What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-12 compared with 2024-03-15 · 364 added, 294 removed, 1027 unchanged (39% of the section changed)

29 unchanged sentences

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 3 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2022.

Basis for Opinion

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We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

33 unchanged sentences

Long-term debt, net

Convertible notes payable - related party, net

Deferred income taxes

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Accumulated deficit

Accumulated other comprehensive income (loss)

Total shareholders' equity attributable to Westrock Coffee Company

Non-controlling interest

Accumulated other comprehensive income

Total shareholders' equity

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Transaction, restructuring and integration expense

Loss on disposal of property, plant and equipment

Impairment charges

(Gain) loss on disposal of property, plant and equipment

Total operating expenses

Income (loss) from operations

(Loss) income from operations

Other (income) expense

4 unchanged sentences

Equity in (earnings) loss from unconsolidated entities

Net income (loss) attributable to non-controlling interest

Net loss attributable to non-controlling interest

Net loss attributable to shareholders

Participating securities' share in earnings

Accretion of Series A Convertible Preferred Shares

3 unchanged sentences

Net loss attributable to common shareholders

Loss per common share (1) :

(Loss) earnings per common share:

Weighted-average number of shares outstanding:

(1) Retroactively adjusted for de-SPAC merger transaction as described in Note 4.

See accompanying notes to the consolidated financial statements.

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Total other comprehensive income (loss)

Comprehensive loss

Comprehensive (loss) income

Comprehensive income (loss) attributable to non-controlling interests

Comprehensive loss attributable to shareholders

Participating securities' share in earnings

Accretion of Series A Convertible Preferred Shares

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Net income (loss)

Other comprehensive income (loss)

Equity-based compensation

Net share settlement of equity awards

Accumulating preferred dividends

Balance at December 31, 2021

Net income (loss)

Issuance of common shares upon closing of de-SPAC merger transaction, net of issuance costs, net of $ 3,178 of taxes

35 unchanged sentences

Balance at December 31, 2023

Net income (loss)

Issuance of common shares related to "at-the-market" offering program, net of issuance costs

Issuance of common shares related to stock options exercised

Issuance of common shares related to warrant exchange

Issuance of common shares related to conversion of Series A Convertible Preferred Shares

Accretion of Series A Convertible Preferred Shares

Other comprehensive income (loss)

Equity-based compensation

Net share settlement of equity awards

Balance at December 31, 2024

See accompanying notes to the consolidated financial statements.

5 unchanged sentences

Depreciation and amortization

Impairment charges

Equity-based compensation

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Loss on debt extinguishment

Loss on disposal of property, plant and equipment

(Gain) loss on disposal of property, plant and equipment

Mark-to-market adjustments

1 unchanged sentence

Foreign currency transactions

Deferred income tax benefit

Deferred income tax expense (benefit)

Change in operating assets and liabilities:

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Accrued liabilities and other

Net cash provided by (used in) operating activities

Net cash used in operating activities

Cash flows from investing activities:

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Proceeds from supply chain financing program

Proceeds from convertible notes payable

Proceeds from convertible notes payable - related party

Proceeds from related party debt

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Payment of debt issuance costs

Payment of convertible notes payable issuance costs

Proceeds from de-SPAC merger and PIPE financing

Payment of common equity issuance costs

Proceeds from common equity issuance

Payment of preferred equity issuance costs

Net proceeds from (repayments of) repurchase agreements

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Proceeds from exercise of Public Warrants

Proceeds from issuance of common stock

Common equivalent preferred dividends

Payment of equity issuance costs

Payment of preferred equity issuance costs

Payment for purchase of non-controlling interest

Payment for taxes for net share settlement of equity awards

Proceeds from the issuance of common equivalent preferred units

Net cash provided by financing activities

Effect of exchange rate changes on cash

Net increase in cash and cash equivalents and restricted cash

Net (decrease) increase in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

2 unchanged sentences

Property, plant and equipment acquired but not yet paid

Accumulating preferred dividends

Exchange of Redeemable Common Equivalent Preferred Units for Series A Convertible Preferred Shares

Exchange of Redeemable Common Equivalent Preferred Units for common shares

Related party debt exchanged for common shares

Loss on extinguishment of Common Equivalent Preferred Units

Supplemental cash flow information:

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Through this segment, we combine our product innovation and customer insights to provide value-added beverage solutions, including coffee, tea, flavors, extracts and ingredients.

We provide products in a variety of packaging, including branded and private label coffee in bags, fractional packs, and single serve cups, as well as extract solutions to be used in products such as cold brew and ready-to-drink offerings.

We provide products in a variety of packaging, including branded and private label coffee in bags, fractional packs, single serve cups, multi-serve bottles and ready-to-drink bottles and cans, as well as extract solutions to be used in products such as cold brew and ready-to-drink offerings.

Currently we serve customers in the United States, Europe and Asia, through the retail, food service and restaurant, convenience store and travel center, non-commercial account, CPG and hospitality industries.

Sustainable Sourcing & Traceability :

Through this segment, we utilize our proprietary technology and digitally traceable supply chain to directly impact and improve the lives of our farming partners, tangible economic empowerment and an emphasis on environmental accountability and farmer literacy.

Through this segment, we utilize our proprietary technology and digitally traceable supply chain to directly impact and improve the lives of our farming partners, provide tangible economic empowerment and emphasize environmental accountability and farmer literacy.

Revenues primarily consist of sales from commodity contracts related to forward sales of green coffee.

The Company operates three manufacturing facilities in Concord, North Carolina, one in North Little Rock, Arkansas, one in Richmond, California, one in Kigali, Rwanda, and one in Johor Bahru, Malaysia.

The Company is currently completing the build out of its Conway, Arkansas facility, which is expected to begin commercial production in 2024.

The Company operates manufacturing and distribution facilities in Concord, North Carolina, North Little Rock, Arkansas, Conway, Arkansas, and Johor Bahru, Malaysia.

In addition, the Company operates Trading and Representative offices in Lewes, UK, Austin, Texas, Lima & Jaen, Peru, Addis Ababa, Ethiopia, Johor Bahru, Malaysia, and Seoul, Korea, alongside a coffee milling and exporting facility in Kigali, Rwanda.

On August 26, 2022 (the “Closing Date”), pursuant to the terms of the Transaction Agreement, dated April 4, 2022, by and among the Company, Riverview Acquisition Corp., a special purpose acquisition vehicle and a Delaware corporation ( “ Riverview ” ), Origin Merger Sub I, Inc.

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On April 3, 2023, the Company purchased the remaining 15 % of the equity interests of Falcon Coffees Limited (“Falcon”) that it did not previously own, resulting in Falcon becoming a wholly owned subsidiary of the Company.

Aggregate consideration paid for the interest totaled $ 3.2 million and included $ 2.0 million in cash and 100,000 shares of Common Shares.

Aggregate consideration paid for the interest totaled $ 3.2 million and included $ 2.0 million in cash and 100,000 Common Shares.

Due to the Company’s controlling financial interest in Falcon prior to the purchase, the transaction was accounted for as an equity transaction.

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Common Unit Conversion

In connection with the Transaction and pursuant to the Transaction Agreement, (a) each issued and outstanding common unit of the Converting Company (“Common Units”) was automatically converted into 0.1049203474320 Common Shares, (b) each issued and outstanding common equivalent preferred unit of the Converting Company (the “Common Equivalent Preferred Units”) for which the holder had not elected to convert such unit into shares of Series A convertible preferred stock, par value $ 0.01 per share, of the Company (the “Westrock Series A Preferred Shares”), automatically converted into 0.1086138208640 Common Shares if such Common Equivalent Preferred Unit was designated a Westrock Series A Common Equivalent Preferred Unit or 0.1049203474320 Common Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit and (c) each outstanding Common Equivalent Preferred Unit for which the holder thereof had made an election to convert such unit into Westrock Series A Preferred Shares, converted into 0.1086138208740 Westrock Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.0919280171940 Westrock Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit.

Prior to the Closing, the Converting Company’s ownership interests consisted of two classes of equity, common units (“Common Units”) and common equivalent preferred units ("Common Equivalent Preferred Units”).

In connection with the Transaction and pursuant to the Transaction Agreement, (a) each issued and outstanding Common Unit of the Converting Company was automatically converted into 0.1049203474320 Common Shares, (b) each issued and outstanding Common Equivalent Preferred Unit of the Converting Company for which the holder had not elected to convert such unit into shares of Series A convertible preferred stock, par value $ 0.01 per share, of the Company (the “Westrock Series A Preferred Shares”), automatically converted into 0.1086138208640 Common Shares if such Common Equivalent Preferred Unit was designated a Westrock Series A Common Equivalent Preferred Unit or 0.1049203474320 Common Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit and (c) each outstanding Common Equivalent Preferred Unit for which the holder thereof had made an election to convert such unit into Westrock Series A Preferred Shares, converted into 0.1086138208740 Westrock Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.0919280171940 Westrock Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit.

For the periods prior to the Closing, the number of outstanding units, weighted average number of outstanding units, loss per common unit, equity-based compensation and other financial amounts previously expressed on the basis of Common Units have been retroactively adjusted on the basis of Common Shares reflecting the common unit conversion ratio, as described above.

Reclassifications

Certain reclassifications of prior years’ amounts have been made to conform with the current period financial statements presentation.

These reclassifications had no impact on prior years’ net income as previously reported.

Summary of Significant Accounting Policies

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The preparation of consolidated financial statements in conformity with U.S.

GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes.

On an ongoing basis, we evaluate our estimates, including those related to the allowance for credit losses, useful lives of property, plant and equipment, incremental borrowing rates for lease liability measurement, fair values of forward purchase and sales contracts, green coffee associated with forward contracts, warrant liabilities, share-based compensation, contingencies, and income taxes, among others.

GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of

contingent assets and liabilities in the consolidated financial statements and accompanying notes.

On an ongoing basis, we evaluate our estimates, including those related to the allowance for credit losses, useful lives of property, plant and equipment, incremental borrowing rates for lease liability measurement, fair values of forward purchase and sales contracts, green coffee associated with forward contracts, share-based compensation, contingencies, and income taxes, among others.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

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In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40) , the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its obligations as they become due within one year after the date that the financial statements are available to be issued.

The Company is dependent on borrowings under its Credit Agreement and cash generated from operations to finance its operations, service its debt requirements, maintain compliance with its covenants, and to fund capital requirements.

The Company believes that proceeds from the equity issuance in August 2023 described in Note 1, the issuance of convertible notes described in Note 23, projected cash flow from operations and available borrowings under its Credit Agreement, as amended, as described in Note 23, will be sufficient to fund operations for at least the next twelve months.

However, during the years ended December 31, 2023, 2022 and 2021, we incurred net losses of $ 34.6 million, $ 55.5 million and $ 21.3 million, respectively, and if we are unable to meet our financial targets and generate sufficient cash flows from operations, it may restrict our liquidity and capital resources and our ability to maintain compliance with our financial covenants.

During the years ended December 31, 2023 and 2022, net cash used in operating activities was $ 64.1 million and $ 56.6 million, respectively, and during the year ended December 31, 2021, net cash provided by operating activities was $ 2.9 million.

As management’s ability to amend its financial covenants cannot be assured, management has committed to raise additional capital, delay growth capital expenditures and/or reduce operating expenses, including headcount, salary and/or bonus reductions, all of which are in the Company’s control, as necessary, in order to have adequate liquidity and to remain in compliance with its debt covenants.

The Company is dependent on borrowings under its Credit Agreement (as defined herein) and cash generated from operations to finance its operations, service its debt requirements, maintain compliance with its covenants, and to fund capital requirements.

The Company believes that projected cash flow from operations, including current projections of the timing and amount of cash flows to be generated from our Conway, Arkansas extract and ready-to-drink manufacturing facility (the “Conway Facility”) and available borrowings under its Credit Agreement, as amended, as described in Note 23, will be sufficient to fund operations and to maintain covenant compliance for at least the next twelve months.

However, during the year ended December 31, 2024, we incurred net losses of $ 80.3 million and net cash outflows from operating activities of $ 13.2 million.

If we are unable to achieve our profitability growth projections and maintain our covenant leverage ratio and minimum liquidity requirements, as a result of, for example, experiencing any adverse impact of changes or further delays in the estimated timing and volume of products to be commercialized in our Conway Facility over the next twelve months, and generate sufficient cash flows from operations, it may restrict our liquidity and capital resources and our ability to maintain compliance with our financial covenants.

As further discussed in Note 23, on January 15, 2025, the Company entered into an Incremental Assumption Agreement and Amendment No.

4 to its Credit Agreement (as defined in Note 12), which increased available borrowings under the Credit Agreement by $ 25.0 million and modified certain financial covenants.

However, as management’s ability to amend its financial covenants cannot be assured, if necessary, management has committed to delay growth capital expenditures and/or reduce operating expenses, including headcount, salary and/or bonus reductions, all of which are in the Company’s control, as necessary, in order to have adequate liquidity and to remain in compliance with its debt covenants.

As further discussed in Restructuring Activities below, the Company recently consolidated its manufacturing operations, completed the sale of its West Winds facility and executed a targeted reduction in excess workforce capacity, which were designed to improve operational efficiency.

If required, the Company will further reduce operating costs to ensure compliance with its financial covenants.

The accompanying Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business.

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We estimate the fair value of green coffee based on the quoted market price at the end of each reporting period, with changes in fair value being reported as a component of costs of sales in our Consolidated Statements of Operations.

For the years ended December 31, 2023, 2022 and 2021, we recognized $ 4.2 million of net unrealized gains, $ 12.3 million of net unrealized losses and $ 8.4 million of net unrealized gains, respectively, on green coffee inventory associated with our forward sales and purchase contracts.

For the years ended December 31, 2024, 2023 and 2022, we recognized $ 6.8 million of net unrealized gains, $ 4.2 million of net unrealized gains and $ 12.3 million of net unrealized losses, respectively, on green coffee inventory associated with our forward sales and purchase contracts.

Property, Plant and Equipment

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The amount of interest capitalized is based on eligible expenditures incurred during the period involved in bringing the assets to their intended use and the Company’s weighted-average interest rate during the period.

For the year ended December 31, 2023, we capitalized approximately $ 3.2 million of interest costs.

No such interest was capitalized during the year ended December 31, 2022.

For the years ended December 31, 2024 and 2023, we capitalized approximately $ 11.7 million and $ 3.2 million of interest costs, respectively.

Supply Chain Finance Program

The Company is party to a supply chain finance program (the “Program”) with a third-party financing provider to provide better working capital usage by deferring payments for certain raw materials.

Under the Program, the financing provider remits payment to the Company’s suppliers for approved invoices, and the Company repays the financing provider the amount of the approved invoices, plus a financing charge, on 180-day terms.

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Amounts paid to the financing provider are reflected as cash outflows from financing activities in our Consolidated Statements of Cash Flows.

As of December 31, 2023, there were $ 78.1 million obligations outstanding under the Program.

There were no such obligations outstanding as of December 31, 2022.

Activity in the Program was as follows:

December 31, 2024

December 31, 2023

Confirmed obligations outstanding at the beginning of the year

Invoices confirmed during the year

Confirmed invoices paid during the year

Confirmed obligations outstanding at the end of the year

Invoices confirmed during the period

Confirmed invoices paid during the period

Confirmed obligations outstanding at the end of the quarter

Restructuring Activities

The Company accounts for exit or disposal activities in accordance with ASC 420, Exit or Disposal Cost Obligations (“ASC 420”).

Restructuring charges may include one-time termination benefits related to employee separations, contract termination costs, long-lived asset impairments, and other related costs with exit or disposal activities.

The recognition of restructuring charges requires the Company to make certain judgements and estimates regarding the nature, timing and amount of costs associated with the planned exit activity.

To the extent the Company’s actual results differ from its estimates and assumptions, the Company may be required to revise the estimates of future liabilities, require the recognition of additional restructuring charges or the reduction of liabilities already recognized.

Such changes to previously estimated amounts may be material to the Consolidated Financial Statements.

Restructuring charges are not included in the Company’s measurement of segment profitability as discussed in Note 20.

During the second quarter of 2024, the Company committed to a plan to consolidate its manufacturing operations in its Beverage Solutions segment, which resulted in the closure and sale of its West Winds manufacturing facility in Concord, North Carolina, and the closure of its manufacturing facility in Richmond, California.

All production from the impacted facilities was consolidated into other facilities operated by the Company in Concord, North Carolina and Conway, Arkansas.

The closure of the West Winds facility was completed as of June 30, 2024, and the Company completed the sale of the associated land and buildings during the fourth quarter of 2024, recognizing a $ 3.4 million gain, which is recorded in (gain) loss on disposal of property, plant and equipment in the Consolidated Statements of Operations .

Production in our Richmond, California facility ceased during the third quarter of 2024.

During the year ended December 31, 2024, the Company recognized $ 5.6 million and $ 0.1 million of impairment charges on property, plant and equipment and intangible assets, respectively, as a result of the consolidation of manufacturing facilities, which are recorded in

impairment charges in the Consolidated Statements of Operations.

The Company estimates total charges related to the plant consolidations of approximately $ 4.0 million, of which $ 3.2 million have been incurred during the year ended December 31, 2024.

These charges primarily relate to costs to remove and re-install production equipment into other manufacturing facilities.

In addition, during the second quarter of 2024, the Company committed to targeted restructuring activities to improve operational efficiency by reducing excess workforce capacity.

As a result of this reduction, and the impacts of the consolidation of manufacturing facilities noted above, the Company recognized approximately $ 4.7 million of one-time employee severance costs during the year ended December 31, 2024, which are recorded in transaction, restructuring and integration expense in the Consolidated Statements of Operations.

At December 31, 2024, approximately $ 0.6 million of such termination benefits were accrued for within accrued expenses and other current liabilities in the Consolidated Balance Sheets.

The following table summarizes the changes in the Company’s accrual for employee termination benefits:

Balance at beginning of period

Balance at end of the period

On February 12, 2024, following the completion of its 530,000 square foot distribution center in Conway, AR, the Company entered into a lease termination agreement for its distribution center located in North Little Rock, AR (the “Gregory Distribution Center”).

The Gregory Distribution Center lease terminated, by mutual agreement, on June 30, 2024.

No costs were incurred as a result of the lease termination.

During the first quarter of 2024, the Company remeasured the Gregory Distribution Center lease liability, and related right-of-use asset, in accordance with ASC 842, Leases , resulting in a reduction of the lease liability and right-of-use asset of approximately $ 3.0 million.

At December 31, 2024, there was no remaining lease liability or right-of-use assets related to the Gregory Distribution Center recorded in the Consolidated Balance Sheets.

Goodwill and Indefinite Lived Intangible Assets

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When performing a quantitative assessment, we estimate the fair value of our reporting unit using a combination of an income approach based on the present value of estimated future cash flows, and a market approach based on market data of comparable businesses and acquisition multiples paid in recent transactions.

We evaluate the appropriateness of each

valuation methodology in determining the weighting applied to each in the determination of the concluded fair value.

We evaluate the appropriateness of each valuation methodology in determining the weighting applied to each in the determination of the concluded fair value.

If the carrying value of a reporting unit’s net assets is less than its fair value, no indication of impairment exists.

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As a result, the Company concluded that no impairment existed in the year ending December 31, 2024.

We reached this conclusion based on consideration of the significant excess fair value over carrying value of previous quantitative goodwill impairment evaluations, the recently completed PIPE Investment and the Company’s current market capitalization.

Our previous quantitative goodwill analysis indicated that the estimated fair value of our reporting units exceeded their carrying values by over 50%.

Subsequent to that evaluation, we have noted no events or circumstances that would indicate that it is more likely than not that the carrying value of our reporting units exceed their fair value.

We reached this conclusion based on consideration of the significant excess fair value over carrying value of previous quantitative goodwill impairment evaluations, the Company’s current market capitalization and the Company’s expected future revenues and operating cash flows generated by our extract and ready-to-drink manufacturing facility in Conway, Arkansas.

Our previous quantitative goodwill analyses indicated that the estimated fair value of our reporting units exceeded their carrying values by over 50%.

Subsequent to that evaluation, we have noted no events or circumstances that would indicate that it is more likely than not that the carrying value of our goodwill reporting units exceed their fair value.

Impairment of Property, Plant and Equipment

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If the asset group is not fully recoverable, an impairment loss would be recognized for the difference between the carrying value of the asset group and its estimated fair value.

As discussed in the Restructuring Activities section of this Note 3, for the year ended December 31, 2024, the Company recognized impairment losses of approximately $ 5.6 million.

For the years ended December 31, 2023 and 2022, there were no events or changes in circumstances indicating that the carrying amount of any of our asset groups were not recoverable from future undiscounted cash flows we expect the asset groups to generate, and no impairment losses were recognized.

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Intangible assets, including acquired finite-lived intangible assets, are amortized on a straight-line basis over their remaining useful lives.

The useful life for the customer relationship intangible assets acquired in our acquisitions was determined to be the expected remaining life of those relationships on a basis that reflects the pattern of realization.

The useful life for the customer relationship intangible assets acquired in our acquisitions

was determined to be the expected remaining life of those relationships on a basis that reflects the pattern of realization.

Other intangible assets are amortized over their expected recovery periods.

Finite-lived intangible assets are tested for impairment with the applicable asset group and evaluated for impairment along with property, plant and equipment.

As discussed in the Restructuring Activities section of this Note 3, for the year ended December 31, 2024, the Company recognized impairment losses of approximately $ 0.1 million.

For the years ended December 31, 2023 and 2022, no impairment losses were recognized related to intangible assets subject to amortization.

Warrant Liabilities

We account for warrants assumed in connection with the Transaction (see Note 4) in accordance with the guidance contained in ASC 815, under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities.

Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period.

The liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Consolidated Statements of Operations.

The Company re-measures the fair value of the Westrock Public Warrants (as defined in Note 4) based on the quoted market price of the Westrock Public Warrants.

The Westrock Private Warrants (as defined in Note 4) are valued using a binomial lattice valuation model.

For the years ended December 31, 2023 and 2022, the Company recognized $ 10.2 million of gains and $ 29.7 million of losses, respectively, related to the change in fair value of warrant liabilities, which is recognized in other (income) expense in the Consolidated Statements of Operations.

Prior to October 2024, the Company had outstanding warrants to purchase Common Shares (the “Warrants”), which were accounted for in accordance with the guidance contained in ASC 815, under which the warrants did not meet the criteria for equity treatment and must be recorded as liabilities.

Accordingly, we classified the warrants as liabilities at their fair value and adjusted the warrants to fair value at each reporting period, with changes in fair value being recognized in our Consolidated Statements of Operations.

The Company re-measured the fair value of the Westrock Public Warrants (as defined in Note 4) based on the quoted market price of the Westrock Public Warrants.

The Westrock Private Warrants (as defined in Note 4) were valued using a binomial lattice valuation model.

The primary unobservable input utilized in determining the fair value of the Westrock Private Warrants was the expected volatility of the stock price, which is determined by use of an option pricing model.

For the year ended December 31, 2024, the Company recognized $ 7.0 million of gains related to the change in fair value of warrant liabilities.

At December 31, 2024, there were no outstanding Warrants.

Equity Method Investments

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Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.

We recognize interest and penalties related to unrecognized tax benefits within the income tax benefit line in the accompanying Consolidated Statements of Operations, and we include accrued interest and penalties within other long-term liabilities in the accompanying Consolidated Balance Sheets.

We recognize interest and penalties related to unrecognized tax benefits within the income tax expense (benefit) line in the accompanying Consolidated Statements of Operations, and we include accrued interest and penalties within other long-term liabilities in the accompanying Consolidated Balance Sheets.

Business Combinations

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Any excess of the purchase price over the fair value of the separately identifiable assets acquired and the liabilities assumed is allocated to goodwill.

The fair value of the acquired assets and liabilities assumed are estimated using the income, market and/or cost approach.

The fair value

of the acquired assets and liabilities assumed are estimated using the income, market and/or cost approach.

The income approach utilizes the present value of estimated future cash flows that a business or asset can be expected to generate, while under the market approach, the fair value of an asset or business reflects the price at which comparable assets are purchased under similar circumstances.

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Transaction costs represent incremental transaction pursuit and unsuccessful pursuit costs, including professional services (legal, accounting, advisory, etc.), finder’s fees and other direct expenses associated with an acquisition or other capital markets transactions.

Restructuring and integration costs include direct costs related to restructuring activities, and costs necessary to integrate an acquired business, including professional services, systems and data conversions, severance and retention bonuses to employees of an acquired business.

Restructuring and integration costs include direct costs related to restructuring activities, and costs necessary to integrate our systems and business processes, including professional services, systems and data conversions costs, severance and retention bonuses.

Recently adopted accounting pronouncements

Update ASU 2016-02 – Leases (Topic 842) and Update ASU 2018-10 – Codification Improvements to Topic 842, Leases

Effective January 1, 2022, we account for leases in accordance with ASC 842, Leases (“ASC 842”).

The standard establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months.

Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations.

We adopted ASC 842 using a modified retrospective transition approach as permitted by the amendments of Accounting Standards Update (“ASU”) 2018-11 Leases (Topic 842):

Target Improvements , which provides an alternative modified retrospective transition method.

As a result, we were not required to adjust our comparative period financial information for effects of the standard or make the new required lease disclosures for periods before the date of adoption (i.e., January 1, 2022).

We have elected to adopt the package of transition practical expedients and, therefore, have not reassessed (i) whether existing or expired contracts contain a lease, (ii) lease classification for existing or expired leases, or (iii) the accounting for initial direct costs that were previously capitalized.

We determine if an arrangement is a lease at contract inception.

A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration.

The definition of a lease embodies two conditions:

(i) there is an identified asset in the contract that is land or a depreciable asset, and (ii) the customer has a right to control the use of the identified asset.

We enter into lease contracts for manufacturing and production facilities, distribution and warehousing facilities, vehicles and machinery and equipment.

Upon adoption, we recognized $ 13.0 million of ROU assets and lease liabilities on our Consolidated Balance Sheets.

See Note 9 for additional disclosures related to leases.

ROU assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred, less any lease incentives received.

The lease liabilities are initially measured at the present value of the unpaid lease payments at the lease commencement date.

Lease expense, for operating leases, is recognized on a straight-line basis over the lease term.

Key estimates and judgements include the following:

(i) Discount rate – ASC 842 requires a lessee to discount its unpaid lease payments using the rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate.

As we generally do not know the rate implicit in our leases, we use our incremental borrowing rate, based on the information available at the lease commencement date, in determining the present value of our lease payments.

Our incremental borrowing rate for a lease is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

(ii) Lease term – The lease term for all of our leases includes the noncancellable period of the lease plus any additional periods covered by either a lessee option to extend (or not to terminate) the lease that is reasonably certain to be exercised.

Variable lease payments associated with our leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs.

Variable lease payments are included in both costs of sales and selling, general and administrative expenses in our Consolidated Statements of Operations.

We monitor for events or changes in circumstances that require a reassessment of a lease.

When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the associated ROU asset, unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero.

In that case, the amount of the adjustment that would result in a negative ROU asset is recorded in the Consolidated Statements of Operations.

We have elected not to recognize ROU assets and lease liabilities for all short-term leases that have a lease term of 12 months or less.

We recognize the lease payments associated with our short-term leases as an expense on a straight-line basis over the lease term.

Furthermore, we have elected to combine lease and non-lease components for all contracts.

Non-lease components primarily relate to maintenance services related to the leased asset.

ASU 2022-04 - Liabilities—Supplier Finance Programs (Subtopic 405-50):

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ASU 2022-04 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on roll forward information, which is effective for fiscal years beginning after December 15, 2023.

The Company adopted the applicable amendments within ASU 2022-04 on a retrospective basis effective January 1, 2023.

The Company adopted the amendments within ASU 2022-04 on a retrospective basis effective January 1, 2023.

The amendments to ASU 2022-04 do not affect the recognition, measurement or financial statement presentation of obligations covered by supplier finance programs.

ASU 2021-08 – Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, instead of at fair value on the acquisition date as previously required by ASC 805, Business Combinations (“ASC 805”).

The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for acquired revenue contracts and revenue contracts not acquired in a business combination.

ASU 2021-08 was effective for years beginning after December 15, 2022.

The adoption of ASU 2021-08 did not have a significant impact on the Company’s financial position or results of operations.

Recently issued accounting pronouncements

ASU 2023-07 – Segment Reporting (Topic 280):

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The amendments in the update are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses.

ASU 2023-07 requires disclosure to include significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and a description of other segment items by reportable segment.

ASU 2023-07 requires disclosure to include significant segment expenses that are regularly provided to the chief operating decision maker and a description of other segment items by reportable segment.

ASU 2023-07 also requires all annual disclosures currently required by Topic 280 to be included in interim periods.

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The amendments in the update require retrospective application to all prior periods presented in the financial statements.

The Company is currently evaluating the impact that ASU 2023-07 will have on our consolidated financial statements.

The Company adopted the amendments within ASU 2023-07 when it became effective, in our 2024 annual reporting, on a retrospective basis.

The adoption of this guidance did not have a material impact on our financial position, results of operations or cash flows.

Recently issued accounting pronouncements

ASU 2023-05 – Business Combinations – Joint Venture Formations (Subtopic 805-60):

Recognition and Initial Measurement

In August 2023, the FASB issued ASU 2023-05, “Business Combinations – Joint Venture Formations (Subtopic 805-60):

Recognition and Initial Measurement”.

The amendments in this update require that a joint venture recognize and initially measure assets contributed and liabilities assumed at fair value upon its formation in the joint venture’s separate financial statements.

The amendments in this update are effective prospectively for all joint venture formations with a formation date on or after January 1, 2025, with early adoption permitted.

The Company will apply the provisions of ASU 2023-05 to new joint ventures, as applicable, but does not believe the adoption of ASU 2023-05 will have a material impact on our consolidated financial statements.

ASU 2023-09 – Income Taxes (Topic 740):

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The Company is currently evaluating the impact that ASU 2023-09 will have on our consolidated financial statements.

ASU 2024-03 – Income Statement – Reporting Comprehensive Income (Topic 220):

Expense Disaggregation Disclosures

In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income (Topic 220):

Expense Disaggregation Disclosures”.

The amendments in this update include requirements for public business entities to provide disclosure, in the notes to the financial statements, of specified information about certain costs and expenses.

The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The amendments in this update may be applied either prospectively or retrospectively.

The Company is currently evaluating the impact that ASU 2024-03 will have on our consolidated financial statements.

The Enhancement and Standardization of Climate-Related Disclosure for Investors

In March 2024, the SEC adopted final rules requiring registrants to provide certain climate-related disclosures, including Scope 1 and Scope 2 greenhouse gas emissions to the extent they are material.

These rules require certain disclosures related to severe weather events and other natural conditions in the notes to audited financial statements.

These disclosures are required to phase-in over multiple years beginning with fiscal 2025 for large accelerated filers and fiscal 2026 for accelerated filers.

On April 4, 2024, the SEC determined to voluntarily stay the final rules pending certain legal challenges.

The Company is currently evaluating the impact of the new rules.

De-SPAC Merger Transaction

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At Closing, the Company issued 12,868,151 Common Shares to public and class B shareholders of Riverview, receiving $ 49.8 million of the cash held in the trust account of Riverview, which is net of $ 17.1 million of Riverview transaction expenses that were either paid by Riverview prior to Closing or offset against proceeds received by the Company at Closing.

The 12,868,151 shares issued at Closing include 1,910,000 shares issued to PIPE investors who elected to satisfy their PIPE commitments through the purchase of shares of Class A common stock of Riverview (“Riverview Class A Shares”) on the public market, pursuant to the terms of their respective subscription agreements.

The 12,868,151 shares issued at Closing include 1,910,000 shares issued to PIPE investors who elected to satisfy their PIPE commitments through the

purchase of shares of Class A common stock of Riverview (“Riverview Class A Shares”) on the public market, pursuant to the terms of their respective subscription agreements.

Substantially concurrently with the Closing, the Company received $ 205.9 million in cash proceeds (which amount excludes contribution to the Company of certain related party notes outstanding immediately prior to Closing) from common stock PIPE investments, issued 20,590,000 Common Shares to the PIPE investors (which share amount excludes the conversion of the related party notes), and entered into a credit agreement that includes (a) a senior secured first lien revolving credit facility in an initial aggregate principal amount of $ 175.0 million and (b) a senior secured first lien term loan facility in an initial aggregate principal amount of $ 175.0 million.

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At inception, each Common Equivalent Preferred Unit has a liquidation preference of $ 1.00 per unit, increased by an amount accruing at the rate of 10 % per annum, compounding annually, based on its liquidation preference as of the time of such accrual, and reduced by the cumulative amount of any cash dividends or distributions, if any, made by the Company in respect of such Common Equivalent Preferred Unit.

During the years ended December 31, 2022 and 2021, the Common Equivalent Preferred Units accrued $ 13.9 million and $ 24.2 million of liquidation preference, respectively.

During the year ended December 31, 2022, the Common Equivalent Preferred Units accrued $ 13.9 million of liquidation preference.

In connection with the Closing, holders of Common Equivalent Preferred Units were paid a cash dividend totaling $ 4.4 million, which is equal to the accreted liquidation preference of the Common Equivalent Preferred Units from June 30, 2022 through Closing.

Pursuant to the Transaction Agreement, (a) each issued and outstanding Common Unit converted into 0.1049203474320 Common Shares, (b) each issued and outstanding Common Equivalent Preferred Unit for which the holder had not elected to convert such unit into shares of Westrock Series A Preferred Shares (see Note 13), automatically converted into 0.1086138208640 Common Shares if such Westrock Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.1049203474320 Common Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit and (c) each outstanding Westrock Preferred Unit, for which the holder thereof had made an election to convert such unit into Westrock Series A Preferred Shares, converted into 0.1086138208740 Westrock Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series A Common Equivalent Preferred Unit or 0.0919280171940 Westrock Series A Preferred Shares if such Common Equivalent Preferred Unit was designated a Series B Common Equivalent Preferred Unit.

As a result, we issued 34,855,535 Common Shares to holders of Common Units, 2,220,305 Common Shares to holders of Common Equivalent Preferred Units who elected to convert their Common Equivalent Preferred Units into Common Shares, and 23,587,952 Westrock Series A Preferred Shares to holders who elected to convert their Common Equivalent

Preferred Units into Westrock Series A Preferred Shares.

During the year ended December 31, 2022, the Company realized a net loss on extinguishment of the Common Equivalent Preferred Units of $ 2.9 million, including the payment of approximately $ 1.3 million of issuance costs, which have been recorded within accumulated deficit on our Consolidated Balance Sheets and adjusts earnings attributable to common shareholders in computing basic and diluted earnings per share.

During the year ended December 31, 2022, the Company realized a net loss on extinguishment of the Common Equivalent Preferred Units of $ 2.9 million, including the payment of approximately $ 1.3 million of issuance costs, which adjusts earnings attributable to common shareholders in computing basic and diluted earnings per share.

In addition, at Closing, (i) each outstanding share of class B common stock of Riverview (the “Riverview Class B Shares” together with the Riverview Class A Shares, the “Riverview Shares”) (other than the Riverview Class B Shares held as treasury stock, which were automatically cancelled and extinguished at Closing), automatically converted into one Riverview Class A Share, (ii) each outstanding Riverview Class A Share (including the Riverview Class A Shares resulting from the conversion of Riverview Class B Shares at Closing but excluding any Riverview Class A Shares held as treasury stock, which were automatically cancelled and extinguished at Closing) were exchanged for one Common Share, (iii) each outstanding warrant to purchase Riverview Class A Shares (the “Riverview Warrants”) was, by its terms, automatically converted into a comparable warrant to purchase Common Shares (the “Westrock Warrants”) on the terms and subject to the conditions set forth in the warrant agreement for the Riverview Warrants and the amended and restated warrant agreement for the Westrock Warrants, (iv) each Riverview Share held immediately prior to Closing by Riverview as treasury stock was automatically canceled and extinguished and (v) each share of capital stock of Merger Sub I issued and outstanding immediately prior to Closing was automatically canceled and extinguished and converted into one share of common stock, par value $ 0.01 , of the surviving corporation in the SPAC Merger.

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The Westrock Warrants entitle the holder to purchase one Common Share at an exercise price of $ 11.50 per share.

The Westrock Warrants may only be exercised for a whole number of shares, and will expire on August 26, 2027 (i.e., five years following the Closing), or earlier upon redemption or liquidation.

Westrock may redeem the outstanding Westrock Public Warrants (i) in whole and not in part;

(ii) at a price of $ 0.01 per warrant;

(iii) upon not less than 30 days ’ prior written notice of redemption to each warrant holder;

and (iv) if, and only if, the reported last sale price of the Common Shares for any 20 trading days within a 30 -trading day period ending three business days before Westrock sends the notice of redemption to the warrant holders equals or exceeds $ 18.00 per share.

During any period when Westrock fails to maintain an effective registration statement registering the Common Shares issuable upon the exercise of the Westrock Warrants, Westrock is required to permit holders of Westrock Warrants to exercise their Westrock Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act of 1933, as amended, or another exemption.

If and when the Westrock Public Warrants become redeemable by Westrock, Westrock may exercise its redemption right even if Westrock is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

The Westrock Private Warrants, which were initially held by Riverview Sponsor Partners, LLC (the “Riverview Sponsor”), are generally identical to the Westrock Public Warrants, except they cannot be redeemable by Westrock so long as they are held by the Riverview Sponsor or its permitted transferees.

Furthermore, the Riverview Sponsor, or its permitted transferees, have the option to exercise the Westrock Private Warrants on a cashless basis.

During the year ended December 31, 2023, the Riverview Sponsor transferred ownership of its Westrock Private Warrants.

At December 31, 2023, 2,026,046 warrants are held by permitted transferees and retain the rights of the Westrock Private Warrants described above, while 5,373,954 warrants are now redeemable by Westrock and exercisable by the holders on the same basis as the Westrock Public Warrants.

On August 28, 2024, the Company announced that it had commenced an exchange offer (the “Offer”) and consent solicitation (the “Consent Solicitation”) relating to its outstanding (i) public warrants to purchase Common Shares, which traded on The Nasdaq Global Market (the “Nasdaq”) under the symbol “WESTW” (the “Westrock Public Warrants”), and (ii) private placement warrants to purchase Common Shares (the “Westrock Private Warrants” and, together with the Westrock Public Warrants, the “Westrock Warrants”).

The Company offered to all holders of the Westrock Warrants the opportunity to receive 0.290 Common Shares in exchange for each of the Westrock Warrants tendered pursuant to the Offer.

The Offer and Consent Solicitation expired on September 26, 2024 (the “Expiration Date”).

As of the Expiration Date, (x) 16,676,541 outstanding Westrock Public Warrants were validly tendered and not validly withdrawn in the Offer and Consent Solicitation, representing approximately 97.42 % of the Westrock Public Warrants and (y) 2,026,046 outstanding Westrock Private Warrants were validly tendered and not validly withdrawn in the Offer and Consent Solicitation, representing 100 % of the Westrock Private Warrants.

On September 30, 2024, the Company issued 5,423,681 Common Shares in exchange for the tendered Westrock Warrants.

Concurrently with the Offer, the Company also solicited consents from the holders of each of the Westrock Public Warrants and the Westrock Private Warrants to amend that certain Warrant Agreement, dated as of August 25, 2022, by and between the Company and Computershare Inc., a Delaware corporation, and its affiliate, Computershare Trust Company, N.A., a federally chartered trust company, as warrant agent (the “Warrant Agent”), which governs all of the Westrock Warrants (the “Warrant Agreement”), to permit the Company to require that (x) each Westrock Public Warrant that is outstanding upon the closing of the Offer be exchanged for 0.261 Common Shares, which is a ratio 10 % less than the exchange ratio applicable to the Offer and (y) each Westrock Private Warrant that is outstanding upon the closing of

the Offer be exchanged for 0.261 Common Shares, which is a ratio 10 % less than the exchange ratio applicable to the Offer (such amendment, the “Warrant Amendment”).

Pursuant to the Consent Solicitation, the Company received the approval of holders of approximately 97.42 % of the outstanding Westrock Public Warrants and 100 % of the outstanding Westrock Private Warrants to adopt the Warrant Amendment, which exceeded (x) the 50 % threshold of the outstanding Westrock Public Warrants required to amend the Warrant Agreement with respect to the Westrock Public Warrants and (y) the 50 % threshold of the outstanding Westrock Private Warrants required to amend the Warrant Agreement with respect to the Westrock Private Warrants.

Accordingly, the Company and the Warrant Agent entered into the Warrant Amendment, dated September 30, 2024.

On September 30, 2024, the Company announced that it would exercise its right, in accordance with the terms of the Warrant Amendment, to exchange each Westrock Public Warrant that is outstanding following the closing of the Offer for 0.261 Common Shares per warrant (the “Post-Offer Exchange”).

The Company fixed the date for the Post-Offer Exchange as October 15, 2024.

On October 16, 2024, the Post-Offer Exchange related to the Westrock Public Warrants was completed, resulting in the issuance of 115,220 Common Shares in exchange for then outstanding Westrock Public Warrants.

Following the completion of the Post-Offer Exchange, no Westrock Warrants remain outstanding.

Accordingly, the Westrock Public Warrants were suspended from trading on the Nasdaq as of the close of business on October 15, 2024, and were delisted.

Revenue from Contracts with Customers (ASC 606)

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A portion of the Company’s revenues consist of sales from commodity contracts that are accounted for under ASC 815.

Sales from commodity contracts primarily relate to forward sales of green coffee which are accounted for as derivatives at fair value under ASC 815.

Sales from commodity contracts primarily relate to forward sales of green coffee which are accounted for as derivatives

at fair value under ASC 815.

These forward sales meet the definition of a derivative under ASC 815 as they have an underlying, notional amount, no initial net investment and can be net settled since the commodity is readily converted to cash.

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Prior to settlement, these forward sales contracts are recognized at fair value with the unrealized gains or losses recorded within cost of sales on our Consolidated Statements of Operations.

For the years ended December 31, 2023, 2022 and 2021, we recorded $ 4.1 million of net unrealized losses, $ 8.8 million of net unrealized gains and $ 4.8 million of net unrealized losses, respectively, within costs of sales.

For the years ended December 31, 2024, 2023 and 2022, we recorded $ 2.1 million of net unrealized losses, $ 4.1 million of net unrealized losses and $ 8.8 million of net unrealized gains, respectively, within costs of sales.

For the years ended December 31, 2024, 2023 and 2022, the Company recognized $ 190.0 million, $ 141.0 million and $ 181.7 million in revenues under ASC 815, respectively, and are reported within the Company’s Sustainable Sourcing & Traceability segment.

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Concentration of Customers

For the year ended December 31, 2023, one customer, who is represented in the Company’s Beverage Solutions segment, accounted for 10.4 %, or $ 90.0 million, of the Company’s consolidated net revenues.

For the years ended December 31, 2022 and 2021, no customers accounted for more than 10% of our consolidated net revenues.

For the year ended December 31, 2024, no customers accounted for more than 10% of our consolidated net revenues.

For the year ended December 31, 2023, one customer, who is represented in the Company’s Beverage Solutions

segment, accounted for 10.4 %, or $ 90.0 million, of the Company’s consolidated net revenues.

For the years ended December 31, 2022, no customers accounted for more than 10% of our consolidated net revenues.

Disaggregated Revenue

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All other countries

For the years ended December 31, 2024, 2023 and 2022, other than the United States, no country accounted for more than 10 percent of our consolidated net sales.

Bixby Roasting Co.

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Kohana Coffee is an extract and ready-to-drink focused business, based in Richmond, California, serving customers in the retail and CPG industries.

acquisition allows the Company to accelerate the development, production, and distribution of ready-to-drink products in cans and bottles.

The acquisition allows the Company to accelerate the development, production, and distribution of ready-to-drink products in cans and bottles.

Aggregate consideration paid for Kohana Coffee included 1,852,608 Common Shares and approximately $ 15.7 million in cash, subject to customary adjustments.

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Expenses associated with the acquisition were not material.

As described in Note 3, during the second quarter of 2024, the Company closed its manufacturing facility in Richmond, California.

All production from the facility was consolidated into other facilities operated by the Company in Concord, North Carolina and Conway, Arkansas.

The following table presents the unaudited pro forma summary of our financial results as if the Kohana Acquisition had occurred on January 1, 2021.

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December 31, 2022

December 31, 2021

Net loss attributable to common shareholders

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The following table summarizes property, plant and equipment, net as of December 31, 2024 and 2023:

(Dollars in Thousands)

Depreciable Lives

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December 31, 2023

Buildings (4)

10 - 40 years

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3 - Lease right-of-use assets are amortized over the shorter of the useful life of the asset or the lease term.

4 – We identified a $ 10.1 million classification error in the disclosure of buildings, plant equipment, furniture and fixtures, and construction in progress and equipment deposits for the year ended December 31, 2022.

Amounts presented above reflect the corrected amounts.

Depreciation expense for the years ended December 31, 2024, 2023 and 2022 was $ 26.6 million, $ 18.4 million and $ 17.4 million, respectively.

Assets classified as construction in progress and equipment deposits are not depreciated, as

they are not ready for production use.

Assets classified as construction in progress and equipment deposits are not depreciated, as they are not ready for production use.

All assets classified as construction in progress and equipment deposits at December 31, 2024 are expected to be in production use.

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Operating lease liabilities

During the years ended December 31, 2024 and 2023, the Company obtained approximately $ 1.0 million and $ 60.2 million, respectively, of right-of-use operating lease assets in exchange for lease obligations.

On February 12, 2024, following the completion of its 530,000 square foot distribution center in Conway, Arkansas, the Company entered into a lease termination agreement for the Gregory Distribution Center lease.

The Gregory Distribution Center lease terminated, by mutual agreement, on June 30, 2024.

No costs were incurred as a result of the

lease termination.

This lease termination event does not significantly alter the Company’s operational capabilities or its financial position.

Depending on the nature of the lease, lease costs are classified within costs of sales or selling, general and administrative expense on the Company’s Consolidated Statements of Operations.

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Short-term lease cost

We identified a $ 3.3 million disclosure error in the disclosure of the components of lease costs for the year ended December 31, 2022.

The amounts presented above reflect the corrected amounts.

The following table presents information about the Company’s weighted average discount rate and remaining lease term as of December 31, 2024 and 2023:

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Year Ended December 31,

Operating cash flows from operating leases

We identified a $ 2.5 million disclosure error in the disclosure of operating cash flows from operating leases for the year ended December 31, 2022.

The amount presented above reflects the corrected amount.

During the year ended December 31, 2023, the Company obtained $ 60.2 million of right-of-use operating lease assets in exchange for lease obligations.

Cash paid related to operating lease liabilities

Finance lease assets are recorded in property, plant and equipment, net with the corresponding lease liabilities included in accrued expenses and other current liabilities and long-term debt, net on the Consolidated Balance Sheets.

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Present value of minimum lease payments

The lease will terminate by mutual agreement, effective June 30, 2024.

As of December 31, 2023, the premises associated with this lease was classified as held and used.

As of the date of this Annual Report on Form 10-K, no costs have been incurred, and no costs are expected to be incurred, by the Company as a result of the lease termination.

This lease termination event does not significantly alter the Company’s operational capabilities or its financial position.

Changes in the carrying amount of goodwill occurring during the years ended December 31, 2024 and 2023 were as follows:

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Changes during the period:

Measurement period and other adjustments

Balance at December 31, 2023

Accumulated impairment loss

Changes during the period:

Measurement period and other adjustments

Balance at December 31, 2024

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Term loan facility

Delayed draw term loan facility

Revolving credit facility

Convertible notes payable

International trade finance lines

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Current maturities of long-term debt

Convertible notes payable - related party, net

Short-term debt

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The Revolving Credit Facility, the Term Loan Facility and the Delayed Draw Term Loan Facility will mature on August 29, 2027.

All obligations under the Credit Agreement are guaranteed by the Company and each of the Borrower’s domestic subsidiaries, which comprise our Beverage Solutions segment, and are secured by substantially all of the Company’s assets.

Borrowings under the Revolving Credit Facility, the Term Loan Facility and the Delayed Draw Term Loan Facility will bear interest, at the Borrower’s option, initially at an annual rate equal to (a) Term SOFR plus a credit spread adjustment of 0.10 % for loans with an interest period of one month , 0.15 % for loans with an interest period of three months and 0.25 % for loans with an interest period of six months , as applicable, (the “Adjusted Term SOFR”) or (b) the base rate (determined by reference to the greatest of (i) the rate of interest last quoted by The Wall Street Journal in the U.S.

as the prime rate in effect, (ii) the NYFRB Rate from time to time plus 0.50 % and (iii) the Adjusted Term SOFR for a one month interest period plus 1.00 %, (the “Base Rate”)), in each case plus an applicable margin.

At December 31, 2023, we had $ 65.0 million of outstanding borrowings under the Revolving Credit Facility, with a weighted average interest rate of 8.9 %, and the interest rate applicable to our Term Loan Facility was 9.2 %, and we had $ 2.6 million of standby letters of credit outstanding.

At December 31, 2023, no amounts were outstanding under the Delayed Draw Term Loan Facility;

however, on January 8, 2024, the Company borrowed $ 50.0 million under the Delayed Draw Term Loan Facility, using a portion of the proceeds to repay outstanding borrowings under the Revolving Credit Facility.

On June 30, 2023, we entered into Amendment No.

2 (the “Second Amendment”) to the Credit Agreement.

The Second Amendment established a covenant relief period (the “Covenant Relief Period”) commencing on June 30, 2023, and ending on the earlier to occur of (i) April 1, 2025 and (ii) the date following December 31, 2023, on which the Borrower delivers to the administrative agent a certificate of a responsible officer (a) electing to terminate the Covenant Relief Period, (b) demonstrating a total net leverage ratio less than 3.75 :1.00 and (c) attaching projections demonstrating compliance with the total net leverage ratio financial covenant (as in effect prior to giving effect to the Covenant Relief Period) until the then-existing latest maturity date.

During the Covenant Relief Period, (i) the total net leverage ratio financial covenant will be (a) 5.00 :1.00 for the test period ending June 30, 2023, (b) 5.25 :1.00 for the test period ending September 30, 2023, (c) 5.50 :1.00 for the test periods ending on or after December 31, 2023 to and including September 30, 2024, (d) 5.00 :1.00 for the test period ending December 31, 2024 and (e) 4.50 :1.00 for the test period ending March 31, 2025 and (ii) the applicable margin for any term SOFR rate loan will range from 2.50 % to 3.75 % and for any ABR loan will range from 1.50 % to 2.75 %, in each case depending on the total net leverage ratio.

After the Covenant Relief Period, the total net leverage ratio financial covenant and the applicable margin for term SOFR rate loans and ABR loans will revert to the pre-amendment terms of the Credit Agreement.

During and after the Covenant Relief Period, the minimum interest coverage ratio financial covenant will be 2.00 :1.00.

As of December 31, 2023, we were in compliance with the Financial Covenants.

See Note 23 for disclosures regarding the entry into Amendment No.

3 to the Credit Agreement on February 15, 2024, which modifies certain requirements of the Company during the Covenant Relief Period.

The Term Loan Facility and Delayed Draw Term Loan Facility require quarterly principal payments during the first three years of 1.25 % of the original principal balance.

Quarterly payments increase to 1.875 % and 2.5 % of the original principal balance during the fourth and fifth years, respectively.

We incurred a total of $ 6.6 million of financing fees in connection with the Credit Agreement and related amendments.

$ 3.3 million of the fees were allocated to the Term Loan Facility and are being amortized utilizing the frozen effective yield method based on the interest rate in place at the issuance of the Term Loan Facility.

$ 3.3 million of the fees were allocated to the Revolving Credit Facility, which are reported within other long-term assets on the Consolidated Balance Sheets and are being amortized ratably over the term of the Revolving Credit Facility.

Prior Term Loan Facility

On February 28, 2020, Westrock Beverage Solutions, LLC, as borrower, borrowed $ 240.0 million of term loans from various financial institutions pursuant to a loan and security agreement (the “Prior Term Loan Agreement”) (such term loans, the “Prior Term Loan Facility”).

In connection with the Closing, all outstanding Prior Term Loan Facility balances were repaid, and the associated Prior Term Loan Agreement was terminated.

The Company paid a $ 1.6 million early termination fee, and wrote off $ 4.0 million of unamortized deferred financing fees associated with the termination of the Prior Term Loan Facility, which are recorded within interest expense on the Consolidated Statement of Operations.

Prior ABL Facility

On February 28, 2020, Westrock Beverage Solutions, LLC, as borrower, entered into a loan and security agreement with Bank of America as administrative agent (the “Prior ABL Credit Agreement”) that created an asset-based loan of $ 90.0 million (the “Prior ABL Facility”).

In connection with the Closing, all outstanding Prior ABL Facility balances were repaid, and the associated Prior ABL Credit Agreement was terminated.

Upon termination, we wrote off $ 0.3 million of the $ 1.3 million unamortized deferred financing fees associated with the Prior ABL Facility, which are recorded within interest expense on the Consolidated Statement of Operations.

The remaining unamortized deferred financing fees were allocated to the new Revolving Credit Facility and will be amortized over the life of the Revolving Credit Facility.

Outstanding letters of credit under the Prior ABL Facility were replaced by letters of credit under the Credit Agreement.

All obligations under the Credit Agreement are

guaranteed by the Company and each of the Borrower’s domestic subsidiaries, which comprise our Beverage Solutions segment, and are secured by substantially all of the Company’s assets.

Borrowings under the Revolving Credit Facility, the Term Loan Facility and the Delayed Draw Term Loan Facility will bear interest, at the Borrower’s option, initially at an annual rate equal to (a) term SOFR plus a credit spread adjustment of 0.10 % for loans with an interest period of one month , 0.15 % for loans with an interest period of three months and 0.25 % for loans with an interest period of six months , as applicable, (the “Adjusted Term SOFR”) or (b) the base rate (determined by reference to the greatest of (i) the rate of interest last quoted by The Wall Street Journal in the United States as the prime rate in effect, (ii) the NYFRB Rate from time to time plus 0.50 % and (iii) the Adjusted Term SOFR for a one month interest period plus 1.00 %, (the “Base Rate”)), in each case plus an applicable margin.

At December 31, 2024, we had $ 112.5 million of outstanding borrowings under the Revolving Credit Facility, with a weighted average interest rate of 8.6 %, and we had $ 2.6 million of standby letters of credit outstanding.

At December 31, 2024, the interest rate applicable to our Term Loan Facility was 8.2 % and the interest rate applicable to our Delayed Draw Term Loan Facility was 9.2 %.

On February 15, 2024, the Borrower entered into Amendment No.

3 (the “Third Amendment”) to the Credit Agreement.

The Third Amendment modified the existing covenant relief period (the “Covenant Relief Period”), which commenced on June 30, 2023 and will end on the earlier to occur of (i) April 1, 2026 and (ii) any date following June 30, 2024, on which the Borrower elects to terminate the Covenant Relief Period subject to satisfaction of certain conditions.

During the Covenant Relief Period, the Company’s ability to incur additional indebtedness and make investments, restricted payments and junior debt restricted payments will be more limited.

The Third Amendment permits the Company to issue convertible notes, including the Convertible Notes (as defined below).

During the Covenant Relief Period, the applicable margin for any term SOFR rate loan will range from 3.00 % to 4.00 % and for any ABR loan will range from 2.00 % to 3.00 %, in each case depending on the secured net leverage ratio.

After the Covenant Relief Period, the applicable margin for any term SOFR rate loan will range from 2.00 % to 3.00 % and for any ABR loan will range from 1.00 % to 2.00 %, in each case depending on the secured net leverage ratio.

The Credit Agreement, as amended through the Third Amendment, required the Borrower to maintain compliance with (i) a secured net leverage ratio at levels ranging from 4.50 :1.00 to 6.25 :1.00 and stepping down to 4.50 :1.00 by April 2026 (which has been further amended by the Fourth Amendment, as discussed below) and (ii) an interest coverage ratio of at least 1.50 :1.00 on and prior to September 30, 2025 and at least 2.00 :1.00 on December 31, 2025 and thereafter.

The Credit Agreement, as amended through the Third Amendment, also includes (i) a minimum liquidity covenant requiring the Borrower not to permit its liquidity, measured as of the last business day of each calendar month commencing March 29, 2024, to be less than $ 15 million and (ii) an anti-cash hoarding covenant, which shall be effective only during the Covenant Relief Period, requiring the Borrower to have no more than $ 20 million of unrestricted cash on the last day of each calendar month when revolving loans or letters of credit are outstanding or on the date of borrowing of a revolving loan.

As of December 31, 2024, the Company was in compliance with its financial covenants.

The Term Loan Facility and Delayed Draw Term Loan Facility require quarterly principal payments totaling approximately $ 2.8 million ( 1.25 % of the original principal balance).

Quarterly payments increase to approximately $ 4.2 million and $ 5.6 million ( 1.875 % and 2.5 % of the original principal balance) during the final two years of the agreements, respectively.

We incurred a total of $ 2.4 million in financing fees in connection with the Third Amendment.

Approximately $ 1.3 million of the fees were allocated to the Term Loan Facility and are being amortized over the remaining term of the Term Loan Facility utilizing the frozen effective yield method based on the interest rate in place at the issuance of the Term Loan Facility.

Approximately $ 1.0 million of the fees were allocated to the Revolving Credit Facility, are reported within other long-term assets on the Consolidated Balance Sheets and are being amortized ratably over the remaining term of the Revolving Credit Facility.

Convertible Notes

On February 15, 2024, the Company sold and issued in a private placement $ 72.0 million in aggregate principal amount of 5.00 % convertible senior notes due 2029 (the “Convertible Notes”), of which $ 50.0 million was from related parties (See Note 22).

The Convertible Notes are unsecured, senior obligations of the Company and accrue interest at a rate of 5.00 % per annum.

The Convertible Notes are carried at amortized cost and are recorded in long-term debt, net and convertible notes payable – related party, net on the Consolidated Balance Sheets.

At December 31, 2024, the carrying value of the Convertible Notes was $71.6 million, of which $ 49.7 million was from related parties.

We incurred a total of $ 0.5 million of financing fees in connection with the Convertible Notes, which were ratably allocated to the convertible notes payable and the convertible notes payable – related party, respectively, and are being amortized into interest expense over the remaining term of the Convertible Notes utilizing the effective interest rate method.

Pursuant to the terms of the Convertible Notes, noteholders may convert their Convertible Notes at their option only in the following circumstances:

(i) during the period commencing on August 15, 2024, and prior to the close of business on the trading day immediately preceding August 15, 2028, if the closing price for at least 20 trading days (whether or not consecutive) during the period of any 30 consecutive trading days in the immediately preceding calendar quarter is equal to or greater than 130 % of the conversion price;

(ii) during the period commencing on August 15, 2028, and prior to the close of business on the second scheduled trading day immediately preceding February 15, 2029, at any time;

and (iii) during the 35 trading days following the effective date of certain fundamental change transactions that occur prior to the close of business on the trading day immediately preceding August 15, 2028.

The Company will settle conversions by paying or delivering, as applicable, at the Company’s election, cash, Common Shares, or a combination of cash and Common Shares.

The Company may not issue more than 19.99 % of the issued and outstanding Common Shares immediately prior to the issuance of the Convertible Notes in respect of the conversion of the Convertible Notes.

The initial conversion price of the Convertible Notes is $ 12.84 , which corresponds to an initial conversion rate of approximately 77.88 Common Shares per $ 1,000 principal amount of Convertible Notes.

The conversion price and conversion rate are subject to customary adjustments.

International Debt and Lending Facilities

On March 21, 2023, we entered into a $ 70 million working capital trade finance facility with multiple financial institutions through our subsidiary, Falcon.

The facility replaced Falcon’s then existing working capital trade finance facility.

The facility is uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility.

The facility was set to mature one year from inception.

Borrowings under the facility bore interest at the borrower’s option at a rate equal to (a) Term SOFR, as defined in the facility, plus a margin of 4.00 % plus a liquidity premium set by the lender at the time of borrowing or (b) the Base Rate (determined by reference to the greatest of (i) the Prime Rate, as defined in the facility, at such time, (ii) one-half of 1.00% in excess of the Federal Funds Effective Rate, as defined in the facility, at such time, and (iii) Term SOFR for a one-month tenor in effect at such time plus 1.00 %).

On March 8, 2024, Falcon renewed its working capital trade finance facility with multiple institutions.

The facility size was reduced from $ 70.0 million to $ 55.0 million and remains uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility.

The facility will mature one year from inception.

Borrowings under the facility will bear interest at the borrower’s option at a rate equal to (a) Term SOFR, as defined in the facility, plus a margin of 4.00 % plus a liquidity premium set by the lender at the time of borrowing or (b) the Base Rate (determined by reference to the greatest of (i) the Prime Rate, as defined in the facility, at such time, (ii) one-half of 1.00% in excess of the Federal Funds Effective Rate, as defined in the facility, at such time, and (iii) Term SOFR for a one-month tenor in effect at such time plus 1.00 %).

Borrowings under the facility will bear interest at the borrower’s option at a rate equal to (a) Term SOFR plus a margin of 4.00 % plus a liquidity premium set by the lender at the time of borrowing or (b) the Base Rate (determined by reference to the greatest of (i) the Prime Rate, as defined in the facility, at such time, (ii) one-half of 1.00 % in excess of the Federal Funds Effective Rate, as defined in the facility, at such time, and (iii) Term SOFR for a one-month tenor in effect at such time plus 1.00 % ).

On August 21, 2024, Falcon amended its working capital trade finance facility, increasing the facility size from $ 55.0 million to $ 75.0 million.

The interest rates and maturity date were unchanged as a result of the amendment.

At December 31, 2024, there was $ 50.6 million of outstanding borrowings under the facility, which is recorded in short-term debt in the Consolidated Balance Sheets.

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Borrowings under the facility will bear interest at the borrower’s option at a rate equal to (a) (i) the most recent applicable Term SOFR for the longest period (for which Term SOFR is available) which is less than the applicable interest period of the loan or (ii) if no such Term SOFR is available for a period which is less than the applicable interest period, SOFR for the day which is two U.S.

Government Securities Business Days before the Quotation day;

or (b) the most recent applicable Term SOFR (as of Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds the applicable interest period of that loan, in each case plus the applicable margin.

Government Securities Business Days, as defined in the facility, before the Quotation Day, as defined in the facility;

or (b) the most recent applicable Term SOFR (as of the Quotation Day) for the shortest period (for which Term SOFR is available) which exceeds the applicable interest period of that loan, in each case plus the applicable margin.

At December 31, 2024, there was $ 4.5 million of outstanding borrowings under the facility, of which $ 3.5 million and $ 1.0 million is recorded in long-term debt, net and current maturities of long-term debt, respectively, on the Consolidated Balance Sheets.

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Westrock Coffee International, LLC, through its subsidiary Rwanda Trading Company, maintains two mortgage and inventory-backed lending facilities with a local bank in Rwanda:

(a) a short-term trade finance facility with a balance of $ 6.7 million at December 31, 2023 and (b) a long-term note payable with a balance of $ 1.2 million at December 31, 2023.

(a) a short-term trade finance facility with a balance of $ 4.0 million at December 31, 2024 and (b) a long-term note payable with a balance of $ 0.6 million at December 31, 2024, of which $ 0.4 million is reported in current maturities of long-term debt on the Consolidated Balance Sheets.

Series A Preferred Shares

In connection with the Transaction, the Company issued 23,587,952 Westrock Series A Preferred Shares, which rank senior to the Common Shares with respect to dividend rights and/or distribution rights upon the liquidation, winding up or dissolution, as applicable, of Westrock.

Each holder of Westrock Series A Preferred Shares is entitled to vote, on an as-converted basis, as a single class with the holders of Common Shares and the holders of any other class or series of capital stock of Westrock then entitled to vote with the Common Shares on all matters submitted to a vote of the holders of Common Shares.

The Company has 23,510,527 Westrock Series A Preferred Shares outstanding, which rank senior to the Common Shares with respect to dividend rights and/or distribution rights upon the liquidation, winding up or dissolution, as applicable, of Westrock.

Westrock then entitled to vote with the Common Shares on all matters submitted to a vote of the holders of Common Shares.

The initial liquidation preference of Westrock Series A Preferred Shares is $ 11.50 per share, plus any declared but unpaid dividends and subject to accretion under certain circumstances.

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However, at no time will the Westrock Series A Preferred Shares be reported at a value less than its initial carrying value.

For the years ended December 31, 2023 and 2022, the Company recorded $ 0.2 million and $ 1.3 million of accretion, respectively, with respect to the Westrock Series A Preferred Shares.

For the years ended December 31, 2024 and 2023, the Company recorded $ 0.3 million of amortization and $ 0.2 million of accretion, respectively, with respect to the Westrock Series A Preferred Shares.

We record all derivatives, whether designated in a hedging relationship or not, at fair value on the Consolidated Balance Sheets.

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During the years ended December 31, 2024 and 2023, the Company purchased coffee futures contracts and coffee options contracts under our cash flow hedging program with aggregate notional amount of 90.0 million pounds and 63.4 million pounds, respectively.

Approximately $ 6.4 million of net realized loss, $ 13.1 million of net realized gains and $ 7.2 million of net realized gains, representing the effective portion of the cash-flow hedge, were subsequently reclassified from AOCI to earnings and recognized in cost of sales in the Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021, respectively.

Approximately $ 15.8 million of net realized gains, $ 6.4 million of net realized losses and $ 13.1 million of net realized gains, representing the effective portion of the cash-flow hedge, were subsequently reclassified from AOCI to earnings and recognized in cost of sales in the Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022, respectively.

As of December 31, 2024, the estimated amount of net gains reported in AOCI that is expected to be reclassified to the Consolidated Statements of Operations within the next twelve months is $ 19.8 million.

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Derivative assets

Options contracts

Derivative assets

Derivative assets not designated as cash flow hedging instruments:

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Total derivative assets

Derivative liabilities designated as cash flow hedging instruments:

Coffee futures contracts (1)

Derivative liabilities

Derivative liabilities not designated as cash flow hedging instruments:

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Observable inputs include quoted prices for similar instruments in active and non-active markets.

Level 2 includes those financial instruments that are valued with industry standard valuation models that incorporate inputs that are observable in the marketplace throughout the full term of the instrument or can otherwise be derived from or supported by observable market data in the marketplace.

Level 2 includes those financial instruments that are valued with industry standard

valuation models that incorporate inputs that are observable in the marketplace throughout the full term of the instrument or can otherwise be derived from or supported by observable market data in the marketplace.

Level 2 inputs may also include insignificant adjustments to market observable inputs.

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Coffee futures contracts

Options contracts

Forward purchase and sales contracts

Westrock Public Warrants

Westrock Private Warrants

The following table presents the change in the fair value of Level 3 Westrock Private Warrants liabilities during the year ended December 31, 2024:

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Fair value as of December 31, 2023

Transfer out of level 3

Change in fair value

Warrant exchange

Fair value as of December 31, 2024

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Green coffee associated with forward contracts

Forward purchase and sales contracts

Coffee futures contracts

Forward purchase and sales contracts

Westrock Public Warrants

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Fair value as of December 31, 2022

Assumption of warrants

Transfer out of level 3

Change in fair value

Fair value as of December 31, 2023

Financial instruments consist primarily of cash, accounts receivable, accounts payable, a supply chain finance program, convertible notes payable, short-term debt and long-term debt.

The carrying amount of cash, accounts receivable, accounts payable, short-term debt and the supply chain finance program was estimated by management to approximate fair value due to the relatively short period of time to maturity for those instruments.

The Term Loan Facility, Delayed Draw Term Loan Facility and Revolving Credit Facility are carried on the Consolidated Balance Sheets at amortized cost and are estimated by management to approximate fair value as of December 31, 2024, as the interest rate on these facilities is adjusted for changes in the market rates.

The fair value of the Term Loan Facility, Delayed Draw Term Loan Facility and Revolving Credit Facility was determined based on Level 2 inputs under the fair value hierarchy.

Coffee futures contracts and coffee options are valued based on quoted market prices.

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As a result, green coffee associated with forward contracts and forward sales and purchase contracts are classified within Level 2 of the fair value hierarchy.

Westrock Public Warrants are valued based on their quoted market price of $ 2.30 and $ 2.27 per warrant as of December 31, 2023 and 2022, respectively.

Westrock Private Warrants price of $ 2.68 and $ 3.83 per warrant as of December 31, 2023 and 2022, respectively, are valued using a binomial lattice valuation model, which is considered to be a Level 3 fair value measurement.

The Convertible Notes are carried on the Consolidated Balance Sheets at amortized cost.

The estimated fair value of the Convertible Notes was $ 59.6 million as of December 31, 2024, and was determined using a binomial lattice , which is considered to be a Level 3 fair value measurement.

The primary unobservable inputs at December 31, 2024 include the expected volatility and assumed debt yield of 45.0 % and 15.3 %, respectively.

Westrock Public Warrants are valued based on their quoted market price of $ 2.30 per warrant as of December 31, 2023.

As of December 31, 2023, the Westrock Private Warrants price of $ 2.68 per warrant was valued using a binomial lattice valuation model, which is considered to be a Level 3 fair value measurement.

The primary unobservable inputs were as follows:

December 31, 2023

December 31, 2022

Exercise price

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The most significant of these primary unobservable inputs utilized in determining the fair value of the Westrock Private Warrants is the expected volatility of the stock price, which is determined by use of an option pricing model.

Financial instruments consist primarily of cash, accounts receivable, accounts payable, a supply chain finance program and long-term debt.

The carrying amount of cash, accounts receivable, accounts payable and the supply chain finance program was estimated by management to approximate fair value due to the relatively short period of time to maturity

for those instruments.

The Term Loan Facility and the Revolving Credit Facility are carried on the Consolidated Balance Sheets at amortized cost and are estimated by management to approximate fair value as of December 31, 2023, as the interest rate on these facilities is adjusted for changes in the market rates.

The fair value of the Term Loan Facility and the Revolving Credit Facility was determined based on Level 2 inputs under the fair value hierarchy.

Non-financial assets and liabilities, including property, plant and equipment, goodwill, and intangible assets are measured at fair value on a non-recurring basis.

No events occurred during the years ended December 31, 2023 and 2022 requiring these non-financial assets and liabilities to be subsequently recognized at fair value.

No events occurred during the years ended December 31, 2024 and 2023 requiring these non-financial assets and liabilities to be subsequently recognized at fair value, with the exception of the $ 5.7 million of impairment charges for the year ended December 31, 2024 related to the restructuring activities discussed in Note 3.

The equipment is no longer in use and was determined to have no salvage value.

At December 31, 2024, the Company had an equity investment with a carrying value of approximately $ 1.0 million, for which there is no readily determinable fair value.

This investment is recorded at cost within other long-term assets on the Consolidated Balance Sheets.

As of December 31, 2024, there have been no adjustments, upward or downward , to the carrying value.

Equity-Based Compensation

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During the year ended December 31, 2022 we granted 0.3 million options to employees.

One-half of the options granted vest over four years of continuous service by the employee, and one-half of the options vest once the simple average of the daily volume weighted average price per share of Common Shares for 10 trading days in any consecutive 30-day period is $ 18.50 per share (“Performance Options”), provided that the recipient is either still working for the Company at the date of such realization event or that the performance goals are achieved within one year following a qualified termination of the recipient’s employment.

period is $ 18.50 per share (“Performance Options”), provided that the recipient is either still working for the Company at the date of such realization event or that the performance goals are achieved within one year following a qualified termination of the recipient’s employment.

All option grants have an exercise price of $ 9.54 and generally have a ten-year term prior to expiration.

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The Company recognizes expense related to the options using graded vesting attribution and recognized approximately $ 0.1 million, $ 0.4 million and $ 0.6 million of expense for the years ended December 31, 2024, 2023 and 2022, respectively, which is included in selling, general and administrative expense on our Consolidated Statements of Operations.

The total compensation cost of unvested options, not yet recognized, is approximately $ 0.1 million, which is to be recognized over the next four years .

The total compensation cost of unvested options, not yet recognized, is approximately $ 0.1 million, which is to be recognized over the next two years .

Weighted-Average

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For stock options where the weighted-average exercise price exceeds the current market price of the underlying stock, the intrinsic value is zero.

The intrinsic value of options outstanding as of December 31, 2023 was $ 1.9 million, calculated using $ 10.21 per share, which was the closing price of our common stock on December 29, 2023, the last trading day of 2023.

The intrinsic value of options outstanding as of December 31, 2024 was zero , calculated using $ 6.42 per share, which was the closing price of our common stock on December 31, 2024, the last trading day of 2024.

Restricted Stock

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The RCSs vest in three installments on each anniversary of the grant date, vesting in full on February 28, 2023.

During the years ended December 31, 2023, 2022 and 2021, the Company issued 310,670 , 332,251 and 320,998 Common Shares upon vesting of RCSs, for which no proceeds were recorded.

During the year ended December 31, 2023, the Company issued 310,670 Common Shares upon vesting of RCSs, for which no proceeds were recorded.

RCS expense is based on the fair value of the common units on the date of grant and is amortized over the vesting period, which is generally three years .

The value of the RCSs was calculated using a combination of historic equity and implied asset volatility of 40 %, a risk-free rate of 1.14 %, and a marketability discount of 30 %.

The Company recognized approximately $ 0.1 million, $ 0.3 million and $ 0.8 million in expense for the RCSs in the years ended December 31, 2023, 2022 and 2021, respectively, which is included in selling, general and administrative expense on our Consolidated Statements of Operations.

The Company recognized approximately $ 0.1 million in expense for the RCSs in the year ended December 31, 2023, which is included in selling, general and administrative expense on our Consolidated Statements of Operations.

Restricted Stock Unit Awards

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The RSUs had a grant date fair value of $ 13.7 million and $ 15.8 million, respectively, which was calculated using the closing price of the Common Shares on the applicable date of grant.

The RSUs are amortized on a straight-line basis to expense over the vesting period, which is generally three years .

During the years ended December 31, 2023 and 2022, the Company recognized approximately $ 8.3 and $ 1.7 million, respectively, in expense for the RSUs, which is included in selling, general and administrative expense on our Consolidated Statements of Operations.

The RSUs are amortized on a straight-line basis to expense over the vesting period.

For RSUs issued during 2024, the vesting period is four years , and for RSUs issued prior to 2024, the vesting period is three years .

During the years ended December 31, 2024 and 2023, the Company recognized approximately $ 11.6 million and $ 8.3 million,

respectively, in expense for the RSUs.

As of December 31, 2024, there were 2.7 million shares available for future issuance under the 2022 Equity Plan.

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During the year ended December 31, 2024, the Company issued 568,048 Common Shares upon the vesting of RSUs, for which no proceeds were recorded.

The aggregate intrinsic value of RSUs vested for the year ended December 31, 2023 was $ 4.8 million.

The aggregate intrinsic value of RSUs vested for the year ended December 31, 2024 was $ 7.3 million, calculated using the closing price of our common stock on the vesting date.

Accumulated Other Comprehensive Income (Loss)

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Year Ended December 31,

Cash flow hedge changes in fair value gain (loss):

Unrealized gain (loss) on derivative instruments:

Balance at beginning of period

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Balance at end of period

Foreign currency translation gain

Foreign currency translation adjustment

Balance at beginning of period

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Accumulated other comprehensive income (loss) at end of period

and international components of loss before income taxes is as follows:

and international components of income (loss) before income taxes is as follows:

Year Ended December 31,

International

Loss before income taxes

Loss before income taxes and equity in earnings from unconsolidated entities

Income tax expense (benefit) consisted of the following:

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Global intangible low-taxed income ("GILTI") inclusion

Transaction costs

Stock compensation (windfall)/shortfall

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We establish a valuation allowance to reduce deferred tax assets if, based on the weight of the available evidence, both positive and negative, for each respective tax jurisdiction, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

A valuation allowance related to domestic deferred tax assets of $ 9.9 million and $ 6.9 million, respectively, was recorded, of which $ 7.6 million and $ 5.5 million, respectively, was against a portion of the Company’s Section 163(j) interest limitation carryforward, and the remainder was against certain state net operating losses as of December 31, 2023 and 2022, respectively.

A valuation allowance related to domestic deferred tax assets of $ 26.7 million was recorded as of December 31, 2024, of which $ 21.0 million and $ 5.7 million were against the Company’s federal and state net operating loss carryforwards, respectively.

A valuation allowance related to domestic deferred tax assets of $ 9.9 million was recorded as of December 31, 2023, of which $ 7.6 million was against a portion of the Company’s Section 163(j) interest limitation carryforward, and the remainder was against certain state net operating losses.

A valuation allowance related to foreign deferred tax assets of $ 3.8 million and $ 3.0 million was recorded against certain foreign net operating losses as of December 31, 2024 and 2023, respectively.

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Ending Balance

During the year ended December 31, 2024, the valuation allowance increased $ 17.7 million, which was comprised of additional income tax expense of $ 20.8 million that is reflected as a component of the effective tax rate against continuing operations, partially offset by an income tax benefit of $ 3.1 million, which is reflected as a component of other comprehensive income.

As of December 31, 2024, the Company had federal net operating loss carryforwards of approximately $ 283.1 million which do not expire.

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However, it is not practical to estimate the change, which may be influenced by several factors.

Of the total reserve for uncertain tax positions as of December 31, 2023, only $ 0.1 million would impact the

effective tax rate if released.

As indicated in Note 3, the Company re-evaluates uncertain tax positions on a quarterly basis.

Of the total reserve for uncertain tax positions as of December 31, 2024 and 2023, only $ 0.1 million and $ 0.1 million, respectively, would impact the effective tax rate if released.

As indicated in Note 3, the Company re-revaluates uncertain tax positions on a quarterly basis.

The Company recognizes potential interest and penalties relating to unrecognized tax positions as a component of income tax expense (benefit).

A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits is as follows:

A reconciliation of the beginning and ending balances of the reserve for uncertain tax positions is as follows:

December 31, 2024

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Ending Balance

As a result of the U.S.

Tax Cuts and Jobs Act of 2017, or the Tax Act, our accumulated foreign earnings have been subjected to U.S.

Moreover, all future foreign earnings will be subject to a new territorial tax system and dividends received deduction regime in the U.S.

As of December 31, 2024, undistributed earnings of certain foreign subsidiaries of approximately $ 9.9 million are intended to be permanently reinvested outside the U.S.

Accordingly, no provision for foreign withholding tax or state income taxes associated with a distribution of these earnings has been made.

Determination of the amount of the unrecognized deferred tax liability on these unremitted earnings is not practicable.

Accordingly, no provision for foreign withholding tax, foreign exchange gains/losses or state income taxes associated with a distribution of these earnings has been made.

The amount of the unrecognized deferred tax liability on these unremitted earnings is not material.

We are subject to taxation in the United States and various states and foreign jurisdictions, including the United Kingdom.

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Earnings Per Share

Prior to the Conversion, the Company’s ownership interests consisted of two classes of equity units, referred to as Common Units and Common Equivalent Preferred Units (“CEP Units”), which have been retroactively adjusted as shares reflecting the conversion ratios discussed in Note 4.

Westrock Series A Preferred Shares and our RSUs issued under our 2022 Equity Plan are considered participating securities as they receive non-forfeitable rights to dividends at the same rate as Common Shares.

As participating securities, we include these instruments in the computation of earnings per share under the two-class method described in ASC 260 Earnings per Share (“ASC 260”) .

Neither the Series A Preferred Shares nor the RSUs have a contractual obligation to share in losses of the Company.

However, undistributed earnings are allocated to the participating securities.

Prior to the Conversion, the dilutive effect of CEP Units was calculated by using the “if-converted” method.

This assumed an add-back of dividends on the CEP Units to net income attributable to shareholders as if the securities were converted to common shares at the beginning of the reporting period (or at the time of issuance, if later), and the resulting common shares were included in the number of weighted-average units outstanding.

The dilutive effect of Westrock Series A Preferred Shares is calculated using the if-converted method, which assumes an add-back of any accretion on preferred shares to net income attributable to shareholders as if the securities were converted to common shares at the beginning of the reporting period (or at the time of issuance, if later), and the resulting common shares being included in the number of weighted-average units outstanding.

The dilutive effect of Westrock Series A Preferred Shares and the Convertible Notes is calculated using the if-converted method, which assumes an add-back of any accretion on preferred shares and interest expense associated with the Convertible Notes to net income attributable to shareholders as if the securities were converted to Common Shares at the beginning of the reporting period (or at the time of issuance, if later), and the resulting Common Shares being included in the number of weighted-average units outstanding.

The dilutive effect of time-based option awards and RSUs is calculated using the treasury stock method, while performance-based awards are treated as contingently issuable.

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Year Ended December 31,

Restricted stock

Restricted stock units

If-converted securities

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Effect of participating securities

Effect of non-participating securities

Net income (loss) attributable to common shareholders - diluted

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Weighted-average common shares outstanding - diluted

Dilutive loss per common share

Dilutive (loss) earnings per common share

Segment Information

Our two operating segments, Beverage Solutions and Sustainable Sourcing & Traceability, are evaluated using Adjusted EBITDA, which is a segment performance measure we define as net income determined in accordance with GAAP, before interest expense, provision for income taxes, depreciation and amortization, equity-based compensation expense and the impact, which may be recurring in nature, of transaction, restructuring and integrations costs, including management services and consulting agreements entered into in connection with the acquisition of S&D Coffee, Inc., impairment charges, changes in the fair value of warrant liabilities, non-cash mark-to-market adjustments, certain costs specifically excluded from the calculation of EBITDA under our material debt agreements, such as facility start-up costs, and other similar or infrequent items (although we may not have had such charges in the periods presented).

Selected financial data related to our segments is presented below for the periods indicated:

Our two operating segments, Beverage Solutions and Sustainable Sourcing & Traceability, are evaluated using Segment Adjusted EBITDA, which is a segment performance measure.

We define Segment Adjusted EBITDA as net (loss) income determined in accordance with GAAP, before interest expense, provision for income taxes, depreciation and amortization, equity-based compensation expense and the impact, which may be recurring in nature, of transaction, restructuring and integrations costs, including management services and consulting agreements entered into in connection with the acquisition of S&D Coffee, Inc., impairment charges, changes in the fair value of warrant liabilities, non-cash mark-to-market adjustments, certain non-capitalizable costs necessary to place the Conway extract and ready-to-drink facility into commercial production, certain recurring operating costs related to the scale-up of operations of the Conway extract and ready-to-drink facility, the write off of unamortized deferred financing costs, costs incurred as a result of the early repayment of debt, gains or losses on dispositions, and other similar or infrequent items (although we may not have had such charges in the periods presented).

The Company’s Chief Executive Officer, it’s chief operating decision maker (“CODM”), reviews Segment Adjusted EBITDA for the purpose of making operating decisions, assessing financial performance, and deciding how to allocate resources.

Segment Adjusted EBITDA is used by the CODM to review operating trends and to monitor budget-to-actual variances in order to make key operating decisions.

Selected financial data, including a reconciliation of total reportable segments’ Segment Adjusted EBITDA to loss before income taxes and equity in earnings from unconsolidated entities, is presented below for the periods indicated:

Year Ended December 31, 2024

Adjusted EBITDA

Net sales (1)

Segment Adjusted EBITDA

Interest expense

Income tax expense (benefit)

Depreciation and amortization

Transaction, restructuring and integration expense

Change in fair value of warrants

Management and consulting fees (S&D acquisition)

Change in fair value of warrant liabilities

Equity-based compensation

Conway extract and ready-to-drink facility start-up costs

Impairment charges

Conway extract and ready-to-drink facility pre-production costs

Conway extract and ready-to-drink facility scale up operating costs

Mark-to-market adjustments

Loss (gain) on disposal of property, plant and equipment

(Gain) loss on disposal of property, plant and equipment

Loss before income taxes and equity in earnings from unconsolidated entities

Capital expenditures

(1) Excludes $ 11.1 million of intersegment revenues that represent sales of green coffee from our SS&T segment to our Beverage Solutions segment.

Year Ended December 31, 2023

Adjusted EBITDA

Net sales (1)

Segment Adjusted EBITDA

Interest expense

Income tax expense (benefit)

Depreciation and amortization

Transaction, restructuring and integration expense

Change in fair value of warrants

Change in fair value of warrant liabilities

Management and consulting fees (S&D acquisition)

Equity-based compensation

Conway extract and ready-to-drink facility pre-production costs

Mark-to-market adjustments

Loss (gain) on disposal of property, plant and equipment

(Gain) loss on disposal of property, plant and equipment

Loss before income taxes and equity in earnings from unconsolidated entities

Capital expenditures

(1) Excludes $ 5.1 million of intersegment revenues that represent sales of green coffee from our SS&T segment to our Beverage Solutions segment.

Year Ended December 31, 2022

Adjusted EBITDA

Net sales (1)

Segment Adjusted EBITDA

Interest expense

Income tax expense (benefit)

Depreciation and amortization

Transaction, restructuring and integration expense

Change in fair value of warrant liabilities

Management and consulting fees (S&D acquisition)

1 unchanged sentence

Mark-to-market adjustments

Loss (gain) on disposal of property, plant and equipment

(Gain) loss on disposal of property, plant and equipment

Loss before income taxes and equity in earnings from unconsolidated entities

Capital expenditures

(1) Excludes $ 25.0 million of intersegment revenues that represent sales of green coffee from our SS&T segment to our Beverage Solutions segment.

Approximately 100 % of our long-lived assets were located in the United States as of December 31, 2024.

Significant segment expense for our reportable segments is presented below for the periods indicated:

Year ended December 31, 2024

Cost of sales

Employee related (1)

Information technology

Advertising & marketing

Professional fees

Corporate insurance

Other segment expense (2)

Segment Adjusted EBITDA

Year ended December 31, 2023

Cost of sales

Employee related (1)

Information technology

Advertising & marketing

Professional fees

Corporate insurance

Other segment expense (2)

Segment Adjusted EBITDA

Year ended December 31, 2022

Cost of sales

Employee related (1)

Information technology

Advertising & marketing

Professional fees

Corporate insurance

Other segment expense (2)

Segment Adjusted EBITDA

1 - Employee related costs are costs reported within selling, general and administrative expense in our Consolidated Statements of Operations, and include employee salaries, related taxes and benefits, short-term cash incentive compensation and travel and entertainment expenses.

2 – Other segment expense includes equipment and real estate rent, equipment parts, supplies and service expenses and other overhead expenses.

Commitments and Contingencies

8 unchanged sentences

Ford, and the estate of Jo Ellen Ford, who have or had ownership in the Company.

During 2022, Brown Brothers Harriman & Co., which is a holder of Westrock Series A Preferred Shares and participant of the August 2023 equity issuance, and prior to the Conversion was a holder of Westrock Series A and Series B Preferred Units, participated in Falcon’s working capital trade finance facility.

Brown Brothers Harriman & Co.

is a holder of Common Shares and Westrock Series A Preferred Shares and, prior to the Conversion, was a holder of Westrock Series A and Series B Preferred Units.

Furthermore, during 2022, Brown Brothers Harriman & Co.

participated in Falcon’s working capital trade finance facility.

As such, these persons and entities are deemed related parties.

In February 2024, the Company sold and issued Convertible Notes to Westrock Group, LLC (an affiliate of Scott Ford, the Company’s Chief Executive Officer and a member of the board of directors of the Company, “Westrock Group”), Wooster Capital, LLC (an affiliate of Joe Ford, chairman of the board of directors) and HF Direct Investments Pool, LLC (a holder of more than 10 % of the outstanding Common Shares), each a related party.

The Consolidated Financial Statements reflect the following transactions with related parties:

December 31, 2024

December 31, 2023

Accrued expenses and other current liabilities

Westrock Group

Wooster Capital

HF Direct Investment Pool, LLC

December 31, 2024

December 31, 2023

Convertible notes payable - related party, net:

Westrock Group

Wooster Capital

HF Direct Investment Pool, LLC

Unamortized debt costs

Year Ended December 31,

Interest expense:

Brown Brothers Harriman

Westrock Group

Wooster Capital

HF Direct Investment Pool, LLC

Brown Brothers Harriman

Jo Ellen Ford

Westrock Finance, LLC

In connection with the acquisition of S&D Coffee, Inc.

in February 2020, the Company entered into a Management Services Agreement with Westrock Group, LLC (“Westrock Group”), whose controlling manager and controlling member, Greenbrier Holdings, LLC, is owned and controlled by our co-founder and Chief Executive Officer Scott Ford.

in February 2020, the Company entered into a Management Services Agreement with Westrock Group, whose controlling manager and controlling member, Greenbrier Holdings, LLC, is owned and controlled by our co-founder and Chief Executive Officer Scott Ford.

Under the terms of the agreement, which expired in February 2023, Westrock Group was paid $ 10.0 million in return for financial, managerial, operational, and strategic services.

The associated expense is recorded within selling, general and administrative expense in our Consolidated Statements of Operations.

During each year ended December 31, 2023, 2022 and 2021, the Company recognized $ 0.6 million, $ 3.3 million and $ 3.3 million, respectively, of such expenses.

The Company recognized no such expenses during the year ended December 31, 2024.

For the years ended December 31, 2023 and 2022, the Company recognized $ 0.6 million and $ 3.3 million, respectively, of such expenses.

In addition, the Company reimburses Westrock Group for the usage of a corporate aircraft, and its portion of shared administrative expense.

2 unchanged sentences

Subsequent Events

On January 8, 2024, the Company borrowed $ 50.0 million under the Delayed Draw Term Loan Facility, using a portion of the proceeds to repay outstanding borrowings under the Revolving Credit Facility.

On February 15, 2024, the Company sold and issued in a private placement $ 72.0 million in aggregate principal amount of 5.00 % convertible senior notes due 2029 (the “Convertible Notes”).

The Convertible Notes will be unsecured and senior obligations of the Company and will accrue interest at a rate of 5.00 % per annum.

Pursuant to the terms of the Convertible Notes, noteholders may convert their Convertible Notes at their option only in the following circumstances:

(ii) during the period commencing on August 15, 2028, and prior to the close of business on the second scheduled trading day immediately preceding February 15, 2029, at any time;

The Company will settle conversions by paying or delivering, as applicable, at the Company’s election, cash, Common Shares, or a combination of cash and Common Shares.

The conversion price and conversion rate are subject to customary adjustments.

The Convertible Notes do not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries.

The Convertible Notes contain customary terms regarding events of default.

If any event of default (other than certain events of bankruptcy, insolvency or reorganization involving the Company) occurs and is continuing, then each noteholder may, by written notice to the Company, declare the principal amount of, and all accrued and unpaid interest on, such noteholder’s Convertible Notes to become due and payable immediately.

If an event of default involving certain events

of bankruptcy, insolvency or reorganization occurs, then the principal amount of, and all accrued and unpaid interest on, all of the Convertible Notes then outstanding will immediately become due and payable without any further action or notice by any person.

The purchasers of the Convertible Notes are Westrock Group, LLC (a holder of more than 5 % of the outstanding Common Shares and an affiliate of Scott Ford, the Company’s Chief Executive Officer and a member of the board of directors of the Company), Wooster Capital, LLC (an affiliate of Joe Ford, chairman of the board of directors), an affiliate of The Stephens Group, LLC (a holder of more than 5 % of the outstanding Common Shares), an affiliate of Sowell Westrock, L.P.

(a holder of more than 5 % of the outstanding Common Shares), HF Direct Investments Pool, LLC (a holder of more than 10 % of the outstanding Common Shares), an affiliate of the Herbert Hunt family and an individual investor.

The offer and sale of the Convertible Notes was authorized and approved unanimously by the Audit & Finance Committee of the board of directors in accordance with the Company’s Related Party Transactions Policy.

On February 15, 2024, Westrock Beverage Solutions, LLC, a Delaware limited liability company and wholly-owned subsidiary of the Company (the “Borrower”), entered into Amendment No.

3 (the “Third Amendment”) to the Credit Agreement.

The Third Amendment modified the existing covenant relief period (the “Covenant Relief Period”), which commenced on June 30, 2023 and will end on the earlier to occur of (i) April 1, 2026 and (ii) any date following June 30, 2024, on which the borrower elects to terminate the Covenant Relief Period subject to satisfaction of certain conditions.

During the Covenant Relief Period, the Company’s ability to incur additional indebtedness and make investments, restricted payments and junior debt restricted payments will be more limited.

The Third Amendment permits the Company to issue convertible notes, including the Convertible Notes.

During the Covenant Relief Period, the Applicable Margin for any term SOFR rate loan will range from 3.00 % to 4.00 % and for any ABR loan will range from 2.00 % to 3.00 %, in each case depending on the secured net leverage ratio.

After the Covenant Relief Period, the Applicable Margin for any term SOFR rate loan will range from 2.00 % to 3.00 % and for any ABR loan will range from 1.00 % to 2.00 % , in each case depending on the secured net leverage ratio.

The Credit Agreement, as amended, requires the Borrower to maintain compliance with (i) a secured net leverage ratio at levels ranging from 4.50 :1.00 to 6.25 :1.00 and stepping down to 4.50 :1.00 by April 2026 and (ii) an interest coverage ratio of at least 1.50 :1.00 on and prior to September 30, 2025 and at least 2.00 :1.00 on December 31, 2025 and thereafter.

The Credit Agreement, as amended, also includes (i) a minimum liquidity covenant requiring the Borrower not to permit its liquidity, measured as of the last business day of each calendar month commencing March 29, 2024, to be less than $ 15 million and (ii) an anti-cash hoarding covenant, which shall be effective only during the Covenant Relief Period, requiring the Borrower to have no more than $ 20 million of unrestricted cash on the last day of each calendar month when revolving loans or letters of credit are outstanding or on the date of borrowing of a revolving loan.

On January 15, 2025, the Company, entered into an Incremental Assumption Agreement and Amendment No.

4 (the “Fourth Amendment”) to the Credit Agreement.

The Fourth Amendment expanded the syndicate to include member banks from the Farm Credit System and increased the amount of revolving facility commitments (the “Existing Revolving Facility Commitments”, and any loans thereunder, the “Existing Revolving Loans”) available to the Borrower under the Credit Agreement by $ 25.0 million (the “Incremental Revolving Facility Commitments” and any loans thereunder, the “Incremental Revolving Loans”).

The amount of revolving facility commitments available to the Borrower under the Credit Agreement, as amended, is $ 200.0 million.

The Incremental Revolving Facility Commitments and the Incremental Revolving Loans are subject to the same interest rates, commitment fees, maturity dates and other terms as the Existing Revolving Facility Commitments and the Existing Revolving Loans.

The proceeds from any Incremental Revolving Loans will be used by the Company to fund the previously announced installation of a second ready-to-drink can line at the Company’s extract and ready-to-drink manufacturing facility in Conway, Arkansas, and for general corporate purposes.

The Fourth Amendment also modified the secured net leverage ratio that the Company must comply with during the Covenant Relief Period to increase the maximum secured net leverage ratio to (a) 6.00 x for the test period ending June 30, 2025, (b) 5.50 x for the test period ending September 30, 2025, and (c) 5.25 x for the test period ending December 31, 2025.

In addition, the minimum liquidity covenant will not apply after the Covenant Relief Period ends.

As of the date of this Annual Report on Form 10-K, the Company was in compliance with its financial covenants.

On March 7, 2025, Falcon renewed its working capital trade finance facility with multiple institutions.

The facility size was reduced from $ 70.0 million to $ 55.0 million and remains uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility.

The facility size was increased from $ 75.0 million to $ 85.0 million and remains uncommitted and repayable on demand, with certain of Falcon’s assets pledged as collateral against the facility.

The facility will mature one year from inception.

Borrowings under the facility will bear interest at the borrower’s option at a rate equal to (a) Term SOFR plus a margin of 4.00 % plus a liquidity premium set by the lender at the time of borrowing or (b) the Base Rate (determined by reference to the greatest of (i) the Prime Rate, as defined in the facility, at such time, (ii) one-half of 1.00% in excess of the Federal Funds Effective Rate, as defined in the facility, at such time, and (iii) Term SOFR for a one-month tenor in effect at such time plus 1.00 %).

Funds Effective Rate, as defined in the facility, at such time, and (iii) Term SOFR for a one-month tenor in effect at such time plus 1.00 %).

Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data