BRC Inc.

3. Supplemental Balance Sheet Information

Accounts Receivable, Net

Allowances

The allowance for sales returns and charge backs was $342 and $756 as of June 30, 2026 and December 31, 2025, respectively, and included in "Accounts receivable, net" on the consolidated balance sheets.

The allowance for credit losses was $132 and $350 as of June 30, 2026 and December 31, 2025, respectively.

Concentrations of Credit Risk

Our assets that are potentially subject to concentrations of credit risk are cash and accounts receivable. Cash balances are maintained in financial institutions, which at times exceed federally insured limits. We monitor the financial condition of the financial institutions in which our accounts are maintained and have not experienced any losses in such accounts. Our accounts receivable are spread over a number of customers, of which one customer and its affiliate accounted for 33% and 37% of total outstanding receivables as of June 30, 2026 and December 31, 2025, respectively. We perform ongoing credit evaluations as to the financial condition of our customers and creditors with respect to trade accounts.

Inventories, Net

Inventories, net, consists of the following (dollars in thousands):

The reserve for excess and obsolete inventory was $1,132 and $2,899 as of June 30, 2026 and December 31, 2025, respectively.

Other Assets

As of June 30, 2026 and December 31, 2025, we reported $47,531 and $50,312 of other assets on the consolidated balance sheets, respectively, related to prepaid advertising credits received in exchange for inventory. We measured the non-cash consideration of the prepaid advertising credits based on the standalone selling price of the finished goods inventory at the time of transfer to the counterparty. Based upon the period over which we expect to use these advertising credits, $5,880 of these credits were current as of both June 30, 2026 and December 31, 2025, and have been recorded as "Prepaid expenses and other current assets" on the consolidated balance sheets, and $41,651 and $44,432 were non-current as of June 30, 2026 and December 31, 2025, respectively, and have been recorded as "Non-current prepaid marketing expenses" on the consolidated balance sheets.

Prepaid advertising credits are recorded upon revenue recognition, coinciding with the transfer of the inventory. The revenue recognized related to shipments of inventory in exchange for prepaid advertising credits was insignificant for both the three and six months ended June 30, 2026 and $406 for both the three and six months ended June 30, 2025 on the consolidated statements of operations.

The following table summarizes the utilization of prepaid advertising credits (dollars in thousands, unaudited):

Property, Plant, and Equipment, Net

Property, plant, and equipment, net consists of the following (dollars in thousands):

The following table summarizes the depreciation expense for internal use software recognized in general and administrative expense within the consolidated statements of operations (dollars in thousands, unaudited):

Accrued Liabilities

Accrued liabilities consists of the following (dollars in thousands):

Deferred purchase incentive

This purchase incentive was received in conjunction with a co-manufacturing agreement and will be recognized as a reduction of cost of sales based on units sold through 2029. $2,506 of the deferred purchase incentive is classified as current as of June 30, 2026 based upon the amount expected to be recognized in the next twelve months, while $5,944 is classified as long-term and is recorded in “Other non-current liabilities” on our consolidated balance sheets as of June 30, 2026.

Deferred Revenue and Gift Card Liability

The following table provides information about deferred revenue, gift cards, and the BRCC Loyalty Points rewards program (the "Loyalty Program"), including significant changes in deferred revenue balances for the below designated periods (dollars in thousands, unaudited):