Bark, Inc. [BARK] Filings

10-Q 1 bark-20230930.htm 10-Q bark-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39691

BARK, INC.

(Exact name of registrant as specified in its charter)


Delaware		85-1872418
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

	120 Broadway, Floor 12
	New York, NY 10271

(Address of Principal Executive Offices)(Zip Code)

(855) 501-2275

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001

BARK

New York Stock Exchange

Warrants, each warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share

BARK WS

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Small reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 6, 2023, there were 179,280,860 shares of the registrant’s common stock, par value of $0.0001 per share, outstanding.

TABLE OF CONTENTS


			Page
PART I. Financial Information			1
ITEM 1. Financial Statements (Unaudited)			1
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Operations and Comprehensive Loss			2
Condensed Consolidated Statements of Stockholders’ Equity			3
Condensed Consolidated Statements of Cash Flows			5
Notes to Condensed Consolidated Financial Statements			7
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk			36
ITEM 4. Controls and Procedures			36
PART II. Other Information			37
ITEM 1. Legal Proceedings			37
ITEM 1A. Risk Factors			37
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			51
ITEM 3. Defaults Upon Senior Securities			52
ITEM 4. Mine Safety Disclosures			52
ITEM 5. Other Information			52
ITEM 6. Exhibits			52
Signatures			54

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q, including, without limitation, statements under the headings “Management's Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, any statements relating to our financial and business performance, the sufficiency of our cash and cash equivalents for our continued operations, market acceptance and the anticipated success of our business model, and our ability to expand the scope of our offerings. These statements are based on management's current expectations, but actual results may differ materially due to various factors.

The forward-looking statements contained in this quarterly report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under Part II, Item 1A: “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under Part II, Item 1A: “Risk Factors” may not be exhaustive.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this quarterly report on Form 10-Q. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this quarterly report on Form 10-Q, those results or developments may not be indicative of results or developments in subsequent periods.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BARK, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)


	September 30,		March 31,
	2023		2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	160,541	$	177,911
Accounts receivable—net	12,390		6,554
Prepaid expenses and other current assets	4,296		3,552
Inventory	109,391		124,336
Total current assets	286,618		312,353
PROPERTY AND EQUIPMENT—NET	28,719		39,851
INTANGIBLE ASSETS—NET	11,606		4,090
OPERATING LEASE RIGHT-OF-USE ASSETS	34,772		36,892
OTHER NONCURRENT ASSETS	7,271		7,234
TOTAL ASSETS	$	368,986	$	400,420
LIABILITIES, AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	26,089	$	34,370
Operating lease liabilities, current	4,831		5,484
Accrued and other current liabilities	30,702		31,975
Deferred revenue	24,340		27,772
Total current liabilities	85,962		99,601
LONG-TERM DEBT	81,594		81,221
OPERATING LEASE LIABILITIES	46,094		47,240
OTHER LONG-TERM LIABILITIES	4,389		1,821
Total liabilities	218,039		229,883
COMMITMENTS AND CONTINGENCIES (Note 8)



STOCKHOLDERS’ EQUITY:
Common stock, par value $0.0001 per share—500,000,000 shares authorized; 179,190,106 and 177,647,754 shares issued	1		1
Treasury stock, at cost, 2,767,684 and 0 shares, respectively	(4,120)		—
Additional paid-in capital	486,845		480,370
Accumulated deficit	(331,779)		(309,834)
Total stockholders’ equity	150,947		170,537
TOTAL LIABILITIES, AND STOCKHOLDERS’ EQUITY	$	368,986	$	400,420

See notes to condensed consolidated financial statements

BARK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)

(Unaudited)


	Three Months Ended				Six Months Ended
	September 30,		September 30,		September 30,		September 30,
	2023		2022		2023		2022
REVENUE	$	123,036	$	143,814	$	243,626	$	274,964
COST OF REVENUE	47,394		63,473		94,948		118,809
Gross profit	75,642		80,341		148,678		156,155
OPERATING EXPENSES:
General and administrative	68,931		74,156		138,352		153,745
Advertising and marketing	17,810		15,331		35,429		31,694
Total operating expenses	86,741		89,487		173,781		185,439
LOSS FROM OPERATIONS	(11,099)		(9,146)		(25,103)		(29,284)
INTEREST INCOME	1,996		—		4,133		—
INTEREST EXPENSE	(1,366)		(1,340)		(2,745)		(2,728)
OTHER INCOME (EXPENSE)—NET	132		(153)		1,715		5,965
NET LOSS BEFORE INCOME TAXES	(10,337)		(10,639)		(22,000)		(26,047)
PROVISION FOR INCOME TAXES	—		—		—		—
NET LOSS AND COMPREHENSIVE LOSS	$	(10,337)	$	(10,639)	$	(22,000)	$	(26,047)

Net loss per common share attributable to common stockholders—basic and diluted	$	(0.06)	$	(0.06)	$	(0.12)	$	(0.15)
Weighted average common shares used to compute net loss per share attributable to common stockholders—basic and diluted	176,975,883		176,463,723		177,150,161		175,980,473

See notes to condensed consolidated financial statements

BARK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In thousands, except share data) (Unaudited)


Three months ended September 30, 2023
	Common Stock				Treasury Stock	Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
		Shares	Amount				Shares					Amount
Balance - June 30, 2023		178,760,600	$	1		—		$	—	$	483,432		$	(321,495)	$	161,938
Net loss		—	—			—		—		—			(10,337)		(10,337)
Issuance for stock options exercised		12,932	—			—		—		13			—		13
Issuance for common stock vested		604,289	—			—		—		—			—		—



Common stock withheld for tax upon release		(187,715)	—			—		—		(289)			—		(289)
Repurchase of common stock		—	—			(2,767,684)		(4,120)		—			—		(4,120)
Stock-based compensation		—	—					—		3,689			—		3,689
Cumulative translation adjustment		—	—			—		—		—			53		53
Balance - September 30, 2023		179,190,106	$	1		(2,767,684)		$	(4,120)	$	486,845		$	(331,779)	$	150,947


Six months ended September 30, 2023
	Common Stock				Treasury Stock	Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
		Shares	Amount				Shares					Amount
Balance - March 31, 2023		177,647,754	$	1		—		$	—	$	480,370		$	(309,834)	$	170,537
Net loss		—	—			—		—		—			(22,000)		(22,000)
Issuance for stock options exercised		98,888	—			—		—		94			—		94
Common stock issued upon vesting of restricted stock units		1,765,033	—			—		—		—			—		—
Issuance of common stock in connection with the employee stock purchase plan		246,733	—			—		—		286			—		286
RSU withheld for taxes		(568,302)	—			—		—		(819)			—		(819)
Repurchase of common stock		—	—			(2,767,684)		(4,120)		—			—		(4,120)
Stock-based compensation		—	—			—		—		6,914			—		6,914
Cumulative translation adjustment		—	—			—		—		—			55		55
Balance - September 30, 2023		179,190,106	$	1		(2,767,684)		$	(4,120)	$	486,845		$	(331,779)	$	150,947

BARK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(In thousands, except share data) (Unaudited)


Three months ended September 30, 2022
	Common Stock				Additional Paid-in Capital	Accumulated Deficit	Total Stockholders’ Equity
		Shares	Amount
Balance - June 30, 2022		176,098,718	$	1			$	469,810	$	(263,656)	$	206,155
Net loss		—	—				—		(10,639)		(10,639)
Issuance for stock options exercised		763,200	—				742		—		742
Issuance for restricted stock units vested		240,073	—				—		—		—


Stock-based compensation		—	—				3,852		—		3,852
Cumulative translation adjustment		—	—				—		(3)		(3)
Balance - September 30, 2022		177,101,991	$	1			$	474,404	$	(274,298)	$	200,107


Six months ended September 30, 2022
	Common Stock				Additional Paid-in Capital	Accumulated Deficit	Total Stockholders’ Equity
		Shares	Amount
Balance - March 31, 2022		175,290,143	$	1			$	465,313	$	(248,253)	$	217,061
Net loss		—	—				—		(26,047)		(26,047)
Issuance for stock options exercised		1,465,376	—				896		—		896
Issuance for restricted stock units vested		346,472	—				—		—		—
Stock-based compensation		—	—				8,195		—		8,195
Cumulative translation adjustment		—	—				—		2		2
Balance - September 30, 2022		177,101,991	$	1			$	474,404	$	(274,298)	$	200,107

See notes to condensed consolidated financial statements

BARK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended
	September 30,		September 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(22,000)	$	(26,047)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation & amortization	5,941		4,017
Impairment of assets	2,970		—
Amortization of right-of-use assets	2,120		2,485
Loss (Gain) on disposal of assets	72		(20)
Amortization of deferred financing fees and debt discount	374		326
Bad debt expense	34		554
Stock-based compensation expense	6,914		8,195
Provision for inventory obsolescence reserve	879		95


Change in fair value of warrant liabilities and derivatives	(1,434)		(4,959)

Changes in operating assets and liabilities:
Accounts receivable	(5,869)		(8,148)
Inventory	14,065		(7,615)
Prepaid expenses and other current assets	(988)		(484)
Other noncurrent assets	(125)		(16)
Accounts payable and accrued expenses	(6,426)		14,368
Deferred revenue	(3,431)		(2,667)
Proceeds from tenant improvement allowances	—		1,628
Operating lease liabilities	(1,800)		(1,510)
Other liabilities	788		235
Net cash used in operating activities	(7,916)		(19,563)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(4,933)		(14,108)

Net cash used in investing activities	(4,933)		(14,108)

CASH FLOWS FROM FINANCING ACTIVITIES:



Payment of finance lease obligations	(106)		(310)


Proceeds from the exercise of stock options	94		896

Proceeds from issuance of common stock under ESPP	286		—
Tax payments related to the issuance of common stock	(819)		—


Payments to repurchase common stock	(4,120)		—

Net cash (used in) provided by financing activities	(4,665)		586



Effect of exchange rate changes on cash	55		2

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(17,459)		(33,083)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—BEGINNING OF PERIOD	183,068		201,679
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIOD	$	165,609	$	168,596

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents	160,541		166,310
Restricted cash - Other noncurrent assets	5,068		2,286
Total cash, cash equivalents and restricted cash	$	165,609	$	168,596

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Purchases of property and equipment included in accounts payable and accrued liabilities	$	11	$	2,311
Cash paid for interest	$	75	$	154

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Establishment of operating lease	$	—	$	24,576

See notes to condensed consolidated financial statements

BARK, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.ORGANIZATION AND DESCRIPTION OF BUSINESS

BARK, Inc., is an omnichannel brand serving dogs across two product lines of toys and accessories, and consumables. The Company is located and headquartered in New York, New York.

BARK, Inc. was incorporated in Delaware on July 8, 2020 as Northern Star Acquisition Corp. (“Northern Star”) as a special purpose acquisition company with the purpose of effecting a merger with one or more operating businesses. On June 1, 2021, Northern Star completed the acquisition of Barkbox, Inc., a Delaware corporation (“Legacy BARK” and the acquisition, the “Merger”), pursuant to that certain Agreement and Plan of Reorganization (the “Merger Agreement”), dated December 16, 2020, by and among Northern Star, NSAC Merger Sub Corp. and wholly-owned subsidiary of Northern Star (“Merger Sub”), and Legacy Bark. Following the Merger, the Company’s legal name became “The Original BARK Company,” and in November 2021 changed its name to BARK, Inc. The Merger between Northern Star and Legacy BARK was accounted for as a reverse recapitalization.

Throughout the notes to the condensed consolidated financial statements, unless otherwise noted, the “Company,” “we,” “us” or “our” and similar terms refer to Legacy BARK and its subsidiaries prior to the consummation of the Merger, and BARK and its subsidiaries after the consummation of the Merger.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation—The accompanying condensed consolidated financial statements include the accounts of BARK, Inc. and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s audited consolidated financial statements as of and for the years ended March 31, 2023 and 2022 contained in the Annual Report on Form 10-K filed with the SEC on June 1, 2023.

The consolidated balance sheet as of March 31, 2023, included herein, was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including certain notes required by U.S. GAAP, required on an annual reporting basis.

In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods. The results for the three and six months ended September 30, 2023 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending March 31, 2024, or any other period.

There have been no material changes to the Company’s significant accounting policies as described in the audited consolidated financial statements as of March 31, 2023 and 2022.

Although the Company has incurred recurring losses in each fiscal year since inception, the Company expects its cash and cash equivalents will be sufficient to fund operations for at least the next twelve months.

Use of Estimates—The Company makes estimates and assumptions about future events that affect the amounts reported in its condensed consolidated financial statements and accompanying notes. Future events and their effects cannot be determined with certainty. On an ongoing basis, management evaluates these estimates, judgments and assumptions.

The Company bases its estimates on historical and anticipated results and trends and on various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates, and any such differences may be material to the Company’s condensed consolidated financial statements. The most significant estimates relate to determination of fair value of the Company’s allowance for uncollectible accounts receivable, excess and obsolete inventory reserve, stock-based compensation, stand-alone selling price of Direct to Consumer offerings and fair value of right-of-use assets. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and records adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from those estimates.

Impact of the COVID-19 Pandemic—The Company continues to monitor the impact of the COVID-19 pandemic, including the emergence and spread of variants of COVID-19 on the U.S. and global economies and on the Company’s operating results, financial condition and cash flows. The estimates of the impact COVID-19 may have on the Company’s business may change based on new information that may emerge concerning COVID-19, the actions to contain it or treat its impact and the economic impact on local, regional, national and international markets. The Company has not incurred any significant impairment losses in the carrying values of its assets as a result of the COVID-19 pandemic and is not aware of any specific related event or circumstance that could require the Company to revise the estimates reflected in its condensed consolidated financial statements.

Fair Value of Financial Instruments—The Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued expenses, are carried at historical cost. At September 30, 2023 and March 31, 2023, the carrying amounts of these instruments approximated their fair values because of their short-term nature. The carrying amounts of the Company’s long-term debt approximate the fair value based on consideration of current borrowing rates available to the Company.

Assets and liabilities recorded at fair value on a recurring basis in the condensed consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

Level 1—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3—Unobservable inputs that are supported by little or no market data for the related assets or liabilities.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following summarizes assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy (in thousands):


	As of September 30, 2023
	Level 1		Level 2		Level 3		Total
Assets
Money market funds(1)	$	91,986	$	—	$	—	$	91,986
	$	91,986	$	—	$	—	$	91,986

Liabilities
Public warrant liability(2)	$	1,102	$	—	$	—	$	1,102
Private warrant liability(2)	—		593		—		593
	$	1,102	$	593	$	—	$	1,695


	As of March 31, 2023
	Level 1		Level 2		Level 3		Total
Assets
Money market funds(1)	$	155	$	—	$	—	$	155
	$	155	$	—	$	—	$	155
Liabilities
Public warrant liability(2)	$	2,035	$	—	$	—	$	2,035
Private warrant liability(2)	—		1,094		—		1,094
	$	2,035	$	1,094	$	—	$	3,129

______________

(1)As of September 30, 2023 and March 31, 2023, the Company had cash equivalents held in a money market account. The Company has concluded that due to the highly liquid nature of the money market account, the carrying value approximates fair value, which represents a Level 1 input. The balance of cash equivalents held in the money market account is included in cash and cash equivalents.

(2)Included in accrued and other current liabilities.

The Company’s warrants include publicly-traded warrants (the “Public Warrants”) which were issued as one-third of a warrant per unit issued during the Company’s initial public offering on November 10, 2020 (the “IPO”), warrants sold in a private placement to Northern Star’s sponsor (the “Private Warrants”), and preferred share warrants issued by Legacy BARK which were assumed by the Company in connection with the Merger and exchanged into warrants for BARK common stock (the “Common Stock Warrants”). All of the Common Stock Warrants have been exercised and are no longer outstanding.

The Company evaluated its warrants under Accounting Standards Codification (“ASC”) ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and concluded that they do not meet the criteria to be classified in stockholders’ equity. Since the Public Warrants and Private Warrants meet the definition of a derivative under ASC 815, the warrants have been recorded as current liabilities on the balance sheet at fair value upon issuance, with subsequent changes in their respective fair values recognized in other income, net on the condensed consolidated statements of operations and comprehensive loss at each reporting date. See further disclosure on the change in fair value of Public and Private Warrant liabilities within Note 10, “Other Income (Expense) - Net.”

Restricted Cash—The Company has restricted cash to secure a letter of credit for four of its leases, restricted cash is expected to be maintained as a security deposit for the duration of each respective lease. As of September 30, 2023 and March 31, 2023, the Company has classified $5.1 million and $5.2 million, respectively, within other noncurrent assets, as restricted cash.

Concentration of Credit Risk and Major Customers and Suppliers—Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains cash and cash equivalents with one domestic financial institution of high credit quality.

The Company’s accounts receivable are derived from sales contracts with large retail customers. The Company maintains reserves for potential credit losses on customer accounts when deemed necessary.

Significant customers are those that represent more than 10% of the Company’s total revenues or gross accounts receivable balance at each balance sheet date. For the three and six months ended September 30, 2023 and 2022, the Company did not have any customers that accounted for 10% or more of total revenues. The Company had two customers that accounted for 45% and 58% of gross accounts receivable as of September 30, 2023 and March 31, 2023, respectively. The Company’s accounts receivable relates to sales to customers within the Commerce segment, which represented 11.3% and 14.2% of total revenue for the six months ended September 30, 2023, and 2022, respectively.

Significant suppliers are those that represent more than 10% of the Company’s total finished goods purchased or accounts payable at each balance sheet date. During the three months ended September 30, 2023 and 2022, the Company had two suppliers that accounted for 40% of total finished goods purchased and two suppliers that accounted for 32% of total finished goods purchased, respectively. During the six months ended September 30, 2023 and 2022, the Company had two suppliers that accounted for 36% of total finished goods purchased and two suppliers that accounted for 31% of total finished goods purchased, respectively. The Company had two suppliers that accounted for 37% and 41% of the accounts payable balance as of September 30, 2023 and March 31, 2023, respectively.

Recent Accounting Pronouncements

The Company did not identify any significant recently issued accounting pronouncements that may potentially impact our financial position and results of operations.

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company’s standard payment terms vary but do not result in a significant delay between the timing of invoice and payment. The Company occasionally negotiates other payment terms during the contracting process for its retail business. The Company has elected the practical expedient to not adjust the total consideration within a contract to reflect a financing component when the duration of the financing is one year or less.

Disaggregated Revenue

Revenue disaggregated by significant revenue stream for the three and six months ended September 30, 2023 and 2022 were as follows (in thousands):


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Revenue
Direct to Consumer:
Toys & Accessories(1)	$	67,149	$	76,493	$	139,251	$	154,013
Consumables(1)	37,163		41,054		76,947		81,931
Total Direct to Consumer	$	104,312	$	117,547	$	216,198	$	235,944
Commerce	18,724		26,267		27,428		39,020
Revenue	$	123,036	$	143,814	$	243,626	$	274,964

(1) The allocation between Toys & Accessories and Consumables includes estimates and was determined utilizing data on stand-alone selling prices that the Company charges for similar offerings, and also reflects historical pricing practices.

Contract Liability

The Company’s contract liability represents cash collections from its customers prior to delivery of subscription products, which is recorded as deferred revenue on the condensed consolidated balance sheets. Deferred revenue is recognized as revenue upon the delivery of the box or product.

Deferred revenue was $24.3 million and $27.8 million as of September 30, 2023 and March 31, 2023, respectively.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. Performance obligations are satisfied as of a point in time when control of promised goods are transferred to customers. The Company has elected to not disclose information related to remaining performance obligations due to their original expected terms being one year or less.

4. DEBT

As of September 30, 2023 and March 31, 2023, long-term debt consisted of the following (in thousands):


	As of September 30,		As of March 31,
	2023		2023
2025 Convertible Notes	$	83,525	$	83,525
Less: deferred financing fees and debt discount	(1,931)		(2,304)
Total long-term debt	$	81,594	$	81,221

2025 Convertible Notes

On November 27, 2020, the Company issued $75.0 million aggregate principal amount of 2025 Convertible Notes (the “2025 Convertible Notes”) to Magnetar Capital, LLC (“Magnetar”) under an indenture, dated as of November 27, 2020, between Legacy BARK and U.S. Bank National Association, as trustee and collateral agent (the “Indenture”). The Company received net proceeds of approximately $74.7 million from the sale of the 2025 Convertible Notes, after deducting fees and expenses of approximately $0.3 million. The Company recorded the expenses associated with the issuance of the 2025 Convertible Notes as a discount to the note and will amortize the expenses over the term of the note. The 2025 Convertible Notes will mature on December 1, 2025, unless earlier converted, redeemed or repurchased.

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 1st of each year commencing December 1, 2021, compounded annually. The accrued interest of $4.4 million and $4.2 million was paid-in-kind through an increase of the outstanding principal on the 2025 Convertible Notes on December 1, 2022 and 2021, respectively.

If the 2025 Convertible Notes are not converted into common stock by the maturity date, the Company must repay the outstanding principal amount plus accrued interest.

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 September 30, 2023. Therefore, the Company did not record a derivative liability related to these features as of September 30, 2023. The Company will assess the probability of occurrence quarterly during the term of the 2025 Convertible Notes.

As of September 30, 2023 and March 31, 2023, the Company had $83.5 million of outstanding borrowings under the note purchase agreement governing the purchase and sale of the 2025 Convertible Notes agreement.

Western Alliance Bank—Line of Credit and Term Loan

In October 2017, the Company entered into a loan and security agreement (as subsequently amended, the “Western Alliance Agreement”) and issued a warrant to purchase preferred stock (“Initial Western Alliance Warrant”) to Western Alliance Bank (“Western Alliance”), which provided for a secured revolving line of credit (the “Credit Facility”) in an aggregate principal amount of up to $35.0 million with a maturity date of October 12, 2020, which was extended several times among other amendments. On October 10, 2023, the Company and Western Alliance entered into the seventeenth loan and security modification agreement, which extended the Credit Facility maturity date to October 31, 2023. On that date, the Credit Facility expired with no outstanding borrowings. The Company is evaluating alternative options or further renewal of the Credit Facility.

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

The Credit Facility had a borrowing base subject to an amount equal to eighty percent (80.00%) of the Company’s trailing three months of subscription revenue and an amount equal to (80.00%) of certain of the Company’s customer accounts receivable when a collateral audit is performed and sixty percent (60.00%) when no such collateral audit is performed. Western Alliance had first perfected security in substantially all of the Company’s assets, including its rights to its intellectual property.

As of September 30, 2023 and March 31, 2023, there were no outstanding borrowings under the Credit Facility.

5. STOCKHOLDERS’ EQUITY

On August 17, 2023, the Company announced that its Board of Directors has authorized a stock repurchase program, pursuant to which the Company may repurchase, from time to time, up to an aggregate of $7.5 million of the Company’s outstanding shares of common stock, exclusive of any fees, commissions or other expenses related to such repurchases. The Company’s stock repurchase programs may be limited or terminated at any time without prior notice. The timing and actual number of shares repurchased will depend on a variety of factors, including corporate and regulatory requirements, price and other market conditions and management’s determination as to the appropriate use of our cash.

During the three and six months ended September 30, 2023, the Company purchased 2,767,684 shares of its common stock under the program in open market transactions for $4.1 million at an average price of $1.49. The repurchased shares of common stock were recorded as treasury stock and were accounted for under the cost method. None of the repurchased shares of common stock have been retired. As of September 30, 2023, $3.4 million of the authorization remained available for future share repurchases.

6. STOCK-BASED COMPENSATION PLANS

Equity Incentive Plans

The Barkbox, Inc. 2011 Stock Incentive Plan (as amended from time to time, the “2011 Plan”) provides for the award of stock options and other equity interests in the Company to directors, officers, employees, advisors or consultants of the Company.

On June 1, 2021, in connection with the Merger, the 2021 Equity Incentive Plan (the “2021 Plan”) became effective and 16,929,505 authorized shares of common stock were reserved for issuance thereunder. In addition, pursuant to the terms of the Merger Agreement, on the Closing Date of the Merger, options to purchase shares of Legacy BARK’s common stock previously issued under the 2011 Plan were converted into options to purchase an aggregate of 29,390,344 shares of BARK common stock.

Beginning on April 1, 2022 and ending on (and including) March 31, 2031, the aggregate number of shares of common stock that may be issued under the 2021 Plan shall increase by a number, determined by the Company’s Board of Directors (the “Board”) on or before May 1st of such fiscal year, not to exceed 5% of the total number of shares of common stock issued and outstanding on the last day of the preceding fiscal year. In April 2023, the Board approved an increase of the aggregate number of common stock that may be issued under the 2021 Plan by 8,876,143 shares. As of September 30, 2023, 17,805,142 shares of common stock were available for the Company to grant under the 2021 Stock Plan; there were no more shares available for grant under the 2011 Plan. Periodically, the Company issues new hire, promotion and other awards under the 2021 Stock Plan and awards may be forfeited resulting in the underlying shares returning to the 2021 Stock Plan.

The 2011 and 2021 Plans (together, the “Plans”) are administered by the Company’s Compensation Committee of its Board (the “Compensation Committee”). The exercise prices, vesting and other restrictions are determined by the Board, except that the exercise price per share of a stock option may not be less than 100% of the fair value of the common share on the date of grant. Stock options awarded under the Plans typically expire 10 years after the date of the grant and generally have vesting conditions of 25% on the first anniversary of the date of grant and 75% on a monthly basis at a rate of 1/36th unless otherwise determined by the Compensation Committee. Restricted stock units (“RSU”) awarded under the plan for the purchase of common stock will vest based on continued service which is generally four years. The grant date fair value of the award will be recognized as compensation expense over the requisite service period. The fair value of the RSUs is estimated on the date of grant based on the fair value of the Company’s common stock. The Plans provide that the Compensation Committee shall determine the vesting conditions of awards granted under the Plans, and the Compensation Committee has from time to time approved vesting schedules for certain awards that deviate from the vesting conditions described in the previous sentence.

Employee Stock Purchase Plan

In June 2021, the 2021 Employee Stock Purchase Plan (the “2021 ESPP”) became effective. The 2021 ESPP authorizes the issuance of shares of common stock pursuant to purchase rights granted to employees. On the first day of each fiscal year commencing on April 1, 2022 and ending on (and including) March 31, 2041, the aggregate number of shares of common stock that may be issued under the ESPP shall increase by a number, determined by the Board on or before May 1st of such fiscal year, not to exceed the lesser of (i) one percent (1%) of the total number of shares of common stock issued and outstanding on the last day of the preceding fiscal year or (ii) 1,500,000 shares of common stock. If the Board does not determine to increase the aggregate number of shares of common stock in the ESPP by May 1st of such fiscal year, such increase shall be zero.

In April 2023, the Board approved the authorization of an additional 1,500,000 shares of common stock that may be issued under the 2021 ESPP. A total of 4,885,901 shares of common stock have been reserved for future issuance under the 2021 ESPP.

Employees who elect to participate in the ESPP commence payroll withholdings that accumulate through the end of the respective offering period. In accordance with the guidance in ASC 718-50 - Compensation - Stock Compensation, the ability to purchase shares of the Company’s common stock for eighty-five percent (85%) of the lower of the price on the first day of the offering period or the last day of the offering period (i.e. the purchase date) represents an option and, therefore, the ESPP is a compensatory plan under this guidance. Accordingly, share-based compensation expense is determined based on the option’s grant-date fair value as estimated by applying the Black Scholes option-pricing model and is recognized over the withholding period.

During the three and six months ended September 30, 2023, employees who elected to participate in the ESPP purchased a total of 246,733 shares of common stock at an average price of $1.16, resulting in cash proceeds to the Company of approximately $0.3 million. ESPP employee payroll contributions accrued as of September 30, 2023 were approximately $0.2 million, and are included within accrued and other current liabilities in the condensed consolidated balance sheet. Cash withheld via employee payroll deductions is presented in financing activities as proceeds from stock purchases under employee stock purchase plan on the consolidated statement of cash flows.

Stock Option Activity

During the six months ended September 30, 2023 the Company granted to its employees equity awards to purchase an aggregate of 1,082,500 shares of common stock with a weighted average exercise price of $1.18 vesting over a four-year period.

Restricted Stock Unit (“RSU”) Activity

During the six months ended September 30, 2023 the Company granted to its employees RSUs for the purchase of 9,579,320 shares of common stock.

In July 2023, the Company approved the Fiscal Year 2024 Management Incentive Program (“2024 Incentive Program”). Under this program, each participant’s award is denominated in shares of common stock and is subject to attainment of BARK’s performance goals as established by the Compensation Committee of the Board for fiscal year 2024. We recorded a stock compensation expense of $0.5 million during the three and six months ended September 30, 2023.

Market-based Award

On April 15, 2022, pursuant to the 2021 Plan, the Company granted its CEO a market condition performance option award for the purchase of up to 600,000 shares of the Company’s common stock. The award had a grant date fair value of approximately $0.7 million using a Monte Carlo simulation model. Options under this market-based award will vest based on achievement of stock price targets of the Company's common stock. The right to purchase 200,000 shares of common stock under the options vests when the stock price meets or exceeds $8.00 per share for 30 consecutive days, the right to purchase 200,000 shares of common stock under the options vest when the stock price meets or exceeds $12.00 per share for 30 consecutive days, and the right to purchase 200,000 shares of common stock under the options vests when the stock price meets or exceeds $16.00 per share for 30 consecutive days. These market-based conditions must be met in order for this option award to vest, and it is therefore possible that no awards would ultimately vest. The Company will recognize compensation expense for this award regardless of whether such conditions are met. The fair value is expensed over the requisite service period.

Stock-based Compensation

The following table summarizes the total stock-based compensation expense by function for the three and six months ended September 30, 2023 and 2022, which includes expense related to options and RSUs (in thousands):


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
General and administrative	$	3,356	$	3,545	$	6,266	$	7,583
Advertising and marketing	333		307		648		612
Total stock-based compensation expense	$	3,689	$	3,852	$	6,914	$	8,195

7. LEASES

The Company has operating leases for its offices and fulfillment centers. Fulfillment and customer service centers and corporate office leases expire at various dates through 2038, excluding renewal options.

The Company also leases certain equipment under operating and finance leases. The terms of equipment leases are generally five years and do not contain renewal options. These finance leases expire at various dates through 2028.

The Company’s finance leases as of September 30, 2023 and March 31, 2023 were not material and were included in property and equipment, net, on the Company’s condensed consolidated balance sheets.

The following schedule represents the components of the Company’s operating lease assets (in thousands):


		As of		As of
Leases	Classification	September 30, 2023		March 31, 2023

Assets
Operating	Operating lease right-of-use assets	$	34,772	$	36,892
Total operating lease assets		$	34,772	$	36,892
Liabilities
Operating lease liabilities (current)	Operating lease liabilities, current	$	4,831	$	5,484
Operating lease liabilities (non-current)	Operating lease liabilities	$	46,094	$	47,240
Total operating lease liabilities		$	50,925	$	52,724

For the six months ended September 30, 2023 no assets were acquired in exchange for new operating lease liabilities. For the six months ended September 30, 2022 assets acquired in exchange for new operating lease liabilities was $17.0 million. Lease expense primarily pertains to operating lease cost. Lease expense for operating leases was $1.9 million and $2.3 million for the three months ended September 30, 2023 and 2022, respectively. Lease expense for operating leases was $3.9 million and $4.5 million for the six months ended September 30, 2023 and 2022, respectively. These lease expenses were included within general and administrative expenses in the condensed consolidated statements of operations and comprehensive loss. Sublease income for the three and six months ended September 30, 2023 and 2022 was immaterial and was recorded within other income (expense), net on the Company’s condensed consolidated statements of operations and comprehensive loss.

Cash flows used in operating activities related to operating leases was approximately $2.1 million for the six months ended September 30, 2023.

8. COMMITMENTS AND CONTINGENCIES

Litigation

On September 1, 2022, plaintiff Amber Farmer filed a complaint against BarkBox, Inc., in the U.S. District Court for the Central District of California. Farmer v. BarkBox, Inc., No. 2:22-cv-06242 (C.D. Cal.). The plaintiff alleges that BarkBox violates California’s Automatic Renewal Law, Unfair Competition Law, and Consumers Legal Remedies Act by failing to adequately disclose the automatic renewal of BarkBox’s subscription plans. The plaintiff seeks to represent a class containing all consumers who purchased a subscription from BarkBox in California. We filed a Motion to Dismiss and Motion to Compel Arbitration on November 4, 2022, which the court denied on October 6, 2023. On October 9, 2023, we filed a notice of appeal, which appeal remains pending. This case is at a very early stage and there can be no assurance that we will be successful in our defense. For this same reason, we cannot currently estimate the loss or the range of possible losses we may experience in connection with this litigation.

On August 23, 2023, a putative shareholder class action styled Vernon v. BARK, Inc., Case No. 2023-0866, was filed in the Delaware Court of Chancery against the Company and certain of its current and former directors.

The complaint asserts a claim for declaratory relief seeking to have the renunciation of the corporate opportunity doctrine in the Company’s certification of incorporation declared invalid. Defendants’ response to the complaint is currently due November 20, 2023. This case is at a very early stage and there can be no assurance that we will be successful in our defense. For this same reason, we cannot currently estimate the loss or the range of possible losses we may experience in connection with this litigation.

In addition, we are from time to time subject to, and are presently involved in, litigation and other legal proceedings in the ordinary course of business. While it is not possible to determine the outcome of any legal proceedings brought against us, we believe that, except for the matter described above, there are no pending lawsuits or claims that, individually or in the aggregate, may have a material effect on our business, financial condition or operating results. Our view and estimate related to these matters may change in the future, as new events and circumstances arise and as the matters continue to develop.

9. INCOME TAXES

The Company did not record a federal, state, or foreign income tax provision or benefit for the three and six months ended September 30, 2023 and 2022 due to the expected loss before income taxes to be incurred for the fiscal year ending March 31, 2024, and actual loss before income taxes incurred for the fiscal year ended March 31, 2023, as well as the Company’s continued maintenance of a full valuation allowance against its net deferred tax assets.

10. OTHER INCOME, (EXPENSE)—NET

Other income (expense)—net consisted of the following:


	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Other income (expense)—net:
Other income	$	2	$	885	$	281	$	1,006
Change in fair value of warrants	130		(1,038)		1,434		4,959



	$	132	$	(153)	$	1,715	$	5,965

11. NET LOSS PER SHARE

Basic and diluted net income (loss) per share attributable to common stockholders was calculated as follows:


	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Numerator:


Net loss attributable to common stockholders—basic and diluted	$	(10,337)	$	(10,639)	$	(22,000)	$	(26,047)
Denominator:
Weighted average common shares outstanding—basic and diluted	176,975,883		176,463,723		177,150,161		175,980,473





Net loss per share attributable to common stockholders - basic and diluted	$	(0.06)	$	(0.06)	$	(0.12)	$	(0.15)

For the three and six months ended September 30, 2023 and 2022, the Company excluded the following potential dilutive securities, which include stock options, RSUs, warrants and convertible notes from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net loss

per share attributable to common stockholders is the same for the three and six months ended September 30, 2023 and 2022.


	As of
	September 30,
		2023	2022
Stock options to purchase common stock		12,750,978	16,030,898
Restricted stock units		14,425,044	8,278,983
Warrants to purchase common stock		13,036,333	13,036,333
2025 Convertible Notes as converted to common stock		8,735,314	8,279,918

The Company’s convertible notes outstanding for the three and six months ended September 30, 2023 could have obligated the Company and/or its stockholders to issue shares of common stock upon the occurrence of various future events at prices and in amounts that are not determinable until the occurrence of those future events. Because the necessary conditions for the conversion of these instruments had not been satisfied during the three and six months ended September 30, 2023, the Company excluded these instruments from the table above and the calculation of diluted net loss per share for the period. See Note 4, “Debt,” for additional details.

12. SEGMENTS

The Company applies ASC 280, Segment Reporting, in determining reportable segments for its financial statement disclosure. The Company has two reportable segments: Direct to Consumer and Commerce. The Direct to Consumer segment derives revenue from the sale of toys & accessories and consumables through BarkBox, Super Chewer, and the companies consumables website, bark.co. The Commerce segment today derives revenue primarily from the sale of individual toys through major retailers and online marketplaces. Reporting in this format provides management with the financial information necessary to evaluate the success of the segments and the overall business. There are no internal revenue transactions between the Company’s segments.

The Chief Executive Officer, as the chief operating decision maker (“CODM”) reviews revenue and gross profit for both of the reportable segments. Gross profit is defined as revenue less cost of revenue incurred by the segment. The Company does not allocate assets at the reportable segment level as these are managed on an entity wide group basis and, accordingly, the Company does not report asset information by segments.

Key financial performance measures of the segments including revenue, cost of revenue, and gross profit are as follows (in thousands):


	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Direct to Consumer:
Revenue	$	104,312	$	117,547	$	216,198	$	235,944
Cost of revenue	36,633		45,936		78,936		93,084
Gross profit	67,679		71,611		137,262		142,860
Commerce:
Revenue	18,724		26,267		27,428		39,020
Cost of revenue	10,761		17,537		16,012		25,725
Gross profit	7,963		8,730		11,416		13,295
Consolidated:
Revenue	123,036		143,814		243,626		274,964
Cost of revenue	47,394		63,473		94,948		118,809
Gross profit	$	75,642	$	80,341	$	148,678	$	156,155

13. SUBSEQUENT EVENTS

Debt Extinguishment

On November 2, 2023, the Company repurchased $45.0 million of the $83.5 million of outstanding aggregate principal amount of 5.50% Convertible Secured Notes due 2025 (the “2025 Convertible Notes”) from entities affiliated with Magnetar Financial, LLC (collectively, the “Holders”), pursuant to the terms and conditions of a negotiated notes purchase agreement (the “Agreement”) among the Company and the Holders. See Note 4, “Debt,” for additional details.

Pursuant to the Agreement, on November 2, 2023, the Company repurchased $45.0 million in aggregate principal amount of the 2025 Convertible Notes plus accrued and unpaid interest thereon to, but excluding, the repurchase date, from the Holders for a total cash purchase price of $44.4 million. 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.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 six months ended September 30, 2023 and 2022, respectively, present the financial position and results of operations of BARK, Inc. and its wholly-owned subsidiaries.

Overview

We believe that dogs and humans are better together and we aspire to be the world’s favorite dog brand. We are a team of dog-obsessed people committed to delivering personalization at scale by satisfying each dog’s distinct personality, preferences, and needs with the best products and services. Since our founding in 2011, we have happily served millions of dogs and their people.

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 (“DTC”) and through our network of retail partners, which currently spans over 40,000 doors across the U.S.

We began our journey with BarkBox – a monthly-themed subscription of toys and treats, tailored to the needs of each customer based on their dog’s size, play style, allergies, and more. By viewing each dog as an individual, and by creating magical experiences for our customers, we have been able to build lasting relationships with millions of dogs and their parents. Our customer service (“Happy Team”) proactively engages around 200,000 customers each month. We use the valuable data from these customer interactions to inform the design and development of future products, and we leverage it along with machine learning technology to recommend additional products to our customers through cross-selling and Add-to-Box (“ATB”).

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.

Certain global events, conditions and challenges

The extent to which the COVID-19 pandemic may continue to impact our business will depend on future developments related to any resurgence or geographic spread of the disease, any mutations or emergence of new diseases, and the duration and severity of potential outbreaks. In the past, the COVID-19 pandemic resulted in travel restrictions, required social distancing, business closures, governmental and business disruptions, and other actions taken by the United States government and the governments of other countries. While conditions appear to have improved, the COVID-19 pandemic has had, and continues to have, unprecedented and unexpected effects on the global economy, civil society, labor markets, and certain industries. As a result, it is difficult to predict the magnitude or scope of the impact that these effects may have directly, or indirectly, on our business, operating results and financial condition in the future.

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.

Although we have no operations in or direct exposure to Israel, Russia, Belarus and Ukraine, we may experience limited constraints in availability and increasing costs required to obtain some materials and supplies due, in part, to the negative impact of the war in Israel and the Ukraine on the global economy. To date, our business has not been materially impacted by these conflicts, however, as these conflicts continue or worsen, it may impact our business, financial condition or results of operations.

Macroeconomic events and challenges

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.

We cannot predict the duration or magnitude of such impacts. Please refer to the “Special Note Regarding Forward-Looking Statements” and the “Risk Factors” in this Quarterly Report on Form 10-Q.

Key Performance Indicators

We use the following key financial and operating metrics to evaluate our business and operations, measure our performance, identify trends affecting our business, project our future performance, and make strategic decisions. These key financial and operating metrics should be read in conjunction with the following discussion of our results of operations and financial condition together with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q.


	Three Months Ended September 30,						Six Months Ended September 30,

	2023			2022			2023			2022
Total Orders (in thousands)	3,361			3,689			6,921			7,557
Average Order Value	$	31.03		$	31.87		$	31.24		$	31.22
Direct to Consumer Gross Profit (in thousands)	$	67,679		$	71,611		$	137,262		$	142,860
Direct to Consumer Gross Margin	64.9		%	60.9		%	63.5		%	60.5		%

Total Orders

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.

Average Order Value

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

Components of Our Results of Operations

We operate with two reportable segments: Direct to Consumer and Commerce, to reflect the way our Chief Executive Officer, who is our CODM, reviews and assesses the performance of the business.

Revenue

The Company generates revenue through its Direct to Consumer and Commerce segments, each of which participate in the sale of the Company’s Toys & Accessories and Consumables product lines. See below for additional information.

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 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.

We also sell toys through our Commerce segment which is a network of retail partners and online major market places. This distribution channel allows us to reach new customers and introduce them to the BARK brand. Commerce revenue derived from our retail partners is recognized net of estimates for sales returns, discounts, markdowns and allowances, after the goods are shipped, or when the retail customer picks up the goods directly from one of our distribution points and control of the goods is transferred to the customer. Online marketplaces revenue is recognized upon delivery of goods to the end customer.

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

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.

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. The Company is currently in discussions with its retail partners to begin selling treats through its retail network.

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.

Supplements—Includes a variety of dog supplements such as hip and joint support, and skin and coat support. These products are often targeted at specific breeds that are prone to certain ailments.

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.

Dental—Also known as BARK Bright, this category includes a variety of chews and toothpastes aimed at improving your dog’s dental health. BARK Bright eliminates the arduous task of brushing a dog’s teeth while still effectively fighting germs and bad breath. Our BARK Bright dental kit provides an innovative regimen for dog dental care.

Overall, we see significant runway in our consumables category long-term, and anticipate the majority of our future growth may be driven by these product categories.

Cost of Revenue

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.

Operating Expenses

Operating expenses consist of general and administrative and advertising and marketing expenses.

General and Administrative

General and administrative expenses consist primarily of compensation and benefits costs, including stock-based compensation expense, office expense, including rent, insurance, professional service fees, and other general overhead costs including depreciation and amortization of right-of-use, fixed and intangible assets, account management support teams, and commissions. General and administrative expenses also include fees charged by third parties that provide payment processing services, fulfillment costs, which represent costs incurred in operating and staffing fulfillment and customer service centers, including costs attributable to receiving, inspecting, picking, packaging and preparing customer orders for shipment, outbound freight costs associated with shipping orders to customers, and responding to inquiries from customers.

Advertising and Marketing

Advertising and marketing expense consists primarily of internet advertising, promotional items, agency fees, other marketing costs and compensation and benefits expenses, including stock-based compensation expense, for employees engaged in advertising and marketing.

Interest Income

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

Interest Expense

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

Other Income (Expense), Net

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

Results of Operations

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 six months ended September 30, 2023 and 2022 included elsewhere in this Quarterly Report on Form 10-Q.


	Three Months Ended September 30,						Six Months Ended September 30,
	2023		2022		% Change		2023		2022		% Change
	(in thousands)						(in thousands)
Condensed Consolidated Statements of Operation and Comprehensive Loss Data:
Revenue
Direct to Consumer	$	104,312	$	117,547	(11.3)	%	$	216,198	$	235,944	(8.4)	%
Commerce	18,724		26,267		(28.7)	%	27,428		39,020		(29.7)	%
Total revenue	123,036		143,814		(14.4)	%	243,626		274,964		(11.4)	%
Cost of revenue
Direct to Consumer	36,633		45,936		(20.3)	%	78,936		93,084		(15.2)	%
Commerce	10,761		17,537		(38.6)	%	16,012		25,725		(37.8)	%
Total cost of revenue	47,394		63,473		(25.3)	%	94,948		118,809		(20.1)	%
Gross profit	75,642		80,341		(5.8)	%	148,678		156,155		(4.8)	%
Operating expenses:
General and administrative	68,931		74,156		(7.0)	%	138,352		153,745		(10.0)	%
Advertising and marketing	17,810		15,331		16.2	%	35,429		31,694		11.8	%
Total operating expenses	86,741		89,487		(3.1)	%	173,781		185,439		(6.3)	%
Loss from operations	(11,099)		(9,146)		21.4	%	(25,103)		(29,284)		(14.3)	%
Interest income	1,996		—		N/M		4,133		—		N/M
Interest expense	(1,366)		(1,340)		2.0	%	(2,745)		(2,728)		0.7	%
Other income, net	132		(153)		N/M		1,715		5,965		N/M
Net Loss before income taxes	(10,337)		(10,639)		(2.8)	%	(22,000)		(26,047)		(15.5)	%
Provision for income taxes	—		—		0.0	%	—		—		0.0	%
Net loss and comprehensive loss	$	(10,337)	$	(10,639)	(2.8)	%	$	(22,000)	$	(26,047)	(15.5)	%

N/M means not meaningful.

Comparison of the Three Months Ended September 30, 2023 and September 30, 2022

Revenue


	Three Months Ended September 30,
	2023			2022			$ Change		% Change
	( in thousands)
Revenue
Direct to Consumer	$	104,312		$	117,547		$	(13,235)	(11.3)	%
Commerce	18,724			26,267			(7,543)		(28.7)	%
Total revenue	$	123,036		$	143,814		$	(20,778)	(14.4)	%
Percentage of Revenue
Direct to Consumer	84.8		%	81.7		%
Commerce	15.2		%	18.3		%

Direct to Consumer revenue decreased by $13.2 million, or 11.3%, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. This decrease was primarily driven by a 8.9%, or 0.3 million decrease in Total Orders, and a $0.84 or 2.6% decrease in AOV.

Commerce revenue decreased by $7.5 million for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. This decrease was primarily driven by a decrease in sales volume related to inventory reduction initiatives by our retail partners, macroeconomic headwinds applying downward pressure impacting revenue performance, and shift in timing of seasonal product orders.

Gross Profit


	Three Months Ended September 30,
	2023			2022			$ Change		% Change
	( in thousands)
Gross Profit
Direct to Consumer	$	67,679		$	71,611		$	(3,932)	(5.5)	%
Commerce	7,963			8,730			(767)		(8.8)	%
Total gross profit	$	75,642		$	80,341		$	(4,699)	(5.8)	%
Percentage of revenue	61.5		%	55.9		%

Direct to Consumer gross profit decreased by $3.9 million while Commerce gross profit decreased by $0.8 million for the three months ended September 30, 2023 compared to the three months ended September 30, 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 decrease in Commerce gross profit is primarily attributable lower volume as discussed above.

Gross profit as a percentage of revenue increased 5.6% for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. Direct to Consumer gross margin was 64.9%, 400 basis points higher than the same period last year. The increase in Direct to Consumer gross margin is attributable to product cost and inbound freight improvements. Commerce gross margin was 42.5%, 900 basis points higher than the same period last year. The increase in commerce gross margin is primarily attributable to lower promotional costs and product cost improvements.

Operating Expenses

General and Administrative Expense


	Three Months Ended September 30,
	2023			2022			$ Change		% Change
	( in thousands)
Other general and administrative	$	34,473		$	35,549		$	(1,076)	(3.0)%
Shipping and fulfillment	34,458			38,607			(4,149)		(10.7)%
Total General and administrative	68,931			74,156			$	(5,225)	(7.0)%
Percentage of revenue	56.0		%	51.6		%

Total general and administrative expense decreased by $5.2 million, or 7.0%, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. This decrease during the period was primarily due to a decrease in shipping and fulfillment expense of $4.1 million due to lower volumes, a $1.7 million decrease in compensation expense due to lower headcount, and a $2.2 million decrease in consultant fees compared to the prior period. The decrease in general and administrative expense was offset by non-cash impairment charges of $3.0 million relating to previously capitalized software costs and prepaid software licenses in addition to $1.4 million of reduction in force costs.

Advertising and Marketing


	Three Months Ended September 30,
	2023			2022			$ Change		% Change
	( in thousands)
Advertising and marketing	$	17,810		$	15,331		$	2,479	16.2%
Percentage of revenue	14.5		%	10.7		%

Advertising and marketing expense increased by $2.5 million, or 16.2%, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. The increase is primarily attributable to increased marketing spend.

Interest Income


	Three Months Ended September 30,
	2023			2022			$ Change		% Change
	( in thousands)
Interest income	$	1,996		$	—		$	1,996	N/M
Percentage of revenue	1.6		%	—		%

Interest income was $2.0 million for the three months ended September 30, 2023. The Company did not record any interest income during three months ended September 30, 2022. The increase in interest income is due to interest earned on our money market funds and interest-bearing deposit accounts.

Interest Expense


	Three Months Ended September 30,
	2023			2022			$ Change		% Change
	( in thousands)
Interest expense	$	(1,366)		$	(1,340)		$	(26)	2.0%
Percentage of revenue	(1.1)		%	(0.9)		%

Interest expense remained relatively flat for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. Interest expense for each period is derived from the Company’s 2025 Convertible Notes.

Other Income (Expense), Net


	Three Months Ended September 30,
	2023			2022			$ Change		% Change
	( in thousands)
Other income (expense), net	$	132		$	(153)		$	285	N/M
Percentage of revenue	0.1		%	(0.1)		%
N/M means not meaningful.

Other income (expense), net increased by $0.3 million for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. This increase in other income, net, was primarily due to an increase of $1.2 million of other income related to the changes in fair value of our warrant liabilities, offset by a decrease in other income due to a $0.8 million related to a state workforce incentive that the Company received in prior period.

Comparison of the Six Months Ended September 30, 2023 and September 30, 2022

Revenue


	Six Months Ended September 30,
	2023			2022			$ Change		% Change
	( in thousands)
Revenue
Direct to Consumer	$	216,198		$	235,944		$	(19,746)	(8.4)	%
Commerce	27,428			39,020			(11,592)		(29.7)	%
Total revenue	$	243,626		$	274,964		$	(31,338)	(11.4)	%
Percentage of Revenue
Direct to Consumer	88.7		%	85.8		%
Commerce	11.3		%	14.2		%

Direct to Consumer revenue decreased by $19.7 million, or 8.4%, for the six months ended September 30, 2023 compared to the six months ended September 30, 2022. This decrease was primarily driven by the 8.4% or 0.6 million decrease in Total Orders.

Commerce revenue decreased by $11.6 million for the six months ended September 30, 2023 compared to the six months ended September 30, 2022. This decrease was primarily driven by a decrease in sales volume related to inventory reduction initiatives by our retail partners, macroeconomic headwinds applying downward pressure impacting revenue performance, and shift in timing of seasonal product orders.

Gross Profit


	Six Months Ended September 30,
	2023			2022			$ Change		% Change
	( in thousands)
Gross Profit
Direct to Consumer	$	137,262		$	142,860		$	(5,598)	(3.9)	%
Commerce	11,416			13,295			(1,879)		(14.1)	%
Total gross profit	$	148,678		$	156,155		$	(7,477)	(4.8)	%
Percentage of revenue	61.0		%	56.8		%

Direct to Consumer and Commerce gross profit decreased by $5.6 million and $1.9 million, respectively, for the six months ended September 30, 2023 compared to the six months ended September 30, 2022. The decrease in Direct to Consumer gross profit is primarily attributable to a decrease in revenue offset by lower costs from our suppliers. The decrease in Commerce gross profit is primarily attributable to the lower volume as discussed above offset by lower costs from our suppliers.

Gross profit as a percentage of revenue increased 420 basis points for the six months ended September 30, 2023 compared to the six months ended September 30, 2022. Direct to Consumer gross margin was 63.5%, 300 basis points higher than the same period last year. The increase in Direct to Consumer gross margin is attributable to product cost improvements. Commerce gross margin was 41.6%, 750 basis points higher than the same period last year. The increase in commerce gross margin is primarily attributable to lower promotional costs and product cost improvements.

Operating Expenses

General and Administrative Expense


	Six Months Ended September 30,
	2023			2022			$ Change		% Change
	( in thousands)
Other general and administrative	$	67,651		$	74,037		$	(6,386)	(8.6)	%
Shipping and fulfillment	$	70,701		$	79,708		(9,007)		(11.3)	%
Total General and administrative	$	138,352		$	153,745		$	(15,393)	(10.0)	%
Percentage of revenue	56.8		%	55.9		%

General and administrative expense decreased by $15.4 million, or 10.0%, for the six months ended September 30, 2023 compared to the six months ended September 30, 2022. This decrease during the period was primarily due to: decreased fulfillment and shipping costs of $9.0 million attributable to lower volumes, decreased compensation expense of $3.8 million due to a decrease in headcount, decreased consulting fees of $2.7 million, decreased donation expense of $1.4 million, and decreased professional and legal expense compared to the prior period. The decrease in general and administrative expense was offset by non-cash impairment charges of $3.0

million relating to previously capitalized software costs and prepaid software licenses in addition to $1.5 million in reduction in force costs.

Advertising and Marketing


	Six Months Ended September 30,
	2023			2022			$ Change		% Change
	( in thousands)
Advertising and marketing	$	35,429		$	31,694		$	3,735	11.8	%
Percentage of revenue	14.5		%	11.5		%

Advertising and marketing expense increased by $3.7 million, or 11.8%, for the six months ended September 30, 2023 compared to the six months ended September 30, 2022. The increase during the period is attributable to increased marketing spend.

Interest Income


	Six Months Ended September 30,
	2023			2022			$ Change		% Change
	( in thousands)
Interest income	$	4,133		$	—		$	4,133	N/M
Percentage of revenue	1.7		%	—		%

Interest income increased by $4.1 million for the six months ended September 30, 2023 compared to the six months September 30, 2022. The increase in interest income is due to interest earned on our money market funds and interest-bearing deposit accounts.

Interest Expense


	Six Months Ended September 30,
	2023			2022			$ Change		% Change
	( in thousands)
Interest expense	$	(2,745)		$	(2,728)		$	(17)	0.7%
Percentage of revenue	(1.1)		%	(1.0)		%

Interest expense remained relatively flat for the six months ended September 30, 2023 compared to the six months ended September 30, 2022. Interest expense for each period is derived from the Company’s 2025 Convertible Notes.

Other Income, Net


	Six Months Ended September 30,
	2023			2022			$ Change		% Change
	( in thousands)
Other income, net	$	1,715		$	5,965		$	(4,250)	N/M
Percentage of revenue	0.7		%	2.2		%
N/M means not meaningful.

Other income, net decreased by $4.3 million for the six months ended September 30, 2023 compared to the six months ended September 30, 2022. The decrease in other income, net, was primarily due to a decrease of $3.5 million of other income related to the changes in fair value of our warrant liabilities, and a decrease of $0.8 million related to a state workforce incentive that the Company received in prior period.

Non-GAAP Financial Measures

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.

We calculate Adjusted Net Loss as net income 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 (5) duplicate headquarters rent expense, and (6) other items (as defined below).

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

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.

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, and (10) other items (as defined below).

We calculate Adjusted EBITDA Margin by dividing Adjusted EBITDA for the period by revenue for the period.

We calculate Free Cash Flow as net cash provided by (used in) operating activities less capital expenditures.

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.

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 income (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.

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:

Adjusted Net Loss


	Three Months Ended September 30,						Six Months Ended September 30,
	2023			2022			2023			2022
	(in thousands, except per share data)
Net loss	$	(10,337)		$	(10,639)		$	(22,000)		$	(26,047)
Stock-based compensation expense	3,689			3,852			6,914			8,195
Change in fair value of warrants and derivatives	(130)			1,038			(1,434)			(4,959)
Sales and use tax income (1)	(68)			(148)			(137)			(231)
Impairment of assets	2,970			—			2,970			—
Restructuring	1,442			—			1,543			—
Duplicate headquarters rent	21			603			46			1,206
Other items (2)	973			(56)			1,117			49


Adjusted net income (loss)	$	(1,440)		$	(5,350)		$	(10,981)		$	(21,787)
Net income (loss) margin	(8.40)		%	(7.40)		%	(9.03)		%	(9.47)		%
Adjusted net loss margin	(1.17)		%	(3.72)		%

Bark, Inc. [BARK] Filings
Bark, Inc. [BARK-WT] Filings
10-Q	[2023-11-08]
10-Q	[2023-08-08]
10-K	[2023-06-01]
10-Q	[2023-02-09]
10-Q	[2022-11-09]
10-Q	[2022-08-09]
10-K	[2022-05-31]
10-Q	[2022-02-11]
10-Q	[2021-11-12]
10-Q	[2021-08-10]
S-1	[2021-06-23]
10-K	[2021-06-07]
10-Q	[2021-02-16]
10-Q	[2020-12-23]
S-1	[2020-09-29]

Bark, Inc. [BARK] Filings

Bark, Inc. [BARK-WT] Filings