Bark, Inc. [BARK] Filings

10-Q 1 bark-20221231.htm 10-Q bark-20221231

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 December 31, 2022

☐ 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)

(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 February 6, 2023, there were 177,669,529 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			22
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk			40
ITEM 4. Controls and Procedures			41
PART II. Other Information			43
ITEM 1. Legal Proceedings			43
ITEM 1A. Risk Factors			43
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			58
ITEM 3. Defaults Upon Senior Securities			58
ITEM 4. Mine Safety Disclosures			58
ITEM 5. Other Information			58
ITEM 6. Exhibits			58
Signatures			60

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)


	December 31,		March 31,
	2022		2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	164,181	$	199,397
Accounts receivable—net	4,584		9,752
Prepaid expenses and other current assets	7,503		5,878
Inventory	145,269		153,115
Total current assets	321,537		368,142
PROPERTY AND EQUIPMENT—NET	40,084		28,128
INTANGIBLE ASSETS—NET	3,884		3,837
OPERATING LEASE RIGHT-OF-USE ASSETS	37,601		29,552
OTHER NONCURRENT ASSETS	4,256		4,402
TOTAL ASSETS	$	407,362	$	434,061
LIABILITIES, AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	27,269	$	36,834
Operating lease liabilities, current	5,650		5,060
Accrued and other current liabilities	30,888		35,168
Deferred revenue	32,916		31,549
Total current liabilities	96,723		108,611
LONG-TERM DEBT	81,037		76,190
OPERATING LEASE LIABILITIES	46,996		28,847
OTHER LONG-TERM LIABILITIES	528		3,352
Total liabilities	225,284		217,000
COMMITMENTS AND CONTINGENCIES (Note 8)



STOCKHOLDERS’ EQUITY:
Common stock, par value $0.0001 per share—500,000,000 shares authorized; 177,636,726 shares issued and outstanding as of December 31, 2022 and 500,000,000 shares authorized; 175,290,143 shares issued and outstanding as of March 31, 2022.	1		1

Additional paid-in capital	477,665		465,313
Accumulated deficit	(295,588)		(248,253)
Total stockholders’ equity	182,078		217,061
TOTAL LIABILITIES, AND STOCKHOLDERS’ EQUITY	$	407,362	$	434,061

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				Nine Months Ended
	December 31,		December 31,		December 31,		December 31,
	2022		2021		2022		2021
REVENUE	$	134,334	$	140,812	$	409,298	$	378,580
COST OF REVENUE	54,144		62,403		172,952		160,493
Gross profit	80,190		78,409		236,346		218,087
OPERATING EXPENSES:
General and administrative	80,192		78,636		233,937		216,369
Advertising and marketing	21,747		26,828		53,441		61,053
Total operating expenses	101,939		105,464		287,378		277,422
LOSS FROM OPERATIONS	(21,749)		(27,055)		(51,032)		(59,335)
INTEREST INCOME (EXPENSE)—NET	(1,266)		(1,284)		(3,995)		(4,141)
OTHER INCOME (EXPENSE)—NET	1,745		15,098		7,710		31,887
NET LOSS BEFORE INCOME TAXES	(21,270)		(13,241)		(47,317)		(31,589)
PROVISION FOR INCOME TAXES	—		—		—		—
NET LOSS AND COMPREHENSIVE LOSS	$	(21,270)	$	(13,241)	$	(47,317)	$	(31,589)

Net loss per common share attributable to common stockholders—basic and diluted	$	(0.12)	$	(0.08)	$	(0.27)	$	(0.21)
Weighted average common shares used to compute net loss per share attributable to common stockholders—basic and diluted	177,672,036		172,554,101		176,546,378		150,313,932

See notes to condensed consolidated financial statements

BARK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

(In thousands, except share data) (Unaudited)


Three months ended December 31, 2022
	Common Stock				Additional Paid-in Capital	Accumulated Deficit	Total Stockholders’ Equity
		Shares	Amount
Balance - October 1, 2022		177,101,991	$	1			$	474,404	$	(274,298)	$	200,107
Net loss		—	—				—		(21,270)		(21,270)
Issuance for stock options exercised		86,455	—				84		—		84
Issuance for common stock vested		491,221	—				—		—		—


Issuance of common stock in connection with the employee stock purchase plan		109,186	—				145		—		145
Common stock withheld for tax upon release		(152,127)	—				(649)		—		(649)
Stock-based compensation		—	—				3,681		—		3,681
Cumulative translation adjustment		—	—				—		(20)		(20)
Balance - December 31, 2022		177,636,726	$	1			$	477,665	$	(295,588)	$	182,078


Nine Months Ended December 31, 2022
	Common Stock				Additional Paid-in Capital	Accumulated Deficit	Total Stockholders’ Equity
		Shares	Amount
Balance - April 1, 2022		175,290,143	$	1			$	465,313	$	(248,253)	$	217,061
Net loss		—	—				—		(47,317)		(47,317)
Issuance for stock options exercised		1,551,831	—				980		—		980
Issuance for common stock vested		991,315	—				—		—		—
Issuance of common stock in connection with the employee stock purchase plan		109,186	—				145		—		145
Common stock withheld for tax upon release		(305,749)	—				(649)		—		(649)
Stock-based compensation		—	—				11,876		—		11,876
Cumulative translation adjustment		—	—				—		(18)		(18)
Balance - December 31, 2022		177,636,726	$	1			$	477,665	$	(295,588)	$	182,078

BARK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

(In thousands, except share data)


Three months ended December 31, 2021
	Common Stock				Additional Paid-in Capital	Accumulated Deficit	Total Stockholders’ Equity
		Shares	Amount
Balance-October 1, 2021		171,069,553	$	1			$	452,180	$	(198,302)	$	253,879
Net Loss		—	—				—		(13,241)		(13,241)
Issuance for stock options exercised		2,426,047	—				1,698		—		1,698

Restricted shares vesting		273	—				—		—		—
Conversion of Convertible Notes		—	—				152		—		152
Stock-based compensation expense		—	—				4,209		—		4,209
Cumulative translation adjustment		—	—				—		1		1
Balance - December 31, 2021		173,495,873	$	1			$	458,239	$	(211,542)	$	246,698


Nine months ended December 31, 2021
	Convertible Redeemable Preferred Stock		Common Stock		Treasury Stock		Additional Paid-in Capital	Accumulated Deficit	Total Stockholders’ Equity
	Shares	Amount	Shares	Amount	Shares	Amount
Balance-April 1, 2021	7,752,515	59,987	5,498,588	—	259,953	(4,764)	25,748	(179,954)	(158,970)
Retroactive application of recapitalization	—	—	42,573,189	—	(259,953)	4,764	(4,764)	—	—
BALANCE-April 1, 2021, as revised	7,752,515	59,987	48,071,777	—	—	—	20,984	(179,954)	(158,970)
Net loss	—	—	—	—	—	—	—	(31,589)	(31,589)
Issuance for stock options exercised	—	—	5,508,181	—	—	—	2,829	—	2,829
Issuance for warrants exercised	—	—	1,931,621	—	—	—	1,019	—	1,019
Restricted shares vesting	—	—	7,124	—	—	—	—	—	—
Stock-based compensation	—	—	—	—	—	—	11,036	—	11,036
Conversion of Preferred Shares	(7,752,515)	(59,987)	7,752,515	—	—	—	59,987	—	59,987
Conversion of Convertible Notes	—	—	1,135,713	—	—	—	12,128	—	12,128
PIPE Issuance	—	—	20,000,000	—	—	—	200,000	—	200,000
Net equity infusion from the Merger	—	—	89,088,942	1	—	—	150,256	—	150,257
Cumulative translation adjustment	—	—	—	—	—	—	—	1	1
Balance-December 31, 2021	—	—	173,495,873	1	—	—	458,239	(211,542)	246,698

BARK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended
	December 31,		December 31,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(47,317)	$	(31,589)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation & amortization	6,508		2,924
Impairment of assets	1,661		—
Amortization of right-of-use assets	3,754		—

Amortization of deferred financing fees and debt discount	494		671
Bad debt expense	803		—
Stock-based compensation expense	11,876		11,036
Provision for inventory reserves	(2,486)		—
Loss on extinguishment of debt	—		2,024
Loss on exercise of equity classified warrants	—		303
Change in fair value of warrant liabilities and derivatives	(6,523)		(38,861)
Paid in kind interest on convertible notes	4,354		4,171
Changes in operating assets and liabilities:
Accounts receivable	4,365		(11,306)
Inventory	10,333		(73,236)
Prepaid expenses and other current assets	(222)		(425)
Other assets	155		(314)
Accounts payable and accrued expenses	(5,339)		(12,290)
Deferred revenue	1,367		9,033
Proceeds from tenant improvement allowances	6,177		—
Operating lease liabilities	(2,307)		—
Other liabilities	(2,139)		(8,678)
Net cash used in operating activities	(14,486)		(146,537)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(18,854)		(17,605)

Net cash used in investing activities	(18,854)		(17,605)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of finance fees	—		(641)
Payments of transaction costs	—		(25,233)
Payment of deferred underwriting fees	—		(8,902)
Payment of finance lease obligations	(2,326)		(427)
Proceeds from equity infusion from the Merger, net of redemptions	—		227,092
Proceeds from PIPE Issuance	—		200,000
Proceeds from the exercise of stock options	980		2,829
Proceeds from the exercise of warrants	—		121
Proceeds from issuance of common stock under ESPP	145		—
Tax payments related to the issuance of common stock	(649)		—



Payments of long-term debt	—		(39,457)
Net cash provided by financing activities	(1,850)		355,382



Effect of exchange rate changes on cash	(18)		1

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(35,208)		191,240
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—BEGINNING OF PERIOD	201,679		39,731
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—END OF PERIOD	$	166,471	$	230,972

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents	164,181		228,692
Restricted cash - Other noncurrent assets	2,290		2,280
Total cash, cash equivalents and restricted cash	$	166,471	$	230,972

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Purchases of property and equipment included in accounts payable and accrued liabilities	$	342	$	483
Cash paid for interest	$	275	$	776

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Establishment of operating lease	$	24,576	$	—
Lease modification and termination	$	3,532	$	—
Conversion of preferred stock to common stock	$	—	$	59,987
Issuance of common stock related to convertible notes	$	—	$	13,367
Capital contribution related to extinguishment of debt	$	—	$	536
Issuance of common stock related to cashless exercise of liability classified warrants	$	—	$	595

See notes to condensed consolidated financial statements

BARK, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.ORGANIZATION AND DESCRIPTION OF BUSINESS

BARK, Inc. (the “Company”), a Delaware corporation formerly known as The Original BARK Company and, prior to the Merger (as defined below in Note 3), Northern Star Acquisition Corp. ("Northern Star"), is an omnichannel brand serving dogs across the four key categories of Play, Food, Health and Home. The Company is located and headquartered in New York, New York.

Following the closing of the business combination discussed in Note 3 below, the Company changed its name to “The Original BARK Company,” and in November 2021 changed its name to BARK, Inc.

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, 2022 and 2021 contained in the Annual Report on Form 10-K filed with the SEC on May 31, 2022.

The consolidated balance sheet as of March 31, 2022, 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 months and nine months ended December 31, 2022 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending March 31, 2023, 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, 2022 and 2021.

Although the Company has incurred recurring losses in each 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, allowance for inventory obsolescence, stock-based compensation, fair value of

right-of-use assets and the valuation of embedded derivatives. 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 December 31, 2022 and March 31, 2022, 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 December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets
Money market funds(1)	$	55,077	$	—	$	—	$	55,077
	$	55,077	$	—	$	—	$	55,077

Liabilities
Public warrant liability(2)	$	1,272	$	—	$	—	$	1,272
Private warrant liability(2)	—		684		—		684
	$	1,272	$	684	$	—	$	1,956


	As of March 31, 2022
	Level 1		Level 2		Level 3		Total
Liabilities
Public warrant liability(2)	$	5,516	$	—	$	—	$	5,516
Private warrant liability(2)	—		2,963		—		2,963
	$	5,516	$	2,963	$	—	$	8,479

______________

(1)As of December 31, 2022, 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 income (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 two of its leases, restricted cash is expected to be maintained as a security deposit for the duration of each respective lease. As of both December 31, 2022 and March 31, 2022, the Company has classified $2.3 million 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 nine months ended December 31, 2022 and 2021, the Company did not have any customers that accounted for 10% or more of total revenues. The Company had two customers that accounted for 59% of gross accounts receivable as of December 31, 2022 and March 31, 2022, respectively. The Company’s accounts receivable relates to sales to customers within the Commerce segment, which represented 10.6% and 13.0% of total revenue for the three and nine months ended December 31, 2022, respectively, and 16.1% and 12.7% of total revenue for the three and nine months ended December 31, 2021, 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 December 31, 2022 and 2021, the Company had two suppliers that accounted for 30% of total finished goods purchased and two suppliers that accounted for 26% of total finished goods purchased, respectively. During the nine months ended December 31, 2022 and 2021, the Company had two suppliers that accounted for 30% of total finished goods purchased and two suppliers that accounted for 29% of total finished goods purchased, respectively. The Company had two suppliers that accounted for 49% of the accounts payable balance and two suppliers that accounted for 26% of the accounts payable balance as of December 31, 2022 and March 31, 2022, respectively.

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes. This update amends and simplifies the accounting for income taxes by eliminating certain exceptions in existing guidance related to performing intraperiod tax allocation, calculating interim period taxes, and recognizing deferred taxes for investments. The update also provides new guidance to reduce complexity in certain areas. The Company adopted this guidance on April 1, 2022. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments by removing major separation models required under current guidance. ASU 2020-06 also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those annual reporting periods, with early adoption permitted. The Company adopted this guidance on April 1, 2022. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

3.MERGER

On June 1, 2021 (the “Closing Date”), 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., a Delaware corporation and wholly-owned subsidiary of Northern Star (“Merger Sub”), and Legacy Bark.

Immediately upon the consummation of the Merger and the other transactions contemplated by the Merger Agreement (collectively, the “Transactions” and the consummation of the Transactions, the “Closing”), Merger Sub merged with and into Legacy BARK, with Legacy BARK surviving the Business Combination as a wholly-owned subsidiary of the Company. In connection with the Transactions, the Company changed its name to “The Original BARK Company,” and in November 2021 changed its name to BARK, Inc.

The Merger is accounted for as a reverse recapitalization in accordance with U.S. GAAP primarily due to the fact that Legacy BARK stockholders continue to control the Company post the closing of the Merger. Under this method of accounting, Northern Star is treated as the “acquired” company for accounting purposes and the Merger is treated as the equivalent of Legacy BARK issuing stock for the net assets of Northern Star, accompanied by a recapitalization. The net assets of Northern Star are stated at historical cost, with no goodwill or other intangible assets recorded. Reported shares and earnings per share available to holders of the Company’s common stock and equity awards prior to the Business Combination have been retroactively restated reflecting the exchange ratio established pursuant to the Business Combination Agreement (1:8.7425). Treasury stock has also been retrospectively restated to reflect the cancellation and extinguishment of the shares pursuant to the Business Combination Agreement.

Pursuant to the Merger, on the Closing Date, each stockholder of Legacy BARK’s common and preferred stock, (including stockholders issued common stock as a result of the conversion of Legacy BARK’s outstanding convertible promissory notes issued in 2019 and 2020 (other than the 2025 Convertible Notes - see Note 5, “Debt”)) received 8.7425 shares of the Company’s common stock, par value $0.0001 per share, per share of Legacy BARK’s common stock and preferred stock, respectively, owned by such Legacy BARK stockholder that was outstanding immediately prior to the Closing Date.

In addition, pursuant to the terms of the Merger Agreement, at the effective time of the Merger, (1) options to purchase shares of Legacy BARK’s common stock were converted into options to purchase an aggregate of 29,257,576 shares of the Company's common stock and (2) warrants to purchase shares of Legacy BARK’s common and redeemable convertible preferred stock were converted into warrants to purchase an aggregate of 1,897,212 shares of the Company's common stock.

Additionally, at the Closing:

•the conversion obligations with respect to Legacy BARK’s 5.50% convertible senior secured notes due 2025 (the “2025 Convertible Notes”) were assumed by the Company and the 2025 Convertible Notes became convertible at the election of the holders into shares of the Company's common stock. As of the Closing, the 2025 Convertible Notes were convertible at the election of the holder into an aggregate of 7,713,121 shares of the Company's common stock based on the then outstanding principal and accrued interest. The 2025 Convertible Notes are still outstanding as of December 31, 2022;

•certain investors (the “PIPE Investors”) purchased an aggregate of 20,000,000 shares of the Company's common stock in a private placement at a price of $10.00 per share for an aggregate purchase price of $200.0 million (the “PIPE Issuance”);

•each of the 6,358,750 outstanding shares of Northern Star’s Class B common stock were converted into a share of the Company's common stock on a one-for-one basis. Each outstanding warrant of Northern Star entitles the holder to purchase shares of the Company's common stock at a price of $11.50 per share beginning on November 13, 2021; and

•the Company amended and restated its amended and restated certificate of incorporation, increasing the number of shares of common stock the Company is authorized to issue to 500,000,000 shares.

4.REVENUE FROM CONTRACTS WITH CUSTOMERS

The Company generates revenue through its Direct to Consumer segment which consists of product sales of monthly subscription boxes, as well as sales through its website, BarkShop.com, and its Commerce segment which generates revenue from product sales to retailers and through marketplaces. 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 nine months ended December 31, 2022 and 2021 were as follows (in thousands):


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2022		2021		2022		2021
Revenue
Direct to Consumer:
Toys and treats subscription	$	114,673	$	114,270	$	342,076	$	321,343
Other	5,402		3,854		13,942		8,973
Total Direct to Consumer	$	120,075	$	118,124	$	356,018	$	330,316
Commerce	14,259		22,688		53,280		48,264
Revenue	$	134,334	$	140,812	$	409,298	$	378,580

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 $32.9 million and $31.5 million as of December 31, 2022 and March 31, 2022, 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.

5.DEBT

As of December 31, 2022 and March 31, 2022, long-term debt consisted of the following (in thousands):


	As of December 31,		As of March 31,
	2022		2022
2025 Convertible Notes	$	83,525	$	79,171
Less: deferred financing fees and debt discount	(2,488)		(2,981)
Total long-term debt	$	81,037	$	76,190

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 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 Company used approximately $27.6 million of the net proceeds from the sale of the 2025 Convertible Notes to repay the previously outstanding term loans with Western Alliance Bank and Pinnacle, which included $2.0 million of early repayment fees related to the Pinnacle loan.

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 December 31, 2022. Therefore, the Company did not record a derivative liability related to these features as of December 31, 2022. The Company will assess the probability of occurrence quarterly during the term of the 2025 Convertible Notes.

As of December 31, 2022 and March 31, 2022, the Company had $83.5 million and $79.2 million, respectively, 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 (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.

On December 7, 2018, the Company amended the Western Alliance Agreement, which included the issuance of a warrant to purchase common stock (“Subsequent Western Alliance Warrant”) to Western Alliance. The modification to the Western Alliance Agreement provided for an additional term loan of $10.0 million at issuance and an incremental seasonal loan of $5.0 million. The seasonal loan matured and was repaid on March 31, 2020. The term loan had a maturity date of December 31, 2021.

On July 31, 2020, the Company amended the Western Alliance Agreement and extended the expiration of the warrants to July 31, 2030. The modification to the Western Alliance Agreement amended the maturity date of the Credit Facility to August 12, 2021.

On November 27, 2020, the Company repaid the outstanding $10.0 million principal of the term loan with Western Alliance Bank, as well as $0.2 million of early repayment fees, using proceeds from the issuance of the 2025 Convertible Notes. See further discussion of the 2025 Convertible Notes issuance above.

In conjunction with the 2025 Convertible Notes issuance, the Company amended the Western Alliance Agreement to extend the Credit Facility repayment date from August 12, 2021 to December 31, 2021.

On January 22, 2021, the Company amended the Western Alliance Agreement to extend the Credit Facility maturity date to May 31, 2022.

On October 29, 2021, the Company and Western Alliance entered into the eleventh loan and security modification agreement, which increased the sublimit for foreign exchange services and export, import, and standby letters of credit under the Company’s existing loan and security agreement with Western Alliance to $2.7 million.

On May 27, 2022, the Company and Western Alliance entered into the twelfth loan and security modification agreement, which extended the Credit Facility maturity date to June 30, 2022.

On June 30, 2022, the Company and Western Alliance entered into the thirteenth loan and security modification agreement, which extended the Credit Facility maturity date to July 15, 2022.

On August 3, 2022, the Company and Western Alliance entered into the fourteenth loan and security modification agreement, which extended the Credit Facility maturity date to May 31, 2023.

The interest rate for borrowings under the Credit Facility, as amended, is 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 has 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 has first perfected security in substantially all of the Company’s assets, including its rights to its intellectual property.

As of December 31, 2022 and March 31, 2022, there were no outstanding borrowings under the Credit Facility. The full amount of the Credit Facility of $35.0 million is available to be borrowed by the Company if or when needed through the termination date of the agreement of May 31, 2023.

Under the terms of this Credit Facility, the Company is required to comply with certain financial and non-financial covenants, including covenants to maintain certain liquidity amounts, as defined in the amended Western Alliance Agreement. As of December 31, 2022 and March 31, 2022, the Company was compliant with its financial covenants.

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. As of December 31, 2022, 12,039,811 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.

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 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.

The 2011 and 2021 Plans (together, the “Plans”) are administered by the Company’s Compensation Committee of its Board of Directors (the “Compensation Committee”). The exercise prices, vesting and other restrictions are determined by the Board of Directors (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. A total of 3,385,901 shares of common stock have been reserved for future issuance under the 2021 ESPP. 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 Company's board of directors 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 of Directors 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.

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 nine months ended December 31, 2022, employees who elected to participate in the ESPP purchased a total of 109,186 shares of common stock, resulting in cash proceeds to the Company of approximately $0.1 million. ESPP employee payroll contributions accrued as of December 31, 2022 were less than $0.1 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 nine months ended December 31, 2022 the Company granted to its employees equity awards to purchase an aggregate of 1,575,074 shares of common stock with a weighted average exercise price of $2.94 vesting over a four-year period.

Restricted Stock Unit (“RSU”) Activity

During the nine months ended December 31, 2022 the Company granted to its employees RSUs for the purchase of 7,428,120 shares of common stock.

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 nine months ended December 31, 2022 and 2021, which includes expense related to options and RSUs (in thousands):


	Three Months Ended				Nine Months Ended
	December 31,				December 31,
	2022		2021		2022		2021
General and administrative	$	3,354	$	2,200	$	10,937	$	4,599
Advertising and marketing	327		2,009		939		6,437
Total stock-based compensation expense	$	3,681	$	4,209	$	11,876	$	11,036

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.

On October 29, 2021, the Company entered into a lease agreement for a new office space in New York, New York to serve as the Company’s new headquarters. During the third quarter of fiscal 2023 the Company completed the move to the new headquarters. In accordance with ASC 842, Leases, the lease was classified as an operating lease. The new lease requires total lease payments of $39.8 million with a lease term of 16.5 years, excluding renewal options. Rent expense is recorded on a straight-line basis over the lease term.

Lease payments commence starting October 1, 2023, however, the Company took initial possession of the new headquarters on April 1, 2022 to begin constructing leasehold improvements, which resulted in an initial recording of a right-of-use asset of $17.0 million, other current asset of $7.6 million and corresponding operating lease liability of $24.6 million, and commencement of operating lease expense. The Company has the right to sublease all, or a portion, of this leased office space provided that certain terms and conditions are met.

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 2026.

The Company’s finance leases as of December 31, 2022 and March 31, 2022 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	December 31, 2022		March 31, 2022

Assets
Operating	Operating lease right-of-use assets	$	37,601	$	29,552
Total operating lease assets		$	37,601	$	29,552
Liabilities
Operating lease liabilities (current)	Operating lease liabilities, current	$	5,650	$	5,060
Operating lease liabilities (non-current)	Operating lease liabilities	$	46,996	$	28,847
Total operating lease liabilities		$	52,646	$	33,907

During the three and nine months ended December 31, 2022, the Company vacated the prior headquarters in New York, New York and recorded impairments of $1.5 million and $1.7 million, respectively, to its right-of-use assets associated with the vacated location based on projected or actual sublease rental income and actual or estimated sublease commencement dates and the remeasurement of its operating lease liabilities associated with the modification of certain leases and the early termination of certain leases within the suite of leases pertaining to its prior headquarters.

The impairment analyses were performed at the asset group level and the impairment charges were estimated by comparing the fair value of each asset group based on the expected cash flows to its respective book value. The Company determined the discount rate for each asset group based on the approximate interest rate on a collateralized basis with similar remaining terms and payments as of the impairment date. Significant judgment was required to estimate the fair value of each asset group and actual results could vary from the estimates, resulting in potential future adjustments to amounts previously recorded.

For the nine months ended December 31, 2022 assets acquired in exchange for new operating lease liabilities pertained to the new headquarters and was $17.0 million. Lease expense primarily pertains to operating lease cost. Lease expense for operating leases was $2.2 million and $1.5 million for the three months ended December 31, 2022 and 2021, respectively. Lease expense for operating leases was $6.7 million and $3.7 million for the nine months ended December 31, 2022 and 2021, respectively. These lease expenses were included within general and administrative expenses in the condensed consolidated statements of operations. Sublease income for the three and nine months ended December 31, 2022 was immaterial and was recorded within other income (expense), net on the Company’s condensed consolidated statement of operations.

Cash flows used in operating activities related to operating leases was approximately $2.3 million for the nine months ended December 31, 2022.

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. While we intend to vigorously defend against this litigation, 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 months or nine months ended December 31, 2022 and 2021 due to the expected loss before income taxes to be incurred for the fiscal year ended March 31, 2023, and actual loss before income taxes incurred for the fiscal year ended March 31, 2022, 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 December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Other income (expense)—net:
Other income	$	181	$	54	$	1,187	$	236
Change in fair value of warrants	1,564		14,470		6,523		33,978
Gain (loss) on extinguishment of debt	—		574		—		(2,024)
Loss on warrant exercise	—				—		(303)

	$	1,745	$	15,098	$	7,710	$	31,887

11. NET LOSS PER SHARE

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


	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Numerator:


Net income (loss) attributable to common stockholders—basic and diluted	$	(21,270)	$	(13,241)	$	(47,317)	$	(31,589)
Denominator:
Weighted average common shares outstanding—basic and diluted	177,672,036		172,554,101		176,546,378		150,313,932




Net income (loss) per share attributable to common stockholders
Net income (loss) per share attributable to common stockholders - basic and diluted	$	(0.12)	$	(0.08)	$	(0.27)	$	(0.21)

For the three and nine months ended December 31, 2022 , the Company’s potential dilutive securities, which include stock options, RSUs, warrants and convertible notes have been excluded 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 nine months ended December 31, 2022 .

For the three and nine months ended December 31, 2021, the Company’s potential dilutive securities, which include redeemable convertible preferred stock, stock options and warrants, have been excluded 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 nine months ended December 31, 2021.

The Company excluded the following potential shares of common stock, presented based on amounts outstanding at December 31, 2022 and 2021 from the computation of diluted net loss per share attributable to common shareholders for the three and nine months ended December 31, 2022 and 2021 because including them would have had an anti-dilutive effect.


	As of
	December 31,
		2022	2021
Stock options to purchase common stock		16,068,852	23,902,292
Restricted stock units		8,615,450	1,979,396
Warrants to purchase common stock		13,036,333	13,036,333
2025 Convertible Notes as converted to common stock		8,390,774	7,952,919

The Company also had convertible notes outstanding for the three and nine months ended December 31, 2022, which 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 nine months ended December 31, 2022, the Company excluded these instruments from the table above and the calculation of diluted net loss per share for the period. See Note 5, “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 BarkBox, Super Chewer, BARK Bright and BARK Food subscriptions, as well as product line sales through the Company’s website, BarkShop. The Commerce segment derives revenue from the sale of toys, BARK Bright and BARK Home products 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 December 31,		Nine Months Ended December 31,
	2022	2021	2022	2021
Direct to Consumer:
Revenue	$

Bark, Inc. [BARK] Filings
Bark, Inc. [BARK-WT] Filings
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