Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2026, for Smartbird, Inc. (formerly Allbirds, Inc.). The Company has completed a strategic pivot, selling all assets of its historical footwear business (classified as discontinued operations) to Allbirds IP LLC on June 9, 2026. Smartbird is now operating a new, speculative AI Infrastructure Business, focused on the acquisition and monetization of graphics processing units (GPUs) and high-performance computing infrastructure. The Company is classified as a non-accelerated filer, smaller reporting company, and emerging growth company.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 |
|---|---|---|
| Net Revenue (Continuing Ops) | $2.76 million | $2.76 million |
| Net Loss (Continuing Ops) | $(12.78) million | $(18.87) million |
| Net Loss (Total, incl. Discontinued) | $(16.37) million | $(37.09) million |
| Cash and Cash Equivalents | $37.38 million (as of June 30, 2026) | |
| Convertible Notes Outstanding | $8.25 million principal (Fair Value: ~$8.2 million) | |
| Adjusted EBITDA Loss | $(8.68) million | $(14.31) million |
Liquidity: As of June 30, 2026, the Company held $37.38 million in cash and cash equivalents. Management stated that proceeds from the Asset Sale, Convertible Notes, and ATM offering have alleviated substantial doubt regarding the Company's ability to continue as a going concern for the next twelve months.
Material Changes vs. Prior Period
- Asset Sale and Discontinued Operations: The Company sold its historical footwear business for $40.7 million in cash. This resulted in a $21.55 million gain from disposal of discontinued operations. Prior period results for the footwear business are now presented as discontinued operations.
- Revenue Generation: Continuing operations revenue of $2.76 million was generated from the new AI Infrastructure Business (specifically a sales-type lease of GPU assets), compared to $0 in the prior year period as the new business did not exist.
- Debt Structure: The Company extinguished its previous $17.3 million Credit Agreement with Second Avenue Capital Partners LLC, incurring a $3.2 million loss on debt extinguishment. It replaced this with a new Convertible Note Facility, issuing $8.25 million in principal to date.
- Operating Expenses: Selling, general, and administrative (SG&A) expenses for continuing operations increased to $10.7 million (Q2 2026) from $5.1 million (Q2 2025), driven by legal fees, stock-based compensation, and costs associated with launching the AI Infrastructure Business.
Guidance, Outlook, and Risks
Outlook and Strategy: Smartbird intends to fund operations through debt/equity financing and future operating cash flow. The business model relies on a "demand-led" approach, acquiring AI infrastructure only when tied to customer orders to minimize capital risk. The Company does not intend to offer "pay-as-you-go" pricing but rather dedicated cluster leases.
Material Risks:
- Speculative Nature: The AI Infrastructure Business is described as "highly speculative, uncertain, unproven," with no assurance it will generate meaningful revenue or achieve profitability.
- Liquidity and Funding: Only $8.25 million of the $100 million Convertible Note Facility has been funded. The remaining $91.75 million is at the option of the note holders. If additional funding is not obtained, the Company may run out of cash.
- Customer Concentration: As of June 30, 2026, 100% of continuing operations revenue was generated by a single customer.
- Transition Risks: The Company faces significant challenges transitioning from a consumer products company to an AI infrastructure firm, including the need for specialized technical expertise and new internal controls.
- Legal Proceedings: The Company is defending against securities class action lawsuits (Shnayder v. Allbirds, Inc.) which were dismissed with prejudice in February 2026 but are currently on appeal.
Subsequent Event: On August 6, 2026, the Board declared a special dividend of $0.31 per share, payable August 20, 2026, funded by Asset Sale proceeds.
Investor Verification Checklist
- Funding Status: Verify if the holders of the Convertible Notes have elected to fund the remaining $91.75 million of the facility, as current cash reserves may be insufficient for long-term operations.
- Customer Diversification: Monitor the Company's ability to secure additional customers beyond the single entity currently generating 100% of revenue.
- Asset Monetization: Confirm the execution of additional GPU acquisition and lease transactions to validate the scalability of the new business model.
- Legal Appeals: Track the status of the Ninth Circuit appeal regarding the dismissed securities class action lawsuit.
- Dividend Impact: Assess the impact of the $3.6 million special dividend payment on the Company's remaining liquidity and working capital.