Solo Brands, Inc.

Current report

Our financial condition previously raised and may in the future raise substantial doubt as to our ability to continue as a going concern.

Current report

As of the filing date of our Annual Report on Form 10-K for the year ended December 31, 2024 and Quarterly Report on Form 10-Q for the three months ended March 31, 2025, we concluded that substantial doubt existed about our ability to continue as a going concern for one year following the issuance of each of the financial statements as a result of our net losses, accumulated deficit and our liquidity position, as well as our noncompliance with certain financial covenants under our Credit Agreement as of March 31, 2025 and the potential consequences thereof. On June 13, 2025, we entered into the 2025 Refinancing Amendment, which effected a reallocation and restructuring of all revolving loans and term loans then outstanding as of such date and the waiver of certain then existing events of default. See Note 11, Debt, Net for more information about the 2025 Refinancing Amendment.

Current report

The ultimate effect of the reverse stock split and the removal of the trading suspension of our Class A common stock on the NYSE on the market price and liquidity of our Class A common stock cannot be predicted with any certainty.

Current report

While the reduction in the number of outstanding shares of Class A common stock as a result of the reverse stock split increased the market price of our Class A common stock immediately following the reverse stock split, we cannot assure you such increase will be permanent or sustained. The market price of our Class A common stock depends on multiple factors, many of which are unrelated to the number of shares outstanding, including our business and financial performance, general market conditions and prospects for future success, any of which could have a counteracting effect to the reverse stock split on the per share price.

Current report

In addition, the reverse stock split reduced the total number of outstanding shares of Class A common stock, which leads to reduced trading volumes for our Class A common stock and may lead to a more volatile trading price. The reverse stock split also increased the number of stockholders who own “odd lots” of less than 100 shares of Class A common stock. A purchase or sale of less than 100 shares of common stock (an “odd lot” transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers. Therefore, those stockholders who own fewer than 100 shares of Class A common stock following the reverse stock split may be required to pay higher transaction costs if they sell their Class A common stock.

Current report

Finally, a decline in the per share price of our Class A common stock and a decline in our overall market capitalization may be greater following the reverse stock split than would have been in the absence of the same. Any reduction in our market capitalization may be magnified as a result of the smaller number of total shares of Class A common stock outstanding following the reverse stock split.

Current report

If in the future, the trading price of our Class A common stock is lower than the minimum bid price pursuant to NYSE rules, pursuant to Rule 802.01 of the NYSE Listed Company Manual, we will be restricted from implementing a further reverse stock split in order to regain compliance with such standards for one year from the effective date of the reverse stock split. As a result, we may not be able to remediate any future non-compliance and our Class A common stock could be delisted from NYSE.

Current report

Sales of a substantial number of shares of our Class A common stock in the public market could cause our stock price to fall.

Current report

Sales of a substantial number of shares of our Class A common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our Class A common stock. In addition, shares of Class A common stock that are either subject to outstanding options or reserved for future issuance under our employee benefit plans will become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules, Rule 144 and Rule 701 under the Securities Act of 1933, as amended (“Securities Act”).

Current report

In June 2025, we entered into a subscription agreement with certain lenders in connection with our entry into the 2025 Refinancing Amendment, pursuant to which we issued an aggregate of 121,998 shares of our Class A common stock (giving effect to the reverse stock split). Even though these shares are “restricted securities” within the meaning of Rule 144 and may be resold only pursuant to an effective registration statement or pursuant to the requirements of Rule 144 or other applicable exemption from registration under the Securities Act and as required under applicable state securities laws, once those requirements are satisfied, these shares could be sold in the market at any time. If these additional shares of Class A common stock are resold, or if it is perceived that they will be resold, the trading price of our Class A common stock could decline.

Current report

In addition, the issuance of these shares of Class A common stock have diluted, and any shares of Class A common stock we may in the future issue may dilute, the percentage ownership held by holders of our Class A common stock.

Previous report

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.

Previous report

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.

Previous report

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.

Previous report

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.

Previous report

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.

Previous report

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.

Previous report

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

Previous report

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.

Previous report — wording carried elsewhere

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.