Solo Brands, Inc.

You should carefully consider the risk factors set forth under Part I, Item 1A. "Risk Factors" in our 2024 Form 10-K, which risk factors are incorporated herein by reference. Such risks could materially affect our business, financial condition, and future results and are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and operating results. There have been no material changes to the risk factors previously disclosed in our 2024 Form 10-K other than the below.

We incurred a net loss of $18.6 million during the quarter ended March 31, 2025 and had an accumulated deficit of $241.0 million as of March 31, 2025. We had cash and cash equivalents of $206.4 million and total debt outstanding of $427.9 million as of March 31, 2025. As of March 31, 2025, we were not in compliance with the interest coverage ratio and total net leverage ratio financial covenants under the credit agreement governing the Term Loan and the Revolving Credit Facility and, without a waiver or forbearance from the lenders thereunder, it is likely that we will be required to report non-compliance with these covenants under the credit agreement with the delivery of the covenant compliance certificate for the first quarter of 2025. As a result, our outstanding debt balance of $427.9 million has been reclassified from a non-current liability to a current liability, as of March 31, 2025. Upon the determination of an event of default under the credit agreement, the lenders could elect to declare all amounts outstanding under the credit facility immediately due and payable and exercise other remedies as set forth in the credit agreement.

We are continuing our evaluation of strategies to refinance our existing debt and are engaged in discussions and negotiations with the lenders under the credit agreement governing the Term Loan and the Revolving Credit Facility. The Company’s strategies include restructuring or refinancing our debt, obtaining a waiver or forbearance, issuing new debt or entering into other financing arrangements or filing to commence proceedings under Chapter 11 of the U.S. Bankruptcy Code. In addition, our plans continue to be focused on improving our results and liquidity through a variety of cost savings and operational improvements throughout 2025, which include a reduction of force and closures of select distribution centers that were completed in the first quarter of 2025, as discussed in Note 2, Restructuring, Contract Termination and Impairment Charges. However, there can be no assurance that we will be able to refinance or restructure our debt, issue new debt or enter into other financing arrangements, obtain a waiver or forbearance or other relief from the lenders, or that we will be able to execute any further cost savings or operational improvements. While we believe our plans to refinance or restructure our indebtedness, obtain relief from the lenders, or issue new debt or enter into other financing arrangements and execute cash savings and operational improvements can alleviate the conditions that raise substantial doubt, these plans are not entirely within our control and cannot be assessed as being probable of occurring.

Our recurring losses, negative cash flow, expected non-compliance reporting under the credit agreement, need for additional financing and the uncertainties surrounding our ability to obtain such financing, improve our results and liquidity, or execute specific initiatives, raise substantial doubt about our ability to continue to execute our operating plan as currently intended. Additional financing, whether in the form of equity or debt, may not be available to us on acceptable terms, on a timely basis, or at all. If adequate funds are not available, or if the terms of potential funding sources are unfavorable, our business would be materially harmed. Furthermore, any new equity we issue will likely result in substantial dilution to our existing stockholders.

If we are unable to obtain a waiver or forbearance or other agreement from the lenders under the credit agreement, obtain additional financing, improve our results or liquidity or execute any operational improvements, we will be unable to continue to fund our operations, continue to sell our products, realize value from our assets, or discharge our liabilities in the normal course of business. If we become unable to continue as a going concern, we could have to liquidate our assets, and potentially realize significantly less than the values at which they are carried on our financial statements, and stockholders could lose all or part of their investment.

If we file to commence proceedings under Chapter 11 of the U.S. Bankruptcy Code, our operations and ability to develop and execute our business plan, and our ability to continue as a going concern, are subject to the risks and uncertainties associated with bankruptcy. As such, filing for Chapter 11 is likely to have a material adverse effect on our business, financial condition, results of operations and liquidity. During any Chapter 11 cases, our senior management would be required to spend a significant amount of time and effort attending to the restructuring of the business instead of focusing exclusively on our business operations. Bankruptcy Court protection also might make it more difficult to retain management and other employees necessary to the success and growth of our business.

Additionally, our financial statements have been prepared assuming that we will continue to operate as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Thus, our financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

The potential delisting of our Class A common stock from NYSE and our trading on the OTC Pink Market is expected to result in a more limited market and lack of liquidity for our securities and may make it more difficult to raise funds on terms acceptable to us, or at all.

On April 22, 2025, the NYSE notified us, and publicly announced, that it had determined to commence proceedings to delist our Class A common stock as a result of the Company’s non-compliance with Rule 802.01D of the NYSE Listed Company Manual due to the Class A common stock trading at “abnormally low price” levels and that trading in the Class A common stock was suspended immediately. Pursuant to our right to a review of the NYSE staff’s determination to delist our Class A common stock by the Board of Directors of the NYSE, we submitted notice of our appeal of the staff of the NYSE Regulation’s determination on May 6, 2025. The NYSE will apply to the SEC to delist the Class A common stock upon completion of all applicable procedures, including our appeal of the NYSE Regulation staff’s decision, if such appeal is unsuccessful.

Our Class A common stock is currently quoted on the OTC Pink Market. The OTC Pink Market is a significantly more limited market than the national securities exchanges such as the NYSE, or Nasdaq stock exchange, and there are lower financial or qualitative standards that a company must meet to have its stock quoted on the OTC Pink Market. The OTC Pink Market is an inter-dealer quotation system much less regulated than the major exchanges, and trading in our Class A common stock may be subject to additional volatility, which may have little to do with our operations or business prospects. This volatility could further depress the market price of our Class A common stock for reasons unrelated to operating performance. These factors may result in investors having difficulty reselling any shares of our Class A common stock and could have a long-term adverse impact on our ability to raise capital in the future. The Company can provide no assurance that the Class A common stock will trade or continue to trade on this market, whether broker-dealers will provide public quotes of the Class A Common Stock on this market, or whether the trading volume of the Class A common stock will be sufficient to provide for an efficient trading market.

In addition, the quotation of our stock in OTC Pink Market is expected to result in a less liquid market available for existing and potential stockholders to trade shares of our Class A common stock, which could further depress the trading price of our Class A common stock, and could have a long-term adverse impact on our ability to raise capital in the future. There can be no assurance that we will be successful in our appeal of the NYSE Regulation’s determination or that our Class A common stock will be listed on a national securities exchange or a national quotation service in the future. In addition, our potential delisting from the NYSE may decrease securities analysts’ coverage of us or diminish investor, supplier and employee confidence.

If shares of our Class A common stock become subject to the penny stock rules, it would become more difficult to trade them.

The SEC has adopted regulations that generally define a “penny stock” to be an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to specific exemptions, including an exemption for any securities listed on a national securities exchange. The rules impose additional sales practice requirements on broker-dealers for transactions involving “penny stock”, with some exceptions. If shares of our Class A common stock are determined to be “penny stock”, broker-dealers may find it more difficult to trade such securities and investors may find it more difficult to acquire or dispose of such securities.