Solo Brands (SBDS) risk factors, FY2024 10-K

Risks Related to our Liquidity and Indebtedness

1. 01Our financial condition raises substantial doubt as to our ability to continue as a going concern
2. 02We may be unable to realize expected benefits from any strategic plans, restructuring and cost reduction efforts, and operational improvements
3. 03Our limited liquidity poses additional risks to our business and operations
4. 04We depend on cash generated from our operations to support our business and our growth initiatives
5. 05Our indebtedness limits our ability to invest in the ongoing needs of our business

Risks Related to our Business and Industry

1. 06Our business depends on maintaining and strengthening our brand and generating and maintaining ongoing demand for our products, and reductions in such demand harm our results of operations
2. 07If we are unable to successfully design, develop and introduce new products, our business will be harmed
3. 08Tariffs or other restrictions placed on foreign imports and any related counter-measures taken by other countries harm our business and results of operations
4. 09Our products are manufactured by third parties outside of the United States, and our business may be harmed by legal, regulatory, economic, societal, and political risks associated with those markets
5. 10Our historic growth rates have not been sustained and are not indicative of future growth
6. 11Our business could be harmed if we are unable to accurately forecast demand for our products or our results of operations
7. 12Our marketing strategy may not be successful with existing and future customers
8. 13If we fail to attract new customers in a cost-effective manner, our business may be harmed
9. 14Our growth depends, in part, on expanding into additional consumer markets, and we may not be successful in doing so
10. 15Our net sales and profits depend on the level of customer spending for our products, which is sensitive to general economic conditions and other factors
11. 16The markets in which we compete are highly competitive and we could lose our market positions
12. 17Competitors have imitated and will likely continue to imitate our products. We may not be able to adequately protect our intellectual property, and if we are unable to protect or preserve our brand image and proprietary rights, our business may be harmed
13. 18that our trademarks are successfully challenged and we lose the rights to use those trademarks, we could be forced to rebrand our products, requiring us to devote resources to advertising and marketing new brands
14. 19We may be subject to liability if we infringe upon the intellectual property rights of third parties and have increased costs protecting our intellectual property rights
15. 20We rely on third-party manufacturers and problems with, or the loss of, our suppliers or an inability to obtain raw materials could harm our business and results of operations
16. 21Our business relies on cooperation of our suppliers, but not all relationships include written exclusivity agreements, which means that they could produce similar products for our competitors. If they produce similar products for our competitors, it could harm our results of operations
17. 22Fluctuations in the cost and availability of raw materials, equipment, labor, and transportation could cause manufacturing delays or increase our costs
18. 23Our business depends on our ability to source and distribute products in a timely manner. However, we cannot control all of the factors that might affect the timely and effective procurement of our products from our third-party manufacturers and the delivery of our products to our retail partners and customers
19. 24We depend in part on our retail partners to display and present our products to customers, and our failure to maintain and further develop our relationships with our domestic retail partners could harm our business
20. 25Insolvency, credit problems or other financial difficulties that could confront our retail partners expose us to financial risk
21. 26If our independent suppliers, manufacturing partners and retail partners do not comply with ethical business practices or with applicable laws and regulations, our reputation, business, and results of operations would be harmed
22. 27We are subject to payment-related risks that may result in higher operating costs or the inability to process payments, either of which could harm our brand, reputation, business, financial condition and results of operations
23. 28We may acquire or invest in other companies, which could divert our management’s attention, result in dilution to our stockholders, and otherwise disrupt our operations, harm our results of operations and negatively impact our financial condition
24. 29Our future success depends on the continuing efforts of our management and key employees, and on our ability to attract and retain highly skilled personnel and senior management
25. 30Our plans for continuing international operations may not be successful
26. 31Our business involves the potential for injury, property damage, quality problems, product recalls, product liability and other claims against us, which could affect our earnings and financial condition
27. 32Third Party Data Processing and Transfers
28. 33Self-Regulatory Industry Standards
29. 34Consumer Protection Laws and FTC Enforcement
30. 35Information Technology Dependencies
31. 36We have incorporated and expect in the future that we will continue to incorporate machine learning and artificial intelligence technologies
32. 37Our business may be adversely affected if we are unable to provide our customers a cost-effective e-commerce platform that is able to respond and adapt to rapid changes in technology
33. 38Government regulation of the Internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could substantially harm our business and results of operations
34. 39We have identified a material weakness in our internal control over financial reporting, which, if not corrected, could affect the reliability of our consolidated financial statements and have other adverse consequences
35. 40Our results of operations are subject to seasonal and quarterly variations, which could cause the price of our common stock to decline
36. 41If our goodwill, other intangible assets, or fixed assets become impaired, we may be required to record a charge to our earnings
37. 42We are subject to credit risk
38. 43An adverse determination in any material product liability related claim against us could adversely affect our operating results or financial condition

Risks Related to Our Organizational Structure and the Tax Receivable Agreement

1. 44Solo Brands, Inc.’s sole material asset is its interest in Holdings, and, accordingly, it will depend on distributions from Holdings to pay its taxes and expenses, including payments under the Tax Receivable Agreement. Holdings’ ability to make such distributions may be subject to various limitations and restrictions
2. 45In certain cases, future payments under the Tax Receivable Agreement to the Continuing LLC Owners may be accelerated or significantly exceed the actual benefits Solo Brands, Inc. realizes in respect of the tax attributes subject to the Tax Receivable Agreement
3. 46Solo Brands, Inc. will not be reimbursed for any payments made to the Continuing LLC Owners under the Tax Receivable Agreement in the event that any tax benefits are disallowed
4. 47Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition
5. 48cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act
6. 49Solo Brands, Inc. is controlled by the Original LLC Owners, whose interests may differ from those of our public stockholders

Risks Related to Ownership of our Class A Common Stock

1. 50The price of our Class A common stock has fluctuated and will likely continue to fluctuate and you may not be able to sell the shares you purchase at or above your purchase price
2. 51Our failure to regain compliance with the continued listing requirements of the NYSE, or any future failure to remain in compliance with such standards, could result in the delisting of our Class A common stock, which would have an adverse impact on the trading, liquidity and market price of our Class A common stock
3. 52Sales of substantial amounts of our Class A common stock in the public market, or the perception that such sales could occur, could adversely affect the price of our Class A common stock and could impair our ability to raise capital through the sale of additional shares
4. 53The Continuing LLC Owners have the right to have their LLC Interests redeemed pursuant to the terms of the Holdings LLC Agreement, which may dilute the owners of the Class A common stock
5. 54Taking advantage of the reduced disclosure requirements applicable to “emerging growth companies” and “smaller reporting companies” may make our Class A common stock less attractive to investors
6. 55We do not currently expect to pay any cash dividends
7. 56Our amended and restated certificate of incorporation contains provisions renouncing our interest and expectation to participate in certain corporate opportunities identified or presented to certain of our Original LLC Owners
8. 57We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Class A common stock, which could depress the price of our Class A common stock
9. 58Anti-takeover provisions in our governing documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and depress the market price of our common stock
10. 59Stock repurchases undertaken by the Company could have adverse effects, including potentially increasing the volatility of the price of our Class A common stock and potentially diminishing our cash reserves while not producing hoped for stockholder value
11. 60We may become involved in legal or regulatory proceedings and audits
12. 61Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud
13. 62Our business is subject to the risk of earthquakes, fire, power outages, floods, and other catastrophic events, and to interruption by problems such as terrorism, cyberattacks, or failure of key information technology systems
14. 63Changes in applicable tax regulations or in their implementation could negatively affect our business and financial results
15. 64If our estimates or judgments relating to our critical accounting policies prove to be incorrect or change significantly, our results of operations could be harmed
16. 65Our ESG and sustainability initiatives and the adoption of ESG regulatory frameworks may impose additional costs and expose us to emerging areas of risk
17. 66The occurrence of any of the foregoing could have a material adverse effect on our business and financial condition and expose us to market, operational and execution costs or risks