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, 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 and six months ended September 30, 2024 and 2023, 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 and nine months ended December 31, 2024 and 2023, respectively, present the financial position and results of operations of BARK, Inc. and its wholly-owned subsidiaries.

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 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, severe weather events, inflation, war in the Middle East and the Ukraine and rising tensions between the U.S. and China.

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 and rising geopolitical tensions, and natural disasters and severe weather events. 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, severe weather events, inflation, war in the Middle East and the Ukraine and rising tensions between the U.S. and China.

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. Total Orders excludes orders from BARK Air.

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. We use Total Orders as an indicator of customer interest and demand.

Previous 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.

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. We use AOV to provide insight into customer spending patterns.

Previous wording

Cost of revenue primarily consists of the purchase price of inventory sold, inbound freight costs associated with inventory, shipping supply costs, and inventory shrinkage costs.

Current wording

Cost of revenue primarily consists of the purchase price of inventory sold, inbound freight costs associated with inventory, shipping supply costs, inventory shrinkage costs and charter costs for BARK Air.

Previous wording

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

Current wording

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

Previous wording

Direct to Consumer revenue decreasedby $1.7 million, or 1.6%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. This decrease was primarily driven by a 2.7%, or 0.1 million decrease in Total Orders, and a $0.12 or 0.4% decrease in AOV, partially offset by revenue from BARK Air of $1.5 million.

Current wording

Direct to Consumer revenue decreasedby $4.8 million, or 4.3%, for the three months ended December 31, 2024 compared to the three months ended December 31, 2023. This decrease was primarily driven by a 4.9%, or 0.2 million decrease in Total Orders, and a $0.40 or 1.3% decrease in AOV, partially offset by revenue from BARK Air of $2.0 million or 1.9% of Direct to Consumer revenue.

Previous wording

Commerce revenue increased by$4.8 million, or 25.6% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. This increase was primarily driven by sales volume from existing and new customers.

Current wording

Commerce revenue increased by$6.2 million, or 43.5% for the three months ended December 31, 2024 compared to the three months ended December 31, 2023. This increase was primarily driven by sales volume from existing and new customers.

Previous wording

Direct to Consumer gross profit decreased by$2.2 million while Commerce gross profit increased by $2.6 millionfor the three months ended September 30, 2024 compared to the three months ended September 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.

Current wording

Direct to Consumer gross profit decreased by$0.5 million while Commerce gross profit increased by $2.5 millionfor the three months ended December 31, 2024 compared to the three months ended December 31, 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.

Previous wording

Gross profit as a percentage of revenue decreased 1.1% for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Direct to Consumer gross margin was 63.9%, 100 basis points lower than the same period last year. When excluding the impact of BARK Air, Direct to Consumer gross margin was 64.8%, less than 10 basis points lower than the same period last year. Commerce gross margin was

Current wording

Gross profit as a percentage of revenue increased 0.9% for the three months ended December 31, 2024 compared to the three months ended December 31, 2023. Direct to Consumer gross margin was 66.3%, 240 basis points higher than the same period last year. Excluding the impact of BARK Air, Direct to Consumer gross margin was 67.4%, 360 basis points higher than the same period last year. The increase in Direct to Consumer gross margin is primarily attributable to inbound freight and product cost improvements. Commerce gross margin was 44.0%, 150 basis points lower than the same period last year. The decrease in Commerce gross margin is primarily attributable to a higher mix of off-price sales.

Previous wording

Total general and administrative expense decreased by $5.8 million, or 8.4%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. This decrease during the period was primarily due to a decrease in compensation expense of $2.5 million due to a decrease in headcount in line with our cost reduction initiatives, and decreased impairment expense of $1.6 million. The remaining decrease in general and administrative costs is due to a reduction in rent, office expenses, and other expenses.

Current wording

Total general and administrative expense decreased by $2.0 million, or 3.0%, for the three months ended December 31, 2024 compared to the three months ended December 31, 2023. This decrease from the prior period was due to a decrease in other general and administrative expense of $3.2 million. The decrease in other general and administrative expense was primarily due to a decrease in compensation expense of $1.3 million in line with the decrease in headcount, as well as decreased professional fees and office expenses of $1.4 million. The decrease in general and administrative costs was offset by an increase in shipping and fulfillment expenses of $1.2 million associated with our warehouse restructuring costs.

Previous wording

Advertising and marketing expense increased by $0.9 million, or 4.8%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase is primarily attributable to marketing spend.

Current wording

Advertising and marketing expense increased by $2.3 million, or 9.0%, for the three months ended December 31, 2024 compared to the three months ended December 31, 2023. The increase is primarily attributable to increased marketing spend.

Previous wording

Interest income decreased by $0.6 million, or 32.2%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease in interest income is due to an overall decrease in cash in interest-bearing deposit accounts in line with the deployment of cash for the partial debt repayment of $44.4 million during the fiscal third quarter ended December 31, 2023 and share repurchases of $5.2 million during the current period as part of the share repurchase program.

Current wording

Interest income decreased by $0.5 million, or 31.4%, for the three months ended December 31, 2024 compared to the three months ended December 31, 2023. The decrease in interest income is due to an overall decrease in cash in interest-bearing deposit accounts in line with the deployment of cash for the partial debt repayment of $44.4 million during the fiscal third quarter ended December 31, 2023 and share repurchases of $8 million during the current fiscal year as part of the share repurchase program.

Previous wording

Interest expense decreased by $0.7 million for three months ended September 30, 2024 compared to the three months ended September 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.

Current wording

Interest expense decreased by $0.2 million for the three months ended December 31, 2024 compared to the three months ended December 31, 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

Other (expense) income, net decreased by $0.4 millionfor the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase in other expense was primarily due to fair value changes of our warrant liabilities of $0.7 million, offset by sublease income.

Current wording

Other income, net decreased by $2.8 millionfor the three months ended December 31, 2024 compared to the three months ended December 31, 2023. The decrease was primarily due to the gain on extinguishment of debt in prior year of $1.8 million. The remaining decrease was primarily due to in the change of the fair value of our warrant liabilities of $0.5 million.

Previous wording

Direct to Consumer revenue decreasedby $6.5 million, or 3.0%, for the six months ended September 30, 2024 compared to the six months ended September 30, 2023. This decrease was primarily driven by the 3.0% or 0.2 million decrease in Total Orders, in addition to a $0.32 or 1.0% decrease in AOV, partially offset by revenue from BARK Air of $2.1 million.

Current wording

Direct to Consumer revenue decreasedby $11.3 million, or 3.5%, for the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023. This decrease was primarily driven by the 3.7% or 0.4 million decrease in Total Orders, in addition to a $0.35 or 1.1% decrease in AOV, partially offset by revenue from BARK Air of $4.1 million or 1.3% of Direct to Consumer revenue.

Previous wording

Commerce revenue increased by$5.2 million for the six months ended September 30, 2024 compared to the six months ended September 30, 2023. This increase was primarily driven by sales volume from existing and new customers.

Current wording

Commerce revenue increased by$11.4 million for the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023. This increase was primarily driven by sales volume from existing and new customers.

Previous wording

Direct to Consumer gross profit decreased by$2.7 million while Commerce gross profit increased $3.4 millionfor the six months ended September 30, 2024 compared to the six months ended September 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.

Current wording

Direct to Consumer gross profit decreased by$3.2 million while Commerce gross profit increased $5.9 millionfor the nine months ended December 31, 2024 compared to the nine months ended December 31, 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 to an increase in revenue and inbound freight and product cost improvements.

Previous wording

Gross profit as a percentage of revenue increased 60 basis points for the six months ended September 30, 2024 compared to the six months ended September 30, 2023. Direct to Consumer gross margin was 64.2%, 70 basis points higher and Commerce gross margin was 45.5%, 390 basis points higher than the same period last year, respectively. When excluding the impact of BARK Air, Direct to Consumer gross margin increased 140 basis points compared to the same period last year. The increase in gross margin is primarily attributable to lower inbound freight and product cost improvements.

Current wording

Gross profit as a percentage of revenue increased 70 basis points for the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023. Direct to Consumer gross margin was 64.9%, 130 basis points higher and Commerce gross margin was 44.9%, 200 basis points higher than the same period last year, respectively. Excluding the impact of BARK Air, Direct to Consumer gross margin increased 210 basis points compared to the same period last year. The increase in gross margin is primarily attributable to lower inbound freight and product cost improvements.

Previous wording

General and administrative expense decreased by $11.8 million, or 8.5%, for the six months ended September 30, 2024 compared to the six months ended September 30, 2023. This decrease during the period was primarily due to: decreased shipping and fulfillment costs of $2.2 million attributable to lower direct to consumer volumes, decreased compensation expense of $4.6 million due to a decrease in headcount, decreased consulting and legal fees of $1.3 million, and decreased impairment expense of $0.8 million. The remaining decrease in general and administrative costs is due to a reduction in rent, office expenses, and other expenses.

Current wording

General and administrative expense decreased by $13.8 million, or 6.7%, for the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023. This decrease from the prior period was primarily due to: decreased shipping and fulfillment costs of $1 million attributable to lower direct to consumer volumes, decreased compensation expense of $5.9 million due to a decrease in headcount, decreased impairment expense of $0.9 million, decreased consulting expense of $0.7 million, and decreased insurance and legal fees of $2.2 million. The remaining decrease in general and administrative costs is due to a reduction in rent, office expenses, and other expenses.

Previous wording

Advertising and marketing expense increased by $3.7 million, or 10.4%, for the six months ended September 30, 2024 compared to the six months ended September 30, 2023. The increase during the period is attributable to increased marketing spend.

Current wording

Advertising and marketing expense increased by $5.9 million, or 9.8%, for the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023. The increase during the period is attributable to increased marketing spend.

Previous wording

Interest income decreased by $1.3 million for the six months ended September 30, 2024 compared to the six months September 30, 2023. The decrease in interest income is due to an overall decrease in cash in interest-bearing deposit accounts in line with the deployment of cash for the partial debt repayment of $44.4 million during the fiscal third quarter ended December 31, 2023 and share repurchases of $11.4 million as part of the share repurchase program which began during the fiscal second quarter ended September 30, 2023.

Current wording

Interest income decreased by $1.8 million for the nine months ended December 31, 2024 compared to the nine months ended December 31, 2023. The decrease in interest income is due to an overall decrease in cash in interest-bearing deposit accounts in line with the deployment of cash for the partial debt repayment of $44.4 million during the fiscal third quarter ended December 31, 2023 and share repurchases of $14.2 million as part of the share repurchase program which began during the fiscal second quarter ended September 30, 2023.

Previous wording

Interest expense decreased by $1.3 million for the six months ended September 30, 2024, 2023 compared to the six months ended September 30, 2023. Interest expense for each period is derived from the Company’s 2025 Convertible Notes. The decrease is attributable to the partial debt repayment of $44.4 million during the fiscal third quarter ended December 31, 2023.

Current wording

Interest expense decreased by $1.6 million for the nine months ended December 31, 2024, compared to the nine months ended December 31, 2023. Interest expense for each period is derived from the Company’s 2025 Convertible Notes. The decrease is attributable to the partial debt repayment of $44.4 million during the fiscal third quarter ended December 31, 2023.

Previous wording

We report our financial results in accordance with U.S. GAAP. However, management believes that Adjusted Net Income (Loss), Adjusted Net Income (Loss) Margin, Adjusted Net Income (Loss) Per Common Share, Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow, all non-GAAP financial measures (together the “Non-GAAP Measures”), provide investors with additional useful information in evaluating our performance.

Current wording

We report our financial results in accordance with U.S. GAAP. However, management believes that Adjusted Net Loss, Adjusted Net Loss Margin, Adjusted Net Loss Per Common Share, Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow, all non-GAAP financial measures (together the “Non-GAAP Measures”), provide investors with additional useful information in evaluating our performance.

Previous wording

We calculate Adjusted Net Income (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 and cloud computing implementation costs, (8) technology modernization costs, and (9) 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 (consisting of legal and related fees for a specific proceeding that is outside of our ordinary course of business), (6) warehouse restructuring costs, (7) non-cash impairment of previously capitalized software and cloud computing implementation costs, (8) technology modernization costs, (9) gain on extinguishment of debt, and (10) other items (as defined below).

Previous wording

We calculate Adjusted Net Income (Loss) Margin by dividing Adjusted Net Income (Loss) for the period by Revenue for the period.

Current wording

We calculate Adjusted Net Loss Margin by dividing Adjusted Net Loss for the period by Revenue for the period.

Previous wording

We calculate Adjusted Net Income (Loss) Per Common Share by dividing Adjusted Net Income (Loss) for the period by weighted average common shares used to compute net income (loss) per share attributable to common stockholders for the period.

Current wording

We calculate Adjusted Net Loss Per Common Share by dividing Adjusted Net Loss for the period by weighted average common shares used to compute net loss per share attributable to common stockholders for the period.

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) 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 and cloud computing implementation costs, (12) technology modernization costs, and (13) 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 (consisting of legal and related fees for a specific proceeding that is outside of our ordinary course of business), (10) warehouse restructuring costs, (11) non-cash impairment of previously capitalized software and cloud computing implementation costs, (12) technology modernization costs, (13) gain on extinguishment of debt, and (14) other items (as defined below).

Previous wording

The following table presents a reconciliation of Adjusted Net Income (Loss) to Net loss, the most directly comparable financial measure stated in accordance with U.S. GAAP, and the calculation of net loss margin, Adjusted Net Income (Loss) Margin and Adjusted Net Income (Loss) Per Common Share for the periods presented:

Current wording

The following table presents a reconciliation of Adjusted Net Loss to Net loss, the most directly comparable financial measure stated in accordance with U.S. GAAP, and the calculation of net loss margin, Adjusted Net Loss Margin and Adjusted Net Loss Per Common Share for the periods presented:

Previous wording

(4) For the three months ended September 30, 2024, other items is comprised of executive transition costs including recruiting costs of less than $0.1 million, costs associated with the share repurchase program of less than $0.1 million, and duplicate headquarters rent of less than $0.1 million. For the three months ended September 30, 2023, other items is comprised of executive transition costs including recruiting costs of $0.4 million and non-recurring retention payments to management of $0.4 million. For the six months ended September 30, 2024, other items is comprised of executive transition costs including recruiting costs of $0.4 million, non-recurring retention payments to management of $0.2 million, costs associated with the share repurchase program of $0.2 million, and duplicate headquarters rent of less than $0.1 million. For the six months ended September 30, 2023, other items is comprised of non-recurring retention payments to management of $0.6 million, executive transition costs including recruiting costs of $0.4 million, and duplicate headquarters rent of less than $0.1 million.

Current wording

(4) For the three months ended December 31, 2024, other items is comprised of executive transition costs including recruiting costs of less than $0.1 million, costs associated with the share repurchase program of less than $0.1 million, and duplicate headquarters rent of less than $0.1 million. For the three months ended December 31, 2023, other items is comprised of non-recurring retention payments of $0.4 million, and duplicate headquarters rent of less than $0.1 million. For the nine months ended December 31, 2024, other items is comprised of executive transition costs including recruiting costs of $0.5 million, costs associated with the share repurchase program of $0.3 million, and duplicate headquarters rent of less than $0.1 million. For the nine months ended December 31, 2023, other items is comprised of non-recurring retention payments of $0.9 million, executive transition costs including recruiting costs of $0.4 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 September 30, 2024, we had cash and cash equivalents of approximately $115.2 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 December 31, 2024, we had cash and cash equivalents of approximately $115.3 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.

Previous wording

The 2025 Convertible Notes are governed by the Indenture. The 2025 Convertible Notes bear interest at the annual rate of 5.50%, payable entirely in payment-in-kind annually on December 1 st of each year commencing December 1, 2021, compounded annually. The accrued interest of $2.1 million and $4.4 million was paid-in-kind through an increase of the outstanding principal on the 2025 Convertible Notes on December 1, 2023 and 2022, respectively.

Current wording

The 2025 Convertible Notes are governed by the Indenture. The 2025 Convertible Notes bear interest at the annual rate of 5.50%, payable entirely in payment-in-kind annually on December 1 st of each year commencing December 1, 2021, compounded annually. The accrued interest of $2.2 million and $2.1 million was paid-in-kind through an increase of the outstanding principal on the 2025 Convertible Notes on December 1, 2024 and 2023, respectively.

Previous wording

As of both September 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.

Current wording

As of December 31, 2024 and March 31, 2024, the Company had $42.9 million and $40.6 million, respectively, of outstanding borrowings under the note purchase agreement governing the purchase and sale of the 2025 Convertible Notes agreement.

Previous wording

Western Alliance Bank—Line of Credit and Term Loan

Current wording

Western Alliance Bank—Line of Credit

Previous wording

As of September 30, 2024 and March 31, 2024, there were no outstanding borrowings under the Credit Facility.

Current wording

As of December 31, 2024 and March 31, 2024, there were no outstanding borrowings under the Credit Facility. As of December 31, 2024 and March 31, 2024, the Company was in compliance with its financial covenants.

Previous wording

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

Current wording

The following table summarizes our cash flows for the nine months ended December 31, 2024 and 2023:

Previous wording

Cash flows provided by (used in) Operating Activities

Current wording

Cash flows provided by Operating Activities

Previous wording

For the six months ended September 30, 2024, net cash provided by operating activities was $4.6 million. The $4.6 million of net cash provided by operating activities consisted of net loss of $15.3 million adjusted for non-cash charges totaling$18.7 million and a net increase of $1.2 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $0.9 million for changes in fair value of warrants,$5.9 million for stock based compensation, impairment of $2.1 million, depreciation and amortization of $5.7 million, and increase in the provision for inventory obsolescence of $1.4 million. The increase in our net operating assets and liabilities was primarily driven by higher accounts payable and accrued expenses of $22.9 million, offset by and an increase in inventory of $5.6 million and an increase in accounts receivable of $9.2 million.

Current wording

For the nine months ended December 31, 2024, net cash provided by operating activities was $3.2 million. The $3.2 million of net cash provided by operating activities consisted of net loss of $26.8 million adjusted for non-cash charges totaling$28.1 million and a net increase of $1.9 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $0.7 million for changes in fair value of warrants,$9.8 million for stock based compensation, impairment of $2.1 million, depreciation and amortization of $8.4 million, paid in kind interest on convertibles notes of $2.2, and increase in the provision for inventory obsolescence of $1.1 million. The increase in our net operating assets and liabilities was primarily driven by higher accounts payable and accrued expenses of $26.7 million, offset by and an increase in inventory of $7.3 million and an increase in accounts receivable of $3.7 million.

Previous wording

For the six months ended September 30, 2023, net cash used in operating activities was $7.9 million. The $7.9 million of net cash used in operating activities consisted of net loss of $22.0 million adjusted for non-cash charges totaling $17.9 million and a net increase of $3.8 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $1.4 million for changes in fair value of warrants, $6.9 million for stock based compensation, impairment of $3.0 million and $5.9 million for depreciation and amortization. The decrease in our net operating assets and liabilities was primarily driven by a reduction accounts payable of $6.4 million related to lower inventory purchases and lower general and administrative expense offset by a reduction of inventory of $14.1 million.

Current 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.

Previous wording

For the six months ended September 30, 2024 and 2023, net cash used in investing activities was $3.9 million and $4.9 million, respectively, primarily due to software development costs and capital expenditures.

Current wording

For the nine months ended December 31, 2024 and 2023, net cash used in investing activities was $4.4 million and $6.7 million, respectively, primarily due to software development costs and capital expenditures.