BRC Inc.
For the period ended Sep 30, 2026. Filed Nov 2, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 2, 2026
BRCC$9.66-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-03.
0001891101-26-000039
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-02.
0001891101-26-000049
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 82 previous paragraphs and 89 current paragraphs.
39 unchanged; 37 reworded; 13 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
Business Optimization Plans
Current report
During the third quarter of 2026, management committed to Project Core, a multi-year strategic initiative intended to strengthen our core coffee business, improve profitability, simplify our operations and reduce the capital intensity of our business. As part of Project Core, we plan to close 12 company-operated Outposts by the end of the first quarter of 2027, and during the third quarter of 2026 we modified leases for eight operating locations to substantially shorten their remaining terms. In the third quarter, we recognized $12.0 million of related costs, consisting of $11.7 million of non-cash impairment charges and $3.5 million of lease modification fees, partially offset by a $3.2 million gain on lease modifications. The lease modification fees which have not yet been paid are included in operating lease liabilities as of September 30, 2026 and are expected to be paid over the next twelve months using cash on hand and borrowings under our ABL Facility. We are not able to reasonably estimate the total costs of Project Core because the remaining actions have not yet been finalized. We expect the Outpost closures to reduce Outpost channel revenue and related operating costs.
Current report
Assets Held for Sale
Current report
On October 29, 2026, subsequent to the end of the third quarter of 2026, we signed an agreement to sell the Manchester Plant to Cascade Coffee, LLC, a longstanding manufacturing partner, for $17.0 million, consisting of $10.0 million in cash and a $7.0 million note receivable. $8.6 million of the cash proceeds will be used to repay the term loan in accordance with our credit agreement. The assets associated with our Manchester facility have been reported as assets held for sale at September 30, 2026.
Current report
Reverse Stock Split
Current report
On August 21, 2026, we effected a 1-for-10 reverse stock split of our Class A common stock and Class B common stock. The par value of both the Class A common stock and Class B common stock remains $0.0001 per share. The Reverse Stock Split did not reduce the number of shares of capital stock we are authorized to issue. Proportionate adjustments were made to the number of shares underlying our outstanding equity-based awards, the number of shares available for issuance under our equity compensation plans and the exercise prices, stock-price goals and other per-share terms applicable to those awards, in accordance with the applicable plans and award agreements. All share and per-share amounts presented in these consolidated financial statements have been retroactively adjusted to reflect the Reverse Stock Split for all periods presented.
Current report
Our Ability to Execute Project Core
Current report
Our ability to successfully execute Project Core, a multi-year initiative to strengthen our core coffee business, improve profitability, simplify our operations and reduce the capital intensity of our business, will be an important factor in our future performance (see “Recent Developments”). Its success will depend on our ability to grow our core coffee business across retail and digital channels, prioritize higher-margin products and channels, improve operating efficiency, and simplify or exit non-core operations. These initiatives may result in additional costs or operational disruption, and we may not realize the anticipated benefits within the expected time frame or at all.
Current report
Net revenue for the three months ended September 30, 2026 increased $7.3 million, or 7%, to $108.0 million as compared to $100.7 million for the corresponding period in 2025.
Current report
General and administrative expenses for the three months ended September 30, 2026 decreased $0.4 million, or 3%, to $12.6 million as compared to $12.9 million for the corresponding period in 2025. The decrease was primarily driven by lower depreciation and amortization expense, outside services, software costs and legal fees, partially offset by costs associated with the modification of Outpost leases in connection with Project Core. As a percentage of revenue, general and administrative expense decreased to 11.7% for the three months ended September 30, 2026 from 12.9% for the corresponding period in 2025.
Current report
Other operating expense, net for the three months ended September 30, 2026 increased approximately $8.7 million, or 1,475%, to $9.3 million as compared to $0.6 million for the corresponding period in 2025. The increase was primarily due to the impairment of certain Outpost locations during the third quarter of 2026 as part of Project Core as well as a legal contingency accrual and a $0.4 million loss on the divestiture of a non-core brand, partially offset by gains on the modification of leases for Outpost locations as part of the initiation of Project Core.
Current report
Net revenue for the nine months ended September 30, 2026 increased $38.8 million, or 14%, to $324.3 million as compared to $285.5 million for the corresponding period in 2025.
Current report
Other operating expense, net for the nine months ended September 30, 2026 increased approximately $3.0 million, or 45%, to $9.8 million as compared to $6.7 million for the corresponding period in 2025. The increase was primarily due to the impairments and lease modifications related to certain Outpost locations during the third quarter of 2026 as a result of the initiation of Project Core.
Removed paragraphs (6)
Previous report
Operational Improvement Plan
Previous report
Net revenue for the three months ended June 30, 2026 increased $12.2 million, or 13%, to $107.0 million as compared to $94.8 million for the corresponding period in 2025.
Previous report
General and administrative expenses for the three months ended June 30, 2026 decreased $5.0 million, or 35%, to $9.3 million as compared to $14.3 million for the corresponding period in 2025. The decrease was primarily attributable to lower legal fees, lower consulting and professional fees, and reduced depreciation and amortization expense as certain assets became fully depreciated, reflecting actions taken to simplify and rationalize the Company's cost structure. As a percentage of revenue, general and administrative expense decreased to 8.7% for the three months ended June 30, 2026 from 15.1% for the corresponding period in 2025.
Previous report
Other operating expense, net for the three months ended June 30, 2026 decreased approximately $4.8 million, or 98%, to $0.1 million as compared to $4.9 million for the corresponding period in 2025. The decrease was primarily due to the absence of legal contingency charges as compared to the corresponding period of 2025.
Previous report
Net revenue for the six months ended June 30, 2026 increased $31.4 million, or 17%, to $216.2 million as compared to $184.8 million for the corresponding period in 2025.
Previous report
Other operating expense, net for the six months ended June 30, 2026 decreased approximately $5.7 million, or 92%, to $0.5 million as compared to $6.2 million for the corresponding period in 2025. The decrease was primarily related to the absence of legal contingency charges recorded in the corresponding period in 2025, as well as a prior-year loss on the disposal of terminated Outpost sites which declined significantly in the current period.
Reworded paragraphs (37)
Previous wording
The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the annual audited consolidated financial statements, notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), contained in our Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Form 10-K"). In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties, and assumptions that could cause the Company's actual results to differ materially from management’s expectations. When used in this report, the terms “we,” “us,” “our,” “BRCC,” “Black Rifle Coffee,” “Black Rifle Coffee Company,” and the “Company” mean BRC Inc. and its consolidated subsidiaries, collectively, unless the context requires otherwise.
Current wording
The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited consolidated financial statements, notes, and Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), contained in our Annual Report on Form 10-K for the year ended December 31, 2025 (the "2025 Form 10-K"). In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties, and assumptions that could cause the Company's actual results to differ materially from management’s expectations. When used in this report, the terms “we,” “us,” “our,” “BRCC,” “Black Rifle Coffee,” “Black Rifle Coffee Company,” and the “Company” mean BRC Inc. and its consolidated subsidiaries, collectively, unless the context requires otherwise.
Previous wording
•Wholesale channel revenue continues to increase as we add new customers and expand our shelf presence in the Food, Drug, and Mass ("FDM") market. We expect continued revenue growth in this channel as we invest to increase brand awareness, efficient promotional activity at-shelf, new product launches, and expanded distribution in the FDM market.
Current wording
•Wholesale channel revenue continues to increase as we add new customers and expand our shelf presence in the Food, Drug, and Mass ("FDM") market. We expect continued revenue growth in this channel as we invest in increasing brand awareness, executing effective in-store promotions, launching new products, and expanding distribution in the FDM market.
Previous wording
•Outpost channel revenue is stabilizing as we focus on improving transaction volumes and average order values through customer retention programs and tailored product offerings. In 2026, we expect consistent performance in this channel as we reallocate investments to other channels while seeking to improve profitability through operational and strategic changes, which may include the closure of underperforming Outposts.
Current wording
•Outpost channel revenue remains under pressure as we focus on improving transaction volumes and average order values through customer retention programs and tailored product offerings. In 2026, we are focused on improving profitability in this channel as we reallocate investment to other channels and implement operational and strategic changes, including the planned closure of underperforming Outposts.
Previous wording
During the second quarter of 2025, we implemented the Operational Improvement Plan to reduce costs and improve the efficiency of certain company-wide functions. This plan was extended in the third quarter of 2025 as a result of the relocation of our corporate headquarters and a change in our third-party logistics provider. The cost of this plan was approximately $6.8 million consisting of severance and transition costs, substantially all of which have been incurred as of June 30, 2026. We estimate that the costs savings as a result of this plan will exceed $12.2 million on an annualized run rate basis. As of June 30, 2026, we have realized approximately $10.4 million of these savings.
Current wording
During the second quarter of 2025, we implemented the Operational Improvement Plan to reduce costs and improve the efficiency of certain company-wide functions. This plan was extended in the third quarter of 2025 as a result of the relocation of our corporate headquarters and a change in our third-party logistics provider. The cost of this plan was approximately $7.0 million consisting of severance and transition costs, substantially all of which have been incurred as of September 30, 2026. We estimate that the costs savings as a result of this plan will exceed $12.7 million on an annualized run rate basis. As of September 30, 2026, we have realized approximately $11.7 million of these savings.
Previous wording
We continue to expand our customer base through our Wholesale channel, with our products now available in a growing number of physical retail locations. Wholesale customers include large national retailers, regional retailers, distributors, and dealers, reflecting increased market presence and distribution reach.
Current wording
We continue to expand our customer base through our Wholesale channel, with our products now available in a growing number of physical retail locations. Wholesale customers include large national retailers, regional retailers, distributors, and dealers, reflecting our expanding market presence and distribution.
Previous wording
We believe that consistently acquiring and retaining customers at a reasonable cost will be a key driver of our future performance. We continue to build brand awareness and reach new consumers by investing in existing and new channels and markets. Our capabilities in digital marketing and consumer engagement provide a competitive advantage in attracting, converting, and retaining our consumers. We remain focused on measuring and optimizing marketing performance to ensure that our advertising spend is efficient, while managing customer acquisition costs and maximizing returns on marketing investments.
Current wording
We believe that consistently acquiring and retaining customers at a reasonable cost will be a key driver of our future performance. We continue to build brand awareness and reach new consumers by investing in existing and new channels and markets. Our capabilities in digital marketing and consumer engagement provide a competitive advantage in attracting, converting, and retaining our consumers. We remain focused on measuring and optimizing marketing performance to improve the efficiency of our advertising spend, while managing customer acquisition costs and seeking to maximize returns on marketing investments.
Previous wording
We gain substantial economic value from repeat users of our products who consistently re-order our products. The pace of our growth rate may be affected by the repeat purchase behavior among our existing and newly acquired customers.
Current wording
We derive substantial economic value from repeat customers who consistently re-order our products. Our growth rate may be affected by repeat purchase behavior among our existing and newly acquired customers.
Previous wording
Our goal is to continue to expand our product line over time to increase our growth opportunities and reduce product-specific risks through diversification into multiple products intended for regular consumer use. Our pace of growth will be partially affected by the timing and scale of new product launches. We believe that it is important to our business to continue to innovate with new products and flavors.
Current wording
Our goal is to develop and refine our product portfolio, prioritizing innovation in our core coffee business and selected adjacent products that support profitable growth. Our pace of growth will be partially affected by the timing and scale of new product launches. We believe that it is important to our business to continue to innovate with new products and flavors.
Previous wording
Our ability to grow and meet future demand will be affected by our ability to properly plan for and source inventory from a variety of suppliers and co-manufacturers located inside and outside the United States. The majority of our green coffee beans come from Colombia, Brazil, and Nicaragua, and since 2020, we have also sourced green coffee beans from more than ten additional countries in Latin America, Africa, and Asia to diversify our supply chain and offer our customers specialty and limited-time-only roasts. Quality control is a critical component of our manufacturing and supply chain operations. All of our bagged coffee is roasted in the United States. Our licensed, Coffee Quality Institute-certified grader and former Green Beret, oversees cupping, grading, scoring, and sourcing of our coffees. We also must effectively manage our co-manufacturers and suppliers.
Current wording
Our ability to grow and meet future demand will depend in part on our ability to properly plan for and source inventory from a variety of suppliers and co-manufacturers located inside and outside the United States. The majority of our green coffee beans come from Colombia, Brazil, and Nicaragua, and since 2020, we have also sourced green coffee beans from more than ten additional countries in Latin America, Africa, and Asia to diversify our supply chain and offer our customers specialty and limited-time-only roasts. Quality control is a critical component of our manufacturing and supply chain operations. All of our bagged coffee is roasted in the United States. Our Coffee Quality Institute-certified grader and former Green Beret oversees cupping, grading, scoring, and sourcing of our coffees. Our performance also depends on effectively managing our relationships with co-manufacturers and suppliers.
Previous wording
We sell our products both directly and indirectly to our customers through a broad set of physical and online platforms. Our revenue, net reflects the impact of product returns as well as discounts and fees for certain sales programs, trade spend, promotions, and loyalty rewards.
Current wording
We sell our products both directly and indirectly to our customers through a broad set of physical and online platforms. Our revenue, net reflects the impact of product returns as well as discounts and fees associated with certain sales programs, trade spending, promotions, and loyalty rewards.
Previous wording
Cost of goods sold primarily includes raw material costs, labor costs directly related to producing our products including wages and benefits, shipping costs, and other overhead costs related to certain aspects of production, warehousing, fulfillment, shipping, and credit card fees.
Current wording
Cost of goods sold primarily includes raw material costs, labor costs directly related to producing our products, including wages and benefits, shipping costs, and other overhead costs related to the production, warehousing, fulfillment, shipping, and credit card fees.
Previous wording
This discussion and analysis pertains to comparisons of material changes on the consolidated financial statements for three and six months ended June 30, 2026 and 2025.
Current wording
This discussion and analysis pertains to comparisons of material changes on the consolidated financial statements for the three and nine months ended September 30, 2026 and 2025.
Previous wording
(1) Gross margin is calculated as gross profit as percentage of revenue, net.
Current wording
(1) Gross margin is calculated as gross profit as a percentage of revenue, net.
Previous wording
The following table summarizes net sales by channel for the periods indicated (dollars in thousands, unaudited):
Current wording
The following table summarizes net revenue by channel for the periods indicated (dollars in thousands, unaudited):
Previous wording
Net revenue for our Wholesale channel for the six months ended June 30, 2026, increased $27.2 million, or 23%, to $145.3 million as compared to $118.1 million for the corresponding period in 2025. The increase was primarily driven by expanded packaged coffee distribution, SKU expansion at FDM retailers, and pricing.
Current wording
Net revenue for our Wholesale channel for the three months ended September 30, 2026, increased $5.4 million, or 8%, to $72.5 million as compared to $67.0 million for the corresponding period in 2025. The increase was primarily driven by expanded packaged coffee distribution, including entry into the dollar channel and continued gains in grocery, increased SKU assortments at FDM retailers, and pricing, partially offset by increased trade investment and lower ready-to-drink sales.
Previous wording
Net revenue for our DTC channel for the three months ended June 30, 2026 increased $3.8 million, or 14%, to $31.4 million as compared to $27.6 million for the corresponding period in 2025. The increase was primarily driven by growth at third-party digital marketplaces, which was partially offset by declines in subscription revenue.
Current wording
Net revenue for our DTC channel for the three months ended September 30, 2026 increased $2.4 million, or 8%, to $30.2 million as compared to $27.8 million for the corresponding period in 2025. The increase was primarily driven by growth through third-party digital marketplaces, partially offset by a decline in subscription revenue and the divestiture of a non-core brand during the quarter.
Previous wording
Net revenue for our Outpost channel for the three months ended June 30, 2026, decreased $0.9 million, or 15%, to $5.0 million as compared to $5.9 million for the corresponding period in 2025. The decrease was primarily driven by a decline in transactions and average order value at Company-operated Outposts.
Current wording
Net revenue for our Outpost channel for the three months ended September 30, 2026, decreased $0.5 million, or 8%, to $5.4 million as compared to $5.8 million for the corresponding period in 2025. The decrease was primarily driven by lower sales at Company-operated Outposts, partially offset by growth in franchise and non-traditional locations.
Previous wording
Cost of goods sold for the three months ended June 30, 2026 increased $7.9 million, or 13%, to $70.5 million as compared to $62.7 million for the corresponding period in 2025. Gross margin increased modestly to 34.1% for the three months ended June 30, 2026 compared to 33.9% for the corresponding period in 2025. The improvement in gross margin was primarily attributable to pricing actions, lower shipping and fulfillment costs driven by productivity gains, and changes in the reserve for excess and obsolete inventory compared to the prior year, which was partially offset by higher green coffee input costs and tariffs, as well as higher third-party e-commerce marketplace fees, which increased in line with the revenue growth in these channels.
Current wording
Cost of goods sold for the three months ended September 30, 2026 increased $4.4 million, or 7%, to $67.9 million as compared to $63.6 million for the corresponding period in 2025. Gross margin increased to 37.1% for the three months ended September 30, 2026 compared to 36.9% for the corresponding period in 2025. The improvement in gross margin was primarily attributable to approximately $3.5 million of refunds of previously paid tariffs, pricing actions that offset green coffee inflation, and productivity gains, partially offset by increased trade investment, higher third-party e-commerce marketplace fees associated with growth in those channels, and higher freight and fuel costs.
Previous wording
Marketing and advertising expenses for the three months ended June 30, 2026 increased $0.8 million, or 8%, to $10.5 million as compared to $9.8 million for the corresponding period in 2025. The increase was primarily driven by higher spending on content production and media, agency, and partnerships, which was partially offset by lower ad placement and in-store marketing costs. As a percentage of revenue, marketing and advertising expense decreased to 9.8% for the three months ended June 30, 2026 from 10.3% for the corresponding period in 2025, as revenue growth outpaced the increase in marketing investment.
Current wording
Marketing and advertising expenses for the three months ended September 30, 2026 increased $1.6 million, or 18%, to $10.3 million as compared to $8.7 million for the corresponding period in 2025. The increase was primarily driven by higher spending on content production and media, influencer programs, agency support and ad placement, partially offset by lower shopper marketing and event costs. As a percentage of revenue, marketing and advertising expense increased to 9.5% for the three months ended September 30, 2026 from 8.6% for the corresponding period in 2025, as revenue growth lagged behind the increase in marketing investment.
Previous wording
Salaries, wages, and benefits expenses for the three months ended June 30, 2026 decreased $0.3 million, or 2%, to $15.5 million as compared to $15.8 million for the corresponding period in 2025. This decrease was primarily attributable to lower severance costs and reduced payroll from the lower headcount as a result of our Operational Improvement Plan, partly offset by higher bonus and stock-based compensation expense in the current period. As a percentage of revenue, salaries, wages, and benefits expense decreased to 14.5% for the three months ended June 30, 2026 from 16.7% for the corresponding period in 2025, reflecting both lower spend and revenue growth.
Current wording
Salaries, wages, and benefits expenses for the three months ended September 30, 2026 increased $1.1 million, or 8%, to $15.5 million as compared to $14.4 million for the corresponding period in 2025. This increase was primarily attributable to higher stock-based compensation, employee benefit costs and base salaries, partially offset by lower severance expense. As a percentage of revenue, salaries, wages, and benefits expense remained flat at 14.3% for the three months ended September 30, 2026 and 2025.
Previous wording
Interest expense, net for the three months ended June 30, 2026 decreased approximately $0.6 million, or 32%, to $1.3 million as compared to $1.8 million for the corresponding period in 2025. The decrease was primarily driven by a lower average outstanding balance of the ABL Facility during the second quarter of 2026 compared to the corresponding period in 2025.
Current wording
Interest expense, net for the three months ended September 30, 2026 decreased approximately $0.6 million, or 34%, to $1.1 million as compared to $1.7 million for the corresponding period in 2025. The decrease was primarily driven by a lower average outstanding balance of the ABL Facility during the third quarter of 2026 compared to the corresponding period in 2025.
Previous wording
Comparison of the six months ended June 30, 2026 to the six months ended June 30, 2025
Current wording
Comparison of the nine months ended September 30, 2026 to the nine months ended September 30, 2025
Previous wording
Net revenue for our Wholesale channel for the three months ended June 30, 2026, increased $9.3 million, or 15%, to $70.6 million as compared to $61.3 million for the corresponding period in 2025. The increase was primarily driven by expanded packaged coffee distribution, SKU expansion at FDM retailers, and pricing.
Current wording
Net revenue for our Wholesale channel for the nine months ended September 30, 2026, increased $32.6 million, or 18%, to $217.8 million as compared to $185.1 million for the corresponding period in 2025. The increase was primarily driven by expanded packaged coffee distribution, SKU expansion at FDM retailers, and pricing.
Previous wording
Net revenue for our DTC channel for the six months ended June 30, 2026 increased $5.8 million, or 10%, to $61.1 million as compared to $55.4 million for the corresponding period in 2025. The increase was primarily driven by growth at third-party digital marketplaces, which was partially offset by declines in subscription and non-subscription revenue.
Current wording
Net revenue for our DTC channel for the nine months ended September 30, 2026 increased $8.1 million, or 10%, to $91.3 million as compared to $83.2 million for the corresponding period in 2025. The increase was primarily driven by growth at third-party digital marketplaces, which was partially offset by declines in subscription and non-subscription revenue and the divestiture of a non-core brand.
Previous wording
Net revenue for our Outpost channel for the six months ended June 30, 2026, decreased $1.5 million, or 14%, to $9.8 million as compared to $11.3 million for the corresponding period in 2025. The decrease was primarily driven by a decline in transactions and average order value at Company-operated Outposts.
Current wording
Net revenue for our Outpost channel for the nine months ended September 30, 2026, decreased $2.0 million, or 12%, to $15.2 million as compared to $17.2 million for the corresponding period in 2025. The decrease was primarily driven by lower sales at Company-operated Outposts, partially offset by growth in franchise and non-traditional locations.
Previous wording
Cost of goods sold for the six months ended June 30, 2026 increased $23.5 million, or 20%, to $143.7 million as compared to $120.2 million for the corresponding period in 2025. Gross margin decreased to 34% for the six months ended June 30, 2026 as compared to 35% for the corresponding period in 2025. The decrease in gross margin was primarily attributable to higher costs driven by inflation and tariffs, which was partially offset by pricing actions, productivity gains from the Operational Improvement Plan, and changes in the reserve for excess and obsolete inventory compared to the prior year.
Current wording
Cost of goods sold for the nine months ended September 30, 2026 increased $27.9 million, or 15%, to $211.6 million as compared to $183.7 million for the corresponding period in 2025. Gross margin decreased to 35% for the nine months ended September 30, 2026 as compared to 36% for the corresponding period in 2025. The decrease in gross margin was primarily attributable to higher costs driven by inflation, partially offset by approximately $3.5 million of refunds of previously paid tariffs, pricing actions, and productivity gains from the Operational Improvement Plan.
Previous wording
Marketing and advertising expenses for the six months ended June 30, 2026 decreased $0.4 million, or 2%, to $20.7 million as compared to $21.1 million for the corresponding period in 2025. Marketing and advertising expense also decreased to 9.6% of net revenue for the six months ended June 30, 2026 from 11.4% for the corresponding period in 2025. This decrease was primarily driven by lower spending on ad placement and in-store marketing, which was partially offset by higher content production and media investment.
Current wording
Marketing and advertising expenses for the nine months ended September 30, 2026 increased $1.2 million, or 4%, to $31.0 million as compared to $29.8 million for the corresponding period in 2025. This increase was primarily driven by higher content production and media, partnership and event spending, partially offset by lower spending on ad placement and shopper marketing. Marketing and advertising expense decreased to 9.6% of net revenue for the nine months ended September 30, 2026 from 10.4% for the corresponding period in 2025.
Previous wording
Salaries, wages, and benefits expenses for the six months ended June 30, 2026 increased $0.2 million, or 1%, to $29.6 million as compared to $29.4 million for the corresponding period in 2025. As a percentage of revenue, salaries, wages, and benefits expense decreased to 13.7% from 15.9% for the corresponding period in 2025. This increase was primarily attributable to higher bonus and stock-based compensation expense in the current period, largely offset by lower payroll costs from reduced headcount as a result of our Operational Improvement Plan and lower severance costs compared to the corresponding period in 2025.
Current wording
Salaries, wages, and benefits expenses for the nine months ended September 30, 2026 increased $1.3 million, or 3%, to $45.0 million as compared to $43.7 million for the corresponding period in 2025. This increase was primarily attributable to higher bonus and stock-based compensation expense in the current period, largely offset by lower payroll costs from reduced headcount as a result of our Operational Improvement Plan and lower severance costs compared to the corresponding period in 2025. As a percentage of revenue, salaries, wages, and benefits expense decreased to 13.9% for the nine months ended September 30, 2026 from 15.3% for the corresponding period in 2025.
Previous wording
General and administrative expenses for the six months ended June 30, 2026 decreased $6.7 million, or 26%, to $19.4 million as compared to $26.1 million for the corresponding period in 2025. This decrease reflects actions taken to simplify and rationalize the Company's cost structure, including lower legal fees, lower consulting and professional fees, as well as lower depreciation and amortization expense driven by certain assets becoming fully depreciated. As a percentage of revenue, general and administrative expense decreased to 9.0% for the six months ended June 30, 2026 from 14.1% for the corresponding period in 2025.
Current wording
General and administrative expenses for the nine months ended September 30, 2026 decreased $7.1 million, or 18%, to $32.0 million as compared to $39.0 million for the corresponding period in 2025. This decrease reflects actions taken to simplify and rationalize the Company's cost structure, including lower legal fees, lower consulting and professional fees, lower software costs, as well as lower depreciation and amortization expense driven by certain assets becoming fully depreciated, partially offset by the impact of Outpost lease modification fees incurred during the third quarter of 2026 in connection with Project Core. As a percentage of revenue, general and administrative expense decreased to 9.9% for the nine months ended September 30, 2026 from 13.7% for the corresponding period in 2025.
Previous wording
Interest expense, net for the six months ended June 30, 2026 decreased approximately $1.7 million, or 41%, to $2.5 million as compared to $4.2 million for the corresponding period in 2025. The decrease was primarily driven by a lower average outstanding balance of the ABL Facility during the first six months of 2026 compared to the corresponding period in 2025.
Current wording
Interest expense, net for the nine months ended September 30, 2026 decreased approximately $2.3 million, or 39%, to $3.6 million as compared to $5.9 million for the corresponding period in 2025. The decrease was primarily driven by a lower average outstanding balance of the ABL Facility during the first nine months of 2026 compared to the corresponding period in 2025.
Previous wording
Our primary sources of cash are (1) cash on hand, (2) cash provided by operating activities, and (3) net borrowings from our credit facilities. As of June 30, 2026, our cash and cash equivalents were approximately $12.0 million, our working capital was $30.8 million, and under our credit facilities, we had $50.4 million of available borrowings. Our ability to draw from the credit facilities is subject to a borrowing base and other covenants. As of June 30, 2026, we are in compliance with our covenants under the credit facilities, and there are no defaults or events of default. We believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments in the ordinary course of business and under the current market conditions for at least the next twelve months.
Current wording
Our primary sources of cash are (1) cash on hand, (2) cash provided by operating activities, and (3) net borrowings from our credit facilities. As of September 30, 2026, our cash and cash equivalents were approximately $9.2 million, our working capital was $43.6 million, and under our credit facilities, we had $49.9 million of available borrowings. Our ability to draw from the credit facilities is subject to a borrowing base and other covenants. As of September 30, 2026, we are in compliance with our covenants under the credit facilities, and there are no defaults or events of default. We believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments in the ordinary course of business and under the current market conditions for at least the next twelve months.
Previous wording
Net cash provided by operating activities was $12.6 million for the six months ended June 30, 2026, compared to net cash used in operating activities of $7.5 million for the corresponding period in 2025. The total increase of $20.1 million in net cash provided by operating activities was primarily due to increased net income and working capital improvements.
Current wording
Net cash provided by operating activities was $10.4 million for the nine months ended September 30, 2026, compared to net cash used in operating activities of $1.1 million for the corresponding period in 2025. The total increase of $11.5 million in net cash provided by operating activities was primarily due to a lower net loss after adjusting for non-cash items, partially offset by an increase in cash outflows for working capital.
Previous wording
Net cash used in investing activities was $1.1 million for the six months ended June 30, 2026, compared to net cash used in investing activities of $2.1 million for the corresponding period in 2025. The $1.1 million decrease in net cash used in investing activities was primarily due to lower capital expenditures, including reduced investment in our Outpost locations, roasting facilities, and information technology.
Current wording
Net cash used in investing activities was $1.2 million for the nine months ended September 30, 2026, compared to net cash used in investing activities of $2.9 million for the corresponding period in 2025. The $1.7 million decrease in net cash used in investing activities was primarily due to lower capital expenditures and an increase in cash received from the sale of assets.
Previous wording
Net cash used in financing activities was $3.9 million for the six months ended June 30, 2026, compared to net cash provided by financing activities of $7.1 million for the corresponding period in 2025. The $11.0 million decrease in net cash provided by financing activities was driven by $6.5 million of net proceeds from long-term debt, primarily related to draws on our ABL Facility, in the prior year period, compared to net repayments of long-term debt in the current period.
Current wording
Net cash used in financing activities was $4.4 million for the nine months ended September 30, 2026, compared to net cash provided by financing activities of $6.6 million for the corresponding period in 2025. The $11.0 million change was primarily due to $37.4 million of net proceeds from our public equity offering in the prior year period, partially offset by lower net repayments of debt, which were $4.2 million in the current period compared to $31.9 million in the prior year period.
Previous wording
The Company has entered into several manufacturing and purchase agreements to purchase coffee products from third-party suppliers. The minimum purchase amounts are based on quantity and in the aggregate will be approximately $20.9 million for the remainder of 2026; $32.4 million for 2027; $15.1 million for 2028; and $14.9 million for 2029. See Note 8, Commitments and Contingencies to the consolidated financial statements included in Item 1 of Part I of this Quarterly Report for information regarding such manufacturing and purchase agreements.
Current wording
The Company has entered into several manufacturing and purchase agreements to purchase coffee products from third-party suppliers. The minimum purchase amounts are based on quantity and in the aggregate will be approximately $4.9 million for the remainder of 2026; $20.4 million for 2027; $19.7 million for 2028; and $19.4 million for 2029. See Note 8, Commitments and Contingencies to the consolidated financial statements included in Item 1 of Part I of this Quarterly Report for information regarding such manufacturing and purchase agreements.
Previous wording
Liabilities relating to operating leases that have commenced as of June 30, 2026 have been reported on the consolidated balance sheets as "Operating lease liabilities". Payments on leases are expected to be approximately $3.7 million in the next twelve months, and approximately $29.5 million beyond twelve months through 2043.
Current wording
Liabilities relating to operating leases that have commenced as of September 30, 2026 have been reported on the consolidated balance sheets as "Operating lease liabilities". Payments on leases are expected to be approximately $2.5 million in the next twelve months, and approximately $14.6 million beyond twelve months through 2042.
Previous wording
Future capital requirements will vary materially from period to period and will depend on factors such as the addition of roasting capacity and the expansion of our corporate and information technology infrastructure to support changes in the Company. We currently expect to fund our material capital requirements with borrowings from our credit facilities, but we may also seek additional debt or equity financing.
Current wording
Future capital requirements will vary materially from period to period and will depend on factors such as the expansion of our corporate and information technology infrastructure to support changes in the Company. We currently expect to fund our material capital requirements with borrowings from our credit facilities, but we may also seek additional debt or equity financing.