The next wave of adoption will be led by builders who focus on execution, reliability, and usability.And Polygon is building for it. https://t.co/qapRiVmXsu ...

Learn more about the deployment: https://t.co/H695OilY1MBDACS (@BDACSKorea):🫱🏼‍🫲🏼@BDACS x @0xPolygonEco – BDACS Expands KRW1 to the Polygon EcosystemWe are excited to expand KRW1 to the Polygon ecosystem.BDACS has deployed its KRW-backed, regulatory-first stablecoin KRW1 on the Polygon blockchain — following a successful PoC proving full end-to-end https://t.co/RNo9XkJuw6 ...

"We're seeing sustained demand from institutional investors for yield-generating digital assets backed by real network activity."- @0xAishwary, global head of payments, exchanges and real-world assets at Polygon Labscrypto.news (@cryptodotnews):LATEST: $POL | @0xPolygon partners with @cypher_capital to expand institutional access to $POL in the Middle East.Long-term capital will be injected into the ecosystem, for exposure to $POL for institutional investors. https://t.co/UUeO05Swbb ...

Financial Performance Overview - The group experienced a decline in earnings, primarily due to weaker performance in the Swedish media houses and distribution operations[3,8] - Digital revenues increased, adjusted for currency effects, by 11.7%, while operating costs decreased by 0.5%[6] - Helthjem Netthandel contributed negatively to the earnings decline by MNOK 5[9] Digital Revenue and User Growth - Strong growth in digital user revenues was observed in both Norway and Sweden[7] - Digital advertising revenues also increased in both countries[7] - Revenues from purely digital products accounted for more than half of the media houses' total advertising and user revenues for the first time[7] Cost Management and Efficiency Measures - Measures implemented in 2023 and 2024 helped limit the group's underlying cost growth to 1%[7] - Further measures were implemented in the Swedish distribution business during the quarter, with savings expected from the third quarter of 2025[7] - A process was initiated to reduce staffing by approximately 60 full-time positions in the Swedish media houses, with savings expected from the fourth quarter of 2025[7] Distribution Performance - Distribution in Norway saw earnings growth driven by reduced costs and increased earnings contribution from Aktiv Norgesdistribusjon[37] - Distribution in Sweden experienced weak earnings development, with new measures implemented and expected to take effect from the next quarter[37] Stampen Media Initiatives - Measures in the distribution business of Stampen Media have been implemented, and further efficiency measures are being implemented in the media business, with an annual earnings effect of approximately MSEK 60[46] - The commenced staff reduction process is expected to result in annual cost savings of approximately MSEK 45[48] - Structural changes related to distribution geography and branch structure were implemented in the second quarter of 2025, with savings expected from the third quarter of 2025, resulting in an annual earnings effect of approximately MSEK 15[49] Financial Position and Cash Flow - The group paid out dividends of MNOK 1,095 in the quarter[52] - The group sold shares in FINN for MNOK 2,500, receiving payment in Vend shares[54]

Summary of Polymetals Resources (POL) 2025 Conference Company Overview - Polymetals Resources is identified as Australia's newest silver and zinc producer, having recently commenced production from the Endeavour Silver zinc mine [1] - The company emphasizes a cost-efficient management and an owner-operator approach [1][2] Key Developments - Acquisition of the Endeavour Silver Zinc mine occurred twelve months prior, followed by securing financing and beginning redevelopment in November [3] - Mining production commenced in May, with mill commissioning starting in June and first cash flow received in July [4][12] Project Details - The Endeavour project has a polymetallic ore body of 50 million tonnes, with historical production of 92 million ounces of silver, 2.6 million tonnes of zinc, and 1.6 million tonnes of lead [7] - The project was previously placed on care and maintenance due to an uneconomic 100% silver streaming royalty, which was restructured to a 4% NSR, recovering approximately 25% of lost revenues [5] Production and Financial Performance - In July, the company generated $15.5 million in cash flow and has $22 million in the bank [14] - The company is currently operating at about 60% of its steady-state production, with plans to ramp up to full capacity by October [14][20] Exploration and Future Plans - Continuous drilling programs are in place to extend mine life and explore new areas, particularly targeting a southern extension of the main ore body [15][16] - The company plans to spend approximately $7.5 million annually on exploration, aiming to be Australia's lowest-cost zinc producer [21] Infrastructure and Operational Efficiency - The mine is fully developed and serviced, with a processing plant capable of handling 1.2 million tonnes [6][10] - The company has agreements in place to mill ore from nearby operations, enhancing operational efficiency [20] Management and Strategic Goals - The management team has a strong commitment to the project, having invested significantly in its success [2] - The company aims to optimize existing assets and potentially introduce a second project in the future [22] Conclusion - Polymetals Resources has made significant strides in bringing the Endeavour project back to production, with a focus on cost management, exploration, and operational efficiency [22][23]

Company Overview - Polymetals is an Australian silver and zinc producer focused on the Endeavor Silver Zinc Mine in the Cobar Basin, NSW[1, 4, 10, 11] - Board and management hold approximately 35% of the company, representing an investment of over $10 million[6] Endeavor Mine Operations & Resources - The Endeavor mine has a 1.2 million tonnes per annum (1.2Mtpa) processing capacity and significant existing infrastructure[15] - The mine has a remaining mineral resource of 16.3 million tonnes (16.3Mt) containing 44.2 million ounces (44.2Moz) of silver, 1.3 million tonnes (1.3Mt) of zinc and 0.73 million tonnes (0.73Mt) of lead[16, 17, 61] - Initial 10-year mine plan targets early silver cash flow, projecting 21.4 million ounces (21.4Moz) of contained silver, 400,000 tonnes of contained zinc, and 172,000 tonnes of contained lead[19] - The first 2 years of the mine plan are projected to generate $250 million EBITDA from 5 million ounces (5Moz) of silver production[19] Financial Performance & Exploration - Concentrate prepayments for July 2025 totaled $11.6 million, with $15.5 million in operating cash flow generated to the end of July 2025[35] - As of August 4, 2025, the company had A$22 million cash at bank and A$7 million available from a finance facility[35, 48] - The company has a $7.5 million annual exploration budget to extend mine life and discover new deposits[37] - Polymetals owns 1,107 square kilometers (1,107km²) of exploration licenses in the Northern Cobar Basin, offering potential for new discoveries[39]

Group 1 - The company, Polished.com Inc., has acknowledged unusual market activity in its stock but is not aware of any undisclosed material changes in its business that would explain the recent increase in share price and trading volume [1] - Polished.com Inc. aims to provide a high-quality shopping experience for home appliances, offering a range of top brand products and exceptional customer service [2] - The company offers a "Love-It-Or-Return-It" 30-day policy, extended warranties, and convenient delivery and installation options to enhance customer satisfaction [2]

PART I FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS.) The company presents its unaudited condensed consolidated financial statements for the period ended September 30, 2023 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets and stockholders' equity from December 31, 2022, to September 30, 2023 Balance Sheet Summary | Metric | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Change (in thousands) | % Change | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Cash and cash equivalents | $9,811 | $19,549 | $(9,738) | -49.8% | | Restricted cash | $5,391 | $950 | $4,441 | 467.5% | | Receivables, net | $19,864 | $26,650 | $(6,786) | -25.5% | | Vendor deposits | $30,828 | $25,022 | $5,806 | 23.2% | | Merchandise inventory, net | $30,093 | $41,766 | $(11,673) | -27.9% | | Total Current Assets | $107,513 | $125,154 | $(17,641) | -14.1% | | Total Assets | $238,817 | $261,914 | $(23,097) | -8.8% | | Total Current Liabilities | $90,968 | $99,295 | $(8,327) | -8.4% | | Total Liabilities | $184,451 | $199,349 | $(14,898) | -7.5% | | Total Stockholders' Equity | $54,366 | $62,565 | $(8,199) | -13.1% | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company experienced significant declines in product sales but improved gross margin, with net loss increasing for both periods Three Months Ended September 30, 2023 vs 2022 | Metric (in thousands) | Sep 30, 2023 | Sep 30, 2022 | Change | % Change | | :-------------------- | :----------- | :----------- | :----- | :------- | | Product sales, net | $77,818 | $143,566 | $(65,748) | -45.8% | | Cost of goods sold | $62,513 | $122,431 | $(59,918) | -48.9% | | Gross profit | $15,305 | $21,135 | $(5,830) | -27.6% | | Gross margin | 19.7% | 14.7% | 5.0 pp | | | Total Operating Expenses | $21,300 | $31,956 | $(10,656) | -33.3% | | LOSS FROM OPERATIONS | $(5,995) | $(10,821) | $4,826 | -44.6% | | Interest expense | $(1,886) | $(1,351) | $(535) | 39.6% | | NET LOSS | $(6,634) | $(5,184) | $(1,450) | 28.0% | | Basic EPS | $(3.14) | $(2.46) | $(0.68) | 27.6% | Nine Months Ended September 30, 2023 vs 2022 | Metric (in thousands) | Sep 30, 2023 | Sep 30, 2022 | Change | % Change | | :-------------------- | :----------- | :----------- | :----- | :------- | | Product sales, net | $261,018 | $430,710 | $(169,692) | -39.4% | | Cost of goods sold | $204,987 | $355,788 | $(150,801) | -42.4% | | Gross profit | $56,031 | $74,922 | $(18,891) | -25.2% | | Gross margin | 21.5% | 17.4% | 4.1 pp | | | Total Operating Expenses | $61,826 | $79,658 | $(17,832) | -22.4% | | LOSS FROM OPERATIONS | $(5,795) | $(4,736) | $(1,059) | 22.4% | | Interest expense | $(4,821) | $(2,594) | $(2,227) | 85.8% | | NET LOSS | $(8,391) | $(3,657) | $(4,734) | 129.5% | | Basic EPS | $(3.98) | $(1.73) | $(2.25) | 130.1% | [Condensed Consolidated Statement of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Stockholders'%20Equity) Stockholders' equity decreased primarily due to net losses incurred during the period, partially offset by minor stock issuances | Metric (in thousands) | Jan 1, 2023 | Sep 30, 2023 | | :-------------------- | :---------- | :----------- | | Total Stockholders' Equity | $62,565 | $54,366 | | Net loss (9 months) | | $(8,391) | | Stock compensation expense | | $10 | - Total stockholders' equity **decreased by $8.199 million** from January 1, 2023, to September 30, 2023, primarily due to accumulated deficit from net losses[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash used in operating activities was significantly reduced, but increased use of cash in financing activities led to a net decrease in cash Nine Months Ended September 30, 2023 vs 2022 | Metric (in thousands) | Sep 30, 2023 | Sep 30, 2022 | Change | % Change | | :-------------------- | :----------- | :----------- | :----- | :------- | | Net cash used in operating activities | $(390) | $(38,693) | $38,303 | -99.0% | | Net cash used in investing activities | $(140) | $(1,318) | $1,178 | -89.4% | | Net cash (used in) provided by financing activities | $(4,767) | $36,386 | $(41,153) | -113.1% | | NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | $(5,297) | $(3,625) | $(1,672) | 46.1% | | Cash, cash equivalents, and restricted cash, END OF PERIOD | $15,202 | $30,166 | $(14,964) | -49.6% | - Significant changes in operating activities for 9M 2023 include cash provided by receivables (**$7.0M**) and inventory (**$12.9M**), and cash used by vendor deposits (**$5.8M**), accounts payable (**$4.9M**), and customer deposits (**$2.8M**)[148](index=148&type=chunk) - Financing activities for 9M 2023 primarily involved repayments of notes payable (**$4.7M**), contrasting with 9M 2022 which saw **$43.0M cash received** from notes payable and **$2.0M in stock repurchases**[149](index=149&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, liquidity issues, revenue disaggregation, debt agreements, and other key financial disclosures [NOTE 1—BASIS OF PRESENTATION](index=13&type=section&id=NOTE%201%E2%80%94BASIS%20OF%20PRESENTATION) - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and SEC rules for interim financial reporting, reflecting normal recurring adjustments[28](index=28&type=chunk) - Interim results for the three and nine months ended September 30, 2023, are **not necessarily indicative of full-year or future period results**[28](index=28&type=chunk) [NOTE 2—RECENT ACCOUNTING PRONOUNCEMENTS](index=13&type=section&id=NOTE%202%E2%80%94RECENT%20ACCOUNTING%20PRONOUNCEMENTS) - The Company adopted ASU 2016-13 (Credit Losses), ASU 2021-08 (Business Combinations), and ASU 2022-02 (Troubled Debt Restructurings) on January 1, 2023[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - The adoption of these accounting updates **did not have a material impact** on the consolidated financial statements and related disclosures[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) [NOTE 3—LIQUIDITY AND GOING CONCERN ASSESSMENT](index=14&type=section&id=NOTE%203%E2%80%94LIQUIDITY%20AND%20GOING%20CONCERN%20ASSESSMENT) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Cash and cash equivalents | $9,800 | $19,600 | | Restricted cash | $5,400 | $1,000 | | Vendor deposits | $30,800 | $25,000 | | Operating loss (9 months/full year) | $5,800 | $134,400 | | Cash flows used in operations (9 months/full year) | $400 | $46,700 | | Working capital | $15,900 | $25,900 | - **Substantial doubt exists** regarding the Company's ability to continue as a going concern based on initial assessment[37](index=37&type=chunk) - Management's plans to mitigate going concern uncertainty include: loan amendment with Bank of America, headcount reductions, warehouse consolidation, improving digital advertising, implementing new customer financing initiatives, and shifting sales focus to higher-margin luxury products[38](index=38&type=chunk)[39](index=39&type=chunk)[45](index=45&type=chunk) [NOTE 4—DISAGGREGATION OF REVENUES](index=15&type=section&id=NOTE%204%E2%80%94DISAGGREGATION%20OF%20REVENUES) Disaggregated Revenue by Product Type (in thousands) | Product Type | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Appliance sales | $70,620 | $136,044 | $234,797 | $402,835 | | Furniture and other sales | $7,198 | $7,522 | $26,221 | $27,875 | | Total | $77,818 | $141,566 | $261,018 | $430,710 | - Appliance sales **decreased by 48.1%** for the three months and **41.7% for the nine months** ended September 30, 2023, compared to the same periods in 2022[45](index=45&type=chunk) [NOTE 5—SUPPLEMENTAL FINANCIAL STATEMENT DISCLOSURES](index=16&type=section&id=NOTE%205%E2%80%94SUPPLEMENTAL%20FINANCIAL%20STATEMENT%20DISCLOSURES) [Receivables](index=16&type=section&id=Receivables) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Trade accounts receivable | $15,050 | $13,691 | | Vendor rebates receivable | $5,459 | $8,514 | | Other receivables | $637 | $5,951 | | Total receivables, net | $19,864 | $26,650 | - Total receivables, net, **decreased by $6.786 million (25.5%)** from December 31, 2022, to September 30, 2023, primarily due to a decrease in vendor rebates and other receivables[47](index=47&type=chunk) [Merchandise Inventory](index=16&type=section&id=Merchandise%20Inventory) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Appliances | $28,240 | $39,702 | | Furniture and other | $2,442 | $3,853 | | Total merchandise inventory, net | $30,093 | $41,766 | - Total merchandise inventory, net, **decreased by $11.673 million (27.9%)** from December 31, 2022, to September 30, 2023, with appliances accounting for the majority of the reduction[48](index=48&type=chunk) [Property and Equipment](index=16&type=section&id=Property%20and%20Equipment) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Total property and equipment | $5,903 | $6,764 | | Accumulated depreciation | $(2,628) | $(1,689) | | Property and equipment, net | $3,275 | $5,075 | - Property and equipment, net, **decreased by $1.8 million (35.5%)** from December 31, 2022, to September 30, 2023[49](index=49&type=chunk) Depreciation Expense (in thousands) | Period | Sep 30, 2023 | Sep 30, 2022 | | :----- | :----------- | :----------- | | Three Months | $0.3 | $0.9 | | Nine Months | $0.9 | $2.9 | [Intangible Assets](index=18&type=section&id=Intangible%20Assets) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Total intangible assets | $10,296 | $10,296 | | Accumulated amortization | $(2,260) | $0 | | Intangible assets, net | $8,036 | $10,296 | Amortization Expense (in thousands) | Period | Sep 30, 2023 | Sep 30, 2022 | | :----- | :----------- | :----------- | | Three Months | $0.8 | $2.6 | | Nine Months | $2.3 | $7.7 | Estimated Annual Amortization Expense (in thousands) | Year ending December 31, | Amount | | :----------------------- | :----- | | 2023 (Remainder of year) | $754 | | 2024 | $3,013 | | 2025 | $3,013 | | 2026 | $1,256 | | 2027 | $0 | | Total | $8,036 | [Accounts Payable and Accrued Expenses](index=18&type=section&id=Accounts%20Payable%20and%20Accrued%20Expenses) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Trade accounts payable | $38,002 | $34,345 | | Accrued sales tax | $32,039 | $36,196 | | Accrued payroll liabilities | $1,110 | $680 | | Accrued liability for sales returns | $1,916 | $3,916 | | Other accrued liabilities | $3,303 | $5,151 | | Total accounts payable and accrued expenses | $76,524 | $81,537 | - Total accounts payable and accrued expenses **decreased by $5.013 million (6.1%)** from December 31, 2022, to September 30, 2023, mainly due to reductions in accrued sales tax and sales returns liability[55](index=55&type=chunk) [NOTE 6—OPERATING LEASES](index=19&type=section&id=NOTE%206%E2%80%94OPERATING%20LEASES) | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Operating lease right-of-use assets | $9,172 | $11,688 | | Lease liabilities, current portion | $1,945 | $3,726 | | Lease liabilities, long-term | $7,919 | $9,013 | | Total operating lease liabilities | $9,864 | $12,739 | - Operating lease right-of-use assets **decreased by $2.516 million (21.5%)** and total operating lease liabilities **decreased by $2.875 million (22.6%)** from December 31, 2022, to September 30, 2023[57](index=57&type=chunk) Operating Lease Expense (in thousands) | Period | Sep 30, 2023 | Sep 30, 2022 | | :----- | :----------- | :----------- | | Three Months | $1.3 | $3.2 | | Nine Months | $3.2 | $8.6 | Maturities of Operating Lease Liabilities (in thousands) | Years Ending December 31, | Amount | | :------------------------ | :----- | | 2023 (Remainder of year) | $948 | | 2024 | $1,808 | | 2025 | $1,489 | | 2026 | $1,532 | | 2027 | $1,284 | | Thereafter | $4,158 | | Total | $11,219 | | Less: imputed interest | $(1,355) | | Total operating lease liabilities | $9,864 | [NOTE 7—RELATED PARTIES](index=20&type=section&id=NOTE%207%E2%80%94RELATED%20PARTIES) - The Company terminated a lease agreement with 8780 19 Ave LLC (an entity owned by former officers) on August 23, 2023, agreeing to pay **$100,000** and terminating claims for reimbursement of building improvements[61](index=61&type=chunk) - The Company is a member of DMI, an appliance purchasing cooperative, and approximately **65% of total purchases** during the nine months ended September 30, 2023, were from DMI, with vendor deposits totaling **$30.8 million**[62](index=62&type=chunk)[63](index=63&type=chunk)[96](index=96&type=chunk) - Total rent expense under related party leases was **$0.8 million** for the nine months ended September 30, 2023[64](index=64&type=chunk) [NOTE 8—NOTES PAYABLE](index=21&type=section&id=NOTE%208%E2%80%94NOTES%20PAYABLE) - The Bank of America Credit Agreement includes a **$100.0 million Term Loan** and a **$40.0 million Revolving Loan** (frozen due to non-compliance), with the Term Loan's carrying value at **$92.3 million** as of September 30, 2023[66](index=66&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) - The Second Amendment (November 20, 2023) **waived events of default**, deferred a principal installment, and set a new maturity date of **November 30, 2024**, while increasing the applicable interest rate to **4.00%**[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - The Company is discussing with investment bankers to replace the existing credit agreement by August 31, 2024, due to the reduced term[76](index=76&type=chunk) Maturities of Notes Payable (in thousands) | For the years ended December 31, | Amount | | :------------------------------- | :----- | | 2023 (Remainder of year) | $1,033 | | 2024 | $92,531 | | 2025 | $201 | | 2026 | $29 | | 2027 | $21 | | Thereafter | $0 | | Total | $93,815 | | Less: Loan costs | $(796) | | Total | $93,019 | | Amount classified as a current liability | $7,859 | | Amount classified as long-term liability | $85,160 | [NOTE 9—DERIVATIVE INSTRUMENTS (INTEREST RATE SWAP)](index=23&type=section&id=NOTE%209%E2%80%94DERIVATIVE%20INSTRUMENTS%20(INTEREST%20RATE%20SWAP)) - The Company entered into an interest rate swap agreement with a notional amount of **$100 million** to reduce exposure to floating SOFR rates, paying a fixed rate of **2.93%**[79](index=79&type=chunk) Gain on Change in Fair Value of Derivative Instruments (in thousands) | Period | Sep 30, 2023 | Sep 30, 2022 | | :----- | :----------- | :----------- | | Three Months | $446 | $4,476 | | Nine Months | $1,020 | $3,540 | - As of September 30, 2023, the fair value of the interest rate swap was **$4.2 million**, classified as a derivative asset[80](index=80&type=chunk) [NOTE 10—STOCKHOLDERS' EQUITY](index=23&type=section&id=NOTE%2010%E2%80%94STOCKHOLDERS'%20EQUITY) | Metric | Sep 30, 2023 | Dec 31, 2022 | | :----- | :----------- | :----------- | | Common stock outstanding | 2,109,398 | 2,104,558 | Stock Options Activity (9 months ended Sep 30, 2023) | Activity | Options | Weighted Average Exercise Price | | :------- | :------ | :------------------------------ | | Outstanding at Dec 31, 2022 | 750 | $155.00 | | Granted | 1,731 | $28.89 | | Forfeited | (750) | $155.00 | | Outstanding at Sep 30, 2023 | 1,731 | $28.89 | | Exercisable at Sep 30, 2023 | 0 | $0 | - Stock-based compensation expense for the nine months ended September 30, 2023, was **$0.2 million**, with **$0.03 million** remaining unrecognized compensation cost[84](index=84&type=chunk) Warrants Outstanding (9 months ended Sep 30, 2023) | Activity | Warrants | Weighted Average Exercise Price | | :------- | :---------- | :------------------------------ | | Outstanding at Dec 31, 2022 | 1,871,333 | $114.85 | | Outstanding at Sep 30, 2023 | 1,871,333 | $114.85 | | Exercisable at Sep 30, 2023 | 1,871,333 | $114.85 | [NOTE 11—EARNINGS (LOSS) PER SHARE](index=24&type=section&id=NOTE%2011%E2%80%94EARNINGS%20(LOSS)%20PER%20SHARE) Basic and Diluted EPS (Three Months Ended Sep 30) | Metric | Sep 30, 2023 | Sep 30, 2022 | | :----- | :----------- | :----------- | | Net income (loss) | $(6,634) | $(5,184) | | Basic weighted average common shares outstanding | 2,109,398 | 2,104,558 | | Basic earnings (loss) per share | $(3.14) | $(2.46) | | Diluted earnings (loss) per share | $(3.14) | $(2.46) | Basic and Diluted EPS (Nine Months Ended Sep 30) | Metric | Sep 30, 2023 | Sep 30, 2022 | | :----- | :----------- | :----------- | | Net income (loss) | $(8,391) | $(3,657) | | Basic weighted average common shares outstanding | 2,108,811 | 2,115,846 | | Basic earnings (loss) per share | $(3.98) | $(1.73) | | Diluted earnings (loss) per share | $(3.98) | $(1.73) | - Potentially dilutive options and warrants (**1,852,015 for 2023** and **1,871,333 for 2022**) were excluded from diluted EPS calculations as their effect was anti-dilutive[87](index=87&type=chunk) [NOTE 12—COMMITMENTS AND CONTINGENCIES](index=25&type=section&id=NOTE%2012%E2%80%94COMMITMENTS%20AND%20CONTINGENCIES) - The Company resolved a legal action (205 Petition) regarding a share increase proposal, agreeing to pay **$475,000** for attorneys' fees to stockholders' counsel on June 28, 2023[91](index=91&type=chunk) - A putative shareholder class action (Maschhof v. Polished.com Inc.) was filed on October 31, 2022, alleging misstatements in SEC filings related to the 2020 IPO[92](index=92&type=chunk) - Two derivative stockholder complaints were filed in early 2023, alleging breaches of fiduciary duty and other claims related to IPO filings; these actions are currently stayed or awaiting consolidation[94](index=94&type=chunk)[95](index=95&type=chunk) [NOTE 13—SUPPLIER CONCENTRATION](index=26&type=section&id=NOTE%2013%E2%80%94SUPPLIER%20CONCENTRATION) - Approximately **65% of the Company's purchases** for the nine months ended September 30, 2023, were made from DMI, an appliance purchasing cooperative[96](index=96&type=chunk) - The Company believes numerous other suppliers could be substituted if DMI became unavailable or non-competitive[96](index=96&type=chunk) [NOTE 14—SUBSEQUENT EVENTS](index=26&type=section&id=NOTE%2014%E2%80%94SUBSEQUENT%20EVENTS) - The Company signed a letter of intent for a new warehouse sublease from DMI, aiming to consolidate operations into one new **232,640 sq ft facility** for seven years[97](index=97&type=chunk) - The Second Amendment to the Bank of America Credit Agreement (Nov 20, 2023) **waived events of default**, deferred a principal installment, and set a new maturity date of **November 30, 2024**[98](index=98&type=chunk)[99](index=99&type=chunk) - A **1-for-50 reverse stock split** became effective on October 20, 2023, approved by shareholders on October 19, 2023[100](index=100&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=27&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) Management provides its perspective on the company's financial condition, results of operations, liquidity, and capital resources [Overview](index=27&type=section&id=Overview) - Polished.com Inc. operates as a content-driven and technology-enabled shopping destination for appliances, furniture, and home goods[103](index=103&type=chunk) - The Company offers a wide range of national, global, and luxury brands, as well as commercial appliances, through warehouse fulfillment centers and showrooms[103](index=103&type=chunk) [Recent Developments](index=27&type=section&id=Recent%20Developments) Recent developments include significant amendments to the Bank of America Credit Agreement and the implementation of a 1-for-50 reverse stock split [Amendment of Bank of America Credit Agreement](index=27&type=section&id=Amendment%20of%20Bank%20of%20America%20Credit%20Agreement) - The First Amendment (July 25, 2023) required the Company to maintain **$8.0 million in liquidity**, including cash and qualifying receivables[104](index=104&type=chunk) - The Second Amendment (November 20, 2023) **waived events of default**, deferred a principal installment of **$937,500** until January 31, 2024, and set a new maturity date of **November 30, 2024**[105](index=105&type=chunk) - The applicable interest rate for the Term Loan and Revolving Loan **increased to 4.00%**, with an additional **2% increase** following an event of default[106](index=106&type=chunk) - The Company entered into an interest rate swap agreement, capping its interest rate at **2.9% plus applicable margins**[107](index=107&type=chunk) [Reverse Stock Split](index=29&type=section&id=Reverse%20Stock%20Split) - A **1-for-50 reverse stock split** became effective on October 20, 2023, converting every 50 shares of common stock into one share[110](index=110&type=chunk) - Proportionate adjustments were made to the exercise price and number of shares for outstanding stock options, warrants, and convertible securities[110](index=110&type=chunk) [Trends and Principal Factors Affecting Our Financial Performance](index=29&type=section&id=Trends%20and%20Principal%20Factors%20Affecting%20Our%20Financial%20Performance) - Key factors affecting financial performance include customer acquisition, competitive pricing, product offerings, industry demand, market conditions, and integration of Appliances Connection operations[112](index=112&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) The company experienced significant revenue declines due to economic slowdown and a strategic shift, but gross margin improved [Comparison of Three Months Ended September 30, 2023 and 2022](index=30&type=section&id=Comparison%20of%20Three%20Months%20Ended%20September%2030,%202023%20and%202022) Key Financials (Three Months Ended Sep 30, in thousands) | Metric | 2023 Amount | 2023 % of Sales | 2022 Amount | 2022 % of Sales | Change (Amount) | Change (%) | | :-------------------------- | :---------- | :-------------- | :---------- | :-------------- | :-------------- | :--------- | | Product sales, net | $77,818 | 100.0% | $143,566 | 100.0% | $(65,748) | -45.8% | | Cost of goods sold | $62,513 | 80.3% | $122,431 | 85.3% | $(59,918) | -48.9% | | Gross profit | $15,305 | 19.7% | $21,135 | 14.7% | $(5,830) | -27.6% | | Personnel | $5,874 | 7.5% | $8,348 | 5.8% | $(2,474) | -29.6% | | Advertising | $5,061 | 6.5% | $7,534 | 5.2% | $(2,473) | -32.8% | | Bank and credit card fees | $2,557 | 3.3% | $5,932 | 4.1% | $(3,375) | -56.9% | | Depreciation and amortization | $1,061 | 1.4% | $2,882 | 2.0% | $(1,821) | -63.2% | | General and administrative | $6,747 | 8.7% | $7,260 | 5.1% | $(513) | -7.1% | | LOSS FROM OPERATIONS | $(5,995) | -7.7% | $(10,821) | -7.5% | $4,826 | -44.6% | | Total Other Income (Expenses) | $(806) | -1.0% | $3,249 | 2.3% | $(4,055) | -124.8% | | NET LOSS | $(6,634) | -8.5% | $(5,184) | -3.6% | $(1,450) | 28.0% | - The decrease in sales is attributed to a general economic slowdown, inflation, increased interest rates, and a **strategic shift to emphasize higher-margin sales**[114](index=114&type=chunk) - **Gross margin improved from 14.7% to 19.7%** due to management's emphasis on profitability[116](index=116&type=chunk) - Personnel expenses **decreased by $2.5 million** due to a reduction in force, including **$0.2 million in severance costs**[117](index=117&type=chunk) - Depreciation and amortization decreased due to a 2022 impairment charge that reduced the amount of intangible assets to be amortized[120](index=120&type=chunk) - General and administrative expenses decreased due to lower insurance premiums and professional fees, partially offset by a write-off of fixed assets[121](index=121&type=chunk) [Comparison of the Nine Months ended September 30, 2023 and 2022](index=32&type=section&id=Comparison%20of%20the%20Nine%20Months%20ended%20September%2030,%202023%20and%202022) Key Financials (Nine Months Ended Sep 30, in thousands) | Metric | 2023 Amount | 2023 % of Sales | 2022 Amount | 2022 % of Sales | Change (Amount) | Change (%) | | :-------------------------- | :---------- | :-------------- | :---------- | :-------------- | :-------------- | :--------- | | Product sales, net | $261,018 | 100.0% | $430,710 | 100.0% | $(169,692) | -39.4% | | Cost of goods sold | $204,987 | 78.5% | $355,788 | 82.6% | $(150,801) | -42.4% | | Gross profit | $56,031 | 21.5% | $74,922 | 17.4% | $(18,891) | -25.2% | | Personnel | $18,379 | 7.0% | $22,396 | 5.2% | $(4,017) | -17.9% | | Advertising | $14,694 | 5.6% | $18,475 | 4.3% | $(3,781) | -20.5% | | Bank and credit card fees | $8,935 | 3.4% | $15,121 | 3.5% | $(6,186) | -40.9% | | Depreciation and amortization | $3,199 | 1.2% | $8,588 | 2.0% | $(5,389) | -62.7% | | General and administrative | $16,619 | 6.4% | $15,078 | 3.5% | $1,541 | 10.2% | | LOSS FROM OPERATIONS | $(5,795) | -2.2% | $(4,736) | -1.1% | $(1,059) | 22.4% | | Total Other Income (Expenses) | $(2,331) | -0.9% | $(2,155) | -0.5% | $(176) | 8.2% | | NET LOSS | $(8,391) | -3.2% | $(3,657) | -0.8% | $(4,734) | 129.5% | - Product sales **decreased by $169.7 million, or 39.4%**, due to a general economic slowdown, inflation, increased interest rates, and a focus on higher-margin sales[126](index=126&type=chunk) - **Gross margin improved from 17.4% to 21.5%** due to management's emphasis on profitability[129](index=129&type=chunk) - Personnel expenses **decreased by $4.0 million**, including **$0.3 million in severance costs** from a reduction in force[130](index=130&type=chunk)[131](index=131&type=chunk) - General and administrative expenses **increased by $1.5 million, or 10.2%**, due to higher insurance premiums and a write-off of fixed assets[135](index=135&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces liquidity challenges, with substantial doubt about its ability to continue as a going concern | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Cash and cash equivalents | $15,200 | $20,500 | | Operating loss (9 months/full year) | $8,400 | $128,300 | | Cash used in operations (9 months/full year) | $400 | $46,700 | | Working capital | $15,900 | $25,900 | - Management believes its forecasts indicate improved operations and **sufficient funds to continue as a going concern** for one year from the filing date[141](index=141&type=chunk)[142](index=142&type=chunk) [Summary of Cash Flow](index=36&type=section&id=Summary%20of%20Cash%20Flow) Net Cash Flow (Nine Months Ended Sep 30, in thousands) | Activity | 2023 | 2022 | | :------- | :--- | :--- | | Net cash used in operating activities | $(390) | $(38,693) | | Net cash used in investing activities | $(140) | $(1,318) | | Net cash (used in) provided by financing activities | $(4,767) | $36,386 | | Net change in cash, cash equivalents, and restricted cash | $(5,297) | $(3,625) | - Operating cash flow improved significantly, with a reduction in cash used from **$38.7 million in 2022 to $0.4 million in 2023**[145](index=145&type=chunk)[148](index=148&type=chunk) - Financing activities shifted from providing **$36.4 million in 2022** to using **$4.8 million in 2023** due to notes payable repayments[147](index=147&type=chunk)[149](index=149&type=chunk) [Credit Facilities](index=37&type=section&id=Credit%20Facilities) - The Company has a **$140.0 million senior secured credit facility** with Bank of America, though the **$40.0 million Revolving Loan was frozen** due to covenant non-compliance[150](index=150&type=chunk)[152](index=152&type=chunk) - Amendments to the Credit Agreement required maintaining **$8.0 million in liquidity**, waived events of default, and set a new maturity date of **November 30, 2024**[153](index=153&type=chunk)[154](index=154&type=chunk) - The applicable interest rate **increased to 4.00%**, with an additional **2% penalty rate** upon default[155](index=155&type=chunk) - The Company is seeking new financing to replace the existing credit agreement by August 31, 2024[157](index=157&type=chunk) [Management Services Agreement](index=38&type=section&id=Management%20Services%20Agreement) - The Company has a management services agreement with 1847 Partners LLC for a quarterly management fee of **$62,500**[158](index=158&type=chunk) Management Fees Expensed (in millions) | Period | Sep 30, 2023 | Sep 30, 2022 | | :----- | :----------- | :----------- | | Three Months | $0.06 | $0.18 | | Nine Months | $0.18 | $0.54 | [Leases](index=39&type=section&id=Leases) - The Company holds various lease agreements for office, warehouse, and showroom spaces, including related party leases[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) - A lease for additional office space with a related party was terminated on August 23, 2023, with the Company agreeing to pay **$100,000**[168](index=168&type=chunk) [Critical Accounting Policies and Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Information regarding the Company's Critical Accounting Policies and Estimates is referenced in the Annual Report on Form 10-K for the year ended December 31, 2022[169](index=169&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=40&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) As a smaller reporting company, the company is not required to provide these disclosures - The Company is not required to disclose information about market risk as it qualifies as a smaller reporting company[170](index=170&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=40&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) Management concluded disclosure controls were not effective due to material weaknesses, and remediation plans are underway [Evaluation of Disclosure Controls and Procedures](index=40&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - As of September 30, 2023, the Company's disclosure controls and procedures were determined to be **not effective** due to material weaknesses in internal control over financial reporting[172](index=172&type=chunk) [Material Weaknesses in Internal Control over Financial Reporting](index=41&type=section&id=Material%20Weaknesses%20in%20Internal%20Control%20over%20Financial%20Reporting) - Material weaknesses include lack of structure, insufficient qualified resources, inadequate oversight, ineffective risk assessment, inadequate control activities, and the lack of an appropriate accounting system[173](index=173&type=chunk)[176](index=176&type=chunk) [Management's Remediation Plans](index=41&type=section&id=Management's%20Remediation%20Plans) - Remediation plans include enhancing reporting structure, increasing qualified resources, establishing formal risk assessment procedures, documenting policies, and implementing a new ERP system[174](index=174&type=chunk)[176](index=176&type=chunk) - Remediation will not be considered complete until controls operate for a sufficient period and are tested for effectiveness[174](index=174&type=chunk) [Changes in Internal Control Over Financial Reporting](index=41&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2023, other than those related to the identified material weaknesses[175](index=175&type=chunk) PART II OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=42&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) The company is involved in several legal proceedings, including derivative actions and actions against former employees [Derivative Actions](index=42&type=section&id=Derivative%20Actions) - The Company resolved a Section 205 Petition action regarding a share increase proposal, agreeing to pay **$475,000 in attorneys' fees**, and the action was dismissed on June 13, 2023[180](index=180&type=chunk) - A putative shareholder class action was filed on October 31, 2022, alleging violations of the Securities Act of 1933 and Securities Exchange Act of 1934 related to IPO filings[181](index=181&type=chunk) - Two derivative stockholder complaints were filed in early 2023, asserting claims for breach of fiduciary duty related to IPO filings; these actions are currently stayed or awaiting consolidation[182](index=182&type=chunk)[184](index=184&type=chunk) [Action Against Former Employee](index=44&type=section&id=Action%20Against%20Former%20Employee) - The Company filed an action against a former employee for conversion, with the court dismissing all counterclaims except for breach of implied contract[186](index=186&type=chunk) - Another action was filed against a former employee and related entities for fraud and misappropriation of Company inventory[187](index=187&type=chunk) [ITEM 1A. RISK FACTORS](index=44&type=section&id=ITEM%201A.%20RISK%20FACTORS.) The company refers to its Annual Report on Form 10-K for risk factors, with no material changes noted - Risk factors are detailed in the Company's Annual Report on Form 10-K filed on July 31, 2023[189](index=189&type=chunk) - As of the date of this report, there have been **no material changes** to the disclosed risk factors[189](index=189&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=44&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) No unregistered sales of equity securities or share repurchases occurred during the period - **No unregistered sales** of equity securities occurred during the nine months ended September 30, 2023[190](index=190&type=chunk) - The Company **did not repurchase any shares** of its common stock during the nine months ended September 30, 2023[191](index=191&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=44&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) No defaults upon senior securities occurred during the reporting period - **No defaults** upon senior securities[191](index=191&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=44&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) Mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are **not applicable**[192](index=192&type=chunk) [ITEM 5. OTHER INFORMATION](index=44&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) No other information is reported under this item - **No other information** to disclose[193](index=193&type=chunk) [ITEM 6. EXHIBITS](index=45&type=section&id=ITEM%206.%20EXHIBITS.) This section lists all exhibits filed, including amendments, agreements, and officer certifications - Exhibits include the Certificate of Amendment for the reverse stock split, First and Second Amendments to the Credit Agreement, a Settlement and Termination Agreement, and officer certifications[195](index=195&type=chunk)

[PART I FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section provides Polished.com Inc.'s financial information, including unaudited condensed consolidated financial statements and management's discussion and analysis [ITEM 1. FINANCIAL STATEMENTS](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS.) Polished.com Inc. presents unaudited condensed consolidated financial statements, highlighting Q2 2023 net income despite decreased sales and addressing liquidity concerns [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202023%20%28Unaudited%29%20and%20December%2031%2C%202022) Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2023 | December 31, 2022 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Total Assets | $249,548 | $261,914 | -$12,366 | | Total Liabilities | $188,552 | $199,349 | -$10,797 | | Total Stockholders' Equity | $60,996 | $62,565 | -$1,569 | | Cash and cash equivalents | $8,977 | $19,549 | -$10,572 | | Restricted cash | $4,687 | $950 | +$3,737 | | Merchandise inventory, net | $39,448 | $41,766 | -$2,318 | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022%20%28Unaudited%29) Three Months Ended June 30 (in thousands) | Metric | 2023 | 2022 | Change (YoY) | | :----------------------------------------- | :----- | :------ | :----------- | | Product sales, net | $87,761 | $138,463 | -$50,702 (-36.6%) | | Gross profit | $19,580 | $23,025 | -$3,445 (-15.0%) | | Net income (loss) | $1,004 | $(4,292) | +$5,296 (+123.4%) | | Basic Income per common share | $0.01 | $(0.04) | +$0.05 | Six Months Ended June 30 (in thousands) | Metric | 2023 | 2022 | Change (YoY) | | :----------------------------------------- | :----- | :------ | :----------- | | Product sales, net | $183,200 | $287,144 | -$103,944 (-36.2%) | | Gross profit | $40,726 | $53,787 | -$13,061 (-24.3%) | | Net income (loss) | $(1,757) | $1,527 | -$3,284 (-215.1%) | | Basic Income per common share | $(0.02) | $0.01 | -$0.03 | [Condensed Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statement%20of%20Stockholders%27%20Equity%20for%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022%20%28Unaudited%29) Stockholders' Equity (in thousands) | Metric | June 30, 2023 | January 1, 2023 | | :-------------------------------- | :------------ | :-------------- | | Total Stockholders' Equity | $60,996 | $62,565 | | Net income for Q2 2023 | $1,004 | N/A | | Net loss for Q1 2023 | $(2,761) | N/A | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022%20%28Unaudited%29) Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2023 | 2022 | | :------------------------------------------ | :------- | :------- | | Net cash used in operating activities | $(3,928) | $(22,190) | | Net cash used in investing activities | $(134) | $(256) | | Net cash (used in) provided by financing activities | $(2,773) | $37,774 | | Net change in cash, cash equivalents, and restricted cash | $(6,835) | $15,328 | | Cash, cash equivalents, and restricted cash, end of period | $13,664 | $49,119 | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) [NOTE 1—BASIS OF PRESENTATION](index=12&type=section&id=NOTE%201%E2%80%94BASIS%20OF%20PRESENTATION) - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and SEC rules for interim reporting[26](index=26&type=chunk) - Interim results for the three and six months ended June 30, 2023, are not necessarily indicative of full-year or future period results[26](index=26&type=chunk) [NOTE 2—RECENT ACCOUNTING PRONOUNCEMENTS](index=12&type=section&id=NOTE%202%E2%80%94RECENT%20ACCOUNTING%20PRONOUNCEMENTS) - The Company adopted ASU 2016-13 (Credit Losses), ASU 2021-08 (Business Combinations), and ASU 2022-02 (Troubled Debt Restructurings) on January 1, 2023[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - The adoption of these accounting updates did not have a material impact on the consolidated financial statements and related disclosures[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) [NOTE 3—LIQUIDITY AND GOING CONCERN ASSESSMENT](index=13&type=section&id=NOTE%203%E2%80%94LIQUIDITY%20AND%20GOING%20CONCERN%20ASSESSMENT) - As of June 30, 2023, the Company had **$13.7 million** in cash and cash equivalents (including restricted cash) and **$22.9 million** in working capital[33](index=33&type=chunk) - An initial assessment indicated substantial doubt about the Company's ability to continue as a going concern[34](index=34&type=chunk) - Management believes its implemented cash preservation initiatives and improved operations will provide adequate liquidity for at least the next 12 months[38](index=38&type=chunk)[39](index=39&type=chunk) [NOTE 4—DISAGGREGATION OF REVENUES](index=14&type=section&id=NOTE%204%E2%80%94DISAGGREGATION%20OF%20REVENUES) Disaggregated Revenue by Product Type (in thousands) | Product Type | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :------------------------ | :------ | :------ | :------ | :------ | | Appliance sales | $77,505 | $128,242 | $164,177 | $266,791 | | Furniture and other sales | $10,256 | $10,221 | $19,023 | $20,353 | | Total | $87,761 | $138,463 | $183,200 | $287,144 | - The Company is shifting its sales focus to high-margin luxury products and negotiating improved terms with vendors[44](index=44&type=chunk) - New customer financing initiatives, including a store-branded credit card and leasing alternatives, are being implemented[44](index=44&type=chunk) [NOTE 5—SUPPLEMENTAL FINANCIAL STATEMENT DISCLOSURES](index=16&type=section&id=NOTE%205%E2%80%94SUPPLEMENTAL%20FINANCIAL%20STATEMENT%20DISCLOSURES) [Receivables](index=16&type=section&id=Recivables) Receivables, Net (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Total receivables, net | $22,089 | $26,650 | | Trade accounts receivable | $13,325 | $13,691 | | Vendor rebates receivable | $8,046 | $8,514 | | Other receivables | $2,230 | $5,951 | [Merchandise Inventory](index=16&type=section&id=Merchandise%20Inventory) Merchandise Inventory, Net (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Total merchandise inventory, net | $39,448 | $41,766 | | Appliances | $37,625 | $39,702 | | Furniture and other | $3,112 | $3,853 | | Less reserve for obsolescence | $(1,289) | $(1,789) | [Property and Equipment](index=16&type=section&id=Property%20and%20Equipment) Property and Equipment, Net (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Property and equipment, net | $4,671 | $5,075 | | Total property and equipment | $6,992 | $6,764 | | Accumulated depreciation | $(2,321) | $(1,689) | | Depreciation expense (H1 2023) | $0.6 million | N/A | [Intangible Assets](index=18&type=section&id=Intangible%20Assets) Intangible Assets, Net (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Intangible assets, net | $8,789 | $10,296 | | Amortization expense (H1 2023) | $1.5 million | N/A | | Amortization expense (H1 2022) | $5.1 million | N/A | - The decrease in amortization expense for H1 2023 is a result of the 2022 impairment charge that reduced the amount of intangible assets to be amortized[52](index=52&type=chunk) [Accounts Payable and Accrued Expenses](index=18&type=section&id=Accounts%20Payable%20and%20Accrued%20Expenses) Accounts Payable and Accrued Expenses (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :---------------- | | Total accounts payable and accrued expenses | $78,176 | $81,537 | | Trade accounts payable | $38,945 | $34,345 | | Accrued sales tax | $30,397 | $36,196 | [NOTE 6—OPERATING LEASES](index=19&type=section&id=NOTE%206%E2%80%94OPERATING%20LEASES) Operating Lease Information (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :---------------- | | Operating lease right-of-use assets | $10,019 | $11,688 | | Total operating lease liabilities | $10,838 | $12,739 | | Weighted-average remaining lease term | 76 months | 73 months | | Weighted average discount rate | 3.9% | 3.9% | [NOTE 7—RELATED PARTIES](index=20&type=section&id=NOTE%207%E2%80%94RELATED%20PARTIES) - The Company is in dispute with 8780 19th Ave LLC (owned by former officers) over **$1.2 million** in building improvements and rent obligations[62](index=62&type=chunk) - Purchases from DMI, an appliance purchasing cooperative, represented approximately **65%** of total purchases for the six months ended June 30, 2023[64](index=64&type=chunk) - Total rent expense under related party leases was **$0.8 million** for the six months ended June 30, 2023[65](index=65&type=chunk) [NOTE 8—NOTES PAYABLE](index=21&type=section&id=NOTE%208%E2%80%94NOTES%20PAYABLE) - The Term Loan carrying value was **$94.1 million** as of June 30, 2023[70](index=70&type=chunk) - The Bank of America Revolving Loan commitment was reduced from **$40.0 million** to **$10.0 million** as of July 25, 2023, following an amendment that waived prior defaults[71](index=71&type=chunk)[73](index=73&type=chunk) - The maturity date for the Term Facility and Revolving Facility is August 31, 2024, and the Company is seeking new financing to replace the existing credit agreement[73](index=73&type=chunk)[77](index=77&type=chunk) [NOTE 9—DERIVATIVE INSTRUMENTS (INTEREST RATE SWAP)](index=23&type=section&id=NOTE%209%E2%80%94DERIVATIVE%20INSTRUMENTS%20%28INTEREST%20RATE%20SWAP%29%3A) - The Company entered into a **$100 million** notional interest rate swap to hedge against SOFR fluctuations, paying a fixed rate of **2.93%**[82](index=82&type=chunk) - As of June 30, 2023, the fair value of the interest rate swap was **$3.8 million** (derivative asset), resulting in a **$1.9 million** gain for Q2 2023 and a **$0.6 million** gain for H1 2023[83](index=83&type=chunk) [NOTE 10—STOCKHOLDERS' EQUITY](index=23&type=section&id=NOTE%2010%E2%80%94STOCKHOLDERS%27%20EQUITY) - As of June 30, 2023, there were **105,469,878** common shares outstanding[85](index=85&type=chunk) - Stock options outstanding totaled **86,550**, with **37,500** forfeited due to employee terminations during H1 2023[86](index=86&type=chunk)[89](index=89&type=chunk) - Stock-based compensation expense for the six months ended June 30, 2023, was **$0.2 million**[90](index=90&type=chunk) - Warrants outstanding remained at **92,514,423** as of June 30, 2023[91](index=91&type=chunk) [NOTE 11—EARNINGS (LOSS) PER SHARE](index=25&type=section&id=NOTE%2011%E2%80%94EARNINGS%20%28LOSS%29%20PER%20SHARE) Basic and Diluted Earnings (Loss) Per Share | Period | Basic EPS | Diluted EPS | | :-------------------------------- | :-------- | :---------- | | Three Months Ended June 30, 2023 | $0.01 | $0.01 | | Three Months Ended June 30, 2022 | $(0.04) | $(0.04) | | Six Months Ended June 30, 2023 | $(0.02) | $(0.02) | | Six Months Ended June 30, 2022 | $0.01 | $0.01 | - Potentially dilutive options and warrants (**92,600,973** for Q2 2023 and **92,664,423** for Q2 2022) were excluded from diluted EPS calculations as their effect was anti-dilutive[92](index=92&type=chunk) [NOTE 12—COMMITMENTS AND CONTINGENCIES](index=26&type=section&id=NOTE%2012%E2%80%94COMMITMENTS%20AND%20CONTINGENCIES) - The Company paid **$475,000** in attorneys' fees to resolve a dispute regarding a stock share increase proposal, leading to the dismissal of the action on June 13, 2023[96](index=96&type=chunk) - The Company is currently facing two putative shareholder class actions and derivative complaints related to alleged misstatements and omissions in IPO filings and breaches of fiduciary duty[97](index=97&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - The Company filed an action against a former employee for conversion, with the defendant asserting counterclaims for breach of contract, implied contract, defamation, and tortious interference[186](index=186&type=chunk) [NOTE 13—SUPPLIER CONCENTRATION](index=27&type=section&id=NOTE%2013%E2%80%94SUPPLIER%20CONCENTRATION) - DMI accounted for approximately **65%** of the Company's total purchases for the six months ended June 30, 2023[102](index=102&type=chunk) - The Company believes numerous other suppliers could be substituted if DMI becomes unavailable or non-competitive[102](index=102&type=chunk) [NOTE 14—SUBSEQUENT EVENTS](index=27&type=section&id=NOTE%2014%E2%80%94SUBSEQUENT%20EVENTS) - The Company signed a letter of intent for a new warehouse sublease from DMI to consolidate two existing New Jersey warehouses, expected to finalize in Q4 2023 or Q1 2025[103](index=103&type=chunk) - On July 25, 2023, the Bank of America Credit Agreement was amended, waiving defaults, reducing the Revolving Loan to **$10 million**, and setting a new maturity date of August 31, 2024[104](index=104&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=28&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) Management discusses Polished.com Inc.'s financial condition and operations, noting decreased sales, improved gross margin, credit agreement developments, and liquidity efforts [Overview](index=28&type=section&id=Overview) - Polished.com Inc. operates as a content-driven and technology-enabled shopping destination for appliances, furniture, and home goods[108](index=108&type=chunk) - The Company offers national and luxury brands and operates through warehouse fulfillment centers and showrooms in the Northeast, Midwest, Brooklyn, NY, and Largo, FL[108](index=108&type=chunk) [Recent Developments](index=28&type=section&id=Recent%20Developments) - On July 25, 2023, the Company amended its Credit Agreement with Bank of America, waiving events of default and reducing the Revolving Loan to **$10 million**[109](index=109&type=chunk) - The maturity date for the Term Facility and Revolving Facility was set to August 31, 2024, with the applicable interest rate increasing to **4.00%** plus Base Rate/Term SOFR[109](index=109&type=chunk)[110](index=110&type=chunk) - The Company has initiated discussions with investment bankers to secure new financing to replace the existing credit agreement by August 31, 2024[113](index=113&type=chunk) [Trends and Principal Factors Affecting Our Financial Performance](index=29&type=section&id=Trends%20and%20Principal%20Factors%20Affecting%20Our%20Financial%20Performance) - Key factors include the ability to acquire and retain customers, competitive product pricing, breadth of product offerings, industry demand, market conditions, and successful integration of Appliances Connection[114](index=114&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) [Comparison of Three Months Ended June 30, 2023 and 2022](index=30&type=section&id=Comparison%20of%20Three%20Months%20Ended%20June%2030%2C%202023%20and%202022) Key Financials (Three Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change (YoY) | | :-------------------------------- | :----- | :------ | :----------- | | Product sales, net | $87,761 | $138,463 | -$50,702 (-36.6%) | | Gross profit | $19,580 | $23,025 | -$3,445 (-15.0%) | | Gross margin | 22.3% | 16.6% | +5.7 pp | | Net income (loss) | $1,004 | $(4,292) | +$5,296 (+123.4%) | | General and administrative expenses | $4,885 | $3,563 | +$1,322 (+37.1%) | - The improvement in gross margin is attributed to management's emphasis on profitability over revenue growth[118](index=118&type=chunk) - General and administrative expenses increased due to higher insurance premiums and professional fees, including costs for reauditing and restating 2021 financials[123](index=123&type=chunk) [Comparison of the six months ended June 30, 2023 and 2022](index=32&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030%2C%202023%20and%202022) Key Financials (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change (YoY) | | :-------------------------------- | :------- | :------- | :----------- | | Product sales, net | $183,200 | $287,144 | -$103,944 (-36.2%) | | Gross profit | $40,726 | $53,787 | -$13,061 (-24.3%) | | Gross margin | 22.2% | 18.7% | +3.5 pp | | Net income (loss) | $(1,757) | $1,527 | -$3,284 (-215.1%) | | General and administrative expenses | $9,872 | $7,818 | +$2,054 (+26.3%) | | Interest expense | $2,935 | $1,243 | +$1,692 (+136.1%) | - The decrease in sales is attributed to a general economic slowdown, inflation, increased interest rates, and a decline in the luxury remodeling market[128](index=128&type=chunk) - The increase in gross margin reflects management's strategic shift to emphasize profitability over revenue growth[131](index=131&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2023, the Company had **$13.7 million** in cash and cash equivalents (including restricted cash) and **$22.9 million** in working capital[140](index=140&type=chunk) Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2023 | 2022 | | :------------------------------------------ | :------- | :------- | | Net cash used in operating activities | $(3,928) | $(22,190) | | Net cash (used in) provided by financing activities | $(2,773) | $37,774 | - The Bank of America Credit Agreement amendment on July 25, 2023, reduced the Revolving Loan to **$10 million** and set a maturity date of August 31, 2024, prompting the Company to seek new financing[153](index=153&type=chunk)[157](index=157&type=chunk) [Management Services Agreement](index=38&type=section&id=Management%20Services%20Agreement) - The Company pays a quarterly management fee of **$62,500** to 1847 Partners LLC, an entity owned by its chairman, for management services[158](index=158&type=chunk) - Management fees expensed for the six months ended June 30, 2023, totaled **$0.06 million**[159](index=159&type=chunk) [Leases](index=39&type=section&id=Leases) - The Company has various lease agreements for office, warehouse, and showroom spaces, including related-party leases with entities owned by former officers[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) - An ongoing dispute exists with a related-party landlord (8780 19th Ave LLC) regarding payment for building improvements and rent obligations[168](index=168&type=chunk) - A new warehouse sublease from DMI is planned to consolidate two existing New Jersey warehouses, with an expected finalization in Q4 2023 or Q1 2025[103](index=103&type=chunk) [Critical Accounting Policies and Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - Information regarding the Company's Critical Accounting Policies and Estimates is detailed in its Annual Report on Form 10-K for the year ended December 31, 2022[169](index=169&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=40&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a smaller reporting company, Polished.com Inc. is not required to provide market risk disclosures in this quarterly report - The Company is not required to disclose information about market risk as a smaller reporting company[170](index=170&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=40&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) Management deemed disclosure controls ineffective due to material weaknesses in internal control, with remediation plans including enhanced structure, resources, and a new ERP system [Evaluation of Disclosure Controls and Procedures](index=40&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The Company's disclosure controls and procedures were determined to be not effective as of June 30, 2023[172](index=172&type=chunk) - This ineffectiveness is a result of material weaknesses in internal control over financial reporting[172](index=172&type=chunk) [Material Weaknesses in Internal Control over Financial Reporting](index=41&type=section&id=Material%20Weaknesses%20in%20Internal%20Control%20over%20Financial%20Reporting) - Material weaknesses include a lack of structure and responsibility, insufficient qualified resources, and inadequate oversight over controls[173](index=173&type=chunk)[176](index=176&type=chunk) - Ineffective assessment and identification of changes in risk, and inadequate selection and development of effective control activities and policies[173](index=173&type=chunk)[176](index=176&type=chunk) - The Company also lacks an accounting system required for its size[173](index=173&type=chunk)[176](index=176&type=chunk) [Management's Remediation Plans](index=41&type=section&id=Management%27s%20Remediation%20Plans) - Remediation plans include enhancing reporting structure, increasing qualified resources, and establishing formal risk assessment procedures[174](index=174&type=chunk)[176](index=176&type=chunk) - The Company is developing and documenting policies and procedures, assessing their effectiveness, and implementing a new ERP system[174](index=174&type=chunk)[176](index=176&type=chunk) [Changes in Internal Control Over Financial Reporting](index=41&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2023, other than the identified material weaknesses[175](index=175&type=chunk) [PART II OTHER INFORMATION](index=42&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers Polished.com Inc.'s legal proceedings, risk factors, equity security sales, defaults, and other required disclosures [ITEM 1. LEGAL PROCEEDINGS](index=42&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) Polished.com Inc. is involved in legal proceedings, including resolved shareholder actions, ongoing class actions, and a lawsuit against a former employee [Derivative Actions](index=42&type=section&id=Derivative%20Actions) - The Company paid **$475,000** in attorneys' fees to resolve a dispute over a stock share increase proposal, leading to the dismissal of the action on June 13, 2023[180](index=180&type=chunk) - Two putative shareholder class actions (Maschhof v. Polished.com Inc., et al.) and derivative complaints (Wong v. Moore et al., Gossett v. Moore, et al.) are ongoing, alleging misstatements in IPO filings and breaches of fiduciary duty[181](index=181&type=chunk)[182](index=182&type=chunk)[184](index=184&type=chunk) [Action Against Former Employee](index=44&type=section&id=Action%20Against%20Former%20Employee) - The Company filed an action against a former employee for conversion, who subsequently filed counterclaims for breach of contract, implied contract, defamation, and tortious interference[186](index=186&type=chunk) - The Company has moved to dismiss the amended counterclaims[186](index=186&type=chunk) [ITEM 1A. RISK FACTORS](index=44&type=section&id=ITEM%201A.%20RISK%20FACTORS.) This section refers to risk factors from the Annual Report on Form 10-K, noting no material changes as of this report's date - No material changes to the risk factors disclosed in the Annual Report on Form 10-K filed on July 31, 2023, have occurred[188](index=188&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=44&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) Polished.com Inc. reported no unregistered equity security sales or common stock repurchases during the six months ended June 30, 2023 - No unregistered equity securities were sold during the six months ended June 30, 2023[189](index=189&type=chunk) - No shares of common stock were repurchased during the six months ended June 30, 2023[190](index=190&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=44&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) The Company reported no defaults upon senior securities for the period - There were no defaults upon senior securities[190](index=190&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=44&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) Mine safety disclosures are not applicable to Polished.com Inc.'s operations - Mine Safety Disclosures are not applicable to the Company[191](index=191&type=chunk) [ITEM 5. OTHER INFORMATION](index=44&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) No other information was reported under this item - No other information was reported[192](index=192&type=chunk) [ITEM 6. EXHIBITS](index=45&type=section&id=ITEM%206.%20EXHIBITS.) This section lists all exhibits filed with the Form 10-Q, including the Credit Agreement amendment and officer certifications - Exhibits include the First Amendment to Credit Agreement, dated July 25, 2023[194](index=194&type=chunk) - Certifications of the Principal Executive Officer and Principal Financial and Accounting Officer are filed/furnished[194](index=194&type=chunk) - Inline XBRL Instance Document and Taxonomy Extension Documents are included[194](index=194&type=chunk)

Acquisition and Corporate Changes - The company completed the acquisition of Appliances Connection on June 2, 2021, for a total purchase price of $224.7 million, which included $180 million in cash and 5,895,973 shares valued at $12.3 million[33]. - The company recorded $0.9 million in acquisition-related expenses during the acquisition of Appliances Connection[33]. - The company changed its corporate name from 1847 Goedeker Inc. to Polished.com Inc. on July 20, 2022, with new ticker symbols "POL" and "POL WS" on NYSE American[36]. - The company completed acquisitions of Appliances Connection and Appliance Gallery in 2021, which may affect the comparability of future financial results[225][221]. Market and Financial Performance - The U.S. major household appliances market is projected to reach $23.2 billion in 2022, with an annual growth rate of 3.08% from 2022 to 2026[49]. - The company has over 400 vendors and more than 500,000 SKUs available for purchase, with Dynamic Marketing Inc accounting for approximately 69% of purchases in 2022[52][54]. - The U.S. appliance market is highly fragmented, presenting opportunities for the company to streamline operations and provide consistent product availability nationwide[61]. - The company is focused on improving operational excellence through initiatives designed to grow revenue and expand margins, including price optimization strategies[68]. - The company has restated its previously issued consolidated financial statements due to an investigation into business operations under former management, which may impact investor confidence and stock price[79]. - The company has significant leverage, which may limit operational flexibility and adversely affect financial condition and cash flows[147]. Cybersecurity and Operational Risks - The company experienced a cybersecurity incident on March 16, 2023, affecting personal information of approximately 9,290 individuals[45]. - A cybersecurity incident occurred on March 16, 2023, which may have implications for the company's operations and reputation[108]. - The company has engaged outside consultants to enhance its cyber defenses and payment card protections following the cybersecurity incident[217]. - The company's internal IT systems are critical for operations, and any failures or security breaches could disrupt business and harm customer trust[101]. - The company may experience periodic system interruptions due to increased transaction volume and online traffic, necessitating further upgrades to technology and logistics[104]. Legal and Regulatory Challenges - The company has faced challenges with SEC reporting obligations, having been delinquent for over 12 months prior to the filing of its annual report[75]. - The company is classified as an "emerging growth company" and a "smaller reporting company," allowing it to rely on exemptions from certain disclosure requirements[69]. - The company is currently involved in multiple legal proceedings, including a putative shareholder class action related to its 2020 IPO[193]. - The company may face significant litigation costs related to intellectual property rights, which could materially adversely affect its business and financial condition[160]. - Evolving government regulations regarding e-commerce could substantially harm the business and results of operations[151]. Consumer Behavior and Market Conditions - Macroeconomic trends such as rising inflation and interest rates are expected to adversely impact the company's financial condition and results of operations, with inflation in the U.S. currently at elevated levels[82]. - The company's business is highly dependent on consumer discretionary spending, which may be affected by various external factors, including economic conditions and public health concerns[83]. - A decrease in consumer discretionary spending could lead to lower comparable sales and average transaction values, negatively impacting gross margins and overall financial results[84]. - The COVID-19 pandemic continues to create uncertainty, potentially impacting consumer spending and demand for products[140]. Operational Strategies and Infrastructure - The company aims to improve its logistics infrastructure to enhance delivery experiences and reduce operational costs[58]. - The company plans to add at least two new fulfillment centers over the next year to optimize logistics and shipping, aiming to minimize product touchpoints and expedite delivery[68]. - The company has implemented enhanced controls to address labor compliance and inventory management issues following an internal investigation[44]. - The company is investing in technology upgrades to adapt to changing consumer access methods, which may involve significant costs and operational challenges[125]. Financial Management and Capital Structure - The company has not paid dividends in the past and does not expect to declare or pay dividends in the foreseeable future due to restrictions under its Credit Agreement[174]. - Future growth may require additional capital, and there is no assurance that financing will be available on reasonable terms, which could hinder the execution of growth strategies[144]. - The outstanding warrants have a weighted average remaining contractual life of 3.4 years with a weighted average exercise price of $2.30[171]. - The company has a public float of less than $250 million or annual revenues of less than $100 million, qualifying it as a "smaller reporting company"[180]. Supply Chain and Inventory Management - Supply chain disruptions, labor shortages, and increased transportation costs may adversely affect revenue and gross margins[123]. - The company faces risks related to inventory management, including potential over-supply that could negatively impact liquidity, sales prices, and margins[122]. - The company’s agreements with suppliers are generally terminable at will, which poses risks to maintaining a broad selection of merchandise[112]. - The company relies on third-party service providers for various operations, and any disruptions in these services could adversely affect customer satisfaction and operational results[118].