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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q 



QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended 

March 31, 2024



TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number
: 

PishPosh, Inc.

(Exact name of registrant as specified in its charter) 

Delaware		88-2267409
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

1915 Swarthmore Avenue  

Lakewood, New Jersey 08701

(Address of principal executive offices, including zip code)

Tel: (813) 659-5921

(Registrant’s telephone number, including area code)

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

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on which Registered
N/A		N/A		N/A

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes





Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‐T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files.) Yes





Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‐accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b‐2 of the Exchange Act.

Large accelerated filer



Accelerated filer



Non-accelerated filer



Smaller reporting company



Emerging growth company



If an emerging growth company, indicate by a 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.



Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b‐2 of the Exchange Act). Yes





As of May 15, 2024, the Company had 4,939,345 shares of common stock, $0.000001 par value, issued and outstanding.

PishPosh, Inc.

FORM 10-Q 

TABLE OF CONTENTS 

		Page

Cautionary Note Regarding Forward-Looking Statements		3

PART I. FINANCIAL INFORMATION		5

ITEM 1.	Condensed Financial Statements – (Unaudited)	5

	Condensed Balance Sheets as of March 31, 2024 and December 31, 2023	5

	Condensed Statements of Comprehensive Loss for the three months ended March 31, 2024 and 2023	6

	Condensed Statements of Stockholders’ Deficit for the three months ended March 31, 2024 and 2023	7

	Condensed Statements of Cash Flows for the three months ended March 31, 2024 and 2023	8

	Notes to Condensed Financial Statements	9

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	27

ITEM 4.	Controls and Procedures	27

PART II. OTHER INFORMATION		28

ITEM 1.	Legal Proceedings	28

ITEM 1A.	Risk Factors	28

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

ITEM 3.	Defaults upon Senior Securities	28

ITEM 4.	Mine Safety Disclosures	28

ITEM 5.	Other Information	29

ITEM 6.	Exhibits	30

SIGNATURES		31

ORWARD‐LOOKING STATEMENTS

This report contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this report are forward-looking statements. Forward-looking statements discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. They appear in a number of places throughout this report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including, without limitation:



the impact of COVID-19 on the U.S. and global economies, our employees, suppliers, customers and end consumers, which could adversely and materially impact our business, financial condition and results of operations;



the impact of damage to or interruption of our information technology systems due to cyber-attacks or other circumstances beyond our control;



our ability to successfully implement our growth strategy;



failure to achieve growth or manage anticipated growth;



our ability to achieve or maintain profitability;



our ability to continue as a going concern;



the loss of key members of our senior management team;



our ability to generate sufficient cash flow to run our operations, service our debt and make necessary capital expenditures;



our ability to establish and maintain effective internal control over financial reporting;



our limited operating history;



our ability to successfully integrate Pish Posh Baby’s businesses and realize anticipated benefits with this acquisition and with other acquisitions or investments we may make;



our dependence on our subsidiaries for payments, advances and transfers of funds due to our holding company status;



our ability to successfully develop additional products and services or successfully commercialize such products and services;



competition in our market;



our ability to attract new and retain existing customers;



our exposure to product liability claims;



interruption in our sourcing operations;



our or our third-party contract manufacturers and suppliers’ ability to comply with legal and regulatory requirements;



our brand reputation;



compliance with data privacy rules;



our compliance with applicable regulations issued by the U.S. Federal Trade Commission (“FTC”) and other federal, state and local regulatory authorities;



risk of our products being recalled for a variety of reasons, including product defects, packaging safety and inadequate or inaccurate labeling disclosure; and



other factors discussed under the headings “Risk Factors,” “Business,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report.

While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties.

ART I – FINANCIAL INFORMATION

TEM 1. FINANCIAL STATEMENTS

PISHPOSH, INC. 

ONDENSED BALANCE SHEETS 

(UNAUDITED) 

	March 31,			December 31,
	2024			2023
ASSETS
Current assets:
Cash and cash equivalents	$	29,735		$	368,242
Accounts receivable		104,930			81,277
Inventory, net		2,459,837			2,803,263
Prepaid expenses and other current assets		83,830			101,802
Deferred offering costs		1,783,671			1,708,147
Total current assets		4,462,003			5,062,731
Intangible assets, net		27,403			36,537
Deposits		10,155			10,155
Right of use asset		36,849			57,128
Total assets	$	4,536,410		$	5,166,551

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	3,586,744		$	3,863,514
Accounts payable, related party		96,348			103,719
Accrued expenses and other current liabilities		846,832			761,022
Loan payable, current		803,539			654,287
Note payable, net of debt discount		2,982,406			2,273,011
Convertible note payable		240,135			240,135
Convertible note payable, related party		1,100,000			1,100,000
Right of use liability, current portion		37,875			58,741
Total liabilities		9,693,879			9,054,429

Commitments and contingencies (Note 12)

Stockholders' deficit:
Preferred stock, $0.000001 par value, 10,000,000 shares authorized, 1,752 shares issued and outstanding as of March 31, 2024 and December 31, 2023		-			-
Common stock, $0.000001 par value, 100,000,000 shares authorized, 4,939,345 shares issued and outstanding as of March 31, 2024 and December 31, 2023		5			5
Additional paid-in capital		13,130,058			13,130,058
Accumulated deficit		(18,287,532	)		(17,017,941	)
Total stockholders' deficit		(5,157,469	)		(3,887,878	)
Total liabilities and stockholders' deficit	$	4,536,410		$	5,166,551

See the accompanying notes to the unaudited condensed financial statements.

PISHPOSH, INC. 

ONDENSED STATEMENTS OF COMPREHENVIE LOSS 

(UNAUDITED) 

	Three Months Ended
	March 31,
	2024			2023
Net revenues	$	2,982,541		$	4,575,891
Cost of net revenues		2,087,188			3,029,512
Gross profit		895,353			1,546,379

Operating expenses:
General and administrative		895,744			885,635
Research and development		-			30,000
Sales and marketing		1,054,433			1,310,365
Total operating expenses		1,950,177			2,226,000

Loss from operations		(1,054,824	)		(679,621	)

Other expense:
Interest expense		(214,767	)		(118,472	)
Total other expense		(214,767	)		(118,472	)

Provision for income taxes		-			-
Net loss	$	(1,269,591	)	$	(798,093	)

Weighted average common shares outstanding - basic and diluted		4,939,345			4,939,345
Net loss per common share - basic and diluted	$	(0.26	)	$	(0.16	)

See the accompanying notes to the unaudited condensed financial statements.

PISHPOSH, INC. 

ONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT 

(UNAUDITED) 

									Additional					Total
	Preferred Stock				Common Stock				Paid-in		Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balances at December 31, 2022		1,752	$	-		4,939,345	$	5	$	5,239,194	$	(6,584,666	)	$	(1,345,467	)
Warrants issued in connect i on with notes		-		-		-		-		509,909		-			509,909
Net loss		-		-		-		-		-		(798,093	)		(798,093	)
Balances at March 31, 2023		1,752	$	-		4,939,345	$	5	$	5,749,103	$	(7,382,759	)	$	(1,633,651	)

Balances at December 31, 2023		1,752	$	-		4,939,345	$	5	$	13,130,058	$	(17,017,941	)	$	(3,887,878	)
Net loss		-		-		-		-		-		(1,269,591	)		(1,269,591	)
Balances at March 31, 2024		1,752	$	-		4,939,345	$	5	$	13,130,058	$	(18,287,532	)	$	(5,157,469	)

See the accompanying notes to the unaudited condensed financial statements.

PISHPOSH, INC. 

ONDENSED STATEMENTS OF CASH FLOWS 

(UNAUDITED) 

	Three Months Ended
	March 31,
	2024			2023
Cash flows from operating activities:
Net loss	$	(1,269,591	)	$	(798,093	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		9,134			11,856
Amortization of debt discount		84,395			23,502
Change in inventory allowance		6,358			(31,582	)
Amortization of right of use asset		20,279			13,990
Changes in operating assets and liabilities:
Accounts receivable		(23,653	)		(162,446	)
Inventory		337,068			455,507
Prepaid expenses and other current assets		17,972			(306,552	)
Deferred offering costs		(75,524	)		(299,712	)
Accounts payable		(276,770	)		707,155
Accounts payable, related party		(7,371	)		75,740
Accrued expenses and other current liabilities		85,810			(93,194	)
Lease liability		(20,866	)		(13,945	)
Net cash used in operating activities		(1,112,759	)		(417,774	)
Cash flows from financing activities:
Proceeds from loan payable		950,564			-
Repayments of loan payable		(801,312	)		(481,195	)
Proceeds from notes payable, net of issuance costs		625,000			1,139,705
Proceeds from loan payable, related party		-			515,000
Repayments of loan payable, related party		-			(515,000	)
Net cash provided by financing activities		774,252			658,510
Net change in cash and cash equivalents		(338,507	)		240,736
Cash and cash equivalents at beginning of period		368,242			218,605
Cash and cash equivalents at end of period	$	29,735		$	459,341

Supplemental disclosure of cash flow information:
Cash paid for interest	$	79,853		$	72,250

Supplemental disclosure of non-cash investing and financing activities:
Warrants issued in connection with notes	$	-		$	509,909

See the accompanying notes to the unaudited condensed financial statements.

PISHPOSH, INC. 

OTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 1: NATURE OF OPERATIONS

Pish Posh Baby, LLC (“Pish Posh”) was a Delaware limited liability company formed on December 15, 2015. Pish Posh was established via an asset purchase agreement with a related entity, Pish Posh, Inc. (the “Seller”), a Nevada corporation, in January 2016. Pursuant to the asset purchase agreement, Pish Posh purchased certain assets and assumed liabilities from Pish Posh, Inc. and all investors in the Seller were transferred into membership interests in Pish Posh.

On February 25, 2022, PishPosh, Inc. (the “Company”), a Delaware corporation formed on December 16, 2021, merged with Pish Posh (the “Merger”). Pursuant to the Merger Agreement, each issued unit of membership interest of Pish Posh outstanding immediately prior to the effectiveness of the merger was converted into 1.572314286 shares of common stock in the Company. At the option of any shareholder, shares of Series A Preferred Stock of the Company, may be issued in lieu of shares of common stock. Upon the closing of the Merger, PishPosh, Inc. became the surviving corporation.

The Company has a wide array of baby products, including brand-name strollers, car seats and other baby gear & accessories, which are sold via its retail location, website and other e-commerce channels. The Company’s headquarters are in Lakewood, New Jersey.

NOTE 2: GOING CONCERN

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 for the next 12 months from the date of this Quarterly Report on Form 10-Q.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has often not generated profits since inception, has sustained net losses of $1,269,591 and $798,093 for the three months ended March 31, 2024 and 2023, respectively, and has negative cash flows from operations for the three months then ended. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern for the next 12 months from the date of this Quarterly Report on Form 10-Q is dependent upon its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or to obtain additional debt or equity financing. Through the date of this Quarterly Report on Form 10-Q, the Company has been primarily financed through the issuance of loans and proceeds from the sale of preferred and common stock. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing shareholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company would be unable to execute upon the business plan or pay costs and expenses as they are incurred, which would have a material, adverse effect on the business, financial condition and results of operations. No assurance can be given that the Company will be successful in these efforts. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company is seeking to raise capital via an equity offering. In the event the Company does not complete an offering, the Company expects to seek additional funding through private equity or debt financings. The Company may not be able to obtain financing on acceptable terms, or at all.

PISHPOSH, INC. 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the unaudited condensed financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and the results of its operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the three months ended March 31, 2024 may not be indicative of results for the full year. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes to those statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2024.

The Company is an emerging growth company as the term is used in The Jumpstart Our Business Startups Act, enacted on April 5, 2021 and has elected to comply with certain reduced public company reporting requirements.

Use of Estimates

The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in these financial statements include, but are not limited to, inventory reserve for obsolescence and fair value of warrants issued with debt. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates.

Significant Risks and Uncertainties

The Company is subject to customary risks and uncertainties including, but not limited to, the need for protection of proprietary technology, dependence on key personnel, costs of services provided by third parties, the need to obtain additional financing, and limited operating history.

PISHPOSH, INC. 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. At March 31, 2024 and December 31, 2023 all of the Company's cash and cash equivalents were held at one accredited financial institution.

Concentrations

The Company is dependent on third-party vendors for its inventory purchases. During the three months ended March 31, 2024 and 2023, four vendors accounted for 56% and 60% of total purchases, respectively. The loss of these vendors may have a negative short-term impact on the Company’s operations; however, the Company believes there are acceptable substitute vendors that can be utilized longer-term.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents.

Fair Value Measurements

Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) 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. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:



Level 1—Quoted prices in active markets for identical assets or liabilities.



Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.



Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The carrying values of the Company’s accounts receivable, prepaid expenses, accounts payable and accrued expenses approximate their fair values due to the short maturity of these instruments. The Company believes the carrying amount of its convertible notes payable, notes payable and loan payable approximate fair value based on rates and other terms currently available to the Company for similar debt instruments.

Accounts Receivable

Accounts receivable are derived from outstanding payments owed to the Company from e-commerce partners and are stated at their net realizable value. Accounts receivable are presented net of an allowance for credit losses, which is an estimate of amounts that may not be collectible. The Company uses a loss-rate approach based on historical loss information, adjusted for management’s expectations about current and future economic conditions, as the basis to determine expected credit losses. Management exercises significant judgment in determining expected credit losses. Key inputs include macroeconomic factors, industry trends, and the creditworthiness of counterparties. Management believes that the composition of receivables at year-end is consistent with historical conditions as credit terms and practices and the client base has not changed significantly.

As of March 31, 2024 and December 31, 2023, the Company determined that no allowance for credit losses was necessary.

PISHPOSH, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Inventory

Inventories consist of finished goods and products in transit from the Company’s suppliers. Finished goods inventory includes amounts primarily held at the Company’s warehouse location and at Amazon. Costs of finished goods inventories include all costs incurred to bring inventory to its current condition, including inbound freight and duties. Inventory is recorded at the lower of cost or net realizable value using the first-in-first-out (FIFO) method. If the Company determines that the estimated net realizable value of its inventory is less than the carrying value of such inventory, it records a charge to cost of goods sold to reflect the lower of cost or net realizable value. If actual market conditions are less favorable than those projected by the Company, further adjustments may be required that would increase the cost of goods sold in the period in which such a determination was made. As of March 31, 2024 and December 31, 2023, there was a reserve for obsolescence of $627,649 and $634,007 respectively.

Deposits for future inventory purchases are included in prepaid expenses and other current assets. As of March 31, 2024 and December 31, 2023, prepaid expenses and other current assets included $76,650 and $101,802 respectively, in inventory deposits.

As of March 31, 2024 and December 31, 2023, the Company had $15,320 and $36,966, respectively, in inventory in transit.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. The Company’s property and equipment includes office and computer equipment, furniture and fixtures and leasehold improvements, which are all depreciated using the straight-line method over their respective estimated useful lives. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in operations.

Intangible Assets

Intangible assets consist of capitalized website development costs less accumulated amortization. Website development costs are capitalized during the application and infrastructure development stage in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350-50. The Company amortizes these costs using the straight-line method over an estimated useful life of three years.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets (property and equipment and amortizable intangible assets) for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows, undiscounted, is less than the carrying amount of the asset, an impairment loss is recognized as the amount by which the carrying amount of the asset exceeds its fair value.

Revenue Recognition

In accordance with FASB ASC 606,

Revenue from Contracts with Customers

¸ the Company determines revenue recognition through the following steps:



Identification of a contract with a customer;



Identification of the performance obligations in the contract;



Determination of the transaction price;



Allocation of the transaction price to the performance obligations in the contract; and



Recognition of revenue when or as the performance obligations are satisfied.

Revenue is recognized when performance obligations are satisfied through the transfer of control of promised goods to the Company's customers in an amount that reflects the consideration expected to be received in exchange for transferring goods or services to customers. Control transfers once a customer has the ability to direct the use of, and obtain substantially all of the benefits from, the product. This includes the transfer of legal title, physical possession, the risks and rewards of ownership, and customer acceptance.

PISHPOSH, INC. 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

The Company derives its revenue primarily from e-commerce transactions. For e-commerce transactions, revenue is recognized at the time the product is shipped to the customer, which is the point in time when control is transferred. The Company generates a small percentage of sales in its showroom, which revenue is recognized at the time the product is sold in store to the customer. There was no breakage income recognized for unredeemed gift cards for the three months ended March 31, 2024 or 2023.

The Company deducts discounts, sales tax, and estimated refunds to arrive at net revenue. Sales tax collected from clients is not considered revenue and is included in accrued expenses until remitted to the taxing authorities. Shipping and handling fees charged to customers are included in net revenues. All shipping and handling costs are accounted for as fulfilment costs in sales and marketing expense, and are therefore not evaluated as a separate performance obligation.

Total shipping and handling billed to customers as a component of net revenues was $2,656 and $6,015 for three months ended March 31, 2024 and 2023, respectively.

Cost of Revenue

Cost of revenue consists of the costs of inventory sold, packaging materials costs, inbound freight and customs and duties. The Company includes outbound freight associated with shipping goods to customers as a component of sales and marketing expenses as noted below.

Sales and Marketing

Sales and marketing expenses includes fulfilment center operations, third-party logistics costs, e-commerce selling commissions, marketing and advertising costs as well as public relations.

The Company also includes outbound freight associated with shipping goods to customers as a component of sales and marketing expenses. During the three months ended March 31, 2024 and 2023, shipping and handling costs were $307,790 and $406,697 respectively.

General and Administrative Expenses

General and administrative expenses consist primarily of compensation and benefits costs, professional services and information technology. General and administrative expenses also include payment processing fees, website costs and warehousing fees.

Advertising Costs

Advertising costs are included in sales and marketing expenses and are expensed as incurred. Advertising costs were $412,849 and $400,950 for the three months ended March 31, 2024 and 2023, respectively.

Research and Development Costs

Costs incurred in the research and development of the Company’s products are expensed as incurred.

Comprehensive Loss

The Company follows FASB ASC 220 in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Since the Company has no items of other comprehensive income, comprehensive loss is equal to net loss.

Deferred Offering Costs

The Company complies with the requirements of FASB ASC 340-10-S99-1 with regards to offering costs. Prior to the completion of an offering, offering costs are capitalized. The deferred offering costs are charged to additional paid-in capital or as a discount to debt, as applicable, upon the completion of an offering or to expense if the offering is not completed. As of March 31, 2024 and December 31, 2023, the Company had capitalized $1,783,671 and $1,708,147 in deferred offering costs, respectively. Deferred offering costs includes professional fees incurred including legal, accounting, underwriting and advisory in connection with the Company’s anticipated equity offering.

As of March 31, 2024, management assessed the recoverability of the capitalized deferred offering costs Of the $1,783,671 in deferred offering costs, $1,708,147 pertain to costs incurred from 2021 through 2023 when the Company initiated its public offering efforts. These costs include legal fees and accounting fees related to the Company’s previous audits. Management believes that these costs should not be impaired as of March 31, 2024 as they still provide economic benefits for the Company’s potential public offering. All initial offering costs incurred have enabled the Company to achieve and maintain SEC effectiveness, which is a key component of the Company’s ability to undergo a successful initial public offering. Management will continue to monitor any further delay or abandonment of the contemplated public offering. If any further delays are expected, the Company may have to impair a substantial portion, or all, of its deferred offering costs.

PISHPOSH, INC. 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Accounting for Preferred Stock

ASC 480, Distinguishing Liabilities from Equity, includes standards for how an issuer of equity (including equity shares issued by consolidated entities) classifies and measures on its balance sheet certain financial instruments with characteristics of both liabilities and equity.

Management is required to determine the presentation for the preferred stock as a result of the redemption and conversion provisions, among other provisions in the agreement. Specifically, management is required to determine whether the embedded conversion feature in the preferred stock is clearly and closely related to the host instrument, and whether the bifurcation of the conversion feature is required and whether the conversion feature should be accounted for as a derivative instrument. If the host instrument and conversion feature are determined to be clearly and closely related (both more akin to equity), derivative liability accounting under ASC 815,

Derivatives and Hedging

, is not required. Management determined that the host contract of the preferred stock is more akin to equity, and accordingly, liability accounting is not required by the Company. The Company has presented preferred stock within stockholders’ deficit.

Costs incurred directly for the issuance of the preferred stock are recorded as a reduction of gross proceeds received by the Company, resulting in a discount to the preferred stock. The discount is not amortized.

Warrant Valuation

Stock warrant valuation models require the input of highly subjective assumptions. The fair value of stock-based payment awards is estimated using the Black-Scholes option model with a volatility figure derived from an average of historical stock prices for comparable entities. The Company accounts for the expected life based on the contractual life of the warrants. The risk-free interest rate is determined from the implied yields of U.S. Treasury zero-coupon bonds with a remaining life consistent with the expected term of the warrants.

Net Loss per Share

Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the actual weighted average of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net loss per share if their inclusion would be anti-dilutive. As all potentially dilutive securities are anti-dilutive as of March 31, 2024 and 2023, diluted net loss per share is the same as basic net loss per share.

Potentially dilutive items outstanding as of March 31, 2024 and 2023 are as follows:

	March 31,
	2024		2023
Convertible note payable		240,135		240,135
Convertible note payable, related party (1)		317,677		172,727
Preferred stock (convertible to common stock)		1,752,371		1,752,371
Common stock warrants		6,032,008		3,975,008
Total potentially dilutive securities		8,342,191		6,140,241

(1)

The potentially dilutive shares from the $1,100,000 convertible note, related party, and accrued interest of $91,288 was estimated using a conversion price of $3.75, which is 100% of the anticipated initial public offering price per share.

In 2023, the potentially dilutive shares from the $950,000 note was estimated using a conversion price of $5.50, which was 110% of the anticipated initial public offering price of $5.00 as of March 31, 2023.

PISHPOSH, INC. 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS 

Leases

In accordance with FASB ASC 842,

Leases

, upon lease commencement the Company recognizes a right-of-use asset and a corresponding lease liability measured at the present value of the fixed future minimum lease payments. The Company calculates operating lease liabilities with a risk-free discount rate, using a comparable period with the lease term. Lease and non-lease components are combined for all leases. Lease payments for leases with a term of 12 months or less are expensed on a straight-line basis over the term of the lease with no lease asset or liability recognized.

Recently Issued and Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09,

Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09)

, which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption is permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company is currently evaluating the impact of this accounting standard on its consolidated financial statements.

Management does not believe that any other recently issued, but not yet effective, accounting st

andard

s could have a material ef

fect on the acc

ompanying financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

NOTE 4: INTANGIBLE ASSETS, NET

Intangible assets, net consists of the following:

	March 31,			December 31,
	2024			2023
Website development costs	$	127,750		$	127,750
Less: Accumulated amortization		(100,347	)		(91,213	)
Intangible assets, net	$	27,403		$	36,537

Amortization expense was $9,134 for the three months ended March 31, 2024 and 2023.

NOTE 5: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

	March 31,		December 31,
	2024		2023
Accrued personnel and other expenses	$	274,699	$	170,308
Gift card liability		202,453		202,453
Allowance for sales returns		42,855		108,279
Interest		223,117		176,245
Security deposit payable		3,708		3,708
Advances from third parties		100,000		100,000
Accrued expenses and other current liabilities	$	846,832	$	761,022

NOTE 6: LOANS AND NOTES PAYABLE

Merchant Advances

During 2024 and 2023, the Company entered into several short-term merchant loans with American Express, Amazon and Shopify. The loans mature in

six

nine months

and bear interest ranging from 8% to 13%. The loans require monthly principal and interest payments. During the three months ended March 31, 2024 and 2023, the Company received merchant advances totaling $908,200 and $0 respectively, and made repayments totaling $758,948 and $481,195 respectively. As of March 31, 2024 and December 31, 2023, the Company had $803,539 and $654,287 respectively in outstanding principal pertaining to these merchant loans. Interest expense for the loans totaled $55,287 and $52,046 for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024 and December 31, 2023, there was $2,761 and $3,598 respectively, in interest payable pertaining to these loans.

Related Party

During 2023, the Company received loan proceeds of 515,000 from a related party. The loan was unsecured, non-interest bearing and due on demand. As of March 31, 2023, the Company fully repaid the loan.

PISHPOSH, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Notes Payable, Net of Debt Discount

Promissory Notes

As of March 31, 2024 and December 31, 2023

the Company had $1,025,000 outstanding pertaining to a promissory note received in 2021. In April 2024, the Company extended the maturity date to June 1, 2024. Interest expense for three months ended March 31, 2024 and 2023 was $0.

In February 2024, the Company received $300,000 in short-term promissory notes. The notes bear interest at 10% per annum and mature on May 31, 2024. Interest expense for the three months ended March 31, 2024 was $7,480, all of which was accrued and unpaid.

OID Notes

On January 25, 2023, the Company issued three unsecured original issue discount promissory notes in the aggregate principal amount of $577,500, respectively (the “OID Notes”). The Company received proceeds in the aggregate amount of $550,000 in connection with the issuance of the OID Notes. No interest shall accrue on the OID Note prior to an event of default and after event of default, interest shall accrue at the rate of 24% per annum. The OID Notes provided that the principal and all unpaid interest owed under each OID Note shall be due and payable on the earlier of (i) April 30, 2023, or (ii)

three

business days after the closing or abandonment of Company’s anticipated initial public offering. In connection with the OID Notes, the Company recognized a debt discount of $27,500. For the three months ended March 31, 2024 and 2023, the Company recognized interest expense associated with the amortization of debt discount of $0 and $18,816, respectively. As of March 31, 2024, unamortized debt discount was $0.

In April 2024, the Company entered into Promissory Note Extension Agreements with the noteholders pursuant to which each such holder agreed to extend the maturity date of the OID Notes to June 1, 2024.

For the three months ended March 31, 2024

and

2023, interest expense on the OID Notes was $8,639 and $6,171, respectively, all of which was accrued and unpaid.

As of March 31, 2024 and December 31, 2023, there was $40,915 and $32,277, respectively, in interest payable pertaining to these loans.

On August 31, 2023, the Company issued two unsecured original issue discount promissory notes in the aggregate principal amount of $336,000, respectively (the “August OID Notes”). The Company received proceeds in the aggregate amount of $320,000 in connection with the issuance of the August OID Notes.

The Company recognized a debt discount of $

16,000

, all of which was amortized to interest expense in 2023.

No interest shall accrue on the OID Note prior to an event of default and after event of default, interest shall accrue at the rate of 24% per annum. The principal and all unpaid interest owed under each August OID Note shall be due and payable on the earlier of (i) November 1, 2023, or (ii)

three

business days after the closing or abandonment of Company’s anticipated initial public offering. As of the date of these financial statements, the amended maturity dates of the OID and August OID Notes was June, 2024.

March 2024, the Company issued two unsecured original issue discount promissory notes in the aggregate principal amount of $343,500, respectively

The Company received proceeds in the aggregate amount of $325,000 in connection with the issuance of the

notes

. No interest shall accrue on the OID

otes prior to an event of default and after event of default, interest shall accrue at the rate of 24% per annum. The March OID Notes mature on October 1, 2024. In connection with the

these notes

, the Company recognized a debt discount of $18,500, of which $2,469, which was amortized to interest expense as of March 31, 2024. As of March 31,2024, $16,031 remained unamortized.

Investor Bridge Notes

The Company conducted a private offering (the “2023 Bridge Offering”) of up to $1,000,000 of unsecured promissory notes (“Investor Bridge Notes”) and warrants to purchase up to 1,000,000 shares of the Company’s common stock. The Investor Bridge Notes will bear interest at a rate of 6% per annum and will mature (the “Investor Bridge Notes Maturity Date”) on the earlier of two years from the date of the initial closing of such private placement or a liquidity event, as defined in the Investor Bridge Notes, which includes a firm commitment underwritten initial public offering of the Company's common stock. Each of the Investor Bridge Notes will be coupled with an equal number of warrants (the “Investor Bridge Warrants”) to purchase common stock (up to 1,000,000 warrants) at an exercise price of $1.00 per share. On the Investor Bridge Notes Maturity Date, the Investor Bridge Notes will be automatically repaid, and the proceeds payable shall be automatically applied to the exercise of the Investor Bridge Warrants.

At the first closing of the 2023 Bridge Offering, which took place on March 24, 2023, the Company issued $650,000 of Investor Bridge Notes and issued Investor Bridge Warrants to purchase 650,000 shares of common stock with an exercise price of $1.00 per share. In connection with the first closing of the 2023 Bridge Offering, the Company paid Boustead Securities, LLC (“Boustead”), its placement agent in such 2023 Bridge Offering, $52,000 in cash and issued the placement agent 5-year warrants to purchase 45,500 shares of common stock (the “Boustead Bridge Warrants”), at an exercise price of $1.00 per share and are exercisable immediately. The Boustead Bridge Warrants are considered as compensation to Boustead pursuant to the rules of FINRA and will not be exercisable until 180 days following the date of commencement of sales of the Company’s common stock pursuant to its initial public offering. Following the first closing of the 2023 Bridge Offering, the Company received net proceeds of $589,705 after deducting fees.

At the second closing of the 2023 Bridge Offering, which took place on April 14, 2023, the Company issued $100,000 of Investor Bridge Notes and issued Investor Bridge Warrants to purchase 100,000 shares of common stock with an exercise price of $1.00 per share. In connection with the second closing of the 2023 Bridge Offering, the Company paid Boustead $8,000 in cash and issued the placement agent 5-year warrants to purchase 7,000 shares of common stock at an exercise price of $1.00 per share and are exercisable immediately. Following the second closing of the 2023 Bridge Offering, the Company received net proceeds of $91,455 after deducting fees.

For the three months ended March 31, 2024 and 2023, interest expense on the 2023 Bridge Offering was $11,219 and $748, respectively.

As of March 31, 2024 and December 31, 2023, there was $45,641 and $34,422, respectively, in interest payable pertaining to these loans.

In connection with the Investor Bridge Notes, the Company recognized a debt discount of $657,206, consisting of the relative fair value of the warrants issued of $588,366 (see Note 8) and issuance costs of $68,840. The fair value of the warrants was as calculated by assumptions used in the Black-Scholes model (Note 9) .The debt discount will be amortized to interest expense over the life of the loan. For

the three months ended March 31, 2024 and

2023, $81,926 and $4,687 was amortized to interest expense, respectively. As of March 31, 2024 and December 31, 2023, $333,563 and $574,201, respectively, remained unamortized.

PISHPOSH, INC. 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Notes payable, net of debt discount, consisted of the following:

	March 31,			December 31,
	2024			2023
Principal:
Promissory note	$	1,325,000		$	1,025,000
OID Notes		1,257,000			913,500
Investor Bridge Notes		750,000			750,000
		3,332,000			2,688,500
Less: Unamortized debt discount		(349,594	)		(415,489	)
Notes payable, net of debt discount	$	2,982,406		$	2,273,011

NOTE 7: CONVERTIBLE NOTES

As of both March 31, 2024 and December 31, 2023, the Company had total convertible promissory notes outstanding of $1,340,135. In April 2024, the maturity date on all notes was extended to June 30, 2024.

Interest expense was $20,372 and $16,448 for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024 and December 31, 2023, interest payable on the convertible notes was $126,320 and $105,948, respectively.

NOTE 8: STOCKHOLDERS’ EQUITY

Preferred Stock

The Company’s Amended Certificate of Incorporation authorizes the Board to establish and to issue from time to time one or more series of preferred stock, par value $0.000001 per share, covering up to an aggregate of 10,000,000 shares of preferred stock. Each series of preferred stock will cover the number of shares and will have the powers, preferences, rights, qualifications, limitations and restrictions determined by the board of directors, which may include, among others, dividend rights, liquidation preferences, voting rights, conversion rights, preemptive rights and redemption rights. As of March 31, 2024 and December 31, 2023, 20,000 shares of preferred stock are designated as Series A preferred stock.

Common Stock

The Company’s Amended Certificate of Incorporation authorizes 100,000,000 shares of common stock, par value $0.000001 per share.

As of both March 31, 2024 and December 31, 2023, there were 1,752.37 shares of preferred stock and 4,939,345 shares of common stock issued and outstanding.

2022 Equity Incentive Plan

The board and stockholders adopted the 2022 Equity Incentive Plan (the “2022 Equity Incentive Plan”) on September 1, 2022 and October 19, 2022, respectively. The 2022 Equity Incentive Plan governs equity awards to employees, directors, officers, consultants, and other eligible participants. Under the 2022 Equity Incentive Plan there are 350,000 shares of common stock reserved for issuance. The types of awards permitted under the 2022 Equity Incentive Plan include nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, and other awards. Each option shall be exercisable at such times and subject to such terms and conditions as the Board may specify. As of March 31, 2024 and December 31, 2023, the Company has not granted any awards under the 2022 Equity Incentive Plan.

PISHPOSH, INC. 

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS 

NOTE 9: WARRANTS

The following is a summary of warrants:

	Warrants		Weighted Average Exercise Price		Intrinsic Value
Outstanding as of December 31, 2023		6,032,008	$	0.68	$	18,518,522
Outstanding as of March 31, 2024		6,032,008	$	0.68	$	18,518,522

Exercisable as of December 31, 2023		840,183	$	1.00	$	2,307,489
Exercisable as of March 31, 2024		840,183	$	1.00	$	2,307,489

NOTE 10: RELATED PARTY TRANSACATIONS

The Company received advances for purchases which were charged on credit cards owned by the previous Managing Member of Pish Posh Baby. As of March 31, 2024 and December 31, 2023, there were net advances of $346,347 and $353,719, outstanding, respectively, which are reflected as accounts payable – related party on the balance sheets.

Refer to Note 6 for detail on related party loans.

NOTE 11: INCOME TAXES

There is no income tax benefit for the losses for the three months ended March 31, 2024 and 2023 because the Company has determined that the realization of the net deferred tax asset is not assured.

There was no change in unrecognized tax benefits during the period ended March 31, 2024 and there was no accrual for uncertain tax positions as of March 31, 2024.

Tax years from 2020 through 2023 remain subject to examination by U.S. federal and state jurisdictions.

NOTE 12: COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company’s leases consist solely of retail showroom and office space in Lakewood, New Jersey which matures in October 2024.

The components of the Company’s lease costs, which are included in general and administrative expenses on the accompanying statement of comprehensive loss for the three months ended March 31, 2024 and 2023, are as follows:

	Three Months Ended
	March 31,
	2024			2023
Operating lease cost	$	12,635		$	13,190
Sublease income		(8,944	)		(8,982	)
Total lease cost	$	3,691		$	4,208

Additional information related to the Company’s lease for the three months ended March 31, 2024 and 2023 is as follows:

	Three Months Ended
	March 31,
	2024		2023
Operating cash flows from operating lease	$	23,970	$	18,198
Remaining lease term - oper a ting lease		0.6 years		1.6 years

PishPosh, Inc. 10-Q