# EDGAR Filing Document

**Accession Number:** 0001891101
**File Stem:** 0001891101-25-000033
**Filing Date:** 2025-11
**Character Count:** 185768
**Document Hash:** 6c82291e17da12443a5aa9ac2707ac82
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001891101-25-000033.hdr.sgml**: 20251103

**ACCESSION NUMBER**: 0001891101-25-000033

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 77

**CONFORMED PERIOD OF REPORT**: 20250930

**FILED AS OF DATE**: 20251103

**DATE AS OF CHANGE**: 20251103

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BRC Inc.
- **CENTRAL INDEX KEY:** 0001891101
- **STANDARD INDUSTRIAL CLASSIFICATION:** BEVERAGES [2080]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 873277812
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-41275
- **FILM NUMBER:** 251444480

**BUSINESS ADDRESS:**
- **STREET 1:** 3131 W. 2210 S., SUITE C
- **CITY:** WEST VALLEY CITY
- **STATE:** UT
- **ZIP:** 84119
- **BUSINESS PHONE:** (801) 874-1189

**MAIL ADDRESS:**
- **STREET 1:** 3131 W. 2210 S., SUITE C
- **CITY:** WEST VALLEY CITY
- **STATE:** UT
- **ZIP:** 84119

?xml version='1.0' encoding='ASCII'? brrc-20250930

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended September 30, 2025**

**OR**

☐ &nbsp;&nbsp;&nbsp;&nbsp;**TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from ________ to ________**

**Commission file number 001-41275**

**BRC Inc.**

**(Exact name of registrant as specified in its charter)**

---

| | |
|:---|:---|
| **Delaware** | **87-3277812** |
| (State or other jurisdiction of<br>incorporation or organization) | (I.R.S. Employer Identification No.) |

---

**3131 W. 2210 S, Suite C**

**West Valley City, UT 84119**

(Address of principal executive office, zip code)

**(801) 874-1189**

Registrant's telephone number, including area code

**1144 S. 500 W**

**Salt Lake City, UT 84101** 

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| **Class A Common Stock, $0.0001 par value** | **BRCC** | **New York Stock Exchange** |

---

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☒ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| | | Emerging growth company | ☒ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 29, 2025, the registrant had (i) 114,647,011 shares of Class A common stock, par value $0.0001 per share (the "Class A Common Stock") and, (ii) 133,852,869 shares of Class B common stock, par value $0.0001 per share (the "Class B Common Stock") outstanding.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**Table of Contents**

---

| | | |
|:---|:---|:---|
| | | **Page** |
| **<u>[Forward-Looking Statements](#i182b6debc8d047c491d3b2340447c673_10)</u>** | **<u>[Forward-Looking Statements](#i182b6debc8d047c491d3b2340447c673_10)</u>** | <u>[1](#i182b6debc8d047c491d3b2340447c673_10)</u> |
| **<u>[Part I - Financial Information](#i182b6debc8d047c491d3b2340447c673_13)</u>** | **<u>[Part I - Financial Information](#i182b6debc8d047c491d3b2340447c673_13)</u>** | |
| <u>[Item 1](#i182b6debc8d047c491d3b2340447c673_16)</u> | <u>[Financial Statements (unaudited)](#i182b6debc8d047c491d3b2340447c673_16)</u> | <u>[3](#i182b6debc8d047c491d3b2340447c673_16)</u> |
| | &nbsp;&nbsp;&nbsp;&nbsp;<u>[Consolidated Balance Sheets](#i182b6debc8d047c491d3b2340447c673_19)</u> | <u>[3](#i182b6debc8d047c491d3b2340447c673_19)</u> |
| | &nbsp;&nbsp;&nbsp;&nbsp;<u>[Consolidated Statements of Operations](#i182b6debc8d047c491d3b2340447c673_22)</u> | <u>[4](#i182b6debc8d047c491d3b2340447c673_22)</u> |
| | &nbsp;&nbsp;&nbsp;&nbsp;<u>[Consolidated Statements of Stockholders' Equity](#i182b6debc8d047c491d3b2340447c673_25)</u> | <u>[5](#i182b6debc8d047c491d3b2340447c673_25)</u> |
| | &nbsp;&nbsp;&nbsp;&nbsp;<u>[Consolidated Statements of Cash Flows](#i182b6debc8d047c491d3b2340447c673_28)</u> | <u>[7](#i182b6debc8d047c491d3b2340447c673_28)</u> |
| | &nbsp;&nbsp;&nbsp;&nbsp;<u>[Index for Notes to Consolidated Financial Statements](#i182b6debc8d047c491d3b2340447c673_31)</u> | <u>[9](#i182b6debc8d047c491d3b2340447c673_31)</u> |
| | &nbsp;&nbsp;&nbsp;&nbsp;<u>[Notes to Consolidated Financial Statements](#i182b6debc8d047c491d3b2340447c673_34)</u> | <u>[10](#i182b6debc8d047c491d3b2340447c673_34)</u> |
| <u>[Item 2](#i182b6debc8d047c491d3b2340447c673_82)</u> | <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i182b6debc8d047c491d3b2340447c673_82)</u> | <u>[33](#i182b6debc8d047c491d3b2340447c673_82)</u> |
| <u>[Item 3](#i182b6debc8d047c491d3b2340447c673_85)</u> | <u>[Quantitative and Qualitative Disclosures About Market Risk](#i182b6debc8d047c491d3b2340447c673_85)</u> | <u>[42](#i182b6debc8d047c491d3b2340447c673_85)</u> |
| <u>[Item 4](#i182b6debc8d047c491d3b2340447c673_88)</u> | <u>[Controls and Procedures](#i182b6debc8d047c491d3b2340447c673_88)</u> | <u>[42](#i182b6debc8d047c491d3b2340447c673_88)</u> |
| **<u>[Part II - Other Information](#i182b6debc8d047c491d3b2340447c673_91)</u>** | **<u>[Part II - Other Information](#i182b6debc8d047c491d3b2340447c673_91)</u>** | |
| <u>[Item 1](#i182b6debc8d047c491d3b2340447c673_94)</u> | <u>[Legal Proceedings](#i182b6debc8d047c491d3b2340447c673_94)</u> | <u>[43](#i182b6debc8d047c491d3b2340447c673_94)</u> |
| <u>[Item 1A](#i182b6debc8d047c491d3b2340447c673_97)</u> | <u>[Risk Factors](#i182b6debc8d047c491d3b2340447c673_97)</u> | <u>[43](#i182b6debc8d047c491d3b2340447c673_97)</u> |
| <u>[Item 2](#i182b6debc8d047c491d3b2340447c673_100)</u> | <u>[Unregistered Sales of Equity Securities and Use of Proceeds](#i182b6debc8d047c491d3b2340447c673_100)</u> | <u>[43](#i182b6debc8d047c491d3b2340447c673_100)</u> |
| <u>[Item 3](#i182b6debc8d047c491d3b2340447c673_103)</u> | <u>[Defaults Upon Senior Securities](#i182b6debc8d047c491d3b2340447c673_103)</u> | <u>[43](#i182b6debc8d047c491d3b2340447c673_103)</u> |
| <u>[Item 4](#i182b6debc8d047c491d3b2340447c673_106)</u> | <u>[Mine Safety Disclosures](#i182b6debc8d047c491d3b2340447c673_106)</u> | <u>[44](#i182b6debc8d047c491d3b2340447c673_106)</u> |
| <u>[Item 5](#i182b6debc8d047c491d3b2340447c673_109)</u> | <u>[Other Information](#i182b6debc8d047c491d3b2340447c673_109)</u> | <u>[44](#i182b6debc8d047c491d3b2340447c673_109)</u> |
| <u>[Item 6](#i182b6debc8d047c491d3b2340447c673_115)</u> | <u>[Exhibits](#i182b6debc8d047c491d3b2340447c673_115)</u> | <u>[45](#i182b6debc8d047c491d3b2340447c673_115)</u> |
| **<u>[Signatures](#i182b6debc8d047c491d3b2340447c673_118)</u>** | | <u>[46](#i182b6debc8d047c491d3b2340447c673_118)</u> |

---

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**<u>CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS</u>**

This Quarterly Report on Form 10-Q (this "Quarterly Report") includes statements that express the Company's opinions, expectations, hopes, beliefs, plans, intentions, objectives, strategies, assumptions or projections regarding future events or future results of operations or financial condition and therefore are, or may be deemed to be, "forward-looking statements." The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "will," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements appear in a number of places throughout this Quarterly Report and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, results of operations, the Company's financial condition, liquidity, prospects, growth, strategies, future market conditions or economic performance and developments in the capital and credit markets and expected future financial performance, the markets in which the Company operates as well as any information concerning possible or assumed future results of operations of the Company. Such forward-looking statements are based on information available as of the date of this Quarterly Report and management's expectations, beliefs and forecasts concerning future events impacting the Company. Factors that may cause such forward-looking statements to differ from actual results include, but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Competition and our ability to grow, manage sustainable expansion, and retain key employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to compete effectively with other producers, distributors and retailers of coffee and energy drinks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our limited operating history, which may hinder the successful execution of strategic initiatives and make it difficult to assess future risks and challenges;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Challenges in managing rapid growth, inventory needs, and relationships with key business partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Inability to raise additional capital necessary for business development;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to achieve or sustain long-term profitability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Inability to effectively manage debt obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to maximize the value of assets received through bartering transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Negative publicity affecting our brand, reputation, or that of key employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to uphold our position as a supportive member of the Veteran, military and first responder communities, or other factors negatively affecting brand perception;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Inability to establish and maintain strong brand recognition through intellectual property or other means;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Shifts in consumer spending, lack of interest in new products or changes in brand perception upon evolving consumer preferences and tastes, including due to shifts in demographic or health and wellness trends, reduction in discretionary spending and price increases, and our ability to anticipate or react to these changes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Price changes that are insufficient to offset cost increases and maintain profitability or that result in sales volume declines associated with pricing elasticity;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Unsuccessful marketing campaigns that incur costs without attracting new customers or realizing higher revenue;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to attract new customers or retain existing customers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Risks associated with reliance on social media platforms, including dependence on third-party platforms for marketing and engagement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Declining performance of the Direct-to-Consumer ("DTC") revenue channel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Inability to effectively manage or scale distribution through Wholesale business partners, particularly key Wholesale partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to manage supply chain operations effectively, including inaccurate forecasting of raw material and co-manufacturing requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Loss of one or more co-manufacturers or production delays, quality issues, or labor-related disruptions affecting manufacturing output;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Supply chain disruptions or failures by third-party suppliers to deliver coffee, store supplies, ready-to-drink ("RTD") beverage ingredients, or merchandise, including disruptions caused by external factors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Ongoing risks related to supply chain volatility and reliability, including tariffs, political and climate risks;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fluctuations in the market for high-quality coffee beans and other key commodities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Unpredictable changes in the cost and availability of real estate, labor, raw materials, equipment, transportation, or shipping;

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to successfully improve profitability of existing Outpost Retail Stores ("Outposts"), including challenges or delays with the implementation of operational and strategic changes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Risks related to long-term, non-cancelable lease obligations and other real estate-related concerns;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Inability of franchise partners to successfully operate and manage their franchise locations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to maintain high-quality customer experiences for retail partners and end users, including production defects or issues caused by co-manufacturers that negatively impact product quality and brand reputation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to comply with food safety regulations or maintain product quality standards;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Difficulties in successfully expanding into new domestic and international markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to comply with federal, state, and local laws and regulations, or inability to prevail in civil litigation matters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Risks related to potential unionization of employees;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to execute our operational improvement plan ("Operational Improvement Plan") to reduce costs and improve efficiency of certain company-wide functions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to protect against cybersecurity threats, software vulnerabilities, or hardware security risks; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Other risks and uncertainties indicated in Part II. Item 1A. Risk Factors of this Quarterly Report and in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the "SEC") on March 3, 2025 (the "2024 Form 10-K") including those set forth under "Item 1A. Risk Factors" included therein.

The forward-looking statements contained in this Quarterly Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under "Item 1A. Risk Factors" in our 2024 Form 10-K and described under "Item 1A. Risk Factors" in Part II of this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**PART I - FINANCIAL INFORMATION**

**Item 1. Financial Statements**

**BRC Inc.**

**CONSOLIDATED BALANCE SHEETS**

***(in thousands, except share and par value amounts)***

---

| | | |
|:---|:---|:---|
| | **September 30,**<br>**2025** | **December 31,**<br>**2024** |
| | **(unaudited)** | **(audited)** |
| **Assets** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;Cash and cash equivalents | $9482 | $6810 |
| &nbsp;&nbsp;Accounts receivable, net | 30449 | 33604 |
| &nbsp;&nbsp;Inventories, net | 53021 | 42647 |
| &nbsp;&nbsp;Prepaid expenses and other current assets | 11349 | 12410 |
| &nbsp;&nbsp;Assets held for sale | 4294 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 108595 | 95471 |
| Property, plant and equipment, net | 46582 | 59204 |
| Operating lease, right-of-use asset | 23356 | 26703 |
| Non-current prepaid marketing expenses | 43431 | 45506 |
| Identifiable intangibles, net | 314 | 359 |
| Other | 123 | 139 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total assets | $222401 | $227382 |
| **Liabilities and stockholders' equity** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;Accounts payable | $35303 | $38817 |
| &nbsp;&nbsp;Accrued liabilities | 36755 | 27900 |
| &nbsp;&nbsp;Deferred revenue and gift card liability | 4669 | 3918 |
| &nbsp;&nbsp;Current maturities of long-term debt | 2150 | 2047 |
| &nbsp;&nbsp;Current operating lease liability | 2462 | 2523 |
| &nbsp;&nbsp;Current maturities of finance lease obligations | 4 | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 81343 | 75218 |
| Non-current liabilities: |  |  |
| &nbsp;&nbsp;Long-term debt, net | 32859 | 63027 |
| &nbsp;&nbsp;Finance lease obligations, net of current maturities | 16 |  |
| &nbsp;&nbsp;Operating lease liability | 25440 | 29087 |
| &nbsp;&nbsp;Other non-current liabilities | 8549 | 10554 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total non-current liabilities | 66864 | 102668 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 148207 | 177886 |
| Commitments and Contingencies (Note 14) |  |  |
| Stockholders' equity: |  |  |
| &nbsp;&nbsp;Preferred Stock, $0.0001 par value, 1,000,000 shares authorized; no shares issued or outstanding as of both September 30, 2025 and December 31, 2024 |  |  |
| &nbsp;&nbsp;Class A Common Stock, $0.0001 par value, 2,500,000,000 shares authorized; 114,593,285 and 78,286,909 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively | 11 | 8 |
| &nbsp;&nbsp;Class B Common Stock, $0.0001 par value, 300,000,000 shares authorized; 133,889,692 and 134,536,464 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively | 13 | 13 |
| &nbsp;&nbsp;Class C Common Stock, $0.0001 par value, 1,500,000 shares authorized; no shares issued or outstanding as of both September 30, 2025 and December 31, 2024 |  |  |
| &nbsp;&nbsp;Additional paid in capital | 180100 | 136583 |
| &nbsp;&nbsp;Accumulated deficit | (132133) | (123430) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total BRC Inc.'s stockholders' equity | 47991 | 13174 |
| Non-controlling interests | 26203 | 36322 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 74194 | 49496 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $222401 | $227382 |

---

*See accompanying notes to consolidated financial statements.*

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**BRC Inc.**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

***(in thousands, except share and per share amounts)***

***(unaudited)***

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| **Revenue, net** | $100712 | $98204 | $285524 | $285613 |
| **Cost of goods sold** | 63563 | 56856 | 183729 | 164822 |
| &nbsp;&nbsp;&nbsp;&nbsp;Gross profit | 37149 | 41348 | 101795 | 120791 |
| **Operating expenses** |  |  |  |  |
| &nbsp;&nbsp;Marketing and advertising | 8707 | 10109 | 29798 | 25129 |
| &nbsp;&nbsp;Salaries, wages and benefits | 14389 | 16548 | 43743 | 49419 |
| &nbsp;&nbsp;General and administrative | 12947 | 12324 | 39046 | 38619 |
| &nbsp;&nbsp;Other operating expense, net | 588 | 1261 | 6746 | 1584 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 36631 | 40242 | 119333 | 114751 |
| **Operating income (loss)** | 518 | 1106 | (17538) | 6040 |
| **Non-operating expenses** |  |  |  |  |
| &nbsp;&nbsp;Interest expense, net | (1712) | (2453) | (5925) | (6805) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total non-operating expenses | (1712) | (2453) | (5925) | (6805) |
| **Loss before income taxes** | (1194) | (1347) | (23463) | (765) |
| Income tax expense | 44 | 50 | 132 | 151 |
| **Net loss** | $(1238) | $(1397) | $(23595) | $(916) |
| &nbsp;&nbsp;Less: Net loss attributable to non-controlling interest | (752) | (862) | (14893) | (446) |
| **Net loss attributable to BRC Inc.** | $(486) | $(535) | $(8702) | $(470) |
| **Net loss per share attributable to Class A Common Stock** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic and diluted | $0.00 | $(0.01) | $(0.10) | $(0.01) |
| **Weighted-average shares of Class A Common Stock outstanding** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Basic and diluted | 107994798 | 72154931 | 88625749 | 68904034 |

---

*See accompanying notes to consolidated financial statements.*

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**BRC Inc.**

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY**

***(in thousands, except for number of shares)***

***(unaudited)***

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Shares** | **Shares** | **Shares** | | | | | | | |
| | **Class A Common Stock** | **Class B Common Stock** | **Class C Common Stock** |<br>**Class A Common Stock** |<br>**Class B Common Stock** |<br>**Class C Common Stock** |<br>**Additional Paid-In Capital** |<br>**Accumulated Deficit** |<br>**Non-Controlling Interest** |<br>**Total Stockholders' Equity** |
| **Balance at January 1, 2025** | 78286909 | 134536464 |  | $8 | $13 | $— | $136583 | $(123430) | $36322 | $49496 |
| &nbsp;&nbsp;Equity-based compensation |  |  |  |  |  |  | 943 |  | 1648 | 2591 |
| &nbsp;&nbsp;Employee stock purchase plan | 100626 |  |  |  |  |  | 194 |  |  | 194 |
| &nbsp;&nbsp;Vesting of stock awards, net of shares withheld for taxes | 222149 |  |  |  |  |  | (250) |  |  | (250) |
| &nbsp;&nbsp;Net loss |  |  |  |  |  |  |  | (2888) | (4958) | (7846) |
| **Balance at March 31, 2025** | 78609684 | 134536464 |  | $8 | $13 | $— | $137470 | $(126318) | $33012 | $44185 |
| &nbsp;&nbsp;Equity-based compensation |  |  |  |  |  |  | 1000 |  | 1740 | 2740 |
| &nbsp;&nbsp;Common Unit redemption | 109603 | (109603) |  |  |  |  | 20 |  | (20) |  |
| &nbsp;&nbsp;Shares issued upon settlement agreement | 2300100 |  |  |  |  |  | 3367 |  |  | 3367 |
| &nbsp;&nbsp;Vesting of stock awards, net of shares withheld for taxes | 335969 |  |  |  |  |  | (130) |  |  | (130) |
| &nbsp;&nbsp;Net loss |  |  |  |  |  |  |  | (5329) | (9183) | (14512) |
| **Balance at June 30, 2025** | 81355356 | 134426861 |  | $8 | $13 | $— | $141727 | $(131647) | $25549 | $35650 |
| &nbsp;&nbsp;Equity-based compensation |  |  |  |  |  |  | 864 |  | 1490 | 2354 |
| &nbsp;&nbsp;Common Unit redemption | 537169 | (537169) |  |  |  |  | 84 |  | (84) |  |
| &nbsp;&nbsp;Employee stock purchase plan | 75088 |  |  |  |  |  | 103 |  |  | 103 |
| &nbsp;&nbsp;Vesting of stock awards, net of shares withheld for taxes | 425672 |  |  |  |  |  | (101) |  |  | (101) |
| &nbsp;&nbsp;Shares issued for public equity offering, net of issuance costs <sup>[1]</sup> | 32200000 |  |  | 3 |  |  | 37423 |  |  | 37426 |
| &nbsp;&nbsp;Net loss |  |  |  |  |  |  |  | (486) | (752) | (1238) |
| **Balance at September 30, 2025** | 114593285 | 133889692 |  | $11 | $13 | $— | $180100 | $(132133) | $26203 | $74194 |

---

[1] Includes gross proceeds of $40,250, less issuance costs of $2,824.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**BRC Inc.**

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)**

***(in thousands, except for number of shares)***

***(unaudited)***

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Shares** | **Shares** | **Shares** | | | | | | | |
| | **Class A Common Stock** | **Class B Common Stock** | **Class C Common Stock** |<br>**Class A Common Stock** |<br>**Class B Common Stock** |<br>**Class C Common Stock** |<br>**Additional Paid-In Capital** |<br>**Accumulated Deficit** |<br>**Non-Controlling Interest** |<br>**Total Stockholders' Equity** |
| **Balance at January 1, 2024** | 65637806 | 146484989 |  | $6 | $15 | $— | $133728 | $(120478) | $33237 | $46508 |
| &nbsp;&nbsp;Equity-based compensation |  |  |  |  |  |  | 612 |  | 1340 | 1952 |
| &nbsp;&nbsp;Common Unit redemption | 1405124 | (1405124) |  |  |  |  | (42) |  | 42 |  |
| &nbsp;&nbsp;Employee stock purchase plan | 63832 |  |  |  |  |  | 251 |  |  | 251 |
| &nbsp;&nbsp;Vesting of stock awards, net of shares withheld for taxes | 28235 |  |  |  |  |  | (30) |  |  | (30) |
| &nbsp;&nbsp;Net income |  |  |  |  |  |  |  | 548 | 1307 | 1855 |
| **Balance at March 31, 2024** | 67134997 | 145079865 |  | $6 | $15 | $— | $134519 | $(119930) | $35926 | $50536 |
| &nbsp;&nbsp;Equity-based compensation |  |  |  |  |  |  | 1078 |  | 2227 | 3305 |
| &nbsp;&nbsp;Common Unit redemption | 2511602 | (2511602) |  |  |  |  | 4 |  | (4) |  |
| &nbsp;&nbsp;Employee stock purchase plan | 1898 |  |  |  |  |  | 7 |  |  | 7 |
| &nbsp;&nbsp;Vesting of stock awards, net of shares withheld for taxes | 304585 |  |  | 1 | (1) |  | (333) |  |  | (333) |
| &nbsp;&nbsp;Proceeds from exercise of stock options, net of taxes | 2546 |  |  |  |  |  | 13 |  |  | 13 |
| &nbsp;&nbsp;Net loss |  |  |  |  |  |  |  | (482) | (892) | (1374) |
| **Balance at June 30, 2024** | 69955628 | 142568263 |  | $7 | $14 | $— | $135288 | $(120412) | $37257 | $52154 |
| &nbsp;&nbsp;Equity-based compensation |  |  |  |  |  |  | 938 |  | 1667 | $2605 |
| &nbsp;&nbsp;Common Unit redemption | 7094928 | (7094928) |  |  |  |  | (975) |  | 975 | $— |
| &nbsp;&nbsp;Employee stock purchase plan | 78287 |  |  |  |  |  | 260 |  |  | $260 |
| &nbsp;&nbsp;Vesting of stock awards, net of shares withheld for taxes | 136569 |  |  | 1 |  |  | (58) |  |  | $(57) |
| &nbsp;&nbsp;Net loss |  |  |  |  |  |  |  | (535) | (862) | $(1397) |
| **Balance at September 30, 2024** | 77265412 | 135473335 |  | $8 | $14 | $— | $135453 | $(120947) | $39037 | $53565 |

---

*See accompanying notes to consolidated financial statements.*

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

 **BRC Inc.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

***(in thousands)***

***(unaudited)***

---

| | | |
|:---|:---|:---|
| | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
| | **2025** | **2024** |
| **Operating activities** |  |  |
| Net loss | $(23595) | $(916) |
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 9591 | 7458 |
| &nbsp;&nbsp;&nbsp;&nbsp;Equity-based compensation | 7685 | 7862 |
| &nbsp;&nbsp;&nbsp;&nbsp;Settlement of litigation by issuance of stock | 2367 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt issuance costs | 809 | 908 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal of assets | 1396 | 1236 |
| &nbsp;&nbsp;&nbsp;&nbsp;Paid-in-kind interest | 1224 | 2014 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other | 83 | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 3072 | (3960) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories, net | (11772) | (8965) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other assets | 7895 | (2289) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (3264) | (1010) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities | 8376 | 1081 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue and gift card liability | 751 | (6161) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liability | (3708) | 462 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | (2005) | 11395 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) operating activities | (1095) | 9145 |
| **Investing activities** |  |  |
| Purchases of property, plant and equipment | (2964) | (7007) |
| Proceeds from sale of property and equipment | 102 | 911 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (2862) | (6096) |
| **Financing activities** |  |  |
| Proceeds from issuance of long-term debt, net of discount | 231206 | 206182 |
| Debt issuance costs paid | (225) | (164) |
| Repayment of long-term debt | (262032) | (214751) |
| Financing lease obligations | 7 | (62) |
| Repayment of promissory note | (1047) | (1047) |
| Issuance of stock from the Employee Stock Purchase Plan | 297 | 518 |
| Proceeds received for issuance of common stock | 1000 |  |
| Proceeds received for public offering, net of issuance costs | 37423 |  |
| Proceeds from exercise of stock options |  | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) financing activities | 6629 | (9311) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net increase (decrease) in cash, cash equivalents and restricted cash | 2672 | (6262) |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents, beginning of period | 6810 | 12448 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted cash, beginning of period |  | 1465 |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents, end of period | $9482 | $7336 |
| &nbsp;&nbsp;&nbsp;&nbsp;Restricted cash, end of period&nbsp;&nbsp;&nbsp;&nbsp; | $— | $315 |

---

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

---

| | | |
|:---|:---|:---|
| **BRC Inc.** | **BRC Inc.** | **BRC Inc.** |
| **CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)** | **CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)** | **CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)** |
| ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** |
| ***(unaudited)*** | ***(unaudited)*** | ***(unaudited)*** |
| | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
|  | **2025** | **2024** |
| **Non-cash operating activities** |  |  |
| &nbsp;&nbsp;Derecognition of right-of-use operating lease assets | $(1927) | $(5363) |
| &nbsp;&nbsp;Recognition of revenue for inventory exchanged for prepaid advertising | $1398 | $15220 |
| **Non-cash investing and financing activities** |  |  |
| &nbsp;&nbsp;Property and equipment purchased but not yet paid | $54 | $530 |
| **Supplemental cash flow information** |  |  |
| &nbsp;&nbsp;Cash paid for income taxes | $378 | $385 |
| &nbsp;&nbsp;Cash paid for interest | $3991 | $5372 |

---

*See accompanying notes to consolidated financial statements.*

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**BRC Inc.**

**INDEX FOR NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

---

| | | |
|:---|:---|:---|
| **Note 1** | <u>[Organization and Nature of Business](#i182b6debc8d047c491d3b2340447c673_37)</u> | <u>[10](#i182b6debc8d047c491d3b2340447c673_37)</u> |
| **Note 2** | <u>[Summary of Significant Accounting Policies](#i182b6debc8d047c491d3b2340447c673_40)</u> | <u>[10](#i182b6debc8d047c491d3b2340447c673_40)</u> |
| **Note 3** | <u>[Inventories, Net](#i182b6debc8d047c491d3b2340447c673_43)</u> | <u>[19](#i182b6debc8d047c491d3b2340447c673_43)</u> |
| **Note 4** | <u>[Property, Plant and Equipment, Net](#i182b6debc8d047c491d3b2340447c673_46)</u> | <u>[19](#i182b6debc8d047c491d3b2340447c673_46)</u> |
| **Note 5** | <u>[Other Assets](#i182b6debc8d047c491d3b2340447c673_49)</u> | <u>[20](#i182b6debc8d047c491d3b2340447c673_49)</u> |
| **Note 6** | <u>[Accrued Liabilities](#i182b6debc8d047c491d3b2340447c673_52)</u> | <u>[20](#i182b6debc8d047c491d3b2340447c673_52)</u> |
| **Note 7** | <u>[Deferred Revenue and Gift Card Liability](#i182b6debc8d047c491d3b2340447c673_55)</u> | <u>[21](#i182b6debc8d047c491d3b2340447c673_55)</u> |
| **Note 8** | <u>[Long-Term Debt](#i182b6debc8d047c491d3b2340447c673_58)</u> | <u>[21](#i182b6debc8d047c491d3b2340447c673_58)</u> |
| **Note 9** | <u>[Stockholders' Equity](#i182b6debc8d047c491d3b2340447c673_61)</u> | <u>[24](#i182b6debc8d047c491d3b2340447c673_61)</u> |
| **Note 10** | <u>[Equity-Based Compensation](#i182b6debc8d047c491d3b2340447c673_64)</u> | <u>[26](#i182b6debc8d047c491d3b2340447c673_64)</u> |
| **Note 11** | <u>[Defined Contribution Plan](#i182b6debc8d047c491d3b2340447c673_67)</u> | <u>[29](#i182b6debc8d047c491d3b2340447c673_67)</u> |
| **Note 12** | <u>[Income Taxes](#i182b6debc8d047c491d3b2340447c673_70)</u> | <u>[29](#i182b6debc8d047c491d3b2340447c673_70)</u> |
| **Note 13** | <u>[Net Loss Per Share](#i182b6debc8d047c491d3b2340447c673_73)</u> | <u>[30](#i182b6debc8d047c491d3b2340447c673_73)</u> |
| **Note 14** | <u>[Commitments and Contingencies](#i182b6debc8d047c491d3b2340447c673_76)</u> | <u>[31](#i182b6debc8d047c491d3b2340447c673_76)</u> |
| **Note 15** | <u>[Operational Improvement Plan](#i182b6debc8d047c491d3b2340447c673_79)</u> | <u>[33](#i182b6debc8d047c491d3b2340447c673_79)</u> |

---

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**BRC Inc.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

***(in thousands, except unit/share and per unit/share amounts)***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***(unaudited)***

**1. Organization and Nature of Business**

BRC Inc., a Delaware public benefit corporation ("BRC Inc." or the "Company"), previously entered into a Business Combination Agreement, dated as of November 2, 2021, as amended by the First Amendment to Business Combination Agreement, dated as of January 4, 2022 (the "First Amendment" and the Business Combination Agreement as so amended, the "Business Combination Agreement"), each by and among BRC Inc., SilverBox Engaged Merger Corp I, a Delaware corporation ("SilverBox"), Authentic Brands LLC, a Delaware limited liability company ("Authentic Brands"), and certain other parties thereto. On February 9, 2022, as contemplated by the Business Combination Agreement, a series of transactions (the "Business Combination") were completed (the "Closing") for an estimated value of $1,839,815 as a result of which Authentic Brands became a subsidiary of BRC Inc., with BRC Inc. acting as sole managing member thereof as a public benefit corporation.

BRC Inc. conducts substantially all of its business through its solely managed subsidiary, Authentic Brands, and Authentic Brands' subsidiaries, all of which are consolidated in these financial statements. Authentic Brands, through its wholly-owned subsidiaries, purchases, roasts, and sells high quality coffee, coffee accessories, energy drinks and branded apparel through its online channels and business networks. Authentic Brands also develops and promotes online content for the purpose of growing its brands, which include Black Rifle Coffee Company ("BRCC").

Unless the context indicates otherwise, references to "the Company," "we," "us" and "our" refers to BRC Inc. and its consolidated subsidiaries following the closing of the Business Combination.

**2. Summary of Significant Accounting Policies**

***Basis of Presentation and Consolidation***

The Company has prepared the accompanying consolidated financial statements and accompanying notes in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information. The consolidated financial statements reflect the financial position and operating results of the Company including its wholly-owned subsidiaries. These financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair statement of the operating results for the interim periods presented. Intercompany transactions and balances have been eliminated in consolidation. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2024 included in the Company's Annual Report on Form 10-K filed with the SEC on March 3, 2025.

The Business Combination was accounted for as a reverse recapitalization transaction between entities under common control, whereas Authentic Brands was considered the accounting acquirer and predecessor entity. The Business Combination was reflected as the equivalent of Authentic Brands issuing stock for the net assets of SilverBox, accompanied by a recapitalization with no incremental goodwill or intangible assets recognized.

Authentic Brands was determined to be the predecessor entity to the Business Combination based on a number of considerations, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Authentic Brands former management making up the majority of the management team of BRC Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Authentic Brands former management nominating or representing the majority of BRC Inc.'s Board of Directors

(the "Board of Directors");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Authentic Brands representing the majority of the continuing operations of BRC Inc.; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The chief executive officer of Authentic Brands then having voting control of the combined company.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

***Use of Estimates***

The preparation of consolidated financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. Such estimates include but are not limited to estimated losses on accounts receivable, inventory reserves, undiscounted future cash flows and the fair value of assets or asset groups for the purpose of assessing impairment of long-lived assets, liabilities for contingencies, equity-based compensation, estimates for sales returns and related allowance, loyalty rewards, deferred revenue, and measurement and realization of deferred tax assets. Actual results could differ materially from those estimates.

***Revenue Recognition***

The Company recognizes revenue in accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2014-09, *Revenue from Contracts with Customers*, or Accounting Standards Codification ("ASC") 606. Revenue is recognized when, or as, control of a promised product or service transfers to a customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring those products. Revenue excludes any amounts collected on behalf of third parties, including sales and indirect taxes. Revenue recognition is evaluated through the following five steps:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.Identification of the contract with a customer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Identification of the performance obligations in the contract;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Determination of the transaction price;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.Allocation of the transaction price to the performance obligations in the contract; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.Recognition of revenue when or as a performance obligation is satisfied.

*Sources and Timing of Revenue*

The Company's revenue is primarily derived from product sales through its e-commerce websites and to Wholesale customers who sell the products to end users. In addition, the Company derives revenues from Company-operated store locations, and franchise and license agreements. Revenues from the sale of products and merchandise are recognized when control of the product passes to the customer, typically at the date of delivery of the merchandise to the customer and in an amount that reflects the expected consideration to be received in exchange for such goods. As such, customer orders are recorded as deferred revenue prior to delivery of products. As the Company ships high volumes of packages through multiple carriers, it is not practical for the Company to track the actual delivery date of each shipment. Therefore, the Company uses estimates to determine which shipments are delivered and recognizes revenue based on these estimates at the end of the period. Delivery date estimates are based on average transit times calculated based on factors such as the type of carrier, the fulfillment source, the delivery destination and historical transit time experience. Actual shipping times may differ from the Company's estimates. Costs to obtain or fulfill a contract with a customer are expensed as incurred and are generally not significant.

Revenues from Company-operated stores are recognized when payment is tendered at the point of sale as the performance obligation has been satisfied. Store revenues are reported excluding sales, use or other transaction taxes that are collected from customers and remitted to taxing authorities.

*Deferred Revenue*

Deferred revenue consists of amounts billed to or received from customers prior to delivery of products. The Company recognizes such amounts in revenues when the product is delivered.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

*Gift Cards*

Gift cards can be purchased online through the Company's website in digital or physical format. In addition, physical gift cards can be purchased at any of the Company-operated store locations and limited franchise owned stores. When a gift card is purchased, the Company recognizes a corresponding liability for the full amount of the gift card, which is recorded in "Deferred revenue and gift card liability" on the consolidated balance sheets. Gift cards can be redeemed online through the Company's website and at any of the Company-operated store locations and limited franchise owned stores. When a gift card is redeemed, the Company reduces the corresponding liability and recognizes revenue. There are no expiration dates to the gift cards. While the Company will continue to honor all gift cards presented for payment, the Company may determine the likelihood of redemption, based on historical experience, is deemed to be remote for certain cards due to long periods of inactivity. In these circumstances if the Company also determines there is no requirement for remitting balances to government agencies under unclaimed property laws, unredeemed card balances may then be recognized as breakage income, which is included in "Revenue, net" on the consolidated statements of operations.

*Loyalty Rewards Program*

In August 2020, BRCC established its BRCC Loyalty Points rewards program (the "Loyalty Program"), which is primarily a spend-based program. BRCC customers who establish an online account are enrolled in the Loyalty Program. Under the program, there are multiple levels in which customers can participate and earn loyalty points. Subscription customers (customers in the BRCC Coffee Club or subscribed to another subscription product type) are in the highest tier and earn 5% on purchases. Non-subscription customers earn 1% on purchases. Any customer who spends $200 or more annually can also earn 5% on purchases after the spending criteria is met. In addition to earning points on purchases, customers can earn points through certain other activities. BRCC reserves the right in its sole discretion to modify, change, add, or remove activities which can be accomplished to earn points at any time. Under the Loyalty Program, customers may redeem rewards as they reach minimum thresholds per reward. The Company reserves the right to modify, change, add, or remove rewards and their points thresholds at any time. BRCC loyalty points will expire one year after they have been earned. Conversion of rewards are non-changeable after redemption, have no cash value, and are non-transferable. A portion of the rewards that are expected to expire and not be redeemed will be recognized as income over time. Based on historical expiration rates, the Company estimates a certain percentage of rewards to expire and reassesses this estimate on a quarterly basis.

The Company defers revenue associated with the points earned through purchases that are expected to be redeemed, net of estimated unredeemed loyalty points. When a customer redeems an earned reward, the Company recognizes revenue for the redeemed product and reduces the related deferred revenue liability. The deferred revenue liability is included in "Deferred revenue and gift card liability" on the consolidated balance sheets. Until March 2024, BRCC loyalty points expired if there was no account activity (i.e., if there is no new purchase made or order placed) for a period of twelve months. In March 2024, BRCC amended the Loyalty Program such that BRCC loyalty points expire after twelve months without consideration of account activity. The change in BRCC's Loyalty Program points policy regarding expired points resulted in a reduction to the deferred revenue liability and an increase to revenue in our DTC Channel of $571 and $5,686 for the three and nine months ended September 30, 2024, respectively.

For those points that are earned through other activities, the Company recognizes the redemption of these points as a discount to the transaction price at time of sale. Refer to <u>[Note 7,](#i182b6debc8d047c491d3b2340447c673_55)</u>*<u>[Deferred Revenue and Gift Card Liability](#i182b6debc8d047c491d3b2340447c673_55)</u>* for information about changes in the current portion of deferred revenue and gift card liability for the three and nine months ended September 30, 2025 and 2024.

*Franchise Store Revenues*

Franchise rights may be granted through franchise agreements that set out the terms of the arrangement with the franchisee. The franchise agreements require that the franchisee remit continuing fees to the Company as a percentage of the applicable store's revenues in exchange for the license of the intellectual property associated with BRCC's brands. A portion of these fees are dedicated for national marketing campaigns, promotional programs and materials, and other activities that we believe enhance the image of the BRCC brand. Continuing fees represent a portion of the consideration the Company receives under the franchise agreement. Continuing fees are typically billed and collected weekly. Continuing fees are recognized as the related store sales occur. Revenues from continuing fees are included in "Revenue, net" on the consolidated statements of operations.

Under the franchise agreements, BRCC sells products and equipment to its franchisees. The revenue associated with these product and equipment sales are recognized when control passes to the franchisee, typically at the date of delivery of the merchandise to the franchisee and in an amount that reflects the expected consideration to be received in exchange for such goods.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

The franchise agreements also typically require upfront franchise fees such as initial fees paid for the execution of a franchise agreement. The fees associated with these agreements are typically billed and paid when a new franchise agreement becomes effective. The Company has determined that the services it provides in exchange for upfront franchise fees, which primarily relate to pre-opening support, are highly interrelated with the franchise right and are not individually distinct from the ongoing services provided to the Company's franchisees. As a result, upfront franchise fees are recognized as revenue over the term of each respective franchise agreement, generally 10 years. Revenues for these upfront franchise fees are recognized on a straight-line basis, which is consistent with the franchisee's right to use and benefit from the intellectual property associated with BRCC's brands. The current portion of revenues from upfront franchise fees are included in "Deferred revenue and gift card liability" and the long-term portion of revenues from upfront franchisee fees are included in "Other non-current liabilities" on the consolidated balance sheets.

*License Revenues*

License rights may be granted through license agreements that set out the terms of the Company's arrangement with the licensee. The Company's license agreements require that the licensee remit continuing fees to the Company as a percentage of the applicable store's revenues in exchange for the license of the intellectual property associated with BRCC's brands. In addition, licensed store revenues consist of product sales to the licensee. The revenue associated with these product sales are recognized when control of the product passes to the licensee, typically at the date of delivery of the merchandise to the licensee and in an amount that reflects the expected consideration to be received in exchange for such goods. Continuing fees are recognized as the related store sales occur.

The Company's license agreements also typically require upfront license fees such as initial fees paid for the execution of a license agreement. The fees associated with these agreements are typically billed and paid when a new license agreement becomes effective. The Company has determined the services it provides in exchange for upfront license fees, which primarily relate to initial license set up and are not individually distinct from the ongoing services it provides to its licensees. As a result, upfront license fees are recognized as revenue over the term of each respective license agreement, generally 10 years. Revenues for these upfront license fees are recognized on a straight-line basis, which is consistent with the licensee's right to use and benefit from the intellectual property. Revenues from continuing fees and upfront license fees are presented within "Revenue, net" on the consolidated statements of operations.

*Disaggregation of Revenue*

The Company disaggregates revenue by sales channel. The Wholesale channel includes product revenue sold to an intermediary and not directly to the consumer. The DTC channel principally comprises revenue from our e-commerce websites and subscription services directly to the consumer. The Outpost channel includes revenue from Company-operated stores, gift cards, franchise stores and licensing.

The following table disaggregates revenue by sales channel (*dollars in thousands, unaudited*):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| Wholesale | $67032 | $63655 | $185139 | $177844 |
| DTC | 27842 | 29044 | 83203 | 91628 |
| Outpost | 5838 | 5505 | 17182 | 16141 |
| &nbsp;&nbsp;Total net sales | $100712 | $98204 | $285524 | $285613 |

---

Substantially all revenue is derived from customers located in the United States. One wholesale customer and its affiliate represented 30% of revenue for both the three and nine months ended September 30, 2025. One wholesale customer and its affiliate represented 29% of revenue for both the three and nine months ended September 30, 2024.

*Sales Returns and Discounts* 

The Company's product sales contracts include terms that could cause variability in the transaction price for items such as discounts, credits, charge backs, or sales returns. Accordingly, the transaction price for product sales includes estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized will not occur.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

The Company inspects returned items when they arrive at its processing facilities. The Company refunds the full cost of the merchandise returned if the returned item is defective or the Company or its partners have made an error, such as shipping the wrong product. If the return is not a result of a product defect or a fulfillment error and the customer initiates a return of an unopened item within 30 days of delivery, for most products the Company refunds the full cost of the merchandise less the original shipping charge and actual return shipping fees. If the customer returns an item that has been opened or shows signs of wear, the Company issues a partial refund minus the original shipping charge and actual return shipping fees. Bagged coffee and rounds are not eligible for returns. Revenue is recorded net of estimated returns. The Company records an allowance for returns based on current period revenues and historical returns experience. The Company analyzes actual historical returns, current economic trends and changes in order volume and acceptance of its products when evaluating the adequacy of the sales returns allowance in any accounting period. The allowance for sales returns and charge backs was $580 and $560 as of September 30, 2025 and December 31, 2024, respectively, and included in "Accounts receivable, net" on the consolidated balance sheets.

*Shipping and Handling Fees and Costs*

Shipping and handling is considered a fulfillment activity, as it takes place prior to the customer obtaining control of the merchandise, and fees charged to customers are included in net revenue upon completion of the performance obligation.

***Segment Information***

The Company reports operations as a single reportable segment and manages the business as a single-brand consumer products business. This is supported by the operational structure, which includes sales, product design, operations, marketing, and administrative functions focused on the entire product suite rather than individual product categories or sales channels. In accordance with ASC 280, "*Segment Reporting*", the Company's chief operating decision maker ("CODM") has been identified as the Chief Executive Officer, who reviews financial information on a consolidated basis and does not regularly review financial information for individual sales channels, product categories or geographic regions that would allow decisions to be made about allocation of resources or performance. The information reviewed by the CODM is consistent with the presentation on the consolidated statements of operations.

***Cost of Goods Sold***

Cost of goods sold includes product costs, labor costs, occupancy costs, outbound shipping costs, handling and fulfillment costs, credit card fees, and royalty fees, and is recorded in the period incurred.

In 2024, the Company received a purchase incentive to compensate for incremental transition costs as part of an agreement with a co-manufacturing partner for the manufacture and distribution of rounds. The purchase incentive is recognized as a reduction of cost of sales based on units sold over the term of the agreement. The amount of the deferred fees related to the purchase incentive to be recognized in the next twelve months is classified as current in the financial line item "Accrued liabilities" while the remainder of the deferred fees related to the purchase incentive is recorded in "Other non-current liabilities" on the consolidated balance sheets. Refer to <u>[Note 6,](#i182b6debc8d047c491d3b2340447c673_52)</u>*<u>[Accrued Liabilitie](#i182b6debc8d047c491d3b2340447c673_52)</u>*<u>[s](#i182b6debc8d047c491d3b2340447c673_52)</u> for information about changes in the current portion of deferred purchase incentive fees as of September 30, 2025 and December 31, 2024.

***Cash, Cash Equivalents and Restricted Cash***

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents also include proceeds due from credit card transactions with settlement terms of less than five days. The Company maintains cash and cash equivalent balances with financial institutions that exceed federally insured limits. The Company has not experienced any losses related to these balances, and it believes credit risk to be minimal.

Restricted cash relates to amounts that are held by former lenders to secure certain commercial credit obligations until such obligations have been satisfied.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

***Accounts Receivable, Net***

Accounts receivable consist primarily of trade amounts due from business customers at period end. Accounts receivable are recorded at invoiced amounts and do not bear interest. From time to time, the Company grants credit to business customers on normal credit terms. The Company maintains an allowance for doubtful accounts receivable based upon its business customers' financial condition and payment history, and its historical collection experience and expected collectability of accounts receivable. The allowance for doubtful accounts receivable was $479 and $593 as of September 30, 2025 and December 31, 2024, respectively.

***Inventories, Net***

Inventories are stated at the lower of cost, which approximates First In, First Out ("FIFO"), or net realizable value. The Company records inventory reserves for obsolete and slow-moving inventory. Inventory reserves are based on inventory obsolescence trends, historical experience and application of the specific identification method. Inventories, net were $53,021 and $42,647 as of September 30, 2025 and December 31, 2024, respectively. Finished goods includes allocations of labor and occupancy expenses, and inbound transportation costs.

***Property, Plant and Equipment, Net***

Property, plant and equipment, net are stated at cost with depreciation calculated using the straight-line method over the estimated useful lives of the related assets or the term of the related finance lease, whichever is shorter. Leasehold improvements are amortized over the shorter of the term of the related leases or estimated useful lives. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are derecognized, and any resulting gain or loss is reflected in earnings for the period. The cost of maintenance and repairs are charged to earnings as incurred; significant renewals and improvements are capitalized.

Estimated useful lives are as follows:

---

| | |
|:---|:---|
| | **Estimated Useful Lives** |
| Land |  |
| Building and Leasehold improvements | 5 - 39 years |
| Computer equipment and software | 3 years |
| Machinery and equipment | 5 - 15 years |
| Vehicles | 5 years |

---

***Identifiable Intangibles - Internal Use Software***

In accordance with ASC 350-40, *Intangibles - Goodwill and Other, Internal-Use Software*, the Company capitalizes qualifying internal use software costs that are incurred during the application development stage if management with the relevant authority authorizes the project, it is probable the project will be completed, and the software will be used to perform the function intended. Capitalized internal use software costs are reported in property and equipment on the consolidated balance sheets and are amortized over the expected economic life of three years using the straight-line method once the software is ready for intended use. Costs incurred for enhancements that are expected to result in additional significant functionality are capitalized and amortized over the estimated useful life of the enhancement. Costs related to preliminary project activities and post-implementation activities, including training and maintenance, are expensed as incurred. Capitalized software costs net of accumulated amortization are included as a component of "Property, plant and equipment, net" on the consolidated balance sheets.

***Impairment of Long-Lived Assets***

The Company reviews the recoverability of its long-lived assets, such as property and equipment and identifiable intangible assets, when events or changes in circumstances occur that indicate the carrying value of the asset or asset group may not be recoverable. These events primarily include current period losses combined with a history of losses or a decision to close a store. The assessment of possible impairment is based on the Company's ability to recover the carrying value of the asset or asset group from the expected future undiscounted pre-tax cash flows of the related operations. If these undiscounted cash flows are less than the carrying amount of the related asset, an impairment is recognized for the excess of the carrying value over its fair value.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

***Leases***

The Company leases certain property and equipment under non-cancelable finance and operating leases which expire at various dates through 2043. The majority of our leases are operating leases for our Company-operated Outposts. We also lease distribution, warehouse, and corporate office facilities. We do not enter into material lease transactions with related parties. We categorize leases as either operating or finance leases at the commencement date of the lease. Operating lease agreements may contain tenant improvement allowances, rent holidays, rent escalation clauses and/or contingent rent provisions. We have lease agreements with lease and non-lease components, which are accounted for together as a single lease component for underlying classes of assets. The Company has estimated that the lease term for retail stores is generally 10 years to 15 years.

We recognize a right-of-use ("ROU") asset and lease liability for each operating lease with a contractual term greater than twelve months at the time of lease inception. We do not record leases with an initial term of twelve months or less on our consolidated balance sheet but continue to record rent expense on a straight-line basis over the lease term. Our leases often include options to extend or terminate at our sole discretion, which are included in the determination of the lease term when they are reasonably certain to be exercised.

Our lease liability represents the present value of future lease payments over the lease term. We cannot determine the interest rate implicit in each of our leases. Therefore, we use market and term-specific incremental borrowing rates. Our incremental borrowing rate for a lease is the rate of interest we expect to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. We considered a combination of factors, including the rates that we currently pay on our lines of credit, lease terms and the effect of adjusting the rate to reflect the term consideration of collateral.

Total lease costs recorded as rent and other occupancy costs include fixed operating lease costs and short-term lease costs. Our real estate leases may require that we pay certain expenses, such as common area maintenance costs, real estate taxes and other executory costs, of which any fixed portion would be included in operating lease costs. We recognize operating lease costs on a straight-line basis over the lease term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. A significant majority of our leases are related to our Company-operated Outposts, and their related costs are recorded within "General and administrative" expenses on the consolidated statements of operations.

The ROU asset is measured at the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, initial direct costs, and any material tenant improvement allowances reasonably certain to be received. For operating leases, ROU assets are reduced over the lease term by the recognized straight-line lease expense less the amount of accretion of the lease liability determined using the effective interest method. For finance leases, assets are amortized on a straight-line basis over the shorter of the useful life of the leased asset or the lease term. Interest expense on each finance lease liability is recognized utilizing the effective interest method. ROU assets are tested for impairment in the same manner as long-lived assets. Additionally, we monitor for events or changes in circumstances that may require a reassessment of one of our leases and determine if a remeasurement is required.

***Income Taxes***

The Company accounts for income taxes under the liability method, and deferred tax assets ("DTA") and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying values of existing assets and liabilities and their respective tax bases. DTAs and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided if it is determined that it is more likely than not that the DTA will not be realized. The Company records interest and penalty expense related to income taxes as interest and other expense, respectively.

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 occur when the Company subsequently determines that a tax position no longer meets the more likely-than-not threshold of being sustained.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

***Equity-Based Compensation***

The Company recognizes the cost of equity-based compensation awards and incentive unit awards based on the fair value estimated in accordance with ASC 718, *Stock Based Compensation*. The Company records equity-based compensation expense for awards with only a service based vesting condition based on the fair value of such awards at the grant date and recognizes compensation expense on a straight-line basis over the requisite service period. Equity-based compensation expense for awards with market based vesting conditions is recorded based on the fair value of such awards at the grant date and recognized on an accelerated basis over the requisite service period. The assumptions used to calculate the fair value of equity awards granted are evaluated and revised, as necessary, to reflect the Company's historical experience and current market conditions. For more information, see <u>[Note 10,](#i182b6debc8d047c491d3b2340447c673_64)</u>*<u>[Equity-Based Compensation](#i182b6debc8d047c491d3b2340447c673_64)</u>*.

***Net Loss Per Share***

Basic net loss per share is calculated by dividing net loss attributable to BRC Inc. by the weighted-average shares of Class A Common Stock outstanding without the consideration for potential dilutive securities. Diluted net loss per share represents basic net loss per share adjusted to include the potentially dilutive effect of outstanding unvested share awards, and units of Authentic Brands designated as common units (the "Common Units") and restricted units (the "Restricted Common Units") in the Third Amended and Restated Limited Liability Company Operating Agreement of Authentic Brands (the "LLC Agreement") that are exchangeable into shares of Class A Common Stock. Diluted net loss per share is computed by dividing the net loss attributable to BRC Inc. by the weighted-average number of shares of Class A Common Stock outstanding for the period determined using the treasury stock method and if-converted method, as applicable. As the impact of these if-converted securities is generally antidilutive during periods of net loss, the diluted net loss per share calculation for periods with net losses is the same as the basic net loss per share. For more information, see <u>[Note 13,](#i182b6debc8d047c491d3b2340447c673_73)</u>*<u>[Net Loss Per Share](#i182b6debc8d047c491d3b2340447c673_73)</u>*.

***Concentrations of Credit Risk***

The Company's assets that are potentially subject to concentrations of credit risk are cash and accounts receivable. Cash balances are maintained in financial institutions which at times exceed federally insured limits. The Company monitors the financial condition of the financial institutions in which its accounts are maintained and has not experienced any losses in such accounts. The accounts receivable of the Company are spread over a number of customers, of which five customers accounted for 56% of total outstanding receivables as of September 30, 2025 and four customers accounted for 63% of total outstanding receivables as of December 31, 2024. The Company performs ongoing credit evaluations as to the financial condition of its customers and creditors with respect to trade accounts.

***Marketing and Advertising Expenses***

The Company's marketing and advertising expenses are primarily internet marketing expenses, commercial sponsorships and advertising time slots. Marketing expenses are recognized as incurred based on the terms of the individual agreements, which are generally, but not limited to: a commission for traffic driven to its websites that generate a sale, programmatic targeting advertisements, national television and radio advertisements, or payments to social media influencers. The Company may also enter into marketing service agreements with third party production and content providers where the Company prepays for certain services or deliverables and recognizes the expense when the service is completed. Marketing and advertising expenses totaled $8,707 and $29,798 for the three and nine months ended September 30, 2025, respectively, and $10,109 and $25,129 for the three and nine months ended September 30, 2024, respectively.

***Fair Value Measurements***

The Company's financial instruments consist primarily of accounts receivable, accounts payable and long-term debt. The carrying amounts of accounts receivable and accounts payable are representative of their respective fair values due to the short-term maturity of these instruments. The fair value of variable rate long-term debt is based upon the current market rates for debt with similar credit risk and maturity, which approximated its carrying value, as interest is based upon the Secured Overnight Financing Rate ("SOFR"), or the PNC Base Rate (see further explanation of the Base Rate in <u>[Note 8,](#i182b6debc8d047c491d3b2340447c673_58)</u>*<u>[Long-Term Debt](#i182b6debc8d047c491d3b2340447c673_58)</u>*), plus an applicable floating margin. In measuring fair value, the Company reflects the impact of credit risk on liabilities, as well as any collateral. The Company also considers the credit standing of counterparties in measuring the fair value of assets.

The Company uses any of three valuation techniques to measure fair value: the market approach, the income approach, and the cost approach in determining the appropriate valuation technique based on the nature of the asset or liability being measured and the reliability of the inputs used in arriving at fair value.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

The Company follows the provisions of ASU No. 2022-03- *Fair Value Measurements* ("Topic 820") for non-financial assets and liabilities measured on a non-recurring basis.

The inputs used in applying valuation techniques include assumptions that market participants would use in pricing the asset or liability (i.e., assumptions about risk). Inputs may be observable or unobservable. The Company uses observable inputs in the Company's valuation techniques and classifies those inputs in accordance with the fair value hierarchy established by applicable accounting guidance, which prioritizes those inputs. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels are defined as follows:

Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. As of September 30, 2025, the Company had no Level 3 financial assets or liabilities.

***Comprehensive Income (Loss)***

The Company has no components of comprehensive income and comprehensive income (loss) is equivalent to net income (loss) in each of the periods presented. As such, no statement of comprehensive income (loss) is presented.

***Recently Adopted Accounting Pronouncements***

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740), *Improvements to Income Tax Disclosures*, which "enhances the transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information". The FASB determined that these amendments should be effective for public business entities for annual periods beginning after December 15, 2024 (early adoption is permitted). The Company has adopted ASU 2023-09, effective January 1, 2025.

***Recent Accounting Pronouncements Not Yet Adopted***

In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), *Disaggregation of Income Statement Expenses*, "to improve the disclosures about a public business entity's expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions." The FASB determined this guidance is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027 (early adoption is permitted). The Company is currently evaluating the impact of this amendment on its consolidated financial statements and accompanying disclosures.

In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), *Targeted Improvements to the Accounting for Internal-Use Software*, "to modernize the accounting for software costs that are accounted for under Subtopic 350-40, Intangibles-Goodwill and Other - Internal-Use Software". The FASB determined this guidance is effective for all entities for fiscal years beginning after December 15, 2027, and interim reporting periods within those fiscal years (early adoption is permitted). The Company is currently evaluating the impact of this amendment on its consolidated financial statements and accompanying disclosures.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**3. Inventories, Net**

Inventories consist of the following (*dollars in thousands*):

---

| | | |
|:---|:---|:---|
| | **September 30,**<br>**2025** | **December 31,**<br>**2024** |
| | **<u>(unaudited)</u>** | **<u>(audited)</u>** |
| Coffee and Energy: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unroasted | $3445 | $3180 |
| &nbsp;&nbsp;&nbsp;&nbsp;Finished Goods | 24328 | 16502 |
| &nbsp;&nbsp;&nbsp;&nbsp;Ready-to-Drink (raw materials) | 5844 | 10206 |
| &nbsp;&nbsp;&nbsp;&nbsp;Ready-to-Drink (finished goods) | 15491 | 9545 |
| Apparel and other merchandise | 3913 | 3214 |
| &nbsp;&nbsp;Total inventories, net | $53021 | $42647 |

---

**4. Property, Plant and Equipment, Net**

Property, plant and equipment, net consists of the following (*dollars in thousands*):

---

| | | |
|:---|:---|:---|
| | **September 30,**<br>**2025** | **December 31,**<br>**2024** |
| | **<u>(unaudited)</u>** | **<u>(audited)</u>** |
| Building and leasehold improvements | $24131 | $27429 |
| Machinery and equipment | 19621 | 19946 |
| Computer equipment and software | 19210 | 17814 |
| Furniture and fixtures | 2891 | 2949 |
| Land | 110 | 1547 |
| Vehicles | 551 | 762 |
| Construction in progress | 10848 | 10925 |
| Property, plant, and equipment, gross | 77362 | 81372 |
| Less: accumulated depreciation and amortization | (30780) | (22168) |
| &nbsp;&nbsp;Total property, plant and equipment, net | $46582 | $59204 |

---

The total depreciation expense for internal use software was $1,355 and $4,043 for the three and nine months ended September 30, 2025, respectively, and $1,285 and $3,288 for the three and nine months ended September 30, 2024, respectively.

All long-lived assets are located in the United States.

*Assets Held for Sale*

During the second quarter of 2025, management committed to a plan to sell office property located in Salt Lake City, Utah. As of September 30, 2025, the carrying value of this office property is included in the financial line item "Assets held for sale" on the consolidated balance sheets. The property, including the land, building and improvements had a net carrying value of $4,294 and was previously classified within "Property, plant and equipment, net" on the consolidated balance sheets. On July 17, 2025, the Company entered into an agreement to sell this Salt Lake City property for $5,350. The sale closed on October 17, 2025.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**5. Other Assets**

As of September 30, 2025 and December 31, 2024, we reported $48,471 and $50,546 of other assets on the consolidated balance sheets, respectively, related to prepaid advertising credits received in exchange for finished goods and apparel inventory. We measured the non-cash consideration of the prepaid advertising credits based on the standalone selling price of the finished goods inventory at the time of transfer to the counterparty. Based upon the period over which we expect to use these advertising credits, we concluded that $5,040 were current as of both September 30, 2025 and December 31, 2024, and have been recorded as "Prepaid expenses and other current assets" on the consolidated balance sheets, and $43,431 and $45,506 were non-current as of September 30, 2025 and December 31, 2024, respectively, and have been recorded as "Non-current prepaid marketing expenses" on the consolidated balance sheets.

Prepaid advertising credits are recorded upon revenue recognition, coinciding with the transfer of the finished goods inventory. We recognized $992 and $1,398 of revenue for the three and nine months ended September 30, 2025, respectively, and $3,316 and $15,220 of revenue for the three and nine months ended September 30, 2024, respectively, on the consolidated statements of operations related to shipments of inventory in exchange for prepaid advertising. We utilized $1,182 and $3,473 of prepaid advertising credits for the three and nine months ended September 30, 2025, respectively, and $7 and $1,769 for the three and nine months ended September 30, 2024, respectively.

**6. Accrued Liabilities**

Accrued liabilities consist of the following (*dollars in thousands*):

---

| | | |
|:---|:---|:---|
| | **September 30,**<br>**2025** | **December 31,**<br>**2024** |
| | **<u>(unaudited)</u>** | **<u>(audited)</u>** |
| Accrued compensation and benefits | $6372 | $5873 |
| Accrued legal settlements | 5838 |  |
| Accrued inventory purchases | 4425 | 2175 |
| Deferred purchase incentive | 2610 | 2264 |
| Accrued marketing | 2407 | 4180 |
| Accrued professional fees | 2264 | 3014 |
| Accrued freight | 2018 | 478 |
| Accrued sales and other taxes | 1038 | 1164 |
| Credit card liabilities | 338 | 780 |
| Accrued interest | 68 | 61 |
| Other accrued expenses | 9377 | 7911 |
| &nbsp;&nbsp;Total accrued liabilities | $36755 | $27900 |

---

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**7. Deferred Revenue and Gift Card Liability**

The following table provides information about deferred revenue, gift cards, and the Loyalty Program, including significant changes in deferred revenue balances for the below designated periods (*dollars in thousands, unaudited*):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| Balance at beginning of period | $3770 | $5592 | $3918 | $11030 |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales of gift cards | 88 | 105 | 521 | 556 |
| &nbsp;&nbsp;&nbsp;&nbsp;Redemption of gift cards | (93) | (106) | (645) | (598) |
| &nbsp;&nbsp;&nbsp;&nbsp;Increase from deferral of revenue | 2946 | 1904 | 2946 | 1904 |
| &nbsp;&nbsp;&nbsp;&nbsp;Decrease from revenue recognition | (1738) | (2058) | (1784) | (2832) |
| &nbsp;&nbsp;&nbsp;&nbsp;Loyalty Program points earned | 361 | 423 | 1021 | 1750 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loyalty Program points redeemed/expired | (665) | (991) | (1308) | (6941) |
| Balance at end of period | $4669 | $4869 | $4669 | $4869 |

---

**8. Long-Term Debt**

The Company's credit facilities and related balances were as follows (*dollars in thousands*):

---

| | | |
|:---|:---|:---|
| | **September 30,**<br>**2025** | **December 31,**<br>**2024** |
| | **<u>(unaudited)</u>** | **<u>(audited)</u>** |
| Term Loan Facility | $39250 | $40000 |
| ABL Facility |  | 28853 |
| Notes payable | 400 | 1446 |
| &nbsp;&nbsp;Total principal | 39650 | 70299 |
| Less debt issuance costs and original issue discount ("OID") | (4641) | (5225) |
| Long-term debt, net | $35009 | $65074 |
| **Current maturities:** |  |  |
| &nbsp;&nbsp;Current maturities of long-term debt | $2150 | $2047 |
| **Non-current maturities:** |  |  |
| &nbsp;&nbsp;Non-current principal | $37500 | $68252 |
| &nbsp;&nbsp;Less non-current portion of debt issuance costs and OID | (4641) | (5225) |
| Non-current maturities of long-term debt, net | $32859 | $63027 |

---

Future contractual maturities of credit facilities (not including debt issuance costs) as of September 30, 2025 are as follows (*dollars in thousands, unaudited*):

---

| | |
|:---|:---|
| Remainder of 2025 | $250 |
| 2026 | 2400 |
| 2027 | 2000 |
| 2028 | 2000 |
| 2029 | 33000 |
| &nbsp;&nbsp;Total | $39650 |

---

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

*ABL Facility and Term Loan Facility*

On August 10, 2023, Authentic Brands and certain of its subsidiaries (collectively, the "ABL Borrowers") entered into a Credit Agreement (as amended in accordance with its terms, the "ABL Credit Agreement") with PNC Bank, National Association, as administrative agent and collateral agent ("PNC"), and the lenders from time to time party thereto, pursuant to which the lenders thereunder agreed to provide the ABL Borrowers with a senior secured asset-based revolving credit facility in an aggregate principal amount of up to $75,000 (including a sub-facility for letters of credit in an amount up to $7,500 all of which is available at September 30, 2025) (the "ABL Facility").

On December 27, 2024 (the "Closing Date"), ABL Borrowers entered into a third amendment to the ABL Credit Agreement, and a Financing Agreement (as further amended in accordance with its terms, the "Term Loan Financing Agreement" and together with the ABL Credit Agreement, the "Credit Agreements"), by and among Authentic Brands, certain subsidiaries of Authentic Brands party thereto as "Borrowers" (the "Term Loan Borrowers"), and certain subsidiaries of Authentic Brands from time to time party thereto as "Guarantors" (collectively with Authentic Brands, the "Term Loan Guarantors"), Blue Torch Finance LLC, as administrative agent and collateral agent, pursuant to which the lenders thereunder provided the Term Loan Borrowers with senior secured term loans on the Closing Date in an aggregate principal amount of $40,000 (the "Term Loan Facility"). The Term Loan Facility also includes an uncommitted accordion feature pursuant to which, under certain conditions, including a maximum pro forma total net leverage ratio, the Term Loan Borrowers may, with the agreement of the lenders providing any such incremental loans, add one or more tranches of additional term loans in an aggregate principal amount not to exceed $20,000. The proceeds of the Term Loan Facility were issued net of a $1,000 discount which was recorded against the outstanding amount of debt on our consolidated balance sheet and will be amortized over the life of the Term Loan Financing Agreement.

Debt issuance costs of $920 were incurred during fiscal 2024 and an additional $229 were incurred during the nine months ended September 30, 2025 in connection with the origination of the Credit Agreements and these costs will be reported as a reduction to the outstanding balance of long-term debt on our consolidated balance sheet and amortized over the life of the Credit Agreements.

The obligations under the ABL Credit Agreement are guaranteed by each ABL Borrower and each Guarantor (as defined therein). The obligations under the ABL Credit Agreement are secured by a first priority lien on certain deposit accounts, cash and cash equivalents, accounts receivable, inventory and other related assets of the ABL Borrowers and the Guarantors (the "ABL Priority Collateral") and a second priority lien on substantially all of the other assets of the ABL Borrowers and the Guarantors. The obligations under the Term Loan Financing Agreement are secured by a second priority lien on the ABL Priority Collateral and a first priority lien on substantially all of the other assets of the Term Loan Borrowers and the Term Loan Guarantors.

Each Credit Agreement includes certain conditions to borrowings, representations and warranties, affirmative and negative covenants, and events of default customary for financings of their type and size. Each Credit Agreement requires the Term Loan Borrowers and the ABL Borrowers to maintain (i) a maximum total net leverage ratio (4.00 to 1.00 for fiscal quarter ended March 31, 2025 and at the end of each fiscal quarter thereafter through and including fiscal quarter ended September 30, 2025; 3.50 to 1.00 for fiscal quarter ended December 31, 2025 and at the end of each fiscal quarter thereafter through and including fiscal quarter ended September 30, 2026; and 3.00 to 1.00 for fiscal quarter ended December 31, 2026 and the end of each fiscal quarter thereafter); (ii) a fixed charge coverage ratio greater than or equal to 1.10 to 1.00; and (iii) minimum liquidity of at least $7,500. The Credit Agreements also limit the ABL Borrowers and the Term Loan Borrowers ability to, among other things, incur additional indebtedness, create liens on any assets, pay dividends or make certain restricted payments, make certain investments, consummate certain asset sales, make certain payments on indebtedness, and merge, consolidate or engage in other fundamental changes.

On the Closing Date, the Company used the proceeds from the Term Loan Facility and approximately $12,813 of borrowings under the ABL Facility (i) to retire the Company's term loan credit facility with Whitehawk Capital Partners LP, (ii) to pay transaction fees, costs and expenses related to the Credit Agreements, and (iii) for other general corporate and working capital purposes.

Under the terms of the ABL Credit Agreement, the amount available for advances is subject to a borrowing base, which is calculated by reference to the value of certain eligible inventory, unrestricted cash and cash equivalents, eligible credit card receivables, eligible accounts receivable and eligible inventory, offset by certain reserves. Our available borrowings under the ABL Credit Facility at September 30, 2025 was $49,259.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

Borrowings under the ABL Facility bear interest at a rate per annum of either (i) the Alternate Base Rate (as defined in the ABL Credit Agreement) plus a margin ranging from 0.50% to 1.50% or (ii) Term SOFR (as defined in the ABL Credit Agreement) plus a margin ranging from 1.50% to 2.50%. The ABL Borrowers are also required to pay certain fees in connection with the ABL Credit Agreement, including an unused commitment fee based on the average daily unused portion of the ABL Facility, equal to 0.375% on an annual basis. The ABL Credit Facility is scheduled to mature on December 27, 2029.

Borrowings under the Term Loan Facility bear interest at a rate per annum equal to either (i) a Reference Rate (as defined in the Term Loan Financing Agreement) plus a margin ranging from 5.00% to 5.50% based on a total net leverage ratio threshold or (ii) term SOFR (as defined in the Term Loan Financing Agreement) plus a margin ranging from 6.00% to 6.50% based on a total net leverage ratio threshold. The Reference Rate and term SOFR rate are subject to floors of 3.50% and 2.50%, respectively. The Term Loan Facility requires the Term Loan Borrowers to make quarterly principal repayments in an aggregate principal amount equal to (i) 0.625% of the original aggregate principal amount of the Term Loan commencing with the fiscal quarter ending on March 31, 2025 through the first anniversary of the Closing Date, (ii) 1.25% of the original aggregate principal amount of the term loans extended thereunder commencing with the fiscal quarter ending after the first anniversary of the Closing Date through the maturity date of the Term Loan Facility. The Term Loan Facility is also subject to customary mandatory prepayment provisions, including payments of proceeds from asset dispositions, casualty events, extraordinary receipts and a percentage of excess cash flow. The Term Loan Borrowers may voluntarily prepay amounts outstanding under the Term Loan Facility at any time, subject in certain cases to a prepayment premium. The Term Loan Facility is scheduled to mature on December 27, 2029.

*Notes Payable&nbsp;&nbsp;&nbsp;&nbsp;*

In July and September 2021, the Company entered into note payable agreements for $2,588 at an interest rate of approximately 1.00% per annum to repurchase Incentive Units (as defined below) from former employees. The notes are payable in four annual installment payments. In the third quarter of fiscal 2025, the Company fully repaid these notes payable agreements for $647.

In January 2022, the Company entered into a note payable agreement for $1,599 at an interest rate of 1.30% per annum to repurchase Incentive Units from a former employee. As of September 30, 2025, the outstanding balance on the notes payable is $400.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**9. Stockholders' Equity**

In conjunction with the Business Combination on February 9, 2022, 18,769 class A common units and 73,890 class B common units of Authentic Brands (the holders thereof, the "Existing Members") were converted into an aggregate of 139,106,323 common units in Authentic Brands (the "Common Units") and 19,853,125 restricted common units in Authentic Brands (the "Restricted Common Units"). The Existing Members also received 139,106,323 shares of Class B Common Stock of the Company.

Subsequent to the Business Combination, the Company's authorized capital stock consists of 2,802,500,000 shares including (i) 2,500,000,000 shares of Class A Common Stock, (ii) 300,000,000 shares of Class B Common Stock, (iii) 1,500,000 shares of Class C Common Stock, par value $0.0001 per share (the "Class C Common Stock"), and (iv) 1,000,000 shares of preferred stock, par value $0.0001 per share (the "Preferred Stock"). The Class C Common Stock is divided into two series as follows: (a) 750,000 shares of Series C-1 Common Stock, par value $0.0001 per share; and (b) 750,000 shares of Series C-2 Common Stock, par value $0.0001 per share.

Holders of the Class A Common Stock and the Class B Common Stock are each entitled to one vote per share, and holders of the Class C Common Stock do not have any voting rights. Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our Class A Common Stock are entitled to receive dividends and other distributions as may from time to time be declared by the Board of Directors at its discretion out of legally available Company assets, ratably in proportion to the number of shares held by each such holder, and at such times and in such amounts as the Board of Directors in its discretion may determine. No dividends or other distributions will be declared or paid on the Class B Common Stock or the Class C Common Stock.

A holder of Class B Common Stock may transfer or assign shares of Class B Common Stock only if such holder also simultaneously transfers an equal number of such holder's Common Units in compliance with and as permitted by the LLC Agreement.

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, after payment of debts and other liabilities and after the rights of holders of preferred stock, if any, have been satisfied, the holders of all outstanding shares of Class A Common Stock will be entitled to receive the remaining assets of the Company available for distribution ratably in proportion to the number of shares held by each such stockholder.

The Board of Directors may establish one or more classes or series of preferred stock. The Board of Directors may determine, with respect to any class or series of preferred stock, the terms and rights of such class or series. The Company currently does not have any preferred stock issued and outstanding.

Common Units are entitled to share in the profits and losses of Authentic Brands and to receive distributions declared and have no voting rights. Holders of Common Units receive one share of Class B Common Stock, which are voting, non-economic shares in the Company, for each Common Unit they own. Subject to the terms of the LLC Agreement, the Common Unit holders have the option to redeem all or any portion of their Common Units. However, upon redemption, the Board of Directors determines whether the Common Units are redeemed in cash or Class A Common Stock.

Common Units that are redeemed for shares are exchanged for a number of Class A Common Stock equal to the number of exchanged Common Units. Simultaneously, a number of Class B Common Stock held by the unitholder is surrendered equal to the number of Common Units being redeemed. For Common Units redeemed for cash, cash redemption may only be effected if a concurrent fundraising activity takes place by the Company.

**Non-Controlling Interests**

Non-controlling interests represent the ownership interests in Authentic Brands held by holders other than the Company. As of September 30, 2025, BRC Inc.'s ownership percentage in Authentic Brands controlling and non-controlling interests was 36.7% and 63.3%, respectively.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**Public Offering**

On July 16, 2025, the Company, entered into an underwriting agreement (the "Underwriting Agreement") with D.A. Davidson & Co. (the "Underwriter"), pursuant to which the Company agreed to use and sell 28,000,000 shares of Class A Common Stock at an offering price of $1.25 per share (the "Offering"). Pursuant to the Underwriting Agreement, the Company granted the Underwriter a 30-day option to purchase up to an additional 4,200,000 shares of Class A Common Stock, which option was fully exercised by the Underwriter on July 17, 2025. The Offering closed on July 18, 2025 resulting in the issuance of 32,200,000 shares and gross proceeds of $40,250, which were reduced by $2,824 of issuance costs, resulting in total net proceeds of $37,426 recorded as an increase to Class A common Stock as of September 30, 2025.

**Shares Issued for Legal Settlement** 

On May 15, 2024, Alta Partners, LLC ("Alta") filed a lawsuit in the federal district court in the Southern District of New York against the Company: Alta Partners, LLC v. BRC Inc., Case 24-CV-03741 (AT) (RWL) (Southern District of New York). The complaint alleged breach of contract and that Alta suffered damages arising from the Company's refusal to permit Alta to exercise warrants between March 11 and May 4, 2022. On June 20, 2025, the Company entered into a settlement and release agreement with Alta, pursuant to which, in full settlement of the claims described therein, the Company issued 2,300,100 shares of Class A Common Stock with a market value of $3,367, net in exchange for $1,000 which resulted in $2,367 non-cash charge during the second quarter of 2025. Insurance proceeds were received in the amount of $2,367 in the third quarter of 2025.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**10. Equity-Based Compensation**

**Incentive Units**

Authentic Brands maintains an equity incentive plan (the "2018 Equity Incentive Plan") under which it granted Incentive Units (as defined in the 2018 Equity Incentive Plan) to employees or non-employee directors prior to the Business Combination. As of September 30, 2025, 8,472 Incentive Units remain outstanding under the 2018 Equity Incentive Plan, and no new Incentive Units have been granted under the 2018 Equity Incentive Plan since the completion of the Business Combination. The Board of Directors has the authority to determine the terms and conditions of each grant under the 2018 Equity Incentive Plan, and 200,000 non-voting units have been authorized thereunder. These units may contain certain service and performance related vesting provisions. The Incentive Units were awarded to eligible employees and non-employee directors and entitle each grantee to receive non-voting member units upon vesting, subject solely to the employee's continuing employment or the non-employee director's continuing service on the Board of Directors.

The grant date estimated fair value of the Incentive Units was based upon an option pricing model valuation of the awards at the grant date. The Company utilized the probability-weighted expected return method. The Incentive Units have no strike price; however, participation thresholds, as defined in the Plan, were established at the grant date and must be exceeded for the holder of the unit to participate in any distributions of the Company. The following assumptions were utilized in determining the fair value of the units at the grant date for the nine months ended September 30, 2025 and 2024:

---

| | |
|:---|:---|
| Expected dividend |  |
| Expected volatility | 60% to 85% |
| Risk-free interest rate | 0.13% to 2.53% |
| Expected life of incentive awards (in years) | 1 to 5 years |
| Grant date performance and market threshold | $35,000 to $1,250,000 |

---

The computation of expected volatility is based on a weighted average of comparable public companies within the Company's industry. Expected life is based on the estimated liquidity event timing. The risk-free interest rate is based on the yield of zero-coupon U.S. Treasury securities of comparable terms. The Company does not anticipate paying dividends in the foreseeable future. The Company recognizes pre-vesting forfeitures as they occur rather than estimate the forfeiture rate at the grant date.

The following table summarizes the changes in the number of Incentive Units for the nine months ended September 30, 2025 and 2024:

---

| | | |
|:---|:---|:---|
| | **Incentive Units** | **Weighted Average Grant Date Fair Value** |
| Granted and outstanding at January 1, 2025 | 8472 | $213.79 |
| &nbsp;&nbsp;Granted |  |  |
| &nbsp;&nbsp;Forfeited |  |  |
| Granted and outstanding at September 30, 2025 | 8472 | $213.79 |
| &nbsp;&nbsp;Vested at September 30, 2025 | 8365 | $213.77 |
| Granted and outstanding at January 1, 2024 | 8585 | $213.81 |
| &nbsp;&nbsp;Granted |  |  |
| &nbsp;&nbsp;Forfeited | (113) | 215.31 |
| Granted and outstanding at September 30, 2024 | 8472 | $213.79 |
| &nbsp;&nbsp;Vested at September 30, 2024 | 7125 | $213.50 |

---

For the nine months ended September 30, 2025, the equity compensation expense related to nonvested Incentive Units was fully recognized. For the nine months ended September 30, 2024, the unrecognized equity compensation expense was $200, over a weighted average period of approximately one year.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

In connection with the Business Combination, the Company adopted the 2022 Omnibus Incentive Plan (the "Omnibus Plan"), which replaced the 2018 Equity Incentive Plan, and the 2022 Employee Stock Purchase Plan (the "ESPP") (see disclosed below).

**Stock Options**

The Company grants stock options to employees under the Omnibus Plan that vest ratably over three years and expire after seven years. The grant date estimated fair value of the stock options is based upon a Black Scholes model valuation of the options at the grant date. The following weighted average assumptions were utilized in determining the fair value of options granted:

---

| | | |
|:---|:---|:---|
| | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
| | **2025** | **2024** |
| Weighted average grant date fair value | $1.21 | $2.21 |
| Expected dividend |  |  |
| Expected volatility | 71% | 66% |
| Risk-free interest rate | 4.02% | 4.32% |
| Options term (in years) | 4.5 | 4.5 |

---

The Company computes expected volatility based on the annualized historical daily volatility of our stock as a publicly traded company. Prior to 2024, the date at which we had sufficient history as a public company to estimate our volatility, the computation of expected volatility was based on a weighted average of comparable public companies within the Company's industry. The Company uses the "simplified method" prescribed by the Securities and Exchange Commission Staff Accounting Bulletin No. 107, *Share-Based Payment,* to calculate the expected term of options granted. The risk-free interest rate is based on the yield of zero-coupon U.S. Treasury securities of comparable terms. The Company does not anticipate paying dividends in the foreseeable future. The Company recognizes pre-vesting forfeitures as they occur rather than estimate the forfeiture rate at the grant date.

The following table summarizes information about stock options activities for the nine months ended September 30, 2025 and 2024:

---

| | | |
|:---|:---|:---|
| | **Stock Options** | **Weighted Average Exercise Price** |
| Outstanding at January 1, 2025 | 5424411 | $4.41 |
| &nbsp;&nbsp;Granted | 4637016 | 2.05 |
| &nbsp;&nbsp;Forfeited | (2338940) | 3.35 |
| Outstanding at September 30, 2025 | 7722487 | $3.31 |
| &nbsp;&nbsp;Vested and exercisable at September 30, 2025 | 1624885 | $4.40 |
| Outstanding at January 1, 2024 | 3413340 | $5.19 |
| &nbsp;&nbsp;Granted | 2663464 | 3.94 |
| &nbsp;&nbsp;Forfeited | (511308) | 6.20 |
| &nbsp;&nbsp;Exercised | (2546) | 5.05 |
| Outstanding at September 30, 2024 | 5562950 | $4.50 |
| &nbsp;&nbsp;Vested and exercisable at September 30, 2024 | 988488 | $5.22 |

---

The total unrecognized equity compensation expense related to stock options to be recognized was $6,672 and $8,799, respectively, over a weighted average period of approximately two years, for both the nine months ended September 30, 2025 and 2024.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**Restricted Stock Units**

The Company grants restricted stock unit ("RSU") awards to employees and non-employee directors under the Omnibus Plan that vest annually over approximately three years. The grant date fair values are based on the closing price of the Class A Common Stock of the Company on the date of grant.

The following table summarizes information about the RSUs under the Omnibus Plan for the nine months ended September 30, 2025 and 2024:

---

| | | |
|:---|:---|:---|
| | **Restricted Stock Units** | **Weighted Average Grant Date Fair Value** |
| Nonvested at January 1, 2025 | 2232952 | $4.51 |
| &nbsp;&nbsp;Granted | 4242636 | 1.94 |
| &nbsp;&nbsp;Forfeited | (1148179) | 2.93 |
| &nbsp;&nbsp;Vested | (1203232) | 4.29 |
| Nonvested at September 30, 2025 | 4124177 | $2.37 |
| Nonvested at January 1, 2024 | 1684955 | $5.77 |
| &nbsp;&nbsp;Granted | 1664761 | 4.05 |
| &nbsp;&nbsp;Forfeited | (392844) | 5.29 |
| &nbsp;&nbsp;Vested | (591699) | 6.15 |
| Nonvested at September 30, 2024 | 2365173 | $4.54 |

---

The total unrecognized equity compensation expense related to RSUs to be recognized was $7,632 and $8,515, respectively, over a weighted average period of approximately two years, for both the nine months ended September 30, 2025 and 2024.

**Performance-Based Restricted Stock Units**

On December 29, 2022, the Company granted 8,462,412 performance-based restricted stock units ("PSUs") to a key employee which vest if certain market capital growth rates are achieved each year through April 2027. Vested PSUs are settled in shares of the Company Class A Common Stock equal to the number of PSUs granted. The PSUs are forfeited upon termination of employment before the performance period ends. PSUs granted during the year ended December 31, 2022 have a weighted-average grant date fair value of $0.46 per share. All PSUs were unvested as of September 30, 2025. The Company used the Monte Carlo pricing model to estimate the fair value of PSUs utilizing the following assumptions at the grant date for the nine months ended September 30, 2025 and 2024:

---

| | |
|:---|:---|
| Expected dividend |  |
| Expected volatility | 65% |
| Risk-free interest rate | 3.97% |
| Award term years | 4.3 |
| Valuation date share price | $6.21 |

---

The total unrecognized equity-based compensation expense related to PSUs to be recognized was $505 and $1,180, respectively, over a weighted average period of approximately two years and three years, respectively, for the nine months ended September 30, 2025 and 2024.

**Employee Stock Purchase Plan**

In September 2022, the Company began offering shares of its Class A Common Stock under its ESPP adopted in connection with the Business Combination, whereby eligible employees may acquire an equity interest in the Company through payroll contributions. At the end of a six-month offering period, shares are purchased at 85% of the stock price at enrollment date or purchase date, whichever is lower.

On September 8, 2025, the Company issued 75,088 shares for a total of $103 during the six-month offering period from March 9, 2025 through September 8, 2025.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**11. Defined Contribution Plan**

The Company maintains a voluntary qualified defined contribution plan covering eligible employees as defined by the plan documents. Participating employees may elect to defer and contribute a portion of their eligible compensation to the plan up to limits stated in the plan documents, not to exceed the dollar amounts set by applicable laws. The Company's matching contributions to the plan were $229 and $659 for the three and nine months ended September 30, 2025, respectively, and $227 and $844 for the three and nine months ended September 30, 2024, respectively.

**12. Income Taxes**

BRC Inc. is the managing member of Authentic Brands and, as a result, consolidates the financial results of Authentic Brands. Authentic Brands and its subsidiaries are limited liability companies and have elected to be taxed as partnerships for income tax purposes except for a subsidiary, Free Range American Media Company, which is taxed as a corporation. The Company files income tax returns in the U.S. federal and various state jurisdictions. Any taxable income or loss generated by Authentic Brands is passed through to and included in the taxable income or loss of its members, including BRC Inc., generally on a pro rata basis or otherwise under the terms of the Authentic Brands LLC Agreement. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes with respect to its allocable share of any taxable income or loss of Authentic Brands, as well as any stand-alone income or loss generated by BRC Inc.

The Company's U.S. federal and state income tax returns for the tax years 2020 and beyond remain subject to examination by the Internal Revenue Service. With respect to state and local jurisdictions, the Company and its subsidiaries are typically subject to examination for several years after the income tax returns have been filed. The Internal Revenue Service completed its examination of Authentic Brands' 2021 U.S. federal partnership return during the current year and the audit resulted in no changes in the reported amounts. Accordingly, no adjustments were required to the Company's previously recorded tax positions, and there were no material impacts to the Company's consolidated financial statements. The Company's income tax expense may vary from the expense that would be expected based on statutory rates due principally to its organizational structure and recognition of valuation allowances against deferred tax assets.

Our effective tax rate for the period ended September 30, 2025 differs from the U.S. federal statutory rate primarily due to changes in the valuation allowance and non-controlling interest.

Based primarily on our limited operating history and Authentic Brands' historical losses, the Company believes there is a significant uncertainty as to when the Company will be able to use our DTAs. Therefore, the Company has recorded a valuation allowance against the DTAs for which the Company has concluded it is more likely than not that they will not be realized.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**13. Net Loss Per Share**

Basic net loss per share is calculated by dividing net loss attributable to BRC Inc. by the weighted-average shares of Class A Common Stock outstanding without consideration for potential dilutive securities. Shares of Class B Common Stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted loss per share of Class B Common Stock under the two-class method has not been presented.

The following table sets forth the computation of basic and diluted net loss per share *(in thousands, except unit/share and per unit/share amounts, unaudited)*:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| *Numerator:* |  |  |  |  |
| &nbsp;&nbsp;Net loss | $(1238) | $(1397) | $(23595) | $(916) |
| &nbsp;&nbsp;Less: Net loss attributable to non-controlling interest | (752) | (862) | (14893) | (446) |
| &nbsp;&nbsp;Net loss attributable to BRC Inc. | $(486) | $(535) | $(8702) | $(470) |
| *Denominator:* |  |  |  |  |
| &nbsp;&nbsp;Weighted-average shares of Class A Common Stock outstanding | 107994798 | 72154931 | 88625749 | 68904034 |
| Net loss per share attributable to Class A Common Stock, basic and diluted | $0.00 | $(0.01) | $(0.10) | $(0.01) |

---

The Company excluded the following potentially dilutive securities, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to Class A Common Stock because including them would have had an antidilutive effect:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| Stock options | 7722487 | 5562950 | 7722487 | 5562950 |
| Common Units | 133889692 | 135473335 | 133889692 | 135473335 |
| RSUs | 4124177 | 2365173 | 4124177 | 2365173 |
| PSUs | 8462412 | 8462412 | 8462412 | 8462412 |
| Incentive Units (Share Equivalents) | 1221857 | 1187537 | 1221857 | 1187537 |
| ESPP | 81659 | 78287 | 81659 | 78287 |
| &nbsp;&nbsp;Total units excluded from computation of diluted net loss per share | 155502284 | 153129694 | 155502284 | 153129694 |

---

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**14. Commitments and Contingencies**

***Purchase Agreements***

The Company has entered into manufacturing and purchase agreements to purchase and produce coffee product from third-party suppliers. These purchase agreements are typically obligations to purchase minimum volumes with fixed pricing if the volume terms are not fulfilled, in the form of a take-or-pay provision. The aggregate value of purchases from these third-party suppliers totaled $11,177 and $38,090 for the three and nine months ended September 30, 2025, respectively, and $10,638 and $32,400 for the three and nine months ended September 30, 2024, respectively.

The amounts in the table below represents the Company's future minimum purchase commitments as of September 30, 2025 (*dollars in thousands, unaudited*):

---

| | |
|:---|:---|
| Remainder of 2025 | $7016 |
| 2026 | 30018 |
| 2027 | 32427 |
| 2028 | 15141 |
| 2029 | 14934 |
| Total | $99536 |

---

***Contingencies***

The Company is the subject of various legal actions in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damage, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to such lawsuits, the Company accrues reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. Although the outcomes of these proceedings cannot be predicted with certainty, the Company does not believe any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on results of operations, cash flows or financial condition.

The Company could be subject to additional sales tax or other tax liabilities. The Company follows the guidelines of ASC 450, *Accounting for Contingencies*, and the consolidated financial statements reflect the current impact of such legislation through the Company's best estimates. However, any of these events could have a material effect on the Company's business and operating results depending on the previous periods of applied enforcement by certain jurisdictions.

The Company is also subject to U.S. (federal and state) laws, regulations, and administrative practices that require us to collect information from its customers, vendors, merchants, and other third parties for tax reporting purposes and report such information to various government agencies. The scope of such requirements continues to expand, requiring us to develop and implement new compliance systems. Failure to comply with such laws and regulations could result in significant penalties and interest which might have an adverse effect on the Company's business and operating results. The Company has accrued $320 related to potential sales and other tax exposure as of both September 30, 2025 and December 31, 2024, respectively, which is included in "Accrued liabilities" on the consolidated balance sheets.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

***Legal Disputes***

On April 28, 2022, Tang Capital Partners, LP ("Tang Capital") filed a lawsuit in federal district court in the Southern District of New York against the Company, Tang Capital Partners, LP v. BRC Inc., Case 22-CV-3476 (RWL) (Southern District of New York). The complaint alleges that Tang Capital suffered damages arising from the Company's refusal on two alleged occasions to permit Tang Capital to exercise warrants. On March 8, 2023, the court granted the Company's motion to dismiss a claim for declaratory judgment but denied the Company's motion to dismiss Tang Capital's breach of contract claim. Each party filed respective motions for summary judgment and completed the briefing of these motions on May 31, 2024. Tang Capital's motion for summary judgment sought $10,535 in compensatory damages, plus prejudgment interest. On November 8, 2024, the court granted in part, and denied in part, the respective motions for summary judgment, holding that the Company breached the warrant agreement by not allowing Tang Capital to exercise warrants, but determining that there were fact issues that need to be resolved at trial on the issue of Tang Capital's alleged damages, including whether Tang could have mitigated its alleged damages. On July 21, 2025, Tang Capital and the Company agreed to settle all claims relating to the lawsuit for total consideration of $8,250, and the Court dismissed the matter effective July 21, 2025. Insurance proceeds of $3,948 offsetting these amounts were received in the third quarter of 2025.

On February 3, 2023, Strategy and Execution, Inc. ("SEI") filed a lawsuit in federal district court in Texas against one of the Company's wholly-owned subsidiaries, Strategy and Execution, Inc., v. Black Rifle Coffee Company LLC, Case 23-CV-00135 (FB) (Western District of Texas). The complaint alleges that SEI, a former consultant to the Company, is owed certain disputed royalties and expense reimbursements from the Company. On April 4, 2023, the Company filed a partial motion to dismiss several of the claims which was granted with prejudice with respect to the Company's position that all royalties expired upon expiration of the parties' contract on December 31, 2023. On May 8, 2024, SEI filed a motion for reconsideration of the order granting the partial motion to dismiss, and on May 14, 2024, SEI filed a motion for leave to amend its complaint. On January 28, 2025, the parties settled all remaining claims not subject of the pending motions. In connection with this settlement, the Company paid SEI $418. On March 30, 2025, both SEI motions for reconsideration of the order granting the partial motion to dismiss and for leave to amend its complaint were denied by the court. On April 14, 2025, the Company filed a motion for attorneys' fees, which currently remains pending. On June 27, 2025, SEI filed an appeal in the U.S. Court of Appeals for the Fifth Circuit (the "Fifth Circuit"), alleging the district court erred in granting the Company's motion to dismiss and denying SEI's motion for leave to amend its complaint. The Company filed a response with the Fifth Circuit on August 27, 2025. The Company and SEI held a mediation on October 13, 2025, but did not reach a settlement. On October 23, 2025, the Fifth Circuit affirmed the judgment of the district court granting the Company's motion to dismiss and denying SEI's motion for leave to amend.

On June 22, 2023, John Brian Clark, JBC Structured Products LLC, and Marathon Capital LLC (collectively, "Clark") filed a complaint against BRC Inc. and Black Rifle Coffee Company LLC: John Brian Clark, et al. v. BRC Inc., et al., Case 1:23-CV-5340 (RWL) (Southern District of New York). Clark alleges breach of contract and is seeking a declaratory judgment. The complaint alleges that Clark suffered damages arising from the Company's refusal to allow Clark to exercise warrants. The lawsuit seeks unspecified general and compensatory damages, attorneys' fees, and other reasonable costs and disbursements. The Company believes that it has meritorious defenses to the claims asserted against it and will defend itself vigorously in these proceedings; however, there can be no assurances that it will be successful in its efforts. On July 17, 2025, Clark sent a settlement demand to the Company and the Company is presently seeking further discovery from Clark and plans to vigorously defend itself in this matter. $500 has been included in accrued liabilities related to this matter.

On May 15, 2024, Alta filed a lawsuit in the federal district court in the Southern District of New York against the Company: Alta Partners, LLC v. BRC Inc., Case 24-CV-03741 (AT) (RWL) (Southern District of New York). The complaint alleged breach of contract and that Alta suffered damages arising from the Company's refusal to permit Alta to exercise warrants between March 11 and May 4, 2022. The lawsuit sought unspecified general and compensatory damages, attorneys' fees, and other costs and disbursements. The Company moved to dismiss the Complaint, but on February 18, 2025, the Magistrate Judge issued a report recommending denial of the motion. The District Judge adopted the report on March 6, 2025, and the parties began discovery. On June 20, 2025, the Company entered into a settlement and release agreement with Alta, pursuant to which, in full settlement of the claims described therein, (i) Alta paid the Company $1,000 and (ii) the Company issued 2,300,100 shares of Class A Common Stock with a market value of $3,367 to Alta pursuant to its registration statement on Form S-3 (File No. 333-270727). The case has been dismissed. Insurance proceeds were received in the amount of $2,367 in the third quarter of 2025.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

On May 20, 2024, one of our co-manufacturers filed a complaint in the district court of Riley County, Kansas against one of the Company's wholly-owned subsidiaries, Black Rifle Coffee Company LLC, Case RL-2024-CV-000119. The complaint alleges breach of contract and anticipatory breach of contract with respect to certain fees and order volume pursuant to the parties' drink manufacturing agreement, amongst other allegations. On July 18, 2024, the Company filed a partial motion to dismiss relating to certain of these allegations. On November 13, 2024, the court denied the Company's motion to dismiss other than for the co-manufacturer's claim of fraudulent inducement, for which the court has granted leave to amend. The parties are currently engaged in discovery. The Company believes that it has meritorious defenses to the claims asserted against it and will defend itself in these proceedings. $2,700 has been included in accrued liabilities related to this matter.

**15. Operational Improvement Plan**

Beginning in the second quarter of fiscal year 2025, management implemented an operational improvement plan (the "Operational Improvement Plan") to reduce costs and improve efficiency of certain company-wide functions. These costs pertained primarily to workforce reductions and the actions for this plan are expected to be completed by the end of fiscal year 2025. In the third quarter of 2025, the Operational Improvement Plan was modified as a result of the relocation of our corporate headquarters and the relocation of our inventory as a result of a change in third party logistics providers.

Headcount was reduced by approximately 48 employees across the Company as part of the Operational Improvement Plan. An incremental headcount reduction of 15 employees resulted from the modification of the Operational Improvement Plan in the third quarter of 2025. No liabilities were excluded due to the inability to estimate fair value. For the three and nine months ended September 30, 2025, the Company recorded $788 and $2,937, respectively, for severance expenses as part of the Operational Improvement Plan. As of September 30, 2025, the Company had accrued severance costs of $1,362, which are expected to be fully paid out by the end of the first quarter of fiscal year 2026. Severance costs are included in the consolidated statement of operations line "Salaries, wages, and benefits".

In addition to severance costs included in the Operational Improvement Plan, the Company incurred $702 of transition costs for both the three and nine months ended September 30, 2025. These costs are primarily reported as "General and administrative expenses" in our consolidated statement of operations.

As of September 30, 2025, accrued restructuring costs related to the 2025 Operational Improvement Plan, consist of the following (*dollars in thousands, unaudited*):

---

| | | | |
|:---|:---|:---|:---|
| | **Reduction in Workforce** | **Transition Costs** | **Total Restructuring Costs** |
| Balance as of January 1, 2025 | $— | $— | $— |
| &nbsp;&nbsp;Costs incurred | 2149 |  | 2149 |
| &nbsp;&nbsp;Costs paid or settled | (563) |  | (563) |
| Balance as of June 30, 2025 | $1586 | $— | $1586 |
| &nbsp;&nbsp;Costs incurred | 788 | 702 | 1490 |
| &nbsp;&nbsp;Costs paid or settled | (1012) | (702) | (1714) |
| Balance as of September 30, 2025 | $1362 | $— | $1362 |

---

**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations**

*The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the annual audited consolidated financial statements, notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), contained in our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K"). In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties, and assumptions that could cause the Company's actual results to differ materially from management's expectations. When used in this report, the terms "we," "us," "our," "BRCC," "Black Rifle Coffee," "Black Rifle Coffee Company," and the "Company" mean BRC Inc. and its consolidated subsidiaries, collectively, unless the context requires otherwise.*

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**Overview**

Black Rifle Coffee Company is a Veteran-founded and led premium coffee, energy drink, and media company operating through one reportable segment that comprises three primary channels: Wholesale, DTC, and Outposts. Founded in 2014 by U.S. Army Veteran Evan Hafer, Black Rifle Coffee began with a one-pound coffee roaster in a garage, where Hafer personally roasted, packaged, and shipped coffee directly to consumers. Today, the company has grown into a widely recognized and nationally distributed brand steadfast in its commitment to supporting active-duty military, Veterans, first responders, and all who love America.

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 individual controlling Authentic Brands prior to the Business Combination, who also controls the combined company post Business Combination.

**Trends**

Certain trends affecting our business within the respective sales channels are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Wholesale channel revenue increased as we added new customers and continued to expand our presence in the Food, Drug, and Mass ("FDM") market. We expect further revenue growth in this channel as we invest in customer acquisition, new product launches, including our Black Rifle Energy product line, and distribution expansion in the FDM market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• DTC channel revenue decline is slowing as we execute our strategic initiatives 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 focus on investment on major 3rd Party Ecommerce Marketplaces because of changing consumer trends.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Outpost channel revenue is stabilizing as we focus on improving transaction volumes and average order values through customer retention programs and tailored product offerings. In 2025, we anticipate limited growth in this channel as we reallocate investments to other channels while we work to improve profitability through operational and strategic changes, which may include closing underperforming Outposts.

**Recent Developments**

***Operational Improvement Plan***

During the second quarter of 2025, management implemented the Operational Improvement Plan to reduce costs and improve efficiency of certain company-wide functions. This plan was extended in the third quarter of 2025 as a result of a move of our corporate headquarters and the change in our third party logistics provider. We estimate the cost of this plan will be approximately $3.6 million which is related to severance and transition costs all of which have been incurred as of September 30, 2025. We estimate that the costs savings as a result of this plan will be more than $8.6 million on an annualized run rate basis. As of September 30, 2025, we have realized approximately $3.1 million of these savings.

***Public Offering of Class A Common Stock***

On July 16, 2025, the Company, entered into an underwriting agreement (the "Underwriting Agreement") with D.A. Davidson & Co. (the "Underwriter"), pursuant to which the Company agreed to use and sell 28,000,000 shares of Class A Common Stock, at an offering price of $1.25 per share (the "Offering"). Pursuant to the Underwriting Agreement, the Company granted the Underwriter a 30-day option to purchase up to an additional 4,200,000 shares of Class A Common Stock, which option was fully exercised by the Underwriter on July 17, 2025. The Offering closed on July 18, 2025.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**Key Factors Affecting Our Performance**

***Our Ability to Increase Brand Awareness***

Maintaining and growing brand awareness and loyalty is critical to our success. We believe we have developed an efficient marketing strategy that enhances brand awareness and drives consumer engagement. Consumer appreciation of our brands is primarily reflected in our sales across our three channels. We expect to continue to refine and develop our brand strategy utilizing reach-based formats such as streaming advertising and other select avenues. 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 Wholesale Channel***

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 in market presence and distribution reach.

***Our Ability to Acquire and Retain Customers at a Reasonable Cost***

We believe that consistently acquiring and retaining customers at a reasonable cost will be a key driver of our future performance. We continue to build brand awareness and reach new consumers by investing in existing and new channels and markets. Our expertise in digital creative and engagement provides a distinct advantage in attracting, converting, and retaining our consumers. 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 Purchases 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 will be affected by the repeat usage dynamics of existing and newly acquired customers.

***Our Ability to Expand Our Product Line***

Our goal is to continue to expand our product line over time to increase our growth opportunity and reduce product-specific risks through diversification into multiple products each designed around daily use. Our pace of growth will be partially affected by the cadence and magnitude of new product launches over time. We believe that it is important to our business that we continue innovating with new products and flavors.

***Our Ability to Manage Our Supply Chain***

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, and since 2020, we have also sourced green coffee beans from over ten countries in Latin America, Africa, and Asia to diversify our supply chain and offer our customers specialty and limited-time-only roasts. Quality control is also a critically important part of our manufacturing and supply chain operations. 100% of our coffee is roasted in the United States. Our licensed, Coffee Quality Institute-certified grader and former Green Beret, leads cupping, grading, scoring, and sourcing of our coffees. We also must effectively manage our co-manufacturers and suppliers.

**Components of Our Results of Operations**

***Revenue, net***

We sell our products both directly and indirectly to our customers through a broad set of physical and online platforms. Our revenue, net reflects the impact of product returns as well as discounts and fees for certain sales programs, trade spend, promotions, and loyalty rewards.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

***Cost of goods sold***

Cost of goods sold primarily includes raw material costs, labor costs directly related to producing our products including wages and benefits, shipping costs, and other overhead costs related to certain aspects of production, warehousing, fulfillment, shipping, and credit card fees.

***Operating expenses***

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 payroll 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 administrative costs include other professional fees and services, and general corporate infrastructure expenses, including utilities and depreciation and amortization.

***Interest expense***

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

**Results of Operations**

This discussion and analysis pertains to comparisons of material changes on the consolidated financial statements for three and nine months ended September 30, 2025 and 2024. The following table represents the selected results of operations for BRC Inc. for the periods indicated (*dollars in thousands, unaudited*):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,** | **Three Months Ended September 30,** | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** |
| | **2025** | **2024** | **2025** | **2024** |
| **Revenue, net** | $100712 | $98204 | $285524 | $285613 |
| **Cost of goods sold** | 63563 | 56856 | 183729 | 164822 |
| &nbsp;&nbsp;&nbsp;&nbsp;Gross profit | 37149 | 41348 | 101795 | 120791 |
| **Operating expenses** |  |  |  |  |
| &nbsp;&nbsp;Marketing and advertising | 8707 | 10109 | 29798 | 25129 |
| &nbsp;&nbsp;Salaries, wages and benefits | 14389 | 16548 | 43743 | 49419 |
| &nbsp;&nbsp;General and administrative | 12947 | 12324 | 39046 | 38619 |
| &nbsp;&nbsp;Other operating expense, net | 588 | 1261 | 6746 | 1584 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 36631 | 40242 | 119333 | 114751 |
| **Operating income (loss)** | 518 | 1106 | (17538) | 6040 |
| **Non-operating expenses** |  |  |  |  |
| &nbsp;&nbsp;Interest expense, net | (1712) | (2453) | (5925) | (6805) |
| &nbsp;&nbsp;&nbsp;&nbsp;Total non-operating expenses | (1712) | (2453) | (5925) | (6805) |
| **Loss before income taxes** | (1194) | (1347) | (23463) | (765) |
| Income tax expense | 44 | 50 | 132 | 151 |
| **Net loss** | $(1238) | $(1397) | $(23595) | $(916) |

---

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**Components of Our Operating Income (Loss)**

***Comparison of the three months ended September 30, 2025 to the three months ended September 30, 2024***

The following table summarizes our revenue, gross profit, gross margin, and total operating expenses (*dollars in thousands, unaudited*):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,** | **Three Months Ended September 30,** | | |
| | **2025** | **2024** |<br>**$ Change** |<br>**% Change** |
| Revenue, net | $100712 | $98204 | $2508 | 3% |
| Cost of goods sold | 63563 | 56856 | 6707 | 12% |
| &nbsp;&nbsp;Gross profit | $37149 | $41348 | $(4199) | (10)% |
| &nbsp;&nbsp;Gross margin<sup>(1)</sup> | 37% | 42% |  |  |
| Total operating expenses | $36631 | $40242 | $(3611) | (9)% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(1)</sup>*Gross margin is calculated as gross profit as percentage of revenue, net*

***Revenue, net***

Net revenue for the three months ended September 30, 2025 increased $2.5 million, or 3%, to $100.7 million as compared to $98.2 million for the corresponding period in 2024.

The following table summarizes net sales by channel for the periods indicated (*dollars in thousands, unaudited*):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,** | **Three Months Ended September 30,** | | |
| | **2025** | **2024** |<br>**$ Change** |<br>**% Change** |
| Wholesale | $67032 | $63655 | $3377 | 5% |
| DTC | 27842 | 29044 | (1202) | (4)% |
| Outpost | 5838 | 5505 | 333 | 6% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total net sales | $100712 | $98204 | $2508 | 3% |

---

Net revenue for our Wholesale channel for the three months ended September 30, 2025, increased $3.4 million, or 5%, to $67.0 million as compared to $63.7 million for the corresponding period in 2024. The increase was primarily driven by an increase in Energy revenue in 2025, growth in packaged coffee distribution and SKU expansion at FDM retailers. This increase was partially offset by a $2.3 million decrease in sales from barter transactions in the third quarter of 2024, whereby finished goods inventory was exchanged for prepaid advertising credits.

Net revenue for our DTC channel for the three months ended September 30, 2025 decreased $1.2 million, or 4%, to $27.8 million as compared to $29.0 million for the corresponding period in 2024. The decrease was primarily driven by the impact of a $0.6 million decrease in the accrual for loyalty rewards points in the third quarter of 2024 following a change in policy on expiration of points. In addition, our DTC channel experienced lower customer acquisition due to declines in the overall DTC market, a strategic reallocation of advertising spend to higher return areas, and an increase in points of distribution in the Wholesale channel, which expanded brick and mortar availability for Black Rifle Coffee consumers. This decrease was partially offset by an increase in sales through third party online retailers.

Net revenue for our Outpost channel for the three months ended September 30, 2025, increased $0.3 million, or 6%, to $5.8 million as compared to $5.5 million for the corresponding period in 2024. The increase was primarily driven by higher franchise fees and increased average order values, supported by efforts to drive add-on and bundled purchases through company-owned retail stores.

***Cost of goods sold***

Cost of goods sold for the three months ended September 30, 2025 increased $6.7 million, or 12%, to $63.6 million as compared to $56.9 million for the corresponding period in 2024. Gross margin decreased to 37% for the three months ended September 30, 2025 as compared to 42% for the corresponding period in 2024. The decrease in gross margin was driven by the decrease in revenue as a result of the decrease in the accrual for loyalty reward points in the third quarter of 2024. The decline also reflected higher inflationary costs, primarily in coffee bean prices and shipping cost. In addition, we have increased investments in trade and promotions, partially offset by productivity improvements and favorable mix.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

***Operating expenses***

Total operating expenses for the three months ended September 30, 2025 decreased $3.6 million, or 9%, to $36.6 million as compared to $40.2 million for the corresponding period in 2024.

The following table summarizes operating expenses for the periods indicated (*dollars in thousands, unaudited*):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,** | **Three Months Ended September 30,** | | |
| | **2025** | **2024** |<br>**$ Change** |<br>**% Change** |
| Marketing and advertising | $8707 | $10109 | $(1402) | (14)% |
| Salaries, wages and benefits | 14389 | 16548 | (2159) | (13)% |
| General and administrative | 12947 | 12324 | 623 | 5% |
| Other operating expense, net | 588 | 1261 | (673) | (53)% |
| &nbsp;&nbsp;&nbsp;Total operating expenses | $36631 | $40242 | $(3611) | (9)% |

---

Marketing and advertising expenses for the three months ended September 30, 2025 decreased $1.4 million, or 14%, to $8.7 million as compared to $10.1 million for the corresponding period in 2024. This decrease was primarily driven by lower spending on non-working and less effective marketing activities as we continue to optimize our marketing mix. This reduction reflects a strategic reallocation of resources toward working media and performance-based initiatives that are expected to generate higher returns on investment and more directly support revenue growth.

Salaries, wages and benefits expenses for the three months ended September 30, 2025 decreased $2.2 million, or 13%, to $14.4 million as compared to $16.5 million for the corresponding period in 2024. This decrease was primarily a result of reduced compensation costs through headcount reductions, partially offset by an increase in severance costs associated with our Operational Improvement Plan.

General and administrative expenses for the three months ended September 30, 2025 increased $0.6 million, or 5%, to $12.9 million as compared to $12.3 million for the corresponding period in 2024. This increase was primarily as a result of costs related to the change in our third party logistics provider and an increase in depreciation expense as a result of a change in useful life of certain software during the second quarter of 2025, partially offset by an overall decrease in general and administrative expense as a result of our continued efforts to find efficiencies in our corporate infrastructure and remove inefficient or duplicative expenses in professional services, information technology, and other expense areas.

Other operating expense, net for the three months ended September 30, 2025 decreased $0.7 million, or 53%, to $0.6 million as compared to $1.3 million for the corresponding period in 2024. The decrease was primarily related to a decrease in site termination costs for our Outpost locations.

***Non-operating expenses***

The following table summarizes non-operating expenses for the periods indicated (*dollars in thousands, unaudited*):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended September 30,** | **Three Months Ended September 30,** | | |
| | **2025** | **2024** |<br>**$ Change** |<br>**% Change** |
| Interest expense, net | $(1712) | $(2453) | $(741) | (30)% |
| &nbsp;&nbsp;&nbsp;Total non-operating expenses | $(1712) | $(2453) | $(741) | (30)% |

---

Interest expense, net for the three months ended September 30, 2025 decreased $0.7 million, or 30%, to $1.7 million as compared to $2.5 million for the corresponding period in 2024. The decrease was primarily due to the decrease in the average balance of the ABL Facility during the third quarter of 2025.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

***Comparison of the nine months ended September 30, 2025 to the nine months ended September 30, 2024***

The following table summarizes our revenue, gross profit, gross margin, and total operating expenses (*dollars in thousands, unaudited*):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | | |
| | **2025** | **2024** |<br>**$ Change** |<br>**% Change** |
| Revenue, net | $285524 | $285613 | $(89) | —% |
| Cost of goods sold | 183729 | 164822 | 18907 | 11% |
| &nbsp;&nbsp;Gross profit | $101795 | $120791 | $(18996) | (16)% |
| &nbsp;&nbsp;Gross margin<sup>(1)</sup> | 36% | 42% |  |  |
| Total operating expenses | $119333 | $114751 | $4582 | 4% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<sup>(1)</sup>*Gross margin is calculated as gross profit as percentage of revenue, net*

***Revenue, net***

Net revenue for the nine months ended September 30, 2025 remained flat compared to the corresponding period in 2024.

The following table summarizes net sales by channel for the periods indicated (*dollars in thousands, unaudited*):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | | |
| | **2025** | **2024** |<br>**$ Change** |<br>**% Change** |
| Wholesale | $185139 | $177844 | $7295 | 4% |
| DTC | 83203 | 91628 | (8425) | (9)% |
| Outpost | 17182 | 16141 | 1041 | 6% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total net sales | $285524 | $285613 | $(89) | —% |

---

Net revenue for our Wholesale channel for the nine months ended September 30, 2025 increased $7.3 million, or 4%, to $185.1 million as compared to $177.8 million for the corresponding period in 2024. The increase was primarily driven by revenue from Black Rifle Energy launched in the fourth quarter of 2024, growth in packaged coffee distribution and SKU expansion at FDM retailers. This increase was partially offset by a $13.8 million decrease in revenue recognized related to a barter transaction in 2024, whereby we exchanged finished goods inventory for prepaid advertising credits.

Net revenue for our DTC channel for the nine months ended September 30, 2025 decreased $8.4 million, or 9%, to $83.2 million as compared to $91.6 million for the corresponding period in 2024. The decrease was primarily driven by the impact of a $5.7 million decrease in the accrual for loyalty rewards points in 2024 following a change in policy on expiration of points. In addition, our DTC channel experienced lower customer acquisition due to declines in the overall DTC market, a strategic reallocation of advertising spend to higher return areas, and an increase in points of distribution in the Wholesale channel, which expanded brick and mortar availability for Black Rifle Coffee consumers.

Net revenue for our Outpost channel for the nine months ended September 30, 2025 increased $1.0 million, or 6%, to $17.2 million as compared to $16.1 million for the corresponding period in 2024. The increase was primarily driven by higher franchise fees and increased average order values, supported by efforts to drive add-on and bundled purchases through company-owned retail stores.

***Cost of goods sold***

Cost of goods sold for the nine months ended September 30, 2025 increased $18.9 million, or 11%, to $183.7 million as compared to $164.8 million for the corresponding period in 2024. Gross margin decreased to 36% for the nine months ended September 30, 2025 as compared to 42% for the corresponding period in 2024. The decrease in gross margin was driven by the decrease in revenue as a result of the decrease in the accrual for loyalty reward points in 2024. The decline also reflected higher inflationary costs, primarily in coffee bean prices and shipping cost. In addition, we have increased investments in trade and promotions, partially offset by productivity improvements and favorable mix.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

***Operating expenses***

Total operating expenses for the nine months ended September 30, 2025 increased $4.6 million, or 4%, to $119.3 million as compared to $114.8 million for the corresponding period in 2024.

The following table summarizes operating expenses for the periods indicated (*dollars in thousands, unaudited*):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | | |
| | **2025** | **2024** |<br>**$ Change** |<br>**% Change** |
| Marketing and advertising | $29798 | $25129 | $4669 | 19% |
| Salaries, wages and benefits | 43743 | 49419 | (5676) | (11)% |
| General and administrative | 39046 | 38619 | 427 | 1% |
| Other operating expense, net | 6746 | 1584 | 5162 | 326% |
| &nbsp;&nbsp;&nbsp;Total operating expenses | $119333 | $114751 | $4582 | 4% |

---

Marketing and advertising expenses for the nine months ended September 30, 2025 increased $4.7 million, or 19%, to $29.8 million as compared to $25.1 million for the corresponding period in 2024. This increase was due to our expansion of partnerships, an increase in research data, incremental shopper marketing, an increase in overall marketing to support the launch of Black Rifle Energy, and an increase in performance-based initiatives that are expected to generate higher returns on investment and more directly support revenue growth.

Salaries, wages and benefits expenses for the nine months ended September 30, 2025 decreased $5.7 million, or 11%, to $43.7 million as compared to $49.4 million for the corresponding period in 2024. This decrease was primarily a result of reduced compensation costs through headcount reductions, partially offset by an increase in severance costs associated with our Operational Improvement Plan.

General and administrative expenses for the nine months ended September 30, 2025 increased $0.4 million, or 1%, to $39.0 million compared to $38.6 million the corresponding period in 2024. This increase was primarily a result of an increase in depreciation expense as a result of a change in useful life of certain software during the second quarter of 2025, an increase in legal fees related to ongoing litigation which was settled in the second and third quarters of 2025, and costs related to the change in our third party logistics provider, partially offset by decreases as a result of our continued efforts to find efficiencies in our corporate infrastructure and remove inefficient or duplicative expenses in professional services, information technology, and other expense areas.

Other operating expense, net for the nine months ended September 30, 2025 increased $5.2 million, or, 326%, to $6.7 million as compared to $1.6 million for the corresponding period in 2024. The increase was primarily related to a $4.3 million increase in legal contingencies, net of insurance recoveries, partially offset by a decrease in termination costs for our retail outpost locations in 2025. For further discussion around legal contingencies see <u>[Note 14,](#i182b6debc8d047c491d3b2340447c673_76)</u>*<u>[Commitments and Contingencies](#i182b6debc8d047c491d3b2340447c673_76)</u>*, of our consolidated financial statements.

***Non-operating expenses***

The following table summarizes non-operating expenses for the periods indicated (*dollars in thousands, unaudited*):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | | |
| | **2025** | **2024** |<br>**$ Change** |<br>**% Change** |
| Interest expense, net | $(5925) | $(6805) | $(880) | (13)% |
| &nbsp;&nbsp;&nbsp;Total non-operating expenses | $(5925) | $(6805) | $(880) | (13)% |

---

Interest expense, net for the nine months ended September 30, 2025 decreased $0.9 million, or 13%, to $5.9 million as compared to $6.8 million for the corresponding period in 2024. The decrease was primarily due to the decrease in the average balance of the ABL Facility during the third quarter of 2025.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**Liquidity and Capital Resources**

***Liquidity Overview***

Our principal use of cash is to support the growth of our business, including increasing working capital requirements related to inventories, accounts receivable, and general and administrative expenses. Furthermore, we use cash to fund our debt service commitments, capital equipment acquisitions, and other growth-related needs.

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 September 30, 2025, our cash and cash equivalents was $9.5 million, our working capital was $27.3 million, and under our credit facilities, we had $49.3 million of available borrowings. Our ability to draw from the credit facilities is subject to a borrowing base and other covenants. There are no defaults or events of default at this time and the Company is in compliance with all covenants. We believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments in the ordinary course of business and under the current market conditions for at least the next twelve months.

On July 18, 2025, we closed the Offering and issued 28,000,000 shares of Class A Common Stock and an additional 4,200,000 shares of Class A Common Stock as a result of the exercise in full of the underwriter's option, for total net proceeds of $37.4 million.

See <u>[Note 8,](#i182b6debc8d047c491d3b2340447c673_58)</u>*<u>[Long-Term Debt](#i182b6debc8d047c491d3b2340447c673_58)</u>*, to the consolidated financial statements included in Item 1 of Part I of this Quarterly Report for information regarding the Credit Agreements.

***Cash Flows from Operating, Investing and Financing Activities***

The following table summarizes our cash flows for the periods indicated (*dollars in thousands, unaudited*):

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Nine Months Ended September 30,** | **Nine Months Ended September 30,** | | |
| | **2025** | **2024** |<br>**$ Change** |<br>**% Change** |
| &nbsp;&nbsp;Cash flows provided by (used in): |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating activities | $(1095) | $9145 | $(10240) | (112)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investing activities | $(2862) | $(6096) | $(3234) | (53)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financing activities | $6629 | $(9311) | $15940 | 171% |

---

***Operating Activities***

Net cash used in operating activities was $1.1 million for the nine months ended September 30, 2025, compared to net cash provided by operating activities of $9.1 million for the corresponding period in 2024. The total decrease of $10.2 million in net cash provided by operating activities was primarily due to net loss of $23.6 million for the nine months ended September 30, 2025 compared to net loss of $0.9 million for nine months ended September 30, 2024.

***Investing Activities***

Net cash used in investing activities was $2.9 million for the nine months ended September 30, 2025, compared to net cash used in investing activities of $6.1 million for the corresponding period in 2024. The $3.2 million decrease in net cash used in investing activities was primarily due to reduced capital expenditure projects for our Outpost locations, roasting facilities and information technology.

***Financing Activities***

Net cash provided by financing activities was $6.6 million for the nine months ended September 30, 2025, compared to net cash used in financing activities of $9.3 million for the corresponding period in 2024. The $15.9 million increase in net cash provided by financing activities was primarily due to $37.4 million of net proceeds received from the public offering in the third quarter of fiscal year 2025 and $1.0 million of net proceeds from shares issued for legal settlement, offset by a net decrease of $30.8 million on long-term debt, primarily due to repayment of our ABL facility.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**Commitments**

The Company has entered into several manufacturing and purchase agreements to purchase coffee products from third-party suppliers. The minimum purchase amounts are based on quantity and in the aggregate will be approximately $7.0 million for the remainder of 2025; $30.0 million for 2026; and $32.4 million for 2027. See <u>[Note 14,](#i182b6debc8d047c491d3b2340447c673_76)</u>*<u>[Commitments and Contingencies](#i182b6debc8d047c491d3b2340447c673_76)</u>* to the consolidated financial statements included in Item 1 of Part I of this Quarterly Report for information regarding such manufacturing and purchase agreements.

Liabilities relating to operating leases that have commenced as of September 30, 2025 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 $32.2 million beyond twelve months through 2043.

**Capital Expenditures**

Future capital requirements will vary materially from period to period and will depend on factors such as adding additional roasting capacity, expansion of our corporate and information technology infrastructure relating to growth initiatives and expansion and growth by opening additional Company-operated Outposts. 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**

Our significant accounting policies and critical accounting estimates are described in Note 2 to the audited consolidated financial statements for the year ended December 31, 2024 included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 3, 2025. There have been no material changes to our significant accounting policies or critical accounting estimates during the three months ended September 30, 2025.

**Item 3. Quantitative and Qualitative Disclosures About Market Risk**

***Interest Rate Risk***

Our Term Loan Facility bears interest at a rate per annum equal to either (i) a Reference Rate (as defined in the Term Loan Financing Agreement) plus a margin ranging from 5.00% to 5.50% based on a total net leverage ratio threshold or (ii) term SOFR (as defined in the Term Loan Financing Agreement) plus a margin ranging from 6.00% to 6.50% based on a total net leverage ratio threshold. Borrowings under our ABL Facility bear interest at a rate per annum of either (i) the Alternate Base Rate (as defined in the ABL Credit Agreement) plus a margin ranging from 0.50% to 1.50% or (ii) Term SOFR (as defined in the ABL Credit Agreement) plus a margin ranging from 1.50% to 2.50%. We seek to manage exposure to adverse interest rate changes through our normal operating and financing activities. As of September 30, 2025, we had $39.3 million outstanding on our Term Loan Facility and none outstanding on our ABL Facility with available borrowings of $49.3 million. The carrying value of the variable interest rate debt approximates its fair value as the borrowings are based on market interest rates. A hypothetical increase of interest rates of 5% on our outstanding variable rate borrowings would result in additional interest expense annually of approximately $2.0 million.

**Item 4. Controls and Procedures**

***Evaluation of Disclosure Controls and Procedures***

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of September 30, 2025. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2025, our disclosure controls and procedures were effective.

***Changes in Internal Control over Financial Reporting***

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**PART II - OTHER INFORMATION**

**Item 1. Legal Proceedings**

See <u>[Note 14,](#i182b6debc8d047c491d3b2340447c673_76)</u>*<u>[Commitments and Contingencies](#i182b6debc8d047c491d3b2340447c673_76)</u>* to the consolidated financial statements included in Item 1 of Part I of this Quarterly Report for information regarding certain legal proceedings in which the Company is involved.

**Item 1A. Risk Factors**

In addition to the other information included in this Quarterly Report, you should carefully consider the risks and uncertainties discussed in our "*<u>[Cautionary Note Regarding Forward-Looking Statements](#i182b6debc8d047c491d3b2340447c673_10)</u>".* Other than the below risk factors, there have been no material changes to the risk factors that were previously disclosed in Item 1A in the Company's 2024 Form 10-K.

***Changes in U.S. trade policies, including the imposition of tariffs, including punitive and retaliatory tariffs, specifically with respect to countries where we source our high-quality coffee beans, or tariffs that specifically target coffee beans, may adversely impact our business, financial condition, and results of operations.***

The Trump Administration implemented significant changes to U.S. trade policies and implemented new tariffs on coffee and other goods imported into the U.S., which has introduced uncertainty to our business and will increase the cost of our products sourced outside of the U.S. The extent and duration of increased tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, and availability and cost of alternative sources of supply. As a result of these dynamics, we may find it difficult to predict the impact to our business of these and future changes to the trading relationships between the U.S. or other countries or the impact on our business of new laws or regulations adopted by the U.S. or other countries.

The above and other potential tariffs and trade restrictions may 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 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 results of operations and financial condition could be materially and adversely impacted 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 international trade agreements and policies or additional tariffs that may be imposed.

***Our Operational Improvement Plan may not yield its intended efficiencies and could strain resources, negatively impact workforce morale, and slow down execution of our strategic plans.***

Beginning in the second quarter of fiscal 2025, we implemented the Operational Improvement Plan that is designed to improve operational efficiencies, reduce operating costs and better align our workforce with current business needs, top strategic priorities and key growth opportunities. As part of the Operational Improvement Plan we have reduced our workforce by approximately 11.4%. This reduction in force, and any other future reductions, and the attrition that may occur following them could result in the loss of institutional knowledge and expertise and the reallocation and combination of certain roles and responsibilities across our company, all of which could adversely affect our operations. These actions and other additional measures we might take to reduce costs may potentially result in a strain our workforce, divert management attention, yield attrition beyond our intended reduction in force, negatively impact employee morale and productivity, cause us to delay, limit, reduce or eliminate certain strategic plans or otherwise interfere with our ability to operate and grow our business effectively, each of which could have an adverse impact on our business, operating results and financial condition. Additionally, as we are operating our business with a different level and mix of employees, we face additional risk that we might not be able to execute on our strategic plans and product roadmap, which may have an adverse effect on our business, financial condition, and operating results. Moreover, the Operational Improvement Plan may negatively impact our ability to attract, integrate, retain and motivate highly qualified employees, make it difficult for us to pursue new opportunities and initiatives, and may harm our reputation with current or prospective employees.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds** 

Not applicable.

**Item 3. Defaults Upon Senior Securities**

Not applicable.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**Item 4. Mine Safety Disclosures**

Not applicable.

**Item 5. Other Information**

*Rule 10b5-1 Trading Plans - Directors and Section 16 Officers*

On September 12, 2025, Steven Taslitz, a director of the Company, solely in his capacity as Trustee of a trust, adopted a "Rule 10b5-1 trading arrangement", as defined in Item 408(a) of Regulation S-K under the Securities Act of 1933, as amended. The aggregate number of shares that may be sold pursuant to the trading plan is 337,241 shares of Class A Common Stock. The trading plan authorizes the agent to begin selling such shares pursuant to the plan on February 16, 2026 and provides that the agent shall cease selling such shares on the earliest to occur of (i) February 15, 2027 and (ii) the date on which an aggregate of 337,241 shares of Class A Common Stock issuable upon exchange of an equivalent number of common units of Authentic Brands LLC (and forfeiture of an equivalent number of shares of Class B Common Stock) have been sold under such plan.

Other than as disclosed above, during the three months ended September 30, 2025, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**Item 6. Exhibits** 

---

| | |
|:---|:---|
| **Exhibit** | **Description** |
| 3.1 | <u>[Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on February 10, 2022 with the SEC).](https://www.sec.gov/Archives/edgar/data/0001891101/000110465922019525/tm223251d1_ex3-1.htm)</u> |
| 3.2 | <u>[Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed on May 2, 2024 with the SEC).](https://www.sec.gov/Archives/edgar/data/1891101/000114036124024033/ef20028260_ex3-1.htm)</u> |
| 3.3 | <u>[Certificate of Correction to the Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K/A filed on August 16, 2024 with the SEC).](https://www.sec.gov/Archives/edgar/data/1891101/000114036124037669/ef20034154_ex3-1.htm)</u> |
| 3.4 | <u>[Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Form 8-K filed on February 10, 2022 with the SEC).](https://www.sec.gov/Archives/edgar/data/0001891101/000110465922019525/tm223251d1_ex3-2.htm)</u> |
| 3.5 | <u>[Amendment to By-Laws of the Company (incorporated by reference to Exhibit 3.5 to the Company's Form 10-K filed on March 3, 2025, with the SEC).](https://www.sec.gov/Archives/edgar/data/1891101/000189110125000006/brcinc10kfy2024-exhibit35.htm)</u> |
| 31.1 | <u>[Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](brcinc10qq3fy2025-ex311.htm)</u> |
| 31.2 | <u>[Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.](brcinc10qq3fy2025-ex312.htm)</u> |
| 32.1\* | <u>[Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](brcinc10qq3fy2025-ex321.htm)</u> |
| 32.2\* | <u>[Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](brcinc10qq3fy2025-ex322.htm)</u> |
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase. |
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). |

---

\* Furnished herewith.

------

<u>[**Table of Contents**](#i182b6debc8d047c491d3b2340447c673_7)</u>

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

**BRC Inc.**

---

| | | |
|:---|:---|:---|
| | By: | /s/ Christopher Mondzelewski |
| | | Christopher Mondzelewski |
| | | Chief Executive Officer |
| | | (Principal Executive Officer) |
| | By: | /s/ Matthew Amigh |
| | | Matthew Amigh |
| November 3, 2025 |  | Chief Financial Officer |
|  |  | (Principal Financial Officer) |

---

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER** 

**PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002** 

I, Christopher Mondzelewski, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of BRC Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| | /s/ Christopher Mondzelewski |
| Date: November 3, 2025 | Christopher Mondzelewski |
| | Chief Executive Officer |
| | (Principal Executive Officer) |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER** 

**PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002** 

I, Matthew Amigh, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of BRC Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | |
|:---|:---|
| | /s/ Matthew Amigh |
| Date: November 3, 2025 | Matthew Amigh |
| | Chief Financial Officer |
| | (Principal Financial Officer) |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report on Form 10-Q of BRC Inc. (the "Company") for the quarter ended September 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Quarterly Report"), I, Christopher Mondzelewski, Chief Executive Officer (Principal Executive Officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.the Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 3, 2025

---

| |
|:---|
| /s/ Christopher Mondzelewski |
| Christopher Mondzelewski |
| Chief Executive Officer |
| (Principal Executive Officer) |

---

## Exhibit 32.2

**Exhibit 32.2**

**CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report on Form 10-Q of BRC Inc. (the "Company") for the quarter ended September 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the "Quarterly Report"), I, Matthew Amigh, Chief Financial Officer (Principal Financial Officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.the Quarterly Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 3, 2025

---

| |
|:---|
| /s/ Matthew Amigh |
| Matthew Amigh |
| Chief Financial Officer |
| (Principal Financial Officer) |

---

<br>