BRCC 10-K & 10-Q changes, risk factors and insider trading

Our brand, including the quality of media content and active participation in the military, Veteran community,and first-responder communities, is core to our success, and damage to our brand or reputation and negative publicity could negatively impact our business, financial condition, and results of operations.

Our reputation and the quality of our brand are critical to our business and success in existing markets and will be critical to our success as we enter new markets. Our brand and authenticity in supporting the military, Veteran and militaryfirst-responder communitycommunities is a core driver of our success. We promote our brand through media content and active participation in the military, Veteran communityand first-responder communities through events, donations, and hiring commitments, but the continued success of such promotions cannot be guaranteed.

Furthermore, the negative impact of adverse publicity relating to one facility or retail coffee shop may extend far beyond the location involved, to affect some or all of our other Outposts, including our franchise partner Outposts. The risk of negative publicity is particularly great with respect to our franchise partner Outposts because we are limited in the manner in which we can regulate them, especially on a real-time basis, and negative publicity from our franchise partners’ Outposts may also significantly impact Company-operated Outposts. A similar risk exists with respect to Wholesale retail partners if customers mistakenly associate third partythird-party issues with our operations.

EmployeeLegal claims against us based on, among other things, wageemployee and hour violations, discrimination, harassment, or wrongful terminationmatters may also create not only legal and financial liability, but also negative publicity that could adversely affect us and divert our financial and management resources that would otherwise be used to benefit the future performance of our operations.

Our content creation team often produces videos and other media depicting risky or dangerous activities, showcasing stunts and activities with firearms, skydiving, motorsports, handling of explosives, military vehicles, “extreme” sports, marksmanships, and other themes pursuing the lifestyle associated with our brand and sometimes involving certain of our employees and executive officers. While we take precautions to ensure the safety of all involved in creating this content, the activities carry an inherent risk that cannot be eliminated. If any individual were to suffer serious harm while involved with one of our productions, this could lead to negative publicity and harm to the brand and subject us to legal proceedings, for which we may not be adequately insured. 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. The availability of information on social media platforms is virtually immediate as is its impact. Many social media platforms immediately publish the content their subscribers and participants can post, often without filters or checks on accuracy of the content posted. Information concerning us, whether accurate or not, may be posted on such platforms at any time. Our foundersfounder and co-founders often appear in unscripted and un-reviewed online publications, such as podcasts, over which we have little curation.

Failure to maintain or enhance the value and reputation of our brand, including our support of the military, Veteran community,and first-responder communities, could have a negative impact on our financial results.

We believe that brand authenticity and mission alignment are critical to customer loyalty. If we fail to preserve our brand identity, including the quality of our media content and active engagement with the military, Veteran community,and first-responder communities, our consumer perception, brand equity, and financial results could be negatively impacted.

Business incidents, whether isolated or recurring and whether originating from us or our business partners, that erode consumer trust can significantly reduce brand value, potentially trigger boycotts of our Outposts, or result in civil or criminal liability and can have a negative impact on our financial results. Most importantly, if our customers perceive that we have abandoned or decreased the priority of our mission and our authenticity, in particular with respect to our support of the military, Veteran and militaryfirst-responder communities, we could lose significant portions of our customer base and experience substantial harm to our reputation and our operating results. 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. The impact of such incidents may be exacerbated if they receive considerable publicity, including rapidly through social or digital media (including for malicious reasons) or result in litigation. Consumer demand for our products and our brand equity could diminish significantly if we, our employees, franchise partners, or other business partners fail to preserve the quality of our products, act or are perceived to act in an unethical, illegal, racially-biased, unequal, or socially irresponsible manner, including with respect to the sourcing, content, or sale of our products, service and treatment of customers at our Outposts, or the use of customer data for general or direct marketing or other purposes.

As part of our long-term strategy, we aim to expand our market share and revenue through various initiatives, including the continued growth of DTC sales through online channels, expansion of our Wholesale, RTD coffee, and Black Rifle Energy distribution, velocity growth, and product innovation. Additionally, we plan to grow our Outpost business by opening new Company-operated and franchised locations, driving sales at existing locations, and enhancing digital platforms such as online ordering and loyalty programs. Failure to execute these strategic initiatives could result in slowed or halted growth, materially impacting our business, financial results, and overall financial condition.

Even if we successfully expand our new sales channels, they may cannibalize existing channels, leading to lower-than-expected overall growth. Over the past several years, we have expanded our Wholesale footprint, including entering the food, drug, and mass retail market through a partnership with Walmart. As a result, some customers who previously purchased our products through our DTC channel now buy them from retail partners. Depending on our agreements with retail partners, margins on Wholesale sales may be lower than those from DTC sales. Conversely, offering aggressive discounts, loyalty programs, or online advertising for our DTC channel may shift customer purchases toward that channel, potentially reducing overall margins relative to Wholesale and Outpost sales. We cannot guarantee that sales cannibalization will not occur or become more pronounced as we expand within existing markets.

To effectively manage and capitalize on our growth, we must continue to expand our sales and marketing efforts, drive innovation in product and content development, enhance our information management systems, and scale operational processes while recruiting and retaining employees. RapidThis moderate expansion may strain our existing resources, creating challenges in hiring, training, and managing a dispersed and growing workforce across multiple jurisdictions. Failure to scale effectively while maintaining our company culture could negatively impact our ability to attract and retain talent, execute our corporate strategy, and sustain long-term growth.

Additionally, many of our competitors have greater financial resources, allowing them to allocate significantly more capital toward marketing, advertising, and promotional initiatives. If our competitors increase their marketing spend while our available funds decrease, or if our advertising, promotions, or new product offerings are less effective than those of our competitors, our business, financial condition and results of operations and financial performance could be adversely affected.

Failure to attract new customers or retain existing ones, particularly in a cost-effective manner, could limit our ability to increase sales and materially harm our businessbusiness, financial condition and financialresults condition.of operations.

We have devoted, and will continue to devote in the future, significant resources to research, launch and promote new products to serve broader customer demand, adapt to changes in marketsmarket trends, and account for shifts in customer preferences. However, certain of our product launches have not been adopted by our customers as readily as anticipated, and we may not be successful in implementing our distribution strategy, developing innovative new products, or creating products that are successful with consumer preferences. 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.

Failure to properlysuccessfully expand into new channels or introduce different product types could result in significant expenditures without increased revenue.

Developing new products and introducing them into Wholesale retailers, convenience stores, and our DTC platforms is an expensive and time-consuming process. Not only are research and development expensive investments, but there is also no guarantee that our co-manufacturing partners or distribution networks will fully cooperate in producing or promoting our new products. Launching new products at commercial convenience stores, for example, requires lead time. Long lead times may make it more difficult for us to respond rapidly to new or changing product trends or consumer preferences. Launching a new product, or an existing product to new stores, may also require initial “free fills” of shelves, which increases the costs of introducing new products and could adversely impact our operatingbusiness, financial condition and results of operations if the new product is not successful.

We generate a material percentage of our Wholesale sales, which was 63%65% of our net sales in 2024,2025, from amany fewnational primaryand regional Wholesale partners. Our largest primary Wholesale partner represented 28%30% of our consolidated net sales in 2024,2025, 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. Over the last several years, large retailers have faced increased competition from online competitors, declining sales and profitability and tightened credit markets, resulting in store closures, bankruptcies and financial restructurings. Restructuring of our primary Wholesale partner’s operations, store closures or increased direct sourcing by consumers could negatively impact our net sales and profitability.

Our in-house content creation platform represents a significant portion of our marketing. Our content creation team primarily uses third partythird-party social media platforms mentioned below to engage with customers. In addition to company accounts and accounts associated with key employees, such as our founder and co-founder, Evan Hafer and Mat Best, respectively, we rely on key non-employee influencers to drive online traffic and promote our brand. These relationships and agreements with non-employee influencers are often informal and cannot be closely controlled, and uncompensated individuals with whom we have no formal or informal relationship often support our brand publicly, which support is important to our reputation. 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. 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 partythird-party social media platforms, such as Facebook, Instagram, YouTube, X, Google, and others, to generate new customers and to engage with existing customers. As existing social media platforms evolve and new platforms develop, we must continue to maintain a presence on current and emerging platforms. If we are unable to cost-effectively use social media platforms as marketing tools, our ability to acquire new customers may suffer. Moreover, social media and other online platforms often revise their algorithms and introduce new advertising products. If one of the platforms upon which we rely for customer engagement were to modify its general methodology for how it displays our advertisements or keyword search results, resulting in fewer customers clicking through to our websites or coming across our content, our business may suffer.

For example, over the past twoseveral years, various social media platforms have implemented data privacy changes that limit the ability to target and measure advertising. These include increased user opt-out options, restrictions on third-party data usage, limitations on detailed demographic targeting, reduced access to granular event tracking, emphasis on privacy-preserving technologies like Google’s "Privacy Sandbox initiative," and stricter rules around sensitive data collection, particularly for younger users. Because of these changes, the efficacy of our digital and social channels has decreased and may decrease further in the future, increasing our cost to acquire customers. We may not be able to acquire customers in an as cost effective manner as a result of these changes and other competitive factors, which could adversely affect our financial results.

Furthermore, our advertising, including claims made by sponsored third parties, must be truthful and not misleading, and such parties are required to disclose the sponsored nature of their post in accordance with the guidance from the FTC. As laws and regulations governing the use of these platforms evolve, any failure by us or third parties acting at our direction to abide by applicable laws and regulations in the use of these platforms could subject us to regulatory investigations, class action lawsuits, liability, fines, suspension or removal from such platform, or other penalties and adversely affect our business, financial condition, and operatingresults results.of operations. An increase in the use of social media for product promotion and marketing may cause an increase in the burden on us to monitor compliance of such content and increase the risk that such content could contain problematic product or marketing claims in violation of applicable regulations.

Our current operations are highly dependent on the financial performance of our DTCWholesale and WholesaleDTC channels, and reliance on third partythird-party logistics, as well as other risks, could negatively impact our business.

Our financial performance is highly dependent on our DTCWholesale and WholesaleDTC channels, with the Wholesale channel providing approximately 65% and 63% of our revenue in 2025 and 2024, respectively, and our DTC channel providing approximately 32%30% and 36%32% of our revenue in 20242025 and 2023, respectively, and our Wholesale channel providing approximately 63% and 57% of our revenue in 2024 and 2023,2024, respectively. 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.

We experienced a decrease in revenue from our DTC channel in 20242025 compared to 20232024 as customer acquisition costs significantly increased and we shifted marketing investments into other channels with greater returns.returns, and our products become more accessible as we expanded widely into Wholesale. 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. 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. Furthermore, in the future, we may offer new subscription products, implement promotions, or replace or modify current subscription models, any of which could result in additional costs. It is unknown how our subscribers will react to price increases or new models and whether the costs or logistics of implementing these models will adversely impact our business. If the adoption of new revenue models adversely impacts our subscriber relationships, then subscriber growth, subscriber engagement, and our business, financial condition, and operatingresults resultsof operations could be harmed.

Our DTC and Wholesale business’ success depends on third partythird-party logistics and a network of brokers and distributors. We currently work with parties in the United States to store, ship, and otherwise support our distribution of products to our customers and retail partners. In late 2025, we experienced a significant backlog of orders at a third-party logistics location, which led to customer frustration and cancelled orders. Our ability to meet customer and retail partner expectations, manage inventory, complete sales, and achieve objectives for operating efficiencies and growth depends on the proper operation of these third parties’ distribution facilities, the development or expansion of additional distribution capabilities, and the timely performance of services by third parties. If we continue to add thirdor partychange third-party logistics providers, require them to expand their fulfillment, distribution, or warehouse capabilities, expand to new locations, add products categories with different fulfillment requirements, or change the mix of products we sell, our logistics and distribution network will become increasingly complex and its operation will become more challenging for us and our third partythird-party logistics providers. Additionally, as part of our Wholesale channel model, we rely on a network of brokers and distributors to grow and manage our sales. These networks assist in expanding our brand’s reach and ensuring the efficient distribution of our products to our retail partners. If these networks, for any reason, cannot properly or efficiently support our products distribution, our operating results and business may suffer. The third partythird-party logistics providers and distribution networks that we rely upon could be interrupted by issues beyond our control, including, but not limited to, information technology problems, natural disasters, pandemics, government regulation, or supply chain issues. Any significant failure in our third partythird-party logistics providers to operate effectively couldhas in the past adversely affected, and may in the future adversely affect our business. In addition, we may be required to expand our capacity sooner than we anticipate. If we are unable to expand existing or secure new third partythird-party logistics providers to meet our future needs, our order fulfillment and shipping times may be delayed and our business, financial condition, and operatingresults resultsof operations may suffer.

Our business relies on co-manufacturers and third partythird-party suppliers to supply our products, and the loss of any of our co-manufacturers, our failure to identify new co-manufacturers, or our inability to accurately forecast and contract for our co-manufacturing and raw materials needs could harm our business and impede our growth.

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. Our co-manufacturers have been integral in the development of our products. Failure by us to maintain our relationship with our co-manufacturers or failure to properly forecast demand for these products could adversely affect our operating results. 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. Volumes produced under these agreements can fluctuate significantly based upon the product’s life cycle, product promotions, alternative production capacity, and other factors, none of which are under our direct control.

If, for any reason, any of our co-manufacturers or raw material suppliers cannot fulfill their obligations,obligations any(which we have previously experienced due to quality issues at certain of our co-manufacturerco-manufacturers), faces an enforcement action by the U.S. Food and Drug Administration (the “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 have historically experienced meaningful variability of our needs for co-manufacturing and various components of co-manufactured goods, and if we do not effectively manage those arrangements or if our forecasting is not accurate, we may experience expiring stock of co-manufactured products, or excess commitments to purchase co-manufactured finished goods and/or components of co-manufactured goods, including aluminum cans and perishable ingredients, resulting in either excess inventory or “take or pay” payments, which we have historically experienced. Any charges related to the write off of excess inventories could have a material adverse effect on our business, operatingfinancial results,condition and financialresults condition.of operations.

In addition, we may face risks related to payment terms, arrangements, and due dates with respect to our co-manufacturer, suppliers, or other vendors due to liquidity concerns. In the event that we are unable to timely pay our co-manufacturer, suppliers, or other vendors we may damage the relationship with such third parties, and may suffer future harm to business operations in the event that such third parties terminate their service arrangements with the Company. The loss of any of our co-manufacturer,co-manufacturers, suppliers, or other vendors could disrupt our business and affect our quality, cost, and availability of products, which could have an adverse effect on our results of operations and financial condition.

As we seek to obtain additional or alternative co-manufacturing arrangements in the future, there can be no assurance that we would be able to do so on satisfactory terms, in a timely manner, or at all. The loss of oura co-manufacturer, any disruption or delay at our co-manufacturer,co-manufacturers, or any failure to identify and engage co-manufacturers to increase production capacity, could delay or postpone the production of our products or reduce our overall production capacity, either of which could have a material adverse effect on our business, operatingfinancial results,condition and financialresults condition.of operations.

Interruption of our supply chain of coffee, storecorrugate, supplies,flexible and metal packaging, RTD beverage ingredients, store supplies or merchandisemerchandise, or of our third-party logistics service providers, could affect our ability to produce or deliver our products and could negatively impact our business and profitability.

We roast coffee beans in-house at our Manchester, TN facility. We also use our co-manufacturers for certain outsourced coffee roasting, and production of our RTD coffee and Black Rifle Energy. Additionally, we contract with suppliers and manufacturers to procure supplies, equipment, and other materials for our operations. Any significant interruption in our supply chain, including interruptions in the supply of coffee beans, corrugate, flexible and metal packaging, coffee machines, restaurant equipment, merchandise, apparel, extract, other product ingredients, or packaging for our proprietary productsproducts, or interruptions or delays by third-party logistics service providers could have a material negative impact on our business and our profitability.

Potential disruptions could arise from various factors, including casualty loss at our roasting facility, interruptions or delays by third partythird-party logistics service providers or common carriers, trade restrictions such as quotas or increased tariffs, regulatory action like placement of a foreign supplier on an FDA import alert, rising postage and shipping costs, embargoes, customs restrictions, pandemics, social or labor unrest, weather events, natural disasters, political disputes, military conflicts, or other unforeseen incidents.

The supply and price of coffee we purchase are and 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. Speculative trading in coffee commodities can also influence coffee prices. Because of the significance of coffee beans to our operations, combined with our ability to only partially mitigate future price risk through purchasing practices, increases in the cost of high-quality coffee beans 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.

The above and other potential tariffs and trade restrictions have caused, and may in the future cause the cost of our products, and as a result prices of our products, to increase, which could reduce demand for such products, and adversely impact our revenue, financial results, and ability to service debt. This in turn could adversely affect our business, financial condition and results of operations. In addition, to the extent changes in the political environment have a negative impact on us or on the markets in which we operate our business, our business, financial condition and results of operations and financial condition could be materially and adversely impactedaffected in the future. At this time, it remains unclear what the U.S. government or foreign governments will or will not do with respect to future international trade agreements and policies or additional tariffs that may be imposed.

We may not be able to compete successfully with other producers and retailers of coffeecoffee, RTD and energy drinks. Intense competition in our markets could make it more difficult to expand our business and could also have a negative impact on our operating results if customers favor our competitors or we are forced to change our pricing and other marketing strategies.

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.markets, including an increase in Veteran-owned specialty coffee roasters. If we cannot compete successfully with other entities in these markets, we could lose customers and our revenue could decline. We expect competition in these markets to continue to be intense as we compete on a variety of fronts, including, without limitation, anticipating and responding to changing consumer demands in a timely manner; establishing and maintaining favorable brand-name recognition; achieving and maintaining product quality; hiring and retaining key employees; maintaining and growing market share; developing quality and differentiated products that appeal to consumers; establishing and maintaining acceptable relationships with Wholesale customers; pricing products appropriately; optimizing roasting and supply chain capabilities; and protecting intellectual property.

Additionally, if our competitors begin to evolve their business strategies and adopt aspects of our business model, such as our subscription model and innovative content and branding, including military, Veteran and first-responder-focused branding -- —certain examples of which exist -- —our customers may be drawn to those competitors for their beverage needs and our business could be harmed.

Our long-term growth strategyprofitability depends in part on opening andsuccessfully operating new Outposts in existing and new markets.Outposts. 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, 2024,2025, we have thirty-seventhirty-five Outposts across ten states, of which eighteenseventeen were Company-operated and nineteeneighteen were franchised. A component of our growth strategyprofitability is openingoperating newour 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. Our ability to open new Outposts is dependent upon a number of factors, many of which are beyond our control, including our and our franchise partners’ ability to:

New Outposts, once opened, may not be profitable or may close, and the increases in average per Outpost revenue and comparable sales that we have experienced in the past may not be indicative of future results.

Unless the context otherwise requires, references to “we”, “us”, “our”, “Black Rifle Coffee”, “Black Rifle Coffee Company”, “BRCC” and the “Company” in this section are to the business and operations of BRC Inc. and its consolidated subsidiaries. The following discussion and analysis should be read in conjunction with the audited annual consolidated financial statements and related notes thereto included in Part II, Item 8, Financial Statements and Supplementary Data inof 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. Factors which could cause such differences are discussed herein and set forth in Part I, Item 1A, Risk Factors in this Annual Report.

Black Rifle Coffee Company is a Veteran-founded and led premium coffee, and energy drink, and mediadrink company operating through one reportable segment thatcomposed comprisesof three primary channels: Wholesale, DTC, and Outposts. We leverage in-house media and content creation to support brand awareness, customer engagement, and community building. Founded in 2014 by U.S. Army Veteran Evan Hafer, Black Rifle Coffee began with a one-pound coffee roaster in a garage, where Mr. Hafer personally roasted, packaged, and shipped coffee directly to consumers. Today, thewe company hashave grown into a widely recognized and nationally distributed brand steadfast in its commitment to supporting active-duty military, Veterans, first responders, and allothers who loveshare America.our values.

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. The Business Combination was accounted for as a reverse acquisition and a recapitalization of Authentic Brands. Accordingly, the Business Combination was reflected as the equivalent of Authentic Brands issuing stock for the net assets of SilverBox, accompanied by a recapitalization. Under this method of accounting, SilverBox is treated as the “acquired” company for financial reporting purposes. 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 individualcontrolling controllingowner of Authentic Brands prior to the Business Combination, who also controls the combined company postfollowing the Business Combination.

•Wholesale channel revenue increasedcontinues to increase as we addedadd new customers and continued to expand our presence in the FDM market. We expect furthercontinued revenue growth in this channel as we invest to increase brand awareness, and in customer acquisition, new product launches, including our Black Rifle Energy product line, and expanded distribution expansion in the FDM market.

•Outpost channel revenue decreasedis duestabilizing toas lowerwe focus on improving transaction volumes atand existingaverage Outpostorder retailvalues locations.through customer retention programs and tailored product offerings. In 2025,2026, we anticipateexpect limited growth in this channel as we reallocate investments to other channels while we workseeking to improve profitability through operational and strategic changes, which may include closingthe closure of underperforming Outposts. We expect accelerated growth in future years as we resume investment in this part of the business.

Maintaining and growing brand awareness and loyalty is critical to our success. We believe we have developed an efficienteffective marketing strategy that enhances brand awareness and drives consumer engagement. Consumer appreciation of our brandsbrand is primarily reflected in the increase of our sales across our three channels over the last few years.channels. We expectintend to continue to refine and develop our brand strategy utilizing reach-based formats such as national television, streaming advertising,advertising and other select avenues.marketing channels. 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 ChannelsChannel

We continue to expand our customer base through our Wholesale channel, with our products now available in a growing number of physical retail locations. Wholesale customers include large national retailers, regional retailers, distributors, and dealers, reflecting our increases inincreased market presence and distribution reach.

We believe that consistently acquiring and retaining customers at a reasonable cost will be a key driver of our future performance. We continue to build brand awareness and reach new consumers by investing in existing and new channels and markets. Our expertisecapabilities in digital creativemarketing and consumer engagement providesprovide a distinctcompetitive advantage in attracting, converting, and retaining our consumers. 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 UsagePurchases of Our Products

We gain substantial economic value from repeat users of our products who consistently re-order our products. The pace of our growth rate willmay be affected by the repeat usagepurchase dynamicsbehavior ofamong existing and newly acquired customers.

Our goal is to continue to expand our product line over time to increase our growth opportunityopportunities and reduce product-specific risks through diversification into multiple products eachintended designedfor aroundregular dailyconsumer use. Our pace of growth will be partially affected by the cadencetiming and magnitudescale of new product launcheslaunches. over time. Moving forward, weWe believe that it is important to our business that weto continue innovatingto innovate with new products and flavors.

Our ability to grow and meet future demand will be affected by our ability to properly plan for and source inventory from a variety of suppliers and co-manufacturers located inside and outside the United States. The majority of our green coffee beans come from Colombia, Brazil, and Nicaragua,Nicaragua and since 2020, we have also sourced green coffee beans from overmore than ten additional 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 criticallycritical important partcomponent of our manufacturing and supply chain operations. 100%All of our bagged coffee is roasted in the United States. Our licensed, Coffee Quality Institute-certified grader and former Green Beret, leadsoversees cupping, grading, scoring, and sourcing of our coffees. We also must effectively manage our co-manufacturers and suppliers.

Operating expenses consist of marketing and advertising expenses related to brand marketing campaigns through various online platforms, including email, digital, website, social media, search engine optimization, as well as performance marketing efforts including retargeting, paid search and product advertisements, as well as social media advertisements and sponsorships. Operating expenses also consist of salaries, wages, and benefits of payrollbenefits, and payroll related expenses for labor not directly related to producing our products. Payroll expenses include both fixed and variable compensation. Variable compensation includes bonuses and equity-based compensation. General and administrationadministrative costs include other professional fees and services, and general corporate infrastructure expenses, including utilities and depreciation and amortization.

Interest expense consists of interest on our borrowing arrangements, the amortization of debt discounts, and deferred financing costs. For the year ended December 31, 2024, interest expense also included thedebt extinguishment of debt costs.

In accordance with Accounting Standards Codification (“ASC”) 740, Income Taxes, the Company evaluates the technical merits of its income tax positions and establishes unrecognized income tax benefits for uncertain tax positions when deemed appropriate. 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. Measurement – determines the amount of benefit that is greater than 50% likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Derecognition of a tax position that was previously recognized would occuroccurs when the Company subsequently determines that a tax position no longer meets the more likely-than-not threshold of being sustained. See Note 16,13, Income Taxes for additional information.

This discussion and analysis pertains to comparisons of material changes in the consolidated financial statements for the years ended December 31, 20242025 and 2023.2024. For the comparisons of the years ended December 31, 20232024 and 2022,2023, 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, 2023,2024, filed with the Securities and Exchange Commission on March 6,3, 2024.2025. The following table representspresents the selected results of operations for BRCC for the periods indicated (amounts in thousands):

Net revenue for the year ended December 31, 20242025 decreasedincreased $4.1$6.8 million, or 1%,2%, to $391.5$398.3 million as compared to $395.6$391.5 million for the corresponding period in 2023.2024.

Net revenue for our Wholesale channel for the year ended December 31, 20242025 increased $20.0$13.0 million, or 9%,5%, to $245.0$258.0 million as compared to $225.1$245.0 million for the corresponding period in 2023.2024. The Wholesale channel performanceincrease was primarily driven by continued growth ofexpanded packaged coffee indistribution theand SKU expansion at FDM marketretailers, andas thewell launchas ofcontributions from Black Rifle Energy.Energy, Thesewhich increaseswas werelaunched in the fourth quarter of 2024. This increase was partially offset by a $5.0$19.0 million decrease in revenue recognized relatedin toconnection awith barter transactiontransactions, whereby we exchanged finished goods inventory was exchanged for prepaid advertising credits. 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.

Net revenue for our OutpostDTC channel for the year ended December 31, 20242025 decreased $4.7$6.1 million, or 17%,5%, to $22.7$117.6 million as compared to $27.3$123.8 million for the corresponding period in 2023.2024. The declinedecrease was primarily driven by lowerthe transactionimpact volumesof anda reduced$6.5 footmillion trafficdecrease in the accrual for loyalty rewards points in 2024 comparedfollowing a change in the policy related to theexpiration priorof year.loyalty rewards points. Our DTC channel continues to stabilize as consumer purchasing behavior increasingly shifts toward third-party digital retail marketplaces rather than direct-to-consumer platforms.

Cost of goods sold for the year ended December 31, 20242025 decreasedincreased $39.9$30.0 million, or 15%,13%, to $260.3 million compared to $230.3 million as compared to $270.2 million overfor the corresponding period in 2023.2024. Gross margin increaseddecreased to 41%35% for the year ended December 31, 20242025 asfrom compared to 32%41% for the corresponding period in 2023.2024. The increasedecrease in gross margin was a result of product mix shift driven by anhigher increaseinflationary costs, primarily related to coffee bean prices, tariffs, and shipping costs. The decline also reflected the impact of lower net revenue resulting from the decrease in the higheraccrual marginfor FDMloyalty market,reward points in 2024. In addition, we increased investments in trade and promotions, which were partially offset by pricing actions, productivity improvements, and lowerfavorable warehousing costs.mix.

Total operating expenses for the year ended December 31, 20242025 decreasedincreased $18.3$5.2 million, or 10%,3%, to $157.3$162.5 million as compared to $175.7$157.3 million for the corresponding period in 2023.2024.

Marketing and advertising expenses for the year ended December 31, 20242025 increased $4.8$3.6 million, or 16%,10%, to $35.6$39.2 million as compared to $30.8$35.6 million for the corresponding period in 2023.2024. This increase was dueprimarily todriven ourby the expansion of partnerships, includingincreased ourinvestment engagementin withconsumer theresearch UFC,and higher advertising spend,data, incremental shopper marketing, higher marketing spend to support the launch of Black Rifle Energy, and anexpanded increaseperformance-based in trade promotions.initiatives.

Salaries, wages and benefits expenses for the year ended December 31, 20242025 decreased $8.6$5.7 million, or 12%,9%, to $62.4$56.7 million as compared to $71.1$62.4 million for the corresponding period in 2023.2024. This decrease was asprimarily adriven result of our 2023 Restructuring Plan whereby, weby reduced compensation costs through headcount reductionsreductions, partially offset by an increase in 2023severance forcosts whichassociated wewith realizedour theOperational fullImprovement benefit in 2024.Plan.

General and administrative expenses for the year ended December 31, 20242025 decreasedincreased $20.8$3.9 million, or 29%,8%, to $50.8$54.7 million as compared to $71.6$50.8 million for the corresponding period in 2023.2024. This decreaseincrease was asprimarily attributable to accrued costs associated with the termination of a resultsoftware of our 2023 Restructuring Plan which reduced our corporate infrastructure and supportcontract that werewill inefficientbe ortransitioned duplicative,to includinga professionaldifferent services,software informationsolution technology,in and office space.2026.

Other operating expense, net for the year ended December 31, 20242025 increased $6.3$3.4 million, or 285%,40%, to $8.5$11.9 million as compared to $2.2$8.5 million for the corresponding period in 2023.2024. ThisThe increase was primarily related to thea impairment$6.2 lossmillion recognizedincrease in thelegal fourthcontingencies, quarternet of 2024insurance exceedingrecoveries, thepartially impairmentoffset lossby recognizeda decrease in 2023.termination costs for our retail outpost locations in 2025. For further discussion of legal contingencies see Note 15, Commitments and Contingencies, of our consolidated financial statements.

For further detaildetails ofregarding income tax matters, see Note 16,13, Income Taxes, within the audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

Income tax expense was $0.1 million and $0.2 million for each of the years ended December 31, 20242025 and 2023,2024, respectively, representing effective tax rates of (2.30.4)% and 0.3%,(2.3)%, respectively. InThe addition, theeffective tax benefitrate for the year ended December 31, 20242025 reflects thepretax impactlosses ofand our assessment that we will not be able to record the benefit of certain current year deferred tax assets forare whichnot expected to be realized, resulting in the recognition of a valuation allowance is expected.allowance.

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 wealso use cash to fund our debt service commitments, capital equipment acquisitions, and other growth-related needs.

Our primary sources of cash are (1) cash on hand, (2) cash provided by operating activities, and (3) net borrowings from our credit facilities. As of December 31, 2024,2025, our cash and cash equivalents were $6.8$4.3 million, our working capital was $20.3$24.2 million, and under our credit facilities, we had $25.5$55.4 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.borrowings. Our ability to draw from the credit facilities is subject to a borrowing base and other covenants. ThereAs of December 31, 2025, we are in compliance with our covenants under the credit facilities and there are no defaults or events of default at this time.default. 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.

Net cash providedused byin operating activities was $11.3$9.8 million for the year ended December 31, 2024,2025, compared to net cash usedprovided inby operating activities of $25.0$11.3 million for the corresponding period in 2023.2024. The total increase of $36.3$21.1 million change in net cash providedfrom operating activities was primarily duedriven by a net loss of $32.2 million in 2025 compared to a net loss of $56.7 million improving to net loss of $7.6 million forin 2024.2024, as well as changes in working capital, including inventory and accounts payable.

Net cash usedprovided inby investing activities was $7.7$1.4 million for the year ended December 31, 2024,2025, compared to net cash used in investing activities of $21.5$7.7 million for the corresponding period in 2023.2024. The $13.8$9.1 million decrease in net cash usedchange was primarily due to reducedlower capital expenditureexpenditures, projectsincluding forreduced investment in our Outpost locations, roasting facilities and information technology.technology, as well as $5.1 million in proceeds from the sale of property during 2025.

Net cash usedprovided inby financing activities was $10.7$5.9 million for the year ended December 31, 2024,2025, compared to net cash used in financing activities of $10.7 million for the corresponding period in 2024. The $16.6 million increase in net cash provided by financing activities of $21.4 million for the corresponding period in 2023. The $32.1 million decrease in net cash provided was primarily due to an$37.3 increasemillion of net proceeds received from the public offering in repaymentsthe third quarter of long-term debt of $93.3 million2025 and payment of $1.0 million of debtnet extinguishmentproceeds costs,from shares issued in connection with a legal settlement, partially offset by proceedsa fromnet issuancedecrease of $31.6 million on long-term debtdebt, primarily due to repayments of $58.7our million,ABL net of $3.6 million of debt issuance costs.facility.

Future capital requirements will vary materially from period to period and will depend on factors such as addingthe additionaladdition of roasting capacity,capacity and the expansion of our corporate and information technology infrastructure relating to growthsupport initiativeschanges andin expansionthe and growth by opening additional Company-operated Outposts.Company. We currently expect to fund our material capital requirements with borrowings from our credit facilities, but we may also seek additional debt or equity financing.

Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results of operations and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. These estimates are developed based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Critical accounting estimates are accounting estimates where the nature of the estimates areis material due to the levelslevel of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and where the impact of the estimates on financial condition or operating performance is material.

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. The critical accounting estimates, assumptions, and judgments that we believe have the most significant impact on our consolidated financial statements are described below.

The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies for up to five years or until wesuch companies are no longer an emerging growth company.companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We arehave electingelected to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result,Accordingly, the consolidated financial statements may not be comparable to those of companies that comply with new or revised accounting pronouncements as of public company effective dates.

In addition to the other information included in this Quarterly Report, you should carefully consider the risks and uncertainties discussed in our "Cautionary Note Regarding Forward-Looking Statements". Other than the below risk factor,factors below, there have been no material changes to the risk factors that were previously disclosed in Item 1A in the Company's 2025 Form 10-K.

•DTC channel revenue has grown as we continue to optimize customer acquisition, enhance retention, and provide our customers with a personalized and engaging shopping experience through targeted content and tailored product offerings on our website. Additionally, we are increasing our investment in major third-party ecommercee-commerce marketplaces in response to changing consumer purchasing behavior.

During the second quarter of 2025, managementwe implemented the Operational Improvement Plan to reduce costs and improve the efficiency of certain company-wide functions. This plan was extended in the third quarter of 2025 as a result of the relocation of our corporate headquarters and a change in our third-party logistics provider. The cost of this plan was approximately $6.6$6.8 million consisting of severance and transition costs, substantially all of which have been incurred as of MarchJune 31,30, 2026. We estimate that the costs savings as a result of this plan will exceed $11.4$12.2 million on an annualized run rate basis. As of MarchJune 31,30, 2026, we have realized approximately $8.4$10.4 million of these savings.

Interest expenseexpense, net

Interest expenseexpense, net consists of interest on our borrowing arrangements, the amortization of debt discounts, and deferred financing costs.

This discussion and analysis pertains to comparisons of material changes on the consolidated financial statements for three and six months ended MarchJune 31,30, 2026 and 2025. The following table represents the selected results of operations for BRC Inc. for the periods indicated (dollars in thousands, unaudited):

Comparison of the three months ended MarchJune 31,30, 2026 to the three months ended MarchJune 31,30, 2025

The following table summarizes our revenue,results grossof profit,operations grossfor margin,the andperiods total operating expensesindicated (dollars in thousands, unaudited):

Net revenue for the three months ended MarchJune 31,30, 2026 increased $19.3$12.2 million, or 21%,13%, to $109.2$107.0 million as compared to $90.0$94.8 million for the corresponding period in 2025.

Net revenue for our Wholesale channel for the three months ended MarchJune 31,30, 2026, increased $17.9$9.3 million, or 32%,15%, to $74.7$70.6 million as compared to $56.8$61.3 million for the corresponding period in 2025. The increase was primarily driven by expanded packaged coffee distribution anddistribution, SKU expansion at FDM retailers, asand well as contributions from Black Rifle Energy.pricing.

Net revenue for our OutpostDTC channel for the three months ended MarchJune 31,30, 2026,2026 decreasedincreased $0.7$3.8 million, or 12%,14%, to $4.8$31.4 million as compared to $5.5$27.6 million for the corresponding period in 2025. The decreaseincrease was primarily driven by softnessgrowth at third-party digital marketplaces, which was partially offset by declines in volumesubscription and average order values.revenue.

Cost of goods sold for the three months ended MarchJune 31,30, 2026 increased $15.6$7.9 million, or 27%,13%, to $73.1$70.5 million as compared to $57.5$62.7 million for the corresponding period in 2025. Gross margin decreasedincreased modestly to 33%34.1% for the three months ended MarchJune 31,30, 2026 as compared to 36%33.9% for the corresponding period in 2025. The decreaseimprovement in gross margin was primarily attributable to higherpricing costs,actions, lower shipping and fulfillment costs driven by inflation.productivity Grossgains, marginand was further impacted by an increasechanges in the reserve for excess and obsolete inventory.inventory Thesecompared decreasesto werethe prior year, which was partially offset by pricinghigher actionsgreen coffee input costs and productivitytariffs, gains.as well as higher third-party e-commerce marketplace fees, which increased in line with the revenue growth in these channels.

Salaries, wagesMarketing and benefitsadvertising expenses for the three months ended MarchJune 31,30, 2026 increased $0.5$0.8 million, or 4%,8%, to $14.1$10.5 million as compared to $13.6$9.8 million for the corresponding period in 2025. ThisThe increase was primarily attributabledriven toby higher bonusspending expenseon incontent theproduction currentand period.media, Thisagency, increaseand partnerships, which was partially offset by lower payrollad costsplacement drivenand byin-store marketing costs. As a reductionpercentage of revenue, marketing and advertising expense decreased to 9.8% for the three months ended June 30, 2026 from 10.3% for the corresponding period in headcount year over year2025, as arevenue resultgrowth ofoutpaced ourthe Operationalincrease Improvementin Plan.marketing investment.

General and administrative expenses for the three months ended MarchJune 31,30, 2026 decreased $1.7$5.0 million, or 14%,35%, to $10.1$9.3 million as compared to $11.8$14.3 million for the corresponding period in 2025. ThisThe decrease reflectswas primarily attributable to lower legal fees, lower consulting and professional fees, and reduced depreciation and amortization expense as certain assets became fully depreciated, reflecting actions taken to simplify and rationalize the Company's cost structure. As a percentage of revenue, general and administrative expense decreased to 8.7% for the three months ended June 30, 2026 from 15.1% for the corresponding period in 2025.

Other operating expense, net for the three months ended MarchJune 31,30, 2026 decreased approximately $0.9$4.8 million, or 69%,98%, to $0.4$0.1 million as compared to $1.2$4.9 million for the corresponding period in 2025. The decrease was primarily relateddue to athe leaseabsence terminationof thatlegal wascontingency recordedcharges inas compared to the firstcorresponding quarterperiod of 2025.

Interest expense, net for the three months ended MarchJune 31,30, 2026 decreased approximately $1.1$0.6 million, or 48%,32%, to $1.2$1.3 million as compared to $2.4$1.8 million for the corresponding period in 2025. The decrease was primarily driven by a lower average outstanding balance of the ABL Facility during the firstsecond quarter of 2026 compared to the corresponding period in 2025.

Our primary sources of cash are (1) cash on hand, (2) cash provided by operating activities, and (3) net borrowings from our credit facilities. As of MarchJune 31,30, 2026, our cash and cash equivalents were approximately $10.0$12.0 million, our working capital was $29.6$30.8 million, and under our credit facilities, we had $52.5$50.4 million of available borrowings. Our ability to draw from the credit facilities is subject to a borrowing base and other covenants. As of MarchJune 31,30, 2026, we are in compliance with our covenants under the credit facilities, and there are no defaults or events of default. 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.

Net cash provided by operating activities was $6.8$12.6 million for the threesix months ended MarchJune 31,30, 2026, compared to net cash used in operating activities of $4.1$7.5 million for the corresponding period in 2025. The total increase of $10.9$20.1 million in net cash provided by operating activities was primarily due to increased net income and working capital improvements.

Net cash used in investing activities was $0.6$1.1 million for the threesix months ended MarchJune 31,30, 2026, compared to net cash used in investing activities of $1.2$2.1 million for the corresponding period in 2025. The $0.5$1.1 million decrease in net cash used in investing activities was primarily due to lower capital expenditures, including reduced investment in our Outpost locations, roasting facilities, and information technology.

Net cash used in financing activities was $0.5$3.9 million for the threesix months ended MarchJune 31,30, 2026, compared to net cash provided by financing activities of $2.4$7.1 million for the corresponding period in 2025. The $2.9$11.0 million decrease in net cash provided by financing activities was primarilydriven dueby to $2.7$6.5 million of net proceeds from long-term debt, primarily related to draws on our ABL Facility, in the prior year period, compared to net repayments of long-term debt in the current period.

Liabilities relating to operating leases that have commenced as of MarchJune 31,30, 2026 have been reported on the consolidated balance sheets as "Operating lease liabilities". Payments on leases are expected to be approximately $3.7 million in the next twelve months, and approximately $30.4$29.5 million beyond twelve months through 2043.