ThredUp(TDUP) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents ThredUp Inc.'s unaudited condensed consolidated financial statements and related management discussion Item 1. Financial Statements (Unaudited) This section presents ThredUp Inc.'s unaudited condensed consolidated financial statements and comprehensive notes on accounting policies and corporate events Condensed Consolidated Balance Sheets The balance sheets show a significant increase in assets and a shift to positive stockholders' equity following the IPO Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2021 | December 31, 2020 | | :-------------------------------- | :------------ | :------------------ | | Assets | | | | Cash and cash equivalents | $173,058 | $64,485 | | Marketable securities | $57,382 | — | | Total current assets | $242,772 | $75,159 | | Total assets | $312,371 | $142,911 | | Liabilities & Equity | | | | Total current liabilities | $78,174 | $62,564 | | Total liabilities | $131,533 | $118,047 | | Convertible preferred stock | — | $247,041 | | Total stockholders' equity (deficit) | $180,838 | $(222,177) | - Total assets increased significantly from $142.9 million at December 31, 2020, to $312.4 million at June 30, 2021, primarily driven by a substantial increase in cash and cash equivalents and the addition of marketable securities[17] - Stockholders' equity shifted from a deficit of $(222.2) million at December 31, 2020, to a positive $180.8 million at June 30, 2021, largely due to the initial public offering and conversion of preferred stock[17] Condensed Consolidated Statements of Operations The statements of operations detail revenue growth and increased net losses for the three and six months ended June 30, 2021 Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $59,959 | $47,335 | $115,639 | $95,650 | | Total cost of revenue | $15,827 | $14,324 | $31,789 | $30,013 | | Gross profit | $44,132 | $33,011 | $83,850 | $65,637 | | Total operating expenses | $58,018 | $39,485 | $112,414 | $85,394 | | Operating loss | $(13,886) | $(6,474) | $(28,564) | $(19,757) | | Net loss | $(14,379) | $(6,657) | $(30,550) | $(19,872) | | Net loss per share (basic and diluted) | $(0.15) | $(0.61) | $(0.54) | $(1.84) | - Total revenue increased by 27% for the three months ended June 30, 2021, and 21% for the six months ended June 30, 2021, compared to the same periods in 2020[19] - Net loss increased significantly to $(14.4) million for Q2 2021 from $(6.7) million in Q2 2020, and to $(30.6) million for the six months ended June 30, 2021, from $(19.9) million in the prior year, primarily due to increased operating expenses[19] Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity This section outlines changes in equity, reflecting the IPO, preferred stock conversion, and accumulated deficit Changes in Stockholders' Equity (in thousands) | Metric | December 31, 2020 | March 31, 2021 | June 30, 2021 | | :------------------------------------ | :---------------- | :------------- | :------------ | | Total Stockholders' Equity (Deficit) | $(222,177) | $191,427 | $180,838 | | Convertible Preferred Stock (Shares) | 65,970,938 | — | — | | Common Stock (Shares) | 12,889,760 | 94,143,694 | 94,780,166 | | Additional Paid-in Capital | $29,989 | $459,756 | $463,582 | | Accumulated Deficit | $(252,167) | $(268,338) | $(282,717) | - The Company completed its IPO in March 2021, resulting in the conversion of all outstanding convertible preferred stock into Class B common stock and a significant increase in common stock shares and additional paid-in capital[20][31] - Net loss for Q1 2021 was $(16.17) million and for Q2 2021 was $(14.38) million, contributing to an increased accumulated deficit[20] Condensed Consolidated Statements of Cash Flows The cash flow statements show significant cash generation from financing activities, primarily due to the IPO Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(9,090) | $(1,467) | | Net cash used in investing activities | $(66,417) | $(10,695) | | Net cash provided by financing activities | $184,081 | $7,398 | | Net increase (decrease) in cash | $108,574 | $(4,764) | | Cash, cash equivalents and restricted cash, end of period | $176,113 | $83,089 | - Net cash provided by financing activities significantly increased in H1 2021 to $184.1 million, primarily due to $180.3 million in net proceeds from the IPO[26][152] - Investing activities saw a substantial increase in cash usage to $66.4 million in H1 2021, driven by $57.4 million in marketable securities purchases and $9.0 million in capital expenditures[26][151] Notes to Unaudited Condensed Consolidated Financial Statements Detailed notes explain significant accounting policies, recent corporate events like the IPO, and the proposed acquisition of Remix Global AD - ThredUp Inc. completed its Initial Public Offering (IPO) on March 25, 2021, selling 13,800,000 shares of Class A common stock at $14.00 per share, generating $175.5 million in net proceeds[29][91] - Immediately prior to the IPO, 65,970,938 shares of convertible preferred stock and 164,973 convertible preferred stock warrants were converted into Class B common stock and Class B common stock warrants, respectively[31][93] - Subsequent to the reporting period, on August 2, 2021, the Company completed a follow-on public offering, issuing 2,000,000 shares of Class A common stock at $24.25 per share, yielding approximately $45.3 million in net proceeds[85][94] - On July 24, 2021, ThredUp entered into an agreement to acquire Remix Global AD, a fashion resale company in Bulgaria, for approximately $28.5 million, including debt repayment, with a portion payable in Class A common stock and restricted stock units for management[86][95][96] Stock-Based Compensation Expense by Department (in thousands) | Department | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operations, product and technology | $984 | $871 | $2,334 | $1,585 | | Marketing | $289 | $282 | $726 | $456 | | Sales, general and administrative | $1,623 | $813 | $3,334 | $1,367 | | Total | $2,896 | $1,966 | $6,394 | $3,408 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses ThredUp's business, recent developments, COVID-19 impact, financial performance, liquidity, and critical accounting policies Overview ThredUp operates a large online resale platform for apparel, processing millions of items and offering Resale-as-a-Service - ThredUp operates one of the world's largest online resale platforms for women's and kids' apparel, shoes, and accessories, leveraging a custom-built operating platform[89] - Since its founding in 2009, the company has processed over 125 million unique secondhand items from 35,000 brands, saving buyers an estimated $3.3 billion and positively impacting the environment by saving 1.0 billion pounds of CO2 emissions[89] - ThredUp offers a managed marketplace for buyers and a 'Clean Out Kit' service for sellers, and has expanded into Resale-as-a-Service (RaaS) offerings for brands and retailers since 2018[90] Recent Business Developments Recent developments include the IPO, a follow-on offering, and the proposed acquisition of European fashion resale company Remix Global AD - ThredUp completed its Initial Public Offering (IPO) on March 25, 2021, selling 13,800,000 shares of Class A common stock at $14.00 per share, generating $175.5 million in net proceeds[91] - A follow-on public offering on August 2, 2021, raised approximately $45.3 million in net proceeds from the sale of 2,000,000 Class A common stock shares at $24.25 per share[94] - The Company entered into an agreement on July 24, 2021, to acquire Remix Global AD, a European fashion resale company, for an estimated $28.5 million, expected to close in Q4 2021[95][96][97] COVID-19 Impact The pandemic increased demand but also raised operating expenses and retention challenges, with continued adverse impacts expected - The COVID-19 pandemic led to increased demand in H1 2021, partly due to recovery efforts and federal stimulus, but also resulted in higher operating expenses to support demand and retention programs[100] - Unprocessed Clean Out Kits increased in Q2 2021 after lifting restrictions on seller orders, and the company faces challenges in employee retention, leading to higher costs in operations[101][102] - The company expects the pandemic to continue adversely impacting its business, including revenue and cash flows, for the remainder of 2021, with potential shifts in buyer/seller behavior due to economic uncertainties and stimulus changes[103] Overview of Second Quarter Results Second quarter results show revenue growth, improved gross margin, but also increased net loss and Adjusted EBITDA loss Second Quarter 2021 Key Financial Highlights (in millions) | Metric | Q2 2021 | Q2 2020 | YoY Change | | :---------------- | :------ | :------ | :--------- | | Total Revenue | $60.0 | $47.3 | +27% | | Gross Profit | $44.1 | $33.0 | +34% | | Gross Margin | 74% | 70% | +400 bps | | GAAP Net Loss | $(14.4) | $(6.7) | +115% | | Adjusted EBITDA Loss | $(9.0) | $(3.3) | +173% | Second Quarter 2021 Key Operating Metrics (in millions) | Metric | Q2 2021 | Q2 2020 | YoY Change | | :----------- | :------ | :------ | :--------- | | Active Buyers | 1.34 | 1.24 | +8% | | Orders | 1.22 | 0.998 | +22% | Key Financial and Operating Metrics This section details active buyers, orders, and provides an Adjusted EBITDA reconciliation for the periods presented - Active Buyers (buyers with at least one purchase in the last 12 months) increased by 8% year-over-year to 1.34 million as of June 30, 2021[107][108] - Orders (total orders placed, net of cancellations) grew by 22% year-over-year to 1.22 million for the three months ended June 30, 2021[107][109] Adjusted EBITDA Reconciliation (in thousands) | Metric | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(14,379) | $(6,657) | $(30,550) | $(19,872) | | Depreciation and amortization | $1,861 | $1,198 | $3,899 | $2,443 | | Stock-based compensation expense | $2,896 | $1,966 | $6,394 | $3,408 | | Interest expense | $573 | $224 | $1,132 | $497 | | Change in fair value of convertible preferred stock warrant liability | — | $(1) | $930 | $(173) | | Provision for income taxes | $13 | — | $40 | — | | Adjusted EBITDA | $(9,036) | $(3,270) | $(18,155) | $(13,697) | Results of Operations This section analyzes revenue breakdown, cost of revenue, gross profit, and operating expenses, highlighting growth and strategic shifts Revenue Breakdown (in thousands, except percentages) | Revenue Type | Q2 2021 | Q2 2020 | Change (Amount) | Change (%) | H1 2021 | H1 2020 | Change (Amount) | Change (%) | | :------------------- | :------ | :------ | :-------------- | :--------- | :------ | :------ | :-------------- | :--------- | | Consignment revenue | $48,597 | $34,914 | $13,683 | 39% | $93,285 | $70,228 | $23,057 | 33% | | Product revenue | $11,362 | $12,421 | $(1,059) | (9)% | $22,354 | $25,422 | $(3,068) | (12)% | | Total revenue | $59,959 | $47,335 | $12,624 | 27% | $115,639 | $95,650 | $19,989 | 21% | | Consignment % of total | 81% | 74% | 7% | | 81% | 73% | 8% | | | Product % of total | 19% | 26% | (7)% | | 19% | 27% | (8)% | | - Consignment revenue grew significantly (39% in Q2, 33% in H1) and increased its share of total revenue, while product revenue decreased (9% in Q2, 12% in H1) due to a strategic mix shift[113][116][117][118][119] Cost of Revenue and Gross Profit (in thousands, except percentages) | Metric | Q2 2021 | Q2 2020 | Change (Amount) | Change (%) | H1 2021 | H1 2020 | Change (Amount) | Change (%) | | :---------------------- | :------ | :------ | :-------------- | :--------- | :------ | :------ | :-------------- | :--------- | | Total cost of revenue | $15,827 | $14,324 | $1,503 | 10% | $31,789 | $30,013 | $1,776 | 6% | | Gross profit | $44,132 | $33,011 | $11,121 | 34% | $83,850 | $65,637 | $18,213 | 28% | | Gross profit margin | 74% | 70% | 4% | | 73% | 69% | 4% | | - Gross profit margin expanded by 400 basis points in both the three and six months ended June 30, 2021, primarily due to the revenue mix shift towards higher-margin consignment sales[120][121] Operating Expenses (in thousands, except percentages) | Expense Category | Q2 2021 | Q2 2020 | Change (Amount) | Change (%) | H1 2021 | H1 2020 | Change (Amount) | Change (%) | | :-------------------------------- | :------ | :------ | :-------------- | :--------- | :------ | :------ | :-------------- | :--------- | | Operations, product and technology | $31,062 | $22,149 | $8,913 | 40% | $59,374 | $47,624 | $11,750 | 25% | | Marketing | $15,957 | $10,898 | $5,059 | 46% | $31,403 | $23,899 | $7,504 | 31% | | Sales, general and administrative | $10,999 | $6,438 | $4,561 | 71% | $21,637 | $13,871 | $7,766 | 56% | | Total operating expenses | $58,018 | $39,485 | $18,533 | 47% | $112,414 | $85,394 | $27,020 | 32% | - Operating expenses grew faster than gross profit in both periods, reflecting investments in distribution center capacity, marketing, and public company infrastructure[133][134] - Personnel-related costs in Operations, Product and Technology increased by 58% in Q2 2021 and 41% in H1 2021, driven by a 46% and 27% increase in average headcount, respectively, and higher compensation to attract and retain staff[134][135] - Marketing and advertising costs increased by 44% in Q2 2021 and 29% in H1 2021, due to increased efforts to attract new buyers[139] - Sales, General and Administrative expenses surged by 71% in Q2 2021 and 56% in H1 2021, mainly due to increased personnel and professional services costs associated with scaling the business and becoming a public company[140][141][142] Liquidity and Capital Resources The company's liquidity is supported by IPO proceeds, but it anticipates continued operating losses and negative cash flows, requiring future capital - As of June 30, 2021, the Company had $173.1 million in cash and cash equivalents and an accumulated deficit of $282.7 million[144] - Operations have historically generated negative cash flows, financed primarily through equity sales and debt, including $175.5 million net proceeds from the March 2021 IPO and $45.3 million from an August 2021 follow-on offering[144] - The Company expects continued operating losses and negative cash flows, with primary cash uses for distribution center operations, marketing, personnel, and capital expenditures for automation and expansion[145] - Existing cash and equivalents are projected to fund operations for at least the next twelve months, but future capital requirements depend on growth plans and market conditions, potentially necessitating additional financing[145][146] Cash Flows Cash flow analysis shows increased usage in operating and investing activities, offset by significant financing proceeds from the IPO Summary of Cash Flows (in thousands) | Cash Flow Activity | Six months ended June 30, 2021 | Six months ended June 30, 2020 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Operating activities | $(9,090) | $(1,467) | | Investing activities | $(66,417) | $(10,695) | | Financing activities | $184,081 | $7,398 | | Net increase (decrease) in cash | $108,574 | $(4,764) | - Net cash used in operating activities increased to $9.1 million in H1 2021 (from $1.5 million in H1 2020), driven by a net loss of $30.6 million, partially offset by non-cash charges and changes in operating assets and liabilities[149] - Net cash used in investing activities significantly increased to $66.4 million in H1 2021 (from $10.7 million in H1 2020), primarily due to $57.4 million in marketable securities purchases and $9.0 million in capital expenditures[151] - Net cash provided by financing activities surged to $184.1 million in H1 2021 (from $7.4 million in H1 2020), mainly from $180.3 million in IPO proceeds[152] Contractual Obligations and Commitments Contractual obligations remain largely unchanged, with an additional term loan borrowed in February 2021 - There have been no material changes to contractual obligations as of June 30, 2021, compared to December 31, 2020, except for an additional $5.0 million term loan borrowed from Western Alliance Bank in February 2021[155] Off-Balance Sheet Arrangements The company reports no off-balance sheet financing arrangements or relationships with unconsolidated entities - The Company did not have any off-balance sheet financing arrangements or relationships with unconsolidated entities during the periods presented[156] Critical Accounting Policies and Estimates No significant changes to critical accounting policies have occurred since December 31, 2020 - No significant changes to critical accounting policies have occurred since December 31, 2020[158] Recent Accounting Pronouncements The company adopted new accounting standards ASU 2018-15 and ASU 2020-06, with no material financial impact - The Company adopted ASU 2018-15 (Intangibles—Goodwill and Other—Internal-use Software) and ASU 2020-06 (Debt with Conversion and Other Options) as of January 1, 2021, with no material impact on financial statements[46][47] - The Company is currently evaluating the impact of ASU 2016-13 (Financial Instruments - Credit Losses), effective for fiscal years beginning after December 15, 2022[48][50] JOBS Act Accounting Election As an emerging growth company, ThredUp uses an extended transition period for new accounting standards, potentially affecting comparability - As an 'emerging growth company' under the JOBS Act, ThredUp has elected to use the extended transition period for complying with new or revised accounting standards, which may result in financial statements not being comparable to other public companies[160] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details ThredUp's exposure to market risks, including interest rate and inflation risks, which are not expected to materially impact financial condition - As of June 30, 2021, the Company held $173.1 million in cash and cash equivalents and $57.4 million in marketable securities, primarily short to intermediate-term fixed income securities[162] - The Company's loan and security agreement with Western Alliance Bank has an interest rate tied to the prime rate, with a 5.50% nominal interest rate and $40.0 million principal outstanding as of June 30, 2021[163] - A hypothetical 100 basis point change in interest rates is not expected to have a material impact on the Company's financial condition or results of operations[164] - Inflation has not had a material effect on the Company's business, results of operations, or financial condition to date[165] Item 4. Controls and Procedures This section addresses the effectiveness of disclosure controls and internal control over financial reporting, noting material weaknesses and ongoing remediation efforts - As of June 30, 2021, the Company's disclosure controls and procedures were deemed not effective due to a material weakness in internal control over financial reporting[168] - Despite the material weakness, management concluded that the unaudited interim condensed consolidated financial statements fairly present the financial position, results of operations, and cash flows[168] - Previously reported material weaknesses include ineffective controls over accounting and proprietary data systems (user access, program change management, data validation) and inadequate controls over the preparation and review of account reconciliations and journal entries (segregation of duties, precision, timeliness)[170][171][269] - Remediation plans involve hiring additional accounting, finance, and IT personnel, implementing enhancements to accounting and proprietary systems, and evolving accounting and quarterly close processes[174][270] PART II. OTHER INFORMATION This section provides other information, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings The company is not currently involved in any material legal proceedings, though ordinary course claims may arise - The Company is not a party to any material pending legal proceedings[178] - From time to time, the Company may be subject to legal proceedings and claims arising in the ordinary course of business, which management does not believe will have a material adverse effect[80][178] Item 1A. Risk Factors This section details significant risks and uncertainties across business, technology, legal, financial, and stock ownership, including the proposed Remix acquisition Risk Factor Summary Key risks include dependence on buyers/sellers, managing growth, history of losses, and material weaknesses in internal controls - Key risks include dependence on attracting and retaining buyers and sellers, managing rapid growth, a history of losses, potential fluctuations in quarterly results, and challenges in expanding distribution center operations[182] - Other significant risks involve material weaknesses in internal control over financial reporting, the adverse impact of the COVID-19 pandemic, data security compromises, the need for additional capital, and the volatility of Class A common stock due to its dual-class structure[184] Risks Relating to Our Business and Industry Business risks include attracting users, managing operations, rapid growth, competition, COVID-19 impacts, and reliance on third-party vendors - Continued growth relies on attracting and retaining buyers and sellers, which requires effective marketing, a broad selection of desirable items, reliable shipping, and high-quality customer experiences[183][185] - The business is exposed to risks in sourcing, itemizing, warehousing, and shipping, including fluctuations in item quality, potential damage or contamination of items, and challenges in managing distribution center operations and personnel[186][187][201][202] - Rapid growth places significant demands on management and resources, and failure to manage this growth effectively, including scaling operations and improving automation, could harm the business[190][191][194] - The Company has a history of net losses and anticipates increasing operating expenses, making future profitability uncertain, especially with aggressive investments in growth and public company costs[195] - The market is competitive and rapidly changing, with competition from new and secondhand item vendors, large online retailers, and other marketplaces, requiring continuous innovation and strategic relationships[206][209][211] - The global COVID-19 pandemic has adversely impacted operations, including processing delays, increased costs, and shifts in consumer spending, and is expected to continue affecting the business[214][215][216][217][220] - Reliance on third-party shipping vendors and digital advertising platforms (search engines, social media) poses risks if terms change, performance declines, or algorithms are altered, potentially increasing costs or reducing buyer/seller acquisition[224][225][226][227][228][232] Risks Relating to Information Technology, Intellectual Property, Data Security and Privacy IT risks involve data security breaches, evolving privacy laws, service interruptions, intellectual property infringement, and open-source software reliance - Compromises of data security, including hacking or data breaches, could lead to unexpected expenses, harm reputation, disrupt operations, and result in litigation, regulatory fines, or increased transaction fees[244] - The Company's use of personal information is subject to evolving privacy and data protection laws (e.g., CCPA, CPRA, GDPR), and non-compliance or changes in interpretation could result in investigations, fines, and significant costs[247][248][251][252] - Interruptions or delays in services from third-party data centers (like AWS), internet service providers, or payment processors could prevent access to the marketplace and harm business operations[253][254][255][256] - The Company faces risks of intellectual property infringement claims from third parties and challenges in protecting its own intellectual property (patents, trademarks, trade secrets), which could lead to costly litigation or loss of competitive advantage[258][259][260][261] - Reliance on open-source software and third-party commercial software/services introduces risks of license non-compliance, defects, or loss of access, potentially increasing costs or limiting product features[263][264][265] Risks Relating to Legal, Regulatory, Accounting and Tax Matters Legal and regulatory risks include internal control weaknesses, compliance with evolving laws, payment fraud, anti-corruption, tax changes, and JOBS Act election - Material weaknesses in internal control over financial reporting, if not remediated, could lead to inaccurate financial reporting, failure to meet legal deadlines, and potential sanctions[268][269][271] - Failure to comply with evolving laws and regulations (e.g., e-commerce, consumer protection, product safety, secondhand dealer licensing) or changes in their interpretation could result in fines, penalties, and adverse effects on business practices and reputation[272][274][275][276][277] - Risks associated with payment methods, credit card fraud, and other consumer fraud could damage reputation, lead to financial losses, and subject the Company to fines or litigation[278][279][280] - The Company is subject to anti-corruption and anti-bribery laws (e.g., FCPA), and non-compliance, especially with international expansion, could result in severe criminal or civil sanctions and reputational harm[285][287] - Changes in tax laws or adverse application of existing tax laws could substantially increase costs, reduce liquidity, and harm results of operations, including limitations on net operating loss (NOL) carryforwards[296][297][299] - As an emerging growth company, electing reduced reporting requirements under the JOBS Act may make Class A common stock less attractive to some investors and affect market volatility[300][302][303] Risks Relating to Our Indebtedness and Liquidity Indebtedness and liquidity risks involve the need for additional capital and restrictive covenants in loan agreements - The Company may require additional capital for business growth, and if not available on favorable terms, it could lead to significant dilution for stockholders or restrictive debt financing terms[304][306] - The loan and security agreement with Western Alliance Bank imposes financial covenants and restrictions (e.g., on indebtedness, business changes, dividends), which could limit operational flexibility and adversely affect results if not complied with[305][307][308] Risks Relating to Ownership of Our Class A Common Stock Stock ownership risks include price volatility, concentrated voting control, potential dilution from future sales, and anti-takeover provisions - The market price of Class A common stock may be volatile and decline due to various factors, including market performance, operating results, analyst expectations, and broader economic conditions[309][310][311][312] - The dual-class common stock structure concentrates voting control with pre-IPO stockholders (directors, executive officers, affiliates), limiting other stockholders' influence on corporate matters and potentially depressing the stock's trading price[314][315][316][317] - Sales of substantial amounts of Class A common stock in the public markets, especially after lock-up restrictions are released, or the perception of such sales, could cause the market price to decline[319][320][323][325] - Future issuance of additional capital stock for financings, acquisitions, investments, or stock incentive plans will dilute existing stockholders' ownership interests[326] - The Company does not intend to pay dividends in the foreseeable future, meaning returns on investment will depend solely on stock price appreciation[327] - Provisions in charter documents and Delaware law could make company acquisition more difficult, limit stockholder influence, and potentially depress the Class A common stock price[328][329][331] Risks Relating to our Proposed Acquisition Risks for the proposed Remix acquisition include non-completion, integration challenges, and unknown liabilities - The proposed acquisition of Remix Global AD may not be completed on the anticipated timeline or at all, due to closing conditions, potentially leading to incurred costs without benefits and negative reactions from stakeholders[335][336][337] - Integrating Remix with ThredUp's business could be more difficult, costly, or time-consuming than expected, potentially hindering the realization of anticipated benefits and disrupting ongoing operations[338][339] - Remix may have unknown or contingent liabilities that were not discovered during due diligence, which could adversely affect ThredUp's business and financial condition post-acquisition[340] General Risks General risks include dependence on key personnel, social media marketing risks, and management's limited public company experience - The Company's success depends on its executive officers and key employees; loss of these individuals or inability to attract and retain skilled talent could harm the business[341][342] - Use of social media, emails, and text messages for marketing carries risks of reputational damage, fines, or penalties due to non-compliance with evolving laws or inadvertent disclosure of sensitive information[345] - The management team has limited experience managing a public company, and the requirements of being public may strain resources, divert attention, and affect the ability to attract and retain executive management and board members[346][347][348][349][350][351] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports on unregistered sales of equity securities, specifically a warrant exercise for Class B common stock, exempt from registration - On May 28, 2021, a warrant to purchase 138,209 shares was net exercised for 103,806 shares of Class B common stock[353] - This issuance was exempt from registration under Section 4(a)(2) of the Securities Act, as it was a transaction by an issuer not involving a public offering[354] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents and certifications - Exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, Investors' Rights Agreement, First Amendment to Loan and Security Agreement, and certifications from the Principal Executive and Financial Officers[355] - XBRL Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Presentation Linkbase, and Cover Page Interactive Data File are also included[355][356] Signatures This section contains the official signatures of ThredUp Inc.'s CEO and CFO, certifying the Quarterly Report on Form 10-Q - The report is signed by James Reinhart, Chief Executive Officer (Principal Executive Officer), and Sean Sobers, Chief Financial Officer (Principal Financial and Accounting Officer), on August 10, 2021[361]