Aterian, Inc.
For the period ended Jun 30, 2026. Filed Aug 14, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 14, 2026
ATER$0.85+0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-15.
0001437749-26-017437
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-14.
0001437749-26-028004
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 93 previous paragraphs and 114 current paragraphs.
40 unchanged; 28 reworded; 38 added; 24 removed; 1 previous and 8 current paragraphs rearranged.
Tables are not compared: 17 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (38)
Current report
During the three months ended June 30, 2026, the Company received $2.7 million from the U.S. Customs and Border Protection related to previously paid import duties, consisting of $2.6 million in duty refunds and $0.1 million in associated interest income. Of the duty refunds, $2.3 million was recorded as a reduction to cost of goods sold within Income (loss) from discontinued operations for inventory that had previously been sold, and $0.3 million was recorded as a reduction to the carrying value of inventory included within assets held for sale on the Condensed Consolidated Balance Sheet for unsold goods remaining on hand at June 30, 2026. The $0.1 million of interest was recorded within interest income on the Condensed Consolidated Statements of Operations.
Current report
Cost of goods sold decreased $41 thousand, or 87.7%, during the three months ended June 30, 2026 to $6 thousand, compared to $47 thousand for the three months ended June 30, 2025, primarily from reduced sales volumes.
Current report
Sales and distribution expenses decreased to $0.2 million for the three months ended June 30, 2026, from $1.0 million for the three months ended June 30, 2025. This decrease is primarily attributable to lower restructuring costs of $0.8 million.
Current report
The decrease in interest expense, net of $49 thousand is primarily relating to an increase in interest income of $110 thousand relating to tariff refunds received during the three months ending June 30, 2026, partially offset by an increase in interest expense of $61 thousand.
Current report
Gain on extinguishment of debt
Current report
During the three months ended June 30, 2026, the Company settled its seller note payable and recognized a gain on extinguishment of debt of approximately $0.3 million.
Current report
Comparison of the Six Months Ended June 30, 2026 and 2025
Current report
Net revenue decreased $0.1 million, or 83.4%, during the six months ended June 30, 2026 to $25 thousand, compared to $0.2 million for the six months ended June 30, 2025. The decrease in net revenue was primarily attributable to reduction in consumer demand due to the macroeconomic environment.
Current report
Cost of goods sold decreased $46 thousand, or 76.7%, during the six months ended June 30, 2026 to $14 thousand, compared to $60 thousand for the six months ended June 30, 2025, primarily from reduced sales volumes.
Current report
Gross profit decreased to 44.0% for the six months ended June 30, 2026 from 60.3% for the six months ended June 30, 2025. The decrease in gross profit was due primarily to product mix.
Current report
Sales and distribution expenses decreased to $0.5 million for the six months ended June 30, 2026, from $1.1 million for the six months ended June 30, 2025. This decrease is primarily attributable to lower restructuring costs of $0.6 million.
Current report
The increase in general and administrative expenses was primarily the result of an increase of $2.4 million in professional fees, and an increase of $0.1 million in stock-compensation expense, partially offset by a decrease in restructuring costs of $0.8 million, a decrease of $0.8 million in miscellaneous expenses, and a decrease of $0.1 million in headcount expense.
Current report
Interest expense, net
Current report
Interest expense, net was relatively flat for the six months ended June 30, 2026 and June 30, 2025.
Current report
Gain on extinguishment of debt
Current report
During the three months ended June 30, 2026, the Company settled its seller note payable and recognized a gain on extinguishment of debt of approximately $0.3 million.
Current report
Net revenue decreased $6.1 million, or 31.4%, during the three months ended June 30, 2026 to $13.3 million, compared to $19.4 million for the three months ended June 30, 2025. The decrease in net revenue was primarily attributable to the macroeconomic environment resulting in reduced consumer demand.
Current report
Cost of goods sold decreased $5.8 million, or 65.9%, during the three months ended June 30, 2026 to $3.0 million, compared to $8.8 million for the three months ended June 30, 2025, primarily from reduced sales volumes and tariff refunds of $2.3 million that were received during the three months ended June 30, 2026.
Current report
Comparison of the Six Months Ended June 30, 2026 and 2025
Current report
Net revenue decreased $9 million, or 25.8%, during the six months ended June 30, 2026 to $25.7 million, compared to $34.7 million for the six months ended June 30, 2025. The decrease in net revenue was primarily attributable to the macroeconomic environment resulting in reduced consumer demand.
Current report
Cost of goods sold decreased $7.3 million, or 49.6%, during the six months ended June 30, 2026 to $7.5 million, compared to $14.8 million for the six months ended June 30, 2025, primarily from reduced sales volumes and tariff refunds of $2.3 million that were received during the six months ended June 30, 2026.
Current report
Gross profit increased to 71.0% for the six months ended June 30, 2026 from 57.4% for the six months ended June 30, 2025. The increase in gross profit was due primarily to product mix and tariff refunds of $2.3 million that were received during the six months ended June 30, 2026.
Current report
As a percentage of net revenue, sales and distribution expenses decreased to 54.0% for the six months ended June 30, 2026, from 60.4% for the six months ended June 30, 2025. E-commerce platform commissions, online advertising, selling and logistics expenses included within sales and distribution expenses, as a percentage of net revenue, increased to 44.7% for the six months ended June 30, 2026, from 47.0% for the six months ended June 30, 2025.
Current report
On July 17, 2026, the Company completed the sale of substantially all of its assets to Trademark Global, pursuant to the Asset Purchase Agreement, dated as of April 27, 2026 (the “Asset Purchase Agreement” and together with the Securities Purchase Agreement, the “Aterian Transactions”). Pursuant to the Asset Purchase Agreement, Trademark Global acquired certain specified assets and liabilities of the Company, including, among other things, assets associated with the Company’s marquee consumer brands: Mueller Living, PurSteam, hOmeLabs, Squatty Potty, Healing Solutions, and Photo Paper Direct for $18.0 million in cash, subject to certain purchase price adjustments.
Current report
Net Cash Provided by (Used in) Operating Activities
Current report
For the six months ended June 30, 2025, net cash used in investing activities was $6 thousand, primarily related to the purchase of laptops during the six months ended June 30, 2025.
Current report
Since inception, the Company has incurred significant losses and used cash flows from operations to fund its enterprise. To preserve liquidity, management implemented fixed cost reduction plans in May 2025 and January 2026. However, these actions were insufficient to fully offset macroeconomic pressures, such as tariffs, geopolitical instabilities, rising costs for raw materials and shipping, higher marketplace fees, and reduced consumer spending, which continued to negatively impact operating results and cash flows.
Current report
On June 25, 2026, in connection with the Asset Sale to Trademark Global, LLC and the Securities Purchase Agreement with David E. Lazar, the Board of Directors of the Company conditionally declared a dividend in the form of contingent value rights. The contingent value rights were declared to record holders as of the close of business on July 8, 2026, comprising holders of the Company’s common stock, par value $0.0001 per share, and holders of certain unexercised participating warrants to purchase common stock. Each eligible holder is entitled to receive one contingent value right for each share of common stock held or issuable upon exercise of participating warrants as of the record date. Shares of Series AA and Series AAA Convertible Non-Redeemable Preferred Stock are expressly excluded from participating in the distribution. Because the payment of the dividend remained subject to unfulfilled conditions precedent, including stockholder approval and the closing of the transactions, and remained subject to revocation by the Board as of June 30, 2026, no liability or reduction of equity was recognized in the condensed consolidated financial statements for the period ended June 30, 2026.
Current report
On July 17, 2026, following the receipt of stockholder approval at a special meeting of stockholders, the Company completed both the Asset Sale to Trademark Global, LLC and the Stock Sale to Lazar. Upon the closing of the Stock Sale, Lazar became the beneficial owner of approximately 95.8% of the Company's issued and outstanding voting securities, constituting a change in control, and was appointed as Chief Executive Officer. Concurrently, all outstanding indebtedness under the Credit and Security Agreement with MidCap Funding IV Trust was repaid in full, all commitments thereunder were terminated, and all associated guarantees and liens were released.
Current report
On July 17, 2026, following approval by the Company's stockholders at a special meeting, the Company completed the Asset Sale to Trademark Global for $18.0 million in cash, subject to purchase price adjustments, and completed the issuance and sale of 1,750,000 shares of Series AAA Convertible Non-Redeemable Preferred Stock to Lazar for aggregate proceeds of $3.5 million. In connection with the closing of these transactions, the Company entered into a Contingent Value Rights Agreement with Broadridge Corporate Issuer Solutions, LLC, as Rights Agent, on July 17, 2026. Each contingent value right represents a non-transferable contractual right to receive pro rata cash distributions derived from specified future proceeds, including net proceeds from the Asset Sale after satisfaction of certain indebtedness and transaction costs, setting aside $1.0 million for ongoing operational expenses, and establishing up to $6.0 million in reserves for specified liabilities. Additional potential proceeds include any remaining amounts from the specified liability reserves upon full satisfaction of such liabilities, net proceeds from future sales of remaining legacy assets and inventory not acquired by Trademark Global, and net proceeds from tax or tariff refunds, drawbacks, customs claims, or released restricted cash and escrow amounts held prior to closing.
Current report
The Board established August 17, 2026 as the distribution date of the contingent value rights to record holders. Upon the closing of the transactions on July 17, 2026, the condition precedent was satisfied. Consequently, the contingent value right obligation will be measured at fair value as of the effective date in the third quarter of 2026 and recognized as a distribution from equity, within retained earnings or additional paid-in capital, with a corresponding contingent value right liability or equity instrument as evaluated under ASC 480 and ASC 815. The contingent value rights represent contractual payment rights only, do not carry voting or dividend rights, accrue no interest, and do not represent equity ownership in the Company.
Current report
Following the consummation of the Aterian Transactions, the Company will continue to operate its remaining legacy brands, primarily Vremi and Xtava. Management intends to utilize remaining net proceeds to support working capital for these ongoing business segments.
Current report
While the completion of the Aterian Transactions eliminated senior debt obligations and provided immediate capital, the Company's retained legacy business operations remain limited in scale. The ongoing macroeconomic challenges, potential operational cash burn associated with scaling the remaining brands, and execution risks regarding the streamlined growth strategy continue to create uncertainty regarding future cash flows.
Current report
On May 19, 2026, Nasdaq notified the Company in the Compliance Notice that from May 1, 2026 to May 18, 2026 the closing bid price of the Company’s common stock had been $1.00 per share or greater and, accordingly, the Company had regained compliance with Nasdaq Listing Rule 5550(a)(2) and that the matter was now closed.
Current report
As of June 30, 2026, there was no outstanding principal balance under the Existing Credit Agreement. As of June 30, 2026, the Company had an overpayment balance of $0.4 million due from the lender, as well as unamortized deferred financing costs of $0.1 million, both of which are included within Prepaid Expenses and Other Current Assets on the Condensed Consolidated Balance Sheet.
Current report
On July 17, 2026, in connection with the closing of the Asset Sale and the Preferred Stock Sale, all outstanding indebtedness under the Existing Credit Agreement was repaid in full and all commitments thereunder were terminated. Additionally, all guarantees and liens securing the indebtedness under the Existing Credit Agreement were fully discharged and released.
Current report
**Seller Notes—**During the three months ended June 30, 2026, the Company fully settled its outstanding Seller Notes in exchange for a cash payment of $0.1 million, resulting in a gain on extinguishment of debt of $0.3 million in the Condensed Consolidated Statements of Operations.
Current report
On July 17, 2026, the Company completed the sale of substantially all of its assets to Trademark Global, pursuant to the Asset Purchase Agreement, dated as of April 27, 2026. Pursuant to the Asset Purchase Agreement, Trademark Global acquired certain specified assets and liabilities of the Company, including, among other things, assets associated with the Company’s marquee consumer brands: Mueller Living, PurSteam, hOmeLabs, Squatty Potty, Healing Solutions, and Photo Paper Direct for $18.0 million in cash, subject to certain purchase price adjustments.
Removed paragraphs (24)
Previous report
Net Revenue
Previous report
Cost of Goods Sold and Gross Profit
Previous report
Cost of goods sold decreased $5 thousand, or 40.2%, during the three months ended March 31, 2026 to $8 thousand, compared to $13 thousand for the three months ended March 31, 2025, primarily from reduced sales volumes.
Previous report
Sales and Distribution Expenses
Previous report
Sales and distribution expenses increased to $0.3 million for the three months ended March 31, 2026, from $37 thousand for the three months ended March 31, 2025. This increase is primarily attributable to severance relating to our January 2026 workforce reduction of $0.3 million.
Previous report
General and Administrative Expenses
Previous report
The increase in interest expense, net of $0.1 million is primarily relating to** **amortized fees of $69 thousand associated with the March 2026 amendment to lower the liquidity covenant and a decrease in interest income of $38 thousand partially offset by lower borrowings in the current period.
Previous report
Net Revenue
Previous report
Net revenue decreased $2.9 million, or 18.8%, during the three months ended March 31, 2026 to $12.4 million, compared to $15.3 million for the three months ended March 31, 2025. The decrease in net revenue was primarily attributable to the newly implemented tariffs which increased our cost of goods sold, prompting us to raise prices to mitigate the impact. These pricing actions, combined with the broader challenging macroeconomic environment, led to a reduction in unit volume as consumer demand softened at elevated price levels.
Previous report
Cost of Goods Sold and Gross Profit
Previous report
Cost of goods sold decreased $1.5 million, or 25.1%, during the three months ended March 31, 2026 to $4.4 million, compared to $5.9 million for the three months ended March 31, 2025, primarily from reduced sales volumes.
Previous report
Sales and Distribution Expenses
Previous report
General and Administrative Expenses
Previous report
For the three months ended March 31, 2025, no cash was used in investing activities.
Previous report
Upon the closing of these transactions, Mr. Lazar will hold approximately 95.13% of the Company’s fully diluted share capitalization. Management intends to utilize the proceeds from these transactions to satisfy existing debt obligations and provide working capital for our core ongoing business segments, which include the Vremi and Xtava brands. Following the change in control, the Company intends to leverage its retained assets and operational infrastructure to pursue a streamlined growth strategy.
Previous report
Management’s plan to alleviate substantial doubt is centered on the consummation of the Aterian Transactions. If the Company is unable to obtain stockholder approval, or if the transactions otherwise fail to close, management may be required to implement alternative strategies. These may include seeking other strategic buyers, attempting to secure alternative high-cost financing, or a further drastic reduction in our operating footprint.
Previous report
Furthermore, if the transactions are terminated under certain circumstances, the Company may be required to pay a termination fee of $1.1 million and reimburse expenses up to $0.6 million, which would further adversely impact our liquidity.
Previous report
The Bid Price Notice has no immediate effect on the continued listing status of the Common Stock on The Nasdaq Capital Market, and, therefore, the Company's listing remains fully effective.
Previous report
The Company is provided a compliance period of 180 calendar days from the date of the Bid Price Notice, or until June 8, 2026, to regain compliance with the minimum closing bid requirement, pursuant to Nasdaq Listing Rule 5810(c)(3)(A). If at any time before June 8, 2026, the closing bid price of the Common Stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, subject to Nasdaq’s discretion to extend this period pursuant to Nasdaq Listing Rule 5810(c)(3)(H) to 20 consecutive business days, Nasdaq will provide written notification that the Company has achieved compliance with the minimum bid price requirement, and the matter would be resolved. If the Company does not regain compliance during the compliance period ending June 8, 2026, then Nasdaq may grant the Company a second 180 calendar day period to regain compliance, provided the Company meets the continued listing requirement for market value of publicly-held shares and all other initial listing standards for The Nasdaq Capital Market, other than the minimum closing bid price requirement, and notifies Nasdaq of its intent to cure the deficiency during the second compliance period.
Previous report
The Company will continue to monitor the closing bid price of its Common Stock and seek to regain compliance with all applicable Nasdaq requirements within the allotted compliance periods. If the Company does not regain compliance within the allotted compliance periods, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Common Stock will be subject to delisting. The Company would then be entitled to appeal that determination to a Nasdaq hearings panel. There can be no assurance that the Company will regain compliance with the minimum bid price requirement during the 180-day compliance period, secure a second period of 180 days to regain compliance or maintain compliance with the other Nasdaq listing requirements.
Previous report
As of the date of this filing, the Company has not yet received formal written confirmation from Nasdaq that it has regained compliance, as the closing bid price of the Company’s common stock has been at or above $1.00 per share for 10 consecutive business days, ending on May 14, 2026.
Previous report
The outstanding balance on the MidCap credit facility as of March 31, 2026 and December 31, 2025 was $2.5 million and $4.3 million, respectively. The Company had $1.1 million availability on the Midcap credit facility as of March 31, 2026. We are in compliance with the financial covenants contained within the Credit Agreement as of March 31, 2026.
Previous report
We continue to closely monitor actual results versus expectations as well as whether and to what extent any significant changes in current events or conditions result in corresponding changes to our expectations about future estimated cash flows. If our adjusted expectations of the operating results do not materialize, we may be required to record intangible impairment charges, which may be material.
Previous report
While we believe our conclusions regarding the estimates of recoverability of our asset groupings are appropriate, these estimates are subject to uncertainty and by nature include judgments and estimates regarding various factors. These factors include the rate and extent of growth in the markets that our asset groups serve, the realization of future sales price and volume increases, fluctuations in exchange rates, fluctuations in price and availability of key raw materials, fluctuations in discount rate, future operating efficiencies, and strategic alternative processes.
Reworded paragraphs (28)
Previous wording
During 2025, the U.S. government announced a series of new tariff policies affecting imports from several countries, including China. While these actions impact a range of global trade flows, the new tariffs targeting imports from China are the most significant for our business. As a result of these tariffs, we experienced an increase in our cost of goods sold during the year ended December 31, 2025 and the quarter ended March 31, 2026. In response, we implemented targeted price increases across affected product categories to partially offset the higher input costs. These pricing actions, however, contributed to a decline in unit volumes as consumer demand responded to the higher retail prices. We have implemented a range of mitigation strategies to address the impact of these tariffs on our supply chain and margins. These efforts include diversifying sourcing outside of China, renegotiating supplier terms, redesigning certain products to reduce tariff exposure, and implementing selective price increases where appropriate. We continue to evaluate additional structural and operational measures to further reduce tariff-related exposure.
Current wording
During 2025 and early 2026, the U.S. government announced and implemented a series of expanded tariff policies affecting imports from several countries, including China. While these actions impact a range of global trade flows, tariffs targeting imports from China have had the most material impact on our supply chain and operating costs. As a result, we experienced an increase in our cost of goods sold during the year ended December 31, 2025, and the three months ended March 31, 2026. In response, we implemented targeted price increases across affected product categories to partially offset higher input costs. These pricing actions, however, contributed to a decline in unit volumes as consumer demand responded to higher retail prices.
Previous wording
On April 27, 2026, the Company entered into a series of definitive agreements (collectively, the “Aterian Transactions”) to fundamentally restructure its operations and capital position. The Company entered into a definitive Asset Purchase Agreement (the “Asset Purchase Agreement”) with Trademark Global, LLC (“Trademark Global”), marking a significant strategic shift in our business model. Pursuant to this agreement, Trademark Global will acquire substantially all assets and certain liabilities associated with our marquee brands—Mueller Living, PurSteam, hOmeLabs, Squatty Potty, Healing Solutions, and Photo Paper Direct—for $18 million in cash, subject to customary adjustments (the “Asset Sale”).
Current wording
On April 27, 2026, the Company entered into a series of definitive agreements to fundamentally restructure its operations and capital position. On July 17, 2026, following stockholder approval, the Company completed the sale of specified assets and liabilities associated with its marquee consumer brands—including Mueller Living, PurSteam, hOmeLabs, Squatty Potty, Healing Solutions, and Photo Paper Direct to Trademark Global, LLC ("Trademark Global") for $18.0 million in cash, subject to customary post-closing adjustments (the "Asset Sale").
Previous wording
As these marquee brands represent a major portion of the Company’s historical operations and strategic direction, the results of these brands have been classified as discontinued operations in the consolidated financial statements for all periods presented. Following the closing of the Asset Sale, the Company expects to continue operating its remaining legacy brands, including Vremi and Xtava.
Current wording
Because these marquee brands represented a strategic shift and comprised a major portion of the Company’s historical operations, the financial results of these brands have been classified as discontinued operations in the Condensed Consolidated Financial Statements for all periods presented. Following the closing of the Asset Sale, the Company expects to continue operating its remaining retained legacy brands, including Vremi and Xtava.
Previous wording
In conjunction with the Asset Sale, the Company also entered into a Securities Purchase Agreement with David E. Lazar for the issuance of Series AA and Series AAA Preferred Stock for aggregate gross proceeds of $7.0 million. This capital infusion, combined with the proceeds from the Asset Sale, is intended to restructure the Company’s balance sheet.
Current wording
Concurrently with the Asset Sale, on July 17, 2026, the Company completed the final closing under a Securities Purchase Agreement, dated April 27, 2026 (the “Securities Purchase Agreement”), with David E. Lazar for the issuance and sale of Series AA Convertible Non-Redeemable Preferred Stock, par value $0.0001 per share, of the Company (the “Series AA Preferred Stock” and such purchased shares, the “Series AA Preferred Shares”) and Series AAA Convertible Non-Redeemable Preferred Stock, par value $0.0001 per share, of the Company (the “Series AAA Preferred Stock” and together with the Series AA Preferred Stock, the “Preferred Stock” and such purchased shares, the “Series AAA Preferred Shares” and together with the Series AA Preferred Shares, the “Purchased Shares”)for aggregate gross proceeds of $7.0 million (the “Preferred Stock Sale”). This capital infusion, combined with the net proceeds realized from the Asset Sale, was utilized to satisfy outstanding debt obligations, pay transaction fees, and restructure the Company’s balance sheet.
Previous wording
To provide a meaningful comparison of our ongoing business performance, the following discussion separately analyzes the results of our continuing operations and the impact of the discontinued operations for the periods presented.
Current wording
To provide a meaningful comparison of our ongoing business performance, the following discussion separately analyzes the results of our continuing operations and the impact of discontinued operations for the three and six months ended June 30, 2026 and 2025.
Previous wording
Net revenue decreased $45 thousand, or 72%, during the three months ended March 31, 2026 to $18 thousand, compared to $63 thousand for the three months ended March 31, 2025. The decrease in net revenue was primarily attributable to reduction in consumer demand due to the macroeconomic environment.
Current wording
Net revenue decreased $0.1 million, or 91.9%, during the three months ended June 30, 2026 to $7 thousand, compared to $88 thousand for the three months ended June 30, 2025. The decrease in net revenue was primarily attributable to reduction in consumer demand due to the macroeconomic environment.
Previous wording
Gross profit decreased to 56.7% for the three months ended March 31, 2026 from 79.9% for the three months ended March 31, 2025. The decrease in gross profit was due primarily to product mix.
Current wording
Gross profit decreased to 14.0% for the three months ended June 30, 2026 from 46.7% for the three months ended June 30, 2025. The decrease in gross profit was due primarily to product mix.
Previous wording
The decrease in general and administrative expenses was primarily the result of a decrease of $0.3 million in headcount expense, a decrease of $0.3 million in miscellaneous expenses, and a decrease of $0.2 million in stock-compensation expense, partially offset by an increase of $0.4 million in professional fees.
Current wording
The increase in general and administrative expenses was primarily the result of an increase of $2.0 million in professional fees, an increase of $0.3 million in stock-compensation expense, and an increase of $0.1 million in headcount expense, partially offset by a decrease in restructuring costs of $0.8 million, and a decrease of $0.4 million in miscellaneous expenses.
Previous wording
Gross profit increased to 64.3% for the three months ended March 31, 2026 from 60.9% for the three months ended March 31, 2025. The increase in gross profit was due primarily to product mix and higher average sales prices on certain products.
Current wording
Gross profit increased to 77.3% for the three months ended June 30, 2026 from 54.3% for the three months ended June 30, 2025. The increase in gross profit was due primarily to product mix and tariff refunds of $2.3 million that were received during the three months ended June 30, 2026.
Previous wording
Sales and distribution expenses, which included e-commerce platform commissions, online advertising and logistics expenses (i.e., variable sales and distribution expense), decreased to $7.2 million for the three months ended March 31, 2026, from $9.7 million for the three months ended March 31, 2025. This decrease is primarily attributable to the decrease in the volume of products sold in the three months ended March 31, 2026, as our e-commerce platform commissions, online advertising, selling and logistics expenses decreased to $6.0 million in the three months ended March 31, 2026 as compared to $7.3 million in the prior year period.
Current wording
Sales and distribution expenses, which included e-commerce platform commissions, online advertising and logistics expenses (i.e., variable sales and distribution expense), decreased to $6.7 million for the three months ended June 30, 2026, from $11.3 million for the three months ended June 30, 2025. This decrease is primarily attributable to the decrease in the volume of products sold in the three months ended June 30, 2026, as our e-commerce platform commissions, online advertising, selling and logistics expenses decreased to $5.5 million in the three months ended June 30, 2026 as compared to $9.0 million in the prior year period.
Previous wording
Our sales and distribution fixed costs (e.g., salary and office expenses) including stock-based compensation decreased to $1.2 million for the three months ended March 31, 2026, from $2.3 million for the three months ended March 31, 2025. This decrease is primarily attributable to lower headcount expense of $0.6 million, lower miscellaneous expenses of $0.4 million, and lower stock-compensation expense of $0.1 million.
Current wording
Our sales and distribution fixed costs (e.g., salary and office expenses) including stock-based compensation decreased to $1.2 million for the three months ended June 30, 2026, from $2.3 million for the three months ended June 30, 2025. This decrease is primarily attributable to lower miscellaneous expenses of $0.6 million, lower headcount expense of $0.5 million, and lower stock-compensation expense of $0.1 million.
Previous wording
As a percentage of net revenue, sales and distribution expenses decreased to 58% for the three months ended March 31, 2026, from 63% for the three months ended March 31, 2025. E-commerce platform commissions, online advertising, selling and logistics expenses included within sales and distribution expenses, as a percentage of net revenue, stayed consistent at 48% for the three months ended March 31, 2026 and March 31, 2025.
Current wording
As a percentage of net revenue, sales and distribution expenses decreased to 50.4% for the three months ended June 30, 2026, from 58.4% for the three months ended June 30, 2025. E-commerce platform commissions, online advertising, selling and logistics expenses included within sales and distribution expenses, as a percentage of net revenue, decreased to 41.7% for the three months ended June 30, 2026, from 46.7% for the three months ended June 30, 2025.
Previous wording
The decrease in general and administrative expenses was primarily the result of a decrease of $40 thousand in logistics software expenses.
Current wording
The decrease in general and administrative expenses was primarily the result of a decrease of $57 thousand in logistics software expenses.
Previous wording
On April 27, 2026, the Company entered into a definitive Asset Purchase Agreement with Trademark Global, LLC, to sell certain marquee brands for $18 million in cash. Based on the definitive deal terms, specifically the $18.0 million base purchase price and the estimated purchase price adjustments, the Company evaluated the carrying value of its brand intangible assets. The Company determined that the estimated allocated proceeds from the Asset Purchase Agreement were lower than the carrying values for certain definite-lived brand assets. Accordingly, the Company recorded a non-cash impairment charge of $3.4 million during the first quarter of 2026. This charge, recorded within Loss from Discontinued Operations on the Condensed Consolidated Statement of Operations, adjusts the carrying amount of the disposal group to its fair value less costs to sell, based on the $18.0 million cash consideration and estimated purchase price adjustments.
Current wording
Based on the definitive deal terms, specifically the $18.0 million base purchase price and the estimated purchase price adjustments, the Company evaluated the carrying value of its brand intangible assets. As of June 30, 2026, management evaluated the carrying value of these brand intangible assets based on the finalized deal terms and expected net proceeds, and determined that no impairment was required for the three months ended June 30, 2026. Previously, the Company determined that the estimated allocated proceeds from the Asset Purchase Agreement were lower than the carrying values for certain definite-lived brand assets, and accordingly recorded a non-cash impairment charge of $3.4 million during the first quarter of 2026. This charge was recorded within Income (loss) from discontinued operations on the Condensed Consolidated Statement of Operations.
Previous wording
Cash Flows for the Three Months Ended March 31, 2026 and 2025
Current wording
Cash Flows for the Six Months Ended June 30, 2026 and 2025
Previous wording
The following table provides information regarding our cash flows for the three months ended March 31, 2026 and 2025:
Current wording
The following table provides information regarding our cash flows for the six months ended June 30, 2026 and 2025:
Previous wording
Net cash used in operating activities was $0.4 million for the three months ended March 31, 2026, primarily driven by net cash losses from operations of $2.0 million and a $1.6 million inflow from changes in working capital, mainly related to changes in accounts receivable, purchases of inventory, and payments of accounts payable.
Current wording
Net cash provided by operating activities was $0.1 million for the six months ended June 30, 2026, primarily driven by net cash losses from operations of $2.1 million and a $2.2 million inflow from changes in working capital, mainly related to changes in accounts payable.
Previous wording
Net cash used in operating activities was $3.9 million for the three months ended March 31, 2025, resulting primarily from our net cash losses from operations of $2.9 million, outflow from working capital of $1.0 million from changes in accounts receivable, purchases of inventory and payments of accounts payable. The working capital outflow primarily relates to purchases of our air quality products for the summer season.
Current wording
Net cash used in operating activities was $8.3 million for the six months ended June 30, 2025, resulting primarily from our net cash losses from operations of $6.7 million, outflow from working capital of $1.6 million from changes in accounts receivable, purchases of inventory and payments of accounts payable. The working capital outflow primarily relates to purchases of our air quality products for the summer season and intentional build up of certain products to avoid higher tariffs.
Previous wording
For the three months ended March 31, 2026, net cash used in investing activities was $4 thousand, primarily related to the purchase of fixed assets during the three months ended March 31, 2026.
Current wording
For the six months ended June 30, 2026, net cash used in investing activities was $18 thousand, primarily related to the purchase of fixed assets during the six months ended June 30, 2026.
Previous wording
For the three months ended March 31, 2026, cash used in financing activities of $2.1 million primarily from the net repayments for our MidCap credit facility of $1.8 million and payment of insurance obligations of $0.3 million.
Current wording
For the six months ended June 30, 2026, net cash used in financing activities of $2.3 million primarily from the net repayments for our MidCap credit facility of $5.0 million and payment of insurance obligations of $0.5 million, partially offset by $3.2 million in proceeds from the issuance of preferred stock.
Previous wording
For the three months ended March 31, 2025, cash provided by financing activities of $0.4 million was primarily from the net borrowings for our MidCap credit facility of $0.5 million and payment of insurance obligations of $0.1 million.
Current wording
For the six months ended June 30, 2025, net cash provided by financing activities of $0.4 million was primarily from the net borrowings for our MidCap credit facility of $0.2, and net proceeds from insurance financing of $0.3 million, partially offset by repayment of note payable to Smash of $0.1 million.
Previous wording
In accordance with ASC 205-40, Going Concern, management evaluated whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these Condensed Consolidated Financial Statements are issued.
Current wording
In accordance with Accounting Standards Codification 205-40, Presentation of Financial Statements - Going Concern, management evaluated whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these Condensed Consolidated Financial Statements are issued.
Previous wording
On April 27, 2026, the Company entered into a series of definitive agreements (collectively, the “Aterian Transactions”) to fundamentally restructure its operations and capital position. Under the terms of an Asset Purchase Agreement with Trademark Global, LLC, the Company agreed to sell its marquee brands, including Mueller Living, PurSteam, hOmeLabs, Squatty Potty, Healing Solutions, and Photo Paper Direct, for $18 million in cash less transaction related costs. Simultaneously, the Company entered into a Securities Purchase Agreement with David E. Lazar for the issuance of Series AA and Series AAA Preferred Stock for aggregate gross proceeds of $7.0 million.
Current wording
On April 27, 2026, the Company entered into a series of definitive agreements (the "Aterian Transactions"), to restructure its operations and capital position. These agreements included the Asset Purchase Agreement with Trademark Global to sell marquee brands, including Mueller Living, PurSteam, hOmeLabs, Squatty Potty, Healing Solutions, and Photo Paper Direct, for $18.0 million in cash, subject to purchase price adjustments, and the Securities Purchase Agreement with Lazar for the issuance of Series AA Preferred Stock and Series AAA Preferred Stock for aggregate gross proceeds of $7.0 million. As of June 30, 2026, the Company received gross proceeds of $3.5 million from the issuance of the Series AA Preferred Stock, which were offset by approximately $0.3 million of transaction costs recorded as a reduction to additional paid-in capital, resulting in net proceeds of approximately $3.2 million.
Previous wording
As the closing of the Aterian Transactions is subject to factors outside of the Company’s direct control, such as stockholder approval, management has concluded that these uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying Condensed Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty.
Current wording
Based on these factors, management concluded that these conditions continue to raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these Condensed Consolidated Financial Statements are issued. Management’s ongoing plans include driving operational efficiencies across the retained business, optimizing supply chain expenditures, and evaluating additional strategic alternatives. The accompanying Condensed Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty.
Previous wording
**Nasdaq Listing—**On December 9, 2025, the Company received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of the Company’s common stock, par value $0.0001 per share (“Common Stock”), for the last 30 consecutive business days, the Company is not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Notice”).
Current wording
**Nasdaq Listing—**On December 9, 2025, the Company received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of the Company’s common stock, for the last 30 consecutive business days, the Company is not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Notice”).
Previous wording
**Trade Policy—**During 2025, the U.S. government announced a series of new tariff policies affecting imports from several countries, including China. While these actions impact a range of global trade flows, the new tariffs targeting imports from China are the most significant for our business. As a result of these tariffs, we experienced an increase in our cost of goods sold during the quarter ended March 31, 2026. In response, we implemented targeted price increases across affected product categories to partially offset the higher input costs. These pricing actions, however, contributed to a decline in unit volumes as consumer demand responded to the higher retail prices. We have implemented a range of mitigation strategies to address the impact of these tariffs on our supply chain and margins. These efforts include diversifying sourcing outside of China, renegotiating supplier terms, redesigning certain products to reduce tariff exposure, and implementing selective price increases where appropriate. We have implemented a range of mitigation strategies to address the impact of these tariffs on our supply chain and margins. These efforts include diversifying sourcing outside of China, renegotiating supplier terms, redesigning certain products to reduce tariff exposure, and implementing selective price increases where appropriate. We continue to evaluate additional structural and operational measures to further reduce tariff-related exposure.
Current wording
**Trade Policy—**During 2025, the U.S. government announced a series of new tariff policies affecting imports from several countries, including China. While these actions impact a range of global trade flows, the new tariffs targeting imports from China are the most significant for our business. As a result of these tariffs, we experienced an increase in our cost of goods sold during the quarter ended March 31, 2026. In response, we implemented targeted price increases across affected product categories to partially offset the higher input costs. These pricing actions, however, contributed to a decline in unit volumes as consumer demand responded to the higher retail prices. We have implemented a range of mitigation strategies to address the impact of these tariffs on our supply chain and margins. These efforts include diversifying sourcing outside of China, renegotiating supplier terms, redesigning certain products to reduce tariff exposure, and implementing selective price increases where appropriate. We have implemented a range of mitigation strategies to address the impact of these tariffs on our supply chain and margins. These efforts include diversifying sourcing outside of China, renegotiating supplier terms, redesigning certain products to reduce tariff exposure, and implementing selective price increases where appropriate.
Previous wording
On April 27, 2026, the Company entered into an Asset Purchase Agreement with Trademark Global, LLC, to sell the assets and liabilities associated with our marquee brands, including Mueller Living, PurSteam, hOmeLabs, Squatty Potty, Healing Solutions, and Photo Paper Direct. As these brands represented the substantial majority of our historical consolidated operations, their results are now classified as discontinued operations for all periods presented.
Current wording
On July 17, 2026, following stockholder approval, the Company completed the sale of specified assets and liabilities associated with its marquee consumer brands including Mueller Living, PurSteam, hOmeLabs, Squatty Potty, Healing Solutions, and Photo Paper Direct to Trademark Global, LLC ("Trademark Global") for $18.0 million in cash, subject to customary post-closing adjustments. As these brands represented the substantial majority of our historical consolidated operations, their results are now classified as discontinued operations for all periods presented.
Previous wording
On April 27, 2026, the Company entered into a definitive Asset Purchase Agreement with Trademark Global, LLC, to sell certain marquee brands for $18 million in cash. Based on the definitive deal terms, specifically the $18.0 million base purchase price and the estimated purchase price adjustments, the Company evaluated the carrying value of its brand intangible assets. The Company determined that the estimated allocated proceeds from the Asset Purchase Agreement were lower than the carrying values for certain definite-lived brand assets. Accordingly, the Company recorded a non-cash impairment charge of $3.4 million during the first quarter of 2026. This charge, recorded within Loss from Discontinued Operations on the Condensed Consolidated Statement of Operations, adjusts the carrying amount of the disposal group to its fair value less costs to sell, based on the $18.0 million cash consideration and estimated purchase price adjustments.
Current wording
Based on the definitive deal terms, specifically the $18.0 million base purchase price and the estimated purchase price adjustments, the Company evaluated the carrying value of its brand intangible assets. As of June 30, 2026, management evaluated the carrying value of these brand intangible assets based on the finalized deal terms and expected net proceeds, and determined that no impairment was required for the three months ended June 30, 2026. Previously, the Company determined that the estimated allocated proceeds from the Asset Purchase Agreement were lower than the carrying values for certain definite-lived brand assets, and accordingly recorded a non-cash impairment charge of $3.4 million during the first quarter of 2026. This charge was recorded within Income (loss) from discontinued operations on the Condensed Consolidated Statement of Operations.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
The following table sets forth the components of our results of continuing operations:
Current report — wording carried from elsewhere
Change in fair market value of warrant liabilities
Current report — wording carried from elsewhere
The 2026 and 2025 activity is related to the change in fair market value of the warrant liabilities from the common stock warrants from our March 2022 equity raise of capital. The change in fair value of warrant liabilities during the six months ending June 30, 2026 primarily relates to the reduced share price compared to the prior period.
Current report — wording carried from elsewhere
Comparison of the Three Months Ended June 30, 2026 and 2025
Current report — wording carried from elsewhere
The following table sets forth the components of our results of discontinued operations:
Current report — wording carried from elsewhere
Sales and distribution expenses, which included e-commerce platform commissions, online advertising and logistics expenses (i.e., variable sales and distribution expense), decreased to $13.9 million for the six months ended June 30, 2026, from $20.9 million for the six months ended June 30, 2025. This decrease is primarily attributable to the decrease in the volume of products sold in the six months ended June 30, 2026, as our e-commerce platform commissions, online advertising, selling and logistics expenses decreased to $11.5 million in the six months ended June 30, 2026 as compared to $16.3 million in the prior year period.
Current report — wording carried from elsewhere
Our sales and distribution fixed costs (e.g., salary and office expenses) including stock-based compensation decreased to $2.4 million for the six months ended June 30, 2026, from $4.6 million for the six months ended June 30, 2025. This decrease is primarily attributable to lower headcount expense of $1.1 million, lower miscellaneous expenses of $0.8 million, lower stock-compensation expense of $0.2 million, and lower expenses related to the Amazon Seller program of $0.2 million.
Current report — wording carried from elsewhere
The decrease in general and administrative expenses was primarily the result of a decrease of $0.1 million in logistics software expenses.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Net Cash Used in Operating Activities