11. COMMITMENTS AND CONTINGENCIES

Litigation

From time to time, the Company may become involved in various litigation and administrative proceedings relating to claims arising from its operations in the normal course of business. Management believes that the ultimate resolution of any such ordinary-course matter will not have a material adverse effect on the financial position or results of operations of the Company.

On May 4, 2026, a putative class action lawsuit was filed against the GrabAGun LLC in Pennsylvania state court. On May 26, 2026, the GrabAGun LLC removed the case to federal court. The case is styled Justin Popowicz, individually and on behalf of all others similarly situated, vs. Metroplex Trading Company LLC (n/k/a GrabAGun LLC), Case No. 2:26-cv-03564-GAM in the United States District Court for the Eastern District of Pennsylvania. Plaintiff asserts claims on behalf of several thousand Pennsylvania residents who purchased products from GrabAGun LLC’s website, alleging that the Company’s collection and use of its customers’ personal data violates the Pennsylvania Wiretapping Act and the Uniform Firearms Act. Plaintiff seeks unspecified actual damages, statutory damages of not less than $1,000 per violation, punitive damages, and attorneys’ fees. On July 2, 2026, GrabAGun LLC filed a motion to dismiss for lack of personal jurisdiction, improper venue, and failure to state a claim, as well as an alternative motion to transfer the case to a federal district court in Texas, both of which remain pending. GrabAGun LLC believes that it has substantial defenses to the plaintiff’s claims, and it intends to vigorously defend itself against the plaintiff’s allegations. The Company does not believe at this time that a loss is probable in this matter, nor can a range of possible losses be determined. Accordingly, no accrual or range of loss has been included in the accompanying condensed consolidated financial statements.

On June 9, 2026, ABC IP, LLC, Rare Breed Triggers, Inc., and RBTM LLC (collectively, the “Plaintiffs”) filed a complaint against GrabAGun LLC in the United States District Court for the Northern District of Texas (No. 3:26-cv-01903). The action was subsequently transferred to the United States District Court for the Eastern District of Texas and centralized for coordinated pretrial proceedings in a multidistrict litigation proceeding captioned In re Rare Breed Triggers Patent Litigation, MDL No. 3176 (No. 4:26-md-03176-ALM), in which GrabAGun LLC’s matter is pending as No. 4:26-cv-00810. In their complaint, the Plaintiffs allege that GrabAGun LLC directly, contributorily, and by inducement infringed eight United States patents relating to forced-reset trigger technology through the alleged making, using, selling, and/or offering for sale of the “Atrius Development 3 Position Forced Reset Selector” and the “(3-Position) Partisan Disruptor” products. The Plaintiffs also allege federal and common-law trademark infringement, false designation of origin, and unfair competition arising from the alleged use of their FRT marks. The Plaintiffs seek preliminary and permanent injunctive relief, unspecified monetary damages (including alleged lost profits or a reasonable royalty), enhanced damages based on allegations of willful infringement, disgorgement of profits and other monetary relief in connection with the trademark claims, and attorneys’ fees and costs. The complaint does not specify the amount of monetary damages sought. The matter is at an early stage. GrabAGun LLC intends to defend against the claims vigorously. Because the litigation has only recently commenced and involves unresolved factual and legal issues, the Company cannot at this time predict the outcome or reasonably estimate the amount or range of any potential loss. Accordingly, no accrual or range of loss has been included in the accompanying condensed consolidated financial statements.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred, and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

In April 2021, the Company entered into a transaction advisory service agreement to facilitate potential corporate transactions, including mergers, acquisitions, and restructurings. Under the agreement, the Company is obligated to pay the advisor a tiered fee based on the transaction value, ranging from 2% to 5%, with a minimum fee of $1.5 million. The terms of the transaction fee were renegotiated in January 2025, in anticipation of the Business Combination with Colombier. Under the terms of the amended agreement, the Company committed to pay a fixed fee of $2.5 million to the advisor upon consummation of the transaction. This fee was settled as part of transaction costs and advisory fees paid at the closing of the Business Combination as described in Note 4.