Original Bark Co (Form: 8-K, Received: 06/07/2021 17:30:44)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date Earliest Event Reported):

June 7, 2021 (June 1, 2021)

The Original Bark Company

(Exact name of registrant as specified in its charter)


Delaware	001-39691	83-4109918
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

212 Canal Street New York, NY		10013
(Address of Principal Executive Offices)		(Zip Code)

(855) 501-2275

(Registrant’s telephone number, including area code)

Northern Star Acquisition Corp.

c/o Grauhard Miller

The Chrysler Building

405 Lexington Avenue

New York, NY 10174

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e- 4(c))

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001	BARK	New York Stock Exchange
Warrants, each warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share	BARK WS	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☒

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

INTRODUCTORY NOTE

On June 1, 2021 (the “Closing Date”), The Original Bark Company, a Delaware corporation (formerly known as Northern Star Acquisition Corp.) (the “Company”), consummated the previously announced business combination (the “Closing”) pursuant to that certain Agreement and Plan of Reorganization (the “Merger Agreement”), dated December 16, 2020, by and among Northern Star Acquisition Corp. (“Northern Star”), NSAC Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of Northern Star (“Merger Sub”), and Barkbox, Inc., a Delaware corporation (“BARK”). At the Closing, Merger Sub merged with and into BARK, with BARK surviving the merger as a wholly owned subsidiary of Northern Star (the “Merger” and, collectively with the other transactions described in the Merger Agreement, the “Business Combination”). Also at the Closing, Northern Star changed its name to “The Original BARK Company.”

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

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

Additionally, at the Closing, BARK’s 5.50% convertible senior secured notes due 2025 (the “2025 Convertible Notes”) were assumed by the Company and became convertible at the election of the holders into shares of Common Stock. Immediately after the Closing, the 2025 Convertible Notes were convertible into an aggregate of 7,713,121 shares of Common Stock based on the principal and accrued interest as of Closing.

Concurrently with the Closing, certain investors (the “PIPE Investors”) purchased an aggregate of 20,000,000 shares of Common Stock in a private placement at a price of $10.00 per share for an aggregate purchase price of $200,000,000.

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

The foregoing description of the Merger Agreement is a summary only and is qualified in its entirety by reference to the Merger Agreement, a copy of which was attached as Annex A to Northern Star’s definitive proxy statement/prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 12, 2021 (the “Proxy Statement”), and is incorporated herein by reference. A more detailed description of the Business Combination can be found in the section titled “The Business Combination Proposal” in the Proxy Statement.

Item 1.01

Entry into a Material Definitive Agreement

The disclosure set forth in the “Introductory Note” above is incorporated into this Item 1.01 by reference.

Amended and Restated Registration Rights Agreement

In connection with the Closing, the Company, Northern Star Sponsor LLC, a Delaware limited liability company (the “Sponsor”), certain stockholders of Northern Star prior to the Closing (the “Initial Holders”) and certain securityholders of BARK receiving Common Stock or instruments exercisable for Common Stock in connection with the Merger (the “New Holders” and together with the Initial Holders, the “Registration Rights Holders”) entered into an Amended and Restated Registration Rights Agreement (the “A&R Registration Rights Agreement”), which amended and restated the Registration Rights Agreement by and among Northern Star, the Sponsor and the Initial Holders executed in connection with Northern Star’s initial public offering.

Pursuant to the A&R Registration Rights Agreement, the Company agreed that, within six (6) months after the Closing, the Company will file with the SEC (at the Company’s sole cost and expense) a registration statement registering the resale of certain securities held by or issuable to the Registration Rights Holders (the “Resale Registration Statement”), and the Company will use its reasonable best efforts to have the Resale Registration Statement become effective as soon as reasonably practicable after the filing thereof. The A&R Registration Rights Agreement provides the Registration Rights Holders with the right to demand up to four underwritten offerings and the Registration Rights Holders will be entitled to customary piggyback registration rights.

The foregoing description of the A&R Registration Rights Agreement is a summary only and is qualified in its entirety by reference to the A&R Registration Rights Agreement, a copy of which is attached as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.

Lock-Up Agreements

In connection with the Business Combination, certain stockholders of BARK entered into lock-up agreements (the “BARK Lock-Up Agreement”), pursuant to which they agreed, subject to certain exceptions, not to effect any direct or indirect sale, transfer or other disposition with respect to any shares of Common Stock issued to them in the Merger for a period of twelve months after the Closing, which period may be earlier terminated if the reported closing sale price of the Common Stock equals or exceeds $15.00 per share (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations or other similar transactions) for a period of 20 trading days during any 30-trading-day period commencing at least 150 days following the consummation of the Merger.

In addition, certain initial stockholders of Northern Star have amended the existing lock-up restrictions applicable to them and entered into agreements substantially identical to the BARK Lock-Up Agreement (such agreement, the “Northern Star Lock-Up Agreement”) so that the lock-up restrictions with respect to the initial stockholders’ Common Stock will be identical to the lock-up restrictions applicable to BARK’s stockholders who have entered into the BARK Lock-Up Agreement.

Furthermore, pursuant to a letter agreement executed in connection with Northern Star’s initial public offering, the private warrants will not be transferable, assignable or saleable by the Sponsor until July 1, 2021.

The foregoing description of the Norther Star Lock-Up Agreement and the BARK Lock-Up Agreement is a summary only and is qualified in its entirety by reference to the form of Northern Star Lock-Up Agreements and the BARK Lock-Up Agreement, copies of which are attached as Exhibit 10.4 and Exhibit 10.5 to this Current Report on Form 8-K, respectively, and incorporated herein by reference.

Indemnification Agreements

Following the consummation of the Merger, the Company entered into indemnification agreements (the “Indemnification Agreements”) with each of its directors and executive officers. Subject to certain exceptions, the Indemnification Agreements provide that the Company will indemnify each of its directors and executive officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or officer in any action or proceeding arising out of their services as one of the Company’s directors or officers or any other company or enterprise to which the person provides services at the Company’s request. The foregoing description of the Indemnification Agreements is a summary only and is qualified in its entirety by reference to the form of Indemnification Agreement, a copy of which is attached as Exhibit 10.12 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 2.01

Completion of Acquisition or Disposition of Assets

The disclosure set forth in the “Introductory Note” above is incorporated into this Item 2.01 by reference. The material provisions of the Merger Agreement are described in the Proxy Statement in the section titled “The Merger Agreement” beginning on page 107, which is incorporated by reference herein.

On the Closing Date, the Company consummated the previously announced Merger pursuant to the Merger Agreement. Holders of 2,728,989 shares of Common Stock sold in Northern Star’s initial public offering (the “public shares”) properly exercised their right to have such shares redeemed for a full pro rata portion of the trust account holding the proceeds from Northern Star’s initial public offering, calculated as of two business days prior to the Closing, or approximately $10.00 per share and approximately $27,293,747 in the aggregate.

On December 16, 2020, Northern Star entered into subscription agreements (collectively, the “Subscription Agreements”) pursuant to which certain investors agreed to purchase an aggregate of 20,000,000 shares of Common Stock for a purchase price of $10.00 per share and $200,000,000 in the aggregate (the “PIPE Investment”). At the Closing, the Company consummated the PIPE Investment pursuant to the terms of the Subscription Agreements.

As consideration for the Merger, an aggregate of 117,669,723 shares of Common Stock were issued to BARK’s stockholders.

As of the Closing Date and following the completion of the Business Combination, the Company had the following outstanding securities:

•

166,734,484 shares of Common Stock;

•

29,257,576 stock options, each exercisable for one shares of Common Stock at a weighted average exercise price of $2.15 per share;

•

8,478,333 public warrants, each exercisable beginning on November 13, 2021 for one share of Common Stock at a price of $11.50 per share (the “Public Warrants”);

•

4,558,000 private placement warrants, each exercisable beginning on November 13, 2021 for one share of Common Stock at a price of $11.50 per share;

•

1,897,212 assumed warrants, each exercisable for one share of Common Stock at the weighted average price of $1.05 per share; and

•

2025 Convertible Notes with a principal amount of $75,000,000, which as of the Closing Date was convertible into 7,713,121 shares of Common Stock.

The Company’s Common Stock and Public Warrants commenced trading on the New York Stock Exchange (“NYSE”) under the symbols “BARK” and “BARK WS” on June 2, 2021. The Company’s publicly traded units automatically separated into their component securities upon the Closing and, as a result, no longer trade as a separate security and were delisted from the NYSE.

FORM 10 INFORMATION

Prior to the Closing, the Company was a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) with no operations, formed as a vehicle to effect a business combination with one or more operating businesses. After the Closing, the Company became a holding company whose only assets consist of equity interests in BARK. Accordingly, pursuant to Item 2.01(f) of Form 8-K, the Company is providing below the information that would be included in a Form 10 if it were to file a Form 10. Please note that the information provided below relates to the combined company after the consummation of the Merger, unless otherwise specifically indicated or the context otherwise requires.

Cautionary Note Regarding Forward-Looking Statements

The Company makes forward-looking statements in this Current Report on Form 8-K and in documents incorporated by reference herein. All statements, other than statements of present or historical fact included in or incorporated by reference in this Current Report on Form 8-K, regarding the Company’s future financial performance, as well as the Company’s strategy, future operations, future operating results, financial position, estimated revenues, and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “continue,” “project” or the negative of such terms and other similar expressions. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about the Company that may cause the actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Except as otherwise required by applicable law, the Company disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Current Report on Form 8-K. The Company cautions you that these forward-looking statements are subject to numerous risk and uncertainties, most of which are all difficult to predict and many of which are beyond the control of the Company.

In addition, the Company cautions you that the forward-looking statements regarding the Company, which are included in this Current Report on Form 8-K, are subject to the following factors:

•

the ability to maintain the listing of the Company’s securities on the New York Stock Exchange or an alternative national securities exchange following the Business Combination;

•

the potential liquidity and trading of the Company’s public securities;

•

the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, the ability of the Company to grow and manage growth profitably;

•

the Company’s financial and business performance following the Business Combination, including financial projections and business metrics;

•

changes in the Company’s strategy, future operations, expansion plans and opportunities, financial position, estimated revenues and losses, projected costs, prospects and plans, capital requirements and sources and uses of cash;

•

the implementation, market acceptance and success of the Company’s business model and its ability to scale in a cost-effective manner;

•

the Company’s significant reliance on revenue from customers purchasing subscription-based products, such as BarkBox and Super Chewer, and its ability to successfully expand its offerings;

•

the Company’s short history operating at its current scale in a rapidly evolving industry;

•

the effectiveness and efficiency of the Company’s marketing and cross-selling efforts;

•

the Company’s ability to compete in the highly competitive dog products and services retail industry;

•

the Company’s ability to maintain and grow its strong brand and reputation;

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adverse changes in the Company’s shipping arrangements or any interruptions in shipping;

•

the ability to maintain effective controls over disclosure and financial reporting that enable the Company to comply with regulations and produce accurate financial statements;

•

potential failure to comply with privacy and information security regulations;

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the ability to comply with the anti-corruption laws of the United States and various international jurisdictions;

•

potential impairment charges related to identified intangible assets and fixed assets;

•

the effects of economic downturns and other macroeconomic conditions or trends on the Company’s business and consumer spending;

•

the effects of the COVID-19 pandemic on the Company’s business and the actions the Company may take in response thereto;

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potential litigation, product liability claims, regulatory proceedings and/or adverse publicity involving the Company;

•

expectations regarding the Company’s ability to obtain and maintain intellectual property protection and not infringe on the rights of others;

•

expectations regarding the time during which the Company will be an “emerging growth company” under the JOBS Act; and

•

other risks and uncertainties indicated in the Company’s Annual Report on Form 10-K for the year ended March 31, 2021 filed with the SEC on June 7, 2021, as amended by Amendment No. 1 to the Form 10-K filed with the SEC on June 7, 2021 (the “Annual Report”), including those set forth under the section entitled “Risk Factors” beginning on page 16 of the Annual Report, which are incorporated herein by reference.

Business and Properties

The business of the Company following the Business Combination is described in the Annual Report in the section entitled “Business after the Merger” beginning on page 2 , which is incorporated herein by reference.

Risk Factors

The risks associated with the Company’s business are described in the Annual Report in the section titled “Risk Factors” beginning on page 16 , which is incorporated herein by reference.

Unaudited Pro Forma Condensed Consolidated Combined Financial Information

The unaudited pro forma condensed combined financial information of the Company as of and for the year ended March 31, 2021 is set forth in Exhibit 99.1 hereto and is incorporated by reference herein.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of the financial condition and results of operation of BARK is set forth in Exhibit 99.2 hereto and is incorporated by reference herein.

Management’s discussion and analysis of the financial condition and results of operation of the Company prior to the Business Combination is set forth in the Annual Report in the section titled “Management Discussion and Analysis of Financial Condition and Results of Operation beginning on page 52 , which is incorporated herein by reference.

Executive Compensation

Northern Star Executive Officer and Director Compensation

Detailed information regarding the compensation of Northern Star’s named executive officers for the fiscal year ended March 31, 2021 is described in the Annual Report in the section titled “Executive Compensation” beginning on page 61, which is incorporated by reference herein.

BARK Executive Officer and Director Compensation

Detailed information regarding the compensation of BARK’s named executive officers for the fiscal year ended March 31, 2021 is described in the Proxy Statement in the section titled “Executive Compensation—BARK Executive Officer and Director Compensation” beginning on page 146, which is incorporated by reference herein.

Certain Relationships and Related Transactions

Certain relationships and related party transactions are described in the Proxy Statement in the section titled “Certain Relationships and Related Person Transactions” beginning on page 216 of the Proxy Statement, which is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management

Detailed information regarding the beneficial ownership of the Company’s Common Stock following the Business Combination is described in the Annual Report in the section titled “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” beginning on page 62 of the Annual Report, which is incorporated herein by reference.

Directors and Officers

The Company’s directors and executive officers as of the closing of the Business Combination are described in the Annual Report in the section entitled “Directors, Executive Officers and Corporate Governance” beginning on page 56 and that information is incorporated herein by reference.

In connection with the consummation of the Business Combination, each of Northern Star’s officers and Northern Star’s directors, other than Joanna Coles and Jonathan J. Ledecky in their capacity as directors, ceased serving the Company. Each of Matt Meeker, Manish Joneja, Henrik Werdelin, Elizabeth McLaughlin and Jim McGinty were appointed to the Board in connection with the Business Combination. Matt Meeker was appointed Chairman of the Board.

Director Independence

A description of the independence of the Company’s directors and executive officers is described in the Annual Report in the section entitled “Directors, Executive Officers and Corporate Governance” beginning on page 56 and that information is incorporated herein by reference.

Committees of the Board of Directors

A description of the Company’s board committees is described in the Annual Report in the section entitled “Directors, Executive Officers and Corporate Governance” beginning on page 56 and that information is incorporated herein by reference.

Legal Proceedings

The description of legal proceedings of the Company is included in the Annual Report in the section entitled “Legal Proceedings” beginning on page 50 and that information is incorporated herein by reference.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The disclosure contained in Part II, Item 5 of the Annual Report beginning on page 51 of the Annual Report is incorporated herein by reference.

Recent Sales of Unregistered Securities

Reference is made to the disclosure set forth under Item 3.02 of this Current Report on Form 8-K, which is incorporated herein by reference.

Description of Registrant’s Securities

A description of the Company’s securities is set forth in Exhibit 4.16 hereto and incorporated herein by reference.

Indemnification of Directors and Officers

In connection with the Business Combination, the Company entered into indemnification agreements with each of its directors and executive officers. These indemnification agreements provide the directors and executive officers with contractual rights to indemnification and expense advancement.

Financial Statements and Exhibits

The information set forth under Item 9.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 3.02

Unregistered Sales of Equity Securities

The disclosure set forth above in the Introductory Note and Item 2.01 of this Current Report on Form 8-K with respect to the issuance of Common Stock to the PIPE Investors is incorporated herein by reference. The 20,000,000 shares of Common Stock issued to the PIPE Investors were not registered under the Securities Act in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. The parties receiving the securities represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution, and appropriate restrictive legends were affixed to the certificates representing the securities (or reflected in restricted book entry with the Company’s transfer agent). The parties also had adequate access, through business or other relationships, to information about the Company.

The Subscription Agreements provide for certain registration rights. In particular, the Company will, as soon as practicable within 15 business days following the closing date of the Merger, file with the SEC (at the Company’s sole cost and expense) a registration statement registering the resale of the shares issued to the PIPE Investors, and will use its commercially reasonable efforts to have such registration statement declared effective as soon as reasonably practicable after the filing thereof, but no later than the earlier of (i) the 60th calendar day following the actual filing date (or the 90th calendar day if the SEC notifies the Company (orally or in writing) that it will “review” such registration statement) and (ii) the 5th business day after the date the Company is notified (orally or in writing) by the SEC that such registration statement will not be “reviewed” or will not be subject to further review, subject to certain exceptions, such as a PIPE Investor’s failure to provide information requested by the Company that is required to be provided in such registration statement.

The foregoing description does not purport to be complete and is qualified in its entirety by the full text of the form of Subscription Agreement, which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Item 3.03

Material Modification to Rights of Security Holders

The information set forth in Item 5.03 to this Current Report on Form 8-K is incorporated herein by reference.

As disclosed in Item 2.01, the Company’s Common Stock and Warrants commenced trading on the NYSE under the symbols “BARK” and “BARK WS” on June 2, 2021.

Item 5.01

Changes in Control of the Registrant

The information set forth above under “Introductory Note” and “Item 2.01. Completion of Acquisition or Disposition of Assets” is incorporated herein by reference.

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The information set forth above in the sections titled “Directors and Executive Officers,” “Director Independence,” “Committees of the Board of Directors” and “Executive Compensation” in Item 2.01 is incorporated herein by reference.

In addition, the 2021 Equity Incentive Plan (the “2021 Plan”) and the 2021 Employee Stock Purchase Plan (the “ESPP”) became effective upon the Closing.

A description of the 2021 Plan is included in the Proxy Statement in the section titled “The Incentive Plan Proposal” beginning on page 154 of the Proxy Statement, which is incorporated herein by reference. Such description of the 2021 Plan does not purport to be complete and is qualified in its entirety by the full text of the 2021 Plan, a copy of which is attached hereto as Exhibit 10.10 and incorporated herein by reference.

A description of the ESPP is included in the Proxy Statement in the section titled “The ESPP Proposal” beginning on page 159 of the Proxy Statement, which is incorporated herein by reference. Such description of the ESPP does not purport to be complete and is qualified in its entirety by the full text of the ESPP, a copy of which is attached hereto as Exhibit 10.11 and incorporated herein by reference.

Item 5.03

Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

On June 1, 2021, the Company amended and restated its amended and restated certificate of incorporation (as so amended and restated, the “Second A&R Charter”) and its bylaws (as so amended and restated, the “A&R Bylaws”).

A copy of the Second A&R Charter and A&R Bylaws is attached hereto as Exhibit 3.1 and Exhibit 3.2, respectively, and are incorporated herein by reference.

The material terms of each of the Second A&R Charter and the A&R Bylaws and the general effect upon the rights of holders of the Company’s capital stock are included in the Proxy Statement under the sections titled “The Charter Proposals” beginning on page 132 of the Proxy Statement, which is incorporated herein by reference.

Item 5.06

Change in Shell Company Status

As a result of the Merger, the Company ceased to be a shell company (as defined in Rule 12b-2 of the Exchange Act) as of the Closing Date. The material terms of the Business Combination are described in the Proxy Statement in the sections titled “The Business Combination Proposal” beginning on page 86, of the Proxy Statement, which is incorporated herein by reference. Further reference is made to the information contained in Item 2.01 and is incorporated herein by reference.

Item 9.01

Pro Forma Financial Information

(a) Financial Statements of Business Acquired

The audited consolidated financial statements of BARK for the years ended March 31, 2019, 2020 and 2021 are attached as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated herein by reference.

(b) Pro Forma Financial Information

The unaudited pro forma condensed combined financial information of the Company as of and for the year ended March 31, 2021 is attached as Exhibit 99.1 and incorporated herein by reference.

(c)


Exhibit No.	Description	Included	Form	Filing Date

2.1*	Agreement and Plan of Reorganization, dated as of December 16, 2020, by and among Northern Star Acquisition Corp., NSAC Merger Sub Corp. and Barkbox, Inc.	By Reference	8-K	December 17, 2020

3.1	Second Amended and Restated Certificate of Incorporation.	By Reference	S-4/A	March 8, 2021

3.2	Amended and Restated Bylaws.	By Reference	S-4	February 2, 2021

4.2	Specimen Share Certificate.	By Reference	S-1	October 14, 2020

4.3	Specimen Warrant Certificate.	By Reference	S-1	October 14, 2020

4.4	Warrant Agreement, dated as of November 10, 2020, between Continental Stock Transfer & Trust Company and the Registrant.	By Reference	S-1	November 13, 2020

4.5	Indenture, dated as of November 27, 2020, between BarkBox, Inc. and U.S. Bank National Association, as Trustee and Collateral Agent.	By Reference	S-4	February 2, 2021

4.6	Form of Warrant to purchase shares of BarkBox, Inc. common stock dated July 21, 2015	By Reference	S-4	February 2, 2021

4.7	Form of Warrant to purchase shares of BarkBox, Inc. common stock dated April 1, 2016	By Reference	S-4	February 2, 2021

4.8	Form of Warrant to purchase shares of BarkBox, Inc. common stock dated December 3, 2018	By Reference	S-4	February 2, 2021

4.9	Form of Warrant to purchase shares of BarkBox, Inc. preferred stock dated October 12, 2017	By Reference	S-4	February 2, 2021


Exhibit No.	Description	Included	Form	Filing Date

4.10	Form of Warrant to purchase shares of BarkBox, Inc. common stock dated December 7, 2018	By Reference	S-4	February 2, 2021

4.11	Omnibus Amendment to Warrants to purchase shares of BarkBox, Inc. stock dated July 31, 2020	By Reference	S-4	February 2, 2021

4.12	Second Amended and Restated Investors’ Rights Agreement by and among Barkbox, Inc. and the investors listed on Schedule A thereto, dated May 16, 2016	By Reference	S-4	February 2, 2021

4.13	First Amendment to Second Amended and Restated Investors’ Rights Agreement by and among Barkbox, Inc. and the other signatories thereto, dated December 20, 2016	By Reference	S-4	February 2, 2021

4.14	Second Amendment to Second Amended and Restated Investors’ Rights Agreement by and among Barkbox, Inc. and the other parties thereto, dated November 27, 2020	By Reference	S-4	February 2, 2021

4.15	Third Amendment to Second Amended and Restated Investors’ Rights Agreement by and among Barkbox, Inc. and the other parties thereto, dated December 16, 2020	By Reference	S-4	February 2, 2021

4.16	Description of Registrant’s Securities	By Reference	10-K	June 4, 2021

10.1	Form of Subscription Agreement.	By Reference	8-K	December 17, 2020

10.3	Registration Rights Agreement.	By Reference	S-4/A	April 6, 2021

10.4	Form of Northern Star Lock-Up Agreement.	By Reference	S-4	February 2, 2021

10.5	Form of Barkbox, Inc. Stockholder Lock-Up Agreement.	By Reference	S-4	February 2, 2021

10.6	Form of Letter Agreement from each of the Registrant’s initial shareholders, officers and directors.	By Reference	S-1	October 14, 2020

10.7	Investment Management Trust Agreement, dated as of November 10, 2019, between Continental Stock Transfer & Trust Company and the Registrant.	By Reference	8-K	November 13, 2020

10.8	Registration Rights Agreement, dated as of November 10, 2020, with each of the Registrant’s initial shareholders, officers and directors.	By Reference	8-K	November 13, 2020

10.9#	BarkBox, Inc. Stock Incentive Plan	By Reference	S-4	February 2, 2021

10.10#	2021 Equity Incentive Plan	By Reference	S-4/A	May 10, 2021

10.11#	2021 Employee Stock Purchase Agreement	By Reference	S-4/A	May 10, 2021

10.12	Form of Indemnity Agreement	By Reference	S-4	February 2, 2021

10.13	Loan and Security Agreement, dated as of October 12, 2017, by and among Western Alliance Bank, BarkBox, Inc. and its subsidiaries.	By Reference	S-4	February 2, 2021


Exhibit No.	Description	Included	Form	Filing Date

10.14	Loan and Security Agreement Modification, dated as of November 20, 2017, by and among Western Alliance Bank, BarkBox, Inc. and its subsidiaries.	By Reference	S-4	February 2, 2021

10.15	Second Loan and Security Agreement Modification, dated as of April 20, 2018, by and among Western Alliance Bank, BarkBox, Inc. and its subsidiaries.	By Reference	S-4	February 2, 2021

10.16	Third Loan and Security Agreement Modification, dated as of December 3, 2018, by and among Western Alliance Bank, BarkBox, Inc. and its subsidiaries.	By Reference	S-4	February 2, 2021

10.17	Fourth Loan and Security Agreement Modification, dated as of December 7, 2018, by and among Western Alliance Bank, BarkBox, Inc. and its subsidiaries.	By Reference	S-4	February 2, 2021

10.18	Fifth Loan and Security Agreement Modification, dated as of October 7, 2019, by and among Western Alliance Bank, BarkBox, Inc. and its subsidiaries.	By Reference	S-4	February 2, 2021

10.19	Sixth Loan and Security Agreement Modification, dated as of February 25, 2020, by and among Western Alliance Bank, BarkBox, Inc. and its subsidiaries.	By Reference	S-4	February 2, 2021

10.20	Seventh Loan and Security Agreement Modification, dated as of July 31, 2020, by and among Western Alliance Bank, BarkBox, Inc. and its subsidiaries.	By Reference	S-4	February 2, 2021

10.21	Form of Convertible Secured Note due 2025 (included in Exhibit 4.5).	By Reference	S-4	February 2, 2021

10.22A#	Letter re: Offer of Employment by and between Barkbox, Inc. and Manish Joneja, dated July 15, 2020	By Reference	S-4	February 2, 2021

10.22B#	Amendment No. 1 to the Offer Letter by and between Barkbox, Inc. and Manish Joneja, dated February 4, 2021	By Reference	S-4/A	March 8, 2021

10.23#	Offer Letter by and between Barkbox, Inc. and Matt Meeker, dated January 21, 2013	By Reference	S-4	February 2, 2021

10.24#	Offer Letter by and between Barkbox, Inc. and Michael Novotny, dated July 3, 2015	By Reference	S-4	February 2, 2021

10.25#	Offer Letter by and between Barkbox, Inc. and John Toth, dated November 29, 2016	By Reference	S-4	February 2, 2021

10.26#	Independent Contractor Agreement by and between Barkbox, Inc. and Prehype LLC, dated January 1, 2012	By Reference	S-4	February 2, 2021

10.27#	First Amendment to Statement of Work No. 1 Under the Independent Contractor Agreement by and between Barkbox, Inc. and Prehype LLC	By Reference	S-4	February 2, 2021

10.28	Lease Agreement by and between Barkbox, Inc. and 221 Canal Street LLC, dated September 16, 2013	By Reference	S-4	February 2, 2021

10.29	Eighth Loan and Security Agreement Modification, dated as of November 27, 2020, by and among Western Alliance Bank, BarkBox, Inc. and its subsidiaries.	By Reference	S-4	February 2, 2021

10.30	Ninth Loan and Security Agreement Modification, dated as of January 22, 2021, by and among Western Alliance Bank, BarkBox, Inc. and its subsidiaries.	By Reference	S-4	February 2, 2021

21.1	Subsidiaries of the Registrant.	By Reference	10-K	June 4, 2021

99.1	Unaudited pro forma condensed consolidated combined financial information of the Company as of and for the year ended March 31, 2021

99.2	BARK’s Management’s Discussion and Analysis of Financial Condition and Results of Operations

99.3	Audited consolidated financial statements of BARK for the years ended March 31, 2021, 2020 and 2019

+	The schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.

#	Indicates management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


The Original BARK Company

By:		/s/ John Toth
		Name: John Toth
		Title: Chief Financial Officer

Date: June 7, 2021

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Defined terms included below have the same meaning as terms defined and included elsewhere in this current report on Form 8-K.

The following unaudited pro forma condensed combined financial information is provided to aid you in your analysis of the financial aspects of the Business Combination and the PIPE Transaction.

The following unaudited pro forma condensed combined balance sheet as of March 31, 2021 combines the audited historical consolidated balance sheet of Northern Star as of March 31, 2021 with the audited historical consolidated balance sheet of BARK as of March 31, 2021, giving further effect to the Business Combination and the PIPE Transaction, as if they had been consummated as of March 31, 2021.

The following unaudited pro forma condensed combined statements of operations for the year ended March 31, 2021 combines the audited historical consolidated statement of operations of Northern Star for the period from July 8, 2020 (inception) through March 31, 2021, and the audited historical consolidated statement of operations of BARK for the year ended March 31, 2021, giving effect to the Business Combination and the PIPE Transaction as if they had been consummated on April 1, 2020, the beginning of the earliest period presented.

The unaudited pro forma condensed combined financial statements have been derived from and should be read in conjunction with:

•

the accompanying notes to the unaudited pro forma condensed combined financial statements;

•

the historical audited consolidated financial statements of Northern Star as of March 31, 2021 and for the period from July 8, 2020 (inception) through March 31, 2021 and the related notes included elsewhere in this current report on Form 8-K;

•

the historical audited financial statements of BARK as of and for the year ended March 31, 2021 and the related notes included elsewhere in this current report on Form 8-K.

The unaudited pro forma condensed combined financial data below reflects the 2,728,989 shares of the outstanding Northern Star common stock that were redeemed, resulting in an aggregate payment of $27.3 million out of the trust account, at an redemption price of $10.00 per share.

The unaudited pro forma condensed combined financial information is for illustrative purposes only and is not necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination and the PIPE Transaction taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the combined company.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF MARCH 31, 2021

(in thousands)


	Historical			Historical
	(A) Northern Star			(B) BARK			Transaction Accounting Adjustments					PIPE Financing Adjustments				Pro Forma Balance Sheet
ASSETS
Current assets:
Cash and cash equivalents	$	307		$	38,278		$	245,480		5(d	)	$	193,975	5(k	)	$	429,098
								(602	)	5(c	)
								(4,502	)	5(g	)
								(27,290	)	5(j	)
								(16,548	)	5(i	)
Account receivable—net		—			8,927			—					—				8,927
Prepaid expenses and other current assets		26			7,409			—					—				7,435
Inventory		—			77,454			—					—				77,454
Deferred offering costs		—			—			—					—				—

Total current assets		333			132,068			196,538					193,975				522,914
Property and equipment, net		—			13,465			—					—				13,465
Intangible assets, net		—			2,070			—					—				2,070
Cash and marketable securities held in trust account		254,382						(8,902	)	5(b	)		—				—
								(245,480	)	5(d	)
Other non-current assets		—			3,260			—					—				3,260

Total assets	$	254,715		$	150,863		$	(57,844	)			$	193,975			$	541,709

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	—		$	50,501		$	—				$	—			$	50,501
Accrued and other current liabilities		602			44,605			(345	)	5(g	)		—				43,761
								(602	)	5(c	)
								(499	)	5(i	)
Deferred revenue		—			27,177												27,177

Total current liabilities		602			122,283			(1,446	)				—				121,439
Deferred underwriting fee payable		8,902			—			(8,902	)	5(b	)		—				—
Warrant liabilities		41,473															41,473
Long-term debt		—			115,729			(4,993	)	5(f	)		—				110,736
Other long term liabilities		—			11,834			(4,883	)	5(f	)		—				6,951

Total liabilities		50,977			249,846			(20,224	)				—				280,599


Northern Star Class A common stock, subject to possible redemption		198,738						(171,448	)	5(e	)		—				—
								(27,290	)	5(j	)
Redeemable Convertible Preferred Stock
BARK Series Seed convertible preferred stock					1,897			(1,897	)	5(h	)						—
BARK Series A convertible preferred stock					4,948			(4,948	)	5(h	)						—
BARK Series B convertible preferred stock					10,285			(10,285	)	5(h	)						—
BARK Series C convertible preferred stock					34,585			(34,585	)	5(h	)						—
BARK Series C-1 convertible preferred stock					8,272			(8,272	)	5(h	)						—

Stockholders’ equity (deficit):
Northern Star preferred stock		—						—					—				—
Northern Star Class A common stock		1						1		5(a	)		2	5(k	)		16
								12		5(h	)		—
Northern Star Class B common stock		1						(1	)	5(a	)		—				—
BARK common stock		—			—			—		5(h	)		—				2
								—		5(f	)
								2		5(e	)
Treasury stock, at cost		—			(4,764	)		4,764		5(h	)		—				—
Additional paid-in capital		34,636			25,748			25,573		5(h	)		193,973	5(k	)		449,031
								171,446		5(e	)
								11,219		5(f	)
								(2,064	)	5(g	)

								(11,500	)	5(i	)
Accumulated deficit		(29,638	)		(179,954	)		(1,343	)	5(f	)		—				(187,939	)
								29,637		5(h	)
								(2,092	)	5(g	)
								(4,549	)	5(i	)

Total stockholders’ equity (deficit)		5,000			(158,970	)		221,105					193,975				261,110

Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)	$	254,715		$	150,863		$	(57,844	)			$	193,975			$	541,709

See accompanying notes to the unaudited pro forma condensed combined financial information.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED MARCH 31, 2021

(in thousands, except share and per share amounts)


	Historical
	(A) Northern Star			(B) BARK			Transaction Accounting Adjustments					Pro Forma Statement of Operations
Revenue	$	—		$	378,604		$	—				$	378,604
Cost of revenue		—			152,664			—					152,664

Total gross profit		—			225,940			—					225,940
Operating expenses:
General and administrative		—			179,510			6,643		6(e	)		186,153
Advertising and marketing		—			67,029			—					67,029
Formation and operating costs		1,596			—			—					1,596

Total operating expenses		1,596			246,539			6,643					254,778

Loss from operations		(1,596	)		(20,599	)		(6,643	)				(28,838	)
Other income (expense), net:
Interest expense					(10,923	)		596		6(a	)		(9,397	)
								925		6(a	)
								5		6(a	)
Interest earned on marketable securities held in Trust Account		32			—			(32	)	6(d	)		—
Transaction costs incurred in connection with warrant liabilities		(511	)										(511	)
Loss on warrant liabilities		(27,563	)					—					(27,563	)
Other income (expense), net		—			131			935		6(b	)		(277	)
								(1,343	)	6(c	)

Total other income (expense), net		(28,042	)		(10,792	)		1,086					(37,748	)

Net loss	$	(29,638	)	$	(31,391	)	$	(5,557	)			$	(66,586	)

Net loss per share attributable to common stockholders - basic and diluted	$	(4.56	)	$	(5.93	)						$	(0.41	)

Weighted average common shares used to compute net loss per share attributable to common stockholders - basic and diluted		6,498,571			5,295,722			154,115,602		6(f	)		160,614,173

See accompanying notes to the unaudited pro forma condensed combined financial information.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

1.	Description of the Merger

The board of directors of Northern Star Acquisition Corp., a Delaware corporation (“Northern Star”), unanimously approved the Agreement and Plan of Reorganization, dated as of December 16, 2020 (the “Merger Agreement”), by and among Northern Star, NSAC Merger Sub Corp., a Delaware corporation and wholly owned subsidiary of Northern Star (“Merger Sub”), and Barkbox, Inc., a Delaware corporation (“BARK”), pursuant to which Merger Sub merged with and into BARK, with BARK surviving as a wholly owned subsidiary of Northern Star and the securityholders of BARK becoming securityholders of Northern Star (the “Merger”). We refer to the Merger and the other transactions contemplated by the Merger Agreement as the “Business Combination” and the “PIPE Transaction”.

Pursuant to the Merger Agreement, each share of BARK’s common and preferred stock issued and outstanding immediately prior to the effective time of the Merger (including each share of BARK’s common stock issued as a result of the conversion of certain of BARK’s convertible promissory notes, as more fully described in this current report on Form 8-K) was automatically converted into the right to receive a number of shares of Northern Star common stock equal to the Exchange Ratio. The “Exchange Ratio” is the quotient obtained by dividing 150,000,000 by the fully-diluted number of shares of BARK’s common stock outstanding immediately prior to the effective time of the Merger (as determined in accordance with the Merger Agreement and more fully described elsewhere in this current report on Form 8-K). The Exchange Ratio was 8.7426 at the effective time of the Merger.

Each of the options to purchase shares of BARK’s common stock, whether or not exercisable and whether or not vested, and each of the warrants to purchase BARK’s common and preferred stock, in each case that was outstanding immediately prior to the effective time of the Merger, was assumed by Northern Star and converted into an option or warrant, as the case may be, to purchase a number of shares of Northern Star common stock equal to the number of shares of BARK’s common stock subject to such option or warrant immediately prior to the effective time (or the number of shares of common stock issuable upon conversion of the preferred stock subject to such warrant) multiplied by the Exchange Ratio, at an exercise price equal to the exercise price immediately prior to the effective time divided by the Exchange Ratio.

BARK’s outstanding convertible promissory notes issued in 2019 and 2020 (the “2019 Convertible Promissory Notes” and “2020 Convertible Promissory Notes”, respectively) were converted into shares of BARK’s common stock immediately prior to the effective time of the Merger in accordance with their original terms. All shares of BARK’s common stock issued upon such conversion were entitled to receive shares of Northern Star common stock in the Merger as described above. BARK’s 5.50% convertible senior secured notes due 2025 (the “2025 Notes”) issued under an indenture with U.S. Bank National Association were assumed by Northern Star at the effective time and became convertible at the election of the holders into shares of Northern Star common stock.

In connection with the execution of the Merger Agreement, Northern Star entered into subscription agreements with certain investors (the “PIPE Investors”), pursuant to which such PIPE Investors purchased an aggregate of 20,000,000 shares of Northern Star common stock in a private placement at a price of $10.00 per share for an aggregate commitment of $200.0 million (the “PIPE Transaction”). The closing of the PIPE Transaction took place concurrently with the closing of the Business Combination.

2.	Basis of Pro Forma Presentation

The unaudited pro forma condensed combined financial statements were prepared in accordance with Article 11 of SEC Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” Release No. 33-10786 replaces the existing pro forma adjustment criteria with simplified requirements to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). Northern Star has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial information. The adjustments presented in the unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an understanding of the combined company upon consummation of the Business Combination and the PIPE Transaction.

The unaudited pro forma condensed combined balance sheet as of March 31, 2021 was derived from the audited historical consolidated balance sheet of Northern Star as of March 31, 2021 with the audited historical consolidated balance sheet of BARK as of March 31, 2021, giving further effect to the Business Combination and the PIPE Transaction as if they occurred on March 31, 2021. The unaudited pro forma condensed combined statements of operations for the year ended March 31, 2021 combine the historical consolidated statement of operations of Northern Star for the period from July 8, 2020 (inception) through March 31, 2021, and the historical consolidated statement of operations of BARK for the year ended March 31, 2021, giving effect to the Business Combination and the PIPE Transaction as if they had been consummated on April 1, 2020, the beginning of the earliest period presented.

Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.

The pro forma adjustments reflecting the consummation of the Business Combination and the PIPE Transaction are based on certain currently available information and certain assumptions and methodologies that Northern Star believes are reasonable under the circumstances. The pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments, and it is possible the difference may be material. Northern Star believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination and the PIPE Transaction based on information available to management at this time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the Business Combination. Northern Star and BARK have not had any historical relationship prior to the business combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

The unaudited pro forma condensed combined financial information gives pro forma effect to the redemption of 2,728,989 shares of Northern Star common stock for $27.3 million of the cash held in trust, at a redemption price of $10.00 per share.

Shares outstanding as presented in the unaudited pro forma condensed combined financial statements include the 116,970,786 shares of Northern Star common stock issued to BARK’s stockholders, the 29,064,761 shares of Northern Star common stock (after giving effect to the redemption of 2,728,989 shares of Northern Star common stock ), and including the 20,000,000 shares of Northern Star common stock issued in connection with the PIPE Transaction.

As a result of the Business Combination and the PIPE Transaction, including the redemption of 2,728,989 shares of Northern Star common stock, BARK’s stockholders own approximately 70% of the common stock of the combined company, Northern Star public stockholders own approximately 18% of the common stock of the combined company, and investors from the PIPE Transaction own approximately 12% of the common stock of the combined company, based on the number of shares of Northern Star common stock outstanding as of March 31, 2021 (in each case, not giving effect to any shares issuable upon exercise of Northern Star Warrants or Northern Star Options).

These unaudited pro forma condensed combined financial statements and related notes have been derived from and should be read in conjunction with:

•

the accompanying notes to the unaudited pro forma condensed combined financial statements;

•

the historical consolidated financial statements of Northern Star as of March 31, 2021 and for the period from July 8, 2020 (inception) through March 31, 2021 and the related notes included elsewhere in this current report on Form 8-K;

•

the historical consolidated audited financial statements of BARK as of and for the year ended March 31, 2021 and the related notes included elsewhere in this current report on Form 8-K.

3.	Accounting for the Merger

The Business Combination represents a reverse merger and will be accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Northern Star will be treated as the “acquired” company for financial reporting purposes. This determination is primarily based on the fact that subsequent to the Business Combination, BARK stockholders will have a majority of the voting power of the combined company, BARK will comprise all of the ongoing operations of the combined entity, BARK will control a majority of the governing body of the combined company, and BARK’s senior management will comprise all of the senior management of the combined company. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of BARK issuing shares for the net assets of Northern Star, accompanied by a recapitalization. The net assets of BARK will be stated at historical cost. No goodwill or other intangible assets will be recorded. Operations after the Business Combination will be those of BARK.

4.	Shares of Northern Star Common Stock Issued to BARK Stockholders upon Closing of the Business Combination and the PIPE Transaction

Based on 5,626,909 shares of BARK common stock and 7,752,515 shares of BARK convertible preferred stock outstanding immediately prior to the closing of the Business Combination and the PIPE Transaction, assuming the closing occurred on March 31, 2021, and based on the Exchange Ratio determined in accordance with the terms of the Merger Agreement of 8.7426, Northern Star would have issued approximately 116,970,786 shares of Northern Star common stock in the Business Combination, determined as follows:


BARK Common Stock assumed outstanding prior to the closing of the Business Combination and the PIPE Transaction			5,626,909
Assumed Exchange Ratio			8.7426

			49,193,678

BARK convertible preferred stock assumed outstanding prior to the closing of the Business Combination and the PIPE Transaction			7,752,515
Assumed Exchange Ratio			8.7426

			67,777,108

Estimated shares of Northern Star Common Stock issued to BARK Stockholders upon closing of the Business Combination and the PIPE Transaction			116,970,786

5.	Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2021

The unaudited pro forma condensed combined balance sheet as of March 31, 2021 has been prepared to illustrate the effect of the Business Combination and the PIPE Transaction and has been prepared for informational purposes only.

The unaudited pro forma condensed combined balance sheet as of March 31, 2021 include pro forma adjustments that are (1) directly attributable to the Business Combination, and (2) directly attributable to the PIPE Transaction. Northern Star and BARK did not have any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

The pro forma notes and adjustments, based on preliminary estimates that could change materially as additional information is obtained, are as follows:

Pro forma notes

(A)

Derived from the audited consolidated balance sheet of Northern Star as of March 31, 2021.

(B)

Derived from the audited consolidated balance sheet of BARK as of March 31, 2021.

Pro forma transaction accounting:

To reflect the conversion of all outstanding shares of Northern Star’s Class B common stock into Northern Star’s Class A common stock on a one-for-one basis upon the closing of the Business Combination.

To reflect the settlement of $8.9 million of deferred underwriters’ fees incurred during Northern Star’s IPO that are payable upon completion of the Business Combination.

To reflect the payment of Northern Star’s accrued other current liabilities of $0.6 million upon completion of the Business Combination.

To reflect the release of cash from the trust account to the cash and cash equivalents account.

To reflect the reclassification of 17,144,816 shares of common stock subject to redemption of $171.4 million to permanent equity, after giving effect to the redemption of 2,728,989 shares of Northern Star common stock prior to closing.

To reflect the automatic conversion of BARK’s 2019 Convertible Promissory Notes and 2020 Convertible Promissory Notes into shares of BARK common stock and subsequent conversion into Northern Star’s common stock. Upon the conversion, the carrying value of the debt of $5.0 million, including unamortized debt discount of $2.8 million, and the related derivative liability of $4.9 million were derecognized. The Northern Star shares issued in exchange for the debt were recorded at fair value to common stock in the amount of $13 and additional paid in capital in the amount of $11.2 million, with the resulting difference being accounted for as a loss on extinguishment of $1.3 million in earnings (see note 6(c) below).

To reflect the payment of BARK’s total estimated advisory, legal, accounting and auditing fees and other professional fees of $4.5 million that are deemed to be direct and incremental costs of the Business Combination and to accrue $2.1 million of BARK’s additional transaction costs that are not directly attributable to the Business Combination. The payment of $4.5 million of costs directly attributable to the Business Combination have been recorded as a reduction to additional paid-in capital of $2.1 million and accrued and other current liabilities of $2.4 million. The accrual of $2.1 million of additional transaction costs has been recorded as a decrease to accumulated deficit (see note 6(e) below).

To reflect the recapitalization of BARK through the contribution of all outstanding common and preferred stock of BARK to Northern Star and the issuance of 116,970,786 shares of Northern Star common stock and the elimination of the accumulated deficit of Northern Star, the accounting acquiree. As a result of the recapitalization, the carrying value of BARK’s redeemable convertible preferred stock of $60.0 million, common stock of $13, treasury stock of $4.8 million and Northern Star’s accumulated deficit of $29.6 million were derecognized. The Northern Star shares issued in exchange for BARK’s capital were recorded to common stock in the amount of $12 thousand and additional paid in capital in amount of $25.6 million.

To reflect the payment of $16.5 million, of which $12.0 million represents Northern Star’s total estimated advisory, legal, accounting and auditing fees and other professional fees that are deemed to be direct and incremental costs of the Business Combination. In addition, reflects the accrual of $4.5 million of BARK’s additional transaction costs that are not directly attributable to the Business Combination. The payment of $12.0 million of costs directly attributable to the Business Combination have been recorded as a reduction to additional paid-in capital.

To reflect the redemption of 2,728,989 shares of Northern Star common stock prior to the consummation of the Business Combination at a redemption price of approximately $10.00 per share, or $27.3 million in cash.

Pro forma adjustments directly attributable to the PIPE Transaction:

To reflect the issuance of an aggregate of 20,000,000 shares of Northern Star common stock in the PIPE Transaction at a price of $10.00 per share, for an aggregate purchase price of $200.0 million and to record the fee associated with the PIPE Transaction in the amount of $6.0 million.

6.	Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended March 31, 2021

Northern Star and BARK did not have any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statements of operations are based upon the number of Northern Star’s shares outstanding at the closing of the Business Combination and the PIPE Transaction, assuming the Business Combination and the PIPE Transaction occurred on April 1, 2020.

The pro forma notes and adjustments, based on preliminary estimates that could change materially as additional information is obtained, are as follows:

Pro forma notes:

(A)

Derived from the audited consolidated statements of operations of Northern Star for the period from July 8, 2020 (inception) through March 31, 2021.

(B)

Derived from the audited consolidated statements of operations of BARK for the year ended March 31, 2021.

Pro forma adjustments:

To reflect an adjustment to eliminate interest expense, debt issuance cost and amortization of discount on debt upon the automatic conversion of BARK’s 2019 Convertible Promissory Notes and 2020 Convertible Promissory Notes as the convertible notes would have been converted to BARK’s common stock and then to Northern Star common stock as if the Business Combination had occurred on April 1, 2020.

To reflect an adjustment to eliminate the impact of the change in the fair value of derivative liability for convertible notes issued by BARK as the derivative liability would have been extinguished upon conversion of BARK’s 2019 Convertible Promissory Notes and 2020 Convertible Promissory Notes as if the Business Combination had occurred on April 1, 2020.

To reflect an adjustment to record a loss of $1.3 million on conversion of BARK’s 2019 Convertible Promissory Notes and 2020 Convertible Promissory Notes as if the Business Combination had occurred on April 1, 2020. It should be noted that BARK’s 2019 Convertible Promissory Notes and 2020 Convertible Promissory Notes were issued after April 1, 2020, and therefore, the loss on conversion of $1.3 million was calculated based on the carrying amounts of the convertible notes and derivative liability as of March 31, 2021, which represents the best available information.

To reflect an adjustment to eliminate the interest earned of $32 thousand on marketable securities held in trust account of Northern Star.

To reflect an accrual for additional transaction costs of $6.6 million within selling, general and administrative expense of BARK (see note 5(g) and 5(i) above), which includes $4.5 million of expense related to the cash retention pool expected to be paid to certain BARK employees upon the completion of the Business Combination.

As the Business Combination is being reflected as if it had occurred at the beginning of the earliest period presented, the calculation of weighted average shares outstanding for pro forma basic and diluted net income per share assumes that the shares issuable in connection with the Business Combination and the PIPE Transaction have been outstanding for the entirety of the periods presented. This calculation is retroactively adjusted to eliminate 2,728,989 shares of the outstanding Northern Star common stock, redeemed for cash, for the entire period. Pro forma weighted common shares outstanding—basic and diluted for the year ended March 31, 2021 are calculated as follows:


	Year Ended March 31, 2021
Weighted average shares calculation - basic and diluted
Northern Star weighted average public shares outstanding		6,498,571
Northern Star common stock subject to redemption reclassified to equity (net of share redemptions)		17,144,816
Issuance of Northern Star common stock in connection with closing of the PIPE Transaction		20,000,000
Issuance of Northern Star common stock to BARK shareholders in connection with Business Combination		116,970,786

Pro forma weighted average shares outstanding - basic and diluted		160,614,173

Exhibit 99.2

BARK’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the financial condition and results of operations of Barkbox, Inc. (for purposes of this section, “BARK,” “we,” “us” and “our”) should be read together with BARK’s audited consolidated financial statements as of and for the fiscal years ended March 31, 2021, 2020 and 2019, in each case together with the related notes thereto, included elsewhere in this proxy statement/prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described under the heading “Risk Factors.” Actual results may differ materially from those contained in any forward-looking statements. Certain monetary amounts, percentages, and other figures included in this section have been subject to rounding adjustments.

Overview

BARK is a company of dog obsessed people dedicated to making dogs happy. BARK is a vertically integrated, data driven, omnichannel brand serving dogs across the four key categories of Play, Food, Health and Home. BARK’s dog-obsessed team applies its unique, data-driven understanding of what makes each dog special to design playstyle-specific toys, delicious and satisfying treats, food, and wellness supplements, and best in class offerings that foster the health and happiness of dogs. Founded in 2012, BARK serves dogs nationwide with monthly subscription offerings, BarkBox and Super Chewer; a personalized meal delivery service for dogs, BARK Eats; custom collections through online marketplaces and via brick and mortar retail partners, including Target and Amazon; wellness products that meet dogs’ needs with BARK Bright through monthly subscriptions; BARK’S add to box platform; and individually on its website BarkShop.com.

Factors Affecting Our Future Performance

We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section of this proxy statement/prospectus titled “Risk Factors.”

Acquisition of new subscriptions

Our ability to attract new subscriptions is a key factor for our future growth. To date we have successfully acquired new subscriptions through marketing and the development of our brands. As a result, revenue has increased each year since our launch. If we are unable to acquire sufficient new subscriptions in the future, our revenue might decline. New subscriptions could be negatively impacted if our marketing efforts are less effective in the future. Increases in advertising rates could also negatively impact our ability to acquire new subscriptions cost effectively. Consumer tastes, preferences, and sentiment for our brands may also change and result in decreased demand for our products and services.

Retention of existing subscribers

Our ability to retain subscribers is a key factor in our ability to generate revenue growth. Most of our current subscribers purchase products through subscription-based plans, where subscribers are billed and sent products on a recurring basis. The recurring nature of this revenue provides us with a certain amount of predictability for future revenue. If customer behavior changes, and customer retention decreases in the future, then future revenue will be negatively impacted.

Investments in growth

We expect to continue to focus on long-term growth through investments in product offerings and the dog and dog parent experience. We are working to enhance our offerings and expand the breadth of the products and offerings, including BARK Eats and BARK Bright. We expect to make significant investments in marketing to acquire new subscribers and customers. Additionally, we intend to continue to invest in our fulfillment and operating capabilities. In the short term, we expect these investments to increase our operating expenses; however, in the long term, we anticipate that these investments will positively impact our results of operations.

Expansion of new offerings

We expect to continue to invest in the expansion of our new offerings, including BARK Eats, BARK Bright and potential new offerings. By expanding our product lines we seek to attract new customers as well as increase sales to our existing customers. Continuing expansion into new categories, such as BARK Eats and BARK Bright will require financial investments in additional headcount, marketing and customer acquisition expenses, and additional operational capabilities and may require the purchase of new inventory. If we are unable to generate sufficient demand for these new offerings, we may not recover the financial investments we make into new categories and revenue may not increase in the future.

Impact of COVID-19

The global COVID-19 pandemic has impacted and will continue to impact our operating results, financial condition and cash flows.

We have implemented a number of measures to protect the health and safety of our workforce. These measures include substantial modifications to employee travel, employee work locations, and virtualization or cancellation of meetings, among other modifications. Currently, the vast majority of our employees are working remotely. For the employees who work in our offices, we are following the guidance from public health officials and government agencies, including implementation of enhanced cleaning measures, social distancing guidelines and wearing of masks.

BARK has experienced an increase in the rate of BarkBox and Super Chewer subscriptions that we believe is partially attributable to an increase in dog ownership arising from more subscribers working remotely during the COVID-19 pandemic. This rate of growth may not be sustainable or indicative of our future rate of growth.

BARK has experienced an increase in Retail revenue across many existing and new major retail customers, while at the same time, experiencing challenges with select partners due to restrictions in mobility.

BARK experienced minor manufacturing and inbound freight disruptions during the fiscal year ended March 31, 2021 due to the COVID-19 pandemic. Additionally, during the third and fourth quarters of fiscal year 2021 BARK experienced increases in inbound freight costs due to the challenges in the current import market, as transpacific ships and trade lanes continue to be overburdened with volume and experience a significant shortage of equipment and capacity.

During the fiscal year ended March 31, 2021, BARK saw an increase in outbound fulfillment and shipping related fees. This increase was due to price increases from carriers due to increased demand, as well as BARK opting for premium shipping with carriers to help ensure timely delivery and customer satisfaction.

The extent to which the COVID-19 pandemic will continue to impact our business will depend on future developments related to the geographic spread of the disease, the duration and severity of the outbreak, travel restrictions, required social distancing, governmental mandates, business closures or governmental or business disruptions, and the effectiveness of actions taken in the United States and other countries to prevent, contain and treat the virus and any additional government stimulus programs. These impacts are highly uncertain and cannot be predicted with certainty.

Key Performance Indicators

We measure our business using both financial and operating data and use the following metrics and measures (among others) to assess the near-term and long-term performance of our overall business, including identifying trends, formulating financial projections, making strategic decisions, assessing operational efficiencies, and monitoring our business.

We present the following key performance indicators to assist investors in understanding our operating results on an on-going basis: (i) Subscription Shipments; (ii) Average Monthly Subscription Shipment Churn; (iii) Active Subscriptions; (iv) New Subscriptions; and (v) Customer Acquisition Cost. These key performance indicators may also assist investors in making comparisons of the Company’s operating results with those of other companies.

Subscription Shipments

We define Subscription Shipments as the total number of subscription product shipments shipped in a given period. Subscription Shipments does not include gift subscriptions or one-time subscription shipments.

The table below sets forth our Subscription Shipments for the fiscal years ended March 31, 2021 and 2020 (in thousands, except percentages):


	Year ended March 31,
	2021		2020		Change
Subscription Shipments		11,618		7,618		4,000	52.5	%

We believe the rapid increase in Subscription Shipments was the result of our continued investment in driving our subscription growth through product expansion and consumer marketing. Our growth was also the result of continued investment and in creating timely and relevant toys and leveraging strategic license partnerships to drive increased customer satisfaction. The increase in Subscription Shipments for the 12 months ended March 31, 2021, was also partially driven by the increase in dog ownership arising from more customers working remotely during the COVID-19 pandemic.

Average Monthly Subscription Shipment Churn

Average Monthly Subscription Shipment Churn is calculated as the average number of subscription shipments that have been cancelled in the last three months, divided by the average monthly active subscription shipments in the last three months. The number of cancellations used to calculate Average Monthly Subscription Shipment Churn is net of the number of subscriptions reactivated during the last three months.

The table below sets forth our Average Monthly Subscription Shipment Churn for the quarters ended:

Quarter ended

Q1 2021

Q2 2021

Q3 2021

Q4 2021

June 30,

September 30,

December 31,

March 31,

2020

2021

Average Monthly Subscription Churn

6.3

5.4

6.6

5.4

Average Monthly Subscription Shipments Churn fluctuates for a variety of reasons including macroeconomic conditions, seasonality, timing of discount promotions and demand surges related to popular products and timely and relevant themes. For the quarter ended March 31, 2021, we had a decrease in Average Monthly Subscription Shipments Churn due to timing of subscription renewals, as well as seasonality. We do not expect Average Monthly Subscription Churn to remain at this reduced level.

Active Subscriptions

Our ability to expand the number of Active Subscriptions is an indicator of our market penetration and growth. We define Active Subscriptions as the total number of unique product subscriptions with at least one shipment during the last 12 months. Active Subscriptions does not include gift subscriptions or one-time subscription purchases.

The table below sets forth our Active Subscriptions as of fiscal years ended March 31, 2021 and 2020 (in thousands, except percentages):


	As of March 31,
	2021		2020		Change
Active Subscriptions		1,825		1,207		618	51.2	%

Consistent with the increase in Subscription Shipments, we believe the rapid increase in Active Subscriptions was the result of our continued investment in product expansion, consumer marketing, and creating timely and relevant toys. The increase in Active Subscriptions for the 12 months ended March 31, 2021, was also partially driven by the increase in dog ownership arising from more customers working remotely during the COVID-19 pandemic.

New Subscriptions

We define New Subscriptions as the number of unique subscriptions with their first shipment occurring in a period.

The table below sets forth our New Subscriptions for the fiscal years ended March 31, 2021 and 2020 (in thousands, except percentages):


	Year Ended March 31,
	2021		2020		Change
New Subscriptions		1,200		628		572	91.1	%

We believe the increase in New Subscriptions was the result of our continued investment in product expansion and consumer marketing. Our growth was also the result of continued investment in creating timely and relevant toys, including leveraging strategic license partnerships, to drive increased customer satisfaction. We believe the increase in New Subscriptions for the fiscal year ended March 31, 2021 was also partially driven by the increase in dog ownership during the COVID-19 pandemic.

Customer Acquisition Cost

Customer Acquisition Cost (“CAC”) is a measure of the cost to acquire New Subscriptions in our Direct to Consumer business segment. This unit economic metric indicates how effective we are at acquiring each New Subscription. CAC is a monthly measure defined as media spend in our Direct to Consumer business segment in the period indicated, divided by total New Subscriptions in such period. Direct to Consumer media spend is primarily comprised of internet and social media advertising fees.

The table below sets forth our CAC for the fiscal years ended March 31, 2021 and 2020:


	Year Ended March 31,				Change
	2021		2020		$			%
CAC	$	47.51	$	55.40	$	(7.89	)		(14.2	)%

The significant decrease in CAC for the fiscal year ended March 31, 2021 versus the fiscal year ended March 31, 2020 was primarily due to reduction in the cost of media advertising as a result of the COVID-19 outbreak. We do not expect CAC to remain at these reduced levels.

Components of Our Results of Operations

We operate in two reportable segments: Direct to Consumer and Commerce, to reflect the way our chief operating decision maker (“CODM”) reviews and assesses the performance of the business.

Revenue

Direct to Consumer

Direct to Consumer revenue consists of product sales through our monthly subscription boxes, as well as sales through our website, BarkShop.com (“BarkShop”):

Toys and Treats Subscriptions—Our principal revenue generating products consist of a tailored assortment of premium and highly durable toys and treats sold through our BarkBox and Super Chewer monthly subscriptions. BarkBox and Super Chewer subscription rates vary based on the type of subscription plan selected by the customer, with Super Chewer’s price point being slightly higher based on additional costs of the more durable product, but resulting in similar gross margins. Subscription plans are offered as monthly, six month or annual commitments. Subscription revenue is recognized at a point in time as control is transferred to the subscriber upon delivery of each monthly box.

On a monthly basis, toys and treats subscription customers have the option to purchase additional toys, treats, or essential products to add to their respective subscription boxes, through our add to box (“ATB”) offering. ATB revenue is recognized at a point in time as control is transferred to the customer upon delivery of goods to the subscriber.

BARK Bright—BARK Bright revenue consists of sales of our health and wellness solutions, with our initial product being a dental solution, sold primarily through monthly subscriptions. Subscription revenue is recognized at a point in time as control is transferred to the subscriber upon delivery of each monthly box. Revenue for BARK Bright sales to retailers and through marketplaces is recognized at a point in time upon delivery of goods.

BARK Eats—BARK Eats revenue consists of sales of personalized and nutritious meals for dogs sold at a meal per day price. Revenue is recognized at a point in time, as control is transferred to the customer upon delivery of goods.

BarkShop—BarkShop revenue consists of sales of individual toys and treats through our website, BarkShop. Revenue relating to the sale of goods on Barkshop is recognized at a point in time as control is transferred to the customer upon delivery of goods.

Commerce

We also generate revenue from product sales to retailers and through marketplaces. See below for additional information on each offering.

Retail—Retail revenue consists of sales of individual BARK toys, treats, and BARK Bright health and wellness solutions, mainly through major retailers. Revenue is recognized upon delivery to retailer.

BARK Bright—Revenue for BARK Bright sales to retailers and through marketplaces is recognized upon delivery of goods to the customer.

Cost of Revenue

Cost of revenue primarily consists of the purchase price of inventory sold, inbound freight costs associated with inventory, shipping supply costs, and inventory shrinkage costs.

Operating Expenses

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

General and Administrative

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

We expect to incur additional general and administrative expenses as a result of becoming a public company, including expenses related to compliance and reporting obligations of public companies, and increased costs for insurance, investor relations expenses, and professional services. As a result, we expect that our general and administrative expenses will increase in absolute dollars in future periods and vary from period to period as a percentage of revenue.

Advertising and Marketing

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

Interest Expense

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

Other Income (Expense), Net

Other income (expense), net, primarily consists of changes in the fair value of our derivative liabilities and preferred share warrants, as well as rental income from subleases.

Results of Operations

We operate in two reportable segments to reflect the way our chief operating decision maker (“CODM”) reviews and assesses the performance of the business. See Note 2, “Summary of Significant Accounting Policies,” in our consolidated financial statements for the fiscal years ended March 31, 2021, 2020 and 2019 included elsewhere in this current report on Form 8-K.


	Fiscal Year Ended March 31,
	2021		2020		2019		2021 vs 2020			2020 vs 2019
	(in thousands)				(in thousands)
Consolidated Statement of Operation Data:
Revenue
Direct to Consumer	$	333,970	$	204,151	$	177,750		63.6	%		14.9	%
Commerce		44,634		20,184		13,691		121.1	%		47.4	%

Total revenue		378,604		224,335		191,441		68.8	%		17.2	%

Cost of revenue
Direct to Consumer		128,044		79,191		75,085		61.7	%		5.5	%
Commerce		24,620		9,730		9,241		153.0	%		5.3	%

Total cost of revenue		152,664		88,921		84,326		71.7	%		5.4	%

Gross profit		225,940		135,414		107,115		66.9	%		26.4	%
Operating expenses:
General and administrative		179,510		115,893		104,146		54.9	%		11.3	%
Advertising and marketing		67,029		46,147		37,664		45.3	%		22.5	%

Total operating expenses		246,539		162,040		141,810		52.1	%		14.3	%

Loss from operations		(20,599)		(26,626)		(34,695)		(22.6)	%		(23.3)	%

Interest expense		(10,923)		(5,421)		(2,595)		101.5	%		108.9	%
Other income, net		131		679		208		(80.7)	%		226.4	%

Net loss before income taxes		(31,391)		(31,368)		(37,082)		0.1	%		(15.4)	%
Provision for income taxes		—		—		—		—	%		—	%

Net loss	$	(31,391)	$	(31,368)	$	(37,082)		0.1	%		(15.4)	%

Comparison of the Fiscal Years Ended March 31, 2021 and March 31, 2020

Revenue


	Fiscal Year Ended March 31,
	2021			2020			$ Change		% Change
	( in thousands)
Revenue
Direct to Consumer	$	333,970		$	204,151		$	129,819		63.6	%
Commerce		44,634			20,184			24,450		121.1	%

Total revenue	$	378,604		$	224,335		$	154,269		68.8	%

Percentage of Revenue
Direct to Consumer		88.2	%		91.0	%
Commerce		11.8	%		9.0	%

Direct to Consumer revenue increased by $129.8 million, or 63.6%, for the fiscal year ended March 31, 2021 compared to the fiscal year ended March 31, 2020. The increase in Direct to Consumer revenue was primarily driven by a significant increase in Subscription Shipments, which grew by 4.0 million, or 52.5%. Additionally, ATB revenue increased by $15.2 million during the period, from $2.4 million to $17.5 million for the fiscal years ended March 31, 2020 and 2021, respectively.

Commerce revenue increased by $24.5 million for the fiscal year ended March 31, 2021 compared to the fiscal year ended March 31, 2020. The increase in Commerce revenue was primarily driven by a $15.8 million increase in Retail and $8.6 million increase in BARK Home revenue. The increase in Retail revenue was primarily due to the introduction of our products in new retail chains during fiscal year 2021. The increase in BARK Home was primarily due to the increase in product offerings and increased penetration within the online marketplaces during fiscal year 2021.

Cost of Revenue


	Fiscal Year Ended March 31,
	2021		2020		$ Change		% Change
	( in thousands)
Cost of revenue
Direct to Consumer	$	128,044	$	79,191	$	48,853		61.7	%
Commerce		24,620		9,730		14,890		153.0	%

Total cost of revenue	$	152,664	$	88,921	$	63,743		71.7	%

Cost of Direct to Consumer revenue increased by $48.9 million, or 61.7%, for the fiscal year ended March 31, 2021 compared to the fiscal year ended March 31, 2020. This increase is consistent with the increase in Direct to Consumer revenue during the period.

Cost of Commerce revenue increased by $14.9 million, for the fiscal year ended March 31, 2021 compared to the fiscal year ended March 31, 2020. This increase was primarily driven by costs associated with the growth in the number of goods delivered to new and existing retailer customers.

Gross Profit


	Fiscal Year Ended March 31,
	2021			2020			$ Change		% Change
	( in thousands)
Gross Profit
Direct to Consumer	$	205,926		$	124,960		$	80,966		64.8	%
Commerce	$	20,014		$	10,454		$	9,560		91.4	%

Total gross profit	$	225,940		$	135,414		$	90,526		66.9	%

Percentage of revenue		59.7	%		60.4	%

Direct to Consumer gross profit increased by $81.0 million for the fiscal year ended March 31, 2021 compared to the fiscal year ended March 31, 2020.

Commerce gross profit increased by $9.6 million for the fiscal year ended March 31, 2021 compared to the fiscal year ended March 31, 2020.

Gross profit as a percentage of revenue decreased for the fiscal year ended March 31, 2021 compared to the fiscal year ended March 31, 2020. This decrease was primarily due to increased costs related to inbound freight and royalty fees related to strategic license partnerships entered into during the period to enhance our customers experience by creating timely and relevant toys.

Operating Expenses

General and Administrative Expense


	Fiscal Year Ended March 31,
	2021			2020			$ Change		% Change
	( in thousands)
General and administrative	$	179,510		$	115,893		$	63,617		54.9	%
Percentage of revenue		47.4	%		51.7	%

General and administrative expense increased by $63.6 million, or 54.9%, for the fiscal year ended March 31, 2021 compared to the fiscal year ended March 31, 2020. This increase was primarily due to an increase of $41.8 million in fulfillment and shipping costs due to the increase in Active Subscriptions in the period, increased compensation expense of $17.0 million, as a result of higher employee headcount, consultant fees and stock-based compensation expense, increased payment processing fees of $2.7 million, increased marketplace sellers fees of $1.7 million, increased other operating expenses of $1.3 million, increased professional and legal expenses of $1.4 million, increased software expenses of $1.3 million and increased depreciation and amortization expense of $1.0 million. These increases were partially offset by a decrease of $3.4 million in sales and use tax, which was driven by a significant adjustment recorded during the fiscal year ended March 31, 2020 related to the U.S. Supreme Court ruling allowing states to enforce a sales and use tax collection obligation on remote vendors. In addition, there were decreases of $0.8 million in travel and entertainment and office expenses due to the travel restrictions and employees working remotely due to the COVID-19 pandemic. We do not expect travel and entertainment and office expenses to remain at these decreased levels.

Advertising and Marketing


	Fiscal Year Ended March 31,
	2021			2020			$ Change		% Change
	( in thousands)
Advertising and marketing	$	67,029		$	46,147		$	20,882		45.3	%
Percentage of revenue		17.7	%		20.6	%

Advertising and marketing expense increased by $20.9 million, or 45.3%, for the fiscal year ended March 31, 2021 compared to the fiscal year ended March 31, 2020. This increase was due primarily to media advertising spend which increased from $37.9 million for the fiscal year ended March 31, 2020 to $59.8 million for the fiscal year ended March 31, 2021, or $21.9 million. The increase in media spend is due to the increase in New Subscriptions in spite of a decrease in cost per new subscription, or CAC.

Of the $59.8 million of media spend during the fiscal year ended March 31, 2021, $57.1 million related to Direct to Consumer and $2.7 million related to Commerce. Of the $37.9 million of media spend during the fiscal year ended March 31, 2020, $34.8 million related to Direct to Consumer and $3.1 million related to Commerce.

The following table displays the calculation of CAC for the fiscal years ended March 31, 2021 and 2020:


	Fiscal Year Ended March 31,
	2021		2020		Change			% Change
CAC	$	47.51	$	55.40	$	(7.89	)		(14.2	)%
New Subscriptions (in thousands)		1,200		628		572			91.1	%
Direct to Consumer media spend (in thousands)	$	57,060	$	34,762	$	22,298			64.1	%

CAC was $47.51 and $55.40 for the fiscal years ended March 31, 2021 and 2020, respectively. During fiscal year 2021, pricing for internet advertising was significantly lower than normal due to the impact of the COVID-19 pandemic. We increased our internet advertising spend during the period to capitalize on these beneficial prices, resulting in the acquisition of new subscriptions at a substantially lower cost.

Interest Expense


	Fiscal Year Ended March 31,
	2021			2020			$ Change			% Change
	( in thousands)
Interest expense	$	(10,923	)	$	(5,421	)	$	(5,502	)		101.5	%
Percentage of revenue		(2.9	)%		(2.4	)%

Interest expense increased by $5.5 million, or 101.5%, for the fiscal year ended March 31, 2021 compared to the fiscal year ended March 31, 2020. This increase was due primarily to non-cash interest in connection with our convertible promissory notes.

Other Income (Expense), Net


	Fiscal Year Ended March 31,
	2021			2020			$ Change			% Change
	( in thousands)
Other income, net	$	131		$	679		$	(548	)		(80.7	)%
Percentage of revenue		—	%		0.3	%

Other income decreased by $0.5 million, or 80.7%, for the fiscal year ended March 31, 2021 compared to the fiscal year ended March 31, 2020. This decrease in Other income was due to increased expense of $1.0 million related changes in fair value of our derivative liabilities and decreased rental income from our subleases of $0.3 million, offset by $0.8 million of other income related to a settlement agreement payment received during the period.

Comparison of the Fiscal Years Ended March 31, 2020 and March 31, 2019

Revenue


	Fiscal Year Ended March 31,
	2020			2019			$ Change		% Change
	( in thousands)
Revenue
Direct to Consumer	$	204,151		$	177,750		$	26,401		14.9	%
Commerce		20,184			13,691			6,493		47.4	%

Total revenue	$	224,335		$	191,441		$	32,894		17.2	%

Percentage of Revenue
Direct to Consumer		91.0	%		92.8	%
Commerce		9.0	%		7.2	%

Direct to Consumer revenue increased by $26.4 million, or 14.9%, for the fiscal year ended March 31, 2020 compared to the year ended March 31, 2019. The increase in Direct to Consumer revenue was primarily due to an increase in Active Subscriptions, which grew by 0.2 million, or 15.4% during the fiscal year ended March 31, 2020. Additionally, ATB revenue increased by $1.2 million during the period from $1.2 million to $2.4 million for the fiscal year ended March 31, 2019 and 2020, respectively.

Commerce revenue increased by $6.5 million, or 47.4%, for the fiscal year ended March 31, 2020 compared to the fiscal year ended March 31, 2019. The increase in Commerce revenue was primarily due to a $1.5 million increase in Retail and $5.0 million increase in BARK Home revenue. The increase in BARK Home revenue was primarily due to the increase in product offerings and increased penetration within online marketplaces during fiscal year ended March 31, 2020.

Cost of Revenue


	Fiscal Year Ended March 31,
	2020		2019		$ Change		% Change
	( in thousands)
Cost of revenue
Direct to Consumer	$	79,191	$	75,085	$	4,106		5.5	%
Commerce		9,730		9,241		489		5.3	%

Total cost of revenue	$	88,921	$	84,326	$	4,595		5.4	%

Cost of Direct to Consumer revenue increased by $4.1 million, or 5.5%, for the fiscal year ended March 31, 2020 compared to the fiscal year ended March 31, 2019. This increase was primarily due to costs associated with the growth in the number of Active Subscriptions during the period.

Cost of Commerce revenue increased by $0.5 million, or 5.3%, for the fiscal year ended March 31, 2020 compared to the fiscal year ended March 31, 2019. This increase was primarily due to costs associated with the growth in the number of goods delivered to retailers and online marketplaces.

Gross Profit


	Fiscal Year Ended March 31,
	2020			2019			$ Change		% Change
	( in thousands)
Gross Profit
Direct to Consumer	$	124,960		$	102,665		$	22,295		21.7	%
Commerce		10,454			4,450			6,004		134.9	%

Total gross profit	$	135,414		$	107,115		$	28,299		26.4	%

Percentage of revenue		60.4	%		56.0	%

Direct to Consumer gross profit increased by $22.3 million, or 21.7%, for the fiscal year ended March 31, 2020 compared to the fiscal year ended March 31, 2019.

Commerce gross profit increased by $6.0 million, or 134.9%, for the fiscal year ended March 31, 2020 compared to the fiscal year ended March 31, 2019.

Gross profit as a percentage of revenue improved to 60.4% for the fiscal year ended March 31, 2020 compared to 56.0% for the fiscal year ended March 31, 2019. The improvement in gross margin was due primarily to the increase in ATB revenue of $1.2 million or 92.2%, as well as strategic cost management.

Operating Expenses

General and administrative expense


	Fiscal Year Ended March 31,
	2020			2019			$ Change		% Change
	( in thousands)
General and administrative	$	115,893		$	104,146		$	11,747		11.3	%
Percentage of revenue		51.7	%		54.4	%

General and administrative expense increased by $11.7 million, or 11.3%, for the fiscal year ended March 31, 2020 compared to the fiscal year ended March 31, 2019. This increase was primarily due to an increase of $5.8 million in fulfillment and shipping costs due to the increase in Active Subscriptions, an increase of $3.1 million in other operating expense due to higher sales tax, an increase in professional and legal expense of $1.2 million, increased marketplace sellers fees of $1.2 million, increased payment processing fees of $1.0 million, an increase in office expenses of $1.0 million, an increase of $0.9 million in depreciation and amortization and an increase of $0.2 million related to software expense. These increases were partially offset by a decrease in employment costs of $2.1 million and a decrease of $0.5 million of travel and entertainment expense.

Advertising and Marketing


	Fiscal Year Ended March 31,
	2020			2019			$ Change		% Change
	( in thousands)
Advertising and marketing	$	46,147		$	37,664		$	8,483		22.5	%
Percentage of revenue		20.6	%		19.7	%

Advertising and marketing expense increased by $8.5 million, or 22.5%, for the fiscal year ended March 31, 2020 compared to the fiscal year ended March 31, 2019. This increase was primarily due to an increase in media spend, which increased from $31.2 million for the fiscal year ended March 31, 2019 to $37.9 million for the fiscal year ended March 31, 2020, or $6.7 million. The increase in media spend is due to the increase in New Subscriptions in spite of no material change in the cost per new subscription, or CAC.

Of the $37.9 million of media spend during the fiscal year ended March 31, 2020, $34.8 million related to Direct to Consumer and $3.1 million related to Commerce. Of the $31.2 million of media spend during the fiscal year ended March 31, 2019, $30.3 million related to Direct to Consumer and $0.9 million related to Commerce.

The following table displays the calculation of CAC for the fiscal years ended March 31, 2020 and 2019:


	Fiscal Year Ended March 31,
	2020		2019		Change			% Change
CAC	$	55.40	$	58.16	$	(2.76	)		(4.7	)%
New Subscriptions		628		521		107			20.5	%
Direct to Consumer media spend (in thousands)	$	34,762	$	30,273	$	4,489			14.8	%

CAC was $55.40 and $58.16 for the fiscal years ended March 31, 2020 and 2019, respectively. CAC remained relatively flat year over year.

Interest Expense


	Fiscal Year Ended March 31,
	2020			2019			$ Change			% Change
	( in thousands)
Interest expense	$	(5,421	)	$	(2,595	)	$	(2,826	)		108.9	%
Percentage of revenue		(2.4	)%		(1.4	)%

Interest expense increased by $2.8 million, or 108.9%, for the fiscal year ended March 31, 2020 compared to the fiscal year ended March 31, 2019. This increase was due to non-cash interest in connection with our line of credit, term loan and convertible promissory notes.

Other Income (Expense), Net


	Fiscal Year Ended March 31,
	2020			2019			$ Change		% Change
	( in thousands)
Other income, net	$	679		$	208		$	471		226.4	%
Percentage of revenue		0.3	%		0.1	%

Other income, net, increased by $0.5 million, or 226.4%, for the fiscal year ended March 31, 2020 compared to the fiscal year ended March 31, 2019. This increase was primarily due to an increase in rental income from our subleases.

Non-GAAP Financial Measures

We report our financial results in accordance with GAAP. However, management believes that Adjusted EBITDA and Adjusted EBITDA margin, both non-GAAP financial measures, provides investors with additional useful information in evaluating our performance.

We calculate Adjusted EBITDA as net income (loss), adjusted to exclude: (1) interest expense, (2) depreciation and amortization, (3) stock-based compensation expense, (4) change in fair value of warrants and derivatives, (5) sales and use tax expense and (6) one-time transaction costs associated with the financing and merger.

We calculate Adjusted EBITDA margin by dividing Adjusted EBITDA for the period by Revenue for the period.

Adjusted EBITDA and Adjusted EBITDA margin are financial measures that are financial measures that are not required by, or presented in accordance with GAAP. We believe that Adjusted EBITDA and Adjusted EBITDA margin, when taken together with our financial results presented in accordance with GAAP, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of Adjusted EBITDA and Adjusted EBITDA margin are helpful to our investors as they are measures used by management in assessing the health of our business, determining incentive compensation and evaluating our operating performance, as well as for internal planning and forecasting purposes.

Adjusted EBITDA and Adjusted EBITDA margin are presented for supplemental informational purposes only, have limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of the limitations of Adjusted EBITDA and Adjusted EBITDA margin include that (1) the measures do not properly reflect capital commitments to be paid in the future, (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA and Adjusted EBITDA margin do not reflect these capital expenditures, (3) the measures do not consider the impact of stock-based compensation expense, which is an ongoing expense for BARK and (4) the measures do not reflect other non-operating expenses, including interest expense. In addition, our use of Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies because they may not calculate Adjusted EBITDA and Adjusted EBITDA margin in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA and Adjusted EBITDA margin alongside other financial measures, including our net income (loss) and other results stated in accordance with GAAP.

The following table presents a reconciliation of Adjusted EBITDA to net loss, the most directly comparable financial measure stated in accordance with GAAP, and the calculation of net loss margin and Adjusted EBITDA margin for the periods presented:

Adjusted EBITDA


	Fiscal Year Ended March 31,
	2021			2020			2019
	(in thousands)
Net loss	$	(31,391	)	$	(31,368	)	$	(37,082	)
Interest expense		10,923			5,421			2,595
Depreciation and amortization expense		2,405			1,397			505
Stock-based compensation expense		6,522			1,817			5,096
Change in fair value of warrants and derivatives		931			(96	)		(26	)
Sales and use tax expense (1)		1,211			5,023			2,962
Transaction costs (2)		1,545			—			—

Adjusted EBITDA	$	(7,854	)	$	(17,806	)	$	(25,950	)

Net loss margin		(8.29	)%		(13.98	)%		(19.37	)%

Adjusted EBITDA margin		(2.07	)%		(7.94	)%		(13.56	)%

(1)

Sales and use tax expense relates to recording a liability for sales and use tax we did not collect from our customers. Historically, we had collected state or local sales, use, or other similar taxes in certain jurisdictions in which we only had physical presence. On June 21, 2018, the U.S. Supreme Court decided, in South Dakota v. Wayfair, Inc. that state and local jurisdictions may, at least in certain circumstances, enforce a sales and use tax collection obligation on remote vendors that have no physical presence in such jurisdiction. A number of states have positioned themselves to require sales and use tax collection by remote vendors and/or by online marketplaces. The details and effective dates of these collection requirements vary from state to state and accordingly, we recorded a liability in those periods in which we created economic nexus based on each state’s requirements. Accordingly, we now collect, remit, and report sales tax in all states that impose a sales tax.

(2)	Transactions costs represent non-recurring consulting and advisory costs with respect to the merger agreement entered into with Northern Star Acquisition Corp. on December 16, 2020.

The change in Adjusted EBITDA is the result of an increase in revenue and gross profit for the fiscal year ended March 31, 2021 in both Direct to Consumer and Commerce. In addition, lower than historical CAC as a result of decreased pricing for social media advertising due to the impact of the COVID-19 pandemic led to lower advertising and marketing expense as a percentage of revenue. As BARK grows its new businesses and media rates return to historic levels, the Company does not expect to maintain this low CAC.

Additionally, the adjustments to reconcile net loss to Adjusted EBITDA increased by $10.0 million, from $13.6 million for the fiscal year ended March 31, 2020 to $23.5 million for the fiscal year ended March 31, 2021. This increase was primarily due to interest expense and stock-based compensation expense.

The change in Adjusted EBITDA margin is the result of a decrease in net loss margin for the fiscal year ended March 31, 2021 attributed to increase in revenue and gross profit for the fiscal year ended March 31, 2021, as well as lower than historical CAC and benefits of our operational growth during the period.

Additionally, the adjustments to reconcile net loss margin to Adjusted EBITDA margin remained relatively flat for the fiscal years ended March 31, 2021 and 2020.

Liquidity and Capital Resources

Since inception, we have funded our operations with proceeds from sales of our capital stock and proceeds from borrowings. As of March 31, 2021, we had cash and cash equivalents of approximately $38.3 million. We expect that our cash and cash equivalents, together with cash provided by our operating activities and proceeds from borrowings (as defined below), will be sufficient to fund our operating expenses for at least the next 12 months. We are required to comply with certain financial and non financial covenants related to our borrowing agreements, which we expect to be in compliance with during the next 12 months. Our future capital requirements will depend on many factors, including our pace of new and existing customer growth and our investments in partnerships and unexplored channels. We may be required to seek additional equity or debt financing.

Western Alliance Bank—Line of Credit and Term Loan

In October 2017, we entered into a new loan and security agreement (the “Western Alliance Agreement”) and issued a warrant to purchase preferred stock to Western Alliance Bank (“Western Alliance”), which provides for a secured revolving line of credit (the “Credit Facility”) in an aggregate principal amount of up to $35.0 million with a maturity date of October 12, 2020.

On December 7, 2018, we amended the Western Alliance Agreement, which included the issuance of a warrant to purchase common stock to Western Alliance. The modification to the agreement provided for an additional term loan of $10.0 million at issuance and an incremental seasonal loan of $5.0 million. The seasonal loan matured and was repaid on March 31, 2020.

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

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

On January 22, 2021, we amended the Western Alliance Agreement to extend the Credit Facility maturity date to May 30, 2022.

The interest rate for borrowings under the Credit Facility, as amended, is equal to (i) the greater of the prime rate that is published in the Money Rates section of The Wall Street Journal from time to time (the “Prime Rate”) and 5.25%, plus (ii) half of one percent (0.50%), per annum. As of March 31, 2021 and 2020 the weighted-average interest rate for the Western Alliance Credit Facility and term loans was 5.75% and 6.09%, respectively.

The Credit Facility has a borrowing base subject to an amount equal to eighty percent (80%) of our trailing three months of subscription revenue. Western Alliance has first perfected security in substantially all of our assets, including our rights to our intellectual property.

Under the terms of this Credit Facility, we are required to comply with certain financial and nonfinancial covenants, including covenants to maintain certain liquidity amounts, as defined in the Western Alliance Agreement, as amended.

Pinnacle—Term Loan

On December 3, 2018, we entered into a term loan agreement (the “Pinnacle Agreement”), which also included a warrant to purchase common stock. Upon execution of the Pinnacle Agreement, we received the first tranche of the term loan, in the aggregate amount of $7.6 million. Additionally, the Pinnacle Agreement provided for two subsequent term loan tranches of $3.8 million each. On May 22, 2019 and June 22, 2019, we requested the subsequent term loan tranches of $3.8 million each.

On November, 27, 2020, we repaid the outstanding $15.3 million principal of the Pinnacle term loan, as well as $2.0 million of early repayment fees, and $0.1 million of accrued interest, using proceeds from the issuance of the 2025 Convertible Notes. See further discussion of the 2025 Convertible Notes issuance below.

Borrowings under the Pinnacle term loan bear interest at the greater of:

the Prime Rate determined on each date 15 days before the applicable Payment Date plus 525 basis points, and

10.5% per annum, based upon a year of 360 days and actual days elapsed, such rate to change each time the Prime Rate changes.

As of March 31, 2020 the weighted-average interest rate for the Pinnacle term loan was 10.50%.

Convertible Promissory Notes

On December 19, 2019, we entered into a note purchase agreement and issued individual convertible promissory notes thereunder, with an option for subsequent closings through May 1, 2020 for up to $10.0 million in aggregate principal. We received gross proceeds of $3.9 million in two December 2019 closings. The notes bear interest at a rate of 7% per year, capitalized quarterly, and payable in kind. The notes have a maturity date of December 19, 2024, unless previously converted into equity securities pursuant to the terms of the note purchase agreement.

On March 31, 2020, we entered into a note purchase agreement and issued individual convertible promissory notes thereunder, with an option for subsequent closings through May 1, 2020 for up to $10.0 million in aggregate principal. We received gross proceeds of $1.5 million from the initial closing of the note purchase agreement on March 31, 2020 with employees, founders, and existing investors, representing a related party transaction. The agreement consisted of both Pro Rata Notes and a Super Pro Rata Note. Pro-Rata Notes are defined as one or more promissory notes issued to each lender with respect to the amount of the lender’s consideration, up to the lender’s pro rata amount as set forth in the note purchase agreement. Super Pro-Rata Notes are defined as one or more promissory notes issued to each lender with respect to the lender’s amount of consideration paid in excess of their pro rata amount. The Super Pro Rata Notes bears interest at a rate of 10% per year, capitalized quarterly, and payable in kind, while the Pro Rata Notes bear interest at a rate of 8% per year, capitalized quarterly, and payable in kind. Both the Pro Rata and Super Pro Rata notes have a maturity date of March 30, 2023, unless previously converted into equity securities pursuant to the terms of the note purchase agreement.

On May 1, 2020, we received gross proceeds of $1.0 million from the second closing of the March 31, 2020 note purchase agreement with existing investors.

On June 18, 2020, we amended the Pinnacle Agreement, which extended the initial principal repayment period. In consideration of the modification, we issued to Pinnacle convertible promissory notes under the March 31, 2020 note purchase agreement of $0.8 million from the third closing of the March 31, 2020 note purchase agreement.

On December 16, 2020, in connection with the execution of the Merger Agreement, we amended the note purchase agreements associated with the convertible notes issued in 2019 and 2020 to amend the conversion terms of the notes.

Paycheck Protection Program

On April 24, 2020, we received funds of $5.2 million under the Paycheck Protection Program (“PPP”), a part of the CARES Act. The loan is serviced by Western Alliance Bank, and the application for these funds required us to, in good faith, certify that the current economic uncertainty made the loan necessary to support ongoing operations. We plan to use the funds for payroll and related costs. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on our ability to adhere to the forgiveness criteria. The loan bears interest at a rate of 1.00% per annum and matures on April 24, 2022. Under the terms of the PPP, certain amounts may be forgiven if they are used in accordance with the CARES Act.

2025 Convertible Notes

On November 27, 2020, we issued $75.0 million aggregate principal amount of 2025 Convertible Notes to new investors. We received net proceeds of approximately $74.7 million from the sale of the 2025 Convertible Notes, after deducting fees and expenses of approximately $0.3 million.

We used approximately $27.6 million of the net proceeds from the sale of the 2025 Convertible Notes to repay the outstanding term loans with Western Alliance Bank and Pinnacle.

The 2025 Convertible Notes are governed by an indenture, dated as of November 27, 2020, between us and the investor. The 2025 Convertible Notes will bear interest at the annual rate of 5.50%, payable monthly on the first of the month commencing December 1, 2021, compounded annually. The interest rate will increase to 8.00% on November 27, 2021 if certain milestones defined in the indenture have not been met. The 2025 Convertible Notes will mature on December 1, 2025, unless earlier converted, redeemed or repurchased.

Cash Flows

Comparison of the Fiscal Years Ended March 31, 2021, March 31, 2020 and March 31, 2019.

The following table summarizes our cash flows for the fiscal years ended March 31, 2021, 2020 and 2019:


	Year Ended March 31,
	2021			2020			2019
	(in thousands)
Net cash used in operating activities	$	(19,618	)	$	(19,666	)	$	(11,719	)
Net cash used in investing activities		(4,825	)		(4,677	)		(2,036	)
Net cash provided by financing activities		54,498			22,678			16,395

Net increase (decrease) in cash and restricted cash	$	30,055		$	(1,665	)	$	2,640

Cash flows provided by/used in Operating Activities

Net cash flows in operating activities represent the cash receipts and disbursements related to our activities other than investing and financing activities.

Net cash flows used in operating activities is derived by adjusting our net loss for:

•

non-cash operating items such as depreciation and amortization, stock-based compensation and other non-cash income or expenses;

•

changes in operating assets and liabilities reflect timing differences between the receipt and payment of cash associated with transactions.

For the fiscal year ended March 31, 2021, net cash used in operating activities was $19.6 million. The $19.6 million of net cash provided by operating activities consisted of net loss of $31.4 million adjusted for non-cash charges totaling $13.4 million and a net increase of $1.6 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $6.5 million for stock-based compensation, $3.5 million for amortization of deferred financing fees and debt discount, $2.4 million for depreciation and amortization and $0.9 million for changes in fair value of warrant and derivative liabilities. The increase in our net operating assets and liabilities was driven by the changes in accounts payable and accrued expenses of $16.5 million related to increased expenditures to support general business growth, as well as the timing of payments, and other liabilities of $13.3 million, and deferred revenue of $13.9 million, due to growth in our prepaid subscription sales. The increase in our net operating assets and liabilities was partially offset by the change in inventories of $37.8 million, accounts receivable of $5.0 million and prepaid expenses and other current assets of $2.2 million.

For the fiscal year ended March 31, 2020, $19.7 million of net cash used in operating activities consisted of a net loss of $31.4 million adjusted for non-cash charges of $4.7 million and a net increase of $7.0 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $1.8 million for stock-based compensation, $1.4 million for depreciation and amortization and $1.3 million for amortization of deferred financing fees and debt discount. The increase in our net operating assets and liabilities was driven by the changes in accounts payable and accrued expenses of $12.0 million related to increased expenditures to support general business growth, as well as the timing of payments, other liabilities of $10.4 million and deferred revenue of $1.1 million, due to growth in our prepaid subscription sales. The increase in our net operating assets and liabilities was partially offset by the change in inventories for $13.0 million, accounts receivable of $2.4 million and prepaid expenses and other current assets of $1.0 million.

For the fiscal year ended March 31, 2019, $11.7 million of net cash used in operating activities consisted of a net loss of $37.1 million adjusted for non-cash charges totaling $6.3 million and a net change of $19.1 million in our net operating assets and liabilities. The non-cash charges primarily consisted of $5.1 million for stock-based compensation, $0.5 million for depreciation and amortization and $0.5 million for amortization of deferred financing fees and debt discount. The increase in our net operating assets and liabilities was driven by changes in accounts payable and accrued expenses of $18.1 million related to increased expenditures to support general business growth, as well as the timing of payments, other liabilities of $3.1 million and in deferred revenue of $1.1 million, due to growth in our subscription sales. The increase in our net operating assets and liabilities was partially offset by changes in inventories of $2.7 million, accounts receivable of $0.4 million and prepaid expenses and other current assets of $0.2 million.

Cash flows used in Investing Activities

For the fiscal year ended March 31, 2021, net cash used in investing activities was $4.8 million, primarily due to purchases of fixed assets.

For the fiscal year ended March 31, 2020, net cash used in investing activities was $4.7 million, primarily due to purchases of fixed assets.

For the fiscal year ended March 31, 2019, net cash used in investing activities was $2.0 million, primarily due to purchases of fixed assets.

Cash flows provided by Financing Activities

For the fiscal year ended March 31, 2021, net cash provided by financing activities was $54.5 million, primarily due to proceeds of $75.8 million from the issuance of convertible notes and proceeds of $5.2 million from the loan issued under the PPP. The increase in cash provided by financing activities was partially offset by payments of long-term debt of $25.3 million and payments of transaction costs of $1.3 million.

For the fiscal year ended March 31, 2020, net cash provided by financing activities was $22.7 million, primarily due to proceeds from the Western Alliance term loan of $10.0 million, Pinnacle term loan of $7.6 million, and convertible notes issuances of $5.4 million.

For the fiscal year ended March 31, 2019, net cash provided by financing activities was $16.4 million, primarily due to proceeds from the use of our Credit Facility of $9.0 million and the Pinnacle term loan of $7.6 million.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations as of March 31, 2021:


	Payments Due by Period
	Total		Less than 1 Year		1 to 3 Years		4 to 5 Years		More than 5 Years
	(in thousands)
Long-term debt obligations ⁽¹⁾	$	28,381	$	7,104	$	16,766	$	4,511	$	—
Operating lease commitments ⁽²⁾		27,097		4,113		12,626		6,567		3,791

Total	$	55,478	$	11,217	$	29,392	$	11,078	$	3,791

(1)	Reflects long-term debt obligations, including interest either payable in kind or payable in cash, for our revolving line of credit and convertible notes.

(2)	Operating lease obligations relate to our office space.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Qualitative and Quantitative Disclosures about Market Risk

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in:

Interest Rate Risk

We had cash and cash equivalents of approximately $38.3 million as of March 31, 2021. We have not been exposed, nor do we anticipate being exposed, to material risks due to changes in interest rates. A hypothetical 10% increase in interest rates during any of the periods presented would not have had a material impact on our consolidated financial statements.

We are primarily exposed to changes in interest rates with respect to our cost of borrowing under existing Credit Facility. We monitor our cost of borrowing under our Credit Facility, taking into account our funding requirements, and our expectations for short-term rates in the future. A hypothetical 10% change in the interest rate on our Credit Facility for all periods presented would not have a material impact on our consolidated financial statements.

Inflation Risk

We do not believe that inflation has had a material effect on our business, financial condition, or results of operations. If our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition, and operating results.

Critical Accounting Policies and Estimates

We believe that the following accounting policies involve a high degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of our operations. See Note 2 to our consolidated financial statements and Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this proxy statement/prospectus for a description of our other significant accounting policies. The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those financial statements and related notes thereto. The future effects of the COVID-19 pandemic on our results of operations, cash flows and financial position are unclear. However, we believe we have used reasonable estimates and assumptions in preparing the unaudited condensed consolidated financial statements. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates.

Revenue Recognition

Our primary source of revenue is from of our toys and treats subscription and sales or good through retailers, third parties or our website. We recognize revenue upon delivery of products and services to our subscriber or customer, as applicable. The recognition of revenue is determined through application of the following five-step model:

•

Identification of the contract(s) with subscribers or customers, as applicable;

•

Identification of the performance obligation(s) in the contract;

•

Determination of the transaction price;

•

Allocation of the transaction price to the performance obligation(s) in the contract; and

•

Recognition of revenue when or as the performance obligation(s) are satisfied.

Discounts are considered fixed consideration and represent a fixed reduction to revenue for each performance obligation. The sales returns and chargebacks allowance is considered to be contingent and represents a component of variable consideration. The estimated consideration reflects potential sales returns and chargebacks as a reduction in the transaction price. We have determined that the expected value method will provide the best predictor for a refund liability associated with sales returns and chargebacks. The expected value method estimates variable consideration based on the range of possible outcomes and the probabilities of each outcome and is most appropriate when an entity has a large number of contracts that have similar characteristics. The estimate is recorded in total for sales transactions recorded in the current period and, in effect, represents a reduction in the transaction price at the time of sale.

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

Stock-Based Compensation

We measure and record the expense related to stock-based payment awards based on the fair value of those awards as determined on the date of grant. We recognize stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting period and uses the straight-line method to recognize stock-based compensation. For stock options with performance conditions, we record compensation expense when it is deemed probable that the performance condition will be met. We use the Black-Scholes option-pricing model to determine the fair value of stock awards.

We estimate expected forfeitures of stock-based awards at the grant date and recognizes compensation cost only for those awards expected to vest. We estimate future forfeitures at the date of grant based on historical experience and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

For stock-based awards issued to non-employees, including consultants, we record expense related to stock options based on the fair value of the options calculated using the Black-Scholes option-pricing model over the service performance period. The fair value of options granted to non-employees is remeasured over the vesting period and recognized as an expense over the period the services are rendered.

Derivative Assets and Liabilities

Our term loan and convertible note agreements contain features determined to be embedded derivatives from its host. Embedded derivatives are separated from the host contract and carried at fair value when the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and a separate, standalone instrument with the same terms would qualify as a derivative instrument. The derivative is measured both initially and in subsequent periods at fair value, with changes in fair value recognized on the statement of operations and comprehensive loss.

The Company’s valuation of embedded derivative liabilities have historically been measured using an income approach based on a discounted cash flow model, as well as a probability-weighted expected return method (“PWERM”). The Company uses various key assumptions, such as estimation of the timing and probability of expected future events, and selection of discount rates applied to future cash flows using a yield curve equivalent to the Company’s credit risk.

Common Stock Valuations

We have historically granted stock options at exercise prices equal to the fair value as determined by our Board of Directors (the “Board”) on the date of grant. In the absence of a public trading market, our Board of Directors, with input from management, exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of our common stock as of the date of each stock option grant, including:

•

relevant precedent transactions involving our capital stock;

•

the liquidation preferences, rights, preferences, and privileges of our redeemable convertible preferred stock relative to the common stock;

•

our actual operating and financial performance;

•

current business conditions and projections;

•

our stage of development;

•

the likelihood and timing of achieving a liquidity event for the shares of common stock underlying the stock options, such as an initial public offering, given prevailing market conditions;

•

any adjustment necessary to recognize a lack of marketability of the common stock underlying the granted options;

•

recent secondary stock sales and tender offers;

•

the market performance of comparable publicly traded companies; and

•

U.S. and global capital market conditions.

In addition, our Board of Directors considered the independent valuations completed by a third-party valuation consultant. The valuations of our common stock were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

Recent Accounting Pronouncements

See the sections titled “Summary of Significant Accounting Policies—Recently adopted accounting pronouncements” and “—Recently issued accounting pronouncements not yet adopted” in Note 2 to our consolidated financial statements included elsewhere in this proxy statement/prospectus for additional details.

JOBS Act Accounting Election

In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an “emerging growth company” may take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Therefore, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period under the JOBS Act. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting standards.

Exhibit 99.3

BARKBOX, INC.

TABLE OF CONTENTS


	Page
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		F-2
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED MARCH 31, 2021 AND 2020:
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations and Comprehensive Loss		F-4
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Barkbox, Inc. and its subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Barkbox, Inc. and its subsidiaries (the “Company”) as of March 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, redeemable convertible preferred stock and stockholders’ deficit, and cash flows, for each of the three years in the period ended March 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

New York, New York

June 7, 2021

We have served as the Company’s auditor since 2015.

F-2

BARKBOX, INC.

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2021 AND 2020

(In thousands, except share and per share data)


	2021			2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	38,278		$	9,676
Accounts receivable—net		8,927			3,929
Prepaid expenses and other current assets		7,409			1,500
Inventory		77,454			39,696

Total current assets		132,068			54,801
PROPERTY AND EQUIPMENT—NET		13,465			7,144
INTANGIBLE ASSETS—NET		2,070			1,341
OTHER NONCURRENT ASSETS		3,260			1,403

TOTAL ASSETS	$	150,863		$	64,689

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable		50,501			38,584
Accrued and other current liabilities		44,605			21,416
Deferred revenue		27,177			13,282
Short-term debt		—			45,184

Total current liabilities		122,283			118,466
LONG-TERM DEBT		115,729			16,346
OTHER LONG-TERM LIABILITIES		11,834			5,277

Total liabilities		249,846			140,089
COMMITMENTS AND CONTINGENCIES (Note 10)
REDEEMABLE CONVERTIBLE PREFERRED STOCK:
Series Seed preferred stock, par value $0.0001 per share—2,057,188 shares authorized, issued and outstanding as of March 31, 2021 and 2020.		1,897			1,897
Series A preferred stock, par value $0.0001 per share—2,110,400 shares authorized, issued and outstanding as of March 31, 2021 and 2020.		4,948			4,948
Series B preferred stock, par value $0.0001 per share—990,068 shares authorized, issued and outstanding as of March 31, 2021 and 2020.		10,285			10,285
Series C preferred stock, par value $0.0001 per share—2,142,188 shares authorized, issued and outstanding as of March 31, 2021 and 2020.		34,585			34,585
Series C-1 preferred stock, par value $0.0001 per share—710,716 shares authorized; 452,671 shares issued and outstanding as of March 31, 2021 and 2020.		8,272			8,272

Total redeemable convertible preferred stock		59,987			59,987
STOCKHOLDERS’ DEFICIT:
Common stock, par value $0.0001 per share—18,600,000 and 17,000,000 shares authorized; 5,498,588 and 5,196,711 shares issued and outstanding as of March 31, 2021 and 2020, respectively.		—			—
Treasury stock, at cost		(4,764	)		(4,755	)
Additional paid-in capital		25,748			17,931
Accumulated deficit		(179,954	)		(148,563	)

Total stockholders’ deficit		(158,970	)		(135,387	)

TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT	$	150,863		$	64,689

See notes to consolidated financial statements

F-3

BARKBOX, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED MARCH 31, 2021, 2020 AND 2019

(In thousands, except share and per share data)


	2021			2020			2019
REVENUE	$	378,604		$	224,335		$	191,441
COST OF REVENUE		152,664			88,921			84,326

Gross profit		225,940			135,414			107,115
OPERATING EXPENSES:
General and administrative		179,510			115,893			104,146
Advertising and marketing		67,029			46,147			37,664

Total operating expenses		246,539			162,040			141,810

LOSS FROM OPERATIONS		(20,599	)		(26,626	)		(34,695	)
INTEREST EXPENSE		(10,923	)		(5,421	)		(2,595	)
OTHER INCOME—NET		131			679			208

NET LOSS BEFORE INCOME TAXES		(31,391	)		(31,368	)		(37,082	)
PROVISION FOR INCOME TAXES		—			—			—

NET LOSS AND COMPREHENSIVE LOSS	$	(31,391	)	$	(31,368	)	$	(37,082	)

Net loss per common share attributable to common stockholders—basic and diluted	$	(5.93	)	$	(6.08	)	$	(7.56	)
Weighted average common shares used to compute net loss per share attributable to common stockholders—basic and diluted		5,295,722			5,159,893			4,905,972

See notes to consolidated financial statements

F-4

BARKBOX, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

FOR THE YEARS ENDED MARCH 31, 2021 AND 2020

(In thousands, except share data)


	Redeemable Convertible Preferred Stock				Common Stock					Treasury Stock					Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount		Shares		Amount			Capital		Deficit			Deficit
BALANCE—April 1, 2018		7,752,515	$	59,987		4,641,293		$	—		259,953	$	(4,755	)	$	8,426	$	(79,992	)		(76,321	)
Net loss		—		—		—			—		—		—			—		(37,082	)		(37,082	)
Issuance for stock options exercised		—		—		311,937			—		—		—			989		—			989
Vesting of restricted stock units		—		—		171,666			—		—		—			1,519		—			1,519
Issuance of common stock warrants		—		—		—			—		—		—			1,326		—			1,326
Founders and employee sale of common stock		—		—		—			—		—		—			2,173		—			2,173
Stock-based compensation		—		—		—			—		—		—			1,404		—			1,404
BALANCE—March 31, 2019		7,752,515		59,987		5,124,896			—		259,953		(4,755	)		15,837		(117,074	)		(105,992	)
Net loss		—		—		—			—		—		—			—		(31,368	)		(31,368	)
Cumulative impact from the adoption of ASU No. 2014-09 (Note 3)		—		—		—			—		—		—			—		(121	)		(121	)
Issuance for stock options exercised		—		—		49,199			—		—		—			277		—			277
Restricted share vesting		—		—		22,616			—		—		—			271		—			271
Stock-based compensation		—		—		—			—		—		—			1,546		—			1,546

BALANCE—March 31, 2020		7,752,515	$	59,987		5,196,711		$	—		259,953	$	(4,755	)	$	17,931	$	(148,563	)	$	(135,387	)
Net loss		—		—		—			—		—		—			—		(31,391	)		(31,391	)
Issuance for stock options exercised		—		—		267,292			—		—		—			1,215		—			1,215
Restricted shares vesting		—		—		35,000			—		—		—			1,098		—			1,098
Stock-based compensation		—		—		—			—		—		—			5,424		—			5,424
Modification of warrant		—		—		—			—		—		—			80		—			80
Repurchase of common stock		—		—		(415	)		—		—		(9	)		—		—			(9	)

BALANCE—March 31, 2021		7,752,515	$	59,987		5,498,588		$	—		259,953	$	(4,764	)	$	25,748	$	(179,954	)	$	(158,970	)

See notes to consolidated financial statements

F-5

BARKBOX, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED MARCH 31, 2021, 2020 AND 2019

(In thousands)


	2021			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(31,391	)	$	(31,368	)	$	(37,082	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		2,405			1,397			505
Amortization of deferred financing fees and debt discount		3,508			1,324			512
Bad debt expense		52			56			225
Stock-based compensation expense		6,522			1,817			5,096
Change in fair value of warrant liabilities and derivatives		931			96			(26	)
Changes in operating assets and liabilities:
Accounts receivable		(5,049	)		(2,433	)		(399	)
Inventory		(37,758	)		(12,979	)		(2,659	)
Prepaid expenses and other current assets		(2,173	)		(969	)		(243	)
Other assets		(402	)		—			—
Accounts payable and accrued expenses		16,543			11,937			18,117
Deferred revenue		13,894			1,072			1,118
Other liabilities		13,300			10,384			3,117

Net cash used in operating activities		(19,618	)		(19,666	)		(11,719	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized expenditures		(4,825	)		(4,677	)		(1,936	)
Purchases of investments		—			—			(100	)

Net cash used in investing activities		(4,825	)		(4,677	)		(2,036	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of finance fees		(734	)		(30	)		(509	)
Payments of transaction costs		(1,297	)		—			—
Payments of capital lease obligations		(334	)		—			—
Proceeds from the exercise of stock options		1,215			277			989
Proceeds from convertible notes		75,750			5,367			—
Proceeds from debt		5,157			17,564			19,625
Payments to repurchase common stock		(9	)		—			—
Payments of debt		(25,250	)		(500	)		(3,710	)

Net cash provided by financing activities		54,498			22,678			16,395

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		30,055			(1,665	)		2,640
CASH AND CASH EQUIVALENTS—Beginning of year		9,676			11,341			8,701

CASH AND CASH EQUIVALENTS—End of year	$	39,731		$	9,676		$	11,341

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents		38,278			9,676			11,341
Restricted cash—included in prepaid expenses and other current assets		1,453			—			—

TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH	$	39,731		$	9,676		$	11,341

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Purchases of property and equipment included in accounts payable and accrued liabilities	$	1,764		$	204		$	1,228
Cash paid for interest	$	5,170		$	3,026		$	1,156
NONCASH INVESTING AND FINANCING ACTIVITIES:
Non-cash deferred issuance costs	$	3,000		$	—		$	—
Non-cash capital lease obligations	$	2,867		$	—		$	—
Non-cash deferred transaction costs	$	2,439		$	—		$	—
Issuance of derivatives with debt	$	1,153		$	2,692		$	238
Issuance of convertible promissory note	$	800		$	—		$	—
Issuance of warrants with debt	$	—		$	—		$	1,326
Modification of warrant	$	80		$	—		$	—

See notes to consolidated financial statements

F-6

BARKBOX, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED MARCH 31, 2021 AND 2020

(In thousands, except for share and per share data)

1.	ORGANIZATION AND DESCRIPTION OF BUSINESS

Barkbox, Inc. (“BARK” or the “Company”) was incorporated in the state of Delaware in November 2011. BARK is an omnichannel brand serving dogs across the four key categories of Play, Food, Health and Home. BARK serves dogs nationwide with monthly subscription offerings, BarkBox and Super Chewer; a personalized meal delivery service for dogs, BARK Eats; custom collections through online marketplaces and via brick and mortar retail partners; wellness products that meet dogs’ needs with BARK Bright through monthly subscriptions; BARK’S add to box platform; and individually on its website BarkShop.com. The Company is located and headquartered in New York, New York.

On December 16, 2020, the Company entered into a merger agreement (the “Merger Agreement”) with Northern Star Acquisition Corp. (“Northern Star”), a Special Purpose Acquisition Company (“SPAC”). The deal with Northern Star provides all holders of common and preferred stock to receive common stock of the continuing public company, which will be a wholly owned subsidiary of Northern Star. The transaction will be accounted for as a reverse recapitalization and the Company has been determined to be the accounting acquirer.

On December 16, 2020, in connection with the execution of the Merger Agreement, Northern Star entered into subscription agreements with the PIPE Investors, pursuant to which such PIPE Investors have agreed to purchase an aggregate of 20,000,000 shares of Northern Star common stock in a private placement at a price of $10.00 per share for an aggregate commitment of $200.0 million.

On June 1, 2021 (the “Closing Date”), pursuant to the Merger Agreement, the Company consummated (the “Closing”) the merger with Northern Star, with BARK surviving the merger as a wholly-owned subsidiary of Northern Star (the “Merger”), and the other transactions contemplated by the Merger Agreement (the “Transactions”). In connection with the Closing, Northern Star changed its name to The Original BARK Company.

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

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

References to “BARK” and the “Company” in the financial results of the years ended March 31, 2021, 2020 and 2019 refer to BARK prior to the closing of the transactions contemplated by the Merger Agreement. These financial results for the years ended March 31, 2021, 2020 and 2019 reflect only the financial results of the Company prior to the closing of the transactions contemplated by the Merger Agreement.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation—The consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP).

Use of Estimates—Preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period covered by the financial statements and accompanying notes. The most significant estimates relate to determination of fair value of the Company’s common stock and common stock warrants, stock-based compensation and the valuation of embedded derivatives. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and records adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from those estimates.

F-7

Principles of Consolidation—The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Impact of the COVID-19 Pandemic—COVID-19 continues to spread and has led to adverse impacts on the U.S. and global economies and created uncertainty regarding potential impacts on the Company’s operating results, financial condition and cash flows. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19, as well as the economic impacts.

We have implemented a number of measures to protect the health and safety of our workforce. These measures include substantial modifications to employee travel, employee work locations, and virtualization or cancellation of meetings, among other modifications. Currently, the vast majority of our employees are working remotely. For the employees who are in the office, we are following the guidance from public health officials and government agencies, including implementation of enhanced cleaning measures, social distancing guidelines and wearing of masks.

The global outbreak of the COVID-19 pandemic continues to evolve. The extent to which the COVID-19 pandemic may impact our business will depend on future developments related to the geographic spread of the disease, the duration and severity of the outbreak, travel restrictions, required social distancing, governmental mandates, business closures or governmental or business disruptions, and the effectiveness of actions taken in the United States and other countries to prevent, contain and treat the virus and any additional government stimulus programs. These impacts are highly uncertain and cannot be predicted with certainty.

Liquidity and Going Concern—In accordance with Accounting Standards Update (“ASU”) No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.

Through March 31, 2021, the Company has funded its operations primarily with cash flows from proceeds from the sale of its capital stock and proceeds from its existing credit facility and borrowing arrangements. See Note 6, “Debt,” for further information on the Company’s debt arrangements. The Company recognized net loss of $31.4 million and $31.4 million for the years ended March 31, 2021 and March 31, 2020, respectively. In addition, the Company had an accumulated deficit of $180.0 million as of March 31, 2021. As of June 7, 2021, the issuance date of the consolidated financial statements, the Company expects that its cash and cash equivalents of $38.3 million as of March 31, 2021, together with cash provided by operating activities, borrowings under its Credit Facility, and the sale of convertible notes, including the convertible notes due December 1, 2025 (the “2025 Convertible Notes”) issued in November 2020, will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance date of the consolidated financial statements.

Segments—The Company has determined that its chief executive officer and executive chairman together comprise the chief operating decision maker (“CODM”). The Company operates and manages the business as two reporting segments: Direct to Consumer and Commerce.

Fair Value of Financial Instruments—The Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued expenses, are carried at historical cost. At March 31, 2021 and 2020, the carrying amounts of these instruments approximated their fair values because of their short-term nature. The carrying amounts of the Company’s long-term debt approximate the fair value based on consideration of current borrowing rates available to the Company.

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

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

F-8

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

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

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

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


	As of March 31, 2021
	Level 1		Level 2		Level 3		Total
Liabilities
Preferred stock warrant liabilities⁽¹⁾	$	—	$	—	$	133	$	133
Derivative liabilities⁽²⁾		—		—		4,883		4,883

	$	—	$	—	$	5,016	$	5,016


	As of March 31, 2020
	Level 1		Level 2		Level 3		Total
Liabilities
Preferred stock warrant liabilities⁽¹⁾	$	—	$	—	$	127	$	127
Derivative liabilities⁽²⁾		—		—	$	2,805	$	2,805

	$	—	$	—	$	2,932	$	2,932

(1)	Included in accrued and other current liabilities.

(2)	Included in other long-term liabilities.

A summary of the activity of the Level 3 liabilities carried at fair value on a recurring basis for the years ended March 31, 2021 and 2020 is as follows:


	2021		2020
Balance—beginning of period	$	2,932	$	336
Fair value at issuance		1,153		2,692
Change in fair value		931		(96	)

Balance—end of period	$	5,016	$	2,932

The Company measures the convertible preferred stock warrants using Level 3 unobservable inputs within either the Black-Scholes-Merton (“Black-Scholes”) option-pricing model or a Monte Carlo simulation model. The Company used various key assumptions, such as the fair value of common or redeemable convertible preferred stock, volatility, and expected term. The Company monitors the fair value of the redeemable convertible preferred stock warrants and embedded derivatives quarterly, with subsequent revisions reflected within other income within the consolidated statement of operations and comprehensive loss. See Note 7, “Common Stock and Common and Preferred Share Warrants,” for further discussion of the Company’s outstanding warrants and assumptions utilized.

F-9

As of March 31, 2021 and 2020, the Company’s valuation of embedded derivative liabilities was measured using an income approach based on a discounted cash flow model, as well as a probability-weighted expected return method (“PWERM”). The Company used various key assumptions, such as estimation of the timing and probability of expected future events, and selection of discount rates applied to future cash flows using a yield curve equivalent to the Company’s credit risk. See Note 6, “Debt,” for further discussion of the Company’s derivative liabilities.

Cash and Cash Equivalents—Cash and cash equivalents represent cash and highly liquid investments with an original contractual maturity at the date of purchase of three months or less. As of March 31, 2021 and 2020, cash consists primarily of checking and operating accounts.

Restricted Cash—The Company has restricted cash with its primary banks related to operating lease obligations. As of March 31, 2021, the Company has classified $1.5 million within prepaid expenses and other current assets, as restricted cash.

Accounts Receivable—Net—Accounts receivable are stated at net realizable value. On a periodic basis, management evaluates its accounts receivable and determines whether to provide an allowance or if any accounts should be written off based on a past history of write-offs, collections and current credit conditions. A receivable is considered past due if the Company has not received payments based on agreed-upon terms. The Company generally does not require any security or collateral to support its receivables. The Company performs ongoing evaluations of its customers. As of March 31, 2021 and 2020, the Company had an allowance for doubtful accounts of less than $0.1 million and $0.1 million, respectively.

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

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

Significant customers are those that represent more than 10% of the Company’s total revenues or gross accounts receivable balance at each balance sheet date. During the years ended March 31, 2021 and 2020, the Company did not have any customers that accounted for 10% or more of total revenues. The Company had three customers that accounted for 84% and two customers that accounted for 55% of gross accounts receivable as of March 31, 2021 and 2020, respectively.

Significant suppliers are those that represent more than 10% of the Company’s total finished goods purchased or accounts payable at each balance sheet date. During each of the years ended March 31, 2021 and 2020, the Company had two suppliers that accounted for 30% of total finished goods purchased. The Company had two suppliers that accounted for 44% of the accounts payable balance and three suppliers that accounted for 45% of the accounts payable balance as of March 31, 2021 and 2020, respectively.

Property and Equipment—Net—Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is provided for using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset. Costs of maintenance and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. Upon retirement or sale, the cost and related accumulated depreciation and amortization are removed from the consolidated balance sheets and the resulting gain or loss is reflected in general and administrative expenses in the consolidated statements of operations and comprehensive loss.

F-10

The estimated useful lives for significant property and equipment categories are as follows:


Asset Class		Useful Life
Computer equipment, software, and domain names		3 years
Warehouse machinery and equipment		5 years
Furniture and fixtures		5 years
Leased equipment and leasehold improvements		Shorter of remaining lease term or estimated useful life

Long-Lived Assets and Intangible Assets—Net—The Company capitalizes qualifying internally-developed software development costs incurred during the application development stage, as long as it is probable the project will be completed, and the software will be used to perform the function intended. Capitalization of such costs ceases once the project is substantially complete and ready for its intended use. Costs related to maintenance of internal-use software are expensed in the period incurred. Capitalized costs are amortized over the project’s estimated useful life of three years. Software development costs consist primarily of salary and benefits for the Company’s development staff and third-party contractors’ fees. Capitalized software development costs are included in intangible assets on the consolidated balance sheets and amortized to depreciation expense included in general and administrative expenses on the consolidated statement of operations and comprehensive loss for the year ended March 31, 2021 and 2020.

The Company assesses long-lived assets for impairment in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment. A long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the carrying value of the asset and its estimated fair value. The Company estimates fair value based on the best information available, making necessary estimates, judgments and projections. For purposes of these tests, long-lived assets must be grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. There were no impairments of long-lived assets for the years ended March 31, 2021 and 2020.

Income Taxes—The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to operating loss carryforwards and temporary differences between financial statement bases of existing assets and liabilities and their respective income tax bases.

Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in the income tax rates on deferred tax asset and liability balances is recognized in income in the period that includes the enactment date of such rate change. A valuation allowance is recorded for loss carryforwards and other deferred tax assets when it is determined that it is more likely than not that such loss carryforwards and deferred tax assets will not be realized. The Company recognizes the tax benefits on any uncertain tax positions taken or expected to be taken in the consolidated financial statements when it is more likely than not the position will be realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company recognizes estimated interest and penalties related to uncertain tax positions as a part of the provision for income taxes.

Deferred Financing Costs—Deferred financing fees relate to the external costs incurred to obtain financing for the Company. Deferred financing fees are amortized over the respective term of the financing using the effective interest method, with the exception of the Company’s revolving line of credit, as discussed in Note 6, “Debt,” for which deferred financing fees are amortized on a straight-line basis over the term of the agreement. Deferred financing fees are presented on the consolidated balance sheets as a reduction to long-term debt.

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Deferred Transaction Costs—The Company capitalizes deferred transactions costs, which primarily consist of direct, incremental legal, professional, accounting and other third-party fees relating to the anticipated merger, within prepaid expenses and other current assets. The deferred transaction costs will be offset against the merger proceeds upon the consummation of the merger. Should the planned merger be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the consolidated statement of operations and comprehensive loss. As of March 31, 2021, the Company capitalized $3.7 million of deferred transaction costs, recorded within prepaid expenses and other current assets on the consolidated balance sheet.

Derivative Assets and Liabilities—The Company’s term loan and convertible note agreements contain features determined to be embedded derivatives from its host. Embedded derivatives are separated from the host contract and carried at fair value when the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and a separate, standalone instrument with the same terms would qualify as a derivative instrument. The derivative is measured both initially and in subsequent periods at fair value, with changes in fair value recognized on the statement of operations and comprehensive loss.

Revenue Recognition—On April 1, 2019, the Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), using the modified retrospective method. The Company applied the new revenue standard to contracts not completed as of the date of initial application. The Company recognizes revenue upon the transfer of control of its products and services to its customers. The recognition of revenue is determined through application of the following five-step model:

•

Identification of the contract(s) with customers;

•

Identification of the performance obligation(s) in the contract;

•

Determination of the transaction price;

•

Allocation of the transaction price to the performance obligation(s) in the contract; and

•

Recognition of revenue when or as the performance obligation(s) are satisfied.

The Company recorded an adjustment to accumulated deficit on April 1, 2019 due to the cumulative impact of adopting Topic 606. See Note 3, “Revenue from Contracts with Customers” for the required disclosures related to the impact of adopting this standard and a discussion of the Company’s updated policies related to revenue recognition discussed below.

The Company generates revenue through Direct to Consumer channels, which includes the sale of subscription products, sale of BARK Bright products, sale of BARK Eats products, and sale of BarkShop products. See below for additional information on each offering.

Toys and Treats Subscriptions—The Company’s principal revenue generating products are a tailored assortment of premium and highly durable toys and treats sold in boxes through BarkBox and Super Chewer monthly subscriptions. Subscription plans are offered as monthly, three month, six month or annual commitments. BarkBox and Super Chewer subscription rates vary based on the type of subscription plan selected by the customer, with Super Chewer’s price point being slightly higher based on additional costs of the more durable product, but resulting in similar gross margins. Each delivered box represents a single performance obligation and the Company bears the risk of loss if a shipment is not received or is damaged. Subscription revenue is recognized at a point in time as control is transferred to the customer upon delivery of each monthly box. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for transferring products, which includes an estimate of future returns and chargebacks based on historical rates. The transaction price is inclusive of fixed discounts which represent a reduction to revenue for each performance obligation. There is judgement in utilizing historical trends for estimating future returns. As of March 31, 2021 and 2020, the refund liability related to revenue for subscriptions was $1.2 million and $0.5 million, respectively, and is recorded within accrued and other current liabilities on the consolidated balance sheet. While customers have the right to return products for thirty days subsequent to delivery, products are generally not physically returned to the Company, as the Company is generally not able to resell opened products.

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On a monthly basis, subscription customers have the option to purchase additional toys, treats, or other products to add to their respective subscription boxes. Each add on product represents a single performance obligation and therefore revenue is recognized at a point in time as control is transferred to the customer upon delivery of goods to the customer. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for transferring products.

BARK Bright—The initial product in this product line is a proprietary enzymatic dental solution combined with a treat for dogs to prevent and combat oral health issues, sold through monthly subscriptions. Each delivered box represents a single performance obligation and therefore subscription revenue is recognized at a point in time as control is transferred to the customer upon delivery of each monthly box. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for transferring products.

BARK Eats—This product line is personalized meals for dogs sold at a meal per day price. Revenue is recognized at a point in time, as control is transferred to the customer upon delivery.

BarkShop—The Company sells individual toys and treats through the Company’s website, BarkShop. Revenue relating to the sale of goods on BarkShop is recognized at a point in time upon delivery of goods to the customer. Each delivery represents a single performance obligation and the Company bears the risk of loss if a shipment is not received or damaged. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for transferring products. While customers have the right to return products for thirty days subsequent to delivery, products are generally not physically returned to the Company, as the Company is generally not able to resell opened products.

The Company also generates revenue from product sales through retail commerce channels. See below for additional information on each offering.

Retail—The Company sells individual toys and treats through major retailers. Revenue is recognized at a point in time, as control is transferred upon delivery of goods to the retailers. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for transferring products.

Retail sales are generally recognized upon delivery with adjustments to net sales for customer payment discounts, sales returns, and estimated chargebacks reserves. Similar to Toys and Treats subscriptions, the customer payment discounts, sales returns and chargebacks are considered to be contingent and represents a component of variable consideration. The estimated consideration reflects potential sales returns and chargebacks as a reduction in the transaction price. The Company has determined that the expected value method will provide the best predictor for a refund liability associated with sales returns and chargebacks. The estimate is recorded in total for sales transactions recorded in the current period and, in effect, represents a reduction in the transaction price at the time of sale. As of March 31, 2021 and 2020 the refund liability related to retail revenue was $0.1 million and less than $0.1 million, respectively, recorded within accrued and other current liabilities on the consolidated balance sheet. While customers have the right to return products subsequent to delivery, products are generally not physically returned to the Company, as the Company is generally not able to resell opened products.

Online Marketplaces—Online marketplaces revenue consists of sales of BARK Bright health and wellness solutions and BARK Home products sold through major marketplaces. BARK Home consists of an assortment of proprietary essential products for daily life, including dog beds, bowls, collars, harnesses and leashes. Online marketplaces revenue is recognized at a point in time, as control is transferred, upon delivery of goods to the end customer. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for transferring products.

The Company evaluated principal versus agent considerations to determine whether it is appropriate to record seller fees paid to the marketplaces as an expense or as a reduction of revenue. Seller fees charged by third-party marketplaces are recorded as general and administrative expense and are not recorded as a reduction of revenue as the Company owns and controls all the goods before they are transferred to the end customer. The Company can, at any time, direct the marketplaces and similarly with other third-party logistics providers (“Logistics Providers”), to return the Company’s inventory to any location specified by the Company. Any returns made by customers directly to Logistics Providers are the responsibility of the Company to make customers whole and the Company retains the

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inventory risk. Further, the Company is subject to credit risk (i.e., credit card chargebacks), establishes the prices of its products, can determine who fulfills the goods to the customer (third-party online marketplaces or the Company) and can limit quantities or stop selling the goods at any time. Based on these considerations, the Company is the principal in these arrangements.

Prior to the adoption of Topic 606, revenue was recognized when there was persuasive evidence of an agreement or arrangement, products were delivered, the Company’s price to the buyer was fixed or determinable, and collectability was reasonably assured. The Company earned revenue from the sale of Toys and Treats subscriptions, and the sale of goods through the Company’s BarkShop website. Deferred revenue represented payment for subscription boxes that the Company was contractually obligated to deliver in future periods. Subscription revenue was recognized as each monthly box was delivered to the customer. Revenue was recognized net of cash discounts given to the customer and net of estimated sales returns and chargebacks. Revenue relating to the sale of goods was recognized upon delivery of goods to the customer, as the risk of loss on these sales transfers to the customer upon delivery.

Shipping and Handling—The Company includes costs associated with the outbound shipping and handling of its products as a component of general and administrative expenses in the consolidated statements of operations and comprehensive loss. Shipping and handling fees billed to the customers are recorded as revenue.

Sales Tax—As a part of the Company’s normal course of business, sales taxes are collected from customers. Sales taxes collected are remitted to the appropriate governmental tax authority on behalf of the customer. Sales tax collected from customers is not considered revenue and is included in accrued and other current liabilities until remitted. Total sales tax accrued was $24.2 million and $14.0 million, as of March 31, 2021 and 2020, respectively. As of March 31, 2021 and March 31, 2020, $14.5 million and $9.2 million of the sales tax accrued had been collected but not remitted, respectively.

On June 21, 2018, the U.S. Supreme Court decided, in South Dakota v. Wayfair, Inc. that state and local jurisdictions may, at least in certain circumstances, enforce a sales and use tax collection obligation on remote vendors that have no physical presence in such jurisdiction. A number of states have positioned themselves to require sales and use tax collection by remote vendors and/or by online marketplaces. The details and effective dates of these collection requirements vary from state to state and accordingly, the Company recorded a liability in those periods in which it created economic nexus based on each state’s requirements. Total sales tax expense recorded related to economic nexus was $1.2 million and $5.0 million for the years ended March 31, 2021 and 2020, respectively.

Inventories—Represent finished goods, consist of products available for sale and are accounted for using the first-in, first-out (“FIFO”) method and valued at the lower of cost or net realizable value. The Company assesses the valuation and periodically writes down the value for estimated excess and obsolete inventory based upon estimates of future demand and market conditions.

Inventory costs consist of product and inbound shipping and handling costs. Inventory valuation requires the Company to make judgments, based on currently available information, about the likely method of disposition, such as through sales to individual customers or returns to product vendors. Inventory valuation losses are recorded as cost of revenues and historical losses have not been material.

Cost of Revenues—Cost of revenues includes the purchase price of inventory sold, inbound freight costs associated with inventory, shipping supply costs, and inventory shrinkage costs.

General and Administrative—General and administrative expenses include compensation and benefits costs, including stock-based compensation expense, facility costs, insurance, professional service fees, and other general overhead costs including depreciation and amortization and account management support teams, as well as commissions. General and administrative expense also includes processing fees charged by third parties that provide payment processing services for credit cards. For the years ended March 31, 2021, 2020, and 2019 the Company recorded payment processing fees of $8.4 million, $5.7 million and $4.7 million, respectively, within general and administrative expenses in the consolidated statements of operations and comprehensive loss.

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Fulfillment Cost—Fulfillment costs represent those costs incurred in operating and staffing fulfillment and customer service centers, including costs attributable to receiving, inspecting, picking, packaging and preparing customer orders for shipment, outbound freight costs associated with shipping orders to customers, and responding to inquiries from customers. For the years ended March 31, 2021, 2020 and 2019, the Company recorded fulfillment costs of $94.9 million, $53.4 million, and $47.5 million, respectively, which are included within general and administrative expenses in the consolidated statements of operation and comprehensive loss.

Advertising Costs—Costs associated with the Company’s advertising and sales promotions are expensed as incurred and are included in advertising and marketing expense in the consolidated statements of operations and comprehensive loss. During the years ended March 31, 2021, 2020 and 2019, the Company expensed $60.1 million, $39.7 million and $34.3 million, respectively, for advertising costs, which is comprised of print and internet advertising, promotional items, and agency fees.

Stock-Based Compensation—The Company measures and records the expense related to stock-based payment awards based on the fair value of those awards as determined on the date of grant. The Company recognizes stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting period and uses the straight-line method to recognize stock-based compensation. For stock options with performance conditions, the Company records compensation expense when it is deemed probable that the performance condition will be met. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock awards.

The Company estimates expected forfeitures of stock-based awards at the grant date and recognizes compensation cost only for those awards expected to vest. The Company estimates future forfeitures at the date of grant based on historical experience and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

For stock-based awards issued to nonemployees, including consultants, the Company records expense related to stock options based on the fair value of the options calculated using the Black-Scholes option-pricing model over the service performance period. The fair value of options granted to nonemployees is remeasured over the vesting period and recognized as an expense over the period the services are rendered.

The Company calculates the fair value of options granted by using the Black-Scholes option-pricing model with the following assumptions:

Expected Volatility—The Company estimated volatility for option grants by evaluating the average historical volatility of a peer group of companies for the period immediately preceding the option grant for a term that is approximately equal to the options’ expected life.

Expected Term—The expected term of the Company’s options represents the period that the stock-based awards are expected to be outstanding. The Company has elected to use the simplified method to compute the expected term, which the Company believes is representative of future behavior. The Company’s stock plans provide for options that have a 10-year term.

Risk-Free Interest Rate—The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with an equivalent remaining term at the grant date.

Dividend Yield—The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, the dividend yield has been estimated to be zero.

Common Stock Valuations— The Company has historically granted stock options at exercise prices equal to the fair value as determined by the Board of Directors (the “Board”) on the date of grant. In the absence of a public trading market, the Board, with input from management, exercised significant judgment and considered numerous objective and subjective factors to determine the fair value of the Company’s common stock as of the date of each stock option grant, including:

•

relevant precedent transactions involving the Company’s capital stock;

F-15

•

the liquidation preferences, rights, preferences, and privileges of the Company’s redeemable convertible preferred stock relative to the common stock;

•

the Company’s actual operating and financial performance;

•

current business conditions and projections;

•

the Company’s stage of development;

•

the likelihood and timing of achieving a liquidity event for the shares of common stock underlying the stock options, such as an initial public offering, given prevailing market conditions;

•

any adjustment necessary to recognize a lack of marketability of the common stock underlying the granted options;

•

recent secondary stock sales and tender offers;

•

the market performance of comparable publicly traded companies; and

•

U.S. and global capital market conditions.

In addition, the Board considered the independent valuations completed by a third-party valuation consultant. The valuations of the Company’s common stock were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

Net Loss Per Share—Basic net loss per share attributable to common stockholders is computed by dividing the loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the loss attributable to common stockholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding during the period determined using the treasury-stock and if-converted methods. For purposes of the diluted loss per share calculation, stock options, redeemable convertible preferred stock and warrants are considered to be potentially dilutive securities, but were excluded from the calculation of diluted loss per share because their effect would be anti-dilutive and therefore, basic and diluted loss per share were the same for all periods presented.

Related Party Transactions—Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. The only material related party arrangement as of March 31, 2021 was the outstanding convertible notes issued to certain employees, founders, and existing investors on March 31, 2020. See Note 6, “Debt,” for further details.

Emerging Growth Company Status—The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

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Recently Issued Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires a lessee to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the consolidated financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The standard is effective for fiscal years beginning after December 15, 2021, with early adoption permitted. The Company plans to adopt this standard on April 1, 2022 and is continuing to evaluate the expected impact that the standard will have on its consolidated financial statements and related disclosures

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, which requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. This guidance in the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. The Company is currently evaluating the impact that the adoption will have on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify the accounting for income taxes. This updated removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The new standard will be effective beginning April 1, 2022. The Company does not expect the adoption of ASU 2019-12 to have a material impact on the Company’s consolidated financial statements.

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

3.	REVENUE FROM CONTRACTS WITH CUSTOMERS

On April 1, 2019, the Company adopted Topic 606, using the modified retrospective method. The Company’s revenue recognition remained substantially unchanged following adoption of Topic 606 and therefore did not have a material impact to the consolidated financial statements.

Under the modified retrospective transition method, the Company recorded a net decrease to beginning accumulated deficit as of April 1, 2019 of $0.1 million due to the cumulative impact of adopting Topic 606. The impact on revenue recognition due to the adoption of Topic 606 is primarily due to a refinement of the Company’s methodology for estimating sales returns and chargebacks and application of the variable consideration constraint.

The impact of adoption to the Company’s consolidated statement of operations and consolidated balance sheet for the year ended March 31, 2020 was a reduction to revenue of less than $0.1 million, and an increase in the refund liability of $0.1 million, which is recorded within other current liabilities.

The adoption of Topic 606 had no net impact on the Company’s cash flows from operations.

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

Disaggregated Revenue


	March 31,
	2021		2020		2019
Revenue
Direct to Consumer:
Toys and treats subscription	$	325,992	$	199,744	$	168,217
Other		7,978		4,407		9,533

Total Direct to Consumer		333,970		204,151		177,750
Commerce		44,634		20,184		13,691

Revenue	$	378,604	$	224,335	$	191,441

Contract Liability

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

Contractual liabilities included in deferred revenue were $27.2 million and $13.3 million as of March 31, 2021 and 2020, respectively. During the year ended March 31, 2021, the Company recognized $13.3 million of revenue included in deferred revenue as of March 31, 2020.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Topic 606. Performance obligations are satisfied as of a point in time and are supported by contracts with customers. The Company has elected to not disclose information related to remaining performance obligations due to their original expected terms being one year or less.

4.	PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS

Property and equipment consisted of the following as of March 31, 2021 and 2020:


	March 31,
	2021			2020
Computer equipment, software, and domain names	$	3,423		$	2,372
Warehouse machinery and equipment		3,292			—
Furniture and fixtures		992			976
Leasehold improvements		6,338			5,604
Construction in process		3,392			508

Total property and equipment		17,437			9,460
Less: accumulated depreciation		(3,972	)		(2,316	)

Property and equipment—net	$	13,465		$	7,144

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Intangible assets consisted of the following as of March 31, 2021 and 2020:


	March 31,
	2021			2020
Internally developed software	$	3,038		$	1,560
Less: accumulated amortization		(968	)		(219	)

Intangible assets—net	$	2,070		$	1,341

Total depreciation expense for property and equipment during the years ended March 31, 2021 and 2020 was $1.7 million and $1.2 million , respectively. Total amortization expense for internally developed software during the years ended March 31, 2021 and 2020 was $0.7 million and $0.2 million, respectively. Depreciation and amortization expense are included in general and administrative expenses on the consolidated statements of operations and comprehensive loss.

As of March 31, 2021 and 2020, equipment that was leased under capital leases and included in property, plant and equipment, net in the consolidated balance sheets was $3.0 million and $0.1 million, respectively.

5.	ACCRUED AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following as of March 31, 2021 and 2020:


	March 31,
	2021		2020
Sales tax payable	$	24,164	$	14,027
Accrued marketing costs		4,199		2,544
Accrued deferred financing fees		3,000		—
Accrued compensation costs		3,287		1,199
Refund liability		1,292		604
Accrued licensing fees		209		—
Accrued professional and legal fees		2,484		367
Other accrued expenses		5,970		2,675

Accrued and other current liabilities	$	44,605	$	21,416

The Company sponsors a 401(k) defined contribution plan covering all eligible U.S. employees. Subject to certain Internal Revenue Service (“IRS”) limits, eligible employees may elect to contribute from 1% to 100% of their compensation. Company contributions to the plan are at the sole discretion of the Company’s Board. Currently, the Company does not provide a 401(k) match.

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DEBT

At March 31, 2021 and 2020, long-term debt consisted of the following:


	Weighted-Average Interest Rate As of March 31,			As of March 31,
	2021			2021			2020
2025 Convertible Notes		5.50	%	$	75,000		$	—
Western Alliance revolving line of credit & term loan		5.75	%		34,300			44,300
Pinnacle term loan		—	%		—			15,250
Convertible promissory notes		8.17	%		7,167			5,366
PPP loan		1.00	%		5,157			—

					121,624			64,916
Less: short-term debt		—	%		—			(45,184	)
Less: deferred financing fees and debt discount					(5,895	)		(3,386	)

Total long-term debt				$	115,729		$	16,346

Western Alliance Bank—Line of Credit and Term Loan

In October 2017, the Company entered into a new loan and security agreement (the “Western Alliance Agreement”) and issued a warrant to purchase preferred stock (“Initial Western Alliance Warrant”) to Western Alliance Bank (“Western Alliance”), which provides for a secured revolving line of credit (the “Credit Facility”) in an aggregate principal amount of up to $35.0 million with a maturity date of October 12, 2020.

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

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

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

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

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

The Credit Facility has a borrowing base subject to an amount equal to eighty percent (80.00%) of the Company’s trailing three months of subscription revenue. Western Alliance has first perfected security in substantially all of the Company’s assets, including its rights to its intellectual property.

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As of March 31, 2021 and 2020, the Company had $34.3 million and $44.3 million, respectively, of outstanding borrowings under the Credit Facility, recorded as debt on the accompanying consolidated balance sheets, with $39.3 million representing short-term debt as of March 31, 2020. The Company had no outstanding short-term borrowings under this agreement as of March 31, 2021.

Under the terms of this Credit Facility, the Company is required to comply with certain financial and nonfinancial covenants, including covenants to maintain certain liquidity amounts, as defined in the amended Western Alliance Agreement. As of March 31, 2021 and 2020, the Company was compliant with its financial covenants.

See discussion of the Initial and Subsequent Western Alliance Warrant in Note 7, “Common Stock and Common and Preferred Share Warrants.”

Pinnacle—Term Loan

On December 3, 2018, the Company entered into a term loan agreement (the “Pinnacle Agreement”), which included warrants to purchase common stock (“Pinnacle Warrant”). See discussion of the Pinnacle Warrant in Note 7, “Common Stock and Common and Preferred Share Warrants.” Upon execution of the Pinnacle Agreement, the Company received the first tranche of the term loan, in the aggregate amount of $7.6 million (the “Pinnacle Term Loan”). Additionally, the Pinnacle Agreement provided for two subsequent term loan tranches of $3.8 million each. On May 22, 2019 and June 22, 2019, the Company requested the subsequent term loan tranches of $3.8 million each.

On November 27, 2020, the Company repaid the outstanding $15.3 million principal of the term loan with Pinnacle, as well as $2.0 million of early repayment fees, and $0.1 million of accrued interest, using proceeds from the issuance of the 2025 Convertible Notes. See further discussion of the 2025 Convertible Notes issuance below.

As of March 31, 2021, the Company had no outstanding borrowings under this agreement. As of March 31, 2020, the Company had $15.3 million of outstanding borrowings under this agreement, recorded as debt on the accompanying consolidated balance sheets, with $5.9 million representing short-term debt.

Borrowings under the Pinnacle Term Loan bear interest at the greater of:

the Prime Rate determined on each date 15 days before the applicable payment date plus 525 basis points, and

10.5% per annum, based upon a year of 360 days and actual days elapsed, such rate to change each time the Prime Rate changes.

The Pinnacle Agreement includes a mandatory prepayment feature (the “Call Option”), which would occur upon a change of control, initial public offering, or the redemption or repurchase of any equity securities of the Company (other than as permitted under the Pinnacle Agreement). The Company assessed the terms of the Call Option, and determined it meets all of the criteria required to be separated as an embedded derivative from its host. The Company utilized the Monte Carlo simulation model to determine the fair value of the Call Option which is recorded as a derivative liability. The Company revalues the Call Option at each reporting period and recognizes changes in fair value through other expense included in other income, net on the consolidated statements of operations and comprehensive loss.

The Pinnacle Agreement includes an event of default feature (the “Contingent Put Option”), which includes, among other events, the non-payment of principal or interest, or failure to comply with defined debt covenants. The Company assessed the terms of the Contingent Put Option, and determined it meets all of the criteria required to be separated as an embedded derivative from its host. The Company utilized the Monte Carlo simulation model to determine the fair value of the Contingent Put Option and it is recorded as a derivative liability. The Company revalues the Contingent Put Option at each reporting period and recognizes changes in fair value through other expense included in other income, net on the consolidated statements of operations and comprehensive loss.

F-21

There was no derivative liability as of March 31, 2021. The total derivative liability was less than $0.1 million as of March 31, 2020.

Under the terms of the Pinnacle Agreement, the Company is required to comply with certain financial and nonfinancial covenants, as defined in the agreement. The Company had no outstanding borrowings under this agreement as of March 31, 2021. As of March 31, 2020, the Company was compliant with financial covenants.

Convertible Promissory Notes

On December 19, 2019, the Company entered into a note purchase agreement and issued individual convertible promissory notes thereunder (the “2019 Notes”), with an option for subsequent closings through May 1, 2020 for up to $10.0 million in aggregate principal. The Company received gross proceeds of $3.9 million in two December 2019 closings. The 2019 Notes bear interest at a rate of 7% per year, capitalized quarterly, and payable in kind (“PIK Interest”). The 2019 Notes have a maturity date of December 19, 2024, unless previously converted into equity securities pursuant to the terms of the note purchase agreement.

On March 31, 2020, the Company entered into a note purchase agreement and issued individual convertible promissory notes thereunder (the “2020 Notes”), with an option for subsequent closings through May 1, 2020 for up to $10.0 million in aggregate principal. The Company received gross proceeds of $1.5 million from the initial closing of the note purchase agreement on March 31, 2020 with employees, founders, and existing investors, representing a related party transaction. The agreement consisted of both Pro Rata Notes and a Super Pro Rata Note. Pro-Rata Notes are defined as one or more promissory notes issued to each lender with respect to the amount of the lender’s consideration, up to the lender’s pro rata amount as set forth in the note purchase agreement. Super Pro-Rata Notes are defined as one or more promissory notes issued to each lender with respect to the lender’s amount of consideration paid in excess of their pro rata amount. The Super Pro Rata Notes bears interest at a rate of 10% per year, capitalized quarterly, and payable in kind (“PIK Interest”), while the Pro Rata Notes bear interest at a rate of 8% per year, capitalized quarterly, and PIK Interest. The 2020 Notes have a maturity date of March 30, 2023, unless previously converted into equity securities pursuant to the terms of the note purchase agreement.

On May 1, 2020, the Company received gross proceeds of $1.0 million from the second closing of the March 31, 2020 note purchase agreement with existing investors, representing a related party transaction.

On June 18, 2020, the Company amended the Pinnacle Agreement, which extended the initial principal repayment period. In consideration of the modification, the Company issued to Pinnacle convertible promissory notes under the March 31, 2020 note purchase agreement of $0.8 million from the third closing of the March 31, 2020 note purchase agreement.

On November 27, 2020, in connection with the 2025 Convertible Notes issuance, the Company entered into subordination agreements with the 2019 and 2020 Note holders, extending the maturity of the notes to May 30, 2026.

On December 16, 2020, in connection with the execution of the Merger Agreement, the Company amended the note purchase agreements associated with the 2019 and 2020 convertible notes issued to amend the conversion terms of the notes.

The 2019 and 2020 Notes are convertible into shares of common stock as follows:

(A)

Upon the consummation of a Qualified Equity Financing, as defined in the notes purchase agreements, in which the Company receives gross proceeds not less than $30.0 million, will automatically convert into equity securities of the same type sold in the Qualified Equity Financing equal to the outstanding principal and unpaid accrued interest divided by the applicable discounted conversion price. The discounted conversion price is 80%, 70%, and 60% for the 2019 Notes, 2020 Pro Rata Note and 2020 Super Pro Rata Notes, respectively. If the Qualified Equity Financing is not a special purpose acquisition company (“SPAC”) transaction or an initial public offering (“IPO”), the issuance of shares pursuant to the conversion of each note shall otherwise be upon and subject to the same terms and conditions applicable to the equity securities sold in the Qualified Equity Financing. If the Qualified Equity Financing is a SPAC transaction or an IPO, the issuance of shares shall be deemed to occur immediately prior to the consummation of the SPAC transaction or IPO, as applicable.

F-22

(B)

Upon the consummation of a Non-Qualified Equity Financing, as defined in the notes purchase agreements, in which the Company receives gross proceeds of less than $30.0 million, will automatically convert into equity securities of the same type sold in the Non-Qualified Equity Financing equal to the outstanding principal and unpaid accrued interest divided by the applicable discounted conversion price.

The 2019 and 2020 Notes included the following features that were assessed and determined to meet all of the criteria required to be separated as an embedded derivative from its host:

•

In-substance put options upon Qualified or Non-Qualified Equity Financing

•

Redemption (put option) upon deemed liquidation event

The Company utilized an income approach and PWERM to determine the fair value of the features and recorded as derivative liabilities, included in other long-term liabilities on the balance sheet. The Company revalues the derivatives at each reporting period and recognizes changes in fair value through other expense included in other income, net on the consolidated statement of operations and comprehensive loss. At March 31, 2021, the total derivative liabilities were $2.2 million, $1.2 million, $0.8 million and $0.7 million for the notes issued in December 2019, March 2020, May 2020 and June 2020, respectively.

As of March 31, 2021 and 2020, the Company had $7.2 million and $5.4 million of outstanding borrowings under the 2019 and 2020 note purchase agreements.

Paycheck Protection Program

On April 24, 2020, the Company received funds of $5.2 million under the Paycheck Protection Program (“PPP”), a part of the CARES Act. The loan is serviced by Western Alliance Bank, and the application for these funds required the Company to, in good faith, certify that the current economic uncertainty made the loan necessary to support ongoing operations. The Company plans to use the funds for payroll and related costs. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on Company’s ability to adhere to the forgiveness criteria. The loan bears interest at a rate of 1.00% per annum and matures on April 24, 2022. Under the terms of the PPP, certain amounts may be forgiven if they are used in accordance with the CARES Act.

2025 Convertible Notes

On November 27, 2020, the Company issued $75.0 million aggregate principal amount of 2025 Convertible Secured Notes (the “2025 Convertible Notes”) to Magnetar Capital, LLC (“Magnetar”). The Company received net proceeds of approximately $74.7 million from the sale of the 2025 Convertible Notes, after deducting fees and expenses of approximately $0.3 million. The Company recorded the expenses as a discount to the note and will amortize over the term of the note. The 2025 Convertible Notes will mature on December 1, 2025, unless earlier converted, redeemed or repurchased. For a period of one year from the issuance date of the 2025 Convertible Notes, Magnetar may request the Company issue additional notes up to $25.0 million aggregate principal amount.

The Company used approximately $27.6 million of the net proceeds from the sale of the 2025 Convertible Notes to repay the outstanding term loans with Western Alliance Bank and Pinnacle.

The 2025 Convertible Notes are governed by an indenture (the “Indenture”), dated as of November 27, 2020, between the Company and Magnetar. The 2025 Convertible Notes bear interest at the annual rate of 5.50%, payable entirely in payment-in-kind monthly on the first of the month commencing December 1, 2021, compounded annually. The interest rate will increase to 8.00% on November 27, 2021 if certain milestones defined in the indenture have not been met.

F-23

The 2025 Convertible Notes are convertible into shares of common stock as follows:

(A)

At any time prior to a Qualified Public Company Event, as defined in the Indenture as a SPAC Transaction, IPO or direct listing, at a rate equal to approximately $89.94 per share,

(B)

Upon the consummation of a Qualified Equity Financing, as defined in the Indenture, in which the Company receives gross proceeds not less than $20.0 million at a rate equal to the lesser of i) a valuation cap per share determined based on the quotient of $1.5 billion and the number of shares of common stock outstanding immediately before the transaction (“Valuation Cap Per Share”) and ii) the adjusted equity value of the Company per share as determined in the Qualified Equity Financing,

(C)

Upon the consummation of a change of control in which the holders of common equity of the Company own less than 50% of the voting power following the change of control at a rate equal to the lesser of i) the transaction price per share in the change of control transaction and ii) the Valuation Cap Per Share,

(D)

If the Qualified Public Company Event is a SPAC transaction at a rate equal to the lesser of i) $10.00 per SPAC share, ii) the lowest cash price per share of common equity at which the SPAC sells shares of common equity in the SPAC transaction and iii) a valuation cap per share determined based on the quotient of $1.5 billion and the number of SPAC equivalent company shares,

(E)

If the Qualified Public Company Event is a direct listing of Company capital stock on a permitted exchange at a rate equal to the lesser of i) the average daily volume weighted average price of the common stock on the five consecutive trading days after the date of settlement of the opening trade on the applicable permitted exchange following the direct listing and ii) the Valuation Cap Per Share and

(F)

If the Qualified Public Company Event is neither a SPAC transaction nor a direct listing at a rate equal to the lesser of i) the price per share of common stock offered to the public in the underwritten initial public offering and ii) the Valuation Cap Per Share.

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

The 2025 Convertible Notes contain call and put options to be settled in cash contingent upon the occurrence of a change of control, a default interest rate increase of 3.0% applicable upon the occurrence of an event of default, and a contingent interest rate increase of 2.5% applicable if certain milestones have not been met by November 27, 2021, that when evaluated under the guidance of ASC 815, Derivatives and Hedging, are embedded derivatives requiring bifurcation at fair value. The fair value calculation includes Level 3 inputs including the estimated fair value of the Company’s common stock and assumptions regarding the probability that the contingent call or put will be exercised or an event of default will occur. Management determined that the probability that the contingent events will occur was near zero at inception and has remained near zero as of March 31, 2021. Therefore, the Company did not record a derivative liability related to these features at March 31, 2021. The Company will assess the probability of occurrence quarterly during the term of the 2025 Convertible Notes.

7. COMMON STOCK AND COMMON AND PREFERRED SHARE WARRANTS

As of March 31, 2021 and 2020, the Company had 13,101,412 and 11,803,289 shares of common stock authorized and available to issue for purposes of satisfying conversion of preferred stock, the exercise and future grant of common stock options, and for purposes of any future business acquisitions and transactions.

The voting, dividend, and liquidation rights of the holders of the common stock are subject to and qualified by the rights, powers, and preferences of the holders of the preferred stock. The holders of common stock, voting as a separate class, are entitled to elect two members of the Board, the holders of Series Seed preferred stock and Series A preferred stock, and together Series C preferred stock and Series C-1 preferred stock, are each entitled to elect one member of the Board and the remaining two directors are elected by the majority of the holders of common stock and preferred stock.

F-24

Warrants—In October 2017, the Company issued the Initial Western Alliance Warrant to purchase 9,568 Series C-1 preferred shares at an initial strike price of $18.291332 per share. Pursuant to the original terms of the Initial Western Alliance Warrant, the Initial Western Alliance Warrant may be exercised in whole or in part prior to the expiration date of October 12, 2027. The Company utilized the Black-Scholes option- pricing model to determine the fair value of the Initial Western Alliance Warrant. These warrants were determined to be liability classified and were recorded at fair value at initial measurement and included in the debt discount to the Western Alliance loan. The Company revalues the Initial Western Alliance Warrant at each reporting period and recognizes changes in fair value through other expense included in other income, net on the consolidated statements of operations and comprehensive loss.

In December 2018, the Company issued the Pinnacle Warrant to purchase 179,366 shares of common stock in the aggregate at an initial strike price of the lesser of $8.85 per share and the value of a share of the Company’s common stock as determined by the next Section 409A valuation that is prior to the exercise of any portion of the warrant. The Pinnacle Warrant may be exercised in whole or in part prior to the expiration date of December 3, 2028. The Company utilized the Black-Scholes option-pricing model to determine the fair value of the Pinnacle Warrant. These warrants were determined to be equity classified and were recorded at fair value at issuance.

In December 2018, the Company issued the Subsequent Western Alliance Warrant to purchase 26,015 shares of common stock at an initial strike price of $9.61 per share. The Subsequent Western Alliance Warrant may be exercised in whole or in part prior to the expiration date of December 7, 2028. These warrants were determined to be equity classified and were recorded at fair value at issuance. The Company utilized the Black-Scholes option-pricing model to determine the fair value of the Subsequent Western Alliance Warrant.

On July 31, 2020, the Company amended the Western Alliance Agreement, which extended the expiration of the Initial and Subsequent Western Alliance Warrants to July 31, 2030. The Initial and Subsequent Western Alliance Warrants were classified as liabilities and initially recorded at fair value subject to remeasurement at each reporting period, with changes in fair value reflected in earnings. As a result of the modification a new fair value was determined, which was greater than the initial fair value at inception. The incremental change in value due to the modification was de minimus and was recognized as a change in fair value through other expense included in other income, net on the consolidated statements of operations and comprehensive loss.

The Subsequent Western Alliance Warrants were determined to be equity classified and were recorded at fair value at issuance. As a result of the modification a new fair value was determined, which was greater than the initial fair value at inception. The incremental change in the fair value of the warrant of $0.1 million is recognized as a modification fee capitalized to debt discount and recorded to additional paid-in-capital. The incremental change in fair value will be amortized to interest expense over the remaining life of the Western Alliance Term Loan.

At both March 31, 2021 and 2020, the total warrant liability was $0.1 million recorded within accrued and other current liabilities on the consolidated balance sheets.

8. REDEEMABLE CONVERTIBLE PREFERRED STOCK

The following tables summarize issued and outstanding redeemable convertible preferred stock, and is recorded in mezzanine equity on the consolidated balance sheets:


	As of March 31, 2021 and 2020
Redeemable Convertible Preferred Stock	Shares		Carrying Value
Series Seed		2,057,188	$	1,897
Series A		2,110,400		4,948
Series B		990,068		10,285
Series C		2,142,188		34,585
Series C-1		452,671		8,272

The preferred stock has liquidation preferences over the common stock, is convertible to common stock, has certain dividend and voting rights, and is redeemable for cash upon resolution of certain contingent events (“Deemed Liquidation Event”).

F-25

Significant terms of the Series Seed, Series A, Series B, Series C and Series C-1 preferred stock are as follows:

Liquidation Preference—Upon liquidation, dissolution, winding up, or certain mergers and asset sales, Series Seed, A, B, C and C-1 preferred stock is entitled to receive the greater of (a) $0.9352 per share for Series Seed; $2.36922 per share for Series A; $10.43117 per share for Series B; $17.4203167 per share for Series C; and $18.291332 per share for Series C-1 plus, in each case, any declared but unpaid dividends and (b) the amount payable had such shares been converted to common stock prior to the liquidation event. As of March 31, 2021 and 2020, the aggregate liquidation preference for Series Seed was $1.9 million; for Series A was $5.0 million, for Series B was $10.3 million, for Series C was $37.3 million, and for Series C-1 was $8.3 million in each case based on outstanding shares as of such date.

Dividends—Series A, B, C and C-1 preferred stock are entitled to a noncumulative dividend, when, as and if declared by the Company at a rate equal to 8% of each series original issue price, subject to adjustment. Any dividend amount would be calculated to each Series A, B, C and C-1 preferred stockholder in accordance with the Articles of Incorporation of the Company.

Conversion—Each share of Series Seed, A, B, C and C-1 preferred stock converts to common stock at the election of the holder, with the number of shares of common stock issuable determined by dividing the number of shares of preferred stock by $0.9352 for Series Seed; $2.36922 for Series A; $10.43117 for Series B; $17.4203167 for Series C; and $18.29133 for Series C-1; adjusted in each case for certain dilutive events. Each of the Series Seed, A, and B preferred stock is automatically convertible to common stock upon the election of majority of holders on a series-by-series basis of outstanding shares of Series Seed, A and B preferred stock. The Series C and C-1 preferred stock are automatically convertible to common stock upon the election of majority of holders of outstanding shares of Series C and C-1 preferred stock, voting together and on an as converted basis. In addition, all shares of preferred stock are automatically convertible upon the consummation of a public offering of the Company’s stock at a price per share of at least $52.1559 and resulting in at least $20.0 million in net proceeds for the Company.

Voting Rights—Preferred stock and common stock vote together as one class on an as converted basis.

Redemption—Each of the Series A, B, and the C and C-1 preferred stock (with the Series C and C-1 preferred stock being redeemed collectively) shall be redeemed by the Company at a price equal to the greater of: (i) the applicable original issue price per share, plus all declared but unpaid dividends thereon, or (ii) the then-current fair market value of such series of preferred stock, as determined in good faith by the Board, at any time after March 22, 2023 upon receipt by the Company from the holders of a majority of the then outstanding shares of each of the Series A, B, and C and C-1 preferred stock (with the Series C and C-1 preferred stock voting collectively), as applicable, of written notice requesting redemption of all shares of such series of preferred stock; provided, however, that the holders of Series A Shares may not make any redemption request without first obtaining the written consent of the holders of a majority of the then outstanding Series B, Series C and Series C-1 Preferred Shares. As the redemption is at the option of the holder, such preferred stock is presented within temporary equity in the mezzanine section of the consolidated balance sheets.

9. STOCK-BASED COMPENSATION PLANS

Stock Option Plans

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

On August 10, 2020, the Board approved an increase in the number of shares of the Common Stock authorized for issuance under the Plan, increasing the pool by 717,000 shares from 3,560,651 shares to 4,277,651 shares. On December 16, 2020, the Board approved an increase in the number of shares of Common Stock authorized for issuance under the Plan, increasing the pool by 510,719 shares from 4,277,651 shares to 4,788,370 shares. As of March 31, 2021, there were 160,245 shares available for issuance under the Plan.

F-26

The Plan is administered by the Company’s Board. The exercise prices, vesting and other restrictions are determined by the Board, except that the exercise price per share of a stock option may not be less than 100% of the fair value of the common share on the date of grant. Stock options awarded under the Plan typically expire 10 years after the date of the grant and generally have vesting conditions of 25% on the first anniversary of the date of grant and 75% on a monthly basis at a rate of 1/36th unless otherwise decided by the Board. The Plan provides that the Board shall determine the vesting conditions of awards granted under the Plan, and the Board has from time to time approved vesting schedules for certain awards that deviate from the vesting conditions contained in the previous sentence.

Stock Option Activity

The following is a summary of stock option activity for the year ended March 31, 2021:


	Number Options Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding as of March 31, 2020		2,422,421		$	6.78		6.69	$	12,902
Granted		1,260,215			37.03
Exercised		(267,292	)		4.55
Cancelled or forfeited		(46,175	)		15.95

Outstanding as of March 31, 2021		3,369,169		$	18.15		7.17	$	251,646

Vested and expected to vest as of March 31, 2021		2,742,769		$	14.84		6.70	$	213,926

Exercisable as of March 31, 2021		1,735,509		$	6.65		5.34	$	149,575

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common shares for those stock options that had exercise prices lower than the fair value of the Company’s common shares.

The weighted-average grant-date fair value of options granted during the years ended March 31, 2021, 2020 and 2019 was $31.90, $4.97 and $4.40 respectively. The total intrinsic value of options exercised during the year ended March 31, 2021, 2020 and 2019 was $23.6 million, $0.3 million and $2.4 million respectively.

The Company estimates the fair values of stock options using the Black-Scholes option-pricing model on the date of grant. During the years ended March 31, 2021, 2020 and 2019, the assumptions used in the Black-Scholes option pricing model were as follows:


	Fiscal Year Ended March 31,
	2021		2020		2019
Expected term (years)		5.26		5.08		5.25
Expected volatility		76.48%		45.65%		52.31%
Risk-free interest rate		0.19%		1.71%		2.74%
Expected dividend yield		— %		— %		— %

Restricted Stock Grants

The Company granted 35,000 shares, 22,616, and 171,666 shares of restricted stock during the years ended March 31, 2021, 2020 and 2019, respectively. Of the 35,000 shares of restricted stock issued during the year ended March 31, 2021, 25,000 shares vested immediately upon grant and 10,000 shares of restricted stock vest over 12 equal monthly installments. All of the shares of restricted stock granted during the year ended March 31, 2020 had immediate vesting upon grant. Grants of restricted stock are valued at the fair value of the Company’s common stock as of the grant date. The Company’s Board utilizes independent valuations and other available information when estimating the value of the stock underlying the granted shares of restricted stock. The weighted-average estimated fair value per share of the restricted stock granted during the years ended March 31, 2021, 2020, and 2019 was $55.35, $11.93 and $8.85, respectively. The total stock-based compensation expense associated with the grants of restricted stock was $1.1 million, $0.3 million and $1.5 million for the years ended March 31, 2021, 2020 and 2019, respectively.

F-27

Stock-Based Compensation

The following table summarizes the total stock-based compensation expense by function for the years ended March 31, 2021, 2020 and 2019, which includes expense related to options, restricted stock units, and secondary sales:


	Fiscal Year Ended March, 31
	2021		2020		2019
General and administrative	$	6,298	$	1,757	$	5,021
Advertising and marketing		224		60		75

Total stock-based compensation expense	$	6,522	$	1,817	$	5,096

Stock-based compensation expense for the years ended March 31, 2021, 2020, and 2019 was $6.5 million, $1.8 million and $5.1 million respectively. Stock-based compensation expense is allocated based on the department to which the option holder belongs.

As of March 31, 2021, 2020 and 2019, there was $21.9 million, $2.4 million, and $1.3 million of unrecognized stock-based compensation expense related to unvested stock options, respectively. The unrecognized stock-based compensation expense is expected to be recognized over a weighted-average remaining vesting period of 3.44, 2.87 and 2.68 years at March 31, 2021, 2020 and 2019, respectively.

10.

COMMITMENT AND CONTINGENCIES

Operating Leases

The Company has operating leases for its offices expiring on September 15, 2029. Rental expense for operating leases was $3.5 million and $2.3 million for the years ended March 31, 2021 and 2020, respectively.

The following is a schedule by years of future minimum lease payments required under the operating leases that have initial or noncancelable lease terms in excess of one year as of March 31, 2021.


Fiscal year ending March 31:
2022	$	4,113
2023		4,559
2024		4,269
2025		3,798
2026		3,899
Thereafter		6,459

Total minimum lease payments	$	27,097

Litigation

The Company is party to various actions and claims arising in the normal course of business. The Company does not believe that the final outcome of these matters will have a material effect on the Company’s consolidated financial position, results of operations or cash flows. However, no assurance can be given that the final outcome of such proceedings will not materially impact the Company’s consolidated financial condition or results of operations.

In December 2019, the Company’s operations were disrupted due to an unplanned shutdown of one of its third-party warehouses. The Company filed a claim with the third-party warehouse provider to recover incremental costs incurred due to this disruption in operations. According to ASC 450, Contingencies, a recovery related to a contingent loss (e.g., insurance recovery) is a contingent gain. Recovery of a recorded contingent loss shall be

F-28

recognized only when realization of the recovery is deemed probable and reasonably estimable. On November 5, 2020, the Company entered into a settlement agreement with the third-party warehouse and received payment of $0.8 million in consideration of this claim. The Company recorded this settlement payment within other income, net on the consolidated statements of operations and comprehensive loss.

Strategic License Partnerships

The Company has entered into several strategic license partnerships to license intellectual property to produce timely and relevant toys. Certain of these strategic license partnership agreements provide that the Company make minimum guarantee payments, regardless of the sales performance of the associated toys. As of March 31, 2021 and 2020, the future minimum guarantees related to our strategic license partnerships was $0.6 million and less than $0.1 million, respectively.

11.

INCOME TAXES

A reconciliation of the Company’s effective tax rate to the United States federal income tax rate is as follows:


	March 31,
	2021			2020			2019
Federal statutory rate		21.00	%		21.00	%		21.00	%
Permanent differences		(2.29	)		(0.88	)		(1.77	)
State taxes—net of federal benefits		3.12			1.73			1.60
Change in valuation allowance		(18.26	)		(22.79	)		(20.14	)
Stock Compensation		(1.02	)		—			—
Other deferred adjustments		(2.55	)		—			—
Other		—			0.94			(0.69	)

Total		—	%		—	%		—	%

The components of the Company’s deferred taxes are as follows (in thousands):


	March 31,
	2021			2020
Deferred tax assets:
Net operating loss carryforwards	$	24,960		$	24,836
Charitable contributions		155			127
Interest expense		3,330			1,557
UNICAP		3,048			1,430
Stock compensation		1,379			475
Accruals and other		3,861			2,403
Depreciation		—			59

Total deferred tax assets		36,733			30,887
Valuation allowance		(36,621	)		(30,887	)

Total deferred tax assets		112			—

Depreciation		(112	)		—

Total deferred tax liabilities		(112	)		—

Net deferred tax assets	$	—		$	—

As of March 31, 2021, the Company had federal net operating loss carryforwards (“NOLs”) of approximately $112.3 million, of which $60.5 million begin to expire in 2031 and $51.9 million can be carried forward indefinitely. The Company also had state NOLs of approximately $41.1 million which begin to expire in 2031.

F-29

As of March 31, 2020, the Company had federal net operating loss carryforwards (“NOLs”) of approximately $109.5 million, of which $51.6 million begin to expire in 2031 and $57.9 million can be carried forward indefinitely. The Company also had state NOLs of approximately $42.4 million which begin to expire in 2031.

Net operating loss and tax credit carry-forwards are subject to review and possible adjustment by the IRS and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50% as defined under Sections 382 and 383 in the Internal Revenue Code, which could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the Company’s value immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed a formal study through December 31, 2020 to determine if any ownership changes within the meaning of IRC Section 382 and 383 have occurred. As a result of the study, it was determined the Company experienced an ownership change on July 8, 2014; however, the limitation from the ownership change will not result in any of the NOLs or tax credits expiring unutilized.

The Company has recorded a valuation allowance against its deferred tax assets in each of the years ended March 31, 2021 and 2020, because the Company’s management believes that it is more likely than not that these assets will not be realized. As a result of generating additional net operating losses, the valuation allowance increased by approximately $5.7 million, from $30.9 million as of March 31, 2020 to $36.6 million as of March 31, 2021.

The Company had no unrecognized tax benefits or related interest and penalties accrued for the years ended March 31, 2021, 2020 and 2019 . The Company will recognize interest and penalties related to uncertain tax positions in income tax expense.

The Company is subject to U.S. federal income tax and state income tax. The statute of limitations for assessment by the IRS and state tax authorities is open for the tax years since 2016; currently, no federal or state income tax returns are under examination by the respective taxing authorities. To the extent the Company has tax attributes carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the IRS and the state tax authorities to the extent utilized in a future period.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide relief as a result of the COVID-19 outbreak. We have examined the impact of the CARES Act on the business and none of the provisions have a significant impact on the Company.

12.

OTHER INCOME—NET

Other income—net consisted of the following:


	Fiscal Year Ended March 31,
	2021			2020		2019
Other income—net:
Other income	$	267		$	583	$	182
Change in fair value of preferred share warrants		(6	)		3		(6	)
Change in fair value of derivative liability		(925	)		93		32
Settlement claim		795			—		—

	$	131		$	679	$	208

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13.

NET LOSS PER SHARE

Basic and diluted loss per share attributable to common stockholders were calculated as follows:


	Fiscal Year Ended March 31,
	2021			2020			2019
Numerator:
Net loss attributable to common stockholders	$	(31,391	)	$	(31,368	)	$	(37,082	)

Net loss attributable to common stockholders—basic and diluted	$	(31,391	)	$	(31,368	)	$	(37,082	)

Denominator:
Weighted-average number of common shares outstanding—basic and diluted		5,295,722			5,159,893			4,905,972

Net loss per share attributable to common stockholders—basic and diluted	$	(5.93	)	$	(6.08	)	$	(7.56	)

The Company’s potential dilutive securities, which include stock options, redeemable convertible preferred stock and warrants have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of common stock outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same for all periods presented. The Company excluded the following potential common stock, presented based on amounts outstanding at March 31, 2021, 2020 and 2019 from the computation of diluted net loss per share attributable to common stockholders because including them would have had an anti-dilutive effect.


	As of March 31,
	2021		2020		2019
Stock options to purchase common stock		3,369,169		2,422,421		1,865,818
Redeemable convertible preferred stock (as converted to common stock)		3,333,121		3,333,121		3,333,121
Warrants to purchase common stock		233,881		233,881		233,881
Warrants to purchase Series C-1 convertible preferred stock (as converted to common stock)		523		523		523

The Company also had convertible notes outstanding for the fiscal years ended March 31, 2021, 2020 and 2019 which could obligate the Company and/or its stockholders to issue shares of common stock upon the occurrence of various future events at prices and in amounts that are not determinable until the occurrence of those future events. Because the necessary conditions for the conversion of these instruments had not been satisfied during the fiscal years ended March 31, 2021, 2020 and 2019, the Company has excluded these instruments from the table above and the calculation of diluted net loss per share for those periods. See Note 6, “Debt,” for additional details.

14.

SEGMENTS

The Company applies ASC 280, Segment Reporting, in determining reportable segments for its financial statement disclosure. The Company has two reportable segments: Direct to Consumer and Commerce. The Direct to Consumer segment derives revenue from the sale of BarkBox, Super Chewer, BARK Bright and BARK Eats subscriptions, as well as sales of toys and treats through the Company’s website, BarkShop. The Commerce segment derives revenue from the sale of toys, treats and BARK Home products through major retailers and online marketplaces. The Company has aggregated its product lines sold through the Company’s website into the Direct to Consumer segment. The Company has aggregated its BARK Home and Bark Retail operations into the Commerce segment. Reporting in this format provides management with the financial information necessary to evaluate the success of the segments and the overall business. There are no internal revenue transactions between the Company’s segments.

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

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


	Fiscal Year Ended March 31,
	2021		2020		2019
Direct to Consumer:
Revenue	$	333,970	$	204,151	$	177,750
Cost of revenue		128,044		79,191		75,085

Gross profit	$	205,926	$	124,960	$	102,665

Commerce:
Revenue	$	44,634	$	20,184	$	13,691
Cost of revenue		24,620		9,730		9,241

Gross profit	$	20,014	$	10,454	$	4,450

Consolidated:
Revenue	$	378,604	$	224,335	$	191,441
Cost of revenue		152,664		88,921		84,326

Gross profit	$	225,940	$	135,414	$	107,115

15.

SUBSEQUENT EVENTS

The Company has evaluated subsequent events through June 7, 2021, which is the date the financial statements were available to be issued, for events requiring recording or disclosure in the consolidated financial statements for the years ended March 31, 2021 and 2020.

On April 23, 2021, the Company entered into a lease agreement for a new warehouse facility. The new lease commences on January 1, 2022 and includes escalating rent payments and an eighty-seven month term. Rent expense will be recorded on a straight-line basis over the lease term. Future minimum lease payments required under the operating lease are approximately $18.3 million.

On May 21, 2021, the Company granted to its employees equity awards to purchase an aggregate of 26,750 shares of common stock with an exercise price of $79.93, vesting over a four-year period.

As described in Note 1, the Company completed the merger with Northern Star, subsequently renamed the Original Bark Company, on June 1, 2021. In addition, the 2021 Equity Incentive Plan (the “2021 Plan”) and the 2021 Employee Stock Purchase Plan (the “ESPP”) became effective upon the Closing.

The 2021 Plan will provide for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or cash-based awards. Directors, officers and other employees of BARK and its subsidiaries, as well as others performing consulting or advisory services for BARK, will be eligible for grants under the 2021 Plan.

The purpose of the ESPP is to provide employees of the Company and its designated subsidiaries and affiliates (whether now existing or subsequently established) with the ability to acquire shares of BARK common stock at a discount to the market price and to pay for such purchases through payroll deductions or other approved contributions. BARK believes that the ESPP will be important in helping to attract and retain employees.

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