BRC (BRCC) risk factors, FY2025 10-K

Risks Related to Our Business

1. 01Our brand, including the quality of media content and active participation in the military, Veteran 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 operations46% rewritten
2. 02Legal claims against us based on, among other things, employee matters 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 operationsNew
3. 03Failure to maintain or enhance the value and reputation of our brand, including our support of the military, Veteran and first-responder communities, could have a negative impact on our financial resultsNew
4. 04Our 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 challenges22% rewritten
5. 05We 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
6. 06Our marketing programs may not be successful, resulting in harm to our financial results
7. 07Our new products or merchandise may not generate increased sales or profits
8. 08Failure to successfully expand into new channels or introduce different product types could result in significant expenditures without increased revenue
9. 09The 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
10. 10A small number of customers generally account for a significant portion of our accounts receivable in any period, and if any one of them fails to pay us, our business, financial condition and results of operations will be harmedNew
11. 11We are subject to risks associated with using social media as a primary form of advertisement and customer engagement
12. 12Our current operations are highly dependent on the financial performance of our Wholesale and DTC channels, and reliance on third-party logistics, as well as other risks, could negatively impact our business
13. 13Interruption of our supply chain of coffee, corrugate, flexible and metal packaging, RTD beverage ingredients, store supplies or merchandise, 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 profitability22% rewritten
14. 14Increases 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
15. 15Increases 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 business31% rewritten
16. 16Our profitability depends in part on successfully operating Outposts. We may be unsuccessful in opening or profitably operating new Outposts or establishing new markets, which could adversely affect our growth92% rewritten
17. 17Although we establish specific operating and financial targets for our Outposts, some locations may fail to meet these targets or may take longer than expected to reach targeted profitability. Failure to do so could adversely affect our business, financial condition, and results of operationsNew
18. 18Failure to effectively manage growth could harm our business, financial condition and results of operations
19. 19Over 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
20. 20If 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
21. 21If 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
22. 22We 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, financial condition and results of operations
23. 23Nevertheless, 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
24. 24Evolving consumer preferences and tastes, including public or medical opinions about caffeine consumption, may adversely affect our business, financial condition and results of operations
25. 25Food 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
26. 26We are subject to risks associated with long-term, non-cancelable lease agreements and, where applicable, risks related to owning real estate
27. 27If 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 satisfaction41% rewritten
28. 28Disruptions at the bank in which we deposit our funds could have an adverse impact on our business, financial condition and results of operations40% rewritten
29. 29We may be adversely affected by the effects of inflation
30. 30Authentic 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
31. 31Authentic Brands’ debt agreements include the maintenance of financial covenants which could restrict our ability to do businessNew
32. 32Our barter arrangement may not provide the benefits we expect37% rewritten
33. 33Our Operational Improvement Plan may not yield its intended efficiencies and could strain resources, negatively impact workforce morale, and slow down execution of our strategic plansNew

Risks Related to People and Culture

1. 34We 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 business43% rewritten
2. 35Changes in the availability of and the cost of labor could harm our business
3. 36Our unique workplace atmosphere may produce specific challenges
4. 37Unionization activities may disrupt our operations and affect our profitability

Risks Related to Regulation, Litigation and Taxation

1. 38Litigation or legal proceedings could expose us to significant liabilities and negatively impact our reputation or business
2. 39We are subject to numerous federal, state, and local laws with which compliance is both costly and complex
3. 40We may be subject to liability for placing advertisements with content that is deemed inappropriate or misleading27% rewritten
4. 41We 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. 42We 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. 43Our business 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. 44The 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. 45The 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. 46We are a public benefit corporation, and our focus on our public benefit company purpose may negatively impact our financial performance
4. 47Our status as a public benefit corporation could make our acquisition, which may be beneficial to our stockholders, more difficult62% rewritten
5. 48As 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. 49As 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. 50Our 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. 51Delaware 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. 52These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our Board or management
10. 53In 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. 54Certain 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. 55We 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. 56We 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. 57We 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. 58We are a “controlled company” within the meaning of New York Stock Exchange (the “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. 59Because 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
6. 60We may not be able to maintain the listing of our Class A Common Stock on the NYSENew