Aterian, Inc. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Aterian, Inc. disclosed its 2023 10-K, detailing prior goodwill impairments and a recent intangible asset impairment related to a strategy shift in its essential oil business.</b>

AI Summary

Aterian, Inc. (ATER) filed a Annual Report (10-K) with the SEC on March 19, 2024. Aterian, Inc. reported its fiscal year 2023 results in a Form 10-K filing. The company previously recorded goodwill impairment charges of $29.0 million and $90.9 million in Q1 and Q3 2022, respectively. An additional goodwill impairment of $0.5 million was recorded for the three months ended December 31, 2022. In March 2023, leadership changes in the essential oil business led to a strategy shift and reduced portfolio offering. This strategy shift resulted in an impairment charge for certain definite-lived trademark intangible assets.

Why It Matters

For investors and stakeholders tracking Aterian, Inc., this filing contains several important signals. The filing highlights significant goodwill impairments in 2022, indicating past overvaluation or adverse market conditions impacting the company's assets. A recent impairment of trademark intangible assets suggests a reassessment of future revenue and profitability expectations for the essential oil segment.

Risk Assessment

Risk Level: high — Aterian, Inc. shows elevated risk based on this filing. The company has recorded substantial goodwill and intangible asset impairments, indicating ongoing challenges in asset valuation and future profitability expectations, particularly in its essential oil business.

Analyst Insight

Investors should closely monitor Aterian's strategy execution and financial performance following the recent impairments and leadership changes.

Key Numbers

• 2023-12-31 — Fiscal Year End (Reporting period)
• 2024-03-19 — Filing Date (Date of submission)
• 500,000,000 — Authorized Shares (Common stock)
• 80,752,290 — Outstanding Shares (Common stock)
• 90,097,372 — Treasury Shares (Common stock)
• 29,000,000 — Goodwill Impairment (Q1 2022) (Consolidated Statement of Operations)
• 90,900,000 — Goodwill Impairment (Q3 2022) (Consolidated Statement of Operations)
• 500,000 — Goodwill Impairment (Q4 2022) (Consolidated Statement of Operations)

Key Players & Entities

• Aterian, Inc. (company) — Filer name
• 20231231 (date) — Fiscal year end
• 20240319 (date) — Filing date
• $29.0 million (dollar_amount) — Goodwill impairment charge in Q1 2022
• $90.9 million (dollar_amount) — Goodwill impairment charge in Q3 2022
• $0.5 million (dollar_amount) — Goodwill impairment for Q4 2022
• March 20, 2023 (date) — Date of leadership changes
• Step and Go (company) — Acquired brand

FAQ

Risk Factors

• Goodwill Impairment [high — financial]: The company has recorded significant goodwill impairment charges in prior periods due to market capitalization falling below net asset book value.
• Intangible Asset Impairment [high — financial]: A strategy shift in the essential oil business led to an impairment charge for trademark intangible assets, indicating potential future revenue and profitability concerns.

Key Financial Figures

• $0.0001 — ch registered Common stock, par value $0.0001 per share ATER The Nasdaq Stock Mar

Filing Documents

• ater20231231_10k.htm (10-K) — 2265KB
• ex_572918.htm (EX-21.1) — 41KB
• ex_572916.htm (EX-23.1) — 2KB
• ex_572917.htm (EX-31.1) — 10KB
• ex_572919.htm (EX-31.2) — 10KB
• ex_572920.htm (EX-32.1) — 9KB
• ex_637683.htm (EX-31.3) — 9KB
• ex_640084.htm (EX-19.1) — 97KB
• ex_640103.htm (EX-97.1) — 28KB
• 0001437749-24-008398.txt (&nbsp;) — 10211KB
• ater-20231231.xsd (EX-101.SCH) — 86KB
• ater-20231231_cal.xml (EX-101.CAL) — 79KB
• ater-20231231_def.xml (EX-101.DEF) — 637KB
• ater-20231231_lab.xml (EX-101.LAB) — 507KB
• ater-20231231_pre.xml (EX-101.PRE) — 673KB
• ater20231231_10k_htm.xml (XML) — 1471KB

Business

Business 2 Item 1A.

Risk Factors

Risk Factors 4 Item 1B. Unresolved Staff Comments 10 Item 1C. Cybersecurity 10 Item 2.

Properties

Properties 10 Item 3.

Legal Proceedings

Legal Proceedings 10 Item 4. Mine Safety Disclosures 10 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 11 Item 6. Reserved 11 Item 7.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 12 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 25 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data F-1 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure F-29 Item 9A.

Controls and Procedures

Controls and Procedures F-29 Item 9B. Other Information F-29 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections F-29 PART III Item 10. Directors, Executive Officers and Corporate Governance F-30 Item 11.

Executive Compensation

Executive Compensation F-32 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters F-35 Item 13. Certain Relationships and Related Transactions, and Director Independence F-37 Item 14. Principal Accounting Fees and Services F-37 PART IV Item 15. Exhibits, Financial Statement Schedules F-38 Item 16 Form 10-K Summary F-38 Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K (this " Annual Report " ) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as " may, " " will, " " should, " " expects, " " plans, " " anticipates, " " could, " " intends, " " target, " " projects, " " contemplates, " " believes, " " estimates, " " predicts, " " potential, " or " continue " or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. We have based the forward-looking statements contained in this Annual Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and results of operations. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section of this Annual Report entitled " Risk Factors " and elsewhere in this Annual Report. Moreover, we operate in a highly competitive, dynamic and challenging environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an

Business

Item 1. Business. See the sections contained within this Annual Report entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" for further information. About Aterian Aterian, Inc. ("Aterian", the "Company", "we", "us", and "our") is a technology-enabled consumer products company that predominantly operates through online retail channels such as Amazon and Walmart. The Company operates its owned brands, which were either incubated or purchased, selling products in multiple categories, including home and kitchen appliances, kitchenware, air quality appliances, health and wellness products and essential oils. Our primary brands include Squatty Potty; hOmeLabs; Mueller; Pursteam; Healing Solutions; and Photo Paper Direct. We generate revenue primarily through the online sales of our various consumer products with substantially all of our sales being made through the Amazon U.S. marketplace. Products The Company sells a wide-range of products across multiple categories, including home and kitchen appliances, kitchenware, cooling and air quality appliances such as dehumidifiers, health and beauty products, essential oils and more. These products are sold under the Company's owned brands, which were either incubated or acquired. Our primary brands include Squatty Potty; hOmeLabs; Mueller; Pursteam; Healing Solutions; and Photo Paper Direct "(PPD)". We generate revenue primarily through the online sales of our various consumer products with substantially all of our sales being made through the Amazon U.S. marketplace. While we pursue growth from our existing product portfolio and from new product launches, we also intend to pursue growth through strategic acquisitions of brands that we believe will integrate well with our business. Intellectual Property and Technology We rely primarily on a combination of trade secrets, trademarks, employee and third-party nondisclosure agreements and licensing arrange

Risk Factors

Item 1A. Risk Factors. We operate in a dynamic and rapidly changing environment that involves numerous risks and uncertainties. Certain factors may have a material adverse effect on our business, financial condition and results of operations, and you should carefully consider them. Accordingly, in evaluating our business, we encourage you to consider the following discussion of risk factors, in its entirety, in addition to other information contained in this Annual Report on Form 10-K and our other public filings with the SEC. Other events that we do not currently anticipate or that we currently deem immaterial may also affect our results of operations and financial condition. Risks Relating to Our Business We have historically operated at a loss and we may never achieve or sustain profitability or positive cash flows. Further we and our independent registered public accounting firm have expressed substantial doubt about our ability to continue as a going concern. We have experienced significant after tax losses for the years-ended December 31, 2022 and 2023, respectively. In addition, our costs have increased historically and may increase further in future periods, which could negatively affect our future operating results and ability to achieve and sustain profitability. For example, we may need to continue to expend substantial financial and other resources on the ideation, sourcing and development of products, our technology infrastructure, research and development, sales and marketing, international expansion and general administration, including expenses related to being a public company. We have had to rely on a combination of cash flow from operations and new capital in order to sustain our business. Despite the fact that we have raised significant capital, there can be no assurance that we will ever achieve profitability. Even if we do, there can be no assurance that we will be able to maintain or increase profitability on a quarterly or annual basis

View Full Filing

View this 10-K filing on SEC EDGAR