Bark Inc

Previous wording

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto contained in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto for the year ended March 31, 2023 contained in the Annual Report on Form 10-K filed with the SEC on June 1, 2023. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this Quarterly Report on Form 10-Q. Actual results may differ materially from those contained in any forward-looking statements. Unless the context otherwise requires, references to “we”, “us”, “our”, “the Company” and “BARK” are intended to mean the business and operations of BARK, Inc. and its subsidiaries. The unaudited condensed consolidated financial statements for the three and nine months ended December 31, 2023 and 2022, respectively, present the financial position and results of operations of BARK, Inc. and its wholly-owned subsidiaries.

Current wording

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto contained in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto for the year ended March 31, 2024 contained in the Annual Report on Form 10-K filed with the SEC on June 3, 2024. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this Quarterly Report on Form 10-Q. Actual results may differ materially from those contained in any forward-looking statements. Unless the context otherwise requires, references to “we”, “us”, “our”, “the Company” and “BARK” are intended to mean the business and operations of BARK, Inc. and its subsidiaries. The unaudited condensed consolidated financial statements for the three months ended June 30, 2024 and 2023, respectively, present the financial position and results of operations of BARK, Inc. and its wholly-owned subsidiaries.

Previous wording

Certain global events, conditions and challenges

Current wording

Certain macroeconomic and global events, conditions and challenges

Previous wording

In the past, we have experienced increases in inbound freight costs due to the challenges in the import market, as transpacific ships and trade lanes continue to be overburdened with volume and experience a significant shortage of equipment and capacity due to the COVID-19 pandemic and other macroeconomic challenges affecting the global supply chain. Increases in freight costs and supply chain disruptions may continue and could impact our business, in particular as a result of global conditions that are created or driven by market factors or international events, such as increased inflation and the war in Israel and the Ukraine.

Current wording

In the past, we have experienced increases in inbound freight costs due to the challenges in the import market, as transpacific ships and trade lanes were overburdened with volume and experienced a significant shortage of equipment and capacity due to macroeconomic challenges affecting the global supply chain, such as the COVID-19 pandemic, inflation and wars, armed conflicts or rising geopolitical tensions. Increases in freight costs and supply chain disruptions that would impact our business could be created or driven by market factors or international events, such as a global pandemic or other disruptions or disasters, inflation, war in the Middle East and the Ukraine and rising tensions between the U.S. and China.

Previous wording

Macroeconomic conditions and the related impact on levels of consumer spending impacts our business as purchases of discretionary items tend to decline when disposable income is lower or when there are recessions, inflationary pressures or other economic uncertainty. Inflation, rising interest rates, higher fuel and energy costs and commodity prices, reductions in net worth based on market declines and uncertainty, home prices, credit availability and consumer debt levels, concerns of a global banking crisis, political instability due to war or other geopolitical factors and other macroeconomic pressures and general uncertainty regarding the overall future economic environment have led to recession fears and created a challenging environment.

Current wording

Macroeconomic conditions and the related effects on levels of consumer spending impact our business as purchases of discretionary items tend to decline when disposable income is lower or when there are recessions, inflationary pressures or other economic uncertainty. Inflation, rising interest rates, higher fuel and energy costs and commodity prices, reductions in net worth based on market declines and uncertainty, home prices, credit availability and consumer debt levels, political instability due to war or other geopolitical factors and other macroeconomic pressures and general uncertainty regarding the overall future economic environment have led to recession fears and created a challenging environment.

Previous wording

We define Total Orders as the total number of Direct to Consumer orders shipped in a given period. These include all orders across all of our product categories, regardless of whether they are purchased on a subscription, auto-ship, or one-off basis.

Current wording

We define Total Orders as the total number of Direct to Consumer orders shipped in a given period. These include all orders across all of our product categories, regardless of whether they are purchased on a subscription, auto-ship, or one-off basis. Total Orders excludes orders from BARK Air.

Previous wording

Average Order Value (“AOV”) is Direct to Consumer revenue for the period divided by Total Orders for the same period.

Current wording

Average Order Value (“AOV”) is Direct to Consumer revenue for the period divided by Total Orders for the same period. AOV excludes Direct to Consumer revenue from BARK Air.

Previous wording

Consumables—The majority of our consumables revenue today is derived from the treats and chews that are included in our BarkBox and Super Chewer boxes. Over the past two years, the Company has expanded into new and larger consumables markets such as kibble, toppers, supplements and dental products. To sell these products, the Company recently launched a new consumables website, bark.co, which contains the majority of its consumables portfolio, all of which can be purchased on a recurring, auto-ship, or one-off basis. Revenue related to bark.co is recognized at a point in time, as control is transferred to the customer upon each delivery.

Current wording

Consumables—The majority of our consumables revenue today is derived from the treats and chews that are included in our BarkBox and Super Chewer boxes. Over the past two years, the Company has expanded into new and larger consumables markets such as kibble, toppers, supplements and dental products. The Company primarily sells these products via its website at bark.co, all of which can be purchased on a recurring, auto-ship, or one-off basis. Revenue related to bark.co is recognized at a point in time, as control is transferred to the customer upon each delivery.

Previous wording

Treats— Includes treats and chews included in our BarkBox and Super Chewer boxes, as well as the sale of treats on our consumables website. Many of our treats feature monthly themes, similar to our toys. Today, BARK is one of the largest treat brands in the U.S. by revenue, even without any current sales of treats in retail. Recently, the Company secured commitments from two of the nation’s leading retailers to distribute its new treat offering in nearly 2,500 doors nationwide beginning spring 2024.

Current wording

Treats— Includes treats and chews included in our BarkBox and Super Chewer boxes, as well as the sale of treats on our consumables website. Many of our treats feature monthly themes, similar to our toys. Today, BARK is one of the largest treat brands in the U.S. by revenue. The Company recently began selling its new line of treats in 2,400 Target and PetSmart doors nationwide, and expects to further expansion of consumables in retail in the future.

Previous wording

Interest expense primarily consists of interest incurred under our line of credit and convertible promissory notes agreement, and amortization of debt issuance costs.

Current wording

Interest expense primarily consists of interest incurred under our convertible promissory notes agreement, and amortization of debt issuance costs.

Previous wording

Other income, net, primarily consists of changes in the fair value of our warrant liabilities and a gain on extinguishment of debt.

Current wording

Other (expense) income, net, primarily consists of changes in the fair value of our warrant liabilities.

Previous wording

We operate in two reportable segments to reflect the way our CODM reviews and assesses the performance of the business. See Note 2, “Summary of Significant Accounting Policies,” in our condensed consolidated financial statements for the three and nine months ended December 31, 2023 and 2022 included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

We operate in two reportable segments to reflect the way our CODM reviews and assesses the performance of the business. See Note 2, “Summary of Significant Accounting Policies,” in our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

Direct to Consumer revenue decreasedby $9.2 million, or 7.6%, for the three months ended December 31, 2023 compared to the three months ended December 31, 2022. This decrease was primarily driven by a 5.8%, or 0.2 million decrease in Total Orders, in addition toa$0.62, or 1.9% decrease in AOV.

Current wording

Direct to Consumer revenue decreasedby $4.8 million, or 4.3%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This decrease was primarily driven by a 3.3%, or 0.1 million decrease in Total Orders, in addition toa$0.49, or 1.6% decrease in AOV.

Previous wording

Direct to Consumer gross profit decreased by$3.4 million while Commerce gross profit increased by $0.5 millionfor the three months ended December 31, 2023 compared to the three months ended December 31, 2022. The decrease in Direct to Consumer gross profit is primarily attributable to a decrease in revenue partially offset by lower costs from our suppliers. The increase in Commerce gross profit is primarily attributable to inbound freight and product cost improvements.

Current wording

Direct to Consumer gross profit decreased by$0.6 million while Commerce gross profit increased by $0.8 millionfor the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease in Direct to Consumer gross profit is primarily attributable to a decrease in revenue. The increase in Commerce gross profit is primarily attributable an increase in revenue and inbound freight and product cost improvements.

Previous wording

Gross profit as a percentage of revenue increased 2.1% for the three months ended December 31, 2023 compared to the three months ended December 31, 2022. Direct to Consumer gross margin was 63.8%, 200 basis points higher than the same period last year. The increase in Direct to Consumer gross margin is attributable to inbound freight and product cost improvements. Commerce gross margin was 45.5%, 340 basis points higher than the same period last year. The increase in commerce gross margin is primarily attributable to inbound freight and product cost improvements.

Current wording

Gross profit as a percentage of revenue increased 2.5% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Direct to Consumer gross margin was 64.5%, 230 basis points higher than the same period last year and Commerce gross margin was 46.5%, 680 basis points higher than the same period last year. The increase in gross margin is primarily attributable to inbound freight and product cost improvements.

Previous wording

Total general and administrative expense decreased by $14.1 million, or 17.5%, for the three months ended December 31, 2023 compared to the three months ended December 31, 2022. This decrease during the period was primarily due to a decrease in shipping and fulfillment expense of $5.8 million due to lower volumes, a $2.7 million decrease in compensation expense due to lower headcount, a $2.4 million decrease in consulting and legal fees compared to the prior period, and prior period non-cash impairment charges of $1.4 million as a result of relocating our office headquarters.

Current wording

Total general and administrative expense decreased by $6.0 million, or 8.6%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This decrease during the period was primarily due to a decrease in shipping and fulfillment expense of $1.8 million due to lower volumes and lower rates from vendor consolidation, decreased compensation expense of $2.1 million due to a decrease in headcount in line with our cost reduction initiatives, and a release of an accrual for sales and use tax of $1.3 million due to a statute of limitations expiration. The remaining decrease in general and administrative costs is due to a reduction in rent, office expenses, other expenses.

Previous wording

Advertising and marketing expense increased by $3.3 million, or 15.4%, for the three months ended December 31, 2023 compared to the three months ended December 31, 2022. The increase is primarily attributable to increased marketing spend.

Current wording

Advertising and marketing expense increased by $2.8 million, or 16.0%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase is primarily attributable to marketing spend.

Previous wording

Interest expense decreased by $0.4 million for three months ended December 31, 2023 compared to the three months ended December 31, 2022. Interest expense for each period is derived from the Company’s 2025 Convertible Notes. The decrease is attributable to the partial extinguishment of the 2025 Convertible Notes in early November, decreasing interest expense for the remainder of the quarter.

Current wording

Interest expense decreased by $0.7 million for three months ended June 30, 2024 compared to the three months ended June 30, 2023. Interest expense for each period is derived from the Company’s 2025 Convertible Notes, as defined below. The decrease in interest expense is in line with the relief of outstanding principal associated with the partial debt extinguishment of $45.0 million during the fiscal third quarter ended December 31, 2023.

Previous wording

We calculate Adjusted Net Loss as net loss, adjusted to exclude: (1) stock-based compensation expense, (2) change in fair value of warrants and derivatives, (3) sales and use tax income, (4) non-cash impairment of previously capitalized software and prepaid software licenses, (5) restructuring charges related to reduction in force payment (6) duplicate headquarters rent expense, (7) gain on extinguishment of debt, and (8) other items (as defined below).

Current wording

We calculate Adjusted Net Loss as net loss, adjusted to exclude: (1) stock-based compensation expense, (2) change in fair value of warrants and derivatives, (3) sales and use tax income, (4) restructuring charges related to reduction in force payments, (5) litigation expenses, (6) warehouse restructuring costs, (7) non-cash impairment of previously capitalized software, (8) technology modernization costs, and (9) other items (as defined below).

Previous wording

We calculate Adjusted EBITDA as net loss, adjusted to exclude: (1) interest income, (2) interest expense, (3) depreciation and amortization, (4) stock-based compensation expense, (5) change in fair value of warrants and derivatives, (6) sales and use tax income, (7) non-cash impairment of previously capitalized software, (8) restructuring charges related to reduction in force payment, (9) duplicate headquarters rent expense, (10) gain on extinguishment of debt, and (11) other items (as defined below).

Current wording

We calculate Adjusted EBITDA as net loss, adjusted to exclude: (1) interest income, (2) interest expense, (3) depreciation and amortization, (4) stock-based compensation expense, (5) change in fair value of warrants and derivatives, (6) capitalized cloud computing amortization, (7) sales and use tax income, (8) restructuring charges related to reduction in force payments, (9) litigation expenses, (10) warehouse restructuring costs, (11) non-cash impairment of previously capitalized software, (12) technology modernization costs, and (13) other items (as defined below).

Previous wording

The Non-GAAP Measures are financial measures that are not required by, or presented in accordance with U.S. GAAP. We believe that the Non-GAAP Measures, when taken together with our financial results presented in accordance with U.S. GAAP, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of the Non-GAAP Measures are helpful to our investors as they are measures used by management in assessing the health of our business, determining incentive compensation and evaluating our operating performance, as well as for internal planning and forecasting purposes.

Current wording

The Non-GAAP Measures are financial measures that are not required by, or presented in accordance with U.S. GAAP. We believe that the Non-GAAP Measures, when taken together with our financial results presented in accordance with U.S. GAAP, provide meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of the Non-GAAP Measures are helpful to our investors as they are measures used by management in assessing the health of our business, determining incentive compensation and evaluating our operating performance, as well as for internal planning and forecasting purposes.

Previous wording

The Non-GAAP Measures are presented for supplemental informational purposes only, have limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. Some of the limitations of the Non-GAAP Measures include that (1) the measures do not properly reflect capital commitments to be paid in the future, (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect these capital expenditures, (3) Adjusted EBITDA and Adjusted EBITDA Margin do not consider the impact of stock-based compensation expense, which is an ongoing expense for our company, (4) Adjusted EBITDA and Adjusted EBITDA Margin do not reflect other non-operating expenses, including interest expense. In addition, our use of the Non-GAAP Measures may not be comparable to similarly titled measures of other companies because they may not calculate the Non-GAAP Measures in the same manner, limiting their usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider the Non-GAAP Measures alongside other financial measures, including our net loss and other results stated in accordance with U.S.

Current wording

The Non-GAAP Measures are presented for supplemental informational purposes only, have limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. Some of the limitations of the Non-GAAP Measures include that (1) the measures do not properly reflect capital commitments to be paid in the future, (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect these capital expenditures, (3) Adjusted EBITDA and Adjusted EBITDA Margin do not consider the impact of stock-based compensation expense, which is an ongoing expense for our company, (4) Adjusted EBITDA and Adjusted EBITDA Margin do not reflect other non-operating expenses, including interest expense. In addition, our use of the Non-GAAP Measures may not be comparable to similarly titled measures of other companies because they may not calculate the Non-GAAP Measures in the same manner, limiting their usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider the Non-GAAP Measures alongside other financial measures, including our net loss and other results stated in accordance with U.S. GAAP, and (5) Free cash flow does not represent the total residual cash flow available for discretionary purposes and does not reflect our future contractual commitments.

Previous wording

(2) For the three months ended December 31, 2023, other items is primarily comprised of the expense related to non-recurring retention payments to management of $0.4 million, and legal settlements of $0.1 million. For the three months ended December 31,2022, other items is comprised of executive transition costs including recruiting costs of $0.5 million. For the nine months ended December 31, 2023, other items is primarily comprised of the expense related to non-recurring retention payments to management of $0.9 million, warehouse consolidation costs of $0.2 million, executive transition costs including recruiting costs of $0.4 million, and legal settlements of $0.1 million. For the nine months ended December 31, 2022, other items is comprised of executive transition costs including recruiting costs of $0.5 million.

Current wording

(4) For the three months ended June 30, 2024, other items is primarily comprised of the expense related to non-recurring retention payments to management of $0.2 million, executive transition costs including recruiting costs of $0.4 million, costs associated with the share repurchase program of $0.2 million, and duplicate headquarters rent of less than $0.1 million. For the three months ended June 30, 2023, other items is comprised of executive transition costs including recruiting costs of $0.1 million, and duplicate headquarters rent of less than $0.1 million.

Previous wording

Since inception, we have funded our operations with proceeds from sales of our capital stock and proceeds from borrowings in addition to cash generated by our operations. As of December 31, 2023, we had cash and cash equivalents of approximately $131.3 million. We expect that our cash and cash equivalents, together with cash provided by our operating activities and proceeds from borrowings (as defined below), will be sufficient to fund our operations for at least the next 12 months. We are required to comply with certain financial and non-financial covenants related to our borrowing agreements, which we expect to be in compliance with during the next 12 months. Our future capital requirements will depend on many factors, including our pace of new and existing customer growth and our investments in partnerships and unexplored channels. We may be required to seek additional equity or debt financing.

Current wording

Since inception, we have funded our operations with proceeds from sales of our capital stock and proceeds from borrowings in addition to cash generated by our operations. As of June 30, 2024, we had cash and cash equivalents of approximately $117.8 million. We expect that our cash and cash equivalents, together with cash provided by our operating activities and proceeds from borrowings (as defined below), will be sufficient to fund our operations for at least the next 12 months. We are required to comply with certain financial and non-financial covenants related to our borrowing agreements, which we expect to be in compliance with during the next 12 months. Our future capital requirements will depend on many factors, including our pace of new and existing customer growth and our investments in partnerships and unexplored channels. We may be required to seek additional equity or debt financing.

Previous wording

The 2025 Convertible Notes contain call and put options to be settled in cash contingent upon the occurrence of a change of control and a default interest rate increase of 3.0% applicable upon the occurrence of an event of default that when evaluated under the guidance of ASC 815, Derivatives and Hedging, are embedded derivatives requiring bifurcation at fair value. The fair value calculation includes Level 3 inputs including the estimated fair value of the Company’s common stock and assumptions regarding the probability that the contingent call or put will be exercised or an event of default will occur. Management determined that the probability that the contingent events will occur was near zero at inception and has remained near zero as of December 31, 2023. Therefore, the Company did not record a derivative liability related to these features as of December 31, 2023. The Company will assess the probability of occurrence quarterly during the term of the 2025 Convertible Notes.

Current wording

Company’s common stock and assumptions regarding the probability that the contingent call or put will be exercised or an event of default will occur. Management determined that the probability that the contingent events will occur was near zero at inception and has remained near zero as of June 30, 2024. Therefore, the Company did not record a derivative liability related to these features as of June 30, 2024. The Company will assess the probability of occurrence quarterly during the term of the 2025 Convertible Notes.

Previous wording

(as defined in the Indenture) of the Company occurs at any time after the date of the Agreement and prior to the December 1, 2025 maturity date of the Notes, the Holders are also entitled to receive an additional cash “true-up” payment from the Company, totaling, in the aggregate for all Holders, either (i) $11.3 million in the case that the Company elects to redeem all of the Notes outstanding at the time of such Change of Control or (ii) $4.5 million in the case that the Holders elect to require the Company to repurchase all of the 2025 Convertible Notes outstanding at the time of such Change of Control any other case, in each case, in accordance with the terms and conditions specified in the Agreement.

Current wording

Pursuant to the Agreement, the Company repurchased $45.0 million in aggregate principal amount of the 2025 Convertible Notes plus $2.2 million of accrued and unpaid interest thereon to, but excluding the repurchase date, from the Holders for a total cash purchase price of $44.4 million. In addition, $1.0 million of unamortized deferred financing fees were derecognized from the Company’s balance sheet on the date of extinguishment. The accelerated deferred financing fees were recognized as a component of gain on extinguishment of debt. The Company recognized a gain on debt extinguishment of $1.8 million in connection with the repurchase. If a Change of Control (as defined in the Indenture) of the Company occurs at any time after the date of the Agreement and prior to the December 1, 2025 maturity date of the Notes, the Holders are also entitled to receive an additional cash “true-up” payment from the Company, totaling, in the aggregate for all Holders, either (i) $11.3 million in the case that the Company elects to redeem all of the Notes outstanding at the time of such Change of Control or (ii) $4.5 million in the case that the Holders elect to require the Company to repurchase all of the 2025 Convertible Notes outstanding at the time of such Change of Control any other case, in each case, in accordance with the terms and conditions specified in the Agreement.

Previous wording

As of December 31, 2023 and March 31, 2023, the Company had $40.6 million and $83.5 million, respectively, of outstanding borrowings under the note purchase agreement governing the purchase and sale of the 2025 Convertible Notes agreement.

Current wording

As of both June 30, 2024 and March 31, 2024, the Company had $40.6 million of outstanding borrowings under the note purchase agreement governing the purchase and sale of the 2025 Convertible Notes agreement.

Previous wording

The interest rate for borrowings under the Credit Facility is equal to (a)(i) the greater of the prime rate that is published in the Money Rates section of The Wall Street Journal from time to time and (ii) five and one quarter percent (5.25%) per annum, plus (b) half of one percent (0.50%), per annum.

Current wording

The interest rate for borrowings under the Credit Facility is equal to the greater of a)(i) the prime rate that is published in the Money Rates section of The Wall Street Journal from time to time and (ii) five and one quarter percent (5.25%) per annum, plus (b) half of one percent (0.50%), per annum.

Previous wording

The following table summarizes our cash flows for the nine months ended December 31, 2023 and 2022:

Current wording

The following table summarizes our cash flows for the three months ended June 30, 2024 and 2023:

Previous wording

For the nine months ended December 31, 2023, net cash provided by operating activities was $7.1 million. The $7.1 million of net cash provided by operating activities consisted of net loss of $32.1 million adjusted for non-cash charges totaling$25.2 million and a net increase of $14.1 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $2.2 million for changes in fair value of warrants,$10.5 million for stock based compensation, impairment of $3.1 million, depreciation and amortization of $8.9 million, and a gain on extinguishment of debt of $1.8 million. The decrease in our net operating assets and liabilities was primarily driven by a reduction of accounts payable of $4.9 million related to lower inventory purchases and lower general and administrative expense offset by a reduction of inventory of $25.0 million.

Current wording

For the three months ended June 30, 2024, net cash provided by operating activities was $1.8 million. The $1.8 million of net cash provided by operating activities consisted of net loss of $10.0 million adjusted for non-cash charges totaling$9.3 million and a net increase of $2.5 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $0.4 million for changes in fair value of warrants,$2.9 million for stock based compensation, impairment of $0.8 million, and depreciation and amortization of $2.9 million, and increase in inventory reserves of $1.2 million. The increase in our net operating assets and liabilities was primarily driven by higher accounts payable and accrued expenses of $2.4 million and a reduction in inventory of $2.5 million, offset by a reduction in other liabilities of $1.6 million.

Previous wording

For the nine months ended December 31, 2022, net cash used in operating activities was $14.5 million. The $14.5 million of net cash used in operating activities consisted of net loss of $47.3 million adjusted for non-cash charges totaling $20.4 million and a net increase of $12.4 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $6.5 million for changes in fair value of warrants, $11.9 million for stock based compensation, and $6.5 million for depreciation and amortization. The increase in our net operating assets and liabilities was driven by a reduction of inventory of $10.3 million, accounts receivables of $4.4 million related to increased collections, and partial receipt of the new office’s tenant improvements allowance of $6.2 million. The increase in our net operating assets and liabilities was partially offset by the change in accounts payable and accrued expenses of $5.3 million, and other liabilities of $2.1 million.

Current wording

For the three months ended June 30, 2023, net cash used in operating activities was $10.7 million. The $10.7 million of net cash used in operating activities consisted of net loss of $11.7 million adjusted for non-cash charges totaling$6.6 million and a net decrease of $5.7 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $1.3 million for changes in fair value of warrants,$3.2 million for stock based compensation, and $2.9 million for depreciation and amortization. The decrease in our net operating assets and liabilities was primarily driven by a reduction accounts payable and accrued expenses of $14.8 million related to the timing of payments offset by a reduction of inventory of $11.3 million.

Previous wording

For the nine months ended December 31, 2023 and 2022, net cash used in investing activities was $6.7 million and $18.9 million, respectively, primarily due to software development costs and capital expenditures.

Current wording

For the three months ended June 30, 2024 and 2023, net cash used in investing activities was $2.0 million and $3.0 million, respectively, primarily due to software development costs and capital expenditures.

Previous wording

For the nine months ended December 31, 2023, net cash used in financing activities was $47.0 million, primarily due to the payment on long-term debt of $42.3 million and payments to repurchase common stock of $4.1 million.

Current wording

For the three months ended June 30, 2024, net cash used in financing activities was $4.3 million, primarily due to payments to repurchase common stock.