Sometimes, when you watch “Shark Tank,” you see the investors on the panel pass on an offer because they see what’s being offered as a product not a brand.
Just having a single successful product has not hindered many brands. You could argue that GoPro is a one-trick pony and that Crocs essentially only sells one variation of the same thing.
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Before it merged with Dr. Pepper to become Keurig Dr. Pepper (KDP) basically just sold K-Cup coffee machines and pods. It tried a cold variation of that in partnership with Coca-Cola, which failed, leaving it a single-product company (albeit with many versions of that product.
Instant Pot maker Instant Brands filed for bankruptcy when sales of its signature cooking device slowed.
You might have a very hot product, but if you can’t follow it up with something else to diversify your product line, it’s very hard to survive.
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Of course, few companies sell just one item. Most have made an effort to expand their product base, but when those fail, they’re a drain on cash as well.
Now, the makers of a very successful product that they have built a company around have warned that it could default on its bills and have to file for Chapter 11 bankruptcy.
Image source: Shutterstock
Solo Brands was built on a simple product
Solo Brands (DTC)  is best known for its Solo Stove product, a very simple camping stove.
The brand operates under a very simple model. Â
“We design simple, ingenious outdoor products to help you create good moments that become lasting memories,” the company shared on its website.
The company was founded by Canadian-born brothers, Spencer and Jeff Jan, who wanted to get back to doing the things they loved: spending time together and being outdoors.Â
“Making it happen wasn’t fast or easy but after two years and dozens of ideas, Solo Stove was founded in Jeff’s garage in 2010 as an e-commerce, outdoor brand. Our first product, the original Solo Stove Lite camp stove, was designed primarily for backpackers who appreciated an ultra-lightweight stove that required no more than sticks and leaves for fuel (easily found when hiking) and would boil water in under 10 minutes,” according to the website.
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That product line later expanded, but in the same space.
“Within a couple of years, passionate ‘super-fans’ emerged with feedback that we should design slightly larger stoves for day hiking and car camping. We listened. The Titan and Campfire stoves entered the market,” it posted. “…In 2016, we announced plans to release Bonfire, a portable, nearly smokeless, incredibly efficient wood-burning fire pit. Bonfire was born in 2017 and so was the perfect backyard camping experience.”
Those products were successful. The company went public, and the brothers sold out their interests. But the company itself didn’t have enough stuff to sell on a repeat basis that could sustain the company.Â
Solo Brands is running out of cash
Solo Brands reported that it lost $113.4 million during the year that ended December 31, 2024 and had an accumulated deficit of $228.8 million.Â
“We had cash and cash equivalents of $12 million and total debt outstanding of $150.7 million as of December 31, 2024. In addition, subsequent to December 31, 2024, we drew an additional $277.3 million on our Revolving Credit Facility (as defined herein), which matures on May 12, 2026,” the company shared in a filing with the SEC.
As of December 31, 2024, Solo Brands was in compliance with the financial and operational covenants under the credit agreement governing its Revolving Credit Facility, “however, due primarily to uncertainty in our business and our expected levels of indebtedness, without the application of successful mitigating strategies, we expect to experience difficulty remaining in compliance with the quarterly financial covenants,” it shared.Â
That could result in a bankruptcy filing.
“Failure to satisfy either the interest coverage ratio or total net leverage ratio is an event of default under the credit agreement. If an event of default occurs, the lenders could elect to declare all amounts outstanding under the credit facility immediately due and payable and exercise other remedies as set forth in the credit agreement. In such case, we may need to liquidate or seek protection from creditors under Chapter 11 of the U.S. Bankruptcy Code,” it added.
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That, Solo Brands shared “would materially harm our business, financial condition, and results of operations and could cause our stockholders to lose all or part of their investment,” according to the 10-K.
Solo Brands received a non-compliance order from the New York Stock Exchange since its stock had been trading at less than $1 per share over a 30-day trading period. It has six months to comply or risk being delisted from the exchange.
