Common Stock and Preferred Stock.
Holders As of February 26, 2025, there were 37 holders of record of our Class A Common Stock, 51 holders of record of our Class B Common Stock and no holders of record of our Class C Common Stock and Preferred Stock.

Item 7. Management's Discussion & Analysis

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

54 edited+16 added−44 removed32 unchanged
Biggest changeThe following table represents the selected results of operations for BRCC for the periods indicated ( amounts in thousands ): Year Ended December 31, 2023 2022 Revenue, net $ 395,623 $ 301,313 Cost of goods sold 270,175 202,134 Gross profit 125,448 99,179 Operating expenses Marketing and advertising 30,794 38,169 Salaries, wages and benefits 71,054 64,286 General and administrative 71,613 64,486 Other operating expense, net 2,198 — Total operating expenses 175,659 166,941 Operating loss (50,211) (67,762) Non-operating income (expenses) Interest expense, net (6,330) (1,593) Other income, net 10 339 Change in fair value of earn-out liability — (209,651) Change in fair value of warrant liability — (56,675) Change in fair value of derivative liability — (2,335) Total non-operating expenses (6,320) (269,915) Loss before income taxes (56,531) (337,677) Income tax expense 185 367 Net loss $ (56,716) $ (338,044) 51 Table of Contents Comparison of the year ended December 31, 2023 to the year ended December 31, 2022 ( dollars in thousands): Year Ended December 31, 2023 2022 $ Change % Change Revenue, net $ 395,623 $ 301,313 $ 94,310 31 % Cost of goods sold 270,175 202,134 68,041 34 % Gross profit 125,448 99,179 26,269 26 % Gross margin (1) 31.7 % 32.9 % Total operating expenses $ (175,659) $ (166,941) 8,718 5 % (1) Gross margin is calculated as gross profit as a percentage of revenue, net Revenue, net We sell our products both directly and indirectly to our customers through a broad set of physical and online platforms.
Biggest changeThe following table represents the selected results of operations for BRCC for the periods indicated ( amounts in thousands ): Year Ended December 31, 2024 2023 Revenue, net $ 391,490 $ 395,623 Cost of goods sold 230,316 270,175 Gross profit 161,174 125,448 Operating expenses Marketing and advertising 35,631 30,794 Salaries, wages and benefits 62,415 71,054 General and administrative 50,827 71,613 Other operating expense, net 8,453 2,198 Total operating expenses 157,326 175,659 Operating income (loss) 3,848 (50,211) Non-operating income (expenses) Interest expense, net (11,325) (6,330) Other income, net — 10 Total non-operating expenses (11,325) (6,320) Loss before income taxes (7,477) (56,531) Income tax expense 172 185 Net loss $ (7,649) $ (56,716) 50 Table of Contents Components of Our Operating Income (Loss) Comparison of the year ended December 31, 2024 to the year ended December 31, 2023 The following table summarizes our revenue, gross profit, gross margin, and total operating expenses (dollars in thousands) : Year Ended December 31, 2024 2023 $ Change % Change Revenue, net $ 391,490 $ 395,623 $ (4,133) (1) % Cost of goods sold 230,316 270,175 (39,859) (15) % Gross profit 161,174 125,448 35,726 28 % Gross margin (1) 41 % 32 % Total operating expenses $ 157,326 $ 175,659 $ (18,333) (10) % (1) Gross margin is calculated as gross profit as a percentage of revenue, net Revenue, net Net revenue for the year ended December 31, 2024 decreased $4.1 million, or 1%, to $391.5 million as compared to $395.6 million for the corresponding period in 2023.
The majority of our green coffee beans come from Colombia, Nicaragua, and Brazil, and since 2020, we have also sourced green coffee beans from over ten countries in Latin America, Africa, and Asia to diversify our supply chain and offer our customers specialty and limited-time-only roasts.
The majority of our green coffee beans come from Colombia, Brazil, and Nicaragua, and since 2020, we have also sourced green coffee beans from over ten countries in Latin America, Africa, and Asia to diversify our supply chain and offer our customers specialty and limited-time-only roasts.
We consider an accounting policy to be a critical estimate if (1) we must make assumptions that were uncertain when the judgment was made, and (2) changes in the estimate assumptions, or selection of a different estimate methodology could have a significant impact on our financial position and the results that we report in our unaudited consolidated financial statements.
We consider an accounting policy to be a critical estimate if (1) we must make assumptions that were uncertain when the judgment was made, and (2) changes in the estimate assumptions or selection of a different estimate methodology could have a significant impact on our financial position and the results that we report in our consolidated financial statements.
While we believe that our estimates, assumptions and judgements are reasonable, they are based on information available when the estimate was made. Our significant accounting estimates are discussed in more detail in Note 2 , Summary of Significant Accounting Policies to our consolidated financial statements included in Item 8 of Part II of this 10-K.
While we believe that our estimates, assumptions and judgments are reasonable, they are based on information available when the estimate was made. Our significant accounting estimates are discussed in more detail in Note 2, Summary of Significant Accounting Policies to our consolidated financial statements included in Item 8 of Part II of this 10-K.
In addition, the tax benefit for the year ended December 31, 2023 reflects the impact of our assessment that we will not be able to record the benefit of certain current year deferred tax assets for which a valuation allowance is expected.
In addition, the tax benefit for the year ended December 31, 2024 reflects the impact of our assessment that we will not be able to record the benefit of certain current year deferred tax assets for which a valuation allowance is expected.
Liquidity and Capital Resources Liquidity Overview Our principal use of cash is to support the growth of our business including increasing working capital requirements related to inventories and, accounts receivable, and general and administrative expenses. Furthermore, we use cash to fund our debt service commitments, capital equipment acquisitions, Outpost build outs and other growth-related needs.
Liquidity and Capital Resources Liquidity Overview Our principal use of cash is to support the growth of our business, including increasing working capital requirements related to inventories, accounts receivable, and general and administrative expenses. Furthermore, we use cash to fund our debt service commitments, capital equipment acquisitions, and other growth-related needs.
Results of Operations This discussion and analysis pertains to comparisons of material changes in the consolidated financial statements for the years ended December 31, 2023 and 2022.
Results of Operations This discussion and analysis pertains to comparisons of material changes in the consolidated financial statements for the years ended December 31, 2024 and 2023.
The methods, assumptions, and estimates that we use in applying our accounting policies may require us to apply judgements regarding matters that are inherently uncertain.
The methods, assumptions, and estimates that we use in applying our accounting policies may require us to apply judgments regarding matters that are inherently uncertain.
Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more likely-than-not threshold of being sustained. See Note 1 6 , Income Taxes for additional information.
Derecognition of a tax position that was previously recognized would occur when the Company subsequently determines that a tax position no longer meets the more likely-than-not threshold of being sustained. See Note 16, Income Taxes for additional information.
The Company evaluates and accounts for uncertain tax positions using a two-step approach: Step 1. Recognition – occurs when the 50 Table of Contents Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustainable upon examination. Step 2.
The Company evaluates and accounts for uncertain tax positions using a two-step approach: Step 1. Recognition – occurs when the Company concludes that a tax position, based solely on its technical merits, is more-likely-than-not to be sustainable upon examination. Step 2.
The net assets of SilverBox are stated at historical cost, with no goodwill or other intangible assets recorded. This accounting treatment was determined as the individual controlling Authentic Brands prior to the Business Combination also controlled the combined company post business combination.
The net assets of SilverBox are stated at historical cost, with no goodwill or other intangible assets recorded. This accounting treatment was determined by the individual controlling Authentic Brands prior to the Business Combination, who also controls the combined company post Business Combination.
Recent Accounting Pronouncements See Note 2 , Summary of Significa nt Accounting Pol icies to our consolidated financial statements included in Item 8 of Part II of this 10-K for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent it has made one, of their potential impact on our consolidated financial statements.
Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies to our consolidated financial statements included in Item 8 of Part II of this 10-K for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent it has made one, of their potential impact on our consolidated financial statements.
Changes in any or all of these estimates and assumptions, or the relationships between these assumptions, impact the Company’s valuation as of each valuation date and may have a material impact on the 57 Table of Contents valuation of the Company’s equity and equity awards.
Changes in any or all of these estimates and assumptions, or the relationships between these assumptions, impact our valuation as of each valuation date and may have a material impact on the valuation of our equity and equity awards.
Trends Certain trends affecting our business within the respective sales channels are as follows: • Wholesale channel revenue has increased as we have added new customers and we continue to grow our presence in the FDM market.
Trends Certain trends affecting our business within the respective sales channels are as follows: • Wholesale channel revenue increased as we added new customers and continued to expand our presence in the FDM market.
Income Tax Provision The Company accounts for income taxes pursuant to the asset and liability method, which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse.
For the year ended December 31, 2024, interest expense also included the extinguishment of debt costs. 49 Table of Contents Income tax provision The Company accounts for income taxes pursuant to the asset and liability method, which requires the recognition of deferred income tax assets and liabilities related to the expected future tax consequences arising from temporary differences between the carrying amounts and tax bases of assets and liabilities based on enacted statutory tax rates applicable to the periods in which the temporary differences are expected to reverse.
Our ability to draw from the credit facilities is subject to a borrowing base and other covenants. We believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments in the ordinary course of business and under the current market conditions for at least the next twelve months.
We believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments in the ordinary course of business and under the current market conditions for at least the next twelve months.
For the comparisons of the years ended December 31, 2022 and 2021, see the Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2022 Annual Report on Form 10-K.
For the comparisons of the years ended December 31, 2023 and 2022, see the Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on March 6, 2024.
As of December 31, 2023, our cash and cash equivalents were $12.4 million, our working capital was $23.6 million, and under our credit facilities, we had $15.7 million of available borrowings, after the consideration of the $15.0 million reduction required before the Availability Block Release Date, the date on which we have maintained a fixed charge coverage ratio of not less than 1.10 to 1.00 for two consecutive fiscal quarters following August 10, 2023, and no defaults or events of default are then continuing.
As of December 31, 2024, our cash and cash equivalents were $6.8 million, our working capital was $20.3 million, and under our credit facilities, we had $25.5 million of available borrowings, after the consideration of the $5.0 million reduction required before the Availability Block Release Date, the date on which we have maintained a fixed charge coverage ratio of not less than 1.10 to 1.00 based on a trailing four fiscal quarter calculation as of December 31, 2024, and no defaults or events of default are then continuing.
The increase in interest rate is a result of our refinancing in the third quarter of 2023, whereby we entered into a new $75.0 million senior credit facility and a $50.0 million term loan facility with interest rates of term Secured Overnight Financing Rate (“SOFR”) plus 2.60% to 3.10%, based on average excess availability of the borrowing base and term SOFR plus 8.50%, respectively.
Fiscal year 2024 utilized a $75.0 million senior credit facility and a $50.0 million term loan with rates at the term Secured Overnight Financing Rate (“SOFR”) plus 2.60% to 3.10%, based on average excess availability of the borrowing base and term SOFR plus 8.50%, respectively. This agreement was entered in the third quarter 2023.
This is compared to the interest rate under our previous senior credit facility of Bloomberg Short-Term Bank Yield (“BSBY”) plus 2.00% to 2.25%, based on average excess availability of the borrowing base. Other income, net consists of miscellaneous income and expense items such as bank and credit card fees.
In the first half of fiscal year 2023, the previous senior credit facility held a rate of Bloomberg Short-Term Bank Yield (“BSBY”) plus 2.00% to 2.25%, based on average excess availability of the borrowing base. Other expense, net consisted of miscellaneous income (expense) items such as bank fees and credit card rebates in 2023.
Income tax expense was $0.2 million and $0.4 million for the year ended December 31, 2023 and 2022 respectively, representing effective tax rates of 0.33% and 0.11%.
Income tax expense was $0.2 million for each of the years ended December 31, 2024 and 2023, representing effective tax rates of (2.3)% and 0.3%, respectively.
Financing Activities Net cash provided by financing activities was $21.4 million for the year ended December 31, 2023, compared to net cash provided by financing activities of $167.3 million for the year ended December 31, 2022.
Financing Activities Net cash used in financing activities was $10.7 million for the year ended December 31, 2024, compared to net cash provided by financing activities of $21.4 million for the corresponding period in 2023.
The critical accounting estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below. 56 Table of Contents Revenue Recognition We recognize revenue in accordance with Accounting Standards Codification 606.
The critical accounting estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below. Revenue Recognition We recognize revenue in accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers , or Accounting Standards Codification ("ASC") 606.
Interest Expense Interest expense consists of interest on our borrowing arrangements, the amortization of debt discounts and deferred financing costs. For the year ended December 31, 2023, interest expense also included the extinguishment of debt costs.
Interest expense Interest expense consists of interest on our borrowing arrangements, the amortization of debt discounts, and deferred financing costs.
In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties, and assumptions that could cause BRCC’s actual results to differ materially from management’s expectations. Factors which could cause such differences are discussed herein and set forth in Part I, Item 1A, Risk Factors in this Annual Report.
In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties, and assumptions that could cause BRCC’s actual results to differ materially from management’s expectations.
Capital Expenditures Future capital requirements will vary materially from period to period and will depend on factors such as adding additional roasting capacity, expansion of our corporate and information technology infrastructure relating to growth initiatives and expansion and growth by opening additional Company-operated Outposts.
See Note 9 , Leases to the consolidated financial statements included in Item 8 of Part II of this Annual Report for additional information. 54 Table of Contents Capital Expenditures Future capital requirements will vary materially from period to period and will depend on factors such as adding additional roasting capacity, expansion of our corporate and information technology infrastructure relating to growth initiatives and expansion and growth by opening additional Company-operated Outposts.
Operating expenses for the year ended December 31, 2023 increased $8.7 million, or 5.2%, to $175.7 million as compared to $166.9 million for the corresponding period in 2022.
Operating expenses Total operating expenses for the year ended December 31, 2024 decreased $18.3 million, or 10%, to $157.3 million as compared to $175.7 million for the corresponding period in 2023.
Delivery date estimates are based on average transit times calculated based on factors such as the type of carrier, the fulfillment source, the delivery destination and historical transit time experience. Actual shipping times may differ from our estimates. Loyalty Rewards Program We have a loyalty points rewards program (the “Loyalty Program”) that is primarily a spend-based program.
Delivery date estimates are based on average transit times calculated based on factors such as the type of carrier, the fulfillment source, the delivery destination and historical transit time experience. Actual shipping times may differ from our estimates. Equity-Based Compensation We account for stock-based compensation in accordance with ASC Topic 718, Compensation — Stock Compensation .
Applying these valuation and allocation approaches involves the use of estimates, judgment and assumptions that are highly complex and subjective, such as those regarding the Company’s expected future revenue, expenses and cash flows, as well as discount rates, valuation multiples, the selection of comparable public companies and comparable transactions and the probability of future events.
See Note 14, Equity-Based Compensation within the audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for additional information regarding the accounting for stock-based awards. 55 Table of Contents Applying these valuation and allocation approaches involves the use of estimates, judgment and assumptions that are highly complex and subjective, such as those regarding our expected future revenue, expenses, and cash flows, as well as discount rates, valuation multiples, the selection of comparable public companies and comparable transactions, and the probability of future events.
Consumer appreciation of our brands is primarily reflected in the increase of our sales across our three channels over the last few years. We expect to continue to develop and implement forward-looking brand strategies that leverage social media and employ targeted digital advertising to expand the reach of our brand.
Consumer appreciation of our brands is primarily reflected in the increase of our sales across our three channels over the last few years. We expect to continue to refine and develop our brand strategy utilizing reach-based formats such as national television, streaming advertising, and other select avenues.
The following table summarizes net sales by channel for the periods indicated ( dollars in thousands): Year Ended December 31, 2023 2022 $ Change % Change Wholesale $ 225,059 $ 119,360 $ 105,699 89 % Direct to Consumer 143,232 159,022 (15,790) (10) % Outpost 27,332 22,931 4,401 19 % Total net sales $ 395,623 $ 301,313 $ 94,310 31 % For the year ended December 31, 2023, net revenue from our Wholesale channel increased $105.7 million, or 88.6%, to $225.1 million as compared to $119.4 million for the corresponding period in 2022.
The following table summarizes net sales by channel for the periods indicated ( dollars in thousands): Year Ended December 31, 2024 2023 $ Change % Change Wholesale $ 245,040 $ 225,059 $ 19,981 9 % DTC 123,779 143,232 (19,453) (14) % Outpost 22,671 27,332 (4,661) (17) % Total net sales $ 391,490 $ 395,623 $ (4,133) (1) % Net revenue for our Wholesale channel for the year ended December 31, 2024 increased $20.0 million, or 9%, to $245.0 million as compared to $225.1 million for the corresponding period in 2023.
The increase was primarily attributable to the increase in average debt balance and higher interest rates under our new term loan facility.
The increase was primarily due to an increase in average debt balances and higher interest rates.
This growth was primarily driven by our entry into the FDM market for bagged coffee and rounds products, and increases in RTD product sales, both of which are included in the Wholesale channel. 48 Table of Contents The Business Combination In February 2022, we completed the Business Combination and as a result of the consummation of a series of mergers in connection therewith, Authentic Brands became a subsidiary of BRC Inc., with BRC Inc. acting as sole managing member of Authentic Brands as a public benefit corporation.
In February 2022, we completed the Business Combination and as a result of the consummation of a series of mergers in connection therewith, Authentic Brands became a subsidiary of BRC Inc., with BRC Inc. acting as the sole managing member thereof as a public benefit corporation.
We will continue to utilize marketing measurement to ensure our advertising is effective while expanding our brand reach. Our Ability to Drive Repeat Usage of Our Products We gain substantial economic value from repeat users of our products who consistently re-order our products.
We remain focused on measuring and optimizing marketing performance to ensure that our advertising spend is both effective and efficient, while managing customer acquisition costs and maximizing returns on marketing investments. Our Ability to Drive Repeat Usage of Our Products We gain substantial economic value from repeat users of our products who consistently re-order our products.
The $8.9 million decrease in net cash used in investing activities was primarily due to a decrease in capital expenditure projects for our Outpost locations, roasting facilities, and software and other information technology investments, as well as proceeds of $5.7 million from the sale of the land, buildings and improvements of a Company owned Outpost and a corporate office location during 2023.
Investing Activities Net cash used in investing activities was $7.7 million for the year ended December 31, 2024, compared to net cash used in investing activities of $21.5 million for the corresponding period in 2023. The $13.8 million decrease in net cash used was primarily due to reduced capital expenditure projects for our Outpost locations, roasting facilities and information technology.
The change in fair value of the derivative liability was primarily a result of the increase of the closing price of our Class A Common Stock listed on the NYSE from February 9, 2022 to May 4, 2022. 54 Table of Contents Income Tax Provision ( dollars in thousands ) Year Ended December 31, 2023 2022 Income tax expense $ 185 $ 367 Effective income tax rate 0.33 % 0.11 % For further detail of income tax matters, see Note 1 6 , Income Taxes , within the audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
Income Tax Provision The following table summarizes income tax provisions for the periods indicated ( dollars in thousands ): Year Ended December 31, 2024 2023 Income tax expense $ 172 $ 185 Effective income tax rate (2.3) % 0.3 % For further detail of income tax matters, see Note 16, Income Taxes , within the audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
We anticipate limited growth in this channel during 2024. Key Factors Affecting Our Performance Our Ability to Increase Brand Awareness Our ability to promote and maintain brand awareness and loyalty is critical to our success. We believe we have created a highly efficient marketing strategy that provides us the ability to increase brand awareness and drive consumer interaction.
We expect accelerated growth in future years as we resume investment in this part of the business. Key Factors Affecting Our Performance Our Ability to Increase Brand Awareness Maintaining and growing brand awareness and loyalty is critical to our success. We believe we have developed an efficient marketing strategy that enhances brand awareness and drives consumer engagement.
DTC channel net revenue decreased by $15.8 million, or 9.9%, to $143.2 million for the year ended December 31, 2023 as compared to $159.0 million for the corresponding period in 2022 primarily due to lower customer acquisition as we strategically shifted advertising spend to other areas with higher returns.
Net revenue for our DTC channel for the year ended December 31, 2024 decreased $19.5 million, or 14%, to $123.8 million as compared to $143.2 million for the corresponding period in 2023.
Cash Flows from Operating, Investing and Financing Activities The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated (dollars in thousands) : Year Ended December 31, 2023 2022 Cash flows provided by (used in): Operating activities $ (24,967) $ (116,190) Investing activities $ (21,508) $ (30,404) Financing activities $ 21,398 $ 167,250 Comparison of the year ended December 31, 2023 to the year ended December 31, 2022 Operating Activities Net cash used in operating activities was $25.0 million for the year ended December 31, 2023, compared to net cash used in operating activities of $116.2 million for the year ended December 31, 2022.
See Note 8, Long-Term Debt , to the consolidated financial statements included in Item 8 of Part II of this 10-K for information regarding the Credit Agreements. 53 Table of Contents Cash Flows from Operating, Investing and Financing Activities Comparison of the year ended December 31, 2024 to the year ended December 31, 2023 The following table summarizes our cash flows for the periods indicated (dollars in thousands) : Year Ended December 31, 2024 2023 $ Change % Change Cash flows provided by (used in): Operating activities $ 11,308 $ (24,967) $ 36,275 145 % Investing activities $ (7,713) $ (21,508) $ (13,795) (64) % Financing activities $ (10,698) $ 21,398 $ (32,096) (150) % Operating Activities Net cash provided by operating activities was $11.3 million for the year ended December 31, 2024, compared to net cash used in operating activities of $25.0 million for the corresponding period in 2023.
Moving forward, we believe that it is important to our business that we continue innovating with new products and flavors and continue to explore the world to find the highest quality beans possible to deliver to our customers.
Our pace of growth will be partially affected by the cadence and magnitude of new product launches over time. Moving forward, we believe that it is important to our business that we continue innovating with new products and flavors.
We recognize expense over the requisite service period for awards expected to vest using the straight-line method and recognize forfeitures as they occur. See Note 1 4 , Equity-Based Compensation within the audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for additional information regarding the accounting for stock-based awards.
We recognize expense over the requisite service period for awards expected to vest using the straight-line method and recognize forfeitures as they occur.
We expect to see increased revenue within this channel as we increase investment to obtain new customers and expand in the FDM market. • DTC revenue growth has slightly declined as a result of our decision to redirect investments to other growing areas of the business as we continue to experience elevated DTC customer acquisition costs. • Outpost channel revenue has increased as we continue to open additional stores during 2023.
We expect further revenue growth in this channel as we invest in customer acquisition, new product launches, and distribution expansion in the FDM market. • DTC channel revenue growth declined due to both a channel level decline in the DTC category and our strategic decision to redirect investments into higher-growth areas of the business amid elevated DTC customer acquisition costs.
These leases will commence between fiscal year 2024 and fiscal year 2025 with lease terms of 15 years. Payments on leases are expected to be approximately $3.8 million in the next twelve months, and approximately $47.1 million beyond twelve months through 2043.
Liabilities relating to operating leases that have commenced as of December 31, 2024 have been reported on the balance sheet as operating lease liabilities. Payments on leases are expected to be approximately $3.9 million in the next twelve months, and approximately $37.3 million beyond twelve months through 2043.
For the year ended December 31, 2023, net revenue for our Outpost channel increased $4.4 million, or 19.2%, to $27.3 million as compared to $22.9 million for the corresponding period in 2022 primarily due to increased store openings in 2023. We opened a total of three new Company-operated Outposts in Texas in 2023.
The change in policy around the expiration of loyalty rewards point increased our gross margin percentage by 1.0% for the year ended December 31, 2024. Net revenue for our Outpost channel for the year ended December 31, 2024 decreased $4.7 million, or 17%, to $22.7 million as compared to $27.3 million for the corresponding period in 2023.
Our Ability to Acquire and Retain Customers at a Reasonable Cost We believe our ability to consistently acquire and retain new customers at a reasonable cost will be a key factor affecting our future performance.
Wholesale customers include large national retailers, regional retailers, distributors, and dealers, reflecting our increases in market presence and distribution reach. 48 Table of Contents Our Ability to Acquire and Retain Customers at a Reasonable Cost We believe that consistently acquiring and retaining customers at a reasonable cost will be a key driver of our future performance.
For further discussion around the costs incurred related to this dispute, see Note 18 , Commitments and Contingenc ie s . 53 Table of Contents Components of Our Non-Operating Income (Expenses) Comparison of the year ended December 31, 2023 to the year ended December 31, 2022 ( dollars in thousands): Year Ended December 31, 2023 2022 $ Change % Change Non-operating income (expenses) Interest expense, net $ (6,330) $ (1,593) $ 4,737 297 % Other income, net 10 339 (329) 97 % Change in fair value of earn-out liability — (209,651) 209,651 100 % Change in fair value of warrant liability — (56,675) 56,675 100 % Change in fair value of derivative liability — (2,335) 2,335 100 % Total non-operating expenses $ (6,320) $ (269,915) $ 263,595 (98) % Interest expense for the year ended December 31, 2023 increased $4.7 million, or 297.4%, to $6.3 million as compared to $1.6 million for the corresponding period in 2022.
Components of Our Non-Operating Income (Expenses) Comparison of the year ended December 31, 2024 to the year ended December 31, 2023 The following table summarizes non-operating expenses for the periods indicated (dollars in thousands) : Year Ended December 31, 2024 2023 $ Change % Change Interest expense, net $ (11,325) $ (6,330) $ 4,995 79 % Other income, net — 10 10 (100) % Total non-operating expenses $ (11,325) $ (6,320) $ 5,005 79 % 52 Table of Contents Interest expense for the year ended December 31, 2024 increased $5.0 million, or 79%, to $11.3 million as compared to $6.3 million for the corresponding period in 2023.
The following table summarizes operating expenses for the periods indicated ( dollars in thousands ): Year Ended December 31, 2023 2022 $ Change % Change Marketing and advertising $ 30,794 $ 38,169 $ (7,375) (19)% Salaries, wages and benefits 71,054 64,286 6,768 11% General and administrative 71,613 64,486 7,127 11% Other operating expense, net 2,198 — 2,198 100% Total operating expenses $ 175,659 $ 166,941 $ 8,718 5% In 2023, we continued to strengthen our marketing and advertising capabilities, but focused our spend on areas and activities with higher returns.
The following table summarizes operating expenses for the periods indicated ( dollars in thousands ): Year Ended December 31, 2024 2023 $ Change % Change Marketing and advertising $ 35,631 $ 30,794 $ 4,837 16 % Salaries, wages and benefits 62,415 71,054 (8,639) (12) % General and administrative 50,827 71,613 (20,786) (29) % Other operating expense, net 8,453 2,198 6,255 285 % Total operating expenses $ 157,326 $ 175,659 $ (18,333) (10) % Marketing and advertising expenses for the year ended December 31, 2024 increased $4.8 million, or 16%, to $35.6 million as compared to $30.8 million for the corresponding period in 2023.
For the year ended December 31, 2023, cost of goods sold increased $68.0 million, or 33.7%, to $270.2 million as compared to $202.1 million over the corresponding period in 2022. Gross margin decreased 120 basis points to 31.7% for the year ended December 31, 2023 as compared to 32.9% for the year ended December 31, 2022.
The decline was primarily driven by lower transaction volumes and reduced foot traffic in 2024 compared to the prior year. 51 Table of Contents Cost of goods sold Cost of goods sold for the year ended December 31, 2024 decreased $39.9 million, or 15%, to $230.3 million as compared to $270.2 million over the corresponding period in 2023.
This resulted in decreased marketing and advertising expenses of $7.4 million, or 19.3%, to $30.8 million for the year ended December 31, 2023, compared to $38.2 million for the corresponding period in 2022.
This increase was due to our expansion of partnerships, including our engagement with the UFC, higher advertising spend, incremental shopper marketing, and an increase in trade promotions. Salaries, wages and benefits expenses for the year ended December 31, 2024 decreased $8.6 million, or 12%, to $62.4 million as compared to $71.1 million for the corresponding period in 2023.
Our Ability to Grow Our Customer Base in Our Wholesale Channel We are currently growing our customer base through our Wholesale channel. Our products are also sold through a growing number of physical retail channels. Wholesale customers include large national retailers, regional retailers, distributors, and dealers.
In addition, we will leverage our social media presence and employ targeted digital advertising to expand the reach of our brand. Our Ability to Grow Our Customer Base in Our Outposts and Wholesale Channels We continue to expand our customer base through our Wholesale channel, with our products now available in a growing number of physical retail locations.
In addition, General and administrative expenses increased $7.1 million, or 11.1%, to $71.6 million for the year ended December 31, 2023 as compared to $64.5 million for the corresponding period in 2022.
This decrease was as a result of our 2023 Restructuring Plan whereby, we reduced compensation costs through headcount reductions in 2023 for which we realized the full benefit in 2024. General and administrative expenses for the year ended December 31, 2024 decreased $20.8 million, or 29%, to $50.8 million as compared to $71.6 million for the corresponding period in 2023.
The decrease in gross margin was as a result of product mix shift, as RTD has higher product costs and lower margins as compared to bagged coffee, an increase in our inventory reserve as a result of excess RTD inventory, and inflation in raw materials and finished goods.
Gross margin increased to 41% for the year ended December 31, 2024 as compared to 32% for the corresponding period in 2023. The increase in gross margin was a result of product mix shift driven by an increase in the higher margin FDM market, productivity improvements, and lower warehousing costs.
Salaries, wages and benefits increased $6.8 million, or 10.5%, to $71.1 million for the year ended December 31, 2023, compared to $64.3 million for the corresponding period in 2022 primarily as a result of severance expense incurred during the year, while the savings of the headcount reduction was not fully realized during 2023, as the majority of these reductions occurred later in the year.
Other operating expense, net for the year ended December 31, 2024 increased $6.3 million, or 285%, to $8.5 million as compared to $2.2 million for the corresponding period in 2023. This increase was related to the impairment loss recognized in the fourth quarter of 2024 exceeding the impairment loss recognized in 2023.
These purchase agreements are typically obligations to purchase minimum volumes with fixed pricing if the volume terms are not fulfilled, in the form of a take-or-pay provision. The minimum purchase amounts are based on quantity and, in the aggregate, are expected to be approximately $21.0 million for 2024, $26.1 million for 2025 and $30.0 million for 2026.
The minimum purchase amounts are based on quantity and in the aggregate will be approximately $26.1 million for 2025, $30.0 million for 2026 and $32.4 million for 2027. See Note 1 8 , Commitments and Contingencies to the consolidated financial statements included in Item 8 of Part II of this Annual Report for information regarding such manufacturing and purchase agreements.
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Overview Black Rifle Coffee Company is a rapidly growing Veteran-controlled and led coffee and media company that operates through three channels: Wholesale, Direct to Consumer, and our Outposts. Our business started with a loyal and quickly expanding community of consumers through our DTC channel and we now have more than 225,800 active Coffee Club subscribers as of December 31, 2023.
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Factors which could cause such differences are discussed herein and set forth in Part I, Item 1A, Risk Factors in this Annual Report. 47 Table of Contents Overview Black Rifle Coffee Company is a Veteran-founded and led premium coffee, energy drink, and media company operating through one reportable segment that comprises three primary channels: Wholesale, DTC, and Outposts.
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We are now experiencing rapid growth in our Wholesale channel as we have continued our expansion into grocery stores, specialty stores, and other intermediaries. We have also experienced growth in our Outpost channel as we opened additional company owned stores and franchises in 2023.
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Founded in 2014 by U.S. Army Veteran Evan Hafer, Black Rifle Coffee began with a one-pound coffee roaster in a garage, where Hafer personally roasted, packaged, and shipped coffee directly to consumers.
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At Black Rifle Coffee, we develop our roast profiles with the same mission focus we learned as military members serving our country. We produce creative and engaging cause-related media content to inform, inspire, entertain, and build our community.
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Today, the company has grown into a widely recognized and nationally distributed brand steadfast in its commitment to supporting active-duty military, Veterans, first responders, and all who love America.
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We also sell Black Rifle Coffee-brand apparel, coffee brewing equipment, and outdoor and lifestyle gear that our consumers proudly wear and use to showcase our brand. At the heart of everything we do is our commitment to supporting active duty military, Veterans, first responders, and those who love America.
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In addition, we have limited our promotional offerings to focus on profitability. • Outpost channel revenue decreased due to lower transaction volumes at existing Outpost retail locations. In 2025, we anticipate limited growth in this channel as we reallocate investments to other channels while we work to improve profitability through operational and strategic changes, which may include closing underperforming Outposts.
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We utilize a three-pronged approach to craft a unique brand that resonates with our customer base and enhances brand loyalty: Inform, Inspire, and Entertain. We want our audience to love coffee as much as we do, so we strive to inform them on all the awesome facets of coffee.
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We continue to build brand awareness and reach new consumers by investing in existing and new channels and markets. Our expertise in digital creative and engagement provides a distinct advantage in attracting, converting, and retaining our consumers.
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Every day we work to inspire our customers; we take pride in the coffee we roast, the Veterans we employ and the causes we support. We give back to the community and are committed to support those who serve. To support our premium quality product, we own one roasting facility focused on large and small batch roasting.
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The Wholesale channel performance was primarily driven by continued growth of packaged coffee in the FDM market and the launch of Black Rifle Energy. These increases were partially offset by a $5.0 million decrease in revenue recognized related to a barter transaction whereby we exchanged finished goods inventory for prepaid advertising credits.
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Our coffee beans are primarily roasted in-house and 100% in the United States to ensure consistency and quality of product. Our coffee beans are sourced only from the highest quality suppliers. Our state-of-the-art equipment guarantees freshness and offers significant capacity for expansion.
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The prepaid advertising credits are issued by a counterparty that specializes in barter transactions. The barter transactions serve as a sales channel primarily used for selling inventory that is closer to its expiration date compared to inventory sold through non-barter transactions.
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We are a digitally native brand with an established omnichannel business model, reaching our customers through one reportable segment that is comprised of three channels.
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The decline was primarily driven by lower customer acquisition due to declines in the overall DTC market, a strategic reallocation of advertising spend to higher return areas, and an increase in points of distribution in the Wholesale channel, which expanded brick and mortar availability for Black Rifle Coffee consumers.
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Our Wholesale channel includes products sold to an intermediary such as grocery stores, including the FDM customer set, such as Walmart, Specialty Retailers, such as Bass Pro, and convenience stores which primarily sell our RTD products, such as 7-Eleven. Our DTC channel includes our e-commerce business, through which consumers order our products online and products are shipped to them.
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This decrease was partially offset by an increase of $6.5 million as a result of the decrease in the accrual for loyalty rewards points following a change in policy on expiration of points in the first quarter of 2024.
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Our Outpost channel includes our Company-operated and franchised Black Rifle Coffee retail coffee shop locations. We continue to experience strong revenue growth. Revenue increased to $395.6 million and $301.3 million for the years ended December 31, 2023 and 2022, respectively, representing growth of 31.3% year over year.
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This decrease was as a result of our 2023 Restructuring Plan which reduced our corporate infrastructure and support that were inefficient or duplicative, including professional services, information technology, and office space.
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While we have a strong presence in major markets, we still have the opportunity to grow brand awareness, with 29% estimated aided awareness in any region of the country. To accomplish this goal, we intend to grow our brand awareness through various avenues such as national television and streaming advertising, and through select sponsorship and partnership opportunities.
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Our ability to draw from the credit facilities is subject to a borrowing base and other covenants. There are no defaults or events of default at this time.
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In addition, we will strive to strengthen our social media footprint across various platforms such as Facebook, Google, and YouTube. Our digital capabilities provide a distinct advantage and enable us to form direct relationships with our customers and capture valuable customer data and insights.
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The total increase of $36.3 million in net cash provided was primarily due to a net loss of $56.7 million improving to net loss of $7.6 million for 2024.
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Our pace of growth will be partially affected by the cadence and magnitude of new product launches over time. As an example, we launched RTD coffee products in March 2020 with two 11-ounce SKUs. We have since added another 11-ounce SKU and three high-caffeine, boldly-flavored 15-ounce SKUs.
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The $32.1 million decrease in net cash provided was primarily due to an increase in repayments of long-term debt of $93.3 million and payment of $1.0 million of debt extinguishment costs, offset by proceeds from issuance of long-term debt of $58.7 million, net of $3.6 million of debt issuance costs. 2023 Restructuring Plan During fiscal year 2023, management implemented a plan to reduce costs and improve efficiency of certain company-wide functions.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeInterest Rate Risk Our Term Loan Facility bears interest at a rate per annum equal to either (i) a base rate plus 7.50% or (ii) term SOFR plus 8.50%.
Biggest changeInterest Rate Risk Our Term Loan Facility bears interest at a rate per annum equal to either (i) a reference rate plus a margin ranging from 5.00% to 5.50% based on a total net leverage ratio threshold or (ii) term SOFR plus a margin ranging from 6.00% to 6.50% based on a total net leverage ratio threshold.
An increasing rate of inflation in the future may have a material adverse effect on our ability to maintain current levels of gross profit and operating expenses, if the selling prices of our products do not increase with these increased costs. 58 Table of Contents
An increasing rate of inflation in the future may have a material adverse effect on our ability to maintain current levels of gross profit and operating expenses, if the selling prices of our products do not increase with these increased costs. 57 Table of Contents
The supply and price of coffee we purchase can also be affected by multiple factors in the producing countries, such as weather (including the potential effects of climate change), natural disasters, crop disease, inventory levels, and political and economic conditions.
The supply and price of coffee we purchase can also be affected by multiple factors in the producing countries, such as weather (including the potential effects of climate change), natural disasters, crop disease, inventory levels, and political and economic conditions, including trade policy.
A hypothetical increase of interest rates of 5% on our outstanding variable rate borrowings would result in additional interest expense annually of approximately $3.7 million. Inflation Inflationary factors such as increases in the cost of our products, overhead costs and parcel freight costs have had an impact on our operating results.
A hypothetical increase of interest rates of 5% on our outstanding variable rate borrowings would result in additional interest expense annually of approximately $3.4 million. 56 Table of Contents Inflation Inflationary factors such as increases in the cost of our products, overhead costs, and parcel freight costs have had an impact on our operating results.
Borrowings under our ABL Facility bear interest at a rate per annum of either (i) the Base Rate (as defined below) plus a margin ranging from 1.50% to 2.00% or (ii) term SOFR plus a margin ranging from 2.60% to 3.10%.
Borrowings under our ABL Facility bear interest at a rate per annum of either (i) the Base Rate (as defined below) plus a margin ranging from 0.50% to 1.50% or (ii) term SOFR plus a margin ranging from 1.50% to 2.50%.
As of December 31, 2023, we had $50.0 million outstanding on our Term Loan Facility and $23.9 million outstanding on our ABL Facility with available borrowings of $15.7 million. The carrying value of the variable interest rate debt approximates its fair value as the borrowings are based on market interest rates.
As of December 31, 2024, we had $40.0 million outstanding on our Term Loan Facility and $28.9 million outstanding on our ABL Facility with available borrowings of $25.5 million. The carrying value of the variable interest rate debt approximates its fair value as the borrowings are based on market interest rates.

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