Bark, Inc. (The Original BARK Company) — Form 10-K Summary
Reporting period: Fiscal year ended March 31, 2021. The filing’s audited financial statements are for Northern Star Acquisition Corp., a SPAC formed in July 2020, not for BarkBox’s operating business. The business combination closed June 1, 2021, after year-end; therefore, the filing does not include BarkBox’s full-year operating results or reflect the merger in its March 31 balance sheet. The “2020 Q4” metadata does not match the period covered by this annual report.
Business context and reporting period
After the merger, BARK describes itself as a vertically integrated, data-driven dog-products brand spanning Play, Food, Health and Home. Products include BarkBox and Super Chewer subscriptions, BARK Eats food, BARK Bright wellness products, and retail and e-commerce offerings. Subscriptions generated the vast majority of BarkBox’s revenue, according to the filing.
Financial results, cash flow and liquidity
- Audited SPAC results: From inception on July 8, 2020 through March 31, 2021, the registrant reported no operating revenue, $1.6 million of formation and operating costs, and a net loss of $29.6 million. The loss included a $27.6 million non-cash increase in warrant liabilities and $0.5 million of warrant-related transaction costs.
- Cash flow: Net cash used in operating activities was $1.0 million for the inception-to-year-end period. Cash outside the trust account was $306,623 at March 31, 2021.
- Assets and liabilities: The trust account held $254.4 million, primarily in short-term U.S. Treasury bills. Reported liabilities included $41.5 million of warrant liabilities, $8.9 million of deferred underwriting fees and $0.6 million of accrued expenses. The balance sheet also classified $198.7 million of Class A shares as subject to possible redemption.
- Profitability and margins: The filing provides no audited BarkBox full-year revenue, gross profit, operating margin or net income for fiscal 2021. Those values are not clear from the filing text.
- Debt and post-merger liquidity: BarkBox’s 5.50% convertible senior secured notes due 2025, with $75 million aggregate principal originally issued, were assumed at closing. At closing, the notes were initially convertible into approximately 7.7 million shares. A concurrent PIPE raised $200 million. The filing states approximately $396 million of trust and PIPE proceeds, net of transaction expenses, became available to the combined company.
Material changes versus the prior comparable period
The SPAC was newly formed, so the audited statements provide no prior-year operating comparison. Separately, the filing cites BarkBox revenue of $266.4 million for the nine months ended December 31, 2020, versus $161.7 million for the comparable 2019 period, an increase of approximately 64.8%. These are target-company figures cited in the risk discussion, not audited fiscal-year results presented in this 10-K. The filing attributes some subscription growth to pandemic-era dog ownership and remote work.
The SEC’s April 2021 warrant-accounting guidance led the registrant to classify its public and private warrants as liabilities and restate previously issued interim financial statements. The resulting fair-value changes can cause material non-cash earnings fluctuations.
Outlook, commentary, risks and unusual items
- Management expected cash available after the merger, together with operating cash flows, to fund expenses for at least 12 months. The filing also says future capital needs depend on subscriber growth and investment plans, and additional equity or debt financing may be needed.
- BARK planned to invest in marketing, product development, new categories and fulfillment capacity. BARK Eats was available in the Columbus, Ohio market, with expansion to additional markets planned; the filing elsewhere describes a nine-market fiscal 2022 target. BARK Bright and other new offerings were also growth priorities. These are plans, not assurances.
- Key risks include dependence on subscriptions; customer acquisition and retention costs; uncertain sustainability of pandemic-driven demand; intense competition; reliance on suppliers and third-party logistics; higher inbound freight and outbound shipping costs; and execution risk in scaling new products and fulfillment operations.
- The filing describes a November 2020 typhoon-related shipment delay and increased freight and carrier costs during fiscal 2021. COVID-19 caused manufacturing, freight, retail-channel and fulfillment uncertainty.
- Control issues warrant attention. The SPAC reported its disclosure controls were ineffective due to the warrant-accounting material weakness, while management separately concluded internal control over financial reporting was effective as of March 31, 2021. BarkBox had also identified weaknesses involving account reconciliations and inventory controls; remediation was ongoing.
- The company reported no dividends paid and did not expect dividends in the foreseeable future. Potential dilution includes convertible notes, warrants, options and equity-plan shares.
Most important facts for investors to verify
- Review the subsequent post-merger financial statements for BARK’s actual revenue, gross margin, operating losses, cash burn and cash position; this 10-K does not provide audited BarkBox full-year results.
- Confirm the combined company’s debt terms, collateral, covenants, conversion mechanics and any additional note purchases, and reconcile the stated approximately $396 million of net merger and PIPE proceeds with closing disclosures.
- Track remediation of BarkBox’s inventory and reconciliation control weaknesses and the SPAC’s warrant-accounting weakness, including any later restatements or control conclusions.
- Assess whether subscription growth and retention persist after pandemic-related conditions, and whether new offerings can scale without materially worsening acquisition costs, shipping expense or losses.
- Evaluate potential dilution from the 2025 notes, warrants, options and equity plans, as well as the warrant-liability fair-value impact on reported earnings.