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 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.

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, 2025 contained in the Annual Report on Form 10-K filed with the SEC on June 4, 2025. 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, 2025 and 2024, respectively, present the financial position and results of operations of BARK, Inc. and its wholly-owned subsidiaries.

Previous wording

We are a vertically integrated, omnichannel brand serving dogs across two key categories: toys & accessories and consumables. All of our products are designed, developed, and branded BARK. We leverage an ever-growing collection of first-party data, customer insights, and machine learning to deliver personalized products and experiences tailored to the needs of each and every dog we serve. Our products are sold direct-to-consumer and through our network of retail partners, which currently spans over 40,000 doors across the U.S.

Current wording

We are an omnichannel brand serving dogs across two key categories: toys & accessories and consumables. All of our products are designed, developed, and branded by BARK. We leverage an ever-growing collection of first-party data, customer insights, and machine learning to deliver personalized products and experiences tailored to the needs of each and every dog we serve. Our products are sold Direct-to-Consumer and through our network of retail partners, which currently spans over 50,000 doors nationwide and online marketplaces including Amazon and Chewy.

Previous wording

More recently, we have entered exciting, and much larger categories in the consumables space, which include kibble, treats, toppers, supplements, and dental products. This expansion has significantly increased our total addressable market and the number of customers we can serve. We believe that our growing first-party dataset, strong brand, and loyal customer base afford us a meaningful advantage and opportunity to win market share in these newer categories.

Current wording

In addition to being one of the largest dog toy brands in the U.S. by revenue, we also have entered exciting, and much larger categories in the consumables space, which include kibble, treats, toppers, supplements, and dental products. These categories have significantly increased our total addressable market and the number of customers we can serve. We believe that our growing first-party dataset, strong brand, and loyal customer base afford us a meaningful advantage and opportunity to win market share in these newer categories.

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 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.

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 continue to be overburdened with volume and experience a significant shortage of equipment and capacity due to macroeconomic challenges affecting the global supply chain, including, for example, the COVID-19 pandemic. Increases in cost of goods, freight costs and supply chain disruptions may continue and could impact our business, in particular as a result of the imposition of tariffs and other trade barriers, the uncertainty surrounding such tariffs and and trade barriers, and other global conditions. Other market factors or international events, such as increased inflation, war, rising tensions between the U.S. and China, and continued changes to trade policy, including the imposition of tariffs under alternative authority available to the executive branch of the US government.

Previous wording

Toys & Accessories (“toys”)—The majority of our revenue in the toys category is derived from BarkBox and Super Chewer, which are subscription products that feature monthly themed boxes of premium-quality BARK toys and treats that are delivered directly to a dog’s home. Customers have the option to subscribe to these products on a monthly, six month, or annual basis. Subscription revenue is recognized at a point in time as control is transferred to the subscriber upon delivery of each monthly box. During the life of their subscription, we offer customers incremental products via Add to Box (“ATB”), which enables us to cross-sell customers into our full portfolio of products, including kibble, treats, toppers, dental and more. ATB revenue is recognized at a point in time as control is transferred to the customer upon delivery of goods to the subscriber.

Current wording

Toys & Accessories (“toys”)—The majority of our revenue in the toys category is derived from BarkBox and Super Chewer, which are subscription products that feature monthly themed boxes of premium-quality BARK toys and treats that are delivered directly to a dog’s home. Customers have the option to subscribe to these products on a one month, three month, six month, or twelve month basis. Subscription revenue is recognized at a point in time as control is transferred to the subscriber upon delivery of each monthly box. During the life of their subscription, we offer our customers incremental products via “ATB”, which allows us to cross-sell customers across our full portfolio of products, including kibble, treats, toppers, dental and more. ATB revenue is recognized at a point in time as control is transferred to the customer upon delivery of goods to the subscriber.

Previous wording

Our toys category also includes revenue derived from the sale of other products such as beds, leashes, apparel, and other miscellaneous products.

Current wording

Our toys category also includes revenue derived from the sale of other products such as beds, leashes, apparel, and other accessories.

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. 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.

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 several years, the Company has expanded into new and larger consumables markets such as kibble, toppers, supplements and dental products. The Company sells its consumables products both Direct to Consumer (through Bark.co) and through its retail footprint. Products sold via the Company’s website 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. 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.

Current wording

Treats— Includes treats and chews included in our BarkBox and Super Chewer boxes, as well as the sale of treats on Bark.co. 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 also began selling its treats in over 2,400 doors nationwide in the Spring of 2024. The Company has been expanding its treat offering among other partners, including Amazon, Chewy, Meijer and anticipates further expansion in the year ahead.

Previous wording

Toppers—Includes meal-enhancing sprinkles, broths and bites that are added to a dog’s food to enhance the flavor of their food. These toppers are often single ingredient proteins that can be easily added to a dog’s existing meal plan. Toppers are particularly beneficial for picky eaters.

Current wording

Toppers—Includes meal-enhancing sprinkles, broths and bites that are added to a dog’s meal to enhance the flavor of their food. These toppers are often single ingredient proteins that can be easily added to a dog’s existing meal plan. Toppers are particularly beneficial for picky eaters.

Previous wording

Kibble—We sell a variety of kibble, priced to compete with the mass premium category. While our kibble can be purchased on an individual basis, we entered this market with a breed-based approach that recommends meal plans consisting of a mix of kibble, toppers, and supplements based on the characteristics and personalities of various dog breeds. For example, because German Shepherds are prone to hip issues, we recommend hip and joint support supplements with the purchase of their kibble. If that dog is also a picky eater, we will recommend adding one of our toppers. This enhances our average order value and margin profile.

Current wording

Kibble—We sell a variety of kibble, priced to compete with the premium category. While our kibble can be purchased on an individual basis or auto-ship basis, we entered this market with a breed-based approach that recommends meal plans consisting of a mix of kibble, toppers, and supplements based on the characteristics and personalities of various dog breeds. For example, because German Shepherds are prone to hip issues, we recommend hip and joint support supplements with the purchase of their kibble. If that dog is also a picky eater, we will recommend adding one of our toppers. This enhances our average order value and margin profile.

Previous wording

Interest income primarily consists income earned on our money market funds and interest-bearing deposit accounts.

Current wording

Interest income primarily consists of income earned on our money market funds and interest-bearing deposit accounts.

Previous wording

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

Current wording

Interest expense primarily consists of interest incurred under our 2025 Convertible Notes (as defined below), and amortization of debt issuance costs.

Previous 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.

Current wording

Direct to Consumer revenue decreasedby $17.9 million, or 16.7%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. This decrease was primarily driven by a 18.1%, or 0.6 million decrease in Total Orders, and a $0.14 or 0.5% decrease in AOV, partially offset by revenue from BARK Air of $2.3 million or 2.7% of Direct to Consumer revenue.

Previous 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.

Current wording

Commerce revenue increased by$4.5 million, or 49.5% for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. This increase was primarily driven by sales volume from existing and new customers.

Previous 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.

Current wording

Direct to Consumer gross profit decreased by$9.3 million while Commerce gross profit increased by $0.1 millionfor the three months ended June 30, 2025 compared to the three months ended June 30, 2024. 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.

Previous 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.

Current wording

Gross profit as a percentage of revenue decreased 0.8% for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Direct to Consumer gross margin was 67.0%, 250 basis points higher than the same period last year. Excluding the impact of BARK Air, Direct to Consumer gross margin was 69.3%, 420 basis points higher than the same period last year. The increase in Direct to Consumer gross margin is primarily attributable to product cost improvements. Commerce gross margin was 31.7%, 1,490 basis points lower than the same period last year. The decrease in Commerce gross margin is partly attributable to opportunistic sell-through of surplus inventory and from higher tariffs in the quarter.

Previous 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.

Current wording

Total general and administrative expense decreased by $6.2 million, or 9.7%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The decrease from the prior period was primarily due to: decreased shipping and fulfillment costs of $2.6 million attributable to lower Direct to Consumer volumes, decreased compensation expense of $3.0 million, as well as decreased professional fees of $0.5 million.

Previous 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.

Current wording

Interest income decreased by $0.7 million, or 45.3%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The decrease in interest income is due to an overall decrease in cash in interest-bearing deposit accounts.

Previous 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.

Current wording

Interest expense was flat for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Interest expense for each period is derived from the Company’s 2025 Convertible Notes, as defined below.

Previous 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.

Current wording

Other income, net increased by $1.4 millionfor the three months ended June 30, 2025 compared to the three months ended June 30, 2024. The increase was primarily due to in the change of the fair value of our warrant liabilities of $1.2 million.

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) 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).

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, 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) 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).

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, and (13) other items (as defined below).

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. 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.

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 and (5) Free cash flow does not represent the total residual cash flow available for discretionary purposes and does not reflect our future contractual commitements. 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.

Previous wording

(1)Sales and use tax expense relates to recording a liability for sales and use tax we did not collect from our customers. Historically, we had collected state or local sales, use, or other similar taxes in certain jurisdictions in which we only had physical presence. On June 21, 2018, the U.S. Supreme Court decided, in South Dakota v. Wayfair, Inc., that state and local jurisdictions may, at least in certain circumstances, enforce a sales and use tax collection obligation on remote vendors that have no physical presence in such jurisdiction. A number of states have positioned themselves to require sales and use tax collection by remote vendors and/or by online marketplaces. The details and effective dates of these collection requirements vary from state to state and accordingly, we recorded a liability in those periods in which we created economic nexus based on each state’s requirements. Accordingly, we now collect, remit, and report sales tax in all states that impose a sales tax. Subsequently, as certain of these liabilities are waived by tax authorities or the applicable statute of limitations expires, the related accrued liability is reversed.

Current wording

(1)Sales and use tax (income) expense relates to recording a liability for sales and use tax we did not collect from our customers. Historically, we had collected state or local sales, use, or other similar taxes in certain jurisdictions in which we only had physical presence. On June 21, 2018, the U.S. Supreme Court decided, in South Dakota v. Wayfair, Inc., that state and local jurisdictions may, at least in certain circumstances, enforce a sales and use tax collection obligation on remote vendors that have no physical presence in such jurisdiction. A number of states have positioned themselves to require sales and use tax collection by remote vendors and/or by online marketplaces. The details and effective dates of these collection requirements vary from state to state and accordingly, we recorded a liability in those periods in which we created economic nexus based on each state’s requirements. Accordingly, we now collect, remit, and report sales tax in all states that impose a sales tax. Subsequently, as certain of these liabilities are waived by tax authorities or the applicable statute of limitations expires, the related accrued liability is reversed.

Previous 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.

Current wording

(4) For the three months ended June 30, 2025, other items is comprised of costs associated with the share repurchase program of less than $0.1 million. 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.

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, 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.

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, 2025, we had cash and cash equivalents of approximately $84.7 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

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.

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, in each case, in accordance with the terms and conditions specified in the Agreement.

Previous 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.

Current wording

As both of June 30, 2025 and March 31, 2025, the Company had $42.9 million and $42.9 million, respectively, 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 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.

Current wording

The interest rate for borrowings under the Credit Facility is equal to (a) the great of (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, 2024 and 2023:

Current wording

The following table summarizes our cash flows for the three months ended June 30, 2025 and 2024:

Previous wording

Cash flows provided by Operating Activities

Current wording

Cash flows provided by (used in) Operating Activities

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, 2025, net cash used in operating activities was $5.4 million. The $5.4 million of net cash used in operating activities consisted of net loss of $7.0 million adjusted for non-cash charges totaling$6.8 million and a net increase of $5.2 million in our net operating assets and liabilities. The non-cash charges primarily consisted of$3.6 million for stock based compensation, and depreciation and amortization of $2.5 million. The increase in our net operating assets and liabilities was primarily driven by an increase in inventory $10.3 million, offset by a increase in accounts payable and accrued expenses of $5.8 million.

Previous 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.

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, 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.

Current wording

For the three months ended June 30, 2025 and 2024, net cash used in investing activities was $0.7 million and $2.0 million, respectively, primarily due to software development costs and capital expenditures.

Previous wording

For the nine months ended December 31, 2024, net cash used in financing activities was $9.4 million, primarily due to payments to repurchase common stock.

Current wording

For the three months ended June 30, 2025 and 2024, net cash used in financing activities was $2.1 million and $4.3 million, respectively, primarily due to payments to repurchase common stock.

Previous wording

Except as described in Note 2, “Summary of Significant Accounting Policies – Recent Accounting Pronouncements,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in our 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.

Current wording

Except as described in Note 2, “Summary of Significant Accounting Policies – Recently Issued Accounting Pronouncements,” to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in our audited consolidated financial statements and notes thereto for the year ended March 31, 2025 contained in the Annual Report on Form 10-K filed with the SEC on June 4, 2025.