Solo Brands, Inc.

NOTE 17 –Income Taxes

Provision for Income Taxes

Income (loss) before income taxes was as follows (in thousands):

The provision (benefit) for income taxes comprises (in thousands):

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income (loss) before the provision for income taxes. The sources and tax effects of the differences are as follows (dollars in thousands):

(1)The following states represented the majority of the tax effect for this respective line item: Texas, Georgia, and Pennsylvania.

The Company’s effective income tax rates for the years ended December 31, 2025 and 2024 were (2.4)% and 4.7%, respectively. The increase in the amount of income tax expense for the year ended December 31, 2025 when compared to the income tax benefit for the year ended December 31, 2024 was primarily driven by the book losses in the prior year due to the restructuring, contract termination and impairment charges (see Note 3, Restructuring, Contract Termination and Impairment Charges for more information) which the Company was able to recognize prior to the establishment of a valuation allowance, compared to the 2025 losses, which the Company could not recognize.

Deferred Tax Assets and Liabilities

Significant components of the Company’s net non-current deferred tax assets and liabilities are as follows (in thousands):

As of December 31, 2025, the Company has $13.3 million federal net operating losses ("NOLs") and has state NOLs of $2.0 million. The state NOLs will begin to expire in 2038, while the federal NOLs are indefinite lived. As of December 31, 2025, the Company has $0.1 million foreign NOLs. The majority of the NOLs were generated from losses incurred in 2024 and the NOLs were further increased from losses incurred in 2025, of which future realizability of these tax benefits will be subject to limitations on future taxable income and interest.

Due to goodwill and intangible impairments, the difference between the financial reporting basis and tax basis of this investment is a gross deferred tax asset of $77.2 million as of December 31, 2025.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities (including the effect in available carryback and carryforward periods), projected taxable income, and tax-planning strategies in this assessment. In order to fully realize the deferred tax asset, the Company has considered the reversal of its deferred tax liabilities. As of December 31, 2025 and 2024, the Company concluded, based on the weight of all available positive and negative evidence, that all of the Solo Brands, Inc. and Oru’s deferred tax assets are more likely than not to be unrealized resulting in the Company recording a full valuation allowance against the deferred tax of Solo Brands, Inc. and Oru as of December 31, 2025 and 2024.

The changes in the valuation allowance against the deferred tax assets are as follows (in thousands):

The changes in gross unrecognized tax positions are as follows (in thousands):

The Company recognizes interest and penalties, if any, related to unrecognized tax positions in income tax expense (benefit) on the consolidated statements of operations and comprehensive income (loss), which were nominal in any period presented.

Solo Brands, Inc. was formed in June 2021 and did not engage in any operations prior to the Reorganization Transactions. The statute of limitations remains open for tax years beginning in 2021 for Solo Brands, Inc. Additionally, although Holdings is treated as a partnership for U.S. federal and state income tax purposes, it is still required to file an annual U.S. Return of Partnership Income, which is subject to examination by the Internal Revenue Service ("IRS"). The statute of limitations remains open for tax years beginning in 2021 for Holdings.

Pursuant to its election under Section 754 of the Internal Revenue Code (the "Code"), the Company has obtained an increase, and expects to continue to obtain an increase, in its share of the tax basis in the net assets of Holdings when LLC Interests are redeemed or exchanged by the non-controlling interest holders and other qualifying transactions. Refer to Note 16, Equity-Based Compensation for further details on LLC interests that have been redeemed or exchanged. The Company plans to make an election under Section 754 of the Code for each taxable year in which a redemption or exchange of LLC Interests occurs. The Company intends to treat any redemptions and exchanges of LLC Interests by the non-controlling interest holders as direct purchases of LLC Interests for U.S. federal income tax purposes. These increases in tax basis may reduce the amounts that the Company would otherwise pay in the future to various tax authorities. They may also decrease gains (or increase losses) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

On October 27, 2021, the Company entered into a tax receivable agreement with the then-existing non-controlling interest holders (the "Tax Receivable Agreement") that provides for the payment by the Company to the non-controlling interest holders of 85% of the amount of any tax benefits that the Company actually realizes, or in some cases is deemed to realize, as a result of (i) increases in its share of the tax basis in the net assets of Holdings resulting from any redemptions or exchanges of LLC Interests, (ii) tax basis increases attributable to payments made under the Tax Receivable Agreement, and (iii) deductions attributable to imputed interest pursuant to the Tax Receivable Agreement (the "TRA Payments"). The Company expects to benefit from the remaining 15% of any tax benefits that it may actually realize. The TRA Payments are not conditioned upon any continued ownership interest in Holdings or the Company. The rights of each non-controlling interest holder under the Tax Receivable Agreement are assignable to transferees of its LLC Interests.

During the year ended December 31, 2025, there were redemptions of LLC Interests that resulted in a nominal increase in the tax basis of the Company’s investment in Holdings subject to the provisions of the Tax Receivable Agreement. During the year ended December 31, 2025, inclusive of interest, no payments were made to the members of Holdings pursuant to the Tax Receivable Agreement. As of December 31, 2025, there wereno payments due under the Tax Receivable Agreement.

In December 2025, the Company executed a Merger Agreement (as defined below) that became effective on January 1, 2026. The effects of this on income tax Merger Agreement are further detailed in Note 25, Subsequent Events.