PishPosh, Inc.

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

June 30, 2023

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 August

, 2023, 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		1

PART I. FINANCIAL INFORMATION		3

ITEM 1.	Condensed Financial Statements – (Unaudited)	3

	Condensed Balance Sheets as of June 30,2023 and December 31, 2022	3

	Condensed Statements of Comprehensive Loss for the Three and Six Months ended June 30, 2023 and 2022	4

	Condensed Statements of Stockholders’ Deficit for the Three and Six Months ended June 30, 2023 and 2022	5

	Condensed Statements of Cash Flows for the six months ended June 30,2023 and 2022	6

	Notes to Condensed Financial Statements	7

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

ITEM 3	Quantitative and Qualitative Disclosures about Market Risk	29

ITEM 4.	Controls and Procedures	30

PART II. OTHER INFORMATION		31

ITEM 1.	Legal Proceedings	31

ITEM 1A.	Risk Factors	31

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

ITEM 3.	Defaults upon Senior Securities	32

ITEM 4.	Mine Safety Disclosures	32

ITEM 5.	Other Information	32

ITEM 6.	Exhibits	33

SIGNATURES		34

FORWARD‐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 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 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.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PISHPOSH, INC.

CONDENSED BALANCE SHEETS

(UNAUDITED)

	June 30,			December 31,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	295,564		$	218,605
Accounts receivable		52,611			39,511
Inventory, net		3,884,833			4,534,877
Prepaid expenses and other current assets		191,788			346,405
Deferred offering costs		1,519,410			1,183,350
Total current assets		5,944,206			6,322,748
Property and equipment, net		-			2,722
Intangible assets, net		54,806			73,075
Deposits		10,155			10,155
Right of use asset		86,535			114,796
Total assets	$	6,095,702		$	6,523,496

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	2,918,052		$	2,329,669
Accounts payable, related party		652,539			720,954
Accrued expenses and other current liabilities		599,594			643,630
Loan payable, current		2,089,839			1,843,025
Note payable, net of debt discount		746,359			-
Convertible note payable		240,135			240,135
Convertible note payable, related party		1,100,000			950,000
Right of use liability, current portion		61,147			57,809
Total current liabilities		8,407,665			6,785,222
Right of use liability		27,233			58,741
Loan payable		-			1,025,000
Total liabilities		8,434,898			7,868,963

Commitments and contingencies (Note 11)

Stockholders' deficit:
Preferred stock, $0.000001 par value, 10,000,000 shares authorized, 1,752 shares issued and outstanding as of June 30, 2023 and December 31, 2022		-			-
Common stock, $0.000001 par value, 100,000,000 shares authorized, 4,939,345 shares issued and outstanding as of June 30, 2023 and December 31, 2022		5			5
Additional paid-in capital		13,130,058			5,239,194
Accumulated deficit		(15,469,259	)		(6,584,666	)
Total stockholders' deficit		(2,339,196	)		(1,345,467	)
Total liabilities and stockholders' deficit	$	6,095,702		$	6,523,496

See the accompanying notes to the unaudited condensed financial statements.

PISHPOSH, INC.

CONDENSED STATEMENTS OF COMPREHENVIE LOSS

(UNAUDITED)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Net revenues	$	4,431,702		$	6,084,186		$	9,007,593		$	11,235,447
Cost of net revenues		3,001,251			3,857,236			6,030,763			7,264,123
Gross profit		1,430,451			2,226,950			2,976,830			3,971,324

Operating expenses:
General and administrative		6,395,635			1,540,404			7,281,270			4,244,168
Research and development		30,000			66,022			60,000			66,022
Sales and marketing		1,236,998			1,782,166			2,547,363			3,269,295
Total operating expenses		7,662,633			3,388,592			9,888,633			7,579,485

Loss from operations		(6,232,182	)		(1,161,642	)		(6,911,803	)		(3,608,161	)

Other income (expense):
Other income		-			-			-			159,159
Interest expense		(160,468	)		(42,820	)		(278,940	)		(60,813	)
Loss on extinguishment of debt		(1,693,850	)		-			(1,693,850	)		-
Total other income (expense)		(1,854,318	)		(42,820	)		(1,972,790	)		98,346

Provision for income taxes		-			-			-			-
Net loss	$	(8,086,500	)	$	(1,204,462	)	$	(8,884,593	)	$	(3,509,815	)

Weighted average common shares outstanding – basic and diluted		4,939,345			2,432,901			4,939,345			2,432,901
Net loss per common share – basic and diluted	$	(1.64	)	$	(0.50	)	$	(1.80	)	$	(1.44	)

PISHPOSH, INC.

CONDENSED 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, 2021		80	$	-		1,479,766	$	2	$	431,032		$	(1,443,417	)	$	(1,012,383	)
Issuance of shares of common and preferred stock for services		150		-		1,291,922		1		1,441,921			-			1,441,922
Conversion of notes and payables and issuance of common and preferred shares for proceeds		2,270		-		731,690		1		3,001,666			-			3,001,667
Convertible note payable and warrants issued as offering costs		-		-		-		-		(240,135	)		-			(240,135	)
Net loss		-		-		-		-		-			(2,305,353	)		(2,305,353	)
Balances at March 31, 2022		2,500		-		3,503,378		4		4,634,484			(3,748,770	)		885,718
Net loss		-		-		-		-		-			(1,204,462	)		(1,204,462	)
Balances at June 30, 2022		2,500	$	-		3,503,378	$	4	$	4,634,484		$	(4,953,232	)	$	(318,744	)

Balances at December 31, 2022		1,752	$	-		4,939,345	$	5	$	5,239,194		$	(6,584,666	)	$	(1,345,467	)
Warrants issued as debt discount		-		-		-		-		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	)
Warrants issued as debt discount		-		-		-		-		78,458			-			78,458
Warrants issued in connection with extinguishment of debt		-		-		-		-		1,685,166			-			1,685,166
Warrants issued for services		-		-		-		-		5,617,331			-			5,617,331
Net loss		-		-		-		-		-			(8,086,500	)		(8,086,500	)
Balances at June 30, 2023		1,752	$	-		4,939,345	$	5	$	13,130,058		$	(15,469,259	)	$	(2,339,196	)

See the accompanying notes to the unaudited condensed financial statements.

PISHPOSH, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	Six Months Ended
	June 30,
	2023			2022
Cash flows from operating activities:
Net loss	$	(8,884,593	)	$	(3,509,815	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		20,991			21,486
Warrants issued for services		5,617,331			-
Amortization of debt discount		94,881			-
Loss on extinguishment of debt		1,693,850			-
Change in inventory allowance		(31,582	)		41,440
Amortization of right of use asset		28,261			1,034
Issuance of shares of common and preferred stock for services		-			1,441,922
Forgiveness of Payroll Protection Program loan payable		-			(142,597	)
Changes in operating assets and liabilities:
Accounts receivable		(13,100	)		9,260
Inventory		681,626			(1,967,686	)
Prepaid expenses and other current assets		154,617			(54,616	)
Deferred offering costs		(336,060	)		(397,954	)
Accounts payable		588,384			308,933
Accounts payable, related party		(68,415	)		(344,865	)
Accrued expenses and other current liabilities		(44,036	)		62,450
Accrued expenses, related party		-			1,000,000
Lease liability		(28,170	)		-
Net cash used in operating activities		(526,015	)		(3,531,008	)
Cash flows from investing activities:
Website development costs		-			(30,400	)
Net cash used in investing activities		-			(30,400	)
Cash flows from financing activities:
Proceeds from loan and note payable		1,431,160			3,202,000
Repayments of loan payable		(978,186	)		(1,573,730	)
Proceeds from loan and note payable, related party		665,000			-
Repayments of loan payable, related party		(515,000	)		-
Proceeds from issuance of preferred and common stock in Subsequent Closing		-			1,689,980
Net cash provided by financing activities		602,974			3,318,250
Net change in cash and cash equivalents		76,959			(243,158	)
Cash and cash equivalents at beginning of period		218,605			773,880
Cash and cash equivalents at end of period	$	295,564		$	530,722

Supplemental disclosure of cash flow information:
Cash paid for interest	$	124,432		$	70,071

Supplemental disclosure of non-cash investing and financing activities:
Warrants issued as debt discount	$	588,366		$	-
Conversion of accounts payable, related party into equity	$	-		$	250,000
Conversion of notes payable into equity	$	-		$	1,061,687
Convertible note payable and warrants issued as offering costs	$	-		$	240,135
Effect of the Merger on members' capital and additional paid-in capital	$	-		$	431,032
Lease liability arising for obtaining right of use asset	$	-		$	168,113

See the accompanying notes to the unaudited condensed financial statements.

PISHPOSH, INC.

NOTES 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 Merger is being treated as a reverse acquisition and recapitalization effected by a unit-share exchange for financial accounting and reporting purposes. Pish Posh is treated as the accounting acquirer as its members controlled the Company after the conversion of membership interests into the Company’s common shares, even though the Company was the legal acquirer and surviving corporation. As a result, the assets and liabilities and the historical operations of Pish Posh are reflected in the financial statements of the Company. Since the Company had no operations upon the Merger, the transaction was treated as a recapitalization for accounting purposes and no goodwill or other intangible assets were recorded. The accompanying financial statements have been presented to retroactively present the effect of the Merger, including common and preferred stock and additional paid-in capital.

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.

On March 8, 2023, the Company was advised by Boustead Securities, LLC (“Boustead”), the Company’s lead underwriter that Boustead was postponing the Company’s underwritten initial public offering that priced on March 7, 2023. The Company’s shares of Common Stock were expected to begin trading on Nasdaq Capital Market on March 8, 2023, under the symbol “BABY.” The Company’s management intends to continue to focus on

pursuing

its initial public offering at a later date.

NOTE 2: GOING CONCERN

The Company has evaluated whether there are certain conditions and events, considered in the aggregate,

which

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 $8,884,593 and $3,509,815 for the six months ended June 30, 2023 and 2022, respectively, and has negative cash flows from operations for the six 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.

PISHPOSH, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

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.

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 six months ended June 30, 2023 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, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2023.

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, fair value of warrants, revenue recognition, and e-commerce accounting considerations. 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.

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 June 30, 2023 and December 31, 2022 all of the Company's cash and cash equivalents were held at one accredited financial institution.

PISHPOSH, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Concentrations

The Company is dependent on third-party vendors for its inventory purchases. During the six months ended June 30, 2023 and 2022, three and two vendors accounted for 44% and 55% 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 six 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

approximates

fair value based on rates and other terms currently available to the Company for similar debt instruments.

Accounts Receivable

Accounts receivable are derived from products delivered to customers and are stated at their net realizable value. Each month, the Company reviews its receivables on a customer-by-customer basis and evaluates whether an allowance for doubtful accounts is necessary based on any known or perceived collection issues. Any balances that are eventually deemed uncollectible are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of June 30, 2023 and December 31, 2022, the Company determined that no allowance for doubtful accounts 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 June 30, 2023 and December 31, 2022, there was a reserve for obsolescence of $513,851 and $482,269, respectively.

Deposits for future inventory purchases are included in prepaid expenses and other current

assets. As of June 30, 2023 and December 31, 2022, prepaid expenses and other current assets included $179,335 and $330,906, respectively, in inventory deposits.

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.

PISHPOSH, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

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.

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 six months ended June 30, 2023 or 2022.

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.

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

include

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 June 30, 2023 and 2022, shipping and handling costs were $332,094 and $596,323, respectively

During the six months ended June 30, 2023 and 2022, shipping and handling costs were $738,791 and $1,121,745, 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 $472,818 and $475,396 for the three months ended June 30, 2023 and 2022, respectively. Advertising costs were $873,768 and $852,382 for the six months ended June 30, 2023 and 2022, 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.

PISHPOSH, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

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 June 30, 2023 and December 31, 2022, the Company had capitalized $1,519,410 and $1,183,350 in deferred offering costs, respectively. Deferred offering costs

include

professional fees incurred including legal, accounting, underwriting and advisory in connection with the Company’s anticipated equity offering.

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 June 30, 2023, diluted net loss per share is the same as basic net loss per share.

Potentially dilutive items outstanding as of June 30, 2023 and 2022 are as follows:

PISHPOSH, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

	June 30,
	2023		2022
Convertible note payable		240,135		240,135
Convertible note payable, related party		304,126		-
Preferred stock		1,752,371		2,500,000
Common stock warrants		6,032,008		3,241,825
Total potentially dilutive securities		8,328,640		5,981,960

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 June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard establishes an impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses, which is intended to result in a timelier recognition of losses. Under the CECL model, entities will estimate credit losses over the entire contractual term of the instrument (considering estimated prepayments, but not expected extensions or modifications) from the date of initial recognition of the financial instrument. Measurement of expected credit losses

to be based on relevant forecasts that affect collectability. The scope of financial assets within the CECL methodology is broad and includes trade receivables from certain revenue transactions and certain off-balance sheet credit exposures. Different components of the guidance require modified retrospective or prospective adoption.

In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses. ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of the credit losses standard. Instead, entities would need to apply other U.S. GAAP, namely Topic 842 (Leases), to account for changes in the collectability assessment for operating leases. Other than operating lease receivables, Partnership trade receivables include receivables from finance leases and equipment sales. Under Topic 606 (Revenue from Contracts with Customers), revenue is recognized when, among other criteria, it is probable that the entity will collect the consideration to which it is entitled for goods or services transferred to a customer. At the point that finance lease receivables are recorded, they become subject to the CECL model and estimates of expected credit losses over their contractual life will be required to be recorded at inception based on historical information, current conditions, and reasonable and supportable forecasts. Trade receivables derived from equipment sales are of short duration and there is not a material difference between incurred losses and expected losses.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which amends and clarifies several provisions of Topic 326. In May 2019, the FASB issued ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief, which amends Topic 326 to allow the fair value option to be elected for certain financial instruments upon adoption. ASU 2019-10 extended the effective date of ASU 2016-13 until December 15, 2022. The Company adopted this new guidance, including the

subsequent updates to Topic 326, on January 1, 2023 and the adoption did not have a material impact on the Company’s financial statements and related disclosures.

PISHPOSH, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the

accompanying

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:

	June 30,			December 31,
	2023			2022
Website development costs	$	127,750		$	127,750
Less: Accumulated amortization		(72,944	)		(54,675	)
Intangible assets, net	$	54,806		$	73,075

NOTE 5: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

	June 30,		December 31,
	2023		2022
Accrued personnel and other expenses	$	114,924	$	78,343
Inventory related purchases		-		80,230
Gift card liability		202,453		202,453
Allowance for sales returns		57,721		102,887
Sales tax payable		18,829		25,661
Interest		101,960		50,347
Security deposit payable		3,708		3,708
Advances from third parties		100,000		100,000
Accrued expenses and other current liabilities	$	599,594	$	643,630

NOTE 6: LOAN AND NOTES PAYABLE

Merchant Advances

totaling

$200,000 and $3,202,000 respectively, and made repayments

totaling

$978,186 and $1,573,730, respectively. As of June 30, 2023 and December 31, 2022, the Company had $1,064,839 and $1,843,025, respectively in outstanding principal pertaining to these merchant loans. Interest expense for the loans

totaled

$85,551 and $

46,621

for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023 and December 31, 2022, there was $9,362 and $17,376, 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 June 30, 2023, the Company fully repaid this loan.

PISHPOSH, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Loan Payable

As of June 30, 2023 and December 31, 2022, the Company ha

s a

$1,025,000

loan

outstanding

pursuant

to a promissory note

issued

in 2021. In December 2022, the Company extended the maturity date to March 31, 2024. Interest expense for the six months ended June 30, 2023 and 2022 were $0 and $0, respectively.

Notes Payable

OID Notes

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.

In April 2023, 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 30, 2023. As of the issuance date of these financial statements, the OID notes are technically in default.

The fair value of the warrants was $748,963 as calculated by assumptions used in the Black-Scholes model, which was recorded to additional paid-in capital. The Company evaluated the

Promissory Note Extension Agreements under ASC 470-50 and determined they meet the criteria as a debt extinguishment. The fair value of the warrants, and the unamortized debt discount of the old OID notes of $8,684, totaled $757,647, which was recorded as a loss on extinguishment of debt on the statements of comprehensive loss.

During the six months ended June 30, 2023, interest expense on the OID Notes was $14,809, all of which was accrued and unpaid as of June 30, 2023.

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. 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

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. 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. In connection with the second closing of the 2023 Bridge Offering, the Company paid Boustead $8,000 in cash

issued the placement agent 5-year warrants to purchase 7,000 shares of common stock at an exercise price of $1.00 per share. Following the second closing of the 2023 Bridge Offering, the Company received net proceeds of $91,455 after deducting fees.

During the six months ended June 30, 2023, interest expense on the 2023 Bridge Offering was $11,737, all of which was accrued and unpaid as of June 30, 2023.

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 9) and issuance costs of $68,840. The debt discount will be amortized to interest expense over the life of the loan. During the three and six months ended June 30, 2023, $76,065 and $71,378 was amortized to interest expense, respectively. As of June 30, 2023, $581,141 remained unamortized.

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

	June 30,			December 31,
	2023			2022
Principal	$	1,327,500		$	-
Less: Unamortized debt discount		(581,141	)		-
	$	746,359		$	-

PISHPOSH, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 7: CONVERTIBLE NOTES

In March 2022, the Company issued a convertible note to an entity that acted as placement agent for the financings. The principal of the note is $240,135, which bears interest at 8% per annum and matured on March 1, 2023. On March 1, 2023, the maturity date was extended to September 1, 2023. The note is convertible into shares of common stock and/or Series A preferred and warrants on a one-for-one basis. Interest expense for the six months ended June 30, 2023 and 2022 pertaining to this note was

$9,526 and $6,390, respectively. As of June 30, 2023 and December 31, 2022, interest payable was $25,579 and $16,053, respectively.

On August 23, 2022, the Company issued a convertible promissory note to a related party pursuant to services performed in the principal amount of $950,000. The note bears interest at 5% per annum, with principal and interest payments payable monthly, and matures on May 15, 2023. At any time, the investor may convert the outstanding principal amount and accrued but unpaid interest into shares of common stock at a price equal to 110% of the price at which the Company consummates its initial public offering. Pursuant to the terms of the note, the investor may exceed its beneficial ownership limitation upon conversion into shares. Interest expense for six months ended June 30, 2023 was $23,555 and interest payable as of June 30, 2023 and December 31, 2022 was $40,473 and $16,918, respectively.

The fair value of the warrants was $936,203 as calculated by assumptions used in the Black-Scholes model, which was recorded to additional paid-in capital. The Company evaluated the

Promissory Note Extension Agreement under ASC 470-50 and determined it meets the criteria as a debt extinguishment. The fair value of the warrants was recorded as a loss on extinguishment of debt on the statements of comprehensive loss.

In June 2023, the Company received $150,000 in proceeds from a related party pursuant to a convertible promissory note. As of the issuance date of these financial statements, the terms of the convertible promissory note are being finalized, and are expected to be same as the August 2022 terms noted above.

NOTE 8: STOCKHOLDERS’ EQUITY

Merger / Recapitalization to PishPosh, Inc.

Prior to the Merger, Pish Posh‘s membership interests were represented by Units. As of December 31, 2021, Pish Posh had 1,000,000 units issued and outstanding, comprising $431,034 in contributed capital.

In February 2022, the Company cancelled 580,000 membership units in order to effectuate the Merger. Upon the Merger Agreement, the remaining 420,000 units 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. As a result of the Merger, the units were ultimately converted into 580,371 shares of common stock and 80 shares of Series A preferred stock. Furthermore, the Company reissued 899,305 shares of common stock pursuant to the initial cancellation agreement of the 580,000 membership units. As of a result of the Merger, t

he $431,034 in members’

capital was converted into preferred and common stock and additional paid-in capital.

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 June 30, 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 June 30, 2023 and December 31, 2022, there were 1,752.37 shares of preferred stock and 4,939,345 shares of common stock issued and outstanding.

PISHPOSH, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 9: WARRANTS

The following is a summary of warrant activity for the six months ended June 30, 2023:

	Warrants		Weighted Average Exercise Price		Intrinsic Value
Outstanding as of December 31, 2022		3,279,508	$	1.00	$	-
Granted in connection with New Notes		750,000		1.00
Placement agent consideration for New Notes		52,500		1.00
Granted in connection with Notes Extension		450,000		0.01
Issued for services		1,500,000		0.01
Outstanding as of June 30, 2023		6,032,008	$	0.68	$	18,518,522

Exercisable as of June 30, 2023		840,183	$	1.00	$	2,307,489

In connection with the first and second closing of the 2023 Bridge Offering, the Company granted 750,000 Investor Bridge Warrants and 52,500 Boustead Bridge Warrants. Both the Investor Bridge Warrants and the Boustead Bridge Warrants have an exercise price of

$1.00 per share and are exercisable immediately. In the event that a holder of an Investor Bridge Warrant has not elected to exercise such Investor Bridge Warrant prior to the earlier of the Investor Bridge Notes Maturity Date or the consummation of an initial public offering of the Company’s common stock and listing or trading of its common stock on a trading market or national securities exchange ("IPO"), such Investor Bridge Warrant shall automatically be deemed to have been exercised upon the consummation of the IPO and, at such time, as payment of the aggregate exercise price under such Investor Bridge Warrant, the principal of such holder’s corresponding Investor Bridge Note will be deemed repaid in full, and such deemed repayment will be considered payment in full of the aggregate exercise price of the Investor Bridge Warrant, pursuant to the terms of such Investor Bridge Warrant. The relative fair value of the warrants was

$588,366, which was included as a debt discount and will be amortized to interest expense over the life of the Investor Bridge Notes (see Note 6).

In April 2023, the Company entered into two side letter agreements with stockholders pursuant to which, in consideration for advisory services and/or time, effort and non-accountable expenses expended by such stockholders in connection with the Company, the Company issued such stockholders warrants to purchase an aggregate of 1,500,000 of shares of common stock at an exercise price equal to $0.01 per share. The Advisory Warrants are exercisable at any time after the date that the Company’s shares of common stock have been approved for and are listed for trading on certain trading markets, and at any time up to the date that is five years after their original issuance. During the six months ended June 30, 2023, the Company recognized a fair value of $5,617,331 in additional paid-in capital as stock compensation expense pertaining to fair value of these warrants.

In April 2023, the Company issued an aggregate of 450,000 Debt Extension Warrants (see Note 6 and 7). The Debt Extension Warrants are exercisable at any time after the date that the Company’s shares of common stock have been approved for and are listed for trading on certain trading markets, and at any time up to the date that is five years after their original issuance.

The aggregate fair value of the Debt Extension Warrants was $1,685,155, which was included in additional paid-in capital.

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of warrants granted during the six months ended June 30, 2023:

Risk-free interest rate	3.68	%
Expected term (in years)	4.18
Expected volatility	161.0	%
Expected dividend yield	0	%
Estimate fair value of common stock	3.75

The estimated fair value of common stock was based on the anticipated price of the Company’s common stock in its planned equity offering.

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 June 30, 2023 and December 31, 2022, there were net advances of

$652,539 and $720,954, outstanding,

respectively, which are reflected as accounts payable – related party on the balance sheets.

Refer to Note 6 and 7 for detail on related party loans.

PISHPOSH, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 11: INCOME TAXES

There is no income tax benefit for the losses for the six months ended June 30, 2023 and 2022 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 June 30, 2023 and there was no accrual for uncertain tax positions as of June 30, 2023.

Tax years from 2019 through 2022 remain subject to examination by U.S. federal and state jurisdictions.

NOTE 12: COMMITMENTS AND CONTINGENCIES

Lease Commitments

In November 2019, the Company entered into a five-year lease agreement for retail showroom and office space in Lakewood, New Jersey. The lease matures in October 2024. Monthly base rent was $5,394 as of June 30, 2023 and escalates each year of the lease term.

Rent expense was $16,985 and $16,450 for the

three

months ended June 30, 2023 and 2022, respectively.

Rent

expense was $30,176 and $29,489 for the

six months ended June 30, 2023 and 2022, respectively.

NOTE 13: SUBSEQUENT EVENTS

From July 1, 2023 through August

, 2023, the Company has made merchant advance repayments of approximately $313,000.

PISHPOSH, INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related notes for the year ended December 31, 2022 included in Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC on March 28, 2023.

Some of the statements contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, constitute 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. We have based these forward-looking statements on our current expectations and projections about future events. The following information and any forward-looking statements should be considered in light of factors discussed elsewhere in this Quarterly Report on Form 10-Q, particularly including those risks identified in Part II-Item 1A “Risk Factors” and our other filings with the SEC.

Our actual results and timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report on Form 10-Q. Statements made herein are as of the date of the filing of this Form 10-Q with the SEC and should not be relied upon as of any subsequent date. Even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report on Form 10-Q, they may not be predictive of results or developments in future periods. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

Overview of Operations

We are primarily a baby gear retailer based in Lakewood, New Jersey. We showcase and sell our products through our showroom and our website,

www.pishposhbaby.com

, third party marketplaces like Amazon.com and our boutique (on site). We also showcase and sell our baby gear products directly to consumers in our retail showroom in Lakewood, New Jersey. We focus on providing our consumers with high value content and education on brands of baby gear we believe to be of high quality. We have a team of Mom reps to assist consumers in our showroom, online and over the telephone. Our Mom reps are educated consumer advocates who we believe offer real value by helping guide customers, especially new moms to be, who may be very overwhelmed by the pregnancy experience, in a non-judgmental, friendly, and professional manner.

Although approximately 85% of our current sales are from strollers, stroller accessories and car seats, we also offer a variety of products including baby carriers, diaper bags, feeding and safety accessories and bouncers. We do not have our own fulfilment operations. We outsource our order fulfilment operations to a 35,000 square foot warehouse fulfilment center which we believe improves customer service and shortens the delivery time compared with those e-commerce retailers that do not hold any inventory. Outsourcing also lowers shipping costs as compared to drop shipping. We offer next day delivery via FedEx, UPS & USPS in the New York Tri-State area and free shipping on orders over $75. We currently maintain approximately $4.5 million of inventory, consisting of strollers, car seats and highchairs, with a 60 – 90-day turnover. With respect to items of which we sell less, we take customer orders before we purchase inventory from our vendors and then drop ship to the customer directly from the manufacturer thereby reducing our inventory risk on such items.

According to Market Watch, new mothers represent $16 billion in combined consumer purchasing power. We focus on offering baby gear for the mid to higher income demographics, specifically those with annual income of $75,000 and more. Currently, our average order is $200 – $300. However, since we believe that the average spending by expectant parents is around $4,000, we hope to be able to generate additional sales by offering additional products.

Our strategy is built upon:

Sales growth of approximately 17% over the last three years without any new investment dollars, demonstrating ability to grow despite a challenging retail and macro environment.

From 2022 vs. 2021, PishPosh has ramped sales by approximately 65%.

The Company drives engagement using celebrity micro influencers via social media coupled with extensive data-collection and analytic capabilities to provide a personalized shopping experience that anticipates customer preferences and results in repeat purchases over long periods of time.

PishPosh is a valued partner to its vendors because of its large and highly engaged consumer audience, providing significant brand exposure and ongoing revenue opportunities.

The Company has recently integrated a highly successful procurement and manufacturing team and intends to begin leveraging its recognized name by producing PishPosh-branded product lines to yield higher margins.

With additional investment to allow further scaling, the combination of its unique customer base, vendor relationships, efficient fulfilment infrastructure, and the ability to leverage its own brand for new products will result in significant competitive advantages and sustainably higher gross sales and net margins.

Our challenge is to ensure that potential customers do not use our content, education, and advice and purchase elsewhere. We currently intend to purchase, from time to time, end of season inventory to offer lower prices to help with customer acquisition. We also intend to widen our product line to furniture and nursery (products such as bedding and linen) in an effort to reach a broader range of consumers and to have a larger order value and better lifetime value per consumer. We intend to increase our Mom reps to include a wider range of persons in order to communicate with and relate to varied demographics. We believe that our Mom reps not only help increase our customer base but also help us compete with the Big Box stores and other online retailers. The salespeople in the Big Box stores do not necessarily consist of educated parents as our Mom reps. Online e-commerce retailers cannot provide the personal expertise that our Mom reps offer our potential customers.

Another major challenge of ours is that we are subject to the terms and conditions imposed on us by our vendors. We do not have any contracts or binding agreements to purchase inventory. Management works diligently to maintain good relationships with our vendors.

Key Factors Affecting our Performance

As a result of a number of factors, our historical results of operations may not be comparable to our results of operations in future periods, and our results of operations may not be directly comparable from period to period. Set forth below is a brief discussion of the key factors impacting our results of operations.

Known Trends and Uncertainties

Inflation

Prices of certain commodity products, including raw materials, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market speculation, government regulations, trade restrictions and tariffs. Increasing prices in the component materials for the goods we sell may impact the availability and the price of the products, as vendors search for alternatives to existing materials and increase the prices they charge for the goods. Also, cost base reflects significant elements for freight, including fuel, which has significantly increased due to the effects of the coronavirus (COVID-19) pandemic and Russia’s initiation of military action against Ukraine. Rapid and significant changes in commodity prices such as fuel and plastic may increase the price at which we purchase goods that we sell from our vendors, and as a result, if we are unable to pass the increased costs of raw materials on to our customers, such increased costs may negatively affect our profit margins. We have experienced an increase in the cost of products from suppliers as well as an increase in shipping costs due to the increase in gas prices. While product cost increases have been passed through to our customers through product price increases, the increase in shipping costs has been absorbed by the Company, resulting in nominal impact to our profit margins. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs by increasing prices for our products.

Interest Rate

Fluctuations in interest rates impact on the value of investments and financing activities, giving rise to interest rate risk. The debt of the Company is comprised of different instruments, which bear interest at either fixed or floating interest rates. The ratio of fixed and floating rate instruments in the loan portfolio is monitored and managed. All of our notes payable and capital lease obligations are fixed rate instruments and are not subject to fluctuations in interest rates. A majority of the interest rates on our borrowings compare favorably with those rates available in the market.

The Company policy with regard to financial assets, is to invest cash at floating rates of interest and to maintain cash reserves in short-term investments in order to maintain liquidity, while also achieving a satisfactory return for shareholders.

The impact of recent interest rate increases has increased interest incurred on our merchant advances and credit transactions, however the impact has not been material to our operations or financial performance. Increasing interest rates may affect the Company’s financing activities, which could make it more difficult for the Company to secure inventory on a timely basis and adversely impact the Company’s ability to manage its accounts payable with suppliers.

Geopolitical Conditions

Our operations could be disrupted by geopolitical conditions, trade disputes, international boycotts and sanctions, political and social instability, acts of war, terrorist activity or other similar events. From time to time, we could have a large number of customers located in a particular geographic region. Decreased demand from a discrete event impacting a region in which we have a concentrated exposure could negatively impact our results of operations.

Recently, Russia initiated significant military action against Ukraine. In response, the U.S. and certain other countries imposed significant sanctions and export controls against Russia, Belarus and certain individuals and entities connected to Russian or Belarusian political, business, and financial organizations, and the U.S. and certain other countries could impose further sanctions, trade restrictions, and other retaliatory actions should the conflict continue or worsen. It is not possible to predict the broader consequences of the conflict, including related geopolitical tensions, and the measures and retaliatory actions taken by the U.S. and other countries in respect thereof as well as any counter measures or retaliatory actions by Russia or Belarus in response, including, for example, potential cyberattacks or the disruption of energy exports, is likely to cause regional instability, geopolitical shifts, and could materially adversely affect global trade, currency exchange rates, regional economies and the global economy. The situation remains uncertain, and while it is difficult to predict the impact of any of the foregoing, the conflict and actions taken in response to the conflict could increase our costs, disrupt our supply chain, reduce our sales and earnings, impair our ability to raise additional capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and results of operations.

Seasonality

Since the demand for the category of products that we sell is not related to any particular season, and no seasonal pattern exists with respect to pregnancies, our business rarely suffers a seasonal impact.

Components of Our Results of Operations

Net revenues

We sell our products through our showroom and our website, as well as third party marketplaces like Amazon.com and our boutique (on site). We also showcase and sell our baby gear products directly to consumers in our retail showroom in Lakewood, New Jersey.

Cost of net revenues and Gross profit and margin

Our cost of net revenue includes the direct cost of purchased merchandise, inventory shrinkage, inventory adjustments due to obsolescence including excess and slow-moving inventory and lower of cost and net realizable reserves. Cost of net revenues also includes duties and inbound freight.

Our gross profit and margin is primarily driven by fluctuations in our product costs for purchased inventory.

General and Administrative Expenses

General and administrative expenses consist primarily of all payroll and payroll-related expenses, professional fees, insurance, software costs, merchant processing fees and expenses related to our operations at our headquarters, including warehouse costs, including utilities, depreciation and amortization, and other costs related to the administration of our business.

Following the completion of our initial public offering, we expect to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC and higher expenses for insurance, investor relations and professional services. We expect these costs will increase our operating costs.

Sales and Marketing Expenses

Sales and marketing expenses include advertising and marketing costs, including print, email marketing, digital and social media costs, public relations costs, as well as fulfilment charges, outbound shipping to customers, and Amazon commissions.

Interest Expense

Interest expense is incurred on the Company’s various loans and merchant advances.

Results of Operations

Summary of Results of Operations for the three months ended June 30, 2023 and 2022

The following table presents our results of operations for the three months ended June 30, 2023 and 2022:

	Three Months Ended
	June 30,
	2023			2022
Net revenues	$	4,431,702		$	6,084,186
Cost of net revenues		3,001,251			3,857,236
Gross profit		1,430,451			2,226,950
General and administrative		6,395,635			1,540,404
Research and development		30,000			66,022
Sales and marketing		1,236,998			1,782,166
Loss from operations		(6,232,182	)		(1,161,642	)
Other income (expense)		(1,854,318	)		(42,820	)
Net loss	$	(8,086,500	)	$	(1,204,462	)

Net revenues

Net revenue was $4.4 million for the three months ended June 30, 2023, as compared to $6.1 million for the three months ended June 30, 2022, a decrease of $1.7 million. Due to the delayed public offering in March 2023, the Company was unable to acquire desired inventory which caused revenue decreases. The delayed offering also caused the Company to delay a launch of its new product due to less marketing spend surrounding the product.

Cost of net revenues and Gross profit and margin

Cost of net revenues was $3.0 million for the three months ended June 30, 2023 as compared to $3.9 million for the comparable three months ended June 30, 2022, a decrease of $0.9 million. The decrease was primarily attributable to lower revenues in 2023.

Our gross profit for the three months ended June 30, 2023 was $1.4 million and $2.2 million for the three months ended June 30, 2022, and our gross margin was 32.3% and 36.6% for the three months ended June 30, 2023 and 2022.

General and Administrative Expenses

General and administrative expenses were $6.4 million for the three months ended June 30, 2023 as compared to $1.5 million three months ended June 30, 2022, a increase of $4.9 million.

The increase was primarily due to stock-based compensation of $5.6 million in 2023, partially offset by cost-cutting measures initiated in 2023 as compared to 2022.

Research and Development

Research and development expenses were $30,000 and $66,022 in the three months ended June 30, 2023 and 2022, respectively, which related to product testing.

Sales and Marketing Expenses

Sales and marketing expenses were $1.2 million for the three months ended June 30, 2023 as compared to $

1.8

million for the comparable three months ended June 30, 2022, a decrease of $0.5 million. The decrease was primarily due to decreased advertising costs in connection with lower revenues.

Sales and marketing expenses as a percentage of revenues were

27.9

% and

29.3

% for the three months ended June 30, 2023 and 2022, respectively.

Other Income (Expense), Net

Interest expense was $160,469 for the three months ended June 30, 2023 as compared to $42,820 for the three months ended June 30, 2022. The increase was due to new loans and merchant advances entered into 2022 and the first and second quarters of 2023, as well as amortization of debt discount. In April 2023, the Company recorded a loss on extinguishment of debt of $1,693,850 related to the extension of note agreements.

Net Loss

Net loss was $8.1 million for the three months ended June 30, 2023 as compared to $1.2 million for the three months ended June 30, 2022, an increase of $6.9 million. The increase in net loss was primarily due to stock compensation expense of $5.6 million and loss on extinguishment of debt of $1.7 million in 2023, as well as lower gross profit.

Summary of Results of Operations for the six months ended June 30, 2023 and 2022

The following table presents our results of operations for the six months ended June 30, 2023 and 2022:

	Six Months Ended
	June 30,
	2023			2022
Net revenues	$	9,007,593		$	11,235,447
Cost of net revenues		6,030,763			7,264,123
Gross profit		2,976,830			3,971,324
General and administrative		7,281,270			4,244,168
Research and development		60,000			66,022
Sales and marketing		2,547,363			3,269,295
Loss from operations		(6,911,803	)		(3,608,161	)
Other income (expense)		(1,972,790	)		98,346
Net loss	$	(8,884,593	)	$	(3,509,815	)

Net revenues

Net revenue was $9.0 million for the six months ended June 30, 2023, as compared to $11.2 million for the six months ended June 30, 2022, a decrease of $2.2 million. Due to the delayed public offering in March 2023, the Company was unable to acquire desired inventory which caused revenue decreases. The delayed offering also caused the Company to delay a launch of its new product due to less marketing spend surrounding the product.

Cost of net revenues and Gross profit and margin

Cost of net revenues was $6.0 million for the six months ended June 30, 2023 as compared to $7.3 million for the comparable six months ended June 30, 2022, a decrease of $1.3 million. The decrease was primarily attributable to lower revenues in 2022.

Our gross profit for the six months ended June 30, 2023 was $3.0 million and $4.0 million for the six months ended June 30, 2022, and our gross margin was 33.0% and 35.3% for the six months ended June 30, 2023 and 2022.

General and Administrative Expenses

General and administrative expenses were $7.3 million for the six months ended June 30, 2023 as compared to $4.2 million six months ended June 30, 2022, an increase of $3.1 million. The increase was primarily due to stock-based compensation of $5.6 million and other non-cash expenses in 2023, partially offset by cost-cutting measures initiated in 2023 as compared to 2022.

Research and Development

Research and development expenses were $60,000 and $66,002 in the six months ended June 30, 2023 and 2022, respectively, which related to product testing.

Sales and Marketing Expenses

Sales and marketing expenses were $2.5 million for the six months ended June 30, 2023 as compared to $3.3 million for the comparable six months ended June 30, 2022, a decrease of $0.8 million. The decrease was primarily due to decreased advertising costs in connection with lower revenues and certain cost-cutting measures.

Sales and marketing expenses as a percentage of revenues were 28.3% and 29.1% for the six months ended June 30, 2023 and 2022, respectively.

Other Income (Expense), Net

Interest expense was $278,940 for the six months ended June 30, 2023 as compared to $60,813 for the six months ended June 30, 2022. The increase was due to new loans and merchant advances entered into 2022 and the first and second quarters of 2023, as well as amortization of debt discount. Other income was $159,159 in 2022, primarily due to the PPP forgiveness. In April 2023, the Company record a loss on extinguishment of debt of $1,693,850 related to the extension of note agreements.

Net Loss

Net loss was $8.9 million for the six months ended June 30, 2023 as compared to $3.5 million for the six months ended June 30, 2022, an increase of $5.4 million. The increase in net loss was primarily due to stock compensation expense of $5.6 million and loss on extinguishment of debt of $1.7 million in 2023, as well as lower gross profit.

Liquidity and Capital Resources

Our principal liquidity requirements are for working capital to fund our inventory and marketing expenditures. We fund our liquidity requirements primarily through cash on hand, cash flows from operations, and debt financing. As of June 30, 2023 and December 31, 2022, we had $295,564 and $218,605 of cash, respectively.

Borrowings

Merchant Advances

During 2023 and 2022, the Company entered into several short-term merchant loans with Amazon and Shopify. The loans mature in six to nine months and bear interest ranging from 8% to 13%. The loans require monthly principal and interest payments. During the six months ended June 30, 2023 and 2022, the Company received merchant advances totaling $200,000 and $3,202,000 respectively, and made repayments totaling $978,186 and $1,573,730, respectively. As of June 30, 2023 and December 31, 2022, the Company had $1,064,839 and $1,843,025, respectively in outstanding principal pertaining to these merchant loans. Interest expense for the loans totaled $85,551 and $46,621 for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023 and December 31, 2022, there was $9,362 and $17,376, respectively, in interest payable pertaining to these loans.

Related Party

Loan Payable

As of June 30, 2023 and December 31, 2022, the Company had $1,025,000 outstanding pertaining to a promissory note received in 2021. In December 2022, the Company extended the maturity date to March 31, 2024. Interest expense for the six months ended June 30, 2023 and 2022 were $0 and $0, respectively.

Notes Payable

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.

In connection with the Promissory Note Extension Agreements, the Company issued a warrant to purchase an aggregate of 200,000 shares of common stock with an exercise price of $0.01 per share to the noteholders (“Debt Extension Warrants”). The Debt Extension Warrants are exercisable at any time after the date that the Company’s shares of common stock have been approved for and are listed for trading on certain trading markets, and at any time up to the date that is five years after their original issuance. The fair value of the warrants was $748,963 as calculated by assumptions used in the Black-Scholes model, which was recorded to additional paid-in capital. The Company evaluated the Promissory Note Extension Agreements under ASC 470-50 and determined they meet the criteria as a debt extinguishment. The fair value of the warrants, and the unamortized debt discount of the old OID notes of $8,684, totaled $757,647, which was recorded as a loss on extinguishment of debt on the statements of comprehensive loss.

During the six months ended June 30, 2023, interest expense on the OID Notes was $14,809, all of which was accrued and unpaid as of June 30, 2023.

Investor Bridge Notes

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. 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 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. 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. In connection with the second closing of the 2023 Bridge Offering, the Company paid Boustead $8,000 in cash issued the placement agent 5-year warrants to purchase 7,000 shares of common stock at an exercise price of $1.00 per share. Following the second closing of the 2023 Bridge Offering, the Company received net proceeds of $91,455 after deducting fees.

During the six months ended June 30, 2023, interest expense on the 2023 Bridge Offering was $11,737, all of which was accrued and unpaid as of June 30, 2023.

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 9) and issuance costs of $68,840. The debt discount will be amortized to interest expense over the life of the loan. During the three and six months ended June 30, 2023, $76,065 and $71,378 was amortized to interest expense, respectively. As of June 30, 2023, $581,141 remained unamortized.

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

	June 30,			December 31,
	2023			2022
Principal	$	1,327,500		$	-
Less: Unamortized debt discount		(581,141	)		-
	$	746,359		$	-

Convertible Notes

In April 2023, the Company entered into a Promissory Note Extension Agreement with the noteholder pursuant to which the holder agreed to extend the maturity date of the note to December 31, 2023. In connection with the Promissory Note Extension Agreement, the Company issued a warrant to purchase an aggregate of 250,000 shares of common stock with an exercise price of $0.01 per share to the noteholder. The Debt Extension Warrants are exercisable at any time after the date that the Company’s shares of common stock have been approved for and are listed for trading on certain trading markets, and at any time up to the date that is five years after their original issuance. The fair value of the warrants was $936,203 as calculated by assumptions used in the Black-Scholes model, which was recorded to additional paid-in capital. The Company evaluated the Promissory Note Extension Agreement under ASC 470-50 and determined it meets the criteria as a debt extinguishment. The fair value of the warrants was recorded as a loss on extinguishment of debt on the statements of comprehensive loss.

Cash Flows

The following table summarizes our cash flows from operating, investing, and financing activities:

	Six Months Ended
	June 30,
	2023			2022
Net cash used in operating activities	$	(526,015	)	$	(3,531,008	)
Net cash used in investing activities		-			(30,400	)
Net cash provided by financing activities		602,974			3,318,250
Net change in cash and cash equivalents	$	76,959		$	(243,158	)

Cash Used in Operating Activities

Cash flows used in operating activities were $0.5 million for the six months ended June 30, 2023 as compared to $3.5 million for the six months ended June 30, 2022. Cash used during the six months ended June 30, 2023 was primarily driven by our net loss of $8.9 million partially offset by non-cash charges of $7.4 million increases in operating assets and liabilities of $0.9 million driven by a decrease of $0.7 million in inventory.

Cash flows used in operating activities for the six months ended June 30, 2022 were primarily driven by our net loss of $3.5 million and decreases in operating assets and liabilities of $1.4 million, partially offset by non-cash charges of $1.4 million.

Cash Used in Investing Activities

Cash used in investing activities was $0 in 2023 and $30,400 in 2022.

Cash Provided by Financing Activities

We received note proceeds of $1.4 million in the six months ended June 30, 2023 and made loan repayments of $1.0 million. We also received $0.7 million in related party loans and made repayments totaling $0.5 million.

We received loan proceeds of $3.2 million in the six months ended June 30, 2022 and made repayments totaling $1.6 million. We also received $1.7 million for proceed from issuance of preferred and common stock.

Going Concern

We have evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements were issued.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets 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. We have often not generated profits since inception, has sustained net losses of $8,884,593 and $3,509,815 for the six months ended June 30, 2023 and 2022, respectively, and has negative cash flows from operations for the years then ended. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern for the next 12 months from the date the financial statements were available to be issued 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 capital financing. Through the date the financial statements were available to be issued, we has been primarily financed through the issuance of loans and proceeds from the sale of preferred and common stock. In the event that we cannot generate sufficient revenue to sustain its operations, we 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 we is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to we, we 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 we will be successful in these efforts. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We re seeking to raise capital via an equity offering. In the event we do not complete an offering, we expect to seek additional funding through private equity or debt financings. We may not be able to obtain financing on acceptable terms, or at all.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, as defined by applicable regulations of the SEC, that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Emerging Growth Company and Smaller Reporting Company Status

We are an emerging growth company, as defined in 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. We 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 we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. We are using the extended transition period for any other new or revised accounting standards during the period in which we remain an emerging growth company.

We will remain an emerging growth company until the earliest of (i) the last day of our first fiscal year (a) following the fifth anniversary of the completion of this offering, (b) in which we have total annual gross revenues of at least $1.235 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our Common Stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th and (ii) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

We are also a “smaller reporting company,” meaning that the market value of our stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to us as a result of this offering is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after this offering if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Reports on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

Emerging Growth Company Status

We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements.

Section 107 of the JOBS Act provides that an emerging growth company can 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. In other words, 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 take advantage of the benefits of this extended transition period. Our financial statements may, therefore, not be comparable to those of companies that comply with such new or revised accounting standards.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) and are not required to provide the information required under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer) evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based upon that evaluation, and as a result of the remediation of previously identified material weaknesses, as described below, our principal executive officer and principal financial officer concluded that, as of June 30, 2023, our disclosure controls and procedures were effective.

Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013 Framework). Based on this assessment, management concluded that, as of June 30, 2023, the Company’s internal control over financial reporting was effective.

Changes in Internal Control Over Financial Reporting

During the preparation of our financial statements for the fiscal years ended December 31, 2022 and 2021, we identified certain material weaknesses:

Management needs to establish internal controls to ensure all executed agreements are properly retained.

Management needs to establish internal controls to ensure all payments to or on behalf of the Company are made in accordance with the terms of the relevant agreements, are properly recorded, and any required proper annual government forms are filed.

Management needs to implement controls to accurately track gift certificates issued, utilized and outstanding.

The Company does not capitalize any freight costs associated with acquiring its inventory, which is not in accordance with Financial Accounting Standards Board Accounting Standards Codification 330, Inventory. For financial reporting purposes, the Company did make estimates of freight costs to be capitalized as of and recorded these estimates. Management needs to develop internal controls to accurately capture the freight costs in inventory balances for each reporting period.

Management needs to develop internal controls around inventory and inventory in-transit.

The Company lacks internal controls around cash receipts and cash disbursements.

The Company lacks internal controls over journal entries.

The Company lacks documentation of internal control policies over IT systems and third party websites.

The Company utilizes related parties’ credit cards to pay for inventory and other expenses of the Company. These credit cards are used by the Company and by the related parties and thus the credit card charges are co-mingled and susceptible to errors in accounting for Company activity. The Company should avoid utilizing related parties’ credit cards; however, if this type of financing is still required, Management needs to implement internal controls to ensure all Company related credit card charges are properly identified and recorded.

Management needs to establish internal controls to ensure all loans are properly documented and executed and that all payments to loan holders are made in accordance with the loan agreements.

We are in the process of implementing measures designed to improve our internal control over financial reporting to remediate these material weaknesses. The Company’s plan to remediate the material weaknesses in its internal control over financial reporting includes utilizing a portion of the working capital from its initial public offering to increase staffing within its finance department sufficient to facilitate proper segregation of accounting functions and to enable appropriate review of its internally prepared financial statements. In addition, the Company plans to retain outside consultants, experts in, and specializing in SEC reporting for public company registrants.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

Investing in our common stock involves a high degree of risk. Before investing in our common stock, you should consider carefully the risks described in our prospectus filed on March 7, 2023 and Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC on March 28, 2023, together with the other information contained in this Quarterly Report on Form 10-Q, including our financial statements and the related notes and in our other filings with the Securities and Exchange Commission. If any of the risks occur, our business, financial condition, results of operations and prospects could be materially and adversely affected. In these circumstances, the market price of our common stock could decline, and you may lose all or part of your investment.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

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 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. Interest expense pertaining to the OID Notes was $6,171 for the three months ended June 30, 2023, all of which was payable as of June 30, 2023. In connection with the OID Notes, the Company recognized a debt discount of $27,500, of which $18,816 was amortized to interest expense and $8,684 remained unamortized as of June 30, 2023. As of the issuance date of these financial statements, the OID Notes are still outstanding and in default.

The Company is 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. 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. 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.

On April 14, 2023, the Company conducted the second closing of the 2023 Bridge Offering, at which it issued an additional Investor Bridge Note for $100,000 and issued an Investor Bridge Warrant to purchase 100,000 shares of common stock. In connection with the second closing of the 2023 Bridge Offering, the Company paid its placement agent $8,000 in cash and issued a Boustead Bridge Warrant to purchase 7,000 shares of common stock. The Company received $91,455 in net proceeds.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

Exhibit

Number

Description of Exhibit

Exhibit No.	Exhibit Description	Form	File Number	Exhibit	Filing Date
2.1	Agreement and Plan of Merger, dated February 24, 2022, by and between PishPosh, Inc. and Pish Posh Baby LLC.	S-1	333-267982	2.1	10/21/2022
3.1	Second Amended and Restated Certificate of Incorporation of PishPosh, Inc., dated October 20, 2022.	S-1	333-267982	3.1	10/21/2022
3.2	Certificate of Merger of Pish Posh Baby LLC into PishPosh, Inc., dated February 24, 2022 and filed on February 25, 2022.	S-1	333-267982	3.3	10/21/2022
3.3	Bylaws of PishPosh, Inc.	S-1	333-267982	3.4	10/21/2022
10.1	Employment Agreement, dated April 30, 2021, between Pish Posh Baby LLC and Alon Benishai.	S-1	333-267982	10.3	10/21/2022
10.2	Employment Agreement, dated November 23, 2021, between Pish Posh Baby LLC and Charlie Birnbaum.	S-1	333-267982	10.4	10/21/2022
10.3	Amendment No. 1 to Employment Agreement between PishPosh, Inc. and Charlie Birnbaum, dated January 18, 2023.	S-1/A	333-267982	10.4	02/13/2023
10.4	Employment Agreement, dated January 12, 2022, between Pish Posh Baby LLC and Jesse Sutton.	S-1/A	333-267982	10.5	02/13/2023
10.5	Amendment No. 1 to Employment Agreement between PishPosh, Inc. and Jesse Sutton, dated December 20, 2022.	S-1/A	333-267982	10.6	02/13/2023
10.6	Amendment No. 2 to Employment Agreement between PishPosh, Inc. and Jesse Sutton, dated January 18, 2023.	S-1/A	333-267982	10.7	02/13/2023
10.7	Offer Letter, dated August 25, 2022, between PishPosh, Inc. and Eric Sherb.	S-1/A	333-267982	10.8	02/13/2023
10.8	Promissory Note, dated November 15, 2021, issued by Pish Posh Baby LLC in favor of Moishe (Michael) Hartstein.	S-1/A	333-267982	10.9	02/13/2023
10.9	Amendment, dated December 27, 2022, to Promissory Note, issued by Pish Posh Baby LLC in favor of Moishe (Michael) Hartstein.	S-1/A	333-267982	10.10	02/13/2023
10.10	Intercreditor Agreement, dated November 30, 2021, by and among Pish Posh Baby LLC, Dov Kurlander and the noteholders identified therein.	S-1/A	333-267982	10.11	02/13/2023
10.11	2022 Equity Incentive Plan.	S-1/A	333-267982	10.13	02/13/2023
10.12	Form of Indemnification Agreement.	S-1/A	333-267982	10.15	02/13/2023
10.13	Unsecured OID Promissory Note, dated January 25, 2023, issued by PishPosh, Inc. in favor of Alpha Capital Anstalt in the principal amount of $367,500.	S-1/A	333-267982	10.16	02/13/2023
10.14	Unsecured OID Promissory Note, dated January 25, 2023, issued by PishPosh, Inc. in favor of L1 Capital Global Opportunities Master Fund in the principal amount of $157,500.	S-1/A	333-267982	10.17	02/13/2023
10.15	Unsecured OID Promissory Note, dated January 25, 2023, issued by PishPosh, Inc. in favor of The Hewlett Fund LP in the principal amount of $52,500.	S-1/A	333-267982	10.18	02/13/2023
10.16	Engagement Letter between Boustead Securities, LLC and PishPosh, Inc., dated February 2, 2022.	10-K	001-41623	10.19	03/28/2023
10.17	Amendment, dated March 22, 2023, to Engagement Letter between Boustead Securities, LLC and PishPosh, Inc., dated February 2, 2022.	10-K	001-41623	10.19	03/28/2023
10.18	Form of Subscription Agreement in connection with the 2023 Bridge Offering.	10-K	001-41623	10.19	03/28/2023
10.19	Form of Investor Bridge Note in connection with the 2023 Bridge Offering (included as Exhibit A to Exhibit 10.21).	10-K	001-41623	10.19	03/28/2023
10.20	Form of Investor Bridge Warrant in connection with the 2023 Bridge Offering (included as Exhibit B to Exhibit 10.21).	10-K	001-41623	10.19	03/28/2023
10.21	Form of April 2023 Promissory Note Extension Agreement	10-Q	001-41623	10.9	05/15/2023
10.22	Side Letter Agreement between the Company and Palladium Holdings, LLC, dated April 5, 2023.	10-Q	001-41623	10.10	05/15/2023
10.23	Side Letter Agreement between the Company and Alpha Capital Anstalt, dated April 5, 2023.	10-Q	001-41623	10.11	05/15/2023
10.24	Form of April 2023 Warrant.	10-Q	001-41623	10.12	05/15/2023
10.25	Amended and Restated Convertible Promissory Note, dated June 21, 2023, issued by PishPosh, Inc. to Dov Kurlander in the principal amount of $950,000.	POS AM	333-267982	10.28	07/18/2023
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a‐14(a) and 15d‐14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes‐Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a‐14(a) and 15d‐14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes‐Oxley Act of 2002.
32.1*#	Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes‐Oxley Act of 2002
101*	Interactive Data Files.
104*	Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101).

	*	Filed herewith.
	#	This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

SIGNATURES

In accordance with 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, thereunto duly authorized.

	PishPosh, Inc.
August 14, 2023	By:	/s/ Chaim (Charlie) Birnbaum
		Charlie Birnbaum
		Chief Executive Officer
		(Principal Executive Officer)
August 14, 2023	By:	/s/ Eric Sherb
		Eric Sherb
		Chief Financial Officer
		(Principal Financial and Accounting Officer)