BRC (BRCC) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Our brand, including the quality of media content and active participation in the Veteran community, 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
2. 02We 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 Veteran community, our consumer perception, brand equity, and financial results could be negatively impacted
3. 03Our growth strategy depends on the successful execution of our strategic initiatives, and our limited operating history may make it difficult to evaluate future risks and challenges
4. 04We have a limited operating history, and our past financial results may not be indicative of our future performance. Further, our revenue growth rate may slow as our business matures
5. 05Our marketing programs may not be successful, resulting in harm to our financial results
6. 06Our new products or merchandise may not generate increased sales or profits
7. 07Failure to properly expand into new channels or introduce different product types could result in significant expenditures without increased revenue
8. 08The loss of one or more of our primary Wholesale partners, a significant adverse change in a Wholesale partner’s financial position, or an adverse change in our relationships with our Wholesale partners could negatively impact our net sales and profitability
9. 09We are subject to risks associated with using social media as a primary form of advertisement and customer engagement
10. 10Our current operations are highly dependent on the financial performance of our DTC and Wholesale channels, and reliance on third party logistics, as well as other risks, could negatively impact our business
11. 11Interruption of our supply chain of coffee, store supplies, RTD beverage ingredients, or merchandise could affect our ability to produce or deliver our products and could negatively impact our business and profitability
12. 12Increases in the cost of high-quality coffee beans or other commodities or decreases in the availability of high-quality coffee beans or other commodities could have an adverse impact on our business and financial results
13. 13Increases in the cost of dairy products and other commodities, such as petroleum which in turn may increase the cost of our packing materials, or lack of availability, whether due to supply shortages, delays or interruptions in processing, or otherwise, especially in international markets, could harm our business
14. 14Our 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
15. 15We may incur additional costs in new markets, particularly for transportation and distribution, which may impact sales and the profitability of those Outposts. Accordingly, the volume and timing of new Outpost openings may have a material adverse impact on our profitability
16. 16Failure to effectively manage growth could harm our business and operating results
17. 17Over the last several years, we have implemented, and continue to implement, modifications and upgrades to our systems, including making changes to legacy systems, replacing legacy systems, and acquiring new systems with new functionality
18. 18If the technology-based systems that give our consumers the ability to shop or interact with us online do not function effectively, our operating results, as well as our ability to grow our digital commerce business globally or to retain our customer base, could be materially adversely affected
19. 19If we or our franchise partners are unable to protect our customers’ and employees’ personal, financial, or other confidential data, or if our information technology systems are compromised, we could be exposed to data loss, litigation, liability and reputational damage
20. 20We may not be able to adequately protect our intellectual property, including trademarks, trade names, and service marks, which, in turn, could harm the value of our brand and adversely affect our business
21. 21Nevertheless, our competitors may develop similar menu items and concepts, and adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets and other intellectual property
22. 22Evolving consumer preferences and tastes, including public or medical opinions about caffeine consumption, may adversely affect our business
23. 23Food safety and quality concerns may negatively impact our brand, business, and profitability, and our internal operational controls and standards may not always be met. Any possible instances or reports, whether true or not, of food or beverage-borne illness or adulteration could reduce our sales
24. 24We are subject to risks associated with long-term, non-cancelable lease agreements and, where applicable, risks related to owning real estate
25. 25If we fail to maintain adequate operational and financial resources, particularly if we continue to grow rapidly, we may be unable to execute our business plan or maintain high levels of service and customer satisfaction
26. 26Disruptions at the bank in which we deposit our funds could have an adverse impact on our business and financial condition
27. 27We may be adversely affected by the effects of inflation
28. 28Authentic Brands’ debt obligations could impair our financial condition and negatively impact our business. We may be unable to generate sufficient cash flow to meet these obligations
29. 29Authentic Brands’ debt agreements impose restrictions on our business
30. 30Our barter arrangement may not provide the benefits we expect

Risks Related to People and Culture

1. 31We 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
2. 32Changes in the availability of and the cost of labor could harm our business
3. 33Our unique workplace atmosphere may produce specific challenges
4. 34Unionization activities may disrupt our operations and affect our profitability

Risks Related to Regulation, Litigation and Taxation

1. 35Litigation or legal proceedings could expose us to significant liabilities and negatively impact our reputation or business
2. 36We are subject to numerous federal, state, and local laws with which compliance is both costly and complex
3. 37We may be subject to liability for placing advertisements with content that is deemed inappropriate or misleading
4. 38We Process personal information, confidential information, and other information necessary to provide our products and service and ensure that they are delivered effectively, to operate our business, for legal and marketing purposes, and for other business-related purposes
5. 39We and our franchise partners are subject to extensive government regulations that could result in claims leading to increased costs and restrict our ability to operate franchises
6. 40Our business, like many other beverage and restaurant companies, is subject to the risk of class action lawsuits and other proceedings that are costly, divert management attention, and, if successful, could result in our payment of substantial damages or settlement costs

Risks Related to Our Corporate Structure

1. 41The Tax Receivable Agreement with the Unitholders of Authentic Brands, LLC (“Authentic Brands”) requires us to make cash payments to them in respect of certain tax benefits to which we may become entitled, and we expect that the payments we will be required to make could be substantial
2. 42The 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
3. 43We are a public benefit corporation, and our focus on our public benefit company purpose may negatively impact our financial performance
4. 44Our status as a public benefit corporation could make our acquisition, which may be beneficial to our stockholders, more difficult
5. 45As a public benefit corporation, we may be subject to increased derivative litigation concerning our duty to balance stockholder interests and the PBC Purpose, the occurrence of which may have an adverse impact on our financial condition and results of operations
6. 46As a public benefit corporation, we are required to comply with various new reporting requirements, which, even if complied with, could result in harm to our reputation
7. 47Our only material assets are our direct and indirect interests in BRCC LLC, and we are accordingly dependent upon distributions from BRCC LLC to pay dividends and taxes and other expenses
8. 48Delaware law, the Charter and the Bylaws contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable
9. 49These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our Board or management
10. 50In addition, the provisions of the Investor Rights Agreement, as described below, provide the stockholders party thereto with certain board rights which could also have the effect of delaying or preventing a change in control
11. 51Certain significant stockholders and Authentic Brands’ members whose interests may differ from those of our public stockholders following the Business Combination have the ability to significantly influence our business and management

Risks Related to an Investment in Our Securities

1. 52We may issue additional shares of our Class A Common Stock or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of your shares
2. 53We may issue additional shares of our Class A Common Stock or other equity securities of equal or senior rank in the future in connection with, among other things, future acquisitions, repayment of outstanding indebtedness or under our incentive plans, without stockholder approval, in a number of circumstances
3. 54We are subject to rules and regulations regarding our internal control over financial reporting. Failure to establish and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business
4. 55We are a “controlled company” within the meaning of New York Stock Exchange (“NYSE”) rules and, as a result, we qualify for exemptions from certain corporate governance requirements. Our stockholders do not have the same protections afforded to stockholders of companies that are subject to such requirements
5. 56Because there are no current plans to pay cash dividends on our Class A Common Stock for the foreseeable future, you may not receive any return on investment unless you sell your Class A Common Stock for a price greater than that which you paid for it