Kidpik (PIK)2023-11-14 21:51Financial Performance - For the 13 weeks ended September 30, 2023, gross margin was 61.1%, compared to 60.3% for the same period in 2022[103]. - Revenue for the 13 weeks ended September 30, 2023, decreased by 6.7% to $3,389,183 compared to $3,633,467 for the same period in 2022, with subscription box revenue down 15.4%[129]. - Total revenue for the 39 weeks ended September 30, 2023, decreased by 7.4% to $10,867,580 compared to $11,734,132 for the same period in 2022[129]. - Adjusted EBITDA for the 13 weeks ended September 30, 2023, was a loss of $1,610,788, compared to a loss of $2,104,795 for the same period in 2022[109]. - The net loss for the 13 weeks ended September 30, 2023, was $1,925,951, compared to a net loss of $2,438,330 for the same period in 2022[109]. - Gross profit for the 13 weeks ended September 30, 2023, was $2,071,499, a decrease from $2,191,209 for the same period in 2022, primarily due to a decline in subscription box sales[135]. - Loss from operations decreased from $2,416,445 for the 13 weeks ended October 1, 2022, to $1,903,834 for the 13 weeks ended September 30, 2023[141]. - Net cash used in operating activities decreased to $461,162 for the 39 weeks ended September 30, 2023, compared to $7,040,580 for the same period in 2022, a reduction of approximately $6.6 million[156]. Shipping and Sales Metrics - Shipped items decreased to 292,000 for the 13 weeks ended September 30, 2023, down from 358,000 in the same period of 2022[111]. - Average shipment keep rate improved to 82.6% for the 13 weeks ended September 30, 2023, compared to 68.5% for the same period in 2022[112]. - The number of items shipped decreased by 18.3% from approximately 358,000 for the 13 weeks ended October 1, 2022, to approximately 292,000 for the 13 weeks ended September 30, 2023[130]. - Online website sales increased by 58.3% to $469,717 for the 13 weeks ended September 30, 2023, compared to $296,702 for the same period in 2022[129]. - Revenue from new subscriptions decreased by 20.0% to $456,392 for the 13 weeks ended September 30, 2023, compared to $570,718 for the same period in 2022[130]. - Subscription box revenue for the 39 weeks ended September 30, 2023, decreased by 14.1% to $8,006,725 compared to $9,326,331 for the same period in 2022[130]. Cost and Expenses - Cost of goods sold for the 13 weeks ended September 30, 2023, decreased by 8.6% to $1,317,684 compared to $1,442,258 for the same period in 2022[133]. - Total operating expenses for the 13 weeks ended September 30, 2023, decreased by $632,321 or 13.7% to $3,975,333, compared to $4,607,654 for the same period in 2022[139]. - The cost of goods sold for the 39 weeks ended September 30, 2023, decreased by 7.3% to $4,309,473 compared to $4,649,552 for the same period in 2022[133]. Cash Flow and Financial Position - Cash and restricted cash decreased to $60,305 as of September 30, 2023, from $605,213 as of December 31, 2022, representing a decline of 90.0%[148]. - Working capital decreased by $3,720,213 or 45.0% to $4,553,388 as of September 30, 2023, compared to $8,273,601 as of December 31, 2022[148]. - Net cash used in financing activities decreased to $6,447 for the 39 weeks ended September 30, 2023, compared to $1,115,847 for the same period in 2022[158]. Strategic Initiatives and Market Conditions - The company introduced an "add-on" option for active members to increase average box transaction size and gross margin[99]. - The company expanded its product offerings to include larger sizes for boys and girls, as well as toddler sizes, enhancing its market reach[97]. - The company is focusing on increasing new member growth through new advertising channels and affiliate partnerships[100]. - The overall economic environment, including high inflation and interest rates, poses risks to consumer spending and company performance[113]. - The company has made significant investments in brand marketing to enhance brand awareness and customer acquisition since 2016[114]. - The Company expects to continue generating net losses for the foreseeable future, indicating a need for new financing to sustain operations[163]. - The Company plans to significantly reduce purchases of new inventory to manage operating cash flows in the near term[163]. - The Company may pursue strategic alternatives, including business combinations or asset liquidations, but there is no definitive timetable for this process[164]. Debt and Compliance - A Debt Conversion agreement was entered into on September 18, 2023, converting $1,200,000 of principal owed into 1,553,800 shares of restricted common stock[161]. - As of September 30, 2023, there was $1,709,708 due to a related party, an increase from $1,107,665 as of December 31, 2022[162]. - The company intends to monitor its stock price and may consider a reverse stock split to regain compliance with Nasdaq's minimum bid price requirement[155]. Accounting and Reporting - The Company has implemented all new accounting pronouncements that may impact its financial statements[169]. - There were no material changes to the Company's critical accounting policies during the 39 weeks ended September 30, 2023[167].