BRC (BRCC) - 2022 Q4 - Annual Report

FORM 10-K Filing Information General Information This section details BRC Inc.'s Form 10-K filing for fiscal year 2022, including its incorporation, SEC file, and emerging growth company status - BRC Inc. filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2022[145] - The company is incorporated in Delaware with SEC file number 001-41275[145][157] - BRC Inc. is classified as a 'non-accelerated filer' and an 'emerging growth company'[146][158] Common Stock Information (as of March 8, 2023) | Class of Stock | Shares Outstanding | | :------------- | :----------------- | | Class A Common | 58,378,857 | | Class B Common | 153,181,442 | Cautionary Note Regarding Forward-Looking Statements This section warns that forward-looking statements in the report are subject to risks and uncertainties, and the company does not commit to updating them - Forward-looking statements are based on current expectations and beliefs, subject to risks and uncertainties[2] - Actual results or performance may materially differ from those expressed or implied by forward-looking statements[2] - The company will not update or revise forward-looking statements unless required by applicable securities laws[2] Summary of Risk Factors This section summarizes numerous risks that could negatively impact the company's business, financial condition, and operating results - Risks include negative publicity affecting brand and reputation, especially concerning key employees and the veteran/military community[162][187] - Challenges in managing rapid growth, integrating into new markets, and successfully opening new Outposts are significant risks[2][163][166] - Dependence on third-party supply chain, co-manufacturers, and wholesale partners poses risks to product delivery and profitability[1][166] - Increased costs from inflation, competition, and reliance on information technology systems are also highlighted[166] Item 1. Business Company Overview Black Rifle Coffee Company is a veteran-controlled coffee and media company serving premium coffee, content, and merchandise to its community - Black Rifle Coffee Company is a veteran-controlled company serving premium coffee, content, and merchandise to military, veterans, first responders, and patriots[8][173] - The brand is mission-driven, focusing on cause-related content and community building[8][174] - Veterans and veteran spouses comprise approximately half of the company's over 900 employees[12] - In 2022, Black Rifle Coffee donated over $1.6 million in coffee and $1.8 million in other donations through its affiliated non-profit, BRCC Fund, focusing on veteran-related causes[197] Our Business Model and Channels The company operates a digitally native brand with an omnichannel distribution strategy across Direct to Consumer, Wholesale, and Outposts - Omnichannel distribution strategy includes Direct to Consumer (DTC), Wholesale, and Outposts[194] Revenue Growth (2020-2022) | Year | Revenue (Millions USD) | Growth Rate (%) | | :--- | :--------------------- | :-------------- | | 2020 | $163.9 | - | | 2021 | $233.1 | 42.2 | | 2022 | $301.3 | 29.3 | Revenue by Channel (2021 vs 2022) | Channel | 2022 Sales (Millions USD) | 2021 Sales (Millions USD) | Change (%) | | :------ | :------------------------ | :------------------------ | :--------- | | DTC | $159.0 | $165.3 | -3.8 | | Wholesale | $119.4 | $55.8 | 114.1 | | Outpost | $22.9 | $12.0 | 90.5 | - DTC channel revenue decreased by 3.8% in 2022, primarily due to a strategic shift in advertising spend, while customer retention remained steady[49][681] - Wholesale channel revenue increased by 114.1% in 2022, driven by entry into the FDM market (e.g., Walmart) and growth in Ready-To-Drink (RTD) products[48][177] - Outpost channel sales increased by 90.5% in 2022, primarily due to opening seven new company-operated Outposts and three new franchise stores[457] - As of December 31, 2022, the company had 270,000 Coffee Club subscribers and 13.1 million social media followers[198] Product Supply and Roasting The company owns two U.S. roasting facilities and uses co-manufacturers to source and produce high-quality coffee beans and RTD products - The company owns two roasting facilities in the U.S. for in-house roasting, ensuring consistency and quality[171] - Coffee beans are sourced from Colombia, Nicaragua, Brazil, and over ten other countries, with an 83-point grade or higher[171][234] - Co-manufacturers are used for a portion of production capacity, especially for RTD products, to scale quickly[172] Human Capital Black Rifle Coffee prioritizes hiring veterans and veteran spouses, who comprise approximately half of its employees, offering comprehensive development and benefits - Veterans and veteran spouses make up about 50% of the company's 918 employees (as of December 31, 2022)[12][180] - The company aims to be an employer of choice for post-military careers and inspire veteran entrepreneurship[12] - Employee development and training are customized, and a comprehensive 'Total Rewards Package' is offered[204][237] Competition The company competes in the highly competitive $45.0 billion coffee market by leveraging product quality, brand recognition, and a mission-led lifestyle - The company competes in the $45.0 billion coffee market across at-home, RTD, and out-of-home segments[201] - Competition is based on product quality, roasting methods, brand recognition, and technology[201] - The company differentiates itself through superior product, powerful media platform, mission-led lifestyle, and loyal customer base[201] - Entry into the Food, Drug and Mass (FDM) market, in collaboration with Walmart, is expected to significantly boost brand awareness and revenue[9] Intellectual Property Black Rifle Coffee Company owns numerous registered trademarks, including 'Black Rifle Coffee Company' and its 'BRCC' logo, which are crucial to its brand identity - The company owns many registered trademarks and service marks in the U.S., including 'Black Rifle Coffee Company' and the 'BRCC' logo[181] - These marks are considered of significant value and importance to the business[181] - The company licenses its marks to franchise partners and third-party vendors, with agreements restricting use and imposing brand standards[238] Government Regulations The company is subject to extensive federal, state, and local regulations covering public health, food safety, and franchising, requiring complex and costly compliance - The company is subject to extensive federal, state, and local regulations, including public health, safety, nutritional labeling, and food safety[52] - Franchising activities are regulated by the Federal Trade Commission (FTC) and state laws, requiring a franchise disclosure document (FDD)[182] - Compliance with labor laws such as the Fair Labor Standards Act and Americans with Disabilities Act is also required[239] Environmental Federal and state environmental regulations have not materially impacted operations, but stricter local requirements could increase development costs for new facilities - Federal and state environmental regulations have not had a material effect on operations[240] - More stringent local government requirements could delay construction and increase development costs for new facilities[240] - The company is working to manage risks and costs related to environmental sustainability matters, including climate change, water resources, and waste[214] Business Combination and Organizational Structure BRC Inc. completed a business combination in February 2022, becoming the parent of Authentic Brands, operating under an umbrella partnership C corporation (Up-C) structure - BRC Inc. consummated a business combination on February 9, 2022, becoming the parent company of Authentic Brands[207] - The organizational structure is an 'umbrella partnership C corporation' (Up-C) structure[54] - This structure allows certain Authentic Brands owners to retain equity in Authentic Brands, classified as a partnership for U.S. federal income tax purposes[54] Available Information The company files annual, quarterly, and current reports with the SEC, which are publicly available on its investor relations website and the SEC's website - Annual, quarterly, and current reports are filed with the SEC and available on www.blackriflecoffee.com/pages/investor-relations and www.sec.gov**[22](index=22&type=chunk) - Information on the company's website is not part of its SEC filings[22] Item 1A. Risk Factors Risks Related to Our Business This section details various business-specific risks, including those related to brand reputation, growth strategy execution, supply chain, competition, and information technology - Damage to brand or reputation, including negative publicity or perceived abandonment of mission, could significantly impact business and financial results[23][28][209][246] - Failure to successfully execute strategic initiatives for growth in DTC, Wholesale, and Outpost channels, or market cannibalization, could adversely affect growth and profitability[29][30][61][215] - Disruptions in the supply chain for coffee beans, store supplies, or merchandise, or issues with co-manufacturers, could negatively impact production and profitability[40][259] - Intense competition in the coffee market and challenges in opening new Outposts or achieving planned operating levels could hinder expansion and profitability[44][45][109] - Dependence on information technology systems and third-party service providers for operations, sales, and data processing exposes the company to risks of security breaches, system failures, and data loss[87][115][126] - Inability to adequately protect intellectual property, including trademarks and roasting methods, could harm brand value and competitive advantage[127][129][135] - Food safety and quality concerns, evolving consumer preferences, and health perceptions related to caffeine or other ingredients could reduce demand and negatively impact sales[132][141][142] - Reliance on franchise partners, over whom the company has limited control, poses risks to operational standards, brand image, and financial results[470][492] - Inflationary pressures on raw materials, labor, and operating costs could adversely affect profitability if not offset by price increases or efficiency gains[478][787] Risks Related to People and Culture This section outlines risks associated with human capital, including dependence on key executives, labor costs, unique workplace culture, and potential litigation - The company's success is highly dependent on its founder, executive officers (Evan Hafer, Mat Best, Tom Davin), and other key employees, whose loss could harm the business[479][483][533] - Increases in labor costs (minimum wage, healthcare) and difficulty attracting/retaining qualified employees could negatively impact operations and profitability[484][503][534] - The company's unique workplace atmosphere, including a policy permitting firearms, creates inherent risks and potential liability[485][537] - Unionization activities could disrupt operations, increase costs, and affect profitability[487][506] - Litigation or legal proceedings, including employee claims or those related to risky content creation, could expose the company to significant liabilities and reputational damage[5][507][557] Risks Related to Regulation, Litigation and Taxation This section covers extensive regulatory risks, potential litigation, and the increased costs and burdens associated with being a public company - The company is subject to extensive federal, state, and local laws and regulations, including food safety, labor, and franchising laws, with non-compliance leading to costly litigation or enforcement actions[5][509][540][553] - Stringent and evolving data protection laws (e.g., CCPA, CPRA) increase compliance costs and exposure to liability for data breaches or privacy failures[5][517][519][546][548] - Liability for inappropriate or misleading advertisements, especially concerning product claims or national symbols, could harm marketing and brand reputation[5][514] - Changes in accounting principles (GAAP) or interpretations could significantly affect reported financial results[5][527] - As a public company, the company faces increased legal, accounting, and administrative costs, and burdens related to SEC reporting and Sarbanes-Oxley Act compliance[6][530][561] Risks Related to Our Corporate Structure This section addresses risks from the company's corporate structure, including Tax Receivable Agreement payments, public benefit corporation status, and anti-takeover provisions - The Tax Receivable Agreement requires substantial cash payments to Unitholders of Authentic Brands for tax benefits, which could significantly exceed actual tax savings and impact liquidity[531][532][594][596] - As a public benefit corporation, the board must balance stockholder interests with a public benefit purpose, which may negatively impact financial performance or make acquisitions more difficult[565][597][598][599] - Anti-takeover provisions in the Charter and Bylaws, along with the influence of controlling stockholders (Evan Hafer), could delay or prevent acquisitions and changes in management[573][574][581][605] - As a holding company, BRC Inc. is dependent on distributions from its subsidiaries to pay dividends and expenses, which could be restricted by debt agreements or regulations[572][602] - Being an 'emerging growth company' allows exemptions from certain reporting requirements, potentially making securities less attractive to investors or comparisons with other public companies difficult[584][615][644] - As a 'controlled company' under NYSE rules, the company is exempt from certain corporate governance requirements, potentially reducing protections for public stockholders[618][647] - There are no current plans to pay cash dividends, meaning stockholders must rely on stock appreciation for returns[621][649][664] Item 1B. Unresolved Staff Comments This section states that there are no unresolved staff comments from the SEC - No unresolved staff comments are reported[652][975] Item 2. Properties The company's material properties include owned facilities in Salt Lake City, San Antonio, and Manchester, along with leased stores and third-party warehouses Key Property Locations | Property Location | Approximate Size (sq. ft.) | Function | Owned/Leased | | :---------------- | :------------------------- | :---------------------------- | :----------- | | Salt Lake City, UT | 30,295 | HQ, Corporate and Manufacturing | Owned | | San Antonio, TX | 33,980 | Corporate | Owned | | Manchester, TN | 65,000 | Corporate and Manufacturing | Owned | - As of December 31, 2022, the company had fifteen company-operated stores, mostly leased[653] - Inventory is also held at various third-party warehouses[653] Item 3. Legal Proceedings The company is involved in various legal actions, including an ongoing lawsuit by Tang Capital Partners, LP regarding warrant exercise - The company is subject to various legal actions in the ordinary course of business, with no expected material adverse effect[654][971] - A lawsuit by Tang Capital Partners, LP, filed in April 2022, alleges damages from the company's refusal to permit warrant exercise[624][973] - As of March 8, 2023, a breach of contract claim in the Tang Capital lawsuit was not dismissed, and the ultimate outcome or loss cannot be reasonably estimated[624][973] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[625][655] Information About Our Executive Officers This section provides biographical information for the company's executive officers, many of whom have military backgrounds, aligning with its veteran-focused mission Executive Officers and Positions | Name | Age | Position(s) Held | | :------------------------ | :-- | :--------------------------------------------- | | Roland Smith | 68 | Executive Chairman, Director | | Evan Hafer | 45 | Chief Executive Officer, Director | | Mat Best | 36 | Chief Branding Officer | | Tom Davin | 65 | Co-Chief Executive Officer, Director | | Greg Iverson | 47 | Chief Financial Officer | | Kristina Braendel (Smith) | 58 | Chief Accounting Officer | | Toby Johnson | 46 | Chief Operations Officer | | Andrew McCormick | 37 | General Counsel and Corporate Secretary | | Heath Nielsen | 55 | Chief Retail Officer | - Evan Hafer, founder and CEO, has fifteen years of U.S. military service as a Green Beret and worked as a CIA contractor[657] - Mat Best, co-founder and Chief Branding Officer, deployed five times to Iraq and Afghanistan with the 2nd Ranger Battalion[628] - Toby Johnson, COO, served seven years as a U.S. Army AH-64D Apache Longbow pilot[630] Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities BRC Inc.'s Class A Common Stock began trading on the NYSE in February 2022, all warrants were redeemed in May 2022, and no cash dividends are planned - Class A Common Stock (BRCC) began trading on the NYSE on February 10, 2022[663] - All outstanding public and private warrants were redeemed in May 2022, with approximately 99.0% of public warrants and 100.0% of private placement warrants exercised on a cashless basis[687][915] - The Board intends to retain future earnings for business operations and has no current plans to pay cash dividends[664] Item 6. [Reserved] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview and Business Combination This section overviews Black Rifle Coffee Company's business and details the February 2022 Business Combination, accounted for as a reverse acquisition - Black Rifle Coffee Company is a rapidly growing, veteran-controlled coffee and media company with a loyal community and omnichannel distribution[691] - The Business Combination on February 9, 2022, resulted in BRC Inc. becoming the sole managing member of Authentic Brands, accounted for as a reverse acquisition[639][693] - The company's omnichannel strategy includes Direct to Consumer (DTC), Wholesale, and Outposts[668] Key Factors Affecting Our Performance Key performance drivers include increasing brand awareness, cost-effectively acquiring customers, driving repeat usage, expanding product lines, and managing the supply chain - Brand awareness and loyalty are critical, driven by an 'Inform, Inspire, Entertain' marketing approach and leveraging social media[667][694] - Ability to acquire and retain customers at a reasonable cost is key, with plans to expand brand awareness through national advertising and social media[672][697] - Growth is affected by repeat usage of products and the successful expansion of product lines, such as the RTD coffee products[698][699] - Supply chain management, including sourcing high-quality green coffee beans from diverse international suppliers and in-house roasting, is crucial[700] Components of Our Results of Operations This section defines the key components of the company's financial statements: net revenue, cost of goods sold, operating expenses, interest expense, and income tax provision - Revenue, net, reflects product sales adjusted for returns, discounts, and loyalty rewards[673] - Cost of goods sold includes raw materials, direct labor, shipping, warehousing, fulfillment, and credit card fees[674] - Operating expenses encompass marketing, advertising, salaries, wages, benefits, professional fees, and general corporate infrastructure costs[675] - Income taxes are accounted for using the asset and liability method, with a valuation allowance for deferred tax assets if realization is not more likely than not[677] Results of Operations (Comparison of the year ended December 31, 2022 to the year ended December 31, 2021) Net revenue increased significantly in 2022, driven by channel growth, but a substantial net loss was reported due to fair value changes of liabilities Key Financial Highlights (2022 vs 2021) | Metric | 2022 (Thousands USD) | 2021 (Thousands USD) | Change (Thousands USD) | Change (%) | | :------------------------- | :------------------- | :------------------- | :--------------------- | :--------- | | Revenue, net | $301,313 | $233,101 | $68,212 | 29 | | Cost of goods sold | $202,134 | $143,414 | $58,720 | 41 | | Gross profit | $99,179 | $89,687 | $9,492 | 11 | | Gross margin | 32.9% | 38.5% | -5.6 percentage points | | | Total operating expenses | $166,941 | $101,266 | $65,675 | 65 | | Operating income (loss) | $(67,762) | $(11,579) | $(56,183) | 485 | | Total other expense, net | $(269,915) | $(2,088) | $(267,827) | 12827 | | Earnings (loss) before tax | $(337,677) | $(13,667) | $(324,010) | 2370 | | Net income (loss) | $(338,044) | $(13,845) | $(324,199) | 2342 | - Net revenue increased by $68.2 million (29.3%) to $301.3 million in 2022, driven by Wholesale and Outpost channel growth[707] - Cost of goods sold increased by $58.7 million (40.9%) due to higher sales and a product mix shift towards RTD, leading to a 560 basis point decrease in gross margin[709] - Operating expenses increased by $65.7 million (64.9%) due to higher headcount, increased marketing spend, and corporate infrastructure expansion[710][737] - Significant non-operating losses of $269.9 million were recognized from changes in fair value of earn-out liabilities ($209.7 million**), warrant liabilities ($56.7 million), and derivative liabilities ($2.3 million)[713][738][740] Liquidity and Capital Resources The company's cash sources include cash on hand, operating activities, and credit facilities, with significant financing from the Business Combination in 2022 - Primary cash sources are cash on hand, operating activities, and credit facilities[715] Cash Flows (2022 vs 2021) | Activity | 2022 (Thousands USD) | 2021 (Thousands USD) | | :------------------- | :------------------- | :------------------- | | Operating activities | $(116,190) | $(7,691) |\n| Investing activities | $(30,404) | $(19,287) |\n| Financing activities | $167,250 | $9,680 | - Net cash used in operating activities increased by $108.5 million in 2022, primarily due to net loss and increases in accounts receivable and inventories[721] - Net cash provided by financing activities increased by $157.6 million in 2022, mainly from Business Combination proceeds ($338.0 million) offset by preferred equity redemption and transaction costs[750] - As of December 31, 2022, cash and cash equivalents were $39.0 million, with $31.3 million available under credit facilities[715][743] - The company entered into a new Senior Credit Facility in November 2022 for up to $65 million, bearing a variable interest rate[746] - Significant purchase commitments for coffee products are $44.6 million for 2023 and $26.5 million for 2024[751][970] - Operating lease commitments not yet commenced total $66.8 million, primarily for real estate leases starting in 2023-2024[725] Critical Accounting Estimates This section highlights critical accounting estimates requiring significant judgment, including revenue recognition for loyalty programs and equity-based compensation fair value - Revenue recognition involves estimates for product delivery dates and variable consideration like discounts and returns[754][780] - The Loyalty Program requires deferring revenue for expected redemptions, with estimates based on historical expiration rates[729][755][756] - Equity-based compensation fair value estimates for incentive units, stock options, and PSUs involve complex assumptions about future revenue, expenses, cash flows, and discount rates[730][757][783] Recent Accounting Pronouncements The company adopted new FASB guidance on convertible instruments and leases in 2022, with the lease standard materially impacting the balance sheet - Adopted new FASB guidance on convertible instruments and contracts in own equity on January 1, 2022, with no material impact[861] - Adopted new FASB guidance on leases (ASU No. 2016-02) on January 1, 2022, materially impacting the consolidated balance sheet by recognizing $7.56 million in right-of-use assets and $7.69 million in lease liabilities[791][862] - As an 'emerging growth company', the company delays adoption of new accounting standards, which may affect comparability[758][784] - A new credit loss standard, effective after December 15, 2022, is not expected to have a material impact[893] Quantitative and Qualitative Disclosures About Market Risk The company faces market risks primarily from commodity price volatility (coffee beans, dairy, aluminum) and interest rate fluctuations on its variable-rate debt - Commodity price risk is a primary market risk, affected by the cost of coffee beans, dairy products, and aluminum cans[785] - Increases in the 'C' coffee commodity price directly impact the cost of high-quality coffee beans[785] - Interest rate risk stems from variable-rate debt (Senior Credit Facility, Equipment Line) tied to BSBY, with a hypothetical 5% increase potentially adding $1.7 million in interest expense[786] - Inflation adversely affects operating results by increasing costs for products, overhead, and freight, which the company attempts to offset through price increases and efficiency[787] Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm Ernst & Young LLP issued an unqualified opinion on BRC Inc.'s consolidated financial statements for 2022 and 2021, noting a change in lease accounting - Ernst & Young LLP provided an unqualified opinion on the consolidated financial statements for 2022 and 2021[790] - The audit was conducted in accordance with PCAOB standards, assessing risks of material misstatement[766][793] - The company changed its method of accounting for leases in 2022 due to the adoption of ASU No. 2016-02[791] Consolidated Financial Statements This section presents the audited consolidated financial statements, including Balance Sheets, Statements of Operations, Stockholders' Deficit, and Cash Flows Consolidated Balance Sheets (Amounts in Thousands) | Assets/Liabilities/Equity | Dec 31, 2022 | Dec 31, 2021 | | :------------------------ | :----------- | :----------- | | Assets: | | | | Cash and cash equivalents | $38,990 | $18,334 | | Accounts receivable, net | $22,337 | $7,442 | | Inventories | $77,183 | $20,872 | | Total current assets | $145,293 | $53,025 | | Property and equipment, net | $59,451 | $31,114 | | Operating lease, ROU asset | $20,050 | — | | Total assets | $225,334 | $87,082 | | Liabilities: | | | | Accounts payable | $12,429 | $17,387 | | Accrued liabilities | $36,660 | $22,233 | | Deferred revenue | $9,505 | $7,334 | | Total current liabilities | $62,192 | $59,018 | | Long-term debt, net | $47,017 | $22,712 | | Operating lease liability | $19,466 | — | | Total liabilities | $129,398 | $82,292 | | Equity: | | | | Total stockholders' equity/members' deficit | $95,936 | $(149,491) | Consolidated Statements of Operations (Amounts in Thousands) | Metric | 2022 | 2021 | 2020 | | :------------------------- | :----------- | :----------- | :----------- | | Revenue, net | $301,313 | $233,101 | $163,909 | | Gross profit | $99,179 | $89,687 | $69,409 | | Operating income (loss) | $(67,762) | $(11,579) | $5,780 | | Earnings (loss) before tax | $(337,677) | $(13,667) | $4,506 | | Net income (loss) | $(338,044) | $(13,845) | $4,321 | | Net loss attributable to BRC Inc. | $(82,906) | | | | Basic and diluted EPS | $(1.62) | | | Consolidated Statements of Cash Flows (Amounts in Thousands) | Activity | 2022 | 2021 | 2020 | | :------------------- | :----------- | :----------- | :----------- | | Operating activities | $(116,190) | $(7,691) | $11,546 | | Investing activities | $(30,404) | $(19,287) | $(9,760) | | Financing activities | $167,250 | $9,680 | $28,811 | | Net increase (decrease) in cash | $20,656 | $(17,298) | $30,597 | | Ending cash | $38,990 | $18,334 | $35,632 | Notes to Consolidated Financial Statements This section provides detailed explanations of accounting policies, estimates, and specific financial statement line items, offering crucial context for the financial figures - The Business Combination was accounted for as a reverse recapitalization, with Authentic Brands as the accounting acquirer[835] - Revenue is recognized when control of products or services transfers to the customer, with estimates for delivery dates and variable consideration[838] Revenue by Sales Channel (Amounts in Thousands) | Channel | 2022 | 2021 | 2020 | | :--------------- | :-------- | :-------- | :-------- | | Direct to Consumer | $159,022 | $165,299 | $137,724 | | Wholesale | $119,360 | $55,761 | $23,351 | | Outpost | $22,931 | $12,041 | $2,834 | | Total net sales | $301,313 | $233,101 | $163,909 | - Deferred revenue and gift card liability increased to $9.5 million in 2022 from $7.3 million in 2021[276] - Long-term debt, net, increased to $49.2 million in 2022 from $34.7 million in 2021, including mortgages, equipment loans, and a new Senior Credit Facility[931] - Operating lease liabilities, recognized under new guidance, totaled $13.8 million for ROU assets, with future minimum payments of $109.7 million[369][942] - Significant losses were recognized from changes in fair value of earn-out liabilities ($209.7 million) and warrant liabilities ($56.7 million) in 2022 due to stock price increases[346][349][713][946][948] - Equity-based compensation expense for 2022 was $6.1 million, with unrecognized expense of $6.8 million for RSUs, $3.3 million for stock options, and $3.9 million for PSUs[84][386][387][804][956] - The company recognized a full valuation allowance of $84.1 million against its deferred tax assets in 2022 due to cumulative losses[419] - Net loss per share attributable to Class A Common Stock was $(1.62) for the period after the Business Combination through December 31, 2022[800][968] - The company has significant concentrations with five coffee vendors (55.6% of purchases in 2022) and four shipping vendors (73.7% of expenses in 2022)[425] Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures This section states that there have been no changes in or disagreements with accountants on accounting and financial disclosures - No changes in or disagreements with accountants on accounting and financial disclosures are reported[407][975] Item 9A. Controls and Procedures Management assessed the effectiveness of disclosure controls and internal control over financial reporting as effective as of December 31, 2022 - Disclosure controls and procedures were evaluated and deemed effective as of December 31, 2022[976] - Management concluded that internal control over financial reporting was effective as of December 31, 2022[446] - No material changes in internal control over financial reporting occurred during the quarter ended December 31, 2022[406] Item 9B. Other Information This section states that there is no other information to report - No other information is reported[447][978] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This section states that there are no disclosures regarding foreign jurisdictions that prevent inspections - No disclosures regarding foreign jurisdictions that prevent inspections are reported[431] Part III Item 10. Directors, Executive Officers and Corporate Governance Information regarding directors, executive officers, and corporate governance is incorporated by reference from Part I and the 2023 Proxy Statement - Information on executive officers is reported in Part I of this report[448] - Other information is incorporated by reference from the 2023 Proxy Statement[980] Item 11. Executive Compensation Information on executive compensation is incorporated by reference from the 'Executive Compensation' section of the 2023 Proxy Statement - Information on executive compensation is incorporated by reference from the 'Executive Compensation' section of the 2023 Proxy Statement[433][449] Item 12. Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters Information regarding security ownership and related stockholder matters is incorporated by reference from the 2023 Proxy Statement - Information on security ownership and related stockholder matters is incorporated by reference from the 2023 Proxy Statement[434][981] Item 13. Certain Relationships and Related Transactions, and Director Independence Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2023 Proxy Statement - Information on certain relationships and director independence is incorporated by reference from the 2023 Proxy Statement[434][450] Item 14. Principal Accounting Fees and Services Information on principal accounting fees and services is incorporated by reference from the 2023 Proxy Statement - Information on principal accounting fees and services is incorporated by reference from the 2023 Proxy Statement[435][450] Part IV Item 15. Exhibits, Financial Statement Schedules This section lists the financial statements and schedules included in the report, along with a comprehensive list of exhibits filed - Financial statements and schedules are included as part of this item[452] - A list of exhibits, including business combination agreements, organizational documents, and incentive plans, is provided[436][936] - Certain schedules and similar attachments to exhibits have been omitted[328] Item 16. Form 10-K Summary This section indicates that there is no Form 10-K summary provided - No Form 10-K summary is provided[329][455] Signatures This section contains the required signatures for the Form 10-K report, confirming authorization and responsibility for the filing - The report is signed by Evan Hafer, Chief Executive Officer, and other executive officers and directors[333][334][337] - Signatures confirm due authorization and responsibility for the report[332]