brrc-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended March 31, 2022


☐			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 incorporation or organization)						(I.R.S. Employer Identification No.)

1144 S. 500 W

Salt Lake City, UT 84101

(Address of principal executive office, zip code)

(801) 874-1189

Registrant’s telephone number, including area code

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
Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50(1)	BRCC WS	New York Stock Exchange

(1) A Form 25 was filed with the Securities and Exchange Commission (“SEC”) on May 4, 2022 to delist and deregister the warrants. The delisting of the warrants was effective 10 days after the filing of the Form 25. The deregistration of the warrants under Section 12(b) of the Securities Exchange Act of 1934 will be effective 90 days, or such shorter period as the SEC may determine, after the filing of the Form 25. Pending effectiveness of the Form 25, the warrants are no longer trading on the 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 and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


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 Act). Yes ☐ No ☒

As of May 12, 2022, the registrant had (i) 51,780,541 shares of Class A common stock, par value $0.0001 per share (the "Class A Common Stock"), of BRC Inc. and,, (ii) 159,779,758 shares of Class B common stock, par value $0.0001 per share (the "Class B Common Stock"), of BRC Inc.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Table of Contents


		Page
Part I - Financial Information
	Item 1. Financial Statements (unaudited)	1
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
	Item 4. Controls and Procedures	29

Part II - Other Information
	Item 1. Legal Proceedings	30
	Item 1A. Risk Factors	30
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	30
	Item 3. Defaults Upon Senior Securities	31
	Item 4. Mine Safety Disclosures	31
	Item 5. Other Information	31
	Item 6. Exhibits	31

	Signatures	32

Table of Contents

BRC Inc.

CONSOLIDATED BALANCE SHEETS

(Amounts in Thousands, except share and per share amounts)


	March 31, 2022		December 31, 2021
	(unaudited)		(audited)
Assets
Current assets:
Cash and cash equivalents	$	110,102	$	18,334
Accounts receivable, net	13,418		7,442
Inventories	25,857		20,872
Prepaid expenses and other current assets	11,473		6,377
Total current assets	160,850		53,025
Property, plant and equipment, net	34,341		31,114
Operating lease, right-of-use asset	7,340		—
Identifiable intangibles, net	251		167
Restricted cash	8,265		—
Other	795		2,776
Total assets	$	211,842	$	87,082

Liabilities and stockholders' deficit/members’ deficit
Current liabilities:
Accounts payable	$	6,427	$	17,387
Accrued liabilities	25,387		22,233
Deferred revenue and gift card liability	7,768		7,334
Current maturities of long-term debt, net	2,867		11,979
Current operating lease liability	432		—
Current maturities of finance lease obligations	100		85
Total current liabilities	$	42,981	$	59,018
Non-current liabilities:
Long-term debt, net	$	15,777	$	22,712
Finance lease obligations, net of current maturities	273		228
Operating lease liability	7,037		—
Earn-out liability	217,404		—
Warrant liability	98,593		—
Derivative liability	17,248		—
Other non-current liabilities	482		334
Total non-current liabilities	$	356,814	$	23,274
Total liabilities	$	399,795	$	82,292
Commitments and Contingencies (Note 16)
Series A preferred equity, less issuance costs (151,406 units authorized, issued and outstanding as of December 31, 2021)	$	—	$	154,281
Stockholders' equity:
Preferred stock, $0.0001 par value, 1,000,000 shares authorized; no shares issued or outstanding	—		—


Class A common stock, $0.0001 par value, 2,500,000,000 shares authorized; 44,703,936 shares issued and outstanding as of March 31, 2022	4		—
Class B common stock, $0.0001 par value, 300,000,000 shares authorized; 149,032,886 shares issued and outstanding as of March 31, 2022	15		—
Series C common stock, $0.0001 par value, 1,500,000 shares authorized; 694,063 shares issued and outstanding as of March 31, 2022	—		—

Additional paid in capital	38,814		—
Accumulated deficit	(83,748)		(19,996)
Members' deficit (18,769 Class A units and 73,890 Class B units authorized, issued and outstanding as of December 31, 2021)	—		(129,495)
Total BRC Inc.'s stockholders' deficit/members' deficit	$	(44,915)	$	(149,491)
Non-controlling interests	(143,038)		—
Total stockholders' deficit/members' deficit	$	(187,953)	$	(149,491)
Total liabilities and stockholders' deficit/members' deficit	$	211,842	$	87,082

See notes to consolidated financial statements.

BRC Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in Thousands, except share and per share amounts)

(unaudited)


	Three Months Ended March 31,
	2022		2021
Revenue, net	$	65,836	$	48,790
Cost of goods sold	42,623		29,152
Gross profit	23,213		19,638
Operating expenses
Marketing and advertising	8,151		6,551
Salaries, wages and benefits	16,018		7,778
General and administrative	14,887		4,838
Total operating expenses	39,056		19,167
Operating income (loss)	(15,843)		471
Non-operating income (expense)
Interest expense	(490)		(294)
Other income (expense), net	348		8
Change in fair value of earn-out liability	(171,098)		—
Change in fair value of warrant liability	(62,109)		—
Change in fair value of derivative liability	(7,507)		—
Total non-operating expenses	(240,856)		(286)
Income (loss) before income taxes	(256,699)		185
Income tax expense	128		36
Net income (loss)	$	(256,827)	$	149
Less: Net loss attributable to non-controlling interest	(193,906)
Net loss attributable to BRC Inc.	$	(62,921)

Net loss per share attributable to Class A Common Stock(1)
Basic and diluted	$	(1.36)


Weighted-average shares of Class A common stock outstanding
Basic and diluted	44,254,837

(1) For the three months ended March 31, 2022, net income (loss) per share of Class A Common Stock and weighted-average shares of Class A Common Stock outstanding is representative of the period from February 9, 2022 through March 31, 2022, the period following the Business Combination, as defined in Note 1 - Organization and Nature of Business. For more information, refer to Note 15 - Net Loss per Share.

See notes to consolidated financial statements.

BRC Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Amounts in Thousands, except for number of shares)

(unaudited)


			Shares
	Members’ Interest		Class A Common Stock		Class B Common Stock		Class C Common Stock		Class A Common Stock		Class B Common Stock		Class C Common Stock		Additional Paid-In Capital		Accumulated Deficit		Non-Controlling Interest		Total Stockholders' Deficit
Balance at January 1, 2021	$	(96,727)	—		—		—		$	—	$	—	$	—	$	—	$	(6,151)	$	—	$	(102,878)
Equity-based compensation	317		—		—		—		—		—		—		—		—		—		317
Non-employee equity-based compensation	368		—		—		—		—		—		—		—		—		—		368
Series A preferred discount amortization	(5,238)		—		—		—		—		—		—		—		—		—		(5,238)

Net income	—		—		—		—		—		—		—		—		149		—		149
Balance at March 31, 2021	$	(101,280)	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	(6,002)	$	—	$	(107,282)

Balance at January 1, 2022	$	(129,495)	—		—		—		$	—	$	—	$	—	$	—	$	(19,996)	$	—	$	(149,491)
Equity-based compensation prior to Business Combination	308		—		—		—		—		—		—		—		—		—		308
Non-employee equity-based compensation prior to Business Combination	241		—		—		—		—		—		—		—		—		—		241
Series A preferred discount amortization prior to Business Combination	(6,621)		—		—		—		—		—		—		—		—		—		(6,621)
Repurchase of member units prior to Business Combination	(1,599)		—		—		—		—		—		—		—		—		—		(1,599)
Net loss prior to Business Combination	—		—		—		—		—		—		—		—		(2,691)		—		(2,691)
Effect of Business Combination	137,166		44,009,874		139,106,323		1,388,125		4		14		—		—		(831)		(83,021)		53,332
Equity-based compensation after Business Combination	—		—		—		—		—		—		—		31		—		186		217
Non-employee equity-based compensation after Business Combination	—		—		—		—		—		—		—		—		—		114		114
First Tier Vesting Event	—		694,062		9,926,563		(694,062)		—		1		—		38,783		—		133,589		172,373
Net loss after Business Combination	—		—		—		—		—		—		—		—		(60,230)		(193,906)		(254,136)
Balance at March 31, 2022	$	—	44,703,936

SEC Form 10-Q filed by BRC Inc.