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  Filed Pursuant to Rule 424(b)(3)
 Registration No. 333-260942
PROXY STATEMENT FOR
SPECIAL MEETING OF STOCKHOLDERS OF
SILVERBOX ENGAGED MERGER CORP I
(A DELAWARE CORPORATION)
PROSPECTUS FOR
40,725,250 SHARES OF CLASS A COMMON STOCK
17,766,667 WARRANTS TO PURCHASE SHARES OF CLASS A COMMON STOCK AND
17,766,667 SHARES OF CLASS A COMMON STOCK UNDERLYING WARRANTS
OF BRC INC.
(A DELAWARE CORPORATION, WHICH WILL BE CONVERTED INTO A DELAWARE PUBLIC
BENEFIT CORPORATION UPON CONSUMMATION OF THE BUSINESS COMBINATION AS
DESCRIBED HEREIN)
Dear SilverBox Engaged Merger Corp I Stockholders:
On November 2, 2021, SilverBox Engaged Merger Corp I, a Delaware corporation (“SilverBox, “we,” “our” or “us”), BRC Inc., a Delaware corporation and wholly owned subsidiary of SilverBox (“PubCo”), SBEA Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of PubCo (“Merger Sub 1”), BRCC Blocker Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of SilverBox (“Merger Sub 2,” and together with Merger Sub 1, “Merger Subs”), Authentic Brands LLC, a Delaware limited liability company (“Authentic Brands”) and the parent company of Black Rifle Coffee Company LLC, a Delaware limited liability company (“BRCC”), and Grand Opal Investment Holdings, Inc., a Delaware corporation and holder of equity interests in Authentic Brands (“Blocker”), entered into a business combination agreement (as it may be amended or restated from time to time, the “Business Combination Agreement”), pursuant to which SilverBox agreed to combine with Authentic Brands in a series of transactions that will result in PubCo becoming a publicly-traded company on the New York Stock Exchange (“NYSE”) and controlling Authentic Brands in an “Up-C” structure (collectively, the “Business Combination”).
Pursuant to the Business Combination, among other things:
(i)
SilverBox will merge with and into Merger Sub 1, with Merger Sub 1 surviving the SilverBox Merger as a direct wholly owned subsidiary of PubCo, and (x) each share of SilverBox’s Class A common stock, par value $0.0001 per share (“SilverBox Class A Common Stock”), and Class C common stock, par value $0.0001 per share (“SilverBox Class C Common Stock”), outstanding immediately prior to the effectiveness of the SilverBox Merger being converted into the right to receive one share of PubCo’s Class A common stock, par value $0.0001 per share (“PubCo Class A Common Stock”), or an aggregate of 34,500,000 shares of PubCo Class A Common Stock with an aggregate value of $345,000,000 (at a deemed value of $10.00 per share and assuming no redemptions of SilverBox Class A Common Stock), (y) each share of SilverBox’s Class B common stock, par value $0.0001 per share (“SilverBox Class B Common Stock,” and, collectively with the SilverBox Class A Common Stock, the “SilverBox Common Stock”), outstanding immediately prior to the effectiveness of the SilverBox Merger being converted into the right to receive a combination of shares of PubCo Class A Common Stock, or an aggregate of 5,792,500 shares of PubCo Class A Common Stock with an aggregate value of $57,925,000 (at a deemed value of $10.00 per share and assuming no redemptions of SilverBox Class A Common Stock and giving effect to the forfeiture and donation of shares), and PubCo’s Class C common stock, par value $0.0001 per share (“PubCo Class C Common Stock”), or an aggregate of 1,241,250 shares of PubCo Class C Common Stock with an aggregate value of $12,412,500 (at a deemed value of $10.00 per share), which PubCo Class C Common Stock will have no voting rights and will be restricted and convertible automatically into shares of PubCo Class A Common Stock upon the occurrence of certain events, and (z) each warrant of SilverBox outstanding immediately prior to the effectiveness of the SilverBox Merger being converted into the right to receive one warrant of PubCo (the “PubCo Warrants”), with PubCo assuming SilverBox’s obligations under the existing warrant agreement;
 

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(ii)
immediately following the SilverBox Merger, Merger Sub 2 will merge with and into Blocker, with Blocker surviving the Blocker Merger as a direct wholly owned subsidiary of Merger Sub 1 and an indirect wholly owned subsidiary of PubCo and the aggregate shares of common stock of Blocker outstanding immediately prior to the effectiveness of the Blocker Merger being converted into the right to receive a combination of (1) shares of PubCo Class A Common Stock, or an aggregate of 967,559 shares of PubCo Class A Common stock with an aggregate value of $9,675,590 (at a deemed value of $10.00 per share), (2) shares of PubCo Class C Common Stock, or an aggregate of 148,199 shares of PubCo Class C Common Stock with an aggregate value of $1,481,990 (at a deemed value of $10.00 per share), and (3) cash; and
(iii)
PubCo will issue to certain existing members of Authentic Brands (the “Continuing Unitholders”) shares of PubCo’s Class B common stock, par value $0.0001 per share (“PubCo Class B Common Stock”), or an aggregate of 129,608,491 shares of PubCo Class B Common Stock with an aggregate value of $1,296,084,910 (at a deemed value of $10.00 per share), which PubCo Class B Common Stock will have no economic rights but will entitle the holders thereof to vote on all matters on which stockholders of PubCo are entitled to vote generally, equal to the number of Company Common Units held by such members in Authentic Brands. The PubCo Class B Common Stock to be issued to the Continuing Unitholders is not being registered under the Securities Act of 1933, as amended (the “Securities Act”), and will be issued in reliance upon the exemption provided by Rule 506(b) of Regulation D promulgated under the Securities Act.
As a result of the Business Combination, among other things:
(1)
PubCo will hold limited liability company interests in Authentic Brands (Company Units) and will be the managing member of Authentic Brands; and
(2)
the Continuing Unitholders will hold (i) non-voting Company Units (Company Common Units) that are exchangeable on a one-for-one basis for shares of PubCo Class A Common Stock or cash (subject to surrendering a corresponding number of shares of PubCo Class B Common Stock for cancellation), (ii) restricted Company Units that will be subject to vesting, forfeiture and certain other conditions as specified in the limited liability company agreement of Authentic Brands (“Company Restricted Units”), and (iii) a number of shares of PubCo Class B Common Stock corresponding to the number of Company Common Units held.
Concurrently with the completion of the Business Combination, PubCo will enter into the Tax Receivable Agreement, pursuant to which PubCo will be required to pay to the Continuing Unitholders 85% of the tax savings that PubCo realizes as a result of increases in tax basis in Authentic Brands’ assets resulting from the redemption of existing preferred units of Authentic Brands (other than those held by Blocker) and a portion of the Company Common Units for the consideration paid pursuant to the Business Combination Agreement, the future exchange of Company Common Units for shares of PubCo Class A Common Stock (or cash) pursuant to the LLC Agreement and certain pre-existing tax attributes of the Blocker, as well as certain other tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. The Tax Receivable Agreement confers significant economic benefits to the Continuing Unitholders as payments to the Continuing Unitholders may be substantial. Further, any such payments will reduce cash that would otherwise have been available to PubCo for other uses, some of which could benefit the PubCo stockholders. For more information on the Tax Receivable Agreement, please see the section entitled “Certain Agreements Related to the Business Combination — Tax Receivable Agreement.”
Following consummation of the Business Combination, pursuant to the Investor Rights Agreement (as defined below), Evan Hafer, BRCC’s Founder, will beneficially own approximately 58.3% of the combined voting power of PubCo’s Class A Common Stock and Class B Common Stock, assuming no redemptions by SilverBox’s Public Stockholders. As a result, PubCo will be a “controlled company” as defined in the corporate governance rules of the NYSE.
Concurrently with the execution of the Business Combination Agreement, SilverBox entered into subscription and backstop agreements with various accredited investors (collectively, the “PIPE Investors”), including affiliates of SilverBox Engaged Sponsor LLC, a Delaware limited liability company (the “Sponsor”), pursuant to which such investors agreed to purchase (i) an aggregate of 10,000,000 shares of SilverBox Class C Common Stock (which will be issued and purchased prior to the effective time of the SilverBox Merger and will then be converted into the right to receive shares of PubCo Class A Common Stock pursuant to the SilverBox Merger) (each such subscription agreement, a “PIPE Subscription Agreement”)

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for an aggregate purchase price of $100,000,000 (the “PIPE Investment”), and (ii) up to an additional 10,000,000 shares of SilverBox Class C Common Stock in the aggregate to the extent redemptions of SilverBox Class A Common Stock exceed $100,000,000. In addition, investment funds and accounts managed by Engaged Capital, LLC (collectively, the “Forward Purchase Investors”), agreed to purchase an aggregate of 10,000,000 shares of SilverBox Class C Common Stock (the “Forward Purchase Investment”) for an aggregate purchase price of $100,000,000 pursuant to an amended and restated forward purchase agreement (the “Forward Purchase Agreement”). The PubCo Class A Common Stock to be issued in exchange for the SilverBox Class C Common Stock is not being registered under the Securities Act and will be issued in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. The PIPE Investors and the Forward Purchase Investors have been granted registration rights with respect to the PubCo Class A Common Stock issued in exchange for their SilverBox Class C Common Stock in the SilverBox Merger.
SilverBox’s equity securities trade on the Nasdaq Capital Market. Each of SilverBox’s units consists of one share of SilverBox Class A Common Stock and one-third of one warrant and trades under the symbol “SBEAU.” The SilverBox Class A Common Stock and public warrants trade under the symbols “SBEA” and “SBEAW,” respectively. Each whole warrant entitles the holder to purchase one share of SilverBox Class A Common Stock at a price of $11.50 per share, subject to adjustment. The units that have not previously been separated at the election of holders will automatically separate into the component securities upon the closing of the Business Combination (the “Closing”) and, as a result, will no longer trade as a separate security. PubCo intends to apply to list the PubCo Class A Common Stock and PubCo Warrants on the NYSE under the symbols “BRCC” and “BRCC WS,” respectively.
SilverBox cordially invites you to attend a special meeting of its stockholders (the “special meeting”) to consider matters related to the proposed Business Combination. SilverBox and Authentic Brands cannot complete the Business Combination unless SilverBox’s stockholders consent to the approval of the Business Combination Agreement and the transactions contemplated thereby. SilverBox is sending you this proxy statement/prospectus to ask you to vote in favor of these and the other matters described in this proxy statement/prospectus in order to obtain stockholder approvals of the proposals necessary to complete the Business Combination, and these proposals are described in this proxy statement/prospectus.
The special meeting will be held on February 3, 2022, at 10:00 a.m., Eastern time, via a virtual meeting. In light of the novel coronavirus (referred to as “COVID-19”) pandemic and to support the well-being of SilverBox’s stockholders and partners, the special meeting will be completely virtual. You may attend the special meeting and vote your shares electronically during the special meeting via live webcast by visiting https://www.cstproxy.com/silverboxengagedi/2022. You will need the 12-digit meeting control number that is printed on your proxy card to enter the special meeting. SilverBox recommends that you log in at least 15 minutes before the special meeting to ensure you are logged in when the special meeting starts. Please note that you will not be able to attend the special meeting in person.
After careful consideration, the SilverBox board of directors has unanimously approved the Business Combination Agreement and the other proposals described in this proxy statement/prospectus, and the SilverBox board of directors has determined that it is advisable to consummate the Business Combination. SilverBox’s board of directors recommends that you vote “FOR” the proposals described in this proxy statement/prospectus (including each of the sub-proposals).
SilverBox is providing the accompanying proxy statement/prospectus and proxy card to you in connection with the solicitation of proxies to be voted at the special meeting and at any adjournments or postponements of the special meeting. Your vote is very important. If you are a registered stockholder, please vote your shares as soon as possible by signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the special meeting.
More information about SilverBox, Authentic Brands and the Business Combination is contained in this proxy statement/prospectus. SilverBox and Authentic Brands urge you to read the accompanying proxy statement/prospectus, including the financial statements and annexes and other documents referred to herein, carefully and in their entirety. In particular, you should carefully consider the matters discussed in the section entitled “Risk Factors” beginning on page 50 of this proxy statement/prospectus.
TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST ELECT TO HAVE SILVERBOX REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO SILVERBOX’S TRANSFER AGENT AT LEAST TWO

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BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.
On behalf of our board of directors, I thank you for your support and look forward to the successful completion of the Business Combination.
By Order of the Board of Directors
/s/ Joseph E. Reece
Joseph E. Reece
Executive Chairman of the Board
The accompanying proxy statement/prospectus is dated January 13, 2022, and is first being mailed to the stockholders of SilverBox on or about that date.
NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE BUSINESS COMBINATION DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS OR ANY OF THE SECURITIES TO BE ISSUED IN THE BUSINESS COMBINATION, OR PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION.

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SilverBox Engaged Merger Corp I
1250 S. Capital of Texas Highway
Building 2, Suite 285
Austin, Texas 78746
NOTICE OF SPECIAL MEETING
TO BE HELD ON FEBRUARY 3, 2022
TO THE STOCKHOLDERS OF SILVERBOX ENGAGED MERGER CORP I:
NOTICE IS HEREBY GIVEN that a special meeting of SilverBox Engaged Merger Corp I (“SilverBox”), a Delaware corporation, will be held at 10:00 a.m., Eastern time, on February 3, 2022, in a virtual format. You are cordially invited to attend the special meeting, which will be held for the following purposes:
In connection with the Business Combination, you are cordially invited to attend a special meeting (the “special meeting”) of stockholders of SilverBox. At the special meeting, SilverBox stockholders will be asked to consider and vote on:
(1)
Proposal No. 1 — The Business Combination Proposal — To consider and vote upon a proposal to approve and adopt the Business Combination Agreement, dated as of November 2, 2021 (as amended by the First Amendment to Business Combination, dated as of January 4, 2022 and as it may be further amended or restated from time to time, the “Business Combination Agreement”), by and among SilverBox, PubCo, Merger Sub 1, Merger Sub 2, Blocker and Authentic Brands, a copy of which is attached to this proxy statement/prospectus as Annex A. The Business Combination Agreement provides for, among other things, the merger of SilverBox with and into Merger Sub 1, with Merger Sub 1 surviving the merger as a wholly owned subsidiary of PubCo, in accordance with the terms and subject to the conditions of the Business Combination Agreement as more fully described elsewhere in this proxy statement/prospectus (the “Business Combination Proposal”);
(2)
Proposal No. 2 — The Organizational Document Proposals — To consider and vote upon an amendment and restatement of SilverBox’s current Amended and Restated Certificate of Incorporation (the “Existing Charter”), a copy of which is attached to this proxy statement/prospectus as Annex B, and the following material differences between the proposed Amended and Restated Certificate of Incorporation of PubCo, a copy of which is attached to this proxy statement/prospectus as Annex C (the “Proposed Charter” and, together with the proposed Amended and Restated Bylaws of PubCo, a copy of which is attached to this proxy statement/prospectus as Annex D (the “Proposed Bylaws”), the “Proposed Organizational Documents”) and the Existing Charter and the Amended and Restated Bylaws of SilverBox (the “Existing Organizational Documents”) (such proposals, collectively, the “Organizational Document Proposals”):
(i)
Proposal No. 2A — to approve an amendment and restatement of the Existing Charter providing for the creation of 35,000,000 authorized shares of the SilverBox Class C Common Stock for purposes of the PIPE Investment and the Forward Purchase Investment (we refer to this as “Organizational Documents Proposal A”);
(ii)
Proposal No. 2B — to approve the provision in the Proposed Charter changing the authorized capital stock of 111,000,000 shares, consisting of 100,000,000 shares of Class A Common Stock, par value $0.0001 per share, 10,000,000 shares of Class B Common Stock, par value $0.0001 per share, and 1,000,000 preferred shares, par value $0.0001 per share, to authorized capital stock of 2,802,500,000 shares, consisting of 2,500,000,000 shares of Class A Common Stock, par value $0.0001 per share, 300,000,000 shares of Class B Common Stock, par value $0.0001 per share, 1,500,000 shares of Class C Common Stock, par value $0.0001 per shares, which shall be divided into 750,000 shares of Series C-1 Common Stock, par value $0.0001 per share and 750,000 shares of Series C-2 Common Stock, par value $0.0001 per share, and 1,000,000 shares of undesignated preferred stock, par value $0.0001 per share (we refer to this as “Organizational Documents Proposal B”);
 

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(iii)
Proposal No. 2C — to approve the provision in the Proposed Charter pursuant to which: (a) the affirmative vote of the holders of at least 6623% of the total voting power of all then outstanding shares entitled to vote generally in the election of directors, voting together as a single class is required to amend provisions relating to, among other matters: (i) stockholder meetings, (ii) the board of directors, (iii) indemnification and limitation of liability of officers and directors, (iv) election not be governed by Section 203 of the DGCL and business combinations generally, (v) forum selection, and (vi) amendment of the Proposed Charter; and (b) the affirmative vote of at least 80% of the total voting power of all then outstanding shares of PubCo Common Stock entitled to vote generally in the election of directors, voting together as a single class, is required to amend provisions with respect competition and corporate opportunities (we refer to this as “Organizational Documents Proposal C”);
(iv)
Proposal No. 2D — to approve all other changes in connection with the replacement of the Existing Organizational Documents of SilverBox with the Proposed Organizational Documents of PubCo, including, among other things, changing from a blank check company seeking a business combination within a certain period (as provided in the Existing Organizational Documents), to a public benefit corporation having perpetual existence (as provided in the Proposed Charter) (we refer to this as “Organizational Documents Proposal D”); and
(v)
Proposal No. 2E — to provide for a classified board of directors and direct that board vacancies be filled by the majority of directors then in office, unless specified otherwise in the Investor Rights Agreement (as defined below) or the Proposed Bylaws (we refer to this as “Organizational Documents Proposal E”);
(3)
Proposal No. 3 — The Stock Issuance Proposal — To consider and vote upon a proposal to approve and adopt for purposes of complying with the applicable provisions of The Nasdaq Stock Market Listing Rule 5635, the issuance of shares of SilverBox Class C Common Stock to the PIPE Investors pursuant to the PIPE Subscription Agreements and to the Forward Purchase Investors pursuant to the Amended Forward Purchase Agreement, respectively (collectively, the “Stock Issuance Proposal”);
(4)
Proposal No. 4 — The Omnibus Incentive Plan Proposal — To consider and vote upon a proposal to approve the adoption of the Omnibus Incentive Plan, a copy of which will be attached to this proxy statement/prospectus as Annex G (the “Omnibus Incentive Plan,” and such proposal, the “Omnibus Incentive Plan Proposal”);
(5)
Proposal No. 5 — The Employee Stock Purchase Plan Proposal — To consider and vote upon a proposal to approve the adoption of the Employee Stock Purchase Plan, a copy of which will be attached to this proxy statement/prospectus as Annex H (the “Employee Stock Purchase Plan,” and such proposal, the “Employee Stock Purchase Plan Proposal”); and
(6)
Proposal No. 6 — The Adjournment Proposal — To consider and vote upon a proposal to adjourn the special meeting of SilverBox’s stockholders to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders for vote at such special meeting.
We may not consummate the Business Combination unless the Business Combination Proposal, each of the Organizational Document Proposals, the Stock Issuance Proposal, the Omnibus Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal (together, the “Condition Precedent Proposals”) are approved at the special meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus.
These items of business are described in the attached proxy statement/prospectus.
Only holders of record of SilverBox Class A Common Stock and SilverBox Class B Common Stock at the close of business on January 3, 2022, are entitled to notice of and to vote and have their votes counted at the special meeting and any adjournment of the special meeting. A complete list of our stockholders of
 

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record entitled to vote at the special meeting will be available for ten days before the special meeting at our principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the special meeting.
This proxy statement/prospectus and accompanying proxy card is being provided to SilverBox’s stockholders in connection with the solicitation of proxies to be voted at the special meeting and at any adjournment of the special meeting. Whether or not you plan to attend the special meeting, all of SilverBox’s stockholders are urged to read this proxy statement/prospectus, including the Annexes and the documents referred to herein, carefully and in their entirety. You should also carefully consider the risk factors described in the section entitled “Risk Factors” beginning on page 43 of this proxy statement/prospectus.
After careful consideration, the board of directors of SilverBox has unanimously approved the Business Combination and unanimously recommends that stockholders vote “FOR” adoption of the Business Combination Agreement, and approval of the transactions contemplated thereby, including the Business Combination, and “FOR” all other proposals presented to SilverBox’s stockholders in this proxy statement/prospectus. When you consider the recommendation of these proposals by the board of directors of SilverBox, you should keep in mind that SilverBox’s directors and officers have interests in the Business Combination that may conflict with your interests as a stockholder. See the section entitled “Proposal No. 1 — The Business Combination Proposal —  Interests of SilverBox’s Directors and Officers in the Business Combination” in this proxy statement/prospectus for a further discussion of these considerations.
Pursuant to our Existing Charter, a holder of shares of SilverBox Class A Common Stock originally sold in our initial public offering, including as part of the units issued in our initial public offering (such shares, the “Public Shares”), may request of SilverBox that SilverBox redeem all or a portion of such holder’s SilverBox Class A Common Stock for cash if the Business Combination is consummated. As a holder of SilverBox Class A Common Stock, you will be entitled to receive cash for any such shares to be redeemed only if you:
(i)
(a) hold SilverBox Class A Common Stock, or (b) hold SilverBox Class A Common Stock through units, you elect to separate your units into the underlying SilverBox Class A Common Stock and public warrants prior to exercising your redemption rights with respect to the SilverBox Class A Common Stock;
(ii)
submit a written request to Continental Stock Transfer & Trust Company (“Continental”), SilverBox’s transfer agent, that SilverBox redeem all or a portion of your Public Shares for cash; and
(iii)
deliver your Public Shares to Continental, SilverBox’s transfer agent, physically or electronically through The Depository Trust Company (the “Depository Trust Company”).
Holders must complete the procedures for electing to redeem their SilverBox Class A Common Stock in the manner described above prior to 5:00 p.m., Eastern Time, on February 1, 2022 (two business days before the special meeting) in order for their shares to be redeemed.
Holders of units must elect to separate the units into the underlying SilverBox Class A Common Stock and public warrants prior to exercising redemption rights with respect to the SilverBox Class A Common Stock. If holders hold their units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the units into the underlying SilverBox Class A Common Stock and public warrants, or if a holder holds units registered in its own name, the holder must contact Continental, SilverBox’s transfer agent, directly and instruct them to do so. Public stockholders may elect to redeem SilverBox Class A Common Stock regardless of if or how they vote with respect to the Business Combination Proposal. If the Business Combination is not consummated, the Public Shares will be returned to the respective holder, broker or bank.
If the Business Combination is consummated, and if a public stockholder properly exercises its right to redeem all or a portion of the SilverBox Class A Common Stock that it holds and timely delivers its shares to Continental, SilverBox’s transfer agent, PubCo will redeem such SilverBox Class A Common Stock for a per-share price, payable in cash, equal to the pro rata portion of the trust account established at the consummation of our initial public offering (the “Trust Account”), calculated as of two business days prior
 

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to the consummation of the Business Combination. For illustrative purposes, based on funds in the Trust Account as of November 1, 2021 of approximately $345 million, the estimated per share redemption price would have been approximately $10.00. If a public stockholder exercises its redemption rights in full, then it will be electing to exchange its SilverBox Class A Common Stock for cash and will no longer own SilverBox Class A Common Stock. The redemption takes place following the Business Combination and, accordingly, it is shares of PubCo Class A Common Stock that will be redeemed promptly after consummation of the Business Combination. See the section entitled “Special Meeting of SilverBox Stockholders — Redemption Rights” in this proxy statement/prospectus for a detailed description of the procedures to be followed if you wish to redeem your Public Shares for cash.
Notwithstanding the foregoing, a public stockholder, together with any affiliate of such public stockholder or any other person with whom such public stockholder is acting in concert or as a “group” ​(as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)), will be restricted from redeeming its SilverBox Class A Common Stock with respect to more than an aggregate of 15% of the SilverBox Class A Common Stock, without the consent of SilverBox. Accordingly, if a public stockholder, alone or acting in concert or as a group, seeks to redeem more than 15% of the SilverBox Class A Common Stock, then any such shares in excess of that 15% limit would not be redeemed for cash.
Our initial stockholders, including the Sponsor, and our directors and officers have agreed to vote any shares of SilverBox Common Stock owned by them in favor of the Business Combination, including their shares of SilverBox Class B Common Stock and any Public Shares purchased after our initial public offering (including in open market and privately negotiated transactions). As a result, the parties to the Sponsor Letter Agreement (as defined herein) agreed to, among other things, vote at least 8,625,000 shares of SilverBox Class B Common Stock in favor of the Business Combination Agreement and the transactions contemplated thereby, in each case, subject to the terms and conditions contemplated by the Sponsor Letter Agreement. As of the record date, our initial stockholders, including the Sponsor, and our directors and officers beneficially own an aggregate of approximately 20% of the outstanding shares of SilverBox Common Stock. Subject to the terms and conditions contemplated by the Sponsor Letter Agreement, the SilverBox Common Stock held by the Sponsor will be excluded from the pro rata calculation used to determine the per-share redemption price. As of the date of this proxy statement/prospectus, the Sponsor owns approximately 20% of the issued and outstanding SilverBox Common Stock.
The Business Combination Agreement provides that the obligations of Authentic Brands to consummate the Business Combination are conditioned on, among other things, that as of the Closing, the amount of cash available in the trust account, after deducting the amount required to satisfy SilverBox’s obligations to its stockholders (if any) that exercise their redemption rights (but prior to the payment of any (i) deferred underwriting commissions being held in the trust account and (ii) transaction expenses of Authentic Brands and SilverBox, or their affiliates (such amount, the “Trust Amount”)) plus the PIPE Investment Amount, the Backstop Investment, if any, and the Forward Purchase Investment actually received by SilverBox at or prior to the Closing Date, is at least equal to $300.0 million (the “Minimum Available Cash Condition”). The Minimum Available Cash Condition is for the sole benefit of Authentic Brands. If the Trust Amount when added to the PIPE Investment and the Forward Purchase Investment (such aggregate amount, the “Available Cash”) is equal to or greater than the Minimum Available Cash Condition amount, then the Minimum Available Cash Condition will be deemed to have been satisfied. If such condition is not met, and such condition is not or cannot be waived under the terms of the Business Combination Agreement, then the Business Combination Agreement could terminate and the proposed Business Combination may not be consummated. In addition, pursuant to the Organizational Documents, in no event will SilverBox redeem Public Shares in an amount that would cause PubCo’s net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001 upon consummation of the Business Combination.
The Business Combination Agreement is also subject to the satisfaction or waiver of certain other closing conditions as described in this proxy statement/prospectus. There can be no assurance that the parties to the Business Combination Agreement would waive any such provision of the Business Combination Agreement.
The approval of the Organizational Document Proposals (other than Organizational Documents Proposal A) requires the affirmative vote (attending virtually or by proxy) of the holders of a majority of all outstanding shares of SilverBox Common Stock entitled to vote. The approval of Organizational Document
 

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Proposal A will require the affirmative vote of the holders of a majority of the outstanding shares of SilverBox Class A Common Stock on the record date and the affirmative vote of the holders of a majority of the outstanding shares of SilverBox Class B Common Stock on the record date. The Business Combination Proposal and Adjournment Proposal require the affirmative vote of a majority of the shares of SilverBox Common Stock attending virtually or by proxy, entitled to vote. The Stock Issuance Proposal, the Omnibus Incentive Plan Proposal and the Employee Stock Purchase Plan Proposal require the affirmative vote of a majority of the shares of SilverBox Common Stock attending virtually or by proxy, entitled to vote and who vote thereon at the special meeting.
Your vote is very important.   Whether or not you plan to virtually attend the special meeting, please vote as soon as possible by following the instructions in this proxy statement/prospectus to make sure that your shares are represented at the special meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the special meeting. The transactions contemplated by the Business Combination Agreement will be consummated only if the Condition Precedent Proposals are approved at the special meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus.
If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted FOR each of the proposals presented at the special meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the special meeting virtually, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and will not be voted. An abstention or broker non-vote on any proposal will be counted toward the quorum requirement for the special meeting. If you are a stockholder of record and you attend the special meeting and wish to vote virtually, you may withdraw your proxy and vote while attending virtually.
Your attention is directed to the remainder of the proxy statement/prospectus following this notice (including the Annexes and other documents referred to herein) for a more complete description of the proposed Business Combination and related transactions and each of the proposals. You are encouraged to read this proxy statement/prospectus carefully and in its entirety, including the Annexes and other documents referred to herein. If you have any questions or need assistance voting your stock, please contact Morrow Sodali LLC, our proxy solicitor, by calling at (800) 662-5200 or banks and brokers can call collect at (203) 658-9400, or by emailing sbea@investor.morrowsodali.com.
Thank you for your participation. We look forward to your continued support.
By Order of the Board of Directors
/s/ Joseph E. Reece
Joseph E. Reece
Executive Chairman of the Board
January 13, 2022
TO EXERCISE REDEMPTION RIGHTS, HOLDERS MUST TENDER THEIR STOCK TO CONTINENTAL STOCK TRANSFER & TRUST COMPANY, SILVERBOX’S TRANSFER AGENT, NO LATER THAN TWO (2) BUSINESS DAYS PRIOR TO THE SPECIAL MEETING. YOU MAY TENDER YOUR STOCK EITHER BY DELIVERING YOUR STOCK CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DEPOSIT WITHDRAWAL AT CUSTODIAN (“DWAC”) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE THE SECTION ENTITLED “SPECIAL MEETING OF SILVERBOX STOCKHOLDERS — REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.
 

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Annexes
ANNEX A — BUSINESS COMBINATION AGREEMENT Annex A-1
Annex A-81
Annex B-1
Annex C-1
Annex D-1
Annex E-1
Annex F-1
Annex G-1
Annex H-1
You should rely only on the information contained in this proxy statement/prospectus in determining whether to vote in favor of the Business Combination and the other proposals. No one has been authorized to provide you with information that is different from that contained in this proxy statement/prospectus. This proxy statement/prospectus is dated January 13, 2022. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date. Neither the mailing of this proxy statement/prospectus to SilverBox stockholders nor the issuance by PubCo of PubCo Class A Common Stock and PubCo Warrants in connection with the Business Combination will create any implication to the contrary.
 
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ABOUT THIS PROXY STATEMENT/PROSPECTUS
This document, which forms part of a registration statement on Form S-4 filed with the SEC, by PubCo (File Nos. 333-260942; 333-260942-01) (the “Registration Statement”), constitutes a prospectus of PubCo under Section 5 of the Securities Act, with respect to the shares of its PubCo Class A Common Stock and PubCo Warrants to be issued if the Business Combination described herein is consummated. This document also constitutes a notice of meeting and a proxy statement/ prospectus under Section 14(a) of the Exchange Act with respect to the special meeting of SilverBox stockholders at which SilverBox stockholders will be asked to consider and vote upon a proposal to approve the Business Combination by the approval and adoption of the Business Combination Agreement, among other matters.
 
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SELECTED DEFINITIONS
Unless otherwise stated in this proxy statement/prospectus or the context otherwise requires, references to:
“Authentic Brands” means Authentic Brands LLC, a Delaware limited liability company and the indirect parent of BRCC, the subsidiary through which Authentic Brands conducts substantially all of its business.
“Backstop Investment” means that certain private placement in the aggregate amount of up to $100.0 million, to be consummated substantially concurrently with the consummation of the Business Combination, pursuant to the PIPE Subscription Agreements with SilverBox, under which, subject to the conditions set forth therein, the PIPE Investors will purchase up to an additional 10.0 million shares of SilverBox Class C Common Stock at a purchase price of $10.00 per share, to the extent redemptions of Public Shares exceed $100.0 million.
“Backstop Shares” means the additional shares of SilverBox Class C Common Stock purchased pursuant to the PIPE Subscription Agreements based on redemptions of Public Shares.
“Blocker” means Grand Opal Investment Holdings, Inc., a Delaware corporation.
“BRCC” means Black Rifle Coffee Company LLC, a Delaware limited liability company.
“BRCC Founder” means Evan Hafer, an individual.
“BRCC Fund” means Authentic Brands’ 501(c)(3) nonprofit organization.
“BRCC Fund Shares” means shares of PubCo Class A Common Stock to be donated to the BRCC Fund.
“Business Combination” means the transactions contemplated by the Business Combination Agreement.
“Business Combination Agreement” means the Business Combination Agreement, dated as of November 2, 2021, by and among SilverBox, PubCo, Merger Sub 1, Merger Sub 2, Authentic Brands and Blocker, as amended by that certain First Amendment to Business Combination Agreement, dated as of January 4, 2022 and as it may further be amended or restated from time to time.
“Business Combination Proposal” means the proposal to approve the adoption of the Business Combination Agreement and the Business Combination.
“C-1 Conversion Event” means a First Tier Vesting Event or Partial Vesting Event applicable to Company Restricted Units in accordance with the LLC Agreement, which shall be treated as a conversion event in respect of the PubCo Series C-1 Common Stock.
“C-2 Conversion Event” a Second Tier Vesting Event or Partial Vesting Event applicable to Company Restricted Units in accordance with the LLC Agreement, which shall be treated as a conversion event in respect of the PubCo Series C-2 Common Stock.
“CARES Act” means (i) the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. 116-136), the Families First Coronavirus Response Act of 2020 (H.R. 6201), “Division N - Additional Coronavirus Response and Relief” of the Consolidated Appropriations Act, 2021 (H.E. 133) contained in the Consolidated Appropriations Act, 2021, H.R. 133, and the American Rescue Plan Act of 2021, together with all rules and regulations and guidance issued by any Governmental Entity with respect thereto (including IRS Notices 2020-18, 2020-22, and 2020-65), or any other Law or executive order or executive memorandum (including the Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster, dated August 8, 2020) intended to address the consequences of COVID-19 (in each case, including any comparable provisions of state, local or non-U.S. Law and including any related or similar orders or declarations from any Governmental Entity) and (ii) any extension, amendment, supplement, correction, or revision of, or similar treatment to, items described in the foregoing clause (i).
“Closing Date” means the date on which the Closing occurs.
 
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“Closing” means the consummation of the Business Combination.
“Company Common Units” mean the units of Authentic Brands designated as “Common Units” in the LLC Agreement.
“Company Restricted Units” mean the units of Authentic Brands designated as “Restricted Units” in the LLC Agreement.
“Company Units” means the Company Common Units and Company Restricted Units of Authentic Brands.
“Conversion Date” means, with respect to any Company Restricted Unit, the date on which a Vesting Event occurs for such Company Restricted Unit or such later date as determined pursuant to the LLC Agreement.
“Conversion Event” means, together, a C-1 Conversion Event, C-2 Conversion Event and Full Conversion Event.
“DGCL” means the Delaware General Corporation Law.
“Engaged Capital” means Engaged Capital, LLC, a Delaware limited liability company and member of the Sponsor, and its affiliates.
“Engaged Capital Investors” means the investment funds and accounts managed by Engaged Capital subscribing for Forward Purchase Shares.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“First Tier Vesting Event” means the first day on which the VWAP of the PubCo Class A Common Stock is greater than or equal to $15.00 over any 20 trading days within any 30 trading day period commencing at any time on or after the Closing Date; provided that, the reference to $15.00 shall be decreased by the aggregate per share amount of dividends actually paid in respect of a share of PubCo Class A Common Stock following the effective date of the LLC Agreement.
“Forward Purchase Agreement” means the Amended and Restated Forward Purchase Agreement, dated November 2, 2021, by and among SilverBox, Authentic Brands and Engaged Capital, in its capacity as investment advisor on behalf of the Forward Purchase Investors, pursuant to which the Forward Purchase Investors agree to purchase, and SilverBox agrees to issue and sell, an aggregate of 10.0 million shares of SilverBox Class C Common Stock at a purchase price of $10.00 per share or an aggregate purchase price of $100.0 million.
“Forward Purchase Investment” means that certain private placement in the aggregate amount of $100.0 million, to be consummated substantially concurrently with the consummation of the Business Combination, pursuant to the Forward Purchase Agreement with SilverBox, under which, subject to the conditions set forth therein, investment funds and accounts managed by Engaged Capital (collectively, the “Forward Purchase Investors”) will purchase 10.0 million shares of SilverBox Class C Common Stock at a purchase price of $10.00 per share.
“Forward Purchase Shares” means the shares of SilverBox Class C Common Stock to be issued pursuant to the Forward Purchase Agreement.
“Full Conversion Event” a Full Vesting Event applicable to Company Restricted Units in accordance with the LLC Agreement, which shall be treated as a conversion event in respect of the PubCo Series C-1 Common Stock and the PubCo Series C-2 Common Stock.
“Full Vesting Event” means, with respect to the Company Restricted Units, a change of control transaction or liquidation of Authentic Brands.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
“Investment Company Act” means the Investment Company Act of 1940, as amended.
 
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“IPO” means SilverBox’s initial public offering of Units, which was consummated on March 2, 2021.
“LLC Agreement” means that certain Third Amended and Restated Limited Liability Company Agreement of Authentic Brands, to be dated as of the Closing.
“Merger Sub 1” means SBEA Merger Sub LLC, a Delaware limited liability company.
“Merger Sub 2” means BRCC Blocker Merger Sub LLC, a Delaware limited liability company.
“Net Promoter Score” or “NPS” refers to BRCC’s net promoter score, which is a percentage, expressed as a numerical value up to a maximum value of 100, that BRCC uses to gauge customer satisfaction. Net Promoter Score reflects responses to the following question on a scale of 0 to 10: “How likely are you to recommend BRCC’s to a friend or colleague?” Responses of 9 or 10 are considered “promoters,” responses of 7 or 8 are considered neutral or “passives,” and responses of 6 or less are considered “detractors.” BRCC then subtracts the number of respondents who are detractors from the number of respondents who are promoters and divide that number by the total number of respondents. This methodology of calculating Net Promoter Score reflects responses from customers who purchase products from BRCC and choose to respond to the survey question. Net Promotor Score gives no weight to customers who decline to answer the survey question. BRCC’s NPS is based on a survey conducted in June 2021 and represents a sample of 203 BRCC customers who indicated in the survey that they purchased BRCC coffee within the past month.
“Partial Vesting Event” means (a) with respect to 50% of any Authentic Brands member’s Company Restricted Units held as of the date of a First Tier Vesting Event, the First Tier Vesting Event; provided that, a First Tier Vesting Event shall not occur more than once; or (b) with respect to the remaining 50% of any Authentic Brands member’s Company Restricted Units held as of the date of a First Tier Vesting Event (in each case after giving effect to any subdivision (by any equity split, equity distribution, reclassification, recapitalization or otherwise) or combination (by reverse equity split, reclassification, recapitalization or otherwise)), the Second Tier Vesting Event.
“PBC Purpose” means the public benefit purpose of PubCo as set forth in the Proposed Charter, which is to support the underserved active military, veteran and first-responder communities by, among other things (i) hiring and creating meaningful post-military career opportunities for veterans, including by highlighting for other businesses the benefits of hiring veterans, (ii) inspiring veterans to become entrepreneurs through educational programs and donations to relevant charities, (iii) donating cash and in-kind resources to charities that support the unique needs of active military, veterans and first responders, (iv) providing quality products and media relating to these communities and (v) forging an enduring, profitable business.
“PIPE Investment” means that certain private placement in the aggregate amount of $100.0 million, to be consummated substantially concurrently with the consummation of the Business Combination, pursuant to those certain PIPE Subscription Agreements with SilverBox, under which, subject to the conditions set forth therein, the PIPE Investors will purchase 10.0 million shares of SilverBox Class C Common Stock at a purchase price of $10.00 per share.
“PIPE Investors” means the third-party investors who entered into PIPE Subscription Agreements.
“PIPE Shares” means an aggregate of 10.0 million shares of SilverBox Class C Common Stock to be issued to the PIPE Investors pursuant to the PIPE Subscription Agreements.
“PIPE Subscription Agreement” means each agreement pursuant to which the PIPE Investors agreed to purchase, and SilverBox agreed to issue and sell, up to 20.0 million shares of SilverBox Class C Common Stock at a purchase price of $10.00 per share, or an aggregate purchase price of up to $200.0 million.
“Private Placement Warrants” means the warrants to purchase SilverBox Class A Common Stock purchased in a private placement concurrent with the IPO.
“PubCo” means BRC Inc. and its consolidated subsidiaries, immediately upon consummation of the Business Combination.
“PubCo Board” means the board of directors of PubCo.
 
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“PubCo Class A Common Stock” means the Class A common stock, par value $0.0001 per share, of PubCo.
“PubCo Class B Common Stock” means the Class B common stock, par value $0.0001 per share, of PubCo.
“PubCo Class C Common Stock” means, as applicable the shares of Class C non-voting common stock, par value $0.0001 per share, of PubCo, which PubCo Class C Common Stock shall be divided into two series as follows: “750,000 shares of Series C-1 Common Stock, par value $0.0001 per share, of PubCo (“PubCo Series C-1 Common Stock”) and 750,000 shares of Series C-2 Common Stock, par value $0.0001 per share, of PubCo (“PubCo Series C-2 Common Stock”).”
“PubCo Common Stock” means the PubCo Class A Common Stock, PubCo Class B Common Stock and PubCo Class C Common Stock.
“PubCo Warrants” means warrants of PubCo each exercisable for one share of PubCo Class A Common Stock.
“Public Shares” means shares of SilverBox Class A Common Stock issued as a component of the Units sold in the IPO (whether such shares were purchased in the IPO or in the secondary market following the IPO).
“Public Stockholders” means the holders of the Public Shares.
“Public Warrants” means the warrants included as a component of the Units sold in the IPO, each of which is exercisable for one share of SilverBox Class A Common Stock, in accordance with its terms.
“SEC” means the U.S. Securities and Exchange Commission.
“Second Tier Vesting Event” means the first day on which the VWAP of the PubCo Class A Common Stock is greater than or equal to $20.00 over any 20 trading days within any 30 trading day period commencing at any time on or after the Closing Date; provided that, the reference to $20.00 shall be decreased by the aggregate per share amount of dividends actually paid in respect of a share of PubCo Class A Common Stock following the effective date of the LLC Agreement.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“SilverBox,” “we,” “us” and “our” means SilverBox Engaged Merger Corp I, a Delaware corporation, prior to the consummation of the Business Combination.
“SilverBox Capital” means SilverBox Capital LLC.
“SilverBox Class A Common Stock” means SilverBox’s Class A Common Stock, par value $0.0001 per share.
“SilverBox Class B Common Stock” or “Sponsor Shares” means shares of SilverBox Class B Common Stock, par value $0.0001 per share, which are automatically convertible into shares of our SilverBox Class A Common Stock at the time of an initial business combination.
“SilverBox Class C Common Stock” means SilverBox’s Class C Common Stock, par value $0.0001 per share.
“SilverBox Common Stock” means, collectively, the SilverBox Class A Common Stock and the SilverBox Class B Common Stock.
“SilverBox Parties” means, collectively, SilverBox, PubCo, Merger Sub 1 and Merger Sub 2.
“SilverBox Units” and “Units” are to the units of SilverBox, each unit representing one share of SilverBox Class A Common Stock and one-third of one redeemable warrant to acquire one share of SilverBox Class A Common Stock, that were offered and sold in the SilverBox IPO (less the number of units that have been separated into the underlying Public Shares and underlying Public Warrants upon the request of the holder thereof).
 
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“Sponsor” means SilverBox Engaged Sponsor LLC, a Delaware limited liability company.
“Sponsor Letter Agreement” means that certain Sponsor Letter Agreement, dated as of November 2, 2021, by and among the Sponsor, PubCo and Authentic Brands.
“Stockholder Proposals” means, individually or collectively as the context requires, the Business Combination Proposal, the Organizational Document Proposals, the Stock Issuance Proposal, the Omnibus Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and/or the Adjournment Proposal.
“Tax Receivable Agreement” means that certain tax receivables agreement, to be dated the Closing Date, between Authentic Brands, PubCo and the Agent (as defined the Tax Receivable Agreement), pursuant to which, among other things, PubCo will pay to certain parties thereto 85% of certain tax savings, if any, that PubCo realizes.
“Trust Account” means the trust account that holds a portion of the proceeds from the IPO and the sale of the Private Placement Warrants and that is maintained by Continental as trustee.
“Vesting Event” means a Partial Vesting Event or a Full Vesting Event.
“VWAP” means volume-weighted average price.
 
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MARKET INDUSTRY AND DATA
Information contained in this proxy statement/prospectus concerning the market and the industry in which BRCC competes, including its market position, general expectations of market opportunity and market size, is based on information from various third-party sources, on assumptions made by Authentic Brands based on such sources and Authentic Brands’ knowledge of the markets for its services and solutions. Any estimates provided herein involve numerous assumptions and limitations, and you are cautioned not to give undue weight to such information. Third-party sources generally state that the information contained in such source has been obtained from sources believed to be reliable; however, neither Authentic Brands nor SilverBox has verified the accuracy or completeness of third-party data. The industry in which BRCC operates is subject to a high degree of uncertainty and risk. As a result, the estimates and market and industry information provided in this proxy statement/prospectus are subject to change based on various factors, including those described in the section entitled “Risk Factors” and elsewhere in this proxy statement/prospectus.
 
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QUESTIONS AND ANSWERS
The questions and answers below highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions about the special meeting and the proposals to be presented at the special meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that may be important to SilverBox stockholders. Stockholders are urged to read this entire proxy statement/prospectus, including the Annexes and the other documents referred to herein, the proposed Business Combination and the voting procedures for the special meeting.
Q.
Why am I receiving this proxy statement/prospectus?
A.
SilverBox has entered into the Business Combination Agreement, dated as of November 2, 2021 (as amended by the First Amendment to Business Combination, dated as of January 4, 2022 and as may be further amended from time to time, the “Business Combination Agreement”), by and among SilverBox, PubCo, Merger Sub 1, Merger Sub 2, Blocker and Authentic Brands, pursuant to which (i) SilverBox will merge with and into Merger Sub 1, with Merger Sub 1 as the surviving company and wholly owned subsidiary of PubCo, (ii) immediately following the SilverBox Merger, Merger Sub 2 will merge with and into Blocker, with Blocker as the surviving company and wholly owned subsidiary of Merger Sub 1, (iii) Authentic Brands will issue a number of Company Units to PubCo in exchange for a combination of shares of PubCo Class B Common Stock and cash, and PubCo will become the managing member of Authentic Brands, and (iv) following the SilverBox Merger and the Blocker Merger, the successor to SilverBox and Authentic Brands will become wholly owned subsidiaries of PubCo. A copy of the Business Combination Agreement is attached to this proxy statement/prospectus as Annex A, and SilverBox encourages its stockholders to read it in its entirety. SilverBox’s stockholders are being asked to consider and vote upon the Business Combination Proposal to approve and adopt the Business Combination Agreement, among other Stockholder Proposals. See the section titled “Proposal No.1 — The Business Combination Proposal.”
The SilverBox Units, SilverBox Class A Common Stock and Public Warrants are currently listed on Nasdaq under the symbols “SBEAU”, “SBEA” and “SBEAW” respectively. PubCo intends to apply to list the shares of its PubCo Class A Common Stock and PubCo Warrants on the NYSE under the symbols “BRCC” and “BRCC WS,” respectively, upon the Closing.
This proxy statement/prospectus and its annexes contain important information about the proposed Business Combination and the proposals to be acted upon at the special meeting. You should read this proxy statement/prospectus and its annexes carefully and in their entirety. This document also constitutes a prospectus of PubCo with respect to its PubCo Class A Common Stock and PubCo Warrants.
Q.
When and where is the special meeting?
A.
In light of the ongoing health concerns relating to the COVID-19 pandemic and to best protect the health and welfare of SilverBox’s stockholders and personnel, the special meeting will be held completely virtually, conducted only via webcast at the following address:                 .
Q.
There will be no physical meeting location and you will only be able to access the special meeting by means of remote communication.
A.
SilverBox stockholders are nevertheless urged to submit their proxies by completing, signing, dating, and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope.
Q.
What matters will stockholders consider at the special meeting?
A.
At the SilverBox special meeting of stockholders, SilverBox will ask its stockholders to vote in favor of the following Stockholder Proposals:

The Business Combination Proposal — a proposal to approve and adopt the Business Combination Agreement and the Business Combination;
 
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The Organizational Document Proposals — a proposal to approve and adopt an amendment and restatement of the Existing Charter and three proposals relating to approval and adoption of the Proposed Organizational Documents;

The Stock Issuance Proposal — a proposal to approve, for purposes of complying with applicable listing rules of Nasdaq, the issuance of shares of SilverBox Class C Common Stock to the PIPE Investors and the Forward Purchase Investors pursuant to the PIPE Investment and the Forward Purchase Investment, respectively;

The Omnibus Incentive Plan Proposal — a proposal to approve and adopt the Omnibus Incentive Plan;

The Employee Stock Purchase Plan Proposal — a proposal to approve and adopt the Employee Stock Purchase Plan; and

The Adjournment Proposal — a proposal to approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the special meeting.
If SilverBox’s stockholders do not approve each of the Condition Precedent Proposals, then unless certain conditions in the Business Combination Agreement are waived by the applicable parties to the Business Combination Agreement, the Business Combination Agreement could terminate and the Business Combination may not be consummated. The applicable parties to the Business Combination Agreement would not be able to waive Organizational Documents Proposal A and still complete the Business Combination on the terms contemplated by the Business Combination Agreement because there will not be a sufficient number of authorized shares of capital stock of PubCo to issue the shares required to be issued in the Business Combination if Organizational Documents Proposal A is not approved. See the sections entitled “Proposal No. 1 — The Business Combination Proposal,” “Proposal No. 2 — The Organizational Document Proposals,” “Proposal No. 3 — The Stock Issuance Proposal,” “Proposal No. 4 — The Omnibus Incentive Plan Proposal,” “Proposal No. 5 — The Employee Stock Purchase Plan Proposal” and “Proposal No. 6 — The Adjournment Proposal.”
SilverBox will hold the special meeting to consider and vote upon these proposals. This proxy statement/prospectus contains important information about the Business Combination and the other matters to be acted upon at the special meeting. Stockholders of PubCo should read it carefully.
After careful consideration, SilverBox’s board of directors has determined that the Business Combination Proposal, each of the Organizational Document Proposals, the Stock Issuance Proposal, the Omnibus Incentive Plan Proposal, the Employee Stock Purchase Plan Proposal and the Adjournment Proposal are in the best interests of SilverBox and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” each of those proposals.
The existence of financial and personal interests of one or more of SilverBox’s directors may result in a conflict of interest on the part of such director(s) between what he, she or they may believe is in the best interests of SilverBox and its stockholders and what he, she or they may believe is best for himself, herself or themselves in determining to recommend that stockholders vote for the proposals. In addition, SilverBox’s officers have interests in the Business Combination that may conflict with your interests as a stockholder. See the section entitled “Proposal No. 1 — The Business Combination Proposal — Interests of SilverBox’s Directors and Officers in the Business Combination” for a further discussion of these considerations.
Q.
Are any of the proposals conditioned on one another?
A.
Yes. Each of the Condition Precedent Proposals are cross-conditioned on the approval of one another. The Adjournment Proposal is not conditioned upon the approval of any other proposal.
Q.
Why is SilverBox proposing the Business Combination?
A.
SilverBox was organized for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities. SilverBox is not limited to any particular industry or sector.
 
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SilverBox received $345,000,000 from the IPO (including net proceeds from the exercise by the underwriters of their over-allotment option) and sale of the Private Placement Warrants, which was placed into the Trust Account immediately following the initial public offering. In accordance with the Existing Charter, the funds held in the Trust Account will be released upon the consummation of the Business Combination. See the question entitled “What happens to the funds held in the Trust Account after consummation of the Business Combination?”
There currently are 34,500,000 shares of SilverBox Class A Common Stock issued and outstanding and 8,625,000 shares of SilverBox Class B Common Stock outstanding. In addition, there currently are warrants issued and outstanding, consisting of 11,500,000 Public Warrants and 6,266,667 Private Placement Warrants. Each whole warrant entitles the holder thereof to purchase one share of SilverBox Class A Common Stock at a price of $11.50 per share. The warrants will become exercisable on the later of 30 days after the completion of a business combination and 12 months from the closing of the IPO, and expire at 5:00 p.m., New York City time, five years after the completion of a business combination or earlier upon redemption or liquidation. The Private Placement Warrants, however, are non-redeemable so long as they are held by the Sponsor or its permitted transferees.
Under the Existing Charter, SilverBox must provide all holders of Public Shares with the opportunity to have their Public Shares redeemed upon the consummation of SilverBox’s initial business combination in conjunction with a stockholder vote.
Q.
Did the board of directors of SilverBox obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?
A.
No. SilverBox’s board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. SilverBox’s board of directors believes that based upon the financial skills and background of its directors, it was qualified to conclude that, the Business Combination was fair from a financial perspective to its stockholders. SilverBox’s board of directors also determined, without seeking a valuation from a financial advisor, that Authentic Brands’ fair market value was at least 80% of SilverBox’s net assets, excluding any taxes payable on interest earned in the Trust Accout. Accordingly, investors will be relying on the judgment of SilverBox’s board of directors as described above in valuing Authentic Brands’ business and assuming the risk that SilverBox’s board of directors may not have properly valued such business.
Q.
What effect will PubCo being a public benefit corporation under Delaware law have on PubCo’s public stockholders?
A:
Unlike traditional corporations, which have a fiduciary duty to focus exclusively on maximizing stockholder value, as a Delaware public benefit corporation, PubCo’s directors will have a fiduciary duty to consider not only the stockholders’ interests, but also the company’s specific public benefit and the interests of other stakeholders affected by PubCo’s actions. Therefore, PubCo may take actions that its directors believes will be in the best interests of those stakeholders materially affected by its specific benefit purpose, even if those actions do not maximize PubCo’s financial results. While PubCo intends for this public benefit designation and obligation to provide an overall net benefit to PubCo and its stakeholders, it could instead cause PubCo to make decisions and take actions without seeking to maximize the income generated from its business, and hence available for distribution to its stockholders.
In addition, as a public benefit corporation, PubCo may be less attractive as a takeover target than a traditional company would be and, therefore, PubCo stockholders’ ability to realize investment through an acquisition may be more difficult. As set forth in the Proposed Charter, the public benefit purpose of PubCo is to support the underserved active military, veteran and first-responder communities by, among other things (i) hiring and creating meaningful post-military career opportunities for veterans, including by highlighting for other businesses the benefits of hiring veterans, (ii) inspiring veterans to become entrepreneurs through educational programs and donations to relevant charities, (iii) donating cash and in-kind resources to charities that support the unique needs of active military, veterans and first responders, (iv) providing quality products and media relating to these communities and (v) forging an enduring, profitable business.
 
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Stockholders of a Delaware public benefit corporation with shares listed on a national securities exchange (if they, individually or collectively, own at least two percent of the company’s outstanding shares or shares of the corporation with a market value of at least $2,000,000 as of the date the action is instituted) are entitled to file a derivative lawsuit claiming the directors failed to balance stockholder and public benefit interests. This potential liability does not exist for traditional corporations.
Q.
What are some of the positive and negative factors that SilverBox’s board of directors considered when determining to enter into the Business Combination Agreement and its rationale for approving the Business Combination?
A.
The positive factors considered by SilverBox’s board of directors include, but were not limited to, the following:

Authentic and Passionate Focus on Company Mission.   Authenticity of BRCC’s mission of supporting and employing veterans drives customer loyalty and employee retention. The company’s experienced management team has a meaningful focus on the company’s mission. BRCC and the Sponsor together intend to donate over 530,000 shares to support veteran causes.

Mission-Driven Lifestyle Brand with Loyal Customer Base.   BRCC is an attractive consumer brand with national recognition and industry-leading retention. It has a growing, loyal customer base with broad geographic and demographic appeal. It has a large and differentiated social media following that drives consistent engagement. BRCC benefits from a NPS of 78, which BRCC management believes is on par with best-in-class lifestyle brands.

Attractive Omnichannel Model with Recurring Revenue Base and Multiple Venues for Growth.   BRCC serves its customers through multiple channels. Its direct-to-consumer channel generates subscription-based revenues, with a growing customer base and low churn. Its wholesale channel is growing, with an expanding roster of retail partners. BRCC has developed a canned RTD product into a top 4 brand within 18 months after its launch, with substantial potential for market share growth. Its outpost channel is characterized by attractive unit economics, with significant opportunities for new stores.

Highly Scalable Platform Primed to Deliver Profitable Growth.   BRCC generated revenues of $164 million in 2019, which grew 100% from 2018 to 2019, with gross margins of 43%. BRCC management believes there is significant opportunity for not only continued growth, but the margin improvement for profitable growth.

Public Company Positioning and Readiness.   SilverBox’s board of directors believes BRCC is well- positioned to be a public company in terms of scale and size, and a company that public equity market investors will understand and value.

Experienced and Capable Management Team.   Following completion of the Business Combination, BRCC will continue to be led by the proven senior management team as prior to the Business Combination.

Attractive Valuation.   SilverBox’s board of directors’ determination that if BRCC is able to meet its financial forecasts, then SilverBox’s stockholders will have acquired their shares in PubCo at an attractive valuation, which would increase stockholder value.

Continued Ownership by Holders of BRCC Capital Stock.   SilverBox’s board of directors considered that BRCC’s existing equityholders would continue to be significant stockholders of PubCo after closing of the Business Combination.
SilverBox’s board of directors also considered a variety of uncertainties, risks and other potentially negative factors relevant to the Business Combination, including the following:

Macroeconomic Risks Generally.   Macroeconomic uncertainty, particularly the potential impact of the COVID-19 pandemic and future COVID-19 developments, and the effects they could have on BRCC’s revenues and financial performance.

Business Plan and Projections May Not be Achieved.   The risk that BRCC may not be able to execute on its business plan and realize the financial performance as set forth in the financial forecasts presented to management of SilverBox and SilverBox’s board of directors. BRCC has experienced
 
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rapid growth and increased demand for its products, and BRCC may not be able to properly manage such growth and to meet such demand.

BRCC Brand and Reputation.   BRCC’s brand and reputation are critical to its success, and any publicity, regardless of accuracy, that portrays BRCC negatively could adversely impact operating results.

Valuation.   The risk that SilverBox’s board of directors may not have properly valued BRCC’s business.

Stockholder Vote and Other Actions.   The risk that SilverBox stockholders may object to and challenge the Business Combination and take action that may prevent or delay the closing, including to vote against the Transaction Proposals at the special meeting or redeem their Public Shares.

SilverBox’s Stockholders Holding a Minority Position in the Combined Company.   The fact that existing SilverBox stockholders will hold a minority position in PubCo following completion of the Business Combination and that certain existing BRCC equityholders will have additional governance rights.

Redemptions.   The risk that holders of Public Shares would exercise their redemption rights, thereby depleting the amount of cash available in the Trust Account.

Distraction to Operations.   The risk that the potential diversion of BRCC’s management and employee attention as a result of the Business Combination may adversely affect BRCC’s operations.

Readiness to be a Public Company.   As BRCC has not previously been a public company, BRCC may not have all the different types of employees necessary for it to timely and accurately prepare reports for filing with the SEC. There is a risk that BRCC will not be able to hire the right people to fill in these gaps by the time of the Closing or that additional issues could arise after the Closing due to its failure to have hired these people in advance of Closing.

Risk Factors.   SilverBox’s board of directors considered risks of the type and nature described under the section entitled “Risk Factors.”
In addition to considering the factors described above, SilverBox’s board of directors also considered that certain of the officers and directors of SilverBox may have interests in the Business Combination as individuals that are in addition to, and that may be different from, the interests of SilverBox’s stockholders, including the matters described under the sections entitled “Risk Factors” above and “Proposal No. 1 — The Business Combination Proposal — Interests of SilverBox’s Directors and Executive Officers in the Business Combination” below.
SilverBox’s board of directors concluded that the potentially disparate interests would be mitigated because (i) these interests were disclosed in the prospectus for the IPO and would be included in this proxy statement/prospectus, (ii) these disparate interests would exist with respect to a business combination with any target company and (iii) the Business Combination was structured so that the Business Combination may be completed even if public stockholders redeem a substantial portion of the Public Shares.
The above discussion of the material factors considered by SilverBox’s board of directors is not intended to be exhaustive but does set forth the principal factors considered by SilverBox’s board of directors.
Q.
What will happen upon the consummation of the Business Combination?
A.
In accordance with the terms and subject to the conditions of the Business Combination Agreement, the parties to the Business Combination Agreement have agreed that, in connection with the Closing, the parties shall undertake a series of transactions pursuant to which (i) SilverBox will merge with and into Merger Sub 1, with Merger Sub 1 as the surviving company and wholly owned subsidiary of PubCo, (ii) immediately following the SilverBox Merger, Merger Sub 2 will merge with and into Blocker, with Blocker as the surviving company and wholly owned subsidiary of Merger Sub 1, (iii) Authentic Brands will issue a number of Company Units to PubCo in exchange for a combination of shares of PubCo Class B Common Stock and cash, and PubCo will be admitted as the managing member of Authentic
 
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Brands, and (iv) following the SilverBox Merger and the Blocker Merger, the successors to SilverBox and Authentic Brands will become wholly owned subsidiaries of PubCo. The PubCo Class B Common Stock to be issued to the Continuing Unitholders is not being registered under the Securities Act and will be issued in reliance upon the exemption provided by Rule 506(b) of Regulation D promulgated under the Securities Act.
Upon the consummation of the SilverBox Merger: (i) each share of SilverBox Class A Common Stock and SilverBox Class C Common Stock issued and outstanding shall be automatically cancelled, extinguished and converted into one share of PubCo Class A Common Stock, following which time all shares of SilverBox Class A Common Stock and SilverBox Class C Common Stock shall cease to be outstanding and shall automatically be canceled and extinguished and shall cease to exist without any action on the part of any party or the holders thereof; (ii) each share of SilverBox Class B Common Stock issued and outstanding shall be automatically cancelled, extinguished and converted into a combination of shares of PubCo Class A Common Stock and PubCo Class C Common Stock, following which time all shares of SilverBox Class B Common Stock shall cease to be outstanding and shall automatically be canceled and extinguished and shall cease to exist without any action on the part of any party or the holders thereof; (iii) each SilverBox Warrant issued and outstanding will automatically become a PubCo Warrant at the same exercise price per share and on the same terms in effect immediately prior to the PubCo Merger Effective Time, and the rights and obligations of SilverBox under the Warrant Agreement will be irrevocably assigned and assumed by PubCo; and (iv) any shares of SilverBox that are owned by SilverBox or any subsidiary of SilverBox, or that are held as treasury shares, in each case as of the SilverBox Merger Effective Time, shall automatically be canceled, retired and extinguished and shall cease to exist, without any conversion thereof or payment therefor.
Upon the consummation of the Blocker Merger, each share of Blocker issued and outstanding immediately prior to the Blocker Merger Effective Time shall be automatically cancelled and extinguished in exchange for the right to receive, a combination of PubCo Class A Common Stock, PubCo Class C Common Stock and cash consideration (the “Blocker Merger Consideration”), as determined based on Blocker’s share of the aggregate value of the existing preferred units and common units of Authentic Brands. The aggregate cash consideration payable to Blocker as part of the Blocker Merger Consideration is estimated to be approximately $0.9 million assuming no redemptions of Public Shares. In connection with or prior to the completion of the Blocker Merger, Blocker will distribute all remaining cash to its stockholders.
In connection with the consummation of the Business Combination, Authentic Brands will amend and restate its existing limited liability company agreement, a copy of which is attached to this proxy statement/prospectus as Annex E, pursuant to which the existing units (other than the existing preferred units held by holders other than Blocker) of Authentic Brands will be recapitalized into non-voting common units, or Company Common Units, a portion of which will be converted into restricted units, or Company Restricted Units, which corresponds to the earnout of the Continuing Unitholders. In connection with PubCo’s admission as the managing member of Authentic Brands, Authentic Brands will issue Company Common Units and Company Restricted Units to PubCo in exchange for a combination of shares of PubCo Class B Common Stock and cash, with the shares of PubCo Class B Common Stock to be distributed to certain Continuing Unitholders and the cash to be used to redeem the existing preferred units of Authentic Brands (other than those held by Blocker) and to purchase the Company Common Units of certain Continuing Unitholders in an aggregate amount of approximately $270.7 million (assuming no redemptions by SilverBox’s Public Stockholders).
Promptly following the consummation of the SilverBox Merger and the Blocker Merger, the Business Combination shall be consummated.
Following the completion of the Business Combination, as described above, our organizational structure will be what is commonly referred to as an umbrella partnership corporation (or Up-C) structure. This organizational structure will allow the Continuing Unitholders to retain their equity ownership in Authentic Brands, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of Company Common Units and Company Restricted Units. Each Continuing Unitholder will also hold a number of shares of PubCo Class B Common Stock equal to the number of Company Common Units held by such Continuing Unitholder, which will have no economic value,
 
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but which will entitle the holder thereof to one (1) vote per share at any meeting of the stockholders of PubCo. Those investors who, prior to the Business Combination, held SilverBox Class A Common Stock or SilverBox Class B Common Stock and the Blocker stockholders will, by contrast, hold their equity ownership in PubCo, a Delaware public benefit corporation that is a domestic corporation for U.S. federal income tax purposes. The parties agreed to structure the Business Combination in this manner for tax and other business purposes, and we do not believe that our Up-C organizational structure will give rise to any significant business or strategic benefit or detriment. See the sections entitled “Risk Factors — Risks Related to PubCo’s Corporate Structure,” “— Risks Related to an Investment in Securities of PubCo” and “— Risks Related to Taxation” for additional information on our organizational structure, including the Tax Receivable Agreement. The LLC Agreement will provide unitholders in Authentic Brands (other than PubCo and its subsidiaries) the right to exchange Company Common Units, together with the cancellation of an equal number of shares of PubCo Class B Common Stock, for an equal number of shares of PubCo Class A Common Stock, subject to certain restrictions set forth therein. The Company Restricted Units held by unitholders in Authentic Brands will be subject to vesting conditions set forth in the LLC Agreement (described below under the heading “Certain Agreements Related to the Business Combination — LLC Agreement”) and will not be exchangeable for PubCo Class A Common Stock or entitled to receive distributions from Authentic Brands until such units vest in accordance with the terms of the LLC Agreement.
Each share of PubCo Class A Common Stock will provide the holder the rights to vote, receive dividends, and share in distributions in connection with a liquidation and other stockholder rights with respect to PubCo.
Q.
What is the Tax Receivable Agreement?
A.
The redemption of existing preferred units of Authentic Brands (other than those held by Blocker) and a portion of the Company Common Units for the consideration paid pursuant to the Business Combination Agreement, the future exchange of Company Common Units for shares of PubCo Class A Common Stock (or cash) pursuant to the LLC Agreement and certain pre-existing tax attributes of the Blocker are expected to produce favorable tax attributes for PubCo. The resulting anticipated tax basis adjustments are likely to increase (for applicable income tax purposes) PubCo’s depreciation and amortization deductions and therefore reduce the amount of income tax it would be required to pay in the future in the absence of this increased basis. This increased tax basis may also decrease the gain (or increase the loss) on future dispositions of certain assets to the extent the tax basis is allocated to those assets.
Concurrently with the completion of the Business Combination, PubCo will enter into the Tax Receivable Agreement, in substantially the form attached to this proxy statement/prospectus as Annex F. Pursuant to the Tax Receivable Agreement, PubCo will be required to pay to the Continuing Unitholders 85% of the tax savings that PubCo realizes as a result of increases in tax basis in Authentic Brands’ assets resulting from the redemption of existing preferred units of Authentic Brands (other than those held by Blocker) and a portion of the Company Common Units for the consideration paid pursuant to the Business Combination Agreement, the future exchange of Company Common Units for shares of PubCo Class A Common Stock (or cash) pursuant to the LLC Agreement and certain pre- existing tax attributes of the Blocker, as well as certain other tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. Further, to the extent that PubCo does not make payments under the Tax Receivable Agreement when due, as a result of having insufficient funds or otherwise, interest will generally accrue at a rate equal to SOFR plus 100 basis points or in some cases SOFR plus 500 basis points until paid. Nonpayment of PubCo’s obligations for a specified period may constitute a breach of a material obligation under the Tax Receivable Agreement, and therefore may accelerate payments due under the Tax Receivable Agreement resulting in a lump-sum payment, which may be substantial. If PubCo does not have sufficient funds to pay its obligations under the Tax Receivable Agreement, it may have to borrow funds and thus its liquidity and financial condition could be materially and adversely affected.
The increase in tax basis, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the timing of exchanges or redemptions, the price of PubCo Class A Common Stock at the time of the exchange or redemption,
 
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whether such exchanges or redemptions are taxable, the amount and timing of the taxable income PubCo generates in the future, the U.S. federal and state tax rates then applicable, and the portion of its payments under the Tax Receivable Agreement constituting imputed interest. Payments under the Tax Receivable Agreement are expected to give rise to certain additional tax benefits attributable to either further increases in basis or in the form of deductions for imputed interest, depending on the circumstances. Any such benefits are covered by the Tax Receivable Agreement and will increase the amounts due thereunder. In addition, the Tax Receivable Agreement will provide for interest, generally at a rate equal to SOFR plus 100 basis points or in some cases SOFR plus 500 basis points, accrued from the due date (without extensions) of PubCo’s U.S. federal income tax return for the year to which the payment relates to the date of payment under the Tax Receivable Agreement.
PubCo anticipates that the payments that it will be required to make under the Tax Receivable Agreement may be substantial, and any such payments will reduce cash that would otherwise have been available to PubCo for other uses, some of which could benefit the Pubco stockholders. To the extent that PubCo is unable to make timely payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid. Nonpayment for a specified period may constitute a breach of a material obligation under the Tax Receivable Agreement and therefore may accelerate payments due under the Tax Receivable Agreement. Furthermore, PubCo’s future obligation to make payments under the Tax Receivable Agreement could make it a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that may be deemed realized under the Tax Receivable Agreement.
Payments under the Tax Receivable Agreement will be based on the tax reporting positions that PubCo determines. Although PubCo is not aware of any issue that would cause the U.S. Internal Revenue Service, or IRS, to challenge a tax basis increase or other tax attributes subject to the Tax Receivable Agreement, if any subsequent disallowance of tax basis or other benefits were so determined by the IRS, generally PubCo would not be reimbursed for any payments previously made under the Tax Receivable Agreement (although it would generally reduce future amounts otherwise payable under the Tax Receivable Agreement). As a result, the amounts that PubCo may significantly exceed the actual tax savings that it ultimately realizes. PubCo may need to incur debt to finance payments under the Tax Receivable Agreement to the extent its cash resources are insufficient to meet its obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise. In these situations, PubCo’s obligations under the Tax Receivable Agreement could have a substantial negative impact on its liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combination, or other changes of control. There can be no assurance that PubCo will be able to finance its obligations under the Tax Receivable Agreement.
The term of the Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired unless PubCo exercises its right (with the consent of a majority of its disinterested directors and of the Agent under the Tax Receivable Agreement) to terminate the Tax Receivable Agreement for an amount representing the present value of all forecasted future payments that would have otherwise been made under the Tax Receivable Agreement or certain other acceleration events occur. For more information on the Tax Receivable Agreement, please see the section entitled “Certain Agreements Related to the Business Combination — Tax Receivable Agreement.”
Q.
Do I have redemption rights?
A.
If you are a Public Stockholder, you may redeem your Public Shares for cash equal to your pro rata share of the aggregate amount on deposit in the Trust Account, which holds the proceeds of the IPO, as of two business days prior to the Closing, including interest earned on the funds held in the Trust Account and not previously released to SilverBox to pay its income taxes or any other taxes payable, upon the Closing. The per share amount SilverBox will distribute to holders who properly redeem their shares will not be reduced by the deferred underwriting commissions SilverBox will pay to the underwriters of its IPO if the Business Combination is consummated. Holders of the outstanding Public Warrants do not have redemption rights with respect to such warrants in connection with the Business Combination. The Sponsor and the officers and directors of SilverBox have agreed to waive their redemption rights with respect to their Sponsor Shares and any Public Shares that they may have acquired during or after the IPO in connection with the completion of SilverBox’s business
 
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combination. The shares of SilverBox Common Stock purchased by the Sponsor and the officers and directors of SilverBox in connection with our IPO will be excluded from the pro rata calculation used to determine the per share redemption price. For illustrative purposes, based on funds in the Trust Account of approximately $345 million on November 1, 2021, the estimated per share redemption price would have been approximately $10.00. Additionally, Public Shares properly tendered for redemption will only be redeemed if the Business Combination is consummated; otherwise, holders of such shares will only be entitled to a pro rata portion of the Trust Account, including interest (which interest shall be net of taxes payable by SilverBox), in connection with the liquidation of the Trust Account.
Q.
Will how I vote affect my ability to exercise redemption rights?
A.
No. You may exercise your redemption rights whether you vote your Public Shares for or against the Business Combination Proposal and other Stockholder Proposals or do not vote your shares. As a result, the Business Combination Proposal can be approved by stockholders who will redeem their Public Shares and no longer remain stockholders, leaving stockholders who choose not to redeem their Public Shares holding shares in a company with a less liquid trading market, fewer stockholders, less cash, and the potential inability to meet the listing standards of the NYSE.
Q.
How do I exercise my redemption rights?
A.
In order to exercise your redemption rights, you must, prior to 5:00 p.m., Eastern time, on February 1, 2022 (two business days before the special meeting of stockholders), (i) submit a written request to SilverBox’s transfer agent to redeem your Public Shares for cash, and (ii) deliver your stock to SilverBox’s transfer agent physically or electronically through the Depository Trust Company. For the address of Continental Stock Transfer & Trust Company, SilverBox’s transfer agent, see the question “Who can help answer my questions?” below. SilverBox requests that any requests for redemption include the identity as to the beneficial owner making such request. Electronic delivery of your shares generally will be faster than delivery of physical stock certificates.
A physical stock certificate will not be needed if your stock is delivered to SilverBox’s transfer agent electronically. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, the Depository Trust Company and SilverBox’s transfer agent will need to act to facilitate the request. It is SilverBox’s understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because SilverBox does not have any control over this process or over the brokers or the Depository Trust Company, it may take significantly longer than two weeks to obtain a physical stock certificate. Accordingly, if it takes longer than anticipated for stockholders to deliver their shares, stockholders who wish to redeem may be unable to meet the deadline for exercising their redemption rights and thus may be unable to redeem their shares. In the event that a stockholder fails to comply with the various procedures that must be complied with in order to validly tender or redeem Public Shares, its shares may not be redeemed.
Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with SilverBox’s consent, until the vote is taken with respect to the Business Combination. If you delivered your shares to SilverBox’s transfer agent for redemption and decide within the required timeframe not to exercise your redemption rights, you may request that SilverBox’s transfer agent return the shares (physically or electronically). You may make such request by contacting SilverBox’s transfer agent at the phone number or address listed under the question, “Who can help answer my questions?”
Q.
What are the U.S. federal income tax consequences of exercising my redemption rights?
A.
The U.S. federal income tax consequences of exercising your redemption rights depend on your particular facts and circumstances. See the section titled “Material U.S. Federal Income Tax Considerations — Material U.S. Federal Income Tax Considerations of Redemption.” You are urged to consult your tax advisor regarding the tax consequences of exercising your redemption rights.
 
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Q.
What are the U.S. federal income tax consequences of the SilverBox Merger?
A.
As discussed more fully under “Material U.S. Federal Income Tax Considerations” below, it is the opinion of Paul Hastings LLP that the SilverBox Merger will qualify as a “reorganization” within the meaning of Section 368(a)(1)(F) of the U.S. Internal Revenue Code of 1986, as amended. See the section titled “Material U.S. Federal Income Tax Considerations — Material U.S. Federal Income Tax Considerations of the SilverBox Merger — F Reorganization.” However, neither PubCo nor SilverBox intends to or has sought any rulings from the IRS regarding the U.S. federal income tax consequences of the SilverBox Merger; accordingly, no assurance can be given that the IRS will not assert, or that a court will not sustain, a position contrary to the tax treatment of the SilverBox Merger discussed herein. You are urged to consult your tax advisor regarding the tax consequences of the SilverBox Merger.
Q.
If I hold Public Warrants, can I exercise redemption rights with respect to my warrants?
A.
No. Holders of Public Warrants have no redemption rights with respect to the Public Warrants; however, if such Holders choose to redeem their shares of SilverBox Class A Common Stock, those Holders may still exercise their Public Warrants if the Business Combination is consummated.
Q.
Do I have appraisal rights if I object to the proposed Business Combination?
A.
No. There are no appraisal rights available to holders of shares of SilverBox Common Stock in connection with the Business Combination.
Q.
What happens to the funds held in the Trust Account upon consummation of the Business Combination?
A.
If the Business Combination is consummated, the funds held in the Trust Account will be released to pay (i) Public Stockholders who properly exercise their redemption rights and (ii) certain expenses incurred by Authentic Brands and SilverBox in connection with the Business Combination, to the extent not otherwise paid prior to the Closing. The remaining funds available for release from the Trust Account will be used for general corporate purposes of PubCo following the Business Combination.
Q.
What are the PIPE Investment, Backstop Investment and Forward Purchase Investment?
A.
Concurrently with the execution and delivery of the Business Combination Agreement, SilverBox and the PIPE Investors entered into PIPE Subscription Agreements pursuant to which the PIPE Investors have committed to subscribe for and purchase, in the aggregate, up to 10,000,000 shares of SilverBox Class C Common Stock for $10.00 per share, for an aggregate purchase price equal to up to $100.0 million. Further, to the extent redemptions of Public Shares exceed $100 million, the PIPE Investors have agreed to purchase an additional number of SilverBox Class C Common Stock at $10.00 per share for an aggregate purchase price equal to the excess over $100 million in redemptions of Public Shares, for a maximum aggregate amount of $100 million. In addition to the PIPE Investment, pursuant to the Forward Purchase Agreement, Engaged Capital committed to subscribe for and purchase 10,000,000 shares of SilverBox Class C Common Stock for $10.00 per share for an aggregate purchase price equal to $100 million.
Q.
What happens to the proceeds from the PIPE Investment and Forward Purchase Investment upon consummation of the Business Combination?
A.
The PIPE Investment and the Forward Purchase Investment are expected to close prior to the consummation of the SilverBox Merger. Upon the closing of the Business Combination, the proceeds from the PIPE Investment and the Forward Purchase Investment, together with the funds from the Trust Account, will be released to PubCo to fund the cash consideration payable pursuant to the Business Combination Agreement and to pay transaction expenses. Any remaining proceeds will be used by PubCo for general corporate purposes following the Business Combination.
Q.
What happens if a substantial number of Public Stockholders vote in favor of the Business Combination Proposal and exercise their redemption rights?
A.
Public Stockholders may vote in favor of the Business Combination and still exercise their redemption rights. Accordingly, the Business Combination may be consummated even though the funds available
 
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from the Trust Account and the number of Public Stockholders are reduced as a result of redemptions by Public Stockholders.
In no event will SilverBox redeem Public Shares in an amount that would cause its net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) to be less than $5,000,001 after giving effect to the transactions contemplated by the Business Combination Agreement, including the PIPE Investment, the Backstop Investment, if any, and the Forward Purchase Investment. If enough Public Stockholders exercise their redemption rights such that SilverBox cannot satisfy the net tangible asset requirement, SilverBox would not proceed with the redemption of our Public Shares and the Business Combination, and instead may search for an alternate business combination.
As a result of redemptions, the trading market for PubCo Class A Common Stock may be less liquid than the market for SilverBox Class A Common Stock was prior to the Business Combination and PubCo may not be able to meet the listing standards of a national securities exchange.
Additionally, with fewer funds available from the Trust Account, the capital infusion from the Trust Account into PubCo will be reduced and PubCo may not be able to achieve its business plan and may require additional financing sooner than currently anticipated.
Q.
What happens if the Business Combination is not consummated?
A.
There are certain circumstances under which the Business Combination Agreement may be terminated.
See the section titled “Business Combination Agreement — Termination” for information regarding the parties’ specific termination rights.
If SilverBox does not complete the proposed Business Combination for whatever reason, SilverBox would search for another business combination partner with which to complete a business combination. If SilverBox does not complete a business combination with Authentic Brands or another business combination partner by June 2, 2023, SilverBox must redeem 100% of the outstanding Public Shares, at a per share price, payable in cash, equal to the amount then held in the Trust Account divided by the number of then outstanding Public Shares. The Sponsor and the officers and directors of the SilverBox have no redemption rights in the event a business combination is not consummated in the required time period, and, accordingly, their Sponsor Shares will be worthless. Additionally, in the event of such a liquidation, as described above, there will be no distribution with respect to outstanding Public Warrants and, accordingly, the Public Warrants will expire and be worthless.
Q.
What will Authentic Brands security holders receive in the Business Combination?
A.
In accordance with the terms and subject to the conditions of the Business Combination Agreement, the existing unitholders of Authentic Brands (other than Blocker) will (i) retain a certain number of Company Common Units in Authentic Brands and receive a corresponding number of shares of PubCo Class B Common Stock, (ii) receive a certain number of Company Restricted Units in Authentic Brands, which will be subject to certain vesting terms as described herein, in exchange for certain Company Common Units in Authentic Brands and (iii) receive cash in exchange for a portion of the existing common units of Authentic Brands they hold. The PubCo Class B Common Stock to be issued to the Continuing Unitholders is not being registered under the Securities Act and will be issued in reliance upon the exemption provided by Rule 506(b) of Regulation D promulgated under the Securities Act. For further details, see “Proposal No. 1 — The Business Combination Proposal — Business Combination Agreement.”
Q.
What shall be the relative equity stakes of the Public Stockholders, the Authentic Brands security holders, the PIPE Investors and the Forward Purchase Investors in PubCo upon completion of the Business Combination?
A.
Upon consummation of the Business Combination, PubCo shall become a new public company, Merger Sub 1 shall be a wholly owned subsidiary of PubCo and Blocker shall be a wholly owned subsidiary of Merger Sub 1. The former security holders of SilverBox and Authentic Brands, the PIPE Investors and the Forward Purchase Investors shall all become security holders of PubCo.
 
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Upon consummation of the Business Combination, assuming a February 9, 2022 Closing Date, the post-Closing share ownership of PubCo assuming various levels of redemption by the Public Stockholders will be as follows:
No Redemptions(1)
Assuming 50%
Redemptions(2)
Maximum
Redemptions(3)
Shares
%
Shares
%
Shares
%
Authentic Brand Equityholders(4)
130,576,050 62.43% 133,076,050 65.99% 144,415,100 73.52%
Public Stockholders
34,500,000 16.49% 17,250,000 8.55% 0.00%
Public Warrants(5)
11,500,000 5.50% 11,500,000 5.70% 11,500,000 5.85%
Sponsor Shares
5,792,500 2.77% 5,792,500 2.87% 3,723,750 1.90%
Private Placement Warrants(6)
6,266,667 3.00% 6,266,667 3.11% 6,266,667 3.19%
BRCC Fund Shares
532,750 0.25% 532,750 0.26% 532,750 0.27%
Engaged Capital Investors
10,000,000 4.78% 10,000,000 4.96% 10,000,000 5.09%
PIPE Investors
10,000,000 4.78% 17,250,000 8.55% 20,000,000 10.18%
Total
209,167,967 100.00% 201,667,967 100.00% 196,438,267 100.00%
(1)
Assumes that no shares of SilverBox Class A Common Stock are redeemed.
(2)
Assumes that 17.3 million shares of SilverBox Class A Common Stock, or 50% of the shares outstanding are redeemed.
(3)
Assumes that 34.5 million shares of SilverBox Class A Common Stock, or 100% of the shares outstanding are redeemed.
(4)
Shares held by Authentic Brand Equityholders include shares held by management and reflects vested Existing Company Incentive Units existing prior to the Business Combination.
(5)
Assumes the exercise of all Public Warrants for PubCo Class A Common Stock.
(6)
Assumes the exercise of all Private Placement Warrants for PubCo Class A Common Stock.
Share ownership presented in the table above is only presented for illustrative purposes and are based on a number of assumptions. SilverBox cannot predict how many of the Public Stockholders will exercise their right to have their Public Shares redeemed for cash. As a result, the redemption amount and the number of Public Shares redeemed in connection with the Business Combination may differ from the amounts presented above. As such, the ownership percentages and voting power of current SilverBox stockholders may also differ from the presentation above if the actual redemptions are different from these assumptions. The Public Stockholders that do not elect to redeem their Public Shares will experience dilution as a result of the Business Combination. The Public Stockholders currently own 80% of the SilverBox Class A Common Stock. As noted in the above table, if no Public Stockholders redeem their Public Shares in the Business Combination, the Public Stockholders will go from owning 80% of the SilverBox Class A Common Stock prior to the Business Combination to owning 22.0% of the total shares outstanding of PubCo. The Public Stockholders will own approximately 14.3% and 5.9% of the total shares outstanding of PubCo, assuming redemptions equaling 50.0% and Maximum Redemption scenarios as shown above, respectively.
In addition to the changes in percentage ownerships depicted above, variation in the levels of redemption will impact the dilutive effect of certain equity issuances related to the Business Combination which would not otherwise be present in an underwritten public offering. Increasing levels of redemption will increase the dilutive effects of these issuances on non-redeeming Public Stockholders. See the section entitled “Risk Factors — We cannot be certain as to the number of Public Shares that will be redeemed and the potential impact to Public Stockholders who do not elect to redeem their Public Shares” and “ — You may not have the same benefits as an investor in an underwritten public offering.”
 
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No Redemptions(1)
Assuming 50%
Redemptions(2)
Maximum
Redemptions(3)
Shares
Value
Per Share(4)
Shares
Value
Per Share(5)
Shares
Value
Per Share(6)
Base Scenario(7)
191,401,300 $ 10.00 183,901,300 $ 10.00 178,671,600 $ 10.00
Excluding SilverBox Sponsor Shares(8)
185,608,800 10.31 178,108,800 10.33 174,947,850 10.21
Exercising SilverBox Public Stockholder Warrants(9)(10)
202,901,300 9.43 195,401,300 9.41 190,171,600 9.40
Exercising SilverBox Sponsor Warrants(9)(10)
197,667,967 9.68 190,167,967 9.67 184,938,267 9.66
Exercising All SilverBox Warrants(9)(10)
209,167,967 9.15 201,667,967 9.12 196,438,267 9.10
(1)
Assumes that no shares of the SilverBox Class A Common Stock are redeemed.
(2)
Assumes that 17.3 million shares of SilverBox Class A Common Stock, or 50% of the shares outstanding are redeemed.
(3)
Assumes that 34.5 million shares of SilverBox Class A Common Stock, or 100% of the shares outstanding are redeemed.
(4)
Based on a post-transaction equity value of PubCo of $1.914 billion.
(5)
Based on a post-transaction equity value of PubCo of $1.839 billion.
(6)
Based on a post-transaction equity value of PubCo of $1.787 billion.
(7)
Represents the post-Closing share ownership of PubCo assuming various levels of redemption by the Public Stockholders.
(8)
Represents the Base Scenario excluding the Sponsor Shares.
(9)
Represents the Base Scenario plus the full exercise of the IPO Public Warrants and/or the Private Placement Warrants
(10)
Analysis does not account for exercise prices to be paid in connection with the exercise of warrants.
The level of redemption also impacts the effective deferred underwriting fee per Public Share incurred in connection with the IPO and payable upon the completion of the Business Combination. SilverBox incurred $12,075,000 in deferred underwriting fees. Assuming no exercise of SilverBox warrants, in a no redemption scenario, the effective deferred underwriting fee would be approximately $0.35 per Public Share on a pro forma basis (or 3.5% of the value of shares assuming a trading price of $10.00 per share). In a medium redemption scenario in which 50% of the shares assumed to be redeemed under the Maximum Redemption scenario, are redeemed in connection with the Business Combination, the effective deferred underwriting fee would be approximately $0.70 per Public Share on a pro forma basis (or 7.0% of the value of shares assuming a trading price of $10.00 per share). In the Maximum Redemption scenario, the effective deferred underwriting fee is not meaningful when expressed as on a per share or percentage basis as the divisor is zero.
Please see the section titled “Summary Unaudited Pro Forma Condensed Combined Financial Information” for further information.
Q.
Who will be the officers and directors of PubCo if the Business Combination is consummated?
A.
Upon consummation of the Business Combination, the Proposed Charter will provide that, subject to the Investor Rights Agreement, the PubCo Board will be divided among three classes, as follows:

Our Class I directors will be Katy Dickson and Roland Smith and their term will expire at the first annual meeting of stockholders following the Closing and the term of all Class I directors shall automatically become one year commencing on the seventh annual meeting of stockholders.
 
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Our Class II directors will be Tom Davin and George Muñoz and their term will expire at the second annual meeting of stockholders following the Closing and the term of all Class II directors shall automatically become one year commencing on the eighth annual meeting of stockholders.

Our Class III directors will be Evan Hafer, Steven Taslitz and Glenn Welling and their term will expire at the third annual meeting of stockholders following the Closing and the term of all Class III directors shall automatically become one year commencing on the ninth annual meeting of stockholders.
Upon consummation of the Business Combination, the following individuals will serve as executive officers of PubCo:
Name
Position(s) Held
Evan Hafer
Chief Executive Officer
Mat Best
Chief Branding Officer
Tom Davin
Co-Chief Executive Officer
Greg Iverson
Chief Financial Officer
Toby Johnson
Chief Operations Officer
Andrew McCormick
General Counsel and Corporate Secretary
For further details, see “Management After the Business Combination — Directors and Executive Officers.
Q.
Who will have the right to nominate or appoint directors to the PubCo Board after the consummation of the Business Combination?
A.
Subject to the rights set forth under the Investor Rights Agreement, each holder of PubCo Class A Common Stock and PubCo Class B Common Stock has the exclusive right to vote for the election of directors following the consummation of the Business Combination. Holders of PubCo Class A Common Stock will vote together with holders of PubCo Class B Common Stock as a single class. In the case of election of directors all matters to be voted on by stockholders must be approved by a plurality of the votes entitled to be cast by all stockholders present in person or represented by proxy, voting together as a single class. The PubCo Board will be divided into three classes designated Class I, Class II and Class III. Under the Investor Rights Agreement, subject to certain step down provisions, Engaged Capital, on behalf of the Forward Purchase Investors, will have the right to nominate two board members and the Founder will have the right to nominate three board members (including himself). One Engaged Director will be nominated as Class I director with the terms ending at PubCo’s 2023 annual meeting of stockholders; one Founder Director will be nominated as a Class II director with the terms ending at PubCo’s 2024 annual meeting of stockholders; and one Engaged Director and one Founder Director will be nominated as Class III directors with terms ending at PubCo’s 2025 annual meeting of stockholders.
Subject to the Investor Rights Agreement, the term of all Class I directors will automatically become one year beginning on the seventh annual meeting of stockholders, the term of all Class II directors will automatically become one year beginning on the eighth annual meeting of stockholders and the term of all Class III directors will automatically become one year beginning on the ninth annual meeting of stockholders, with all directors having a term of one year from and after the ninth annual meeting of stockholders.
Until the fifth anniversary of the closing of the Business Combination, (i) the holders party to the Investor Rights Agreement will agree to vote all of their respective shares of PubCo Class A Common Stock and PubCo Class B Common Stock, as applicable, in favor of the Engaged Directors and Founder Directors and (ii) the Forward Purchase Investors and the Sponsor and certain other equityholders party to the investor Rights Agreement will agree to vote all of their voting shares in PubCo in the election, removal of directors as directed by the BRCC Founder. As a result, upon consummation of the Business Combination, the BRCC Founder will effectively control a majority of the votes on director elections and removals. For more information on the Investor Rights Agreement,
 
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please see the section entitled “Proposal No. 1 — The Business Combination Proposal — Certain Agreements Related to the Business Combination — Investor Rights Agreement.
Q.
What conditions must be satisfied to consummate the Business Combination?
A.
There are a number of Closing conditions in the Business Combination Agreement, including the approval of the Business Combination Agreement by stockholders of SilverBox and, the effectiveness of the registration statement of which this proxy statement/prospectus forms a part, the receipt of certain regulatory approvals (including, but not limited to, approval for listing on the NYSE of the PubCo Class A Common Stock and PubCo Warrants and the expiration or early termination of the waiting period or periods under the HSR Act), that SilverBox has at least $5,000,001 of net tangible assets upon Closing and the absence of any injunctions. Other conditions to Authentic Brands’ obligations to consummate the Business Combination include, among others, that as of the Closing, the aggregate amount of cash in the Trust Account (after, for the avoidance of doubt, giving effect to all of the redemptions of Public Shares by Public Stockholders (the “SilverBox Stockholder Redemptions”)), plus the gross proceeds of the PIPE Investment and the Forward Purchase Investment shall be equal to or greater than $300,000,000.
For a summary of the conditions that must be satisfied or waived prior to the consummation of the Business Combination, see the section titled “Proposal No. 1 — The Business Combination Agreement — Conditions to Closing.”
Q.
What happens if I sell my shares of SilverBox Common Stock before the special meeting of stockholders?
A.
The record date for the special meeting of stockholders will be earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of SilverBox Common Stock after the record date, but before the special meeting of stockholders, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the special meeting of stockholders. However, you will not become a PubCo stockholder following the Closing because only SilverBox’s stockholders on the Closing Date will become PubCo stockholders.
Q.
What vote is required to approve the proposals presented at the special meeting of stockholders?
A.
The approval of each of the Business Combination Proposal, Organizational Document Proposals and Adjournment Proposal requires the affirmative vote (virtually in person or by proxy) of the holders of a majority of the shares of SilverBox Common Stock that are voted at the special meeting of stockholders. Accordingly, a SilverBox stockholder’s failure to vote by proxy or to vote online at the virtual special meeting of stockholders, an abstention from voting, or a broker non-vote will have no effect on the outcome of any vote on these Stockholder Proposals.
The Sponsor owns all of the outstanding shares of SilverBox Class B Common Stock and has agreed, together with SilverBox’s executive officers and directors, to vote all shares of SilverBox Common Stock owned by Sponsor or such executive officer or director, as applicable, including the SilverBox Class B Common Stock, in favor of the Business Combination Proposal and the Organizational Document Proposals. Such holders represent 20% of the issued and outstanding shares of SilverBox Common Stock as of the record date. As a result, the affirmative vote of holders of an additional 12,397,500 shares of SilverBox Common Stock, representing only 30% of the remaining shares of SilverBox Common Stock held by the Public Stockholders as of the record date, assuming the minimum number of shares required to constitute a quorum are voted at the special meeting, would be required to approve the Business Combination Proposal and the Organizational Document Proposals.
Q.
What interests do the Sponsor and SilverBox’s current officers and directors have in the Business Combination?
A.
SilverBox’s board of directors and officers may have interests in the Business Combination that are different from, in addition to, or in conflict with, yours. These interests include:

the beneficial ownership of the Sponsor of an aggregate of 7,033,750 Sponsor Shares (including 1,241,250 shares subject to vesting and after giving effect to the agreed upon forfeiture of 1,158,500 Sponsor Shares and assuming 432,750 Sponsor Shares are donated to the BRCC Fund upon the
 
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consummation of the Business Combination) and 6,266,667 Private Placement Warrants, which shares and warrants would become worthless if SilverBox does not complete a business combination within the applicable time period, as the Sponsor, SilverBox’s directors and officers and their affiliates have waived any right to redemption with respect to these shares. The Sponsor did not receive any compensation in exchange for this agreement to waive its redemption rights. Each of SilverBox’s directors and officers are members of the Sponsor and, as such, have an indirect interest in the Sponsor Shares. SilverBox’s independent directors collectively have an indirect interest of less 2% in the Sponsor Shares. Such shares and warrants have an aggregate market value of approximately $71.5 million and $9.4 million, respectively, based on the closing price of SilverBox Class A Common Stock of $10.17 on Nasdaq and the closing of the Public Warrants of $1.50 on Nasdaq on January 3, 2022, the record date for the special meeting of stockholders;

the Sponsor paid an aggregate of $25,000 ($0.003 per share) for the Sponsor Shares which will have a significantly higher value at the time of the Business Combination, if it is consummated. If SilverBox does not consummate the Business Combination or another initial business combination by June 2, 2023, and SilverBox is therefore required to be liquidated, these shares would be worthless, as Sponsor Shares are not entitled to participate in any redemption or liquidation of the Trust Account. Based on the difference in the purchase price of $0.003 that the Sponsor paid for the Sponsor Shares, as compared to the purchase price of $10.00 per Unit sold in the IPO, the Sponsor may earn a positive rate of return even if the share price of PubCo after the Closing falls below the price initially paid for the Units in the IPO and the Public Stockholders experience a negative rate of return following the Closing;

the Sponsor paid $9,400,000 for its private warrants, which would be worthless if a business combination is not consummated by June 2, 2023;

the Sponsor and SilverBox’s directors and officers may be incentivized to complete the Business Combination, or an alternative initial business combination with a less favorable company or on terms less favorable to stockholders, rather than to liquidate, in which case the Sponsor and SilverBox’s directors and officers would lose their entire investment. As a result, the Sponsor as well as SilverBox’s directors or officers may have a conflict of interest in determining whether Authentic Brands is an appropriate business with which to effectuate a business combination and/or in evaluating the terms of the Business Combination. SilverBox’s board of directors was aware of and considered these interests, among other matters, in evaluating and unanimously approving the Business Combination and in recommending to Public Stockholders that they approve the Business Combination;

SilverBox’s board of directors will not receive reimbursement for any out-of-pocket expenses incurred by them on SilverBox’s behalf incident to identifying, investigating and consummating the Business Combination to the extent such expenses exceed the amount required to be retained in the Trust Account, unless the Business Combination is consummated, though there have been no material out-of-pocket expenses subject to reimbursement and SilverBox does not anticipate any such expenses prior to Closing;

the Sponsor has entered into the Sponsor Letter Agreement pursuant to which the Sponsor has already agreed to vote its shares in favor of the Business Combination;

certain members of the Sponsor and certain limited partners and co-investors of Engaged Capital, which is a member of the Sponsor, are participating in the PIPE Investment, and investment funds and accounts managed by Engaged Capital have agreed to purchase the Forward Purchase Shares;

the continuation of Glenn Welling as a director of PubCo;

the Investor Rights Agreement will be entered into by the Sponsor and Engaged Capital and certain of its affiliates; and

the continued indemnification of the current directors and officers of SilverBox following the Business Combination and the continuation of directors’ and officers’ liability insurance following the Business Combination.
These interests may influence SilverBox’s board of directors in making their recommendation that you vote in favor of the approval of the Stockholder Proposals. You should also read the section titled
 
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Proposal No. 1 — The Business Combination Proposal — Interests of SilverBox’s Directors and Officers in the Business Combination.
Q.
When is the Business Combination expected to be completed?
A.
It is currently anticipated that the Business Combination will be consummated promptly following the special meeting of stockholders, provided that all other conditions to the Closing have been satisfied or waived. For a description of the conditions to the completion of the Business Combination, see the section titled “Proposal No. 1 — The Business Combination Proposal — The Business Combination Agreement — Conditions to Closing.”
Q.
What do I need to do now?
A.
You are urged to carefully read and consider the information contained in this proxy statement/ prospectus in its entirety, including the financial statements and annexes attached hereto, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.
Q.
How do I vote?
A.
If you were a holder of record of SilverBox Common Stock on January 3, 2022, the record date for the special meeting of stockholders, you may vote on the Stockholder Proposals online at the virtual special meeting of stockholders or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to virtually attend the special meeting of stockholders and vote online, obtain a proxy from your broker, bank or nominee.
Q.
What will happen if I abstain from voting or fail to vote at the special meeting?
A.
At the special meeting of stockholders, SilverBox will count a properly executed proxy marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present. Accordingly, a SilverBox stockholder’s failure to vote by proxy or to vote online at the virtual special meeting of stockholders, an abstention from voting or a broker non-vote will have the same effect as a vote against these proposals. The approval of each of the Business Combination Proposal, the Organizational Document Proposals and Adjournment Proposal requires the affirmative vote (virtually in person or by proxy) of the holders of a majority of the shares of SilverBox Common Stock that are voted at the special meeting of stockholders. Accordingly, a SilverBox stockholder’s failure to vote by proxy or to vote online at the virtual special meeting of stockholders, an abstention from voting, or a broker non-vote will have no effect on the outcome of any vote on these proposals.
Q.
What will happen if I sign and return my proxy card without indicating how I wish to vote?
A.
Signed and dated proxies received by SilverBox without an indication of how the stockholder intends to vote on a proposal will be voted in favor of each of the Stockholder Proposals.
Q.
Do I need to attend the special meeting of stockholders to vote my shares?
A.
No. You are invited to virtually attend the special meeting to vote on the proposals described in this proxy statement/prospectus. However, you do not need to attend the special meeting of stockholders to vote your shares. Instead, you may submit your proxy by signing, dating and returning the applicable enclosed proxy card(s) in the pre-addressed postage-paid envelope. Your vote is important. SilverBox encourages you to vote as soon as possible after carefully reading this proxy statement/prospectus.
 
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Q.
If I am not going to attend the special meeting of stockholders, should I return my proxy card instead?
A.
Yes. After carefully reading and considering the information contained in this proxy statement/ prospectus, please submit your proxy, as applicable, by completing, signing, dating and returning the enclosed proxy card in the pre-addressed postage-paid envelope provided.
Q.
If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?
A.
No. If your broker holds your shares in its name and you do not give the broker voting instructions, under the applicable stock exchange rules, your broker may not vote your shares on any of the Stockholder Proposals. If you do not give your broker voting instructions and the broker does not vote your shares, this is referred to as a “broker non-vote.” Broker non-votes will be counted for purposes of determining the presence of a quorum at the special meeting of stockholders. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide. However, in no event will a broker non-vote have the effect of exercising your redemption rights for a pro rata portion of the Trust Account, and therefore no shares as to which a broker non-vote occurs will be redeemed in connection with the proposed Business Combination.
Q.
May I change my vote after I have mailed my signed proxy card?
A.
Yes. You may change your vote by sending a later-dated, signed proxy card to SilverBox’s secretary at the address listed below prior to the vote at the special meeting of stockholders, or attend the virtual special meeting and vote online. You also may revoke your proxy by sending a notice of revocation to SilverBox’s secretary, provided such revocation is received prior to the vote at the special meeting. If your shares are held in “street name” by a broker or other nominee, you must contact the broker or nominee to change your vote.
Q.
What happens if I fail to take any action with respect to the special meeting?
A.
If you fail to take any action with respect to the special meeting and the Business Combination is approved by stockholders and consummated, you will become a stockholder of PubCo and/or your warrants will entitle you to purchase PubCo Class A Common Stock. As a corollary, failure to vote either for or against the Business Combination Proposal means you will not have any redemption rights in connection with the Business Combination to exchange your Public Shares for a pro rata share of the aggregate amount of funds held in the Trust Account as of two business days prior to the Closing, including any interest thereon but net of any income or other taxes payable. If you fail to take any action with respect to the special meeting and the Business Combination is not approved, you will continue to be a stockholder and/or warrant holder of SilverBox.
Q.
What should I do if I receive more than one set of voting materials?
A.
You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.
Q.
What is the quorum requirement for the special meeting of stockholders?
A.
A quorum of SilverBox’s stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting of stockholders if a majority of the SilverBox Common Stock outstanding and entitled to vote at the meeting is virtually present in person or by proxy. Abstentions will count as present for the purposes of establishing a quorum.
As of the record date for the special meeting, 21,562,501 shares of SilverBox Common Stock will be required to achieve a quorum.
 
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Your shares will be counted towards the quorum only if you submit a valid proxy (or your broker, bank or other nominee submits one on your behalf) or if you vote online at the virtual special meeting of stockholders. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, a majority of the shares represented by stockholders virtually present at the special meeting or by proxy may authorize adjournment of the special meeting to another date.
Q.
What happens to the Public Warrants I hold if I vote my shares of SilverBox Common Stock against approval of the Business Combination Proposal and validly exercise my redemption rights?
A.
Properly exercising your redemption rights as a SilverBox stockholder does not result in either a vote “FOR” or “AGAINST” the Business Combination Proposal. If the Business Combination is not approved and completed, you will continue to hold your Public Warrants, and if SilverBox does not otherwise consummate an initial business combination by June 2, 2023 or obtain the approval of SilverBox stockholders to extend the deadline for SilverBox to consummate an initial business combination, SilverBox will be required to dissolve and liquidate, and your Public Warrants will expire and be worthless.
Q.
Who will solicit and pay the cost of soliciting proxies?
A.
SilverBox will pay the cost of soliciting proxies for the special meeting of stockholders. SilverBox has engaged Morrow Sodali LLC (“Morrow Sodali”) to assist in the solicitation of proxies for the special meeting. SilverBox has agreed to pay Morrow Sodali a fee of $40,000. SilverBox’s directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.
Q.
Who can help answer my questions?
A.
If you have questions about the Stockholder Proposals, or if you need additional copies of this proxy statement/prospectus, the proxy card or the consent card, you should contact our proxy solicitor at: sbea@investor.morrowsodali.com. To obtain timely delivery, SilverBox’s stockholders and warrant holders must request the materials no later than five business days prior to the special meeting.
Morrow Sodali LLC
333 Ludlow Street, 5th Floor
South Tower
Stamford, Connecticut 06902
Individuals call toll-free: (800) 662-5200
Banks and brokers call collect: (203) 658-9400
E-mail: sbea@investor.morrowsodali.com
You may also obtain additional information about SilverBox from documents filed with the SEC by following the instructions in the section titled “Where You Can Find More Information.
If you intend to seek redemption of your Public Shares, you will need to send a letter demanding redemption and deliver your stock (either physically or electronically) to SilverBox’s transfer agent prior to 5:00 p.m., Eastern Time, February 1, 2022, the second business day prior to the special meeting of stockholders. If you have questions regarding the certification of your position or delivery of your shares, please contact:
Continental Stock Transfer & Trust Company
One State Street Plaza, 30th Floor
New York, New York 10004
Attention: Mark Zimkind
E-mail: mzimkind@continentalstock.com
 
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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS
This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the proposals to be submitted for a vote at the special meeting, including the Business Combination, you should read this entire document carefully, including the Business Combination Agreement attached as Annex A to this proxy statement/prospectus. The Business Combination Agreement is the legal document that governs the Business Combination and the other transactions that shall be undertaken in connection with the Business Combination. It is also described in detail in this proxy statement/prospectus in the section entitled “Business Combination Agreement.”
The Parties to the Business Combination
BRCC
BRCC is a veteran-owned company serving premium coffee, content and merchandise to active military, veterans, first responders, and those who love America. Our mission-driven brand is devoted to cause-related content that informs, inspires, entertains, and builds our community. We are committed to producing great coffee that consumers love, and high-quality merchandise that enables our community to showcase the brand. By consistently delivering exceptional products and content, we have built and retained a strong following of loyal customers throughout the United States. We are committed to supporting those who serve and producing quality products and content for our customers.
We utilize a three-pronged approach to craft a unique brand that resonates with our customer base and enhances brand loyalty: Inform, Inspire, and Entertain. We want our audience to love coffee as much as we do, so we simply inform them on all the awesome facets to coffee that we can think of. We take pride in the coffee we roast, the veterans we employ and the causes we support. We give back to the community and are committed to support those who serve. The Entertain marketing strategy drives brand excitement, along with valuable customer insights and data.
We own two roasting facilities, one focused on large batch and the other on small batch. The coffee beans are roasted in-house in the US to ensure consistency and quality of product. Our coffee beans have an 83-point grade or higher and are sourced only from the highest quality suppliers. Our state-of-the-art equipment guarantees freshness and offers significant capacity for expansion.
We have experienced strong revenue growth since inception. Revenue increased to $164 million for the year ended December 31, 2020, from $82 million for the year ended December 31, 2019, representing growth of 100%. Growth in the year ended December 31, 2020 was primarily driven by a significant expansion of our customer base.
Our omnichannel distribution strategy has three key components: Direct to Consumer (“DTC”), Wholesale, and Outposts. Our DTC channel includes our e-commerce business, through which consumers order our products online and products are shipped to them. Our Wholesale channel includes products sold to an intermediary such as convenience, grocery, drug, and mass merchandise stores, as well as outdoor, DIY, and lifestyle retailers, who in turn sell those products to consumers. Our Outpost channel includes revenue from our company-operated and franchised Black Rifle Coffee retail coffee shop locations. Revenue is driven primarily by our DTC channel which contributed to approximately 84% and 90% of our total revenue in 2020 and 2019, respectively.
Authentic Brands LLC, a Delaware limited liability company, was formed on June 5, 2018 and is the indirect parent of Black Rifle Coffee Company LLC, the indirect subsidiary through which Authentic Brands conducts substantially all of its business. The mailing address of Authentic Brands’ principal executive office is 1144 500 W, Salt Lake City, Utah 84101.
SilverBox
SilverBox is a blank check company formed as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses referred to throughout this proxy statement/prospectus as its initial business combination.
 
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The SilverBox Units, SilverBox Class A Common Stock and Public Warrants are currently listed on Nasdaq under the symbols “SBEAU,” “SBEA” and “SBEAW,” respectively.
The mailing address of SilverBox’s principal executive office is 1250 S. Capital of Texas Highway, Building 2, Suite 285, Austin, Texas 78746 and its telephone number is (512) 575-3637.
PubCo
BRC Inc., a Delaware corporation, was formed on October 26, 2021 to consummate the Business Combination. In connection with the Business Combination, BRC Inc. will be converted into a public benefit corporation under the laws of the State of Delaware and adopt the Proposed Charter. Following the Business Combination, PubCo will own Company Units and will be the managing member of Authentic Brands. PubCo intends to apply to list the PubCo Class A Common Stock and the PubCo Warrants on the NYSE under the symbols “BRCC” and “BRCC WS,” respectively, upon the Closing.
The mailing address of PubCo’s principal executive office is 1250 S. Capital of Texas Highway, Building 2, Suite 285, Austin, Texas 78746. Following the consummation of the Business Combination, PubCo’s principal executive offices will be 1144 500 W, Salt Lake City, Utah 84101.
Merger Subs
Merger Sub 1 and Merger Sub 2 are each a Delaware limited liability company formed on October 26, 2021 and a wholly owned subsidiary of PubCo and SilverBox, respectively. The Merger Subs were formed solely for the purpose of effectuating the Business Combination. None of the Merger Subs own any material assets or conduct any business activities other than activities incidental to effectuating the Business Combination.
Blocker
Blocker was incorporated in Delaware on November 16, 2020 in connection with an investment in preferred units and common units in Authentic Brands. Blocker has not conducted any business activities other than activities incidental to Blocker’s ownership of equity interests in Authentic Brands.
The Business Combination
The Business Combination Agreement
On November 2, 2021, SilverBox entered into the Business Combination Agreement with Authentic Brands, Blocker, PubCo, Merger Sub 1 and Merger Sub 2, pursuant to which SilverBox agreed to combine with Authentic Brands in the Business Combination that will result in PubCo becoming a publicly-traded company on the NYSE and controlling Authentic Brands in an “Up-C” structure.
Pursuant to the Business Combination Agreement, and subject to the terms and conditions contained therein, the Business Combination will be effected in two steps: (a) SilverBox will merge with and into Merger Sub 1 (the “SilverBox Merger”), with Merger Sub 1 surviving the SilverBox Merger as a wholly owned subsidiary of PubCo; and (b) immediately following the SilverBox Merger, Merger Sub 2 will merge with and into Blocker (the “Blocker Merger” and, together with the SilverBox Merger and all other transactions contemplated by the Business Combination Agreement, the “Business Combination”), with Blocker surviving as a wholly owned subsidiary of Merger Sub 1. As a result of the Business Combination, PubCo will become a new publicly-traded company on the NYSE and will become the managing member of Authentic Brands in an “Up-C” structure.
The Business Combination Agreement provides that, among other things and upon the terms and subject to the conditions thereof, the following transactions will occur:
(i)
in the SilverBox Merger, (x) each share of SilverBox Class A Common Stock and SilverBox Class C Common Stock outstanding immediately prior to the effectiveness of the SilverBox Merger being converted into the right to receive one share of PubCo Class A Common Stock, (y) each share of SilverBox Class B Common Stock outstanding immediately prior to the effectiveness of
 
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the SilverBox Merger being converted into the right to receive a combination of shares of PubCo Class A Common Stock and PubCo Class C Common Stock, which PubCo Class C Common Stock will have no voting rights and will be restricted and convertible automatically into shares of PubCo Class A Common Stock upon the occurrence of certain events, and (z) each warrant of SilverBox outstanding immediately prior to the effectiveness of the SilverBox Merger being converted into the right to receive one PubCo Warrant, with PubCo assuming SilverBox’s obligations under the existing warrant agreement;
(ii)
immediately following the SilverBox Merger, Merger Sub 2 will merge with and into Blocker, with Blocker surviving the Blocker Merger as a direct wholly owned subsidiary of Merger Sub 1 and an indirect wholly owned subsidiary of PubCo and each share of common stock of Blocker outstanding immediately prior to the effectiveness of the Blocker Merger being converted into the right to receive a combination of shares of PubCo Class A Common Stock, shares of PubCo Class C Common Stock, and cash; and
(iii)
PubCo will issue to the Continuing Unitholders shares of PubCo’s Class B Common Stock. The PubCo Class B Common Stock to be issued to the Continuing Unitholders is not being registered under the Securities Act and will be issued in reliance upon the exemption provided by Rule 506(b) of Regulation D promulgated under the Securities Act.
As a result of the Business Combination, among other things:
(i)
PubCo will hold Company Units and will be admitted as the managing member of Authentic Brands; and
(ii)
the Continuing Unitholders will hold (i) Company Common Units that are exchangeable on a one-for-one basis for shares of PubCo Class A Common Stock (subject to surrendering a corresponding number of shares of PubCo Class B Common Stock for cancellation), (ii) Company Restricted Units, and (iii) a number of shares of PubCo Class B Common Stock corresponding to the number of Company Common Units held.
For more information about the Business Combination Agreement, see the section entitled “The Business Combination Agreement.”
Other Agreements Related to the Business Combination Agreement
LLC Agreement
At the Closing, PubCo and the other holders of Company Units will enter into the LLC Agreement. The operations of Authentic Brands, and the rights and obligations of the holders of the Company Units, will be set forth in the LLC Agreement. The form of the LLC Agreement is attached to this proxy statement/prospetus as Annex E.
Under the LLC Agreement, Authentic Brands will be managed by PubCo. Except as otherwise specifically required under the LLC Agreement, PubCo will have full and complete control of all affairs of Authentic Brands. PubCo will manage and control all business activities and operations of Authentic Brands and control the day-to-day management of the business of Authentic Brands and its subsidiaries. In addition, the LLC Agreement will provide, among other things, that the holders of the Company Common Units (other than PubCo and its subsidiaries) will have the right to require Authentic Brands to redeem all or a portion of such Company Common Units, together with the cancellation of an equal number of shares of PubCo Class B Common Stock, for an equal number of shares of PubCo Class A Common Stock, or a corresponding amount of cash, in each case contributed to Authentic Brands by PubCo, provided that PubCo may elect to effect a direct exchange of such cash or PubCo Class A Common Stock for such Company Common Units in lieu of any such redemption, all in accordance with the terms and subject to certain restrictions set forth in the LLC Agreement.
For more information on the LLC Agreement, please see the section entitled “Certain Agreements Related to the Business Combination — LLC Agreement.”
 
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Tax Receivable Agreement
The redemption of existing preferred units of Authentic Brands (other than those held by Blocker) and a portion of the Company Common Units for the consideration paid pursuant to the Business Combination Agreement, the future exchange of Company Common Units for shares of PubCo Class A Common Stock (or cash) pursuant to the LLC Agreement and certain pre-existing tax attributes of the Blocker are expected to produce favorable tax attributes for PubCo. The resulting anticipated tax basis adjustments are likely to increase (for applicable income tax purposes) PubCo’s depreciation and amortization deductions and therefore reduce the amount of income tax it would be required to pay in the future in the absence of this increased basis. This increased tax basis may also decrease the gain (or increase the loss) on future dispositions of certain assets to the extent the tax basis is allocated to those assets.
Concurrently with the completion of the Business Combination, PubCo will enter into the Tax Receivable Agreement, in substantially the form attached to this proxy statement/prospectus as Annex F. Pursuant to the Tax Receivable Agreement, PubCo will be required to pay to the Continuing Unitholders 85% of the tax savings that PubCo realizes as a result of increases in tax basis in Authentic Brands’ assets resulting from the redemption of existing preferred units of Authentic Brands (other than those held by Blocker) and a portion of the Company Common Units for the consideration paid pursuant to the Business Combination Agreement, the future exchange of Company Common Units for shares of PubCo Class A Common Stock (or cash) pursuant to the LLC Agreement and certain pre- existing tax attributes of the Blocker, as well as certain other tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. Further, to the extent that PubCo does not make payments under the Tax Receivable Agreement when due, as a result of having insufficient funds or otherwise, interest will generally accrue at a rate equal to SOFR plus 100 basis points or in some cases SOFR plus 500 basis points until paid. Nonpayment of PubCo’s obligations for a specified period may constitute a breach of a material obligation under the Tax Receivable Agreement, and therefore may accelerate payments due under the Tax Receivable Agreement resulting in a lump-sum payment, which may be substantial. If PubCo does not have sufficient funds to pay its obligations under the Tax Receivable Agreement, it may have to borrow funds and thus its liquidity and financial condition could be materially and adversely affected.
The increase in tax basis, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors, including the timing of exchanges or redemptions, the price of PubCo Class A Common Stock at the time of the exchange or redemption, whether such exchanges or redemptions are taxable, the amount and timing of the taxable income PubCo generates in the future, the U.S. federal and state tax rates then applicable, and the portion of its payments under the Tax Receivable Agreement constituting imputed interest. Payments under the Tax Receivable Agreement are expected to give rise to certain additional tax benefits attributable to either further increases in basis or in the form of deductions for imputed interest, depending on the circumstances. Any such benefits are covered by the Tax Receivable Agreement and will increase the amounts due thereunder. In addition, the Tax Receivable Agreement will provide for interest, generally at a rate equal to SOFR plus 100 basis points or in some cases SOFR plus 500 basis points, accrued from the due date (without extensions) of PubCo’s U.S. federal income tax return for the year to which the payment relates to the date of payment under the Tax Receivable Agreement.
PubCo anticipates that the payments that it will be required to make under the Tax Receivable Agreement may be substantial, and any such payments will reduce cash that would otherwise have been available to PubCo for other uses, some of which could benefit the Pubco stockholders. To the extent that PubCo is unable to make timely payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid. Nonpayment for a specified period may constitute a breach of a material obligation under the Tax Receivable Agreement and therefore may accelerate payments due under the Tax Receivable Agreement. Furthermore, PubCo’s future obligation to make payments under the Tax Receivable Agreement could make it a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that may be deemed realized under the Tax Receivable Agreement.
Payments under the Tax Receivable Agreement will be based on the tax reporting positions that PubCo determines. Although PubCo is not aware of any issue that would cause the U.S. Internal Revenue Service,
 
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or IRS, to challenge a tax basis increase or other tax attributes subject to the Tax Receivable Agreement, if any subsequent disallowance of tax basis or other benefits were so determined by the IRS, generally PubCo would not be reimbursed for any payments previously made under the Tax Receivable Agreement (although it would generally reduce future amounts otherwise payable under the Tax Receivable Agreement). As a result, the amounts that PubCo may significantly exceed the actual tax savings that it ultimately realizes. PubCo may need to incur debt to finance payments under the Tax Receivable Agreement to the extent its cash resources are insufficient to meet its obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise. In these situations, PubCo’s obligations under the Tax Receivable Agreement could have a substantial negative impact on its liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combination, or other changes of control. There can be no assurance that PubCo will be able to finance its obligations under the Tax Receivable Agreement.
The term of the Tax Receivable Agreement will continue until all such tax benefits have been utilized or expired unless PubCo exercises its right (with the consent of a majority of its disinterested directors and of the Agent under the Tax Receivable Agreement) to terminate the Tax Receivable Agreement for an amount representing the present value of all forecasted future payments that would have otherwise been made under the Tax Receivable Agreement or certain other acceleration events occur.
For more information on the Tax Receivable Agreement, please see the section entitled “Certain Agreements Related to the Business Combination — Tax Receivable Agreement.”
Investor Rights Agreement
The Business Combination Agreement contemplates that, at the Closing, PubCo, the Sponsor, Engaged Capital and certain of its affiliates, BRCC Founder, the Forward Purchase Investors, and certain other equityholders of PubCo will enter into an Investor Rights Agreement, pursuant to which, among others, so long as the BRCC Founder and the Forward Purchase Investors continue to own a specified percentage of PubCo Class A Common Stock and/or Company Common Units, then such holder will have the right to designate for nomination by the board of directors the number of candidates for election to the board of directors specified in the Investor Rights Agreement. In addition, for a period of five years following the Closing, the Sponsor, the Forward Purchase Investors and certain other equityholders party to the Investor Rights Agreement agree to vote as directed by the BRCC Founder on the election and removal of directors. The Investor Rights Agreement also provides that certain specific action as set forth therein shall be approved by a vote of two thirds of the directors then in office. In addition, the Investor Rights Agreement provides that PubCo will agree to register for resale, certain shares of PubCo Class A Common Stock and other equity securities of PubCo that are held by the parties thereto from time to time. The Investor Rights Agreement provides for underwritten offerings and piggyback registration rights, in each case subject to certain limitations set forth therein.
For more information on the Investor Rights Agreement, please see the section entitled “Certain Agreements Related to the Business Combination — Investor Rights Agreement.”
Transaction Support Agreements
Concurrently with the execution and delivery of the Business Combination Agreement, SilverBox, PubCo, Authentic Brands and Blocker entered into Transaction Support Agreements (collectively, the “Transaction Support Agreements”) with certain Authentic Brands members and Blocker stockholders. Pursuant to the Transaction Support Agreements, Authentic Brands members and the Blocker stockholders agreed to, among other things, vote to adopt and approve, as soon as reasonably practicable after (but no later than two business days after) the effectiveness of the Registration Statement, the Business Combination Agreement and all other documents and transactions contemplated thereby, in each case, subject to the terms and conditions of the Transaction Support Agreements, and vote against any alternative merger, purchase of assets or proposals that would impede, frustrate, prevent or nullify any provision of the Business Combination, the Business Combination Agreement or the Transaction Support Agreements or result in a breach of any covenant, representation, warranty or any other obligation or agreement thereunder.
 
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For more information on the Transaction Support Agreements, please see the section entitled “Certain Agreements Related to the Business Combination — Transaction Support Agreements.
Sponsor Letter Agreement
Concurrently with the execution of the Business Combination Agreement, Authentic Brands, PubCo and the Sponsor entered into the Sponsor Letter Agreement, pursuant to which the Sponsor has unconditionally and irrevocably agreed to, among other things: (a) vote at any meeting of the stockholders of SilverBox, and in any action by written resolution of the stockholders of SilverBox, all of the SilverBox Class B Common Stock held by the Sponsor to approve the Business Combination and all related transactions and proposals; (b) withhold consent with respect to any matter, action or proposal that would reasonably be expected to result in a material breach of any of the Sponsor’s covenants, agreements or obligations under the Business Combination Agreement, or any of the Business Combination Closing conditions not being satisfied; (c) waive any rights to adjustment or other anti-dilution or similar protections with respect to the rate that the SilverBox Class B Common Stock held by the Sponsor will convert into SilverBox Class A Common Stock in connection with the Business Combination and related transactions, including the PIPE Investment; (d) forfeit 1,158,500 shares of PubCo Class A Common Stock at the Business Combination Closing, and that after the Business Combination Closing an aggregate of 1,241,250 shares of PubCo Class C Common Stock will be non-transferrable and remain subject to forfeiture and cancellation; (e) donate 332,750 shares of PubCo Class A Common Stock to the BRCC Fund, and, subject to the concurrent donation by certain current Authentic Brands equityholders of at least 100,000 shares of PubCo Common Stock (or, at their election, Company Common Units) to the BRCC Fund, donate an additional 100,000 shares of PubCo Class A Common Stock to the BRCC Fund; (f) forfeit up to 2,068,750 shares of PubCo Class A Common Stock to the extent the aggregate cash proceeds available for release to SilverBox from the Trust Account (after giving effect to all redemptions of shares of SilverBox Class A Common Stock), plus gross proceeds from the PIPE Investment and the Forward Purchase Investment, is less than $445,000,000, with (x) a corresponding decrease in the number of Company Units held by PubCo and (y) a corresponding increase in the number of Company Common Units held by the Continuing Unitholders; and (g) certain provisions with respect to restricted PubCo shares to be held by Sponsor, including with respect to conversion, dividends and potential cancellation and forfeiture; in each case, on the terms and subject to the conditions set forth in the Sponsor Letter Agreement.
For more information on the Sponsor Letter Agreement, please see the section entitled “Certain Agreements Related to the Business Combination — Sponsor Letter Agreement.
Amended and Restated Forward Purchase Agreement
Concurrently with the execution of the Business Combination Agreement, SilverBox entered into the Amended and Restated Forward Purchase Agreement (the “Forward Purchase Agreement”) with Engaged Capital, a member of SilverBox’s sponsor, in its capacity as investment advisor on behalf of investment funds and accounts managed by Engaged Capital (collectively, the “Forward Purchase Investors”), and Authentic Brands, pursuant to, and on the terms and subject to the conditions of, which the Forward Purchase Investors have collectively subscribed for 10,000,000 shares of SilverBox Class C Common Stock (the “Forward Purchase Shares”) at a price of $10.00 per share or an aggregate purchase price of $100,000,000 (the “Forward Purchase Investment”). The PubCo Class A Common Stock to be issued in exchange for the SilverBox Class C Common Stock is not being registered under the Securities Act and will be issued in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. The Forward Purchase Investors have been granted registration rights with respect to the PubCo Class A Common Stock issued in exchange for their SilverBox Class C Common Stock in the SilverBox Merger.
For more information on the Amended and Restated Forward Purchase Agreement, please see the section entitled “Certain Agreements Related to the Business Combination — Amended and Restated Forward Purchase Agreement.
PIPE Subscription Agreements
Concurrently with the execution of the Business Combination Agreement, SilverBox entered into subscription and backstop agreements (collectively, the “PIPE Subscription Agreements”) with various
 
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accredited investors (collectively, the “PIPE Investors”), pursuant to, and on the terms and subject to the conditions of which, the PIPE Investors have collectively subscribed for up to 20,000,000 shares of SilverBox Class C Common Stock at a price of $10.00 per share or an aggregate purchase price of up to $200 million (the “PIPE Investment”), consisting of (i) 10,000,000 shares to be purchased and issued prior to the Closing and (ii) up to an additional 10,000,000 shares to be purchased and issued prior to the Closing to the extent that the SilverBox Stockholder Redemptions exceed $100,000,000. The PubCo Class A Common Stock to be issued in exchange for the SilverBox Class C Common Stock is not being registered under the Securities Act and will be issued in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. The PIPE Investors have been granted registration rights with respect to the PubCo Class A Common Stock issued in exchange for their SilverBox Class C Common Stock in the SilverBox Merger.
For more information on the PIPE Subscription Agreements, please see the section entitled “Certain Agreements Related to the Business Combination — PIPE Subscription Agreements.
Interests of SilverBox’s Directors and Officers in the Business Combination
SilverBox’s board of directors and officers may have interests in the Business Combination that are different from, in addition to, or in conflict with, yours. These interests include:

the beneficial ownership of the Sponsor of an aggregate of 7,033,750 Sponsor Shares (including 1,241,250 shares subject to vesting and after giving effect to the agreed upon forfeiture of 1,158,500 Sponsor Shares and assuming 432,750 Sponsor Shares are donated to the BRCC Fund upon the consummation of the Business Combination) and 6,266,667 Private Placement Warrants, which shares and warrants would become worthless if SilverBox does not complete a business combination within the applicable time period, as the Sponsor, SilverBox’s directors and officers and their affiliates have waived any right to redemption with respect to these shares. The Sponsor did not receive any compensation in exchange for this agreement to waive its redemption rights. Each of SilverBox’s directors and officers are members of the Sponsor and, as such, have an indirect interest in the Sponsor Shares. SilverBox’s independent directors collectively have an indirect interest of less 2% in the Sponsor Shares. Such shares and warrants have an aggregate market value of approximately $71.5 million and $9.4 million, respectively, based on the closing price of SilverBox Class A Common Stock of $10.17 on Nasdaq and the closing of the Public Warrants of $1.50 on Nasdaq on January 3, 2022, the record date for the special meeting of stockholders;

the Sponsor paid an aggregate of $25,000 ($0.003 per share) for the Sponsor Shares which will have a significantly higher value at the time of the Business Combination, if it is consummated. If SilverBox does not consummate the Business Combination or another initial business combination by June 2, 2023, and SilverBox is therefore required to be liquidated, these shares would be worthless, as Sponsor Shares are not entitled to participate in any redemption or liquidation of the Trust Account. Based on the difference in the purchase price of $0.003 that the Sponsor paid for the Sponsor Shares, as compared to the purchase price of $10.00 per Unit sold in the IPO, the Sponsor may earn a positive rate of return even if the share price of PubCo after the Closing falls below the price initially paid for the Units in the IPO and the Public Stockholders experience a negative rate of return following the Closing;

the Sponsor paid $9,400,000 for its private warrants, which would be worthless if a business combination is not consummated by June 2, 2023;

the Sponsor and SilverBox’s directors and officers may be incentivized to complete the Business Combination, or an alternative initial business combination with a less favorable company or on terms less favorable to stockholders, rather than to liquidate, in which case the Sponsor and SilverBox’s directors and officers would lose their entire investment. As a result, the Sponsor as well as SilverBox’s directors or officers may have a conflict of interest in determining whether Authentic Brands is an appropriate business with which to effectuate a business combination and/or in evaluating the terms of the Business Combination. SilverBox’s board of directors was aware of and considered these interests, among other matters, in evaluating and unanimously approving the Business Combination and in recommending to Public Stockholders that they approve the Business Combination;
 
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SilverBox’s board of directors will not receive reimbursement for any out-of-pocket expenses incurred by them on SilverBox’s behalf incident to identifying, investigating and consummating the Business Combination to the extent such expenses exceed the amount required to be retained in the Trust Account, unless the Business Combination is consummated, though there have been no material out-of-pocket expenses subject to reimbursement and SilverBox does not anticipate any such expenses prior to the Closing;

the Sponsor has entered into the Sponsor Letter Agreement pursuant to which the Sponsor has already agreed to vote its shares in favor of the Business Combination;

certain members of the Sponsor and certain limited partners and co-investors of Engaged Capital, which is a member of the Sponsor, are participating in the PIPE Investment, and investment funds and accounts managed by Engaged Capital have agreed to purchase the Forward Purchase Shares;

the continuation of Glenn Welling as a director of PubCo;

the Investor Rights Agreement will be entered into by the Sponsor and Engaged Capital and certain of its affiliates; and

the continued indemnification of the current directors and officers of SilverBox following the Business Combination and the continuation of directors’ and officers’ liability insurance following the Business Combination.
These interests may influence SilverBox’s board of directors in making their recommendation that you vote in favor of the approval of the Stockholder Proposals. You should also read the section titled “Proposal No. 1 — The Business Combination Proposal — The Business Combination — Interests of SilverBox’s Directors and Officers in the Business Combination.
Reasons for the Approval of the Business Combination
SilverBox was organized for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
In evaluating the Business Combination, SilverBox’s board of directors consulted with SilverBox’s management and considered a number of factors. In particular, SilverBox’s board of directors considered, among other things, the following factors, although not weighted or in any order of significance:

Authentic and Passionate Focus on Company Mission.   Authenticity of BRCC’s mission of supporting and employing veterans drives customer loyalty and employee retention. The company’s experienced management team has a meaningful focus on the company’s mission. BRCC and the Sponsor together intend to donate over 530,000 shares to support veteran causes.

Mission-Driven Lifestyle Brand with Loyal Customer Base.   BRCC is an attractive consumer brand with national recognition and industry-leading retention. It has a growing, loyal customer base with broad geographic and demographic appeal. It has a large and differentiated social media following that drives consistent engagement. BRCC benefits from a NPS of 78, which BRCC management believes is on par with best-in-class lifestyle brands.

Attractive Omnichannel Model with Recurring Revenue Base and Multiple Venues for Growth.   BRCC serves its customers through multiple channels. Its direct-to-consumer channel generates subscription-based revenues, with a growing customer base and low churn. Its wholesale channel is growing, with an expanding roster of retail partners. BRCC has developed a canned RTD product into a top 4 brand within 18 months after its launch, with substantial potential for market share growth. Its outpost channel is characterized by attractive unit economics, with significant opportunities for new stores.

Highly Scalable Platform Primed to Deliver Profitable Growth.   BRCC generated revenues of $164 million in 2019, which grew 100% from 2018 to 2019, with gross margins of 43%. BRCC management believes there is significant opportunity for not only continued growth, but the margin improvement for profitable growth.
 
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Public Company Positioning and Readiness.   SilverBox’s board of directors believes BRCC is well-positioned to be a public company in terms of scale and size, and a company that public equity market investors will understand and value.

Experienced and Capable Management Team.   Following completion of the Business Combination, BRCC will continue to be led by the proven senior management team as prior to the Business Combination.

Attractive Valuation.   SilverBox’s board of directors’ determination that if BRCC is able to meet its financial forecasts, then SilverBox’s stockholders will have acquired their shares in PubCo at an attractive valuation, which would increase stockholder value.

Other Alternatives.   SilverBox’s board of directors’ belief, after a thorough review of other business combination opportunities reasonably available to SilverBox, that the Business Combination represents an attractive potential business combination for SilverBox.

Continued Ownership by Holders of BRCC Capital Stock.   SilverBox’s board of directors considered that BRCC’s existing equityholders would continue to be significant stockholders of PubCo after closing of the Business Combination.
In the course of its deliberations, in addition to the various other risks associated with the business of BRCC, as described in the section titled “Risk Factors” appearing elsewhere in this proxy statement/ prospectus, SilverBox’s board of directors also considered a variety of uncertainties, risks and other potentially negative reasons relevant to the Business Combination, including the following:

Macroeconomic Risks Generally.   Macroeconomic uncertainty, particularly the potential impact of the COVID-19 pandemic and future COVID-19 developments, and the effects they could have on BRCC’s revenues and financial performance.

Business Plan and Projections May Not be Achieved.   The risk that BRCC may not be able to execute on its business plan and realize the financial performance as set forth in the financial forecasts presented to management of SilverBox and SilverBox’s board of directors. BRCC has experienced rapid growth and increased demand for its products, and BRCC may not be able to properly manage such growth and to meet such demand.

BRCC Brand and Reputation.   BRCC’s brand and reputation are critical to its success, and any publicity, regardless of accuracy, that portrays BRCC negatively could adversely impact operating results.

No Fairness Opinion.   The risk that SilverBox did not obtain an opinion from any independent investment banking or accounting firm that the price SilverBox is paying to acquire BRCC is fair to SilverBox or its stockholders from a financial point of view.

Valuation.   The risk that SilverBox’s board of directors may not have properly valued BRCC’s business.

Liquidation.   The risks and costs to SilverBox if the Business Combination is not completed, including the risk of diverting management focus and resources from other businesses combination opportunities, which could result in SilverBox being unable to effect a business combination within the completion window, which would require SilverBox to liquidate.

Stockholder Vote and Other Actions.   The risk that SilverBox stockholders may object to and challenge the Business Combination and take action that may prevent or delay the closing, including to vote against the Transaction Proposals at the special meeting or redeem their Public Shares.

Closing Conditions.   The fact that completion of the Business Combination is conditioned on the satisfaction of certain closing conditions that are not within SilverBox’s control.

No Survival of Remedies for Breach of Representations, Warranties or Covenants of BRCC.   The terms of the Business Combination Agreement provide that SilverBox will not have any surviving remedies against BRCC or its equityholders after the Closing to recover for losses as a result of any inaccuracies or breaches of BRCC’s representations, warranties or covenants set forth in the Business
 
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Combination Agreement. As a result, SilverBox stockholders could be adversely affected by, among other things, a decrease in the financial performance or worsening of financial condition of BRCC prior to the Closing, whether determined before or after the Closing, without any ability to reduce the number of shares to be issued in the Business Combination or recover for the amount of any damages. SilverBox’s board of directors determined that this structure was appropriate and customary in light of the fact that several similar transactions include similar terms and the current equityholders of BRCC will be, collectively, the majority equityholders in the combined company.

Fees and Expenses.   The fees and expenses associated with completing the Business Combination.

Exclusivity/Non-Solicit.   The Business Combination Agreement includes a non-solicit provision prohibiting SilverBox from initiating, discussing, or making certain proposals which could lead to an alternative business combination.

SilverBox’s Stockholders Holding a Minority Position in the Combined Company.   The fact that existing SilverBox stockholders will hold a minority position in PubCo following completion of the Business Combination and that certain existing BRCC equityholders will have additional governance rights.

Litigation.   The possibility of litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could indefinitely enjoin consummation of the Business Combination.

Redemptions.   The risk that holders of Public Shares would exercise their redemption rights, thereby depleting the amount of cash available in the Trust Account.

Listing.   The potential inability to maintain the listing of PubCo’s securities on following the Closing.

Distraction to Operations.   The risk that the potential diversion of BRCC’s management and employee attention as a result of the Business Combination may adversely affect BRCC’s operations.

Readiness to be a Public Company.   As BRCC has not previously been a public company, BRCC may not have all the different types of employees necessary for it to timely and accurately prepare reports for filing with the SEC. There is a risk that BRCC will not be able to hire the right people to fill in these gaps by the time of the Closing or that additional issues could arise after the Closing due to its failure to have hired these people in advance of Closing.

Risk Factors.   SilverBox’s board of directors considered risks of the type and nature described under the section entitled “Risk Factors.”
This explanation of SilverBox’s board of directors’ reasons for its approval of the Business Combination, and all other information presented in this section, is forward-looking in nature and, therefore, should be read in light of the factors discussed under the section entitled “Cautionary Note Regarding Forward-Looking Statements.
For a more complete description of the SilverBox board of directors’ reasons for approving the Business Combination, including other factors and risks considered by the SilverBox board of directors, see the section entitled “Proposal No. 1 —  The Business Combination Proposal — SilverBox’s Board of Directors’ Reasons for the Approval of the Business Combination.
Record Date; Persons Entitled to Vote
You will be entitled to vote or direct votes to be cast at the special meeting of stockholders if you owned shares of SilverBox Common Stock at the close of business on January 3, 2022, which is the record date for the special meeting of stockholders. You are entitled to one vote for each share of SilverBox Common Stock that you owned as of the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. On the record date, there were 43,125,000 shares of SilverBox Common Stock outstanding, of which 34,500,000 were shares of SilverBox Class A Common Stock and 8,625,000 were shares of SilverBox Class B Common Stock held by the Sponsor.
 
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The Sponsor and the executive officers and directors of SilverBox have agreed to vote all of their shares of SilverBox Common Stock in favor of the Business Combination Proposal and the other Stockholder Proposals. SilverBox’s issued and outstanding Public Warrants do not have voting rights at the special meeting of stockholders.
Quorum
A quorum of SilverBox’s stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting of stockholders if a majority of the SilverBox Common Stock outstanding and entitled to vote at the meeting is virtually present in person or by proxy. Abstentions will count as present for the purposes of establishing a quorum.
As of the record date for the special meeting, 21,562,501 shares of SilverBox Common Stock will be required to achieve a quorum.
Your shares will be counted towards the quorum only if you submit a valid proxy (or your broker, bank or other nominee submits one on your behalf) or if you vote online at the virtual special meeting of stockholders. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, a majority of the shares represented by stockholders virtually present at the special meeting or by proxy may authorize adjournment of the special meeting to another date.
Abstentions and Broker Non-Votes
Under the rules of various national and regional securities exchanges, your broker, bank or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. SilverBox believes the Stockholder Proposals presented to its stockholders will be considered non-discretionary and therefore your broker, bank or nominee cannot vote your shares without your instruction. If you do not provide instructions with your proxy, your bank, broker or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a bank, broker or nominee is not voting your shares is referred to as a “broker non-vote.”
Abstentions and broker non-votes will be counted for purposes of determining the presence of a quorum at the special meeting of SilverBox stockholders.
Revoking Your Proxy
If you have submitted a proxy to vote your shares and wish to change your vote, you may do so by delivering a later-dated, signed proxy card to SilverBox’s secretary prior to the date of the special meeting or by voting online at the virtual special meeting. Attendance at the special meeting alone will not change your vote. You also may revoke your proxy by sending a notice of revocation to SilverBox’s secretary at the above address.
Redemption Rights
Pursuant to the Existing Charter, the Public Stockholders of SilverBox may elect to redeem all or a portion of their Public Shares at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest (net of permitted withdrawals), divided by the number of then outstanding public shares, subject to the limitations described herein.
As of November 1, 2021, based on funds in the Trust Account of approximately $345 million, this would have amounted to approximately $10.00 per share, excluding the impact of up to $68,626 of interest income available to us to pay taxes. If a Public Stockholder exercises its redemption rights, then such Public Stockholder will be exchanging its shares of SilverBox common stock for cash and will no longer own shares of SilverBox or receive shares in PubCo. Such a holder will be entitled to receive cash for its public shares only if it properly demands redemption and delivers its shares (either physically or electronically) to our transfer agent prior to the special meeting of stockholders. See the section entitled “Special Meeting of
 
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SilverBox Stockholders — Redemption Rights” for the procedures to be followed if you wish to redeem your shares for cash. The amount in the Trust Account is initially anticipated to be $10.00 per public share.
Appraisal or Dissenters’ Rights
No appraisal or dissenters’ rights are available to holders of shares of SilverBox Class A Common Stock or Public Warrants in connection with the Business Combination.
Solicitation of Proxies
SilverBox will pay the cost of soliciting proxies for the special meeting. SilverBox has engaged Morrow Sodali to assist in the solicitation of proxies for the special meeting. SilverBox has agreed to pay Morrow Sodali a fee of $40,000. SilverBox will reimburse Morrow Sodali for reasonable out-of-pocket expenses and will indemnify Morrow Sodali and its affiliates against certain claims, liabilities, losses, damages and expenses. SilverBox also will reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of SilverBox Common Stock for their expenses in forwarding soliciting materials to beneficial owners of SilverBox Common Stock and in obtaining voting instructions from those owners. SilverBox’s directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.
Stock Ownership
As of the record date, the Sponsor beneficially owns an aggregate of approximately 20% of the outstanding shares of SilverBox Common Stock. The Sponsor has agreed to vote all of its shares of SilverBox Common Stock in favor of the Business Combination and each of the Stockholder Proposals.
Organizational Structure
Prior to the Business Combination
The following diagram illustrates the ownership structure of SilverBox prior to the Business Combination. The economic and voting interests shown in the diagram do not account for Public Warrants (which will remain outstanding following the Business Combination and may be exercised at a later date).
[MISSING IMAGE: tm2131392d4-fc_orgstrbw.jpg]
Following the Business Combination
The following diagram illustrates a simplified version of our organizational structure immediately following the completion of the Business Combination and the dissolution of Blocker. This chart is provided for illustrative purposes only and does not represent all legal entities of Authentic Brands and its affiliates.
 
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[MISSING IMAGE: tm2131392d4-fc_buscobwlr.jpg]
Following the completion of the Business Combination, as described above, our organizational structure will be what is commonly referred to as an umbrella partnership corporation (or Up-C) structure. This organizational structure will allow the Continuing Unitholders to retain their equity ownership in Authentic Brands, an entity that is classified as a partnership for U.S. federal income tax purposes, in the form of Company Common Units and Company Restricted Units. Each Continuing Unitholder will also hold a number of shares of PubCo Class B Common Stock equal to the number of Company Common Units held by such Continuing Unitholder, which will have no economic value, but which will entitle the holder thereof to one (1) vote per share at any meeting of the stockholders of PubCo. Those investors who, prior to the Business Combination, held SilverBox Class A Common Stock or SilverBox Class B Common Stock and the Blocker stockholders will, by contrast, hold their equity ownership in PubCo, a Delaware public benefit corporation that is a domestic corporation for U.S. federal income tax purposes. In addition, the parties agreed to structure the Business Combination in this manner for tax and other business purposes, and we do not believe that our Up-C organizational structure will give rise to any significant business or strategic benefit or detriment. See the sections entitled “Risk Factors — Risks Related to PubCo’s Corporate Structure,” “— Risks Related to an Investment in Securities of PubCo” and “— Risks Related to Taxation” for additional information on our organizational structure, including the Tax Receivable Agreement. The LLC Agreement will provide unitholders in Authentic Brands the right to exchange Company Common Units, together with the cancellation of an equal number of shares of PubCo Class B Common Stock, for an equal number of shares of PubCo Class A Common Stock (or cash), subject to certain restrictions set forth therein. The Company Restricted Units held by unitholders in Authentic Brands will be subject to vesting conditions set forth in the LLC Agreement (described below under the heading “Certain Agreements Related to the Business Combination — LLC Agreement”) and will not be exchangeable for PubCo Class A Common Stock or entitled to receive distributions from Authentic Brands until such units vest in accordance with the terms of the LLC Agreement.
Emerging Growth Company
SilverBox is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, SilverBox will be eligible to take advantage of certain exemptions from
 
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various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
Additionally, SilverBox is a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
PubCo will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of SilverBox’s initial public offering, (b) in which SilverBox has total annual gross revenue of at least $1.07 billion or (c) in which PubCo is deemed to be a large accelerated filer, which, in addition to certain other criteria, means the market value of SilverBox’s common equity that is held by non-affiliates exceeds $700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which PubCo has issued more than $1 billion in non-convertible debt securities during the prior three-year period.
Expected Accounting Treatment of the Business Combination
We expect the Business Combination to be accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under the guidance in ASC 805, SilverBox is expected to be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on existing Authentic Brands’ security holders comprising a relative majority of the voting power of PubCo, Authentic Brands’ operations prior to the acquisition comprising the only ongoing operations of PubCo, the majority of the PubCo’s Board being appointed by Authentic Brands’ security holders, and Authentic Brands’ senior management comprising a majority of the senior management of PubCo. Accordingly, the Business Combination is expected to be reflected as the equivalent of SilverBox issuing stock for the net assets of Authentic Brands, accompanied by a recapitalization whereby no goodwill or other intangible assets are recorded. Operations prior to the Business Combination will be those of Authentic Brands.
Regulatory Matters
Under the HSR Act and the rules that have been promulgated thereunder, certain transactions may not be consummated unless information has been furnished to the Antitrust Division of the Department of Justice (“Antitrust Division”) and the Federal Trade Commission (“FTC”) and certain waiting period requirements have been satisfied. The Business Combination is subject to these requirements and may not be completed until the expiration of a 30-day waiting period following the two filings of the required Notification and Report Forms with the Antitrust Division and the FTC or until early termination is granted.
At any time before or after consummation of the Transaction, notwithstanding termination of the respective waiting periods under the HSR Act, the Department of Justice or the FTC, or any state or foreign governmental authority could take such action under applicable antitrust laws as such authority deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Business Combination, conditionally approving the Business Combination upon divestiture of assets, subjecting the completion of the Business Combination to regulatory conditions or seeking other remedies. Private parties may also seek to take legal action under the antitrust laws under certain circumstances. SilverBox and Authentic Brands cannot assure you that the Antitrust Division, the FTC, any state attorney general or any other government authority will not attempt to challenge the Business Combination on antitrust grounds, and, if such a challenge is made, SilverBox and Authentic Brands cannot assure you as to its result.
 
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Neither of SilverBox nor Authentic Brands are aware of any material regulatory approvals or actions that are required for completion of the Business Combination other than the expiration or early termination of the waiting period under the HSR Act. It is presently contemplated that if any such additional regulatory approvals or actions are required, those approvals or actions will be sought. There can be no assurance, however, that any additional approvals or actions will be obtained.
Summary of Risk Factors
You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus. These risks are discussed more fully in the section entitled “Risk Factors” following this summary. If any of these risks actually occur, Authentic Brands’, SilverBox’s or PubCo’s business, financial condition or results of operations would likely be materially adversely affected. These risks include, but are not limited to, the following:
Risks Related to BRCC’s Business

BRCC’s brand and reputation are critical to its success, and any publicity, regardless of accuracy, that portrays BRCC negatively could adversely impact operating results. Negative publicity may arise for various reasons, whether true or not, including, but not limited to, complaints about product quality, safety, or sanitation; company policies; adverse litigation; employment practices; employee actions; actions taken by customers; social media posts; and actions taken by third party business partners.

BRCC promotes itself as a supportive member of the veteran and military community, and actively participates in this community through donations, hiring commitments, and other events. Failure by BRCC to maintain this strong branding could negatively impact BRCC’s business. Additionally, any other factors which may negatively impact perception of the brand, including factors listed elsewhere in this summary, may harm BRCC.

BRCC’s growth strategy depends on the successful execution of its strategic initiatives, and its limited operating history may make it difficult to accurately evaluate future risks and challenges.

BRCC may not always be successful in its marketing efforts. Failed marketing campaigns can incur costs without the benefit of attracting new customers or realizing higher revenue.

Launching and promoting new products is expensive and time-consuming and BRCC may not always succeed in bringing new products to market.

Failure to attract new customers or retain existing customers, or failure to do so in a cost-effective manner, may result in an inability to increase sales and harm to our business.

BRCC relies heavily on social media to advertise and engage with BRCC’s customers. Using social media platforms for advertisements carries a number of associated risks, including dependence on the third party platforms to maintain their platforms in a manner that benefit BRCC’s marketing strategies. Additionally, BRCC is subject to the laws and regulations that govern the use of these platforms and is subject to the risks of improper use.

BRCC relies on its employees to provide a high-quality customer experience, and any failure on behalf of BRCC to cater to the consumer experience could harm the brand.

BRCC is heavily dependent on its direct to consumer revenue channel for success, and this revenue channel relies on third party logistics to succeed. Decrease in success of the direct to consumer revenue channel or any failure or impediment on behalf of third party logistics providers could harm BRCC.

BRCC relies on co-manufactures to supply some of its products, and a loss of one or more of these partners, or failure of these partners to fulfill their contractual obligations, could harm BRCC.

BRCC depends on a single co-manufacturer, and single key broker relationship, for the development, production, and distribution of its Ready-to-Drink products. Failure to maintain this relationship could result in harm to BRCC.
 
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BRCC relies on its wholesale channel partners to effectively distribute its products. Failure on behalf of its third party partners to effectively manage or distribute BRCC’s products, such as by effectively displaying or presenting our products, grow or promote the brand, provide satisfactory consumer experiences, or fulfill their contractual obligations could harm BRCC. Failure by BRCC to maintain and develop these business relationships could harm our business.

BRCC relies on a number of third parties in the supply chain of coffee, store supplies, or merchandise to produce or deliver its products, and failure by these third parties to efficiently operate could adversely impact BRCC.

BRCC is heavily dependent on the market for high-quality Arabica coffee beans and other commodities, and changes in these markets that increase costs or reduce supply, such as through adverse weather, natural disasters, crop disease, political unrest, and other economic conditions, could harm BRCC’s operating results.

BRCC’s success is dependent upon certain financial conditions and any number of factors outside BRCC’s control could negatively impact BRCC’s results of operations. These factors include, but are not limited to, fluctuations in the cost and availability of real estate, labor, raw materials, equipment, transportation, or shipping; pricing pressure; changes in consumer preferences; natural or man-made disasters, pandemics, social unrest, war, or political instability; adverse litigation outcomes; or changes in consumer discretionary spending. Money available for consumer discretionary spending may be affected by job losses, inflation, higher taxes, changes in federal economic policy, and other macroeconomic or political events.

BRCC possesses personal, financial, and other confidential data from customers and employees, and if that data is compromised or loss, even through the actions of third parties, BRCC could be subject to litigation, liability, and reputational damage.

BRCC may not be able to compete successfully with other producers and retailers of coffee. Some of BRCC’s competitors are longer-established, have greater brand recognition, and have substantially greater financial, technological, roasting, sale, distribution, and other resources.

BRCC’s growth strategy depends in part on opening new retail coffee shops. The success of new shops is dependent on a variety of factors, including, but not limited to, consumer preferences, availability of retail space, leasing conditions, construction and equipment costs, and local permitting, licensing, zoning, and other requirements and regulations. There is no guarantee that new retail shops will be successful, and new retail shops could entail high costs without realized profits.

BRCC has experienced rapid growth and increased demand for its products. Failure to properly manage this growth and manage BRCC’s relationships with its various business partners, or failure to accurately forecast our results of operations and growth rate, could harm BRCC’s operating results.

BRCC depends heavily on information technology and its ability to process data in order to sell goods and services. Failure to protect against software or hardware vulnerabilities, as well as disruption, for any reason, to these information technology systems, could result in operating losses, privacy and security breaches, loss of customers, liability, and other negative impacts to the business.

BRCC holds various forms of intellectual property, including trademarks, trade names, and service marks. BRCC’s success is partially dependent upon its ability to build brand recognition using these marks and to protect its intellectual property from infringement and misuse.

If BRCC becomes party to litigation or legal proceedings, BRCC could be exposed to significant liabilities and suffer substantial negative impacts to its reputation or business.

BRCC’s success is dependent upon evolving consumer preferences and tastes, and shifts in consumer spending, lack of interest in new products, or changes in brand perception can negatively affect consumer demand for BRCC’s products.

BRCC is subject to a variety of food safety regulations, and failure to adequately maintain food safety or quality, or reports that BRCC had safety issues or failed to implement proper safety measures, whether true or not, could result in loss of customers, regulatory warnings, food recalls, and other adverse outcomes that could impact BRCC’s profitability.
 
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BRCC plans to expand into new domestic and international markets, and failure to successfully integrate into these new markets could affect BRCC’s profitability.

BRCC is subject to the risks associated with leasing space subject to long-term non-cancelable leases and with respect to real property that BRCC itself owns.

BRCC relies in part on the success of its franchise partners, over whom BRCC has limited control with respect to their operations. Failure on behalf of BRCC’s franchise partners to successfully manage their franchises or effectively represent BRCC and its brand could harm BRCC’s business results.

BRCC must maintain adequate operational and financial resources, especially if BRCC continues to grow, in order to maintain its current market performance. BRCC depends on cash generated from our operations to support our growth, and we may need to raise additional capital, which may not be available on acceptable terms.

Pandemics or disease outbreaks, such as the COVID-19 pandemic, could adversely affect BRCC’s business by disrupting supply chains, negatively impacting consumer preferences and spending, and reducing foot traffic to BRCC’s retail coffee shops and wholesale channel partners.
Risks Related to BRCC’s People and Culture

BRCC depends on its executive officers and other key employees, and the loss of one or more of these individuals, or the inability to attract and retain suitable replacements, could harm BRCC’s business.

BRCC’s success relies heavily on its ability to hire and retain qualified employees, and changes in the availability and the cost of labor could harm its operating results.

BRCC maintains a goal of hiring 10,000 veterans. Failure to meet this goal could adversely affect our employee relationships and reputation among consumers. Furthermore, BRCC’s workplace atmosphere, which permits the carry of firearms, present inherent dangers that may subject BRCC to liability.

If BRCC’s employees were to unionize, and if collective bargaining agreement terms were significantly different than current compensation agreements, BRCC’s operating results could suffer.
Risks Related to BRCC’s Regulation and Litigation

BRCC and its franchise partners are subject to various federal, state, and local laws and regulations. These laws include the FLSA, FMSA, and ADA, as well as laws relating to food and beverage safety, zoning, licenses and permits, employment, franchising, and those enumerated below, among others. Failure to comply with applicable laws and regulations could result in liability for BRCC.

BRCC is subject to laws and regulations from the FDA and FTC governing food and beverage labeling and misleading advertisements. If BRCC mislabels its products or advertises in a way that is untruthful or misleading, BRCC may be subject to liability.

BRCC and its vendors collect, store, process, and use personal and payment information and other customer data, which subjects us to a variety of laws, regulations, and industry standards relating to data processing, protection, privacy, and security. The actual or perceived failure by BRCC, its customers, or its vendors to comply with such laws, regulations, or industry standards may harm BRCC’s results of operations.

Beverage and restaurant companies have been the target of class action lawsuits and other proceedings. BRCC, as a participant in this market, is subject to those same risks, whether liable or not. Lawsuits and proceedings are costly, divert management attention, and could result in negative public perception, regardless of the validity of claims, and therefore implementation of any proceedings could harm BRCC.

BRCC is subject to numerous statutory, regulatory, and other legal requirements regarding accounting practices. Failure to comply with these requirements, or changes in these requirements, could negatively impact BRCC’s operating and financial results.
 
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BRCC is subject to taxes by the U.S. federal, various state, and various local tax authorities. Changes in BRCC’s tax liability could negatively impact BRCC’s operating and financial results.

BRCC is subject to laws and regulations that govern the display and provision of nutritional information of its products. Failure to comply with these requirements or adverse consumer perceptions based on health information could negatively impact BRCC’s operating results.
Other Risks

PubCo will be required under the Tax Receivable Agreement to pay the Continuing Unitholders of Authentic Brands for certain tax savings it may realize, and it is expected that the payments PubCo will be required to make may be substantial. Any such payments will reduce cash that would otherwise have been available to PubCo for other uses. The amounts that PubCo may be required to pay under the Tax Receivable Agreement may be accelerated in certain circumstances and may also significantly exceed the actual tax savings that it ultimately realizes. Generally, PubCo will not be reimbursed for any payments made under the Tax Receivable Agreement in the event that any tax benefits are disallowed.

Upon consummation of the Business Combination, PubCo will be a public benefit corporation and PubCo’s focus on its public benefit purpose and PubCo’s directors’ fiduciary duty to not only consider its stockholders’ interest may negatively impact PubCo’s financial performance.

Certain anti-takeover provisions included in the Proposed Charter and Proposed Bylaws, which may delay or discourage takeover attempts that stockholders may consider favorable.

BRCC’s management has limited experience in operating a public company.

SilverBox’s executive officers and directors have potential conflicts of interests in recommending that stockholders vote in favor of approval of the Business Combination Proposal.

SilverBox’s board of directors did not obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination.
 
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SELECTED HISTORICAL FINANCIAL INFORMATION OF AUTHENTIC BRANDS
The selected consolidated historical statements of operations data of Authentic Brands for the years ended December 31, 2020 and 2019 and the historical consolidated balance sheet data as of December 31, 2020 and 2019 are derived from Authentic Brands’ audited consolidated financial statements included elsewhere in this proxy statement/prospectus. The selected consolidated historical statements of operations data of Authentic Brands for the nine months ended September 30, 2021 and 2020 and the consolidated historical balance sheet data as of September 30, 2021 are derived from Authentic Brands’ unaudited interim consolidated financial statements included elsewhere in this proxy statement/prospectus. In Authentic Brands’ management’s opinion, the unaudited interim consolidated historical financial statements include all adjustments necessary to state fairly Authentic Brands’ financial position as of September 30, 2021 and the results of operations for the nine months ended September 30, 2021 and 2020.
Authentic Brands’ historical results are not necessarily indicative of the results that may be expected in the future and Authentic Brands’ results for the nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021 or any other period. You should read the following selected consolidated historical financial data together with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Authentic Brands” and Authentic Brands’ financial statements and related notes included elsewhere in this proxy statement/prospectus.
(in thousands)
Nine Months Ended
September 30,
Fiscal Year
December 31,
2021
2020
2020
2019
($ in thousands)
Statement of Operations Data:
(Unaudited)
Revenue, net
$ 161,253 $ 104,003 $ 163,909 $ 82,128
Total operating expenses
72,518 41,043 63,629 35,821
Net income (loss) from continuing operations
(7,510) 4,395 5,780 (116)
Total other expense
(1,595) (909) (1,274) (642)
State income tax expense
133 141 185 14
Net income (loss)
(9,238) 3,345 4,321 (772)
Statement of Cash Flow Data:
Net cash provided by (used in) operating activities
(10,654) 3,638 11,546 4,144
Net cash used in investing activities
(11,755) (7,205) (9,760) (1,106)
Net cash provided by (used in) financing activities
769 8,955 28,811 (2,166)
(in thousands)
As of
September 30,
2021
As of
December 31,
2020
2019
Balance Sheet Data:
Total assets
$ 80,305 $ 72,542 $ 18,711
Total liabilities
69,191 46,437 19,960
Total preferred equity
142,790 128,983
Total members’ deficit
(131,676) (102,878) (1,249)
Non-GAAP Financial Measures
To evaluate the performance of our business, we rely on both our results of operations recorded in accordance with GAAP and certain non-GAAP financial measures, including EBITDA and Adjusted EBITDA. These measures, as defined below, are not defined or calculated under principles, standards or rules that comprise GAAP. Accordingly, the non-GAAP financial measures we use and refer to should not be viewed as a substitute for performance measures derived in accordance with GAAP or as a substitute for a
 
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measure of liquidity. Our definitions of EBITDA and Adjusted EBITDA described below are specific to our business and you should not assume that they are comparable to similarly titled financial measures of other companies. We define EBITDA as net income (loss) before interest, state income taxes, depreciation and amortization expense. We define Adjusted EBITDA as EBITDA, as adjusted for stock-based compensation expense, capital raising activities, and costs associated with implementation and material developments to our enterprise systems. When used in conjunction with GAAP financial measures, we believe that EBITDA and Adjusted EBITDA are useful supplemental measures of operating performance because it facilitates comparisons of historical performance by excluding non-cash items such as stock-based payments and other non-recurring amounts not directly attributable to our primary operations. Adjusted EBITDA is also a key metric used internally by our management to evaluate performance and develop internal budgets and forecasts. EBITDA and Adjusted EBITDA have limitations as an analytical tool and should not be considered in isolation or as a substitute for analyzing our results as reported under GAAP and may not provide a complete understanding of our operating results as a whole. Some of these limitations are (i) they do not reflect changes in, or cash requirements for, our working capital needs, (ii) they not reflect our interest expense or the cash requirements necessary to service interest or principal payments on our debt, (iii) they do not reflect our tax expense or the cash requirements to pay our taxes, (iv) they do not reflect historical capital expenditures or future requirements for capital expenditures or contractual commitments, (v) although stock-based compensation expenses are non-cash charges, BRCC relies on equity compensation to compensate and incentivize employees, directors and certain consultants, and it may continue to do so in the future and (vi) although depreciation, amortization and impairments are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these non-GAAP measures do not reflect any cash requirements for such replacements.
A reconciliation of net income, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA is set forth below:
Nine Months Ended
September 30,
Fiscal Year Ended
December 31,
2021
2020
2020
Net income (loss)
$ (9,238) $ 3,345 $ 4,321
Interest expense
1,590 814 1,047
Tax expense
133 141 185
Depreciation and amortization
2,000 985 1,375
EBITDA
$ (5,515) $ 5,285 $ 6,928
Stock-based compensation(1)
$ 3,762 $ 2,650 $ 3,313
System implementation costs(2)
265 504 556
Transaction expenses(3)
655 467 575
Adjusted EBITDA
$ (833) $ 8,906 $ 11,372
(1)
Represents the non-cash expense of our stock-based compensation arrangements for employees, directors, consultants and wholesale channel partner.
(2)
Represents costs associated with the implementation of our enterprise-wide resource planning (ERP) system.
(3)
Represents expenses related to the Business Combination and our 2020 preferred equity raise such as legal, accounting, consulting and other fees.
 
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SELECTED HISTORICAL FINANCIAL INFORMATION OF SILVERBOX
The following tables show selected historical financial information of SilverBox for the periods and as of the dates indicated. The selected historical financial information of SilverBox was derived from the historical financial statements of SilverBox included elsewhere in this proxy statement/prospectus. The following tables should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of SilverBox” and SilverBox’s historical financial statements and the notes and schedules related thereto, included elsewhere in this proxy statement/prospectus.
(in thousands)
Nine Months Ended
September 30,
Fiscal Year
December 31,
2021
2020
2020
2019
($ in thousands)
Statement of Operations Data:
(Unaudited)
Revenue, net
$     — $  — $ $  —
Total operating expenses
1,457 (4)
Net income (loss) from continuing operations
(1,457)
Total other income (expense)
8,581
Net income (loss)
7,124 (4)
Statement of Cash Flow Data:
Net cash provided by (used in) operating activities
(1,208)
Net cash used in investing activities
(345,000)
Net cash provided by (used in) financing activities
347,000 200
(in thousands)
As of
September 30,
2021
As of
December 31,
2020
2019
Balance Sheet Data:
Total assets
$ 346,531 $ 245  —
Total liabilities
25,822 224
Total stockholders’ equity (deficit)
(24,291) 21
 
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This proxy statement/prospectus includes statements that express SilverBox’s and Authentic Brands’ opinions, expectations, hopes, beliefs, plans, intentions, objectives, strategies, assumptions or projections regarding future events or future results of operations or financial condition and therefore are, or may be deemed to be, “forward-looking statements.” The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements appear in a number of places throughout this proxy statement/prospectus and include statements regarding SilverBox’s and Authentic Brands’ intentions, beliefs or current expectations concerning, among other things, the Business Combination, the benefits of the Business Combination, including anticipated cost savings, results of operations, financial condition, liquidity, prospects, growth, strategies, future market conditions or economic performance and developments in the capital and credit markets and expected future financial performance, the markets in which Authentic Brands operates as well as any information concerning possible or assumed future results of operations of PubCo after the consummation of the Business Combination. Such forward-looking statements are based on available current market material and management’s expectations, beliefs and forecasts concerning future events impacting SilverBox, Authentic Brands and PubCo. Factors that may impact such forward-looking statements include:

Negative publicity impacting BRCC’s brand and reputation, which may adversely impact BRCC’s operating results;

Failure by BRCC to maintain its message as a supportive member of the veteran and military communities and any other factors which may negatively impact the perception of the BRCC’s brand;

BRCC’s limited operating history, which may make it difficult to successfully execute its strategic initiatives and accurately evaluate future risks and challenges;

Failed marketing campaigns, which may cause BRCC to incur costs without attracting new customers or realizing higher revenue;

Failure to attract new customers or retain existing customers;

Risks related to the use of social media platforms, including dependence on third-party platforms;

Failure to provide high-quality customer experience, which may impact BRCC’s brand;

Decrease in success of the direct to consumer revenue channel;

Loss of one or more of co-manufacturers;

Failure to effectively manage or distribute BRCC’s products through BRCC’s wholesale business partners;

Failure by third parties involved in the supply chain of coffee, store supplies or merchandise to produce or deliver products;

Changes in the market for high-quality Arabica coffee beans and other commodities;

Fluctuations in costs and availability of real estate, labor, raw materials, equipment, transportation or shipping;

Loss of confidential data from customers and employees, which may subject BRCC to litigation, liability or reputational damage;

Failure to successfully compete with other producers and retailers of coffee;

Failure to successfully open new retail coffee shops;

Failure to properly manage BRCC’s rapid growth and relationships with various business partners;

Failure to protect against software or hardware vulnerabilities;

Failure to build brand recognition using BRCC’s intellectual properties;
 
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Shifts in consumer spending, lack of interest in new products or changes in brand perception upon evolving consumer preferences and tastes;

Failure to adequately maintain food safety or quality and comply with food safety regulations;

Failure to successfully integrate into new domestic and international markets;

Risks related to leasing space subject to long-term non-cancelable leases and with respect to real property;

Failure of BRCC’s franchise partners to successfully manage their franchise;

Failure to raise additional capital to develop the business;

Risks related to the COVID-19 pandemic, including supply chain disruptions;

The loss of one or more of BRCC’s executive officers and other key employees;

Failure to hire and retain qualified employees;

Failure to meet BRCC’s goal of hiring 10,000 veterans;

Risks related to unionization of employees;

Failure to comply with federal state and local laws and regulations;

The parties’ ability to consummate the Business Combination;

The anticipated timing of the Business Combination;

The expected benefits of the Business Combination;

The Sponsor has agreed to vote in favor of the business combination, regardless of how SilverBox’s public stockholders vote;

The Sponsor, certain members of the board of SilverBox and certain officers of SilverBox have interests in the business combination that are different from or are in addition to other stockholders in recommending that stockholders vote in favor of approval of the business combination proposal and approval of the other proposals described in this proxy statement/prospectus;

The board of SilverBox did not obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the business combination; and

Other risks and uncertainties indicated in this proxy statement/prospectus, including those set forth under the section entitled “Risk Factors.”
The forward-looking statements contained in this proxy statement/prospectus are based on SilverBox’s and Authentic Brands’ current expectations and beliefs concerning future developments and their potential effects on the Business Combination and PubCo. There can be no assurance that future developments affecting SilverBox, Authentic Brands and/or PubCo will be those that SilverBox or Authentic Brands has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond either SilverBox’s or Authentic Brands’ control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of the assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. SilverBox, Authentic Brands and PubCo will not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Before a stockholder grants its proxy, instructs how its vote should be cast or votes on the Business Combination Proposal or the Adjournment Proposal, it should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/prospectus may adversely affect SilverBox, Authentic Brands and/or PubCo.
 
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RISK FACTORS
You should carefully review and consider the following risk factors and the other information contained in this proxy statement/prospectus, including the financial statements and notes to the financial statements included herein, in evaluating the Business Combination and the proposals to be voted on at the special meeting. Certain of the following risk factors apply to the business and operations of Authentic Brands and will also apply to the business and operations of PubCo following the consummation of the Business Combination. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the Business Combination, and may have a material adverse effect on the business, cash flows, financial condition and results of operations of PubCo following the Business Combination. The risks discussed below may not prove to be exhaustive and are based on certain assumptions made by SilverBox and Authentic Brands that later may prove to be incorrect or incomplete. SilverBox, Authentic Brands and PubCo may face additional risks and uncertainties that are not presently known to such entity, or that are currently deemed immaterial, which may also impair our business or financial condition. As used in this subsection, “we,” “us,” “our” or “BRCC” refer to the business and operations of Authentic Brands LLC and its consolidated subsidiaries (d/b/a Black Rifle Coffee Company) prior to the Business Combination, which will be the business of PubCo and its subsidiaries following the consummation of the Business Combination.
Risks Related to BRCC’s Business
Our brand is core to our success, and damage to our brand or reputation and negative publicity could negatively impact our business, financial condition, and results of operations.
Our reputation and the quality of our brand are critical to our business and success in existing markets and will be critical to our success as we enter new markets. Our brand and authenticity in supporting the veteran and military community is a core driver of our success. We promote our brand via media content and active participation in the veteran community through events, donations, and hiring commitments. Failure to maintain our brand, including quality of media content and active participation in the veteran community, could adversely impact our consumer resonance, brand perception, and financial performance.
We have historically faced, and may from time to time be faced, with negative publicity, regardless of its accuracy, relating to our brand; our founders and our mission; our charitable activities; our marketing; product quality; the safety, sanitation, and welfare of our facilities; customer complaints or litigation alleging illness or injury; health inspection scores; integrity of our or our suppliers’ food processing, employment practices, and other policies, practices and procedures; or employee relationships and welfare or other matters. Negative publicity may adversely affect us, regardless of whether the allegations are substantiated or whether we are held to be responsible.
Our brand has been in the past, and may be in the future, associated with controversial actions of certain customers of ours. For example, we have recently received negative publicity from leading national media arising out of the presence of, among others, our logos and brands on apparel worn at certain publicized events, even when such individuals were otherwise unaffiliated with us. The negative publicity and our reaction and communication related to such events has in the past resulted in significant losses to our direct-to-consumer subscription service, the loss of investors, and the loss of wholesale channel partners. There is no assurance that any such negative publicity will not occur again in the future and harm our brand and reputation, regardless of our involvement in the publicized events.
Moreover, information posted on social media platforms may be adverse to our interests or may be inaccurate, each of which may harm our performance, prospects, or business. The harm may be immediate without affording us an opportunity for redress or correction. Our brand has been viewed as polarizing, and we may be subject to boycotts or other negative publicity by members of the public or other corporations who fundamentally disagree with our mission or branding.
Furthermore, the negative impact of adverse publicity relating to one facility or retail coffee shop may extend far beyond the location involved, to affect some or all of our other shops, including our franchise partner shops. The risk of negative publicity is particularly great with respect to our franchise partner shops because we are limited in the manner in which we can regulate them, especially on a real-time basis, and
 
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negative publicity from our franchise partners’ shops may also significantly impact company-operated shops. A similar risk exists with respect to wholesale retail partners if customers mistakenly associate third party issues with our operations.
Employee claims against us based on, among other things, wage and hour violations, discrimination, harassment, or wrongful termination may also create not only legal and financial liability, but also negative publicity that could adversely affect us and divert our financial and management resources that would otherwise be used to benefit the future performance of our operations. These types of employee claims could also be asserted against us, on a co-employer theory, by employees of our franchise partners. A significant increase in the number of these claims or an increase in the number of successful claims could harm our business.
Our content creation team often produces videos and other media depicting risky or dangerous activities, showcasing stunts and activities with firearms, military vehicles, “extreme” sports, marksmanships, and other themes pursuing the lifestyle associated with our brand and sometimes involving certain of our employees and executive officers. While we take precautions to ensure the safety of all involved in creating this content, the activities carry an inherent risk that cannot be eliminated. If any individual were to suffer serious harm while involved with one of our productions, this could lead to negative publicity and harm to the brand and subject us to legal proceedings. See also “We depend on our executive officers and other key employees, and the loss of one or more of these employees or an inability to attract and retain other highly skilled employees could harm our business.”
Additionally, there has been a marked increase in the use of social media platforms and similar devices, including blogs, social media websites, and other forms of internet-based communications that provide individuals with access to a broad audience of consumers and other interested persons. The availability of information on social media platforms is virtually immediate as is its impact. Many social media platforms immediately publish the content their subscribers and participants can post, often without filters or checks on accuracy of the content posted. The opportunity for dissemination of information, including inaccurate information, is seemingly limitless and readily available. Information concerning us may be posted on such platforms at any time. Our founders often appear in unscripted and un-reviewed online publications, such as podcasts, over which we have little curation. Our founders have not had a history of appearing on podcasts while representing a public company, and their statements on these public media platforms may change public perception about the brand and affect our market value.
Ultimately, the risks associated with any such negative publicity or incorrect information cannot be completely eliminated or mitigated and may harm our business.
Failure to maintain or enhance the value of our brand could have a negative impact on our financial results.
We strongly believe that the authenticity of our brand and our mission is key to our customer affinity. Failure to maintain our brand or the authenticity of that brand, including quality of media content and active participation in the veteran community, could adversely impact our consumer resonance, brand perception, and financial performance.
Business incidents, whether isolated or recurring and whether originating from us or our business partners, that erode consumer trust can significantly reduce brand value, potentially trigger boycotts of our shops, or result in civil or criminal liability and can have a negative impact on our financial results. Most importantly, if our customers perceive that we have abandoned or less prioritized our mission and our authenticity, in particular with respect to our support of the veteran and military communities, we could lose significant portions of our customer base and experience substantial harm to our reputation and our operating results. Other such incidents that could adversely affect our business include actual or perceived breaches of privacy, contaminated products, employees infected with communicable diseases such as COVID-19, product recalls, controversial actions of customers identified with the brand, or other potential incidents discussed in this risk factors section. The impact of such incidents may be exacerbated if they receive considerable publicity, including rapidly through social or digital media (including for malicious reasons) or result in litigation. Consumer demand for our products and our brand equity could diminish significantly if we, our employees, franchise partners, or other business partners fail to preserve the quality of our products, act or are perceived to act in an unethical, illegal, racially-biased, unequal, or socially irresponsible manner,
 
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including with respect to the sourcing, content or sale of our products, service and treatment of customers at our shops, or the use of customer data for general or direct marketing or other purposes.
If we fail to comply with laws and regulations, publicly take controversial positions or actions, or fail to deliver a consistently positive consumer experience in each of our markets, including by failing to invest in the right balance of wages and benefits to attract and retain employees that represent the brand well, our brand value may be diminished. Additionally, if our in-house content creation platform were to generate public controversy and a negative public response, this could result in a loss of existing customers, difficulty attracting new customers, loss of business partnerships, and other adverse effects on us.
Moreover, our success depends in large part upon our ability to maintain our corporate reputation. For example, the reputation of our brand could be damaged by claims or perceptions about the quality or safety of our ingredients or merchandise, the quality or reputation of our suppliers, distributors, or franchise partners, or by claims or perceptions that we, our franchise partners, or other business partners have acted or are acting in an unethical, illegal, racially-biased, or socially irresponsible manner or are not fostering an inclusive and diverse environment, regardless of whether such claims or perceptions are substantiated. Our corporate reputation could also suffer from negative publicity or consumer sentiment regarding Company action or inaction or brand imagery, a real or perceived failure of corporate governance, or misconduct by any officer or any employee or representative of us or a franchise partner. Any such incidents (even if resulting from actions of a competitor or franchise partner) could cause a decline directly or indirectly in consumer confidence in, or the perception of, our brand and/or our products and reduce consumer demand for our products, which would likely result in lower revenue and profits.
There has been an increased public focus, including from the United States federal and state governments, on environmental sustainability matters, including with respect to climate change, greenhouse gases, water resources, packaging and waste, animal health and welfare, deforestation, and land use. We endeavor to conduct our business in a manner which reflects our priority of sustainable stewardship, including with respect to environmental sustainability matters, and we are working to manage the risks and costs to us, our franchise partners, and our supply chain associated with these types of environmental sustainability matters. In addition, as the result of such heightened public focus on environmental sustainability matters, we may face increased pressure to provide expanded disclosure, make or expand commitments, set targets, or establish additional goals and take actions to meet such goals, in connection with such environmental sustainability matters. These matters and our efforts to address them could expose us to market, operational, reputational, and execution costs or risks.
Our growth strategy depends on the successful execution of our strategic initiatives, and our limited operating history may make it difficult to evaluate future risks and challenges.
We were founded as a digitally native coffee brand in 2014, and have expanded into a number of growth channels, including, but not limited to, merchandise sales, franchised and company-operated retail locations, and Ready-to-Drink products. For example, we started both our Ready-to-Drink and retail coffee shop businesses in 2020. As several of these growth channels are still in the early stages of development, it may be difficult to anticipate risks, including, but not limited to, those associated with the following: revenue generation and key operating expenses; customer retention and acquisition; evolving or changing consumer preferences; product development and innovation; logistics and supply chain management; and all laws and regulations that may apply to each business line. Additionally, we have historically prioritized, and may in the future continue to prioritize, growth over profitability.
As part of our long-term strategy, we intend to grow our market share and revenue through various initiatives, including, but not limited to: continued growth of our direct to consumer sales through online channels; growth of our Ready-To-Drink and wholesale channel including expansion of distribution channels, velocity growth, and product innovation; and growth of our retail coffee shops business including opening new company-operated and franchised shops, driving sales growth at existing shops, and developing new digital platforms such as digital ordering and loyalty programs for customers at our coffee shops. If we are unable to execute our strategic initiative, our business, results of operations, and financial condition could be materially adversely affected.
 
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We have a limited operating history, and our past financial results may not be indicative of our future performance. Further, our revenue growth rate may slow as our business matures.
We have a limited history of generating revenue, in particular with respect to our Ready-To-Drink products and our Outpost locations. As a result of our short operating history, we have limited financial data that can be used to evaluate our current business. Therefore, our historical revenue growth should not be considered indicative of our future performance. Estimates of future revenue growth are subject to many risks and uncertainties and our future revenue may differ materially from our projections.
To effectively manage and capitalize on our growth, we must continue to expand our sales and marketing, focus on innovative product and content development, upgrade our management information systems and other processes, and continue to hire and retain employees. Our continued growth could strain our existing resources, and we could experience ongoing operating difficulties in managing our business across numerous jurisdictions, including difficulties in hiring, training, and managing a diffuse and growing employee base. Failure to scale and preserve our company culture with growth could harm our future success, including our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives. We cannot be sure that we will be successful in addressing these and other challenges we may face in the future, and our business may be adversely affected if we do not manage these risks successfully. In addition, we may not achieve sufficient revenue to attain or maintain positive cash flows from operations or profitability in any given period, or at all.
Our marketing programs may not be successful, resulting in harm to our financial results.
Attracting new customers, and retaining existing customers, is important to the success of our business. We incur costs and expend other resources in our marketing efforts on new products or merchandise and advertising campaigns to raise brand awareness and attract and retain customers. Our approach to marketing, advertising, and branding is often novel and some campaigns may be significantly more successful than others. If any initiatives do not succeed, we may incur expenses without the benefit of higher revenue.
Additionally, some of our competitors have greater financial resources than we do, which enable them to spend significantly more on marketing and advertising and other initiatives than we can. Should our competitors increase spending on marketing and advertising and other initiatives or our marketing funds decrease for any reason, or should our advertising, promotions, and new menu items be less effective than our competitors, there could be an adverse effect on our results of operations and financial condition. Failure to attract new or retain existing customers, or failure to do so in a cost-effective manner, may result in an inability to increase sales and financial harm to our business.
Our new products or merchandise may not generate increased sales or profits.
We have devoted, and will continue to devote in the future, significant resources to launch and promote new products to serve broader customer demand, adapt to changes in markets trends, and account for shifts in customer preferences. However, we may not be successful in implementing our distribution strategy, developing innovative new products, or creating products that are successful with consumer preferences. To the extent that we are not able to effectively gauge the direction of our key markets and successfully identify, develop, and promote new or improved products in the changing market, our operating results could suffer. These risks extend to the implementation of new lines of business or product categories. Failure to properly expand into new channels or introduce different product types could result in significant expenditures without increased revenue.
Developing new products and introducing them into wholesale retails, convenience stores, and our direct to consumer platforms is an expensive and time-consuming process. Not only are research and development expensive investments, there is also no guarantee that our co-manufacturing partners or distribution networks will cooperate in fully promoting our new products. Launching new products at commercial convenience stores, for example, requires lead time. Long lead times may make it more difficult for us to respond rapidly to new or changing product trends or consumer preferences. Launching a new product may also require initial “free fills” of shelves, which increases the costs of introducing new products and could adversely impact our operating results if the new product is not successful.
 
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We are subject to risks associated with using social media as a primary form of advertisement and customer engagement.
Our in-house content creation platform represents a significant portion of our marketing. Our content creation team primarily uses third party social media platforms mentioned above to engage with customers. In addition to company accounts and accounts associated with key employees, such as our founders, Evan Hafer and Mat Best, we rely on key non-employee influencers to drive online traffic and promote our brand. These relationships and agreements with non-employee influencers are often informal and cannot be closely controlled. Any actions or any public statements or social media posts about us or our products by non-employees that are contrary to our values, are critical of our brand, or create public controversy could negatively affect consumer perception of our brand and adversely affect our business. Additionally, if non-employees cease publishing content supporting us on their social media platforms for any reason, our online presence may decrease and our operating results may suffer.
Additionally, we rely on third party social media platforms, such as Facebook, Instagram, YouTube, Google, and others, to generate new customers and to engage with existing customers. As existing social media platforms evolve and new platforms develop, we must continue to maintain a presence on current and emerging platforms. If we are unable to cost-effectively use social media platforms as marketing tools, our ability to acquire new customers may suffer. Moreover, social media and other online platforms often revise their algorithms and introduce new advertising products. If one of the platforms upon which we rely for customer engagement were to modify its general methodology for how it displays our advertisements or keyword search results, resulting in fewer customers clicking through to our websites or coming across our content, our business may suffer.
Furthermore, as laws and regulations governing the use of these platforms evolve, any failure by us or third parties acting at our direction to abide by applicable laws and regulations in the use of these platforms could subject us to regulatory investigations, class action lawsuits, liability, fines, or other penalties and adversely affect our business, financial condition, and operating results. An increase in the use of social media for product promotion and marketing may cause an increase in the burden on us to monitor compliance of such content and increase the risk that such content could contain problematic product or marketing claims in violation of applicable regulations.
If we fail to offer high-quality customer experience, our business and reputation will suffer.
Numerous factors may impact a customer’s experience which may in turn impact the likelihood of such customer returning. Those factors include customer service, convenience, taste, price, quality, location of our retail coffee shops, and brand image. In addition to providing high quality products, we place a strong emphasis on supporting the veteran and military community and providing inspiring and entertaining media. Customers identify with our and any failure to meet customer expectations concerning our veteran and military support by our retail coffee locations, managers, and other employees may result in negative customer experiences that adversely affect customer retention.
Our current operations are highly dependent on the financial performance of our direct to consumer channel, and reliance on third party logistics, as well as other risks, could negatively impact our business.
Our financial performance is highly dependent on our direct to consumer channel, which comprised approximately 72% of our revenues for the nine months ended September 30, 2021. If the direct to consumer revenue trends slow or decline, our other sources of revenues may be unable to make up any significant shortfall and our business and financial results could be adversely affected. The direct to consumer business is more mature than our other channels, and as a result, produces the majority of our profitability and cash flows. Any slowdown or decline in our direct to consumer business could result in reduced cash flows for funding expansion of our other business lines and initiatives.
Our direct to consumer business’ success depends on third party logistics. We currently work with parties in the United States to store, ship, and otherwise support our distribution of products to our customers. Our ability to meet customer expectations, manage inventory, complete sales, and achieve objectives for operating efficiencies and growth depends on the proper operation of these third parties’ distribution facilities, the development or expansion of additional distribution capabilities, and the timely
 
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performance of services by third parties. If we continue to add third party logistics providers, require them to expand their fulfillment, distribution, or warehouse capabilities, expand to new locations, add products categories with different fulfillment requirements, or change the mix of products we sell, our logistics and distribution network will become increasingly complex and its operation will become more challenging for us and our third party logistics providers. The third party logistics providers we rely upon could be interrupted by issues beyond our control, including, but not limited to, information technology problems, natural disasters, pandemics, government regulation, or supply chain issues. Any significant failure in our third party logistics providers to operate effectively could adversely affect our business. In addition, we may be required to expand our capacity sooner than we anticipate. If we are unable to expand existing or secure new third party logistics providers to meet our future needs, our order fulfillment and shipping times may be delayed and our business, financial condition, and operating results may suffer.
We have experienced significant subscriber growth in our direct to consumer business over the past several years. Our continued business and revenue growth is dependent on our ability to continuously attract and retain subscribers, and we cannot be sure that we will be successful in these efforts, or that subscriber retention levels will not materially decline. Furthermore, in the future, we may offer new subscription products, implement promotions, or replace or modify current subscription models, any of which could result in additional costs. It is unknown how our subscribers will react to new models and whether the costs or logistics of implementing these models will adversely impact our business. If the adoption of new revenue models adversely impacts our subscriber relationships, then subscriber growth, subscriber engagement, and our business, financial condition, and operating results could be harmed.
Our business relies on co-manufacturers to supply our products, and loss of one or more of our co-manufacturers, or our failure to identify new co-manufacturers, could harm our business and impede our growth.
We rely on co-manufacturers to provide us with a portion of our production capacity, in particular with our Ready-to-Drink products. The terms of these co-manufacturing agreements vary, and some of these arrangements are short-term or based on purchase orders. Volumes produced under each of these agreements can fluctuate significantly based upon the product’s life cycle, product promotions, alternative production capacity, and other factors, none of which are under our direct control.
If, for any reason, our co-manufacturers cannot fulfill their obligations, or our contract with one or more of our co-manufacturers is terminated, our business may suffer. If we need to replace a co-manufacturer, there can be no assurance that additional capacity will be available in a timely manner and in the quantities required, that our quality control requirements will be met, that we will be able to utilize the product formulas or other intellectual property developed with the co-manufacturer, or that the commercial terms of a replacement will be favorable. If we fail to replace a co-manufacturer, we may be required to reduce our overall production, or increase our production by a smaller amount than forecasted, which could result in loss of sales and reputational harm. Further, an interruption in, or the loss or reduction of operations at, one or more of our co-manufacturing facilities, which may be caused by work stoppages, contamination, disease outbreaks, terrorism, natural disasters, regulatory restrictions, or any other reason, could delay, postpone, or reduce production of our products, which could have a material adverse effect on our business until such time as such interruption is resolved or an alternate source of production is secured.
We believe there are a limited number of high-quality co-manufactures that can meet our pricing requirements and quality control standards. As we seek to obtain additional or alternative co-manufacturing arrangements in the future, there can be no assurance that we would be able to do so on satisfactory terms, in a timely manner, or at all. The loss of one or more co-manufacturers, any disruption or delay at a co-manufacturer, or any failure to identify and engage co-manufacturers to increase production capacity, could delay or postpone the production of our products or reduce our overall production capacity, either of which could have a material adverse effect on our business, operating results, and financial condition.
We heavily depend upon our co-manufacturer relationship, and single key broker relationship, for the success of our Ready-to-Drink business.
We partner with only one co-manufacturer in the production of our Ready-to-Drink products, and that relationship is governed by our contractual arrangement with our key broker. Our co-manufacturer
 
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and broker have each been integral in the development of these products, as well as the sales and marketing efforts concerning these products. The co-manufacturer manages key relationships with a significant portion of our Ready-to-Drink customers, such as convenience stores. Failure by us to maintain our relationship with the co-manufacturer or broker could adversely affect our operating results. If we lose our relationship with our co-manufacturer or broker, we may not be able to replace it with another co-manufacturer or broker with similar expertise, or at all, and our relationships with some of our Ready-to-Drink clients may suffer as a result. The terms of an anticipated long-term agreement with our broker are currently being negotiated in the context of historical arrangements, about which there are certain disagreements. Any dispute with our broker could result in litigation in the future. An adverse outcome to any such dispute could harm our business.
We strongly rely upon our wholesale channel partners. If we cannot maintain good relationships with brokers and distributors, our wholesale revenue channel may be harmed.
Our wholesale relationships are important to our operations. We sell our coffee products, merchandise, and other products through outlets, dealers, and distributors, such as Bass Pro Shop, Cabela’s, 5.11, Scheels, Nine Line, Green Top, and other retailers and sell our Ready-to-Drink products through various regional and national retailers, including Walgreens, Walmart, 7/11, and others. Certain wholesale locations may include significant signage and advertising for our brand, and we rely on these locations to effectively advertise and present our products. Our business could be adversely impacted if our wholesale channel partners face declines in customer traffic, declines in consumer spending, litigation, temporary or sustained store closures, or other business disruptions, including but not limited to supply chain disruptions or inventory management issues. Our business could also be adversely impacted if we fail to grow sales of our Ready-to-Drink, coffee, and merchandise products through wholesale channels, including flat or declining number of outlets and retailers offering our products, flat or declining sales velocity in these channels, and failure to expand through new retail partnerships and outlets selling our products or newly launched products. Failure to maintain or further develop these business relationships could result in harm to our business and results of operations.
As part of our wholesale channel model, we rely on a network of brokers and distributors to grow and manage our sales. These networks assist in expanding our brands reach and ensuring the efficient distribution of our products to our retail partners. If these networks, for any reason, cannot properly or efficiently support our products distribution, our business may suffer. An interruption in, or the loss or reduction of operations at, one of these networks, for any reason including work stoppages, pandemics, terrorism, natural disasters, or regulatory or statutory restrictions, could delay, postpone, or reduce distribution of our products, which could have a material adverse effect on our business. There is also no guarantee that these networks will continue to support our business, and if not, then our operating results may suffer.
Additionally, we may not be able to fully control the actions of our wholesale channel partners. Unsatisfactory service or misconduct by our wholesale channel partners, or their failure to comply with statutory or regulatory requirements, may harm our business or brand reputation. Our wholesale channel partners may also not fulfill their obligations under our agreements, adversely affecting our business. Unilateral decisions by our wholesale channel partners, as well as co-manufacturers, brokers, distributors, logistics providers, retailers, buying groups, mass merchandisers, specialty chain stores, club stores, e-commerce retailers, e-commerce websites, and other customers, to discontinue carrying all or any of our products that they are carrying at any time, restrict the range of our products they carry, impose restrictions or limitations on the sale of our products, or devote less resources to the sale of our products could cause our business to suffer.
Interruption of our supply chain of coffee, store supplies, or merchandise could affect our ability to produce or deliver our products and could negatively impact our business and profitability.
We roast the majority of our coffee beans in-house at our Manchester, TN facility. Additionally, we produce certain merchandise items in-house at our Salt Lake City, UT facility, where we also conduct a small portion of roasting. We also contract with other suppliers and manufacturers to procure supplies, equipment, and other materials and products. Any material interruption in our supply chain, such as material interruption of the supply of coffee beans, coffee machines and other restaurant equipment, merchandise,
 
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apparel, or packaging for our proprietary products could have a negative material impact on our business and our profitability. Disruptions could occur due to the casualty loss of any of our roasting plants, interruptions in service by our third party logistics service providers or common carriers that ship goods within our distribution channels, trade restrictions, such as increased tariffs or quotas, increased prices to postage and shipping, embargoes or customs restrictions, pandemics, social or labor unrest, weather or natural disasters, political disputes and military conflicts, or other potential incidents. Additionally, we rely on our domestic and international business partners to provide high quality products and to comply with applicable laws. If production at our Manchester, TN facility is disrupted, we do not have an auxiliary facility that could continue our roasting operations. We also do not have any agreements in place with third parties to roast our coffee in the event that our Manchester, TN facility were to become inoperable.
Increases in the cost of high-quality Arabica coffee beans or other commodities or decreases in the availability of high-quality Arabica coffee beans or other commodities could have an adverse impact on our business and financial results.
The availability and prices of coffee beans and other commodities are subject to significant volatility. We purchase, roast and sell high-quality whole bean Arabica coffee beans and related coffee products. The high-quality Arabica coffee of the quality we seek tends to trade on a negotiated basis at a premium above the “C” price. This premium depends upon the supply and demand at the time of purchase and the amount of the premium can vary significantly. Increases in the “C” coffee commodity price increase the price of high-quality Arabica coffee and also impact our ability to enter into fixed-price purchase commitments. We frequently enter into supply contracts whereby the quality, quantity, delivery period and other negotiated terms are agreed upon, but the date, and therefore price, at which the base “C” coffee commodity price component will be fixed has not yet been established.
The supply and price of coffee we purchase can also be affected by multiple factors in the producing countries, such as weather (including the potential effects of climate change), natural disasters, crop disease, general increase in farm inputs and costs of production, inventory levels, political and economic conditions, and the actions of certain organizations and associations that have historically attempted to influence prices of green coffee through agreements establishing export quotas or by restricting coffee supplies. Speculative trading in coffee commodities can also influence coffee prices. Because of the significance of coffee beans to our operations, combined with our ability to only partially mitigate future price risk through purchasing practices and hedging activities, increases in the cost of high-quality Arabica coffee beans could have a material adverse impact on our profitability. In addition, if we are not able to purchase sufficient quantities of green coffee due to any of the above factors or to a worldwide or regional shortage, we may not be able to fulfill the demand for our coffee, which could have a material adverse impact on our profitability.
Increases in the cost of dairy products and other commodities, such as petroleum which in turn may increase the cost of our packing materials, or lack of availability, whether due to supply shortages, delays or interruptions in processing, or otherwise, especially in international markets, could harm our business.
Our financial condition and quarterly results of operations are dependent upon consumer discretionary spending, and a number of economic or political conditions, largely outside our control, may adversely affect that spending and as such our results may fluctuate significantly and may not fully reflect the underlying performance of our business.
Our quarterly results of operations and key metrics may vary significantly in the future as they have in the past, and period-to-period comparisons of our results of operations and key metrics may not be meaningful. Accordingly, the results of any one quarter should not be relied upon as an indication of future performance. Our results of operations are subject to seasonal and quarterly variations, and key metrics may fluctuate as a result of a variety of factors, many of which are outside of our control, and thus, may not fully reflect the underlying performance of our business. Fluctuations in quarterly results may negatively impact the value of our securities. Factors that may cause fluctuations in our quarterly results of operations and key metrics include, without limitation, those listed elsewhere in this Risk Factors section and those listed below. Any one or more of the factors listed below or described elsewhere in this section could harm our business:

fluctuations in the cost and availability of real estate, labor, raw materials, equipment, shipping;
 
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pricing pressure;

consumer preferences, including those described above;

money available to consumers for discretionary purchases, which may be affected by job losses, inflation, higher taxes, changes in federal economic policy, or other macroeconomic or political factors;

severe weather or other natural or man-made disasters affecting a large market or several closely located markets that may temporarily but significantly affect our business in such markets;

especially in our large markets, labor discord or disruption, geopolitical events, social unrest, war, terrorism, political instability, acts of public violence, boycotts, hostilities and social unrest and other health pandemics that lead to avoidance of public places or cause people to stay at home; and

adverse outcomes of litigation.
Additionally, certain public entities have recently experienced extreme volatility in the market prices and trading volume of their common stock. This extreme volatility seems to be unrelated to the underlying business of these entities, their market performance, or the macro or industry fundamentals of these entities. These extreme market fluctuations have been accompanied by reports of strong and atypical retail investor interest, including on social media and online forums, and it is unclear how long this volatility will last. Due to our customer basis, online presence, and reputation, among other factors, our Class A Common Stock may be subject to similar market volatility in the future not necessarily related to the performance of our business.
We may not be able to compete successfully with other producers and retailers of coffee. Intense competition in our markets could make it more difficult to expand our business and could also have a negative impact on our operating results if customers favor our competitors or we are forced to change our pricing and other marketing strategies.
The specialty coffee market is intensely competitive, including with respect to product quality, innovation, service, convenience, such as delivery service and mobile ordering, and price, and we face significant and increasing competition in all these areas in each of our channels and markets. If we cannot compete successfully with other entities in the market, we could lose customers and our revenue could decline. We expect competition in this market to continue to be intense as we compete on a variety of fronts, including, without limitation, the following: anticipating and responding to changing consumer demands in a timely manner; establishing and maintaining favorable brand-name recognition; achieving and maintaining product quality; hiring and retaining key employees; maintaining and growing market share; developing quality and differentiated products that appeal to consumers; establishing and maintain acceptable relationships with wholesale customers; pricing products appropriately; optimizing roasting and supply chain capabilities; and protecting intellectual property.
Compared to us, some of our competitors have substantially greater financial, technological, roasting, sale, marketing, distribution, and other resources, have been in business longer, have greater brand recognition, or are better established in the markets where our products are located or are planned to be located. Their greater capabilities in these areas may enable them to compete more effectively on the basis of price, more quickly develop new products, and more easily withstand increasing costs. The general availability of coffee roasting also allows new entrants easy access to the markets in which we compete, which may increase the number of competitors. Any of these competitive factors may adversely affect our business.
Additionally, if our competitors begin to evolve their business strategies and adopt aspects of our business model, such as our subscription model and innovative content and branding, including veteran and first-responder-focused branding, our customers may be drawn to those competitors for their beverage needs and our business could be harmed.
Our growth strategy depends in part on opening new retail coffee shops in existing and new markets. We may be unsuccessful in opening new shops or establishing new markets, which could adversely affect our growth.
As of September 30, 2021, we had eight shops across five states, of which four were company-operated and four were franchised. One of the key means to achieving our growth strategy will be through
 
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opening new shops and operating those shops on a profitable basis. We opened our first company-operated shop in 2020, with the remainder opening in the first nine months of 2021. We anticipate opening three additional company owned shops in 2021, and an additional three franchise shops in 2021. Our ability to open new shops is dependent upon a number of factors, many of which are beyond our control, including our and our franchise partners’ ability to:

identify available and suitable sites, specifically for drive-thru locations;

compete for such sites;

reach acceptable agreements regarding the lease of locations;

obtain or have available the financing required to acquire and operate a shop, including construction and opening costs, which includes access to build-to-suit leases and ground lease construction arrangements;

respond to unforeseen engineering or environmental problems with leased premises;

avoid the impact of inclement weather, natural disasters and other calamities;

hire, train and retain the skilled management and other employees necessary to meet staffing needs;

obtain, in a timely manner and for an acceptable cost, required licenses, permits and regulatory approvals and respond effectively to any changes in local, state or federal law and regulations that adversely affect our and our franchise partners’ costs or ability to open new shops; and

control construction and equipment cost increases for new shops and secure the services of qualified contractors and subcontractors in an increasingly competitive environment.
There is no guarantee that a sufficient number of suitable sites for shops will be available in desirable areas or on terms that are acceptable to us in order to achieve our growth plan. If we are unable to open new shops, or if existing franchise partners do not open new shops, or if shop openings are significantly delayed, our revenue or earnings growth could be adversely affected and our business may be harmed.
As part of our medium term growth strategy, we expect to enter into geographic markets in which we have little or no prior operating experience. The challenges of entering new markets include: adapting to local regulations or restrictions that may limit our ability to open new shops, restrict the use of certain branding or increase the cost of development; difficulties in hiring experienced personnel; unfamiliarity with local real estate markets and demographics; consumer unfamiliarity with our brand; and different competitive and economic conditions, consumer tastes and discretionary spending patterns that are more difficult to predict or satisfy than in our existing markets. Consumer recognition of our brand has been important in the success of our shops in our existing markets, and we will need to build this recognition in new markets. Shops we open in new markets may take longer to reach expected sales and profit levels on a consistent basis and may have higher construction, occupancy and operating costs than existing shops, thereby affecting our overall profitability. Any failure on our part to recognize or respond to these challenges may adversely affect the success of any new shops.
Due to brand recognition and logistical synergies, as part of our growth strategy, we also intend to open new shops in areas where we have existing shops. The operating results and comparable shop sales could be adversely affected due to close proximity with our other shops and market saturation.
New retail coffee shops, once opened, may not be profitable or may close, and the increases in average per shop revenue and comparable sales that we have experienced in the past may not be indicative of future results.
Our results have been, and in the future may continue to be, significantly impacted by the timing of new shop openings, which is subject to a number of factors, many of which are outside of our control, including: landlord delays; associated pre-opening costs and operating inefficiencies; and changes in our geographic concentration due to the opening of new shops. We have typically incurred the most significant portion of pre-opening expenses associated with a given shop within the three months preceding the opening of the shop. Our experience has been that labor and operating costs associated with a newly opened shop for the first several months of operation are materially greater than what can be expected after that time, both
 
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in aggregate dollars and as a percentage of sales. Our new shops commonly take three months or more to reach planned operating levels due to inefficiencies typically associated with new shops, including the training of new personnel, new market learning curves, inability to hire sufficient qualified staff, and other factors. We may incur additional costs in new markets, particularly for transportation and distribution, which may impact sales and the profitability of those shops. Accordingly, the volume and timing of new shop openings may have a material adverse impact on our profitability.
Although we target specified operating and financial metrics, new shops may never meet these targets or may take longer than anticipated to do so. Any new shop we open may never become profitable or achieve operating results similar to those of our existing shops, which could adversely affect our business, financial condition, or results of operations.
Some of our shops open with an initial start-up period of higher than normal sales volumes and related costs, which subsequently decrease to stabilized levels. In new markets, the length of time before average sales for new shops stabilize is less predictable and can be longer as a result of our limited knowledge of these markets and consumers’ limited awareness of our brand. In addition, our volume and comparable sales may not increase at the rates achieved over the past several years. Our ability to operate new shops profitably and increase average shop revenue and comparable shop sales will depend on many factors, some of which are beyond our control, including:

consumer awareness and understanding of our brand;

general economic conditions, which can affect shop traffic, local labor costs, and prices we pay for the products and other supplies we use;

consumption patterns and beverage preferences that differ from region to region;

changes in consumer preferences and discretionary spending;

difficulties obtaining or maintaining adequate relationships with distributors or suppliers in new markets;

increases in prices for commodities, including coffee, milk, and flavored syrups;

inefficiency in our labor costs as the staff gains experience;

competition, either from our competitors in the beverage industry or our own shops;

temporary and permanent site characteristics of new shops;

changes in government regulation; and

other unanticipated increases in costs, any of which could give rise to delays or cost overruns.
If our new shops do not perform as planned or close, our business and future prospects could be harmed. In addition, an inability to achieve our expected average shop revenue could harm our business.
Additionally, opening new shops in existing markets may negatively impact sales at our, and our franchise partners’, existing shops, even if it increases overall volume in a region. The consumer target area of our shops varies by location, depending on a number of factors, including population density, other local retail and business attractions, area demographics and geography. As a result, the opening of a new shop in or near markets in which we or our franchise partners already have shops could adversely impact sales at these existing shops while growing the overall volume in a region. Existing shops could also make it more difficult to build our and our franchise partners’ consumer base for a new shop in the same market. Sales transfer between our shops may become significant in the future as we continue to expand our operations and could affect our sales growth, which could, in turn, harm our business.
Our failure to manage our growth effectively could harm our business and operating results.
We have experienced rapid growth and increased demand for our products. The growth and expansion of our business and products may place a significant strain on our management, operational and financial resources. As we expand our business, it is important that we continue to maintain a high level of customer service and satisfaction which may place a significant strain on our management, sales and marketing,
 
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administrative, financial, and other resources. We may not be able to respond in a timely basis to all the changing demands that our planned expansion will impose on management and on our existing infrastructure, or be able to hire or retain the necessary management and employees, which could harm our business. Failure to accurately forecast our results of operations and growth rate may also result in harm to our business. Further, if we are not able to continue to provide high quality customer service as a result of these demands, our reputation, as well as our business, including a decline in financial performance, could be harmed. If we experience a decline in financial performance, we may decrease the number of or discontinue new shop openings, or we may decide to close shops that we are unable to operate in a profitable manner.
We are required to manage multiple relationships with various strategic partners, our franchise partners, customers, and other third parties. In the event of further growth of our operations or in the number of our third party relationships, our existing management systems, financial and management controls and information systems may not be adequate to support our planned expansion and we may face challenges of integrating, developing, training, and motivating a rapidly growing employee base in our various shops and maintaining our culture across multiple offices and shops. Our ability to manage our growth effectively will require us to continue to enhance our systems, procedures and controls and to locate, hire, train and retain management and employees, particularly in new markets which may require significant capital expenditures.
We are increasingly dependent on information technology and our ability to process data in order to operate and sell our goods and services, and if we (or our vendors) are unable to protect against software and hardware vulnerabilities, service interruptions, data corruption, cyber-based attacks, ransomware or security breaches, or if we fail to comply with our commitments and assurances regarding the privacy and security of such data, our operations could be disrupted, our ability to provide our goods and services could be interrupted, our reputation may be harmed and we may be exposed to liability and loss of customers and business.
We rely on information technology networks and systems and data processing (some of which are managed by third party service providers) to market, sell and deliver our products and services, to fulfill orders, to collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of and share (“Process” or “Processing”) personal information, confidential or proprietary information, financial information and other information, to manage a variety of business processes and activities, for financial reporting purposes, to operate our business, to process orders, for legal and marketing purposes, and to comply with regulatory, legal and tax requirements (“Business Functions”). These information technology networks and systems, and the Processing they perform, may be vulnerable to data security and privacy threats, cyber and otherwise. Moreover, the risk of unauthorized circumvention of our security measures or those of our third parties on whom we rely has been heightened by advances in computer and software capabilities and the increasing sophistication of hackers who employ complex techniques, including, without limitation, “phishing” or social engineering incidents, ransomware, extortion, account takeover attacks, denial or degradation of service attacks and malware. Further, breaches experienced by other companies may also be leveraged against us. For example, credential stuffing attacks are becoming increasingly common and sophisticated actors can mask their attacks, making them increasingly difficult to identify and prevent. Recently, one of our vendor’s technology systems was exploited, giving unauthorized access to certain of our customer data. The unauthorized third party who obtained this data then made certain statements online regarding our online vulnerabilities, but we promptly remedied these identified vulnerabilities. We have technology security initiatives in place to mitigate our risk to these vulnerabilities and do from time to time detect and prevent attempted disruptions, but these measures may not be adequately designed or implemented to ensure that our operations are not disrupted or that data security breaches do not occur. If our information technology networks and systems or data processing suffers damage, security breaches, vulnerabilities, disruption or shutdown, and we do not effectively resolve the issues in a timely manner, they could cause a material adverse impact to, our Business Functions and our business, reputation and financial condition.
Hackers and data thieves are increasingly sophisticated and operate large-scale and complex automated attacks, which may remain undetected until after they occur. Despite our efforts to protect our information technology networks and systems, Processing, and information, we may not be able to anticipate or to implement effective preventive and remedial measures against all data security and privacy threats. Our security measures may not be adequate to prevent or detect service interruption, system failure data loss or
 
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theft, or other material adverse consequences. No security solution, strategy, or measures can address all possible security threats. Our applications, systems, networks, software, and physical facilities could have material vulnerabilities, be breached, or personal or confidential information could be otherwise compromised due to employee error or malfeasance, if, for example, third parties attempt to fraudulently induce our personnel or our customers to disclose information or user names and/or passwords, or otherwise compromise the security of our networks, systems and/or physical facilities. We cannot be certain that we will be able to address any such vulnerabilities, in whole or part, and there may be delays in developing and deploying patches and other remedial measures to adequately address vulnerabilities, and taking such remedial steps could adversely impact or disrupt our operations. We expect similar issues to arise in the future as our products and services are more widely adopted, and as we continue to expand the features and functionality of existing products and services and introduce new products and services.
An actual or perceived breach of our security systems or those of our third party service providers may require notification under applicable data privacy regulations or for customer relations or publicity purposes, which could result in reputational harm, costly litigation (including class action litigation), material contract breaches, liability, settlement costs, loss of sales, regulatory scrutiny, actions or investigations, a loss of confidence in our business, systems and Processing, a diversion of management’s time and attention, and significant fines, penalties, assessments, fees, and expenses.
The costs to respond to a security breach or to mitigate any security vulnerabilities that may be identified could be significant, and our efforts to address these problems may not be successful. These costs include, but are not limited to, retaining the services of cybersecurity providers; compliance costs arising out of existing and future cybersecurity, data protection and privacy laws and regulations; and costs related to maintaining redundant networks, data backups, and other damage-mitigation measures. We could be required to fundamentally change our business activities and practices in response to a security breach or related regulatory actions or litigation, which could have an adverse effect on our business. Additionally, most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities, and others of security breaches involving certain types of data. Such mandatory disclosures are costly, could lead to negative publicity, may cause our customers to lose confidence in the effectiveness of our security measures, and require us to expend significant capital and other resources to respond to or alleviate problems caused by the actual or perceived security breach.
We may not have adequate insurance coverage for handling security incidents or breaches, including fines, judgments, settlements, penalties, costs, attorney fees, and other impacts that arise out of incidents or breaches. If the impacts of a security incident or breach, or the successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), it could harm our business. In addition, we cannot be sure that our existing insurance coverage will continue to be available on acceptable terms or that our insurers will not deny coverage as to all or part of any future claim or loss. Moreover, our privacy risks are likely to increase as we continue to expand, grow our customer base, and process, store, and transmit increasingly large amounts of personal and/or sensitive data.
If we or our franchise partners are unable to protect our customers’ and employees’ personal, financial, or other confidential data, or if our information technology systems are compromised, we could be exposed to data loss, litigation, liability and reputational damage.
Our business requires the collection, transmission, and retention of large volumes of customer and employee data, including credit and debit card numbers and other personally identifiable information, in various information technology systems that we maintain and in those maintained by third parties with whom we contract to provide services. The integrity and protection of that customer and employee data is critical to us. Further, our customers and employees have a high expectation that we and our service providers will adequately protect their personal information. Our systems and technology are vulnerable to damage, disruption, or interruption from, among other things, physical damage, natural disasters, inadequate system capacity, system issues, security breaches, cyber-security attacks, computer viruses, power outages, and other failures or disruptions outside of our control. A material breach of our or third parties’ information technology systems that results in authorized access, theft, use, or destruction of customer or employee confidential information could result in fines, legal claims or proceedings, including regulatory investigations
 
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and actions, or liability for failure to comply with privacy and information security laws, which could disrupt our operations, damage our reputation, and expose us to claims from customers and employees, any of which could harm our business.
We currently accept payments using credit cards and debit cards, for which we rely on third party servicers, and, as such, are subject to payment card association operating rules and certification requirements, including the Payment Card Industry Data Security Standard, which is a security standard applicable to companies like ours that collect, store or transmit certain data regarding credit and debit cards, holders and transactions. We are also subject to rules governing electronic funds transfers. Such rules could change or be reinterpreted to make it difficult or impossible for us to comply. If we (or a third party processing payment card transactions on our behalf) suffer a security breach affecting payment card information, we may have to pay onerous and significant fines, penalties and assessments arising out of the major card brands’ rules and regulations, contractual indemnifications or liability contained in merchant agreements and similar contracts, and we may lose our ability to accept payment cards for payment for our goods and services, which could materially impact our operations and financial performance.
Additionally, we rely on information technology systems across our operations, including administrative and operational functions, online ordering systems, direct to consumer sales including our e-commerce website and subscription services, point-of-sale systems and customer payments, supply chain, and other technology systems. Damage, disruption, or interruption to these systems from, among other things, physical damage, natural disasters, inadequate system capacity, system issues, security breaches, cyber-security attacks, computer viruses, power outages, and other failures or disruptions outside of our control could lead to an interruption in the operation of our systems, resulting in operational inefficiencies and a loss of profits. Furthermore, the information, security and privacy requirements imposed by governmental regulation are increasingly demanding. Our systems may not be able to satisfy these changing requirements and customer and employee expectations or may require significant additional investments or time in order to do so.
We may not be able to adequately protect our intellectual property, including trademarks, trade names, and service marks, which, in turn, could harm the value of our brand and adversely affect our business.
Our ability to implement our business plan successfully depends in part on our ability to further build brand recognition using our trademarks, service marks, proprietary products, and other intellectual property, including our name and logos and the unique character and atmosphere of our retail coffee shops. We rely on U.S. trademark, copyright, and trade secret laws, as well as license agreements, nondisclosure agreements, and confidentiality and other contractual provisions to protect our intellectual property. Nevertheless, our competitors may develop similar menu items and concepts, and adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets and other intellectual property.
The success of our business depends on our continued ability to use our existing trademarks, trade names, and service marks to increase brand awareness and further develop our brand as we expand into new markets. We have registered and applied to register trademarks and service marks in the United States and, to a lesser degree, certain other jurisdictions. We may not be able to adequately protect our trademarks and service marks, and our competitors and others may successfully challenge the validity or enforceability of our trademarks and service marks and other intellectual property. There can also be no assurance that pending or future U.S. trademark applications will be approved in a timely manner or at all, or that such registrations will effectively protect our brand names and trademarks.
Additionally, the steps we have taken to protect our intellectual property in the United States may not be adequate. If our efforts to maintain and protect our intellectual property are inadequate, or if any third party misappropriates, dilutes, or infringes on our intellectual property, the value of our brand may be harmed, which could have a material adverse effect on our business and might prevent our brands from achieving or maintaining market acceptance. Even with our own franchise partners, whose activities are monitored and regulated through our franchise agreements, we face risk that they may refer to or make statements about our brand that do not make proper use of our trademarks or required designations, that improperly alter trademarks or branding, or that are critical of our brand or place our brand in a context that may tarnish our reputation. This may result in dilution of, or harm to, our intellectual property or the value of our brand.
 
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Moreover, we do not hold any patents for our roasting methods. We roast the majority of our coffee beans in-house, and we consider our roasting methods essential to the quality of our products. Because we do not hold any patents for our roasting methods, competitors may be able to duplicate our process if such methods became known. If our competitors copy our roasting methods, the value of our coffee products may decline, and we may lose customers to competitors.
We may also from time to time be required to institute litigation to enforce our trademarks, service marks, and other intellectual property. Such litigation could result in substantial costs and diversion of resources and could negatively affect our sales, profitability, and prospects regardless of whether we can successfully enforce our rights.
Third parties may oppose our trademark and service mark applications, or otherwise challenge our use of the trademarks and service marks. In the event that these or other intellectual property rights are successfully challenged, we could be forced to rebrand our products, which would result in loss of brand recognition and would require us to devote resources to advertising and marketing new brands. Third parties may also assert that we infringe, misappropriate, or otherwise violate their intellectual property and may sue us for intellectual property infringement. Even if we are successful in these proceedings, we may incur substantial costs, and the time and attention of our management and other personnel may be diverted in pursuing these proceedings. If a court finds that we infringe a third party’s intellectual property, we may be required to pay damages or be subject to an injunction. With respect to any third party intellectual property that we use or wish to use in our business (whether or not asserted against us in litigation), we may not be able to enter into licensing or other arrangements with the owner of such intellectual property at a reasonable cost or on reasonable terms.
Litigation or legal proceedings could expose us to significant liabilities and have a negative impact on our reputation or business.
From time to time, we may be party to various claims and litigation proceedings, some of which we may institute ourselves, and some of which we may be defending against. We evaluate these claims and litigation proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the nature and amount of potential recoveries or losses. Based on these assessments and estimates, we may establish reserves, as appropriate. These assessments and estimates are based on the information available to management at the time and involve a significant amount of management judgment. Actual outcomes, gains or losses may differ materially from our assessments and estimates. We may also, from time to time, take certain positions in respect of contractual or other relationships with third parties which may result a dispute, and, ultimately, litigation. We are not currently party to any material litigation.
Even when not merited, the commencement or defense of these lawsuits may divert management’s attention, and we may incur significant expenses in pursuing or defending these lawsuits. The results of litigation and other legal proceedings are inherently uncertain, and adverse judgments or settlements in some of these legal disputes may result in adverse monetary damages, penalties or injunctive relief against us, which could negatively impact our financial position, cash flows or results of operations. Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to compete effectively or to obtain adequate insurance in the future.
Furthermore, while we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as caps on amounts recoverable. Even if we believe a claim is covered by insurance, insurers may dispute our entitlement to recovery for a variety of potential reasons, which may affect the timing and, if the insurers prevail, the amount of our recovery.
Evolving consumer preferences and tastes, including public or medical opinions about caffeine consumption, may adversely affect our business.
Our continued success depends on our ability to attract and retain customers. Our financial results could be adversely affected by a shift in consumer spending away from our products, lack of customer acceptance of new products (including due to price increases necessary to cover the costs of new products or higher input costs), brand perception (such as the existence or expansion of our competitors), or platforms
 
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(such as features of our mobile application and changes in our loyalty rewards programs and initiatives), or customers reducing their demand for our current offerings as new products are introduced.
In addition, most of our products contain caffeine and our Ready-to-Drink products and many of the beverages made at our retail coffee shops contain sugar, dairy products, and other compounds, such as natural and artificial flavors, the health effects of which are the subject of public and regulatory scrutiny, including the suggestion of linkages to a variety of adverse health effects. There is increasing consumer awareness of health risks that are attributed to caffeine and other ingredients we use, particularly in the United States, including obesity, increased blood pressure and heart rate, anxiety and insomnia, as well as increased consumer litigation based on alleged adverse health impacts of consumption of various food and beverage products. An unfavorable report on the health effects of caffeine, sugar, or other ingredients in our products or changes in public perception of these ingredients could significantly reduce the demand for our products. A decrease in customer consumption as a result of these health concerns or negative publicity could significantly reduce the demand for our products and could harm our business.
Food safety and quality concerns may negatively impact our brand, business, and profitability, our internal operational controls and standards may not always be met, and our employees may not always act professionally, responsibly and in our and our customers’ best interests. Any possible instances or reports, whether true or not, of food or beverage-borne illness could reduce our sales.
Incidents or reports, whether true or not, of food-borne or water-borne illness or other food safety issues, food contamination or tampering, employee hygiene and cleanliness failures, or improper employee conduct at our retail coffee shops could lead to product liability or other claims. Such incidents or reports could negatively affect our brand and reputation as well as our business, revenue, and profits. Similar incidents or reports occurring at coffee and convenience shops unrelated to us could likewise create negative publicity, which could negatively impact consumer behavior towards us. Our products may also be subject to food recalls or other regulatory warnings promulgated by the U.S. Food and Drug Administration (the “FDA”) or other regulatory bodies.
We cannot guarantee to customers that our internal controls and training will be fully effective in preventing all food-borne illnesses. New illnesses resistant to our current precautions may develop in the future, or diseases with long incubation periods could arise, potentially giving rise to claims or allegations on a retroactive basis. One or more instances of food-borne illness in one of our company-operated or franchised shops could negatively affect sales at all our shops if highly publicized. This risk exists even if it were later determined that the illness was wrongly attributed to one of our shops. Additionally, even if food-borne illnesses were not identified at our shops, our sales could be adversely affected if instances of food-borne illnesses at other coffee and beverage chains were highly publicized.
Our expansion into new markets may present increased risks, which could affect our profitability.
We plan to open additional retail coffee shops in markets where we have little or no operating experience. The target consumer base of our shops varies by location depending on a number of factors, including population density, other local coffee and convenience beverage distributors, area demographics, and geography. Shops we open in new markets may take longer to reach expected sales and profit levels on a consistent basis. New markets may have competitive conditions, consumer tastes, and discretionary spending patterns that are more difficult to predict or satisfy than our existing markets . We may need to make greater investments than we originally planned in advertising and promotional activity in new markets to build brand awareness. We may find it more difficult in new markets to hire, motivate and keep qualified employees who share our values. We may also incur higher costs from entering new markets if, for example, we assign operators to manage comparatively fewer shops than we assign in more developed markets. Also, until we attain a critical mass in a market, the shops we do open will have reduced operating leverage. As a result, these new shops may be less successful or may achieve target operating profit margins at a slower rate than existing shops did, if ever. If we do not successfully execute our plans to enter new markets, our business could be harmed.
We are subject to the risks associated with leasing space subject to long-term non-cancelable lease and, with respect to the real property that we own, owning real estate.
Our leases generally have initial terms of 10 years with renewal options. Shop leases provide for a specified annual rent, with agreed annual increases and other escalators. Generally, our leases are “net”
 
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leases, which require us to pay all the cost of insurance, taxes, maintenance and utilities. We generally cannot terminate these leases without incurring substantial costs. Additional sites that we lease are likely to be subject to similar long-term non-cancelable leases. If an existing or future shop is not profitable, and we decide to close it, we may nonetheless be committed to perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term. In addition, as each of our leases expires, we may fail to negotiate renewals, either on commercially acceptable terms or at all, which could cause us to close shops in desirable locations. Also, because we sometimes purchase real property for various shop locations and for office, warehouse, and manufacturing facilities, we’re subject to all the risks generally associated with owning real estate, including changes in the investment climate for real estate, demographic trends, and supply or demand for the use of the shops, which may result from competition from similar restaurants in the area as well as strict, joint, and several liability for environmental contamination at or from the property, regardless of fault.
Our operating results and growth strategies are partly dependent upon the success of our franchise partners, and we have limited control with respect to their operations. Additionally, our franchise partners’ interests may conflict or diverge with our interests in the future, which could have a negative impact on our business.
As of September 30, 2021, approximately 56% of our shops were operated by our franchise partners and, because of this, we depend on the financial success and cooperation of our franchise partners for our success. Our franchise partners are independent business operators and are not our employees, and as such we have limited control over how our franchise partners run their businesses, and their inability to operate successfully could adversely affect our operating results.
We receive royalties, franchise fees, contributions to our marketing development fund, and other fees from our franchise partners. Additionally, we sell proprietary products to our franchise partners at a markup over our cost to produce. We have established operational standards and guidelines for our franchise partners; however, we have limited control over how our franchise partners’ businesses are run, including day to day operations. Even with these operation standards and guidelines, the quality of franchised shops may be diminished by any number of factors beyond our control. Consequently, our franchise partners may not successfully operate shops in a manner consistent with our standards and requirements, such as quality, service and cleanliness, or may not hire and train qualified shop managers, employees, and other shop personnel or may not implement marketing programs and major initiatives such as shop remodels or equipment or technology upgrades, which may require financial investment. Even if such unsuccessful operations do not rise to the level of breaching the related franchise documents, they may be attributed by customers to our brand and could have a negative impact on our business.
Our franchise partners may not be able to secure adequate financing to open or continue operating our shops. If they incur too much debt or if economic or sales trends deteriorate such that they are unable to repay existing debt, our franchise partners could experience financial distress or even bankruptcy. If a significant number of our franchise partners become financially distressed, it could harm our operating results through reduced royalty revenue, marketing fees, and proprietary product sales and the impact on our profitability could be greater than the percentage decrease in these revenue streams.
While we are responsible for ensuring the success of our entire system of shops and for taking a longer term view with respect to system improvements, our franchise partners have individual business strategies and objectives, which might conflict with our interests. Our franchise partners may from time to time disagree with us and our strategies and objectives regarding the business or our interpretation of our respective rights and obligations under the franchise agreement and the terms and conditions of the franchise partner relationship. This may lead to disputes with our franchise partners and we expect such disputes to occur from time to time in the future as we continue to have franchises. Such disputes may result in legal action against us. To the extent we have such disputes, the attention, time and financial resources of our management and our franchise partners will be diverted from our shops, which could harm our business even if we have a successful outcome in the dispute.
Actions or omissions by our franchise partners in violation of various laws may be attributed to us or result in negative publicity that affects our overall brand image, which may decrease consumer demand for our products. Franchise partners may engage in online activity via social media or activity in their personal
 
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lives that negatively impacts public perception of our franchise partners’ or our operations or our brand as a whole. This activity may negatively affect franchise partners’ sales and in turn impact our revenue.
In addition, various state and federal laws govern our relationship with our franchise partners and our potential sale of a franchise. A franchise partner and/or a government agency may bring legal action against us based on the franchisee/franchisor relationships that could result in the award of damages to franchise partners and/or the imposition of fines or other penalties against us.
If we fail to maintain adequate operational and financial resources, particularly if we continue to grow rapidly, we may be unable to execute our business plan or maintain high levels of service and customer satisfaction.
Our continuous growth and expansion has placed, and may continue to place, significant demands on our management and our operational and financial resources. In connection therewith, our organizational structure is becoming more complex as we scale our operational, financial, and management controls, as well as our reporting systems and procedures. As we continue to grow, we face challenges of integrating, developing, training, and motivating a rapidly growing employee base in our various retail coffee shops and maintaining our culture across multiple offices and shops. Certain members of our management have not previously worked together for an extended period of time, and some do not have prior experience managing a public company, which may affect how they manage our growth. If we fail to manage our anticipated growth and change in a manner that preserves the key aspects of our corporate culture, the quality of our products and services may suffer, which could negatively affect our brand and reputation and harm our ability to attract users, employees, and organizations.
To manage growth in our operations and personnel, we will need to continue to grow and improve our operational, financial, and management controls and our reporting systems and procedures. We will require significant capital expenditures and the allocation of valuable management resources to grow and change in these areas. We depend on cash generated from our operations to support our growth, and we may need to raise additional capital, which may not always be available on acceptable terms. Our expansion has placed, and our expected future growth will continue to place, a significant strain on our management, customer experience, research and development, sales and marketing, administrative, financial, and other resources.
In addition, as we expand our business, it is important that we continue to maintain a high level of customer service and satisfaction. As our customer base continues to grow, we will need to expand our customer service and other personnel, which will require more complex management and systems. If we are not able to continue to provide high levels of customer service, our reputation, as well as our business could be harmed.
Pandemics or disease outbreaks such as the COVID-19 pandemic have had, and may continue to have, an effect on our business and results of operations.
Pandemics or disease outbreaks such as the COVID-19 pandemic have impacted and are likely to continue to impact customer traffic at our retail coffee shops and may make it more difficult to staff our shops and, in more severe cases, may cause a temporary inability to obtain supplies and increase commodity costs. COVID-19 was officially declared a global pandemic by the World Health Organization in March 2020, and the virus, including the continued spread of highly transmissible variants of the virus, has impacted all global economies, and in the United States has resulted in varying levels of restrictions and shutdowns implemented by national, state, and local authorities.
Such viruses may be transmitted through human contact and airborne delivery, and the risk of contracting viruses could continue to cause employees or customers to avoid gathering in public places, which has had, and could further have, adverse effects on our customer traffic or the ability to adequately staff shops. We may be adversely affected if government authorities: impose restrictions on public gatherings, human interactions, operations of restaurants, or mandatory closures; seek voluntary closures; restrict hours of operations or impose curfews; restrict the import or export of products; or if suppliers issue mass recalls of products. Additional regulation or requirements with respect to the compensation of our employees could also have an adverse effect on our business. Even if such measures are not implemented and a virus or other disease does not spread significantly within a specific area, the perceived risk of infection or health risk in such area may adversely affect our business, liquidity, financial condition, and results of operations.
 
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Additionally, different jurisdictions have seen varying levels of outbreaks or resurgences in outbreaks, and corresponding differences in government responses, which may make it difficult for us to plan or forecast an appropriate response.
Even though we have been deemed an “essential business” during this COVID-19 pandemic and have been allowed to remain in operation, there is no guarantee that in the event of a future pandemic or resurgence of the COVID-19 pandemic that we will receive the same designation. Regardless of our status as an essential business during the COVID-19 pandemic, we expect our operations will be disrupted if employees or employees of our franchise partners are suspected of having COVID-19 or other illnesses, since this requires us or our franchise partners to quarantine some or all such employees and close and disinfect our impacted shops. If a significant percentage of our workforce or the workforce of our franchise partners are unable to work, including because of illness or travel or government restrictions, like quarantine requirements, in connection with pandemics or disease outbreaks, our operations may be negatively impacted, potentially materially adversely affecting our business, liquidity, financial condition, or results of operations.
The COVID-19 pandemic and mitigation measures have also had an adverse impact on global economic conditions, which have had certain adverse effects on our business and financial condition, including specific sales channels, construction costs, supply chain, and difficulties experienced by our partners and employees. Our sales and operating results may be affected by uncertain or changing economic and market conditions arising in connection with and in response to the COVID-19 pandemic, including prolonged periods of high unemployment, inflation, deflation, prolonged weak consumer demand, a decrease in consumer discretionary spending, political instability, or other changes. The significance of the operational and financial impact to us will depend on how long and widespread the disruptions caused by the COVID-19 pandemic, and the corresponding response to contain the virus and treat those affected by it, prove to be.
We do not yet know the full extent of potential delays or impacts on our business, operations, or the global economy as a whole. While there have recently been vaccines developed and administered, and the spread of COVID- 19 may eventually be contained or mitigated, we cannot predict the timing of the vaccine roll-out globally or the efficacy of such vaccines, and we do not yet know how customers or our franchise partners will operate in a post COVID-19 environment. In addition, new strains and variants of the virus have caused a resurgence and an increase in reported infection rates, particularly in areas with lower vaccination rates, which may impact the general economic recovery. There is no guarantee that a future outbreak of this or any other widespread epidemics will not occur, or that the global economy will recover, either of which could seriously harm our business fully recover. The ultimate impact of the COVID-19 pandemic or a similar health epidemic on our business, operations, or the global economy as a whole remains highly uncertain.
While we have developed and continue to develop plans to help mitigate the potential negative impact of the COVID-19 pandemic, these efforts may not be effective, and any protracted economic downturn will likely limit the effectiveness of our efforts. Accordingly, it is not possible for us to predict the duration and extent to which this will affect our business at this time.
Risks Related to People and Culture
We depend on our executive officers and other key employees, and the loss of one or more of these employees or an inability to attract and retain other highly skilled employees could harm our business.
Our success depends partly upon the continued services of our founders, co-chief executive officers, and other executive officers. We rely on our leadership team in the areas of marketing, sales, customer experience, and selling, general and administrative. From time to time, there may be changes in our executive management team resulting from the hiring or departure of executives, which could disrupt our business. The loss of one or more of our executive officers or key employees could harm our business. Changes in our executive management team may also cause disruptions in, and harm to, our business.
Tom Davin, Co-CEO, contributes deep expertise in operations and execution of business growth strategies, based on his significant retail industry background. Evan Hafer, Co-CEO and Co-Founder, provides coffee roasting expertise and in-depth knowledge and experience of military and veteran consumers based on his own significant prior experience in the military. Mat Best, Co-Founder and Chief Branding Officer, has a significant social media following and drives organic customer engagement. Mr. Hafer and
 
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Mr. Best are instrumental to our marketing and publicity strategy and are closely identified with both the brand and us in general. They actively promote the brand through their large social media platforms and through various public appearances, and we believe that the unique personalities of our Founders are part of our success. Our Founders’ public personas are more closely tied to our brand than other companies, and we believe that the continued engagement of our Founders with our customers will be a contributor to our growth.
Additionally, our founders and executive officers occasionally travel in small aircraft to remote locations, sometimes together. They also engage in outdoor recreational activities that have known risks, such as bear hunting. These activities could put our founders at risk and cause potential harm to our business.
If the services of Mr. Hafer, Mr. Best, or Mr. Davin became unavailable to us for any reason, it may be difficult or impossible for us to find adequate replacements, which could cause us to be less successful in maintaining our brand and developing and effectively executing on our strategies.
Changes in the availability of and the cost of labor could harm our business.
Our business could be harmed by increases in labor costs, including those increases triggered by regulatory actions regarding wages, scheduling and benefits, increased health care, and workers’ compensation insurance costs, which, in a business such as ours, are significant costs and expected to grow as our headcount expands. In particular, certain of our employees are paid wage rates at or based on the applicable federal or state minimum wage, and increases in the applicable minimum wage will increase labor costs. From time to time, legislative proposals are made to increase the minimum wage at the federal or state level. As federal, state, or other applicable minimum wage rates increase, we may be required to increase not only the wage rates of minimum wage employees, but also the wages paid to other hourly employees. We may not choose to increase prices in order to pass future increased labor costs on to customers, in which case our margins would be negatively affected. If we do not increase prices to cover increased labor costs, the higher prices could result in lower revenue, which may also reduce margins.
Furthermore, the successful operation of our business depends upon our, and our franchise partners’, ability to attract, motivate, and retain a sufficient number of qualified employees. From time to time, there may be a shortage of qualified employees in certain of the communities in which we operate or expand to. Shortages may make it increasingly difficult and expensive to attract, train, and retain the services of a satisfactory number of qualified employees, which could delay the planned openings of new company-operated and franchised shops and adversely impact the operations and profitability of existing shops. Furthermore, competition for qualified employees, particularly in markets where such shortages exist, could require us to pay higher wages, which could result in higher labor costs. Accordingly, if we and our franchise partners are unable to recruit and retain sufficiently qualified individuals, our business could be harmed.
Additionally, the growth of our business can make it increasingly difficult to locate and hire sufficient numbers of key employees, to maintain an effective system of internal controls for a dispersed chain, and to train employees to deliver consistently high-quality products and customer experiences, which could materially harm our business and results of operations. Furthermore, due to the COVID-19 pandemic, we could experience a shortage of labor for shop positions as concern over exposure to COVID-19 and other factors could decrease the pool of available qualified talent for key functions. In addition, our wages and benefits programs, combined with the challenging conditions due to the COVID-19 pandemic, may be insufficient to attract and retain the best talent.
Our unique workplace atmosphere may produce specific challenges.
We have regularly articulated a goal to hire 10,000 veterans. Failure to meet this goal, or perception that we have strayed from this goal in our hiring practices, may adversely affect our employee relationships and our reputation towards our customers. Moreover, veterans generally experience mental health issues, such as PTSD, at a higher rate than the average population, which could pose unique challenges in our workplace environment.
We maintain a policy of permitting employees and customers to carry firearms in the workplace and at our retail coffee shops. While we have never experienced any significant acts of violence at any of our locations in the past, such policy creates certain inherent risks and any accidents related therewith may subject us to liability.
 
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Unionization activities may disrupt our operations and affect our profitability.
Although none of our employees are currently covered under collective bargaining agreements, our employees may elect to be represented by labor unions in the future. If a significant number of our employees were to become unionized and collective bargaining agreement terms were significantly different from our current compensation arrangements, it could adversely affect our business, financial condition, or results of operations. In addition, a labor dispute involving some or all of our employees may harm our reputation, disrupt our operations, and reduce our revenue, and resolution of disputes may increase our costs. Further, if we enter into a new market with unionized construction companies, or the construction companies in our current markets become unionized, construction and build out costs for new shops in such markets could materially increase.
Risks Related to Regulation and Litigation
We are subject to many federal, state, and local laws with which compliance is both costly and complex.
Our industry is subject to extensive federal, state, and local laws and regulations, including those relating to the preparation and sale of food and beverages or consumption and those relating to building and zoning requirements. Such laws and regulations are subject to change from time to time. The failure to comply with these laws and regulations could adversely affect our operating results. Typically, licenses, permits, and approvals under such laws and regulations must be renewed annually and may be revoked, suspended, or denied renewal for cause at any time if governmental authorities determine that our conduct violates applicable regulations. Difficulties or failure to maintain or obtain the required licenses, permits, and approvals could adversely affect our existing shops and delay or result in our decision to cancel the opening of new shops, which would adversely affect our business.
The development and operation of a retail coffee shop depends, to a significant extent, on the selection of suitable sites, which are subject to unique permitting, zoning, land use, environmental, traffic, and other regulations and requirements. We are also subject to licensing and regulation by state and local authorities relating to health, sanitation, safety, and fire standards.
We are subject to the Fair Labor Standards Act and various other federal, state, and local laws that regulate the wages and hours of employees. These laws commonly apply a strict liability standard so that even inadvertent noncompliance can lead to claims, government enforcement actions, and litigation. These laws vary from state to state and are subject to frequent amendments and judicial interpretations that can require rapid adjustments to operations. Insurance coverage for violations of these laws is costly and sometimes is not available. Changes to these laws can adversely affect our business by increasing labor and compliance costs. The failure to comply with these laws could adversely affect our business as a result of costly litigation or government enforcement actions.
We are also subject to a variety of other employee relations laws including, but not limited to, the Family and Medical Leave Act and state leave laws, employment discrimination laws, predictive scheduling laws, occupational health and safety laws and regulations, and the National Labor Relations Act. Together, these many laws and regulations present a thicket of compliance obligations and liability risks. As we grow, we will need to continue to increase our compliance efforts in these areas, which may affect our results from operations. Changes to these laws and regulations may increase these costs beyond our expectations or predictions, which would adversely affect our business operations and financial results. Violations of these laws could lead to costly litigation or governmental investigation or proceedings.
We are subject to compliance obligations of the Food Safety Modernization Acts (“FSMA”). Under FSMA, we are required to develop and implement a Food Safety Plan for our roasting operations. While we are not currently required to implement a FSMA Food Safety Plan or a Hazard Analysis and Critical Points system (“HACCP”) in our shops, many states have required restaurants to develop and implement HACCP, and the United States government continues to expand the sectors of the food industry that must adopt and implement HACCP. Additionally, our suppliers may initiate or otherwise be subject to food recalls that may impact the availability of certain products, result in adverse publicity, or require us to take actions that could be costly for us or otherwise impact our business.
 
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We are subject to the Americans with Disabilities Act (the “ADA”), which, among other things, requires our shops to meet federally mandated requirements for the disabled. The ADA prohibits discrimination in employment and public accommodations on the basis of disability. Under the ADA, we could be required to expend funds to modify our shops to provide service to, or make reasonable accommodations for the employment of, disabled persons. In addition, our employment practices are subject to the requirements of the Immigration and Naturalization Service relating to citizenship and residency.
In addition, our franchise activities are subject to laws enacted by a number of states and rules and regulations promulgated by the FTC. Failure to comply with new or existing franchise laws, rules, and regulations in any jurisdiction or to obtain required government approvals could negatively affect our licensing sales and our relationships with our licensees.
The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements, and the consequences of litigation relating to current or future laws and regulations, or our inability to respond effectively to significant regulatory or public policy issues, could increase our compliance and other costs of doing business and, therefore, have an adverse effect on our results of operations. Failure to comply with the laws and regulatory requirements of federal, state, and local authorities could result in, among other things, revocation of required licenses, administrative enforcement actions, fines, and civil and criminal liability. In addition, certain laws, including the ADA, could require us to expend significant funds to make modifications to our shops if we failed to comply with applicable standards. Compliance with all these laws and regulations can be costly and can increase our exposure to litigation or governmental investigations or proceedings.
We may be subject to liability for placing advertisements with content that is deemed inappropriate or misleading.
We are subject to a number of regulations applicable to the labeling and advertising of our products. The FDA promulgates a number of restrictions and guidelines on food labeling. For example, effective January 1, 2020, a revised FDA regulation requires the disclosure of the amount of added sugars in our products. We may incur significant costs to alter our existing labeling and packaging materials to comply with new FDA regulations, and new regulations may also negatively impact consumption patterns by consumers. Furthermore, the FTC promulgates a number of regulations regarding marketing and advertising that are applicable to our products, with which we must comply.
The FDA and the FTC require any claim on products to be truthful and not misleading. Failure to comply with these requirements may be subject to regulatory penalties or civil litigation. Our advertising often uses humor in conjunction with supportable facts about the products or their ingredients to engage with our customers and promote the brand. While we have not faced any liability concerning our advertising, an adverse ruling that our branding is misleading could harm our marketing and brand. We also sell certain products or merchandise labeled with an American flag even though they are not made in the United States, such as our coffee, which is roasted in the United States but sourced in traditional coffee growing regions, such as Latin America. If a customer or regulatory agency were to file suit over misleading advertising claims, whether or not they are successful, our business and brand reputation could be harmed.
We, as well as our vendors, are subject to stringent and changing laws, regulations, and industry standards related to data Processing, protection, privacy, and security. The actual or perceived failure by us, our customers, or vendors to comply with such laws, regulations, and industry standards may harm our business, financial condition, results of operations, and prospects.
We process personal information, confidential information, and other information necessary to provide our products and service and ensure that they are delivered effectively, to operate our business, for legal and marketing purposes, and for other business-related purposes.
Data privacy and regulation of privacy, information security, and processing has become a significant issue in the United States. The legal and regulatory framework for privacy and security issues is rapidly evolving and is expected to increase our compliance costs and exposure to liability. There are numerous federal, state, and local laws, orders, codes, regulations, and regulatory guidance regarding privacy, information security, and processing (“Data Protection Laws”), the number and scope of which is changing, subject to
 
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differing applications and interpretations, and which may be inconsistent among jurisdictions, or in conflict with other rules, laws, or Data Protection Obligations (defined below). We expect that there will continue to be new Data Protection Laws and Data Protection Obligations, and we cannot yet determine the impact such future Data Protection Laws may have on our business. Any significant change to Data Protection Laws and Data Protection Obligations, including without limitation, how the express or implied consent of customers for Processing is obtained, could increase our costs and require us to modify our operations, possibly in a material manner, which we may be unable to complete and may limit our ability to store and process customer data and operate our business.
Data Protection Laws are, and are likely to remain, uncertain for the foreseeable future, and our actual or perceived failure to address or comply with these laws could: increase our compliance and operational costs; limit our ability to market our products or services and attract new and retain current customers; limit or eliminate our ability to Process; expose us to regulatory scrutiny, actions, investigations, fines, and penalties; result in reputational harm; lead to a loss of customers; reduce the use of our products or services; result in litigation and liability, including class action litigation; cause to incur significant costs, expenses, and fees (including attorney fees); cause a material adverse impact to business operations or financial results; and otherwise result in other material harm to our business (“Adverse Data Protection Impact”).
We are or may also be subject to the terms of our external and internal privacy and security policies, codes, representations, certifications, industry standards, publications, and frameworks (“Privacy Policies”) and contractual obligations to third parties related to privacy, information security, and Processing, including contractual obligations to indemnify and hold harmless third parties from the costs or consequences of non-compliance with Data Protection Laws or other obligations (“Data Protection Obligations”).
We strive to comply with applicable Data Protection Laws, Privacy Policies, and Data Protection Obligations to the extent possible, but we may at times fail to do so, or may be perceived to have failed to do so. Moreover, despite our efforts, we may not be successful in achieving compliance if our employees, partners, or vendors do not comply with applicable Data Protection Laws, Privacy Policies, and Data Protection Obligations. We may be subject to and suffer an Adverse Data Protection Impact if we fail (or are perceived to have failed) to comply with applicable Data Protection Laws, Privacy Policies, and Data Protection Obligations, if our Privacy Policies are, in whole or part, found to be inaccurate, incomplete, deceptive, unfair, or misrepresentative of our actual practices. In addition, any such failure or perceived failure could result in public statements against us by consumer advocacy groups, the media, or others, which may cause us material reputational harm. Our actual or perceived failure to comply with Data Protection Laws, Privacy Policies, and Data Protection Obligations could also subject us to litigation, claims, proceedings, actions, or investigations by governmental entities, authorities, or regulators, which could result in an Adverse Data Protection Impact, including required changes to our business practices, the diversion of resources and the attention of management from our business, regulatory oversights and audits, discontinuance of necessary Processing, or other remedies that adversely affect our business.
In the United States, these include rules and regulations promulgated under the authority of the Federal Trade Commission (the “FTC”), the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act (the “CCPA”) and other state and federal laws relating to privacy and data security. The CCPA, which among other things, establishes a privacy framework for covered businesses, including an expansive definition of personal data and data privacy rights. The CCPA provides individual privacy rights for California residents and places increased privacy and security obligations on covered businesses processing personal data. The CCPA requires covered businesses to provide new disclosures to California residents and provide such individuals with ways to opt-out of certain sales of personal data. The CCPA also provides a private right of action and statutory damages for violations, including for data breaches. To the extent applicable to our business and operations, the CCPA may impact our business activities by increasing our compliance costs and potential liability with respect to personal information that we or third parties with whom we contract to provide services maintain about California residents. It is anticipated that the CCPA will be expanded on January 1, 2023, when the California Privacy Rights Act of 2020 (the “CPRA”) becomes operative. The CPRA will, among other things, give California residents the ability to limit use of certain sensitive personal data, further restrict the use of cross-contextual advertising, establish restrictions on the retention of personal data, expand the types of data breaches subject to the CCPA’s private right of action, provide for increased penalties for CPRA violations
 
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concerning California residents under the age of 16, and establish a new California Privacy Protection Agency to implement and enforce the law. These Data Protection Laws (such as the CCPA and CPRA) exemplify the vulnerability of our business to the evolving regulatory environment related to personal data.
Moreover, across the United States, laws and regulations governing data privacy and security continue to develop and evolve. For example, Virginia enacted the Consumer Data Protection Act (“CDPA”) that may impose obligations similar to or more stringent than those we may face under other Data Protection Laws. Compliance with the CPRA, the CCPA, the CDPA and any newly enacted privacy and data security laws or regulations may be challenging and cost- and time-intensive, and may require us to modify our data processing practices and policies and to incur substantial costs and potential liability in an effort to comply with such legislation. The Data Protection Laws, Privacy Policies, and Data Protection Obligations to which we are subject may significantly affect our business activities and many of these obligations may contain ambiguous provisions creating uncertainty. Compliance with the requirements imposed by such Data Protection Laws and Data Protection Obligations may require us to revise our business practices, allocate more resources to privacy and security, and implement new technologies. Such efforts may result in significant costs to our business. Noncompliance could result in Adverse Data Protection Impact, including proceedings against us by governmental and regulatory entities, collaborators, individuals, or others.
We rely on a variety of marketing techniques and practices, including email and social media marketing, online targeted advertising, and cookie-based processing, to sell our products and services and to attract new customers, and we, and our vendors, are subject to various current and future Data Protection Laws and Data Protection Obligations that govern marketing and advertising practices. Governmental authorities continue to evaluate the privacy implications inherent in the use of third party “cookies” and other methods of online tracking for behavioral advertising and other purposes, such as by regulating the level of consumer notice and consent required before a company can employ cookies or other electronic tracking tools or the use of data gathered with such tools. Additionally, some providers of consumer devices, web browsers, and application shops have implemented, or announced plans to implement, means to make it easier for Internet users to prevent the placement of cookies or to block other tracking technologies, require additional consents, or limit the ability to track user activity, which could, if widely adopted, result in the use of third party cookies and other methods of online tracking becoming significantly less effective. Laws and regulations regarding the use of these cookies and other current online tracking and advertising practices or a loss in our ability to make effective use of services that employ such technologies could increase our costs of operations and limit our ability to acquire new customers on cost-effective terms, which, in turn, could have an adverse effect on our business, financial condition, results of operations, and prospects.
We and our franchise partners are subject to extensive government regulations that could result in claims leading to increased costs and restrict our ability to operate franchises.
We and our franchise partners are subject to extensive government regulation at the federal, state, and local government levels, including by the FTC. These include, but are not limited to, regulations relating to the preparation and sale of beverages, zoning and building codes, franchising, land use, and employee, health, sanitation, and safety matters. We and our franchise partners are required to obtain and maintain a wide variety of governmental licenses, permits, and approvals. Local authorities may suspend or deny renewal of our governmental licenses if they determine that our operations do not meet the standards for initial grant or renewal. Difficulty or failure in obtaining them in the future could result in delaying or canceling the opening of new shops and thus could harm our business. Any such failure could also subject us to liability from our franchise partners.
Additionally, Congress has a legislation proposal in process that could shift more liability for franchise partner employment practices onto franchisors. The federal PRO Act would codify the Browning-Ferris decision that redefined joint employment to include a broader category of conduct by the franchisor, thereby increasing the possibility of us being held liable for our franchise partners’ employment practices.
Beverage and restaurant companies have been the target of class action lawsuits and other proceedings that are costly, divert management attention, and, if successful, could result in our payment of substantial damages or settlement costs.
Our business is subject to the risk of litigation by employees, customers, competitors, landlords, or neighboring businesses, suppliers, franchise partners, stockholders, or others through private actions, class
 
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actions, administrative proceedings, regulatory actions, or other litigation. The outcome of litigation, particularly class action and regulatory actions, is difficult to assess or quantify. In recent years, beverage and restaurant companies have been subject to lawsuits, including class action lawsuits, alleging violations of federal and state laws regarding workplace and employment matters, discrimination, and similar matters. A number of these lawsuits have resulted in the payment of substantial damages by the defendants. Similar lawsuits have been instituted from time to time alleging violations of various federal and state wage and hour laws regarding, among other things, employee meal deductions, overtime eligibility of assistant managers, and failure to pay for all hours worked. While we have not been a party to any of these types of lawsuits in the past, there can be no assurance that we will not be named in any such lawsuit in the future or that we would not be required to pay substantial expenses or damages.
Our customers may file complaints or lawsuits against us alleging that we are responsible for some illness or injury they suffered at or after a visit to one of our retail coffee shops, including actions seeking damages resulting from food-borne illness or accidents in our shops. We also could be subject to a variety of other claims from third parties arising in the ordinary course of our business, including contract claims. The beverage and restaurant industry has also been subject to a growing number of claims that their menus and actions have led to the obesity of certain of their customers.
Occasionally, we and our franchise partners may become involved in disputes with neighbors, government officials, and landlords over the lines of cars attempting to visit our shops. These disputes could lead to the loss or changing of locations, changes to hours and operations, and costly litigation. If we are unable to reach agreement in future disputes or to alleviate pressure on certain shops by building additional shops or making operational changes, we may be required to close locations or alter operations at some locations. Lost sales and royalty payments caused by such closures or alterations, plus increased expenses from litigation, would harm our business.
Our business also carries a unique risk of liability in our industry regarding personal injury to employees and contractors. Our content creation team often produces videos and other media depicting risky or dangerous activities, showcasing stunts and activities with firearms, military vehicles, “extreme” sports, marksmanships, and other themes pursuing the lifestyle associated with our brand. While we take precautions to ensure the safety of all involved in creating this content, the activities carry an inherent risk that cannot be eliminated. If any individual were to suffer serious harm while involved with one of our productions, this could lead to litigation against us.
Regardless of whether any claims against us are valid or whether we are liable, claims may be expensive to defend and may divert time and money away from our operations. In addition, they may generate negative publicity, which could reduce customer traffic and sales. Although we maintain what we believe to be adequate levels of insurance, insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to these or other matters. A judgment or other liability in excess of our insurance coverage for any claims or any adverse publicity resulting from claims could harm our business.
Changes in statutory, regulatory, accounting, and other legal requirements, including changes in accounting principles generally accepted in the United States, could potentially impact our operating and financial results.
We are subject to numerous statutory, regulatory, and legal requirements. Our operating results could be negatively impacted by developments in these areas due to the costs of compliance in addition to possible government penalties and litigation in the event of deemed noncompliance. Changes in the regulatory environment in the area of food safety, privacy and information security, wage, and hour laws, among others, could potentially impact our operations and financial results.
Generally accepted accounting principles in the United States (“GAAP”) are subject to interpretation by the Financial Accounting Standards Board, the American Institute of Certified Public Accountants, the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change.
Moreover, while we believe that we maintain insurance customary for businesses of our size and type, there are types of losses we may incur that cannot be insured against or that we believe are not economically reasonable to insure. Such losses could harm our business.
 
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Fluctuations in our tax obligations and effective tax rate and realization of our deferred tax assets may result in volatility of our operating results and adversely affect our financial condition.
We are subject to taxes by the U.S. federal, state, and local tax authorities, and our tax liabilities will be affected by the allocation of expenses to differing jurisdictions. We record tax expense based on our estimates of future payments, which may include reserves for uncertain tax positions in multiple tax jurisdictions, and valuation allowances related to certain net deferred tax assets. At any one time, many tax years may be subject to audit by various taxing jurisdictions. The results of these audits and negotiations with taxing authorities may affect the ultimate settlement of these issues. We expect that throughout the year there could be ongoing variability in our quarterly tax rates as events occur and exposures are evaluated. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

changes in the valuation of our deferred tax assets and liabilities;

expected timing and amount of the release of any tax valuation allowance;

changes in tax laws, regulations or interpretations thereof; or

future earnings being lower than anticipated in jurisdictions where we have lower statutory tax rates and higher than anticipated earnings in jurisdictions where we have higher statutory tax rates.
In addition, our effective tax rate in a given financial statement period may be materially impacted by a variety of factors including but not limited to changes in the mix and level of earnings, varying tax rates in the different jurisdictions in which we operate, fluctuations in the valuation allowance, or by changes to existing accounting rules or regulations. Further, tax legislation may be enacted in the future which could negatively impact our current or future tax structure and effective tax rates. We may be subject to audits of our income, sales, and other transaction taxes by U.S. federal, state, and local taxing authorities. Outcomes from these audits could have an adverse effect on our operating results and financial condition.
Legislation and regulations requiring the display and provision of nutritional information for our menu offerings, and new information or attitudes regarding diet and health or adverse opinions about the health effects of consuming our menu offerings, could affect consumer preferences and negatively impact our business, financial condition, and results of operations.
Government regulation and consumer eating habits may impact our business as a result of changes in attitudes regarding diet and health or new information regarding the health effects of consuming our menu offerings. These changes have resulted in, and may continue to result in, the enactment of laws and regulations that impact the ingredients and nutritional content of our menu offerings, or laws and regulations requiring us to disclose the nutritional content of our food offerings.
For example, a number of states, counties, and cities have enacted menu labeling laws requiring multi-unit restaurant operators to disclose certain nutritional information to customers, or have enacted legislation restricting the use of certain types of ingredients in food sold at restaurants. Furthermore, the Patient Protection and Affordable Care Act of 2010 (the “PPACA”) establishes a uniform federal requirement for certain restaurants to post certain nutritional information on their menus. Specifically, the PPACA amended the Federal Food, Drug, and Cosmetic Act to require certain chain restaurants to publish the total number of calories of standard menu items on menus and menu boards, along with a statement that puts this calorie information in the context of a total daily calorie intake. The PPACA also requires covered restaurants to provide to consumers, upon request, a written summary of detailed nutritional information for each standard menu item, and to provide a statement on menus and menu boards about the availability of this information. The PPACA further permits the FDA to require covered restaurants to make additional nutrient disclosures, such as disclosure of trans-fat content. An unfavorable report on, or reaction to, our menu ingredients, the size of our portions, or the nutritional content of our menu items could negatively influence the demand for our offerings.
We cannot make any assurances regarding our ability to effectively respond to changes in consumer health perceptions or our ability to successfully implement the nutrient content disclosure requirements and to adapt our menu offerings to trends in drinking and consumption habits. The imposition of menu-labeling laws could have an adverse effect on our results of operations and financial position, as well as the beverage industry in general.
 
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Risks Related to PubCo’s Corporate Structure
PubCo will be a public benefit corporation, and its focus on the PBC Purpose may negatively impact its financial performance.
Unlike traditional corporations, which have a fiduciary duty to focus exclusively on maximizing stockholder value, PubCo directors will have a fiduciary duty to balance the pecuniary interests of stockholders, the best interests of those materially affected by its conduct and the PBC Purpose. Therefore, PubCo may take actions that it believes will be in the best interests of those stakeholders materially affected by its conduct and/or pursuant to the PBC Purpose even if those actions do not maximize its financial results. PubCo’s public benefit designation and obligation to provide an overall net benefit to PubCo and its stakeholders and promote the PBC Purpose could cause PubCo to make decisions and take actions without seeking to maximize the income generated from its business, and hence available for distribution to its stockholders. PubCo’s pursuit of longer-term or non-pecuniary benefits may not materialize within the timeframe it expects or at all, yet may have an immediate negative effect on any amounts available for distribution to its stockholders. Accordingly, being a public benefit corporation could have a material adverse effect on PubCo’s business, results of operations and financial condition, which in turn could cause the price of PubCo’s stock to decline.
Further, there is no assurance that PubCo will be able to achieve the PBC Purpose or that the expected positive impact from being a public benefit corporation will be realized, which could have a material adverse effect on PubCo’s reputation, which in turn may have a material adverse effect on its business, results of operations and financial condition.
PubCo’s directors will have a fiduciary duty to consider not only its stockholders’ interests, but also the best interests of those materially affected by its conduct and the PBC Purpose. If a conflict between such interests arises, there is no guarantee such a conflict would be resolved in favor of PubCo stockholders.
While directors of traditional corporations are required to make decisions they believe to be in the best interests of their stockholders, directors of a public benefit corporation have a fiduciary duty to consider not only the stockholders’ interests, but also the PBC Purpose and the interests of other stakeholders affected by the company’s actions. Under Delaware law, directors are shielded from liability for breach of these obligations if they make informed and disinterested decisions that serve a rational purpose. Thus, unlike traditional corporations which must focus exclusively on stockholder value, PubCo directors will not merely be permitted, but obligated, to consider the PBC Purpose and the interests of other stakeholders. In the event of a conflict between the interests of PubCo stockholders and the interests of the PBC Purpose or its other stakeholders, PubCo directors must only make informed and disinterested decisions that serve a rational purpose. Therefore, there is no guarantee such a conflict would be resolved in favor of PubCo stockholders, which could have a material adverse effect on our business, results of operations and financial condition, which in turn could cause the price of PubCo’s stock to decline.
PubCo’s status as a public benefit corporation could make its acquisition, which may be beneficial to its stockholders, more difficult.
PubCo’s status as a public benefit corporation could make it more difficult for another party to obtain control of PubCo. While Delaware common law, as stated in Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986), and related cases, imposes upon directors of a traditional corporation a duty to maximize short-term stockholder value in certain ‘sale of the company’ transactions, a public benefit corporation board’s decision-making would not be subject to those same constraints. The PubCo Board could reject a bid to acquire PubCo in favor of pursuing the PBC Purpose, to the detriment of stockholders. Consideration of these competing interests would not preclude the PubCo Board from accepting a bid that maximizes short-term stockholder value. Rather, PubCo’s board of directors could weigh the merits of accepting the short-term value offered by a bid against other options that may generate greater long-term value, be in the best interests of those materially affected by its conduct and/or better promote the PBC Purpose and, if appropriate, could accept a bid that does not maximize the financial return to stockholders. Any of the foregoing provisions could limit the price that investors might be willing to pay in the future
 
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for shares of PubCo capital stock, and deter potential acquirers of PubCo, thereby reducing the likelihood that you would receive a premium for your PubCo stock in an acquisition.
Further, public benefit corporations may not be attractive targets for activists or hedge fund investors because new directors would still have to consider and give appropriate weight to the public benefit along with stockholder value, and stockholders committed to the public benefit can enforce this through derivative suits. By requiring that board of directors of public benefit corporations to consider additional constituencies other than maximizing stockholder value, Delaware public benefit corporation law could potentially make it easier for a board of directors to reject a hostile bid, even where the takeover would maximize the financial return to stockholders.
As a public benefit corporation, PubCo may be subject to increased derivative litigation concerning its duty to balance stockholder interests and the PBC Purpose, the occurrence of which may have an adverse impact on PubCo’s financial condition and results of operations.
Stockholders of a Delaware public benefit corporation, if they, individually or collectively, own at least 2% of its outstanding capital stock or at least $2.0 million in market value, are entitled to file a derivative lawsuit claiming that its directors failed to balance stockholder and public benefit interests. This potential liability does not exist for traditional corporations. Therefore, PubCo be subject to the possibility of increased derivative litigation, which would require the attention of management and, as a result, may adversely impact management’s ability to effectively execute its strategy. Any such derivative litigation may be costly and have an adverse impact on PubCo’s financial condition and results of operations.
As a public benefit corporation, PubCo will be required to comply with various new reporting requirements, which, even if complied with, could result in harm to its reputation.
As a public benefit corporation, PubCo will be required to publicly disclose a report at least biennially on its overall public benefit performance and success in achieving its specific public benefit purpose. If PubCo is not able to provide this report in a timely or at all, or if the report is not viewed favorably by parties doing business with PubCo or regulators or others reviewing PubCo’s credentials, its reputation and status as a public benefit corporation may be harmed and the value of PubCo’s stock could decrease as a result.
PubCo’s only material assets are its direct and indirect interests in BRCC, and PubCo is accordingly dependent upon distributions from BRCC to pay dividends and taxes and other expenses.
PubCo is a holding company and has no material assets other than its managing member interest and direct and indirect limited liability company interests in BRCC. PubCo has no independent means of generating revenue. PubCo intends to cause its subsidiaries (including BRCC) to make distributions in an amount sufficient to cover all applicable taxes and other expenses payable and dividends, if any, declared by it. The terms of any credit agreements or other borrowing arrangements PubCo or its subsidiaries enter into in the future may impose restrictions on the ability to pay dividends to PubCo. To the extent that PubCo needs funds, and any of its direct or indirect subsidiaries is restricted from making such distributions under these debt agreements or applicable law or regulation, or is otherwise unable to provide such funds, it could materially adversely affect PubCo’s liquidity and financial condition.
Delaware law, the Proposed Charter and the Proposed Bylaws will contain certain provisions, including anti-takeover provisions that limit the ability of stockholders to take certain actions and could delay or discourage takeover attempts that stockholders may consider favorable.
The Proposed Charter, the Proposed Bylaws and the DGCL contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by the PubCo Board and therefore depress the trading price of the PubCo Class A Common Stock. These provisions could also make it difficult for stockholders to take certain actions, including electing directors who are not nominated by the current members of the PubCo Board or taking other corporate actions, including effecting changes in management. Among other things, the Proposed Charter and Proposed Bylaws include provisions regarding:
 
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a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of the PubCo Board;

the ability of the PubCo Board to issue shares of preferred stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;

the limitation of the liability of, and the indemnification of, PubCo’s directors and officers;

the right of the PubCo Board to elect a director to fill a vacancy created by the expansion of the PubCo Board or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on the PubCo Board;

the requirement that directors may only be removed from the PubCo Board for cause, upon the affirmative vote of the holders of at least 66 2/3% of the voting power of all of then outstanding shares of the voting stock, voting together as a single class;

the requirement that a special meeting of stockholders may be called only by the PubCo Board, the chairman of the PubCo Board or PubCo’s chief executive officer, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors;

controlling the procedures for the conduct and scheduling of the PubCo Board and stockholder meetings;

the requirement for the affirmative vote of holders of (i) (a) at least 66-2/3%, in case of certain provisions or (b) a majority, in case of other provisions, of the voting power of all of then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal certain provisions of the PubCo’s Charter; and (ii) (a) at least 66-2/3%, in case of certain provisions, or (b) a majority, in case of other provisions, of the voting power of all of then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal certain provisions of the Proposed Bylaws, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the PubCo Board and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt;

the ability of the PubCo Board to amend the Proposed Bylaws, which may allow the PubCo Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Proposed Bylaws to facilitate an unsolicited takeover attempt; and

advance notice procedures with which stockholders must comply to nominate candidates to the PubCo Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the PubCo Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of PubCo.
These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the PubCo Board or management.
In addition, as a Delaware public benefit corporation, PubCo will generally be subject to provisions of Delaware law, including the DGCL. Although PubCo will elect not to be governed by Section 203 of the DGCL, certain provisions of the Proposed Charter will, in a manner substantially similar to Section 203 of the DGCL, prohibit certain PubCo’s stockholders (other than Evan Hafer) who hold 15% or more of PubCo’s outstanding capital stock from engaging in certain business combination transactions with PubCo for a specified period of time unless certain conditions are met. See the section entitled “Description of PubCo Securities — Anti-Takeover Effects of the Proposed Charter, the Proposed Bylaws and Certain Provisions of Delaware Law.”
Any provision of the Proposed Charter, the Proposed Bylaws or Delaware law that has the effect of delaying or preventing a change in control could limit the opportunity for stockholders to receive a premium
 
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for their shares of PubCo’s capital stock and could also affect the price that some investors are willing to pay for PubCo’s common stock.
The form of the Proposed Charter is attached as Annex B to this proxy statement/prospectus and we urge you to read it.
In addition, the provisions of the Investor Rights Agreement, as described below, provide the stockholders party thereto with certain board rights which could also have the effect of delaying or preventing a change in control.
The Proposed Charter will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by PubCo’s stockholders, which could limit PubCo’s stockholders’ ability to obtain a favorable judicial forum for disputes with PubCo or its directors, officers or other employees.
The Proposed Charter will provide that, unless PubCo consents in writing to the selection of an alternative forum, (i) any derivative action or proceeding brought on behalf of PubCo, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee, agent or stockholder of PubCo to PubCo or PubCo’s stockholders, or any claim for aiding and abetting such alleged breach, (iii) any action asserting a claim against PubCo or any current or former director, officer, other employee, agent or stockholder of PubCo (a) arising pursuant to any provision of the DGCL, the Proposed Charter (as it may be amended or restated) or the Proposed Bylaws or (b) as to which the DGCL confers jurisdiction on the Delaware Court of Chancery or (iv) any action asserting a claim against PubCo or any current or former director, officer, other employee, agent or stockholder of PubCo governed by the internal affairs doctrine of the law of the State of Delaware shall, as to any action in the foregoing clauses (i) through (iv), to the fullest extent permitted by law, be solely and exclusively brought in the Delaware Court of Chancery; provided, however, that the foregoing shall not apply to any claim (a) as to which the Delaware Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Delaware Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (b) which is vested in the exclusive jurisdiction of a court or forum other than the Delaware Court of Chancery, or (c) arising under federal securities laws, including the Securities Act as to which the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum. Notwithstanding the foregoing, the provisions of the Proposed Charter will not apply to suits brought to enforce any liability or duty created by the Exchange Act, or any other claim for which the federal district courts of the United States of America shall be the sole and exclusive forum. While Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
Any person or entity purchasing or otherwise acquiring any interest in any shares of PubCo’s capital stock shall be deemed to have notice of and to have consented to the forum provisions in the Proposed Charter. If any action the subject matter of which is within the scope of the forum provisions is filed in a court other than a court located within the State of Delaware (a “foreign action”) in the name of any stockholder, such stockholder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”); and (y) having service of process made upon such stockholder in any such enforcement action by service upon such stockholder’s counsel in the foreign action as agent for such stockholder.
This choice-of-forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with PubCo or its directors, officers, stockholders, agents or other employees, which may discourage such lawsuits. We note that there is uncertainty as to whether a court would enforce this provision, and the enforceability of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings. Further, investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. It is possible that a court could find these types of provisions to be inapplicable or unenforceable, and if a court were to find this provision of
 
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the Proposed Charter inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, PubCo may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect PubCo’s business, financial condition and results of operations and result in a diversion of the time and resources of PubCo’s management and board of directors.
Following the completion of the Business Combination, certain significant PubCo’s stockholders and Authentic Brands’ members whose interests may differ from those of PubCo public stockholders following the Busi