Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10−Q

(Mark One)

☒ 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 No. 001-39418

Polished.com Inc.

(Exact name of registrant as specified in its charter)

Delaware		83-3713938
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1870 Bath Avenue, Brooklyn, NY		11214
(Address of principal executive offices)		(Zip code)

800-299-9470

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	POL	NYSE American LLC
Warrants to Purchase Common Stock	POL WS	NYSE American LLC

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 ☒ No ☐

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 ☒ No ☐

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 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 check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 10, 2023, there were 105,469,878 shares of the registrant’s common stock issued and outstanding.

Polished.com Inc.

Quarterly Report on Form 10-Q
Period Ended June 30, 2023

TABLE OF CONTENTS

	PART I FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	34

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to us. All statements other than statements of historical facts are forward-looking statements. These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements about:

●

cybersecurity or data security breaches such as the hacking attack we disclosed in May 2023, the improper disclosure of confidential, personal or proprietary data and changes to laws and regulations governing cybersecurity and data privacy, including any related costs, fines or lawsuits, and our ability to continue ongoing operations and safeguard the integrity of our information technology infrastructure, data, and employee, customer and vendor information;

●

our ability to acquire new customers and sustain and/or manage our growth;

●

the effect of supply chain delays and disruptions on our operations and financial condition;

●

our goals and strategies;

●

the identification of material weaknesses in our internal control over financial reporting and disclosure controls and procedures that, if not corrected, could affect the reliability of our unaudited condensed consolidated financial statements and have other adverse consequences such as a failure to meet reporting obligations;

●

our future business development, financial condition and results of operations;

●

expected changes in our revenue, costs or expenditures;

●

growth of and competition trends in our industry;

●

our expectations regarding demand for, and market acceptance of, our products;

●

our expectations regarding our relationships with investors, institutional funding partners and other parties we collaborate with;

●

fluctuations in general economic and business conditions in the markets in which we operate; and

●

relevant government policies and regulations relating to our industry.

In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and elsewhere in this report. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.

The forward-looking statements made in this report relate only to events or information as of the date on which the statements are made in this report. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

POLISHED.COM INC.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

		Page
Condensed Consolidated Balance Sheets as of June 30, 2023 (Unaudited) and December 31, 2022		2
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)		3
Condensed Consolidated Statement of Stockholders’ Equity for Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)		4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (Unaudited)		5
Notes to Condensed Consolidated Financial Statements (Unaudited)		6

POLISHED.COM INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	June 30,			December 31,
	2023			2022
	(Unaudited)
ASSETS

Current Assets
Cash and cash equivalents	$	8,977		$	19,549
Restricted cash		4,687			950
Receivables, net		22,089			26,650
Vendor deposits		30,452			25,022
Merchandise inventory, net		39,448			41,766
Prepaid expenses and other current assets		10,141			11,217

Total Current Assets		115,794			125,154

Property and equipment, net		4,671			5,075
Operating lease right-of-use assets		10,019			11,688
Derivative instruments		3,752			3,178
Goodwill		106,173			106,173
Intangible assets, net		8,789			10,296
Deferred tax asset		-			1
Other long-term assets		350			349

TOTAL ASSETS	$	249,548		$	261,914

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities
Accounts payable and accrued expenses	$	78,176		$	81,537
Customer deposits		4,041			7,292
Current portion of notes payable, net		7,866			6,628
Current portion of finance lease liabilities		111			112
Current portion of operating lease liabilities		2,730			3,726

Total Current Liabilities		92,924			99,295

Notes payable, net of current portion		87,065			90,816
Finance lease liabilities, net of current portion		169			225
Operating lease liabilities, net of current portion		8,108			9,013
Deferred tax liability		286			-

TOTAL LIABILITIES		188,552			199,349

Stockholders’ Equity
Preferred stock, $0.0001 par value, 20,000,000 shares authorized; none issued and outstanding as of June 30, 2023 and December 31, 2022		-			-
Common stock, $0.0001 par value, 200,000,000 shares authorized; 105,469,878 and 105,227,876 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively		11			11
Additional paid-in capital		223,015			222,827
Accumulated deficit		(162,030	)		(160,273	)

TOTAL STOCKHOLDERS’ EQUITY		60,996			62,565

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	249,548		$	261,914

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

POLISHED.COM INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2023			2022			2023			2022
Product sales, net	$	87,761		$	138,463		$	183,200		$	287,144
Cost of goods sold		68,181			115,438			142,474			233,357
Gross profit		19,580			23,025			40,726			53,787

Operating Expenses
Personnel		6,021			7,402			12,505			14,048
Advertising		4,512			5,363			9,633			10,941
Bank and credit card fees		3,005			4,600			6,378			9,189
Depreciation and amortization		1,068			2,887			2,138			5,706
General and administrative		4,885			3,563			9,872			7,818

Total Operating Expenses		19,491			23,815			40,526			47,702

INCOME (LOSS) FROM OPERATIONS		89			(790	)		200			6,085

Other Income (Expenses)
Interest income		375			64			732			108
Adjustment in value of contingency		-			-						(2	)
Interest expense		(1,053	)		(302	)		(2,935	)		(1,243	)
Gain (loss) on change in fair value of derivative instruments		1,899			(936	)		574			(936	)
Loss on settlement of debt		-			(3,241	)		-			(3,241	)
Other income (expense)		22			(41	)		104			(90	)

Total Other Income (Expenses)		1,243			(4,456	)		(1,525	)		(5,404	)

NET INCOME (LOSS) BEFORE INCOME TAXES		1,332			(5,246	)		(1,325	)		681

INCOME TAX (EXPENSE) BENEFIT		(328	)		954			(432	)		846

NET INCOME (LOSS)	$	1,004		$	(4,292	)	$	(1,757	)	$	1,527

Income per common share
Basic	$	0.01		$	(0.04	)	$	(0.02	)	$	0.01
Diluted	$	0.01		$	(0.04	)	$	(0.02	)	$	0.01

Weighted average common shares outstanding
Basic		105,469,878			105,774,197			105,425,640			106,080,764
Diluted		105,469,878			105,774,197			105,425,640			106,080,764

POLISHED.COM INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share and per share data)

For the Three and Six Months Ended June 30, 2023

					Additional					Treasury		Total
	Common Stock				Paid-In		Accumulated			Stock		Stockholders’
	Shares		Amount		Capital		Deficit			At Cost		Equity
Balance January 1, 2023		105,227,876		11		222,827		(160,273	)		-		62,565
Issuance of common stock through equity incentive awards		83,011		-		60		-			-		60
Issuance of common stock in connection with employment agreements		158,991		-		120		-			-		120
Stock compensation expense		-		-		8		-			-		8
Net loss for the three months ended March 31, 2023		-		-		-		(2,761	)		-		(2,761	)
Balance March 31, 2023 (unaudited)		105,469,878		11		223,015		(163,034	)		-		59,992
Net income for the three months ended June 30, 2023		-		-		-		1,004			-		1,004
Balance June 30, 2023 (Unaudited)		105,227,876		11		223,015		(162,030	)		-		60,996

For the Three and Six Months Ended June 30, 2022

						Additional					Treasury			Total
	Common Stock					Paid-In		Accumulated			Stock			Stockholders’
	Shares			Amount		Capital		Deficit			At Cost			Equity
Balance January 1, 2022		106,387,332		$	11	$	224,648	$	(34,308	)		-		$	190,351
Issuance of common stock through equity incentive awards		69,766			-		120		-			-			120
Stock compensation expense for the three months ended March 31, 2022		-			-		33		-			-			33
Net income for the three months ended March 31, 2022		-			-		-		5,819			-			5,819
Balance March 31, 2022 (Unaudited)		106,457,098			11		224,801		(28,489	)					196,323
Purchase of treasury stock		(1,229,222	)		-		-		-			(2,000	)		(2,000	)
Stock compensation expense for the three months ended June 30, 2022		-			-		20		-			-			20
Net loss for the three months ended June 30, 2022		-			-		-		(4,292	)		-			(4,292	)
Balance June 30, 2022 (Unaudited)		105,227,876		$	11	$	224,821	$	(32,781	)	$	(2,000	)	$	190,051

POLISHED.COM INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except share and per share data)

(Unaudited)

	Six Months Ended
	June 30,			June 30,
	2023			2022

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(1,757	)	$	1,527
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization		2,138			5,706
Amortization of debt discount		109			406
Loss on settlement of debt		-			3,241
Stock-based compensation		68			173
Adjustment to contingent liability		-			2
Inventory reserve		(500	)		157
Loss (Gain) on change in fair value of derivative instruments		(574	)		936
Bad debt expense		5			175
Deferred tax expense (benefit)		287			(938	)
Non-cash lease expense		1,670			1,610
Changes in operating assets and liabilities:
Accounts receivable		4,555			(2,301	)
Deposits with vendors		(5,430	)		(5,931	)
Inventory		2,818			(4,513	)
Prepaid expenses and other current assets		1,075			(355	)
Accounts payable and accrued liabilities		(3,240	)		(10,652	)
Due to related party		-			2,413
Customer deposits		(3,251	)		(12,065	)
Operating lease liabilities		(1,901	)		(1,781	)
Net cash (used in) provided operating activities		(3,928	)		(22,190	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(134	)		(256	)
Net cash used in investing activities		(134	)		(256	)

CASH FLOWS FROM FINANCING ACTIVITIES

Cash received from notes payable		-			43,045
Repayment of notes payable		(2,716	)		(3,223	)
Repayments of financing lease liabilities		(57	)		(48	)
Purchase of treasury stock at cost		-			(2,000	)
Net cash (used in) provided by financing activities		(2,773	)		37,774

NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH		(6,835	)		15,328
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD		20,499			33,791

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	$	13,664		$	49,119

Cash, cash equivalents, and restricted cash consist of the following:
End of the period
Cash and cash equivalents	$	8,977		$	47,386
Restricted cash		4,687			1,733

	$	13,664		$	49,119

Cash, cash equivalents, and restricted cash consist of the following:
Beginning of the period
Cash and cash equivalents	$	19,549		$	25,724
Restricted cash		950			8,067

	$	20,499		$	33,791

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	2,494		$	1,531
Cash paid for income taxes	$	-		$	-

NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued in vesting of RSUs	$	-		$	-
Financed purchases of property and equipment	$	94		$	308
Common stock issued in connection with employment agreements	$	121		$	-
Debt discount on notes payable	$	-		$	1,104
Settlement of notes payable and interest through the issuance of a new note	$	-		$	55,851

POLISHED.COM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023 and 2022 (UNAUDITED)

NOTE 1—BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited condensed consolidated financial statements of Polished.com Inc. (the “Company,” “Polished.com Inc.,” “we,” “us,” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting and reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the results of the interim periods presented. Certain information and note disclosures normally included in the audited financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The information included in the Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022. Furthermore, interim results for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2023 or future periods.

NOTE 2—RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted

In June 2016, the FASB issued ASU 2016-13 Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years beginning after December 15, 2019. This pronouncement was amended under ASU 2019-10 to allow an extension on the adoption date for entities that qualify as a small reporting company. The Company has elected this extension and the effective date for the Company to adopt this standard will be for fiscal years beginning after December 15, 2022. The Company adopted this guidance on January 1, 2023. The Company’s adoption of this update did not have a material impact on the consolidated financial statements and related disclosures.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This ASU amends ASC 805 to require acquiring entities to apply ASC 606 to recognize and measure contract assets and contract liabilities in business combinations. The ASU is effective for public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted this guidance on January 1, 2023. The Company’s adoption of this update did not have a material impact on the consolidated financial statements and related disclosures.

In March 2022, the FASB issued ASU 2022-02, Troubled Debt Restructurings (“TDRs”) and Vintage Disclosures (Topic 326): Financial Instruments – Credit Losses. This amended guidance will eliminate the accounting designation of a loan modification as a TDR, including eliminating the measurement guidance for TDRs. The amendments also enhance existing disclosure requirements and introduce new requirements related to modifications of receivables made to borrowers experiencing financial difficulty. Additionally, this guidance requires entities to disclose gross write-offs by year of origination for financing receivables, such as loans and interest receivable. The ASU is effective January 1, 2023, and is required to be applied prospectively, except for the recognition and measurement of TDRs which can be applied on a modified retrospective basis. The Company adopted this guidance on January 1, 2023. The Company’s adoption of this update did not have a material impact on the consolidated financial statements and related disclosures.

POLISHED.COM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023 and 2022 (UNAUDITED)

NOTE 3—LIQUIDITY AND GOING CONCERN ASSESSMENT

Management assesses liquidity and going concern uncertainty in the Company’s condensed consolidated financial statements to determine whether there is sufficient cash on hand and working capital, including available borrowings on loans, to operate for a period of at least one year from the date the unaudited condensed consolidated financial statements are issued or available to be issued, which is referred to as the “look-forward period”, as defined in GAAP. As part of this assessment, based on conditions that are known and reasonably knowable to management, management will consider various scenarios, forecasts, projections, estimates and will make certain key assumptions, including the timing and nature of projected cash expenditures or programs, its ability to delay or curtail expenditures or programs and its ability to raise additional capital, if necessary, among other factors. Based on this assessment, as necessary or applicable, management makes certain assumptions around implementing curtailments or delays in the nature and timing of programs and expenditures to the extent it deems probable those implementations can be achieved and management has the proper authority to execute them within the look-forward period.

As of June 30, 2023, we had cash and cash equivalents of $13.7 million including restricted cash of $4.7 million and vendor deposits of $30.5 million. For the six months ended June 30, 2023, we had operating income of approximately $0.2 million, cash flows used in operations of $3.9 million and working capital of $22.9 million. As of and for the year ended December 31, 2022, we had an operating loss of $128.3 million (including a non-cash impairment charge of $109.1 million), cash used in operations of $46.7 million, cash and cash equivalents of $20.5 million including restricted cash of $0.95 million and working capital of $25.9 million.

The Company performed an assessment to determine whether there were conditions or events that, considered in the aggregate, raised substantial doubt about the Company’s ability to continue as a going concern within one year after the filing date of this report, when the accompanying financial statements are being issued. Initially, this assessment did not consider the potential mitigating effect of management’s plans that had not been fully implemented.

Based on the initial assessment, substantial doubt exists regarding our ability to continue as a going concern. Management then assessed the mitigating effect of its plans to determine if it is probable that the plans (1) would be effectively implemented within one year after the filing date of this report, when the accompanying financial statements are being issued and (2) when implemented, would mitigate the relevant conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern.

POLISHED.COM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023 and 2022 (UNAUDITED)

As discussed below, the Company has implemented plans which encompass short-term cash preservation initiatives to provide the Company with adequate liquidity to meet its obligations for at least the 12-month period following the date its financial statements are issued, in addition to creating sustained cash flow generation thereafter. The Company has either taken or intends to take, the following actions, among others, to improve its liquidity position and to address uncertainty about its ability to continue as a going concern:

●

As described in Note 8, the Company entered into a loan amendment of their term loan and revolver loan agreement with Bank of America, in which Bank of America waived specific technical defaults and re-established a revolver loan commitment balance of $10 million.

●

We are taking concrete steps to improve efficiency and profitability through headcount reductions and consolidation of operations including the imminent consolidation of two existing New Jersey warehouses into one new warehouse.

●

We hired an internationally recognized firm of digital advertising consultants to help us improve our return on advertising spend, which we believe when completed will result in more sales per dollar of advertising expense.

●

We are implementing new financing initiatives for our customers, including a new store-branded credit card and a leasing alternative for customers who do not qualify for conventional credit, and we have added a new payment processor which will provide additional liquidity compared to our incumbent processor.

●

We have changed our sales focus to emphasizing the sale of high-margin luxury products, as opposed to mass-market appliances, began becoming dealers for higher-margin small appliances and promoting them on our website, and have begun actively negotiating improved terms with several of our largest appliance vendors.

Management has prepared estimates of operations for fiscal years 2023 and 2024 and believes that sufficient funds will be generated from operations to fund its operations, and to service its debt obligations for one year from the date of the filing of these consolidated financial statements in the Company’s 10-Q. The accompanying condensed consolidated financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. Management believes that based on relevant conditions and events that are known and reasonably knowable that its forecasts, for one year from the date of the filing of these condensed consolidated financial statements, indicate improved operations and the Company’s ability to continue operations as a going concern.

NOTE 4—DISAGGREGATION OF REVENUES

The Company sells a vast assortment of household appliances, including refrigerators, ovens, dishwashers, microwaves, freezers, washers and dryers. In addition to appliances, we also offer a broad assortment of products in the furniture, décor, bed & bath, lighting, outdoor living, electronics categories, fitness equipment, plumbing fixtures, air conditioners, fireplaces, fans, dehumidifiers, humidifiers, air purifiers and televisions.

Revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Each customer order generally contains only one performance obligation based on the merchandise sale to be delivered, at which time revenue is recognized.

The Company disaggregates revenue from contracts with customers by product type, as it believes it best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

The Company’s disaggregated revenue by product type is as follows (in thousands):

	For the Three Months Ended				For the Six Months Ended
	June 30		June 30		June 30		June 30
	2023		2022		2023		2022
Appliance sales	$	77,505	$	128,242	$	164,177	$	266,791
Furniture and other sales		10,256		10,221		19,023		20,353

Total	$	87,761	$	138,463	$	183,200	$	287,144

POLISHED.COM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023 and 2022 (UNAUDITED)

NOTE 5—SUPPLEMENTAL FINANCIAL STATEMENT DISCLOSURES

Recivables

Receivables at June 30, 2023 and December 31, 2022, consisted of the following (in thousands):

	June 30,			December 31,
	2023			2022

Trade accounts receivable	$	13,325		$	13,691
Vendor rebates receivable		8,046			8,514
Other receivables		2,230			5,951

Total receivables		23,601			28,156
Less allowance for doubtful accounts		(1,512	)		(1,506	)

Total receivables, net	$	22,089		$	26,650

Merchandise Inventory

Inventory as June 30, 2023 and December 31, 2022, consisted of the following (in thousands):

	June 30,			December 31,
	2023			2022

Appliances	$	37,625		$	39,702
Furniture and other		3,112			3,853

Total merchandise inventory		40,737			43,555
Less reserve for obsolescence		(1,289	)		(1,789	)

Total merchandise inventory, net	$	39,448		$	41,766

Property and Equipment

Property and equipment at June 30, 2023 and December 31, 2022, consisted of the following (in thousands):

	June 30,			December 31,
	2023			2022

Warehouse equipment	$	291		$	291
Financed warehouse		515			515
Furniture and fixtures		332			324
Transportation equipment		1,566			1,466

Leasehold improvements		3,251			3,131
Showroom inventory		1,037			1,037

Total property and equipment		6,992			6,764
Less: accumulated depreciation		(2,321	)		(1,689	)

Property and equipment, net	$	4,671		$	5,075

Depreciation expense for the three and six months ended June 30, 2023 and 2022, was $0.3 million and $0.6 million, respectively.

POLISHED.COM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023 and 2022 (UNAUDITED)

Intangible Assets

The following table provides a breakdown of identifiable intangible assets as of June 30, 2023 and December 31, 2022 (in thousands):

	June 30,			December 31,
	2023			2022
Customer relationships	$	3,461		$	3,461
Marketing related - tradename		6,835			6,835
Total intangible assets		10,296			10,296
Accumulated amortization		(1,507	)		(-	)

Intangible assets, net	$	8,789		$	10,296

Amortization expense for the three and six months ended June 30, 2023, was $0.8 million and $1.5 million, respectively. In comparison, amortization expense for the three and six months ended June 30, 2022, was $2.6 million and $5.1 million, respectively.

These assets are being amortized on a straight-line basis over their weighted average estimated useful life of 2.9 years.

At June 30, 2023, estimated annual amortization expense for each of the next five years is as follows (in thousands):

Year ending December 31,	Amount
2023 (Remainder of year)	$	1,507
2024		3,013
2025		3,013
2026		1,256

Total	$	8,789

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at June 30, 2023 and December 31, 2022, consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022

Trade accounts payable	$	38,945	$	34,345
Accrued sales tax		30,397		36,196
Accrued payroll liabilities		697		680
Accrued interest		19		37
Accrued liability for sales returns		3,916		3,916
Credit cards payable		81		32
Accrued insurance		-		1,180
Other accrued liabilities		4,121		5,151

Total accounts payable and accrued expenses	$	78,176	$	81,537

POLISHED.COM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023 and 2022 (UNAUDITED)

NOTE 6—OPERATING LEASES

The following was included in our unaudited condensed consolidated balance sheet at June 30, 2023 and December 31, 2022 (in thousands):

	June 30,			December 31,
	2023			2022

Operating lease right-of-use assets	$	10,019		$	11,688

Lease liabilities, current portion		2,730			3,726
Lease liabilities, long-term		8,108			9,013

Total operating lease liabilities	$	10,838		$	12,739

Weighted-average remaining lease term (months)		76			73

Weighted average discount rate		3.9	%		3.9	%

Operating lease expense for the three and six months ended June 30, 2023 and 2022, was $0.9 million and $1.9 million, respectively.

As of June 30, 2023, maturities of operating lease liabilities were as follows, in thousands:

Years Ending December 31,	Amount
2023 – Remainder of year	$	2,029
2024		1,808
2025		1,489
2026		1,532
2027		1,284
Thereafter		4,159

Total		12,301
Less: imputed interest		(1,463	)

Total operating lease liabilities	$	10,838

Finance Leases

The Company has three finance leases. At June 30, 2023, the total amount due on these leases was $0.3 million.

POLISHED.COM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023 and 2022 (UNAUDITED)

NOTE 7—RELATED PARTIES

On March 15, 2022, the Company entered into a lease for additional office space with 8780 19th Ave LLC (“Landlord”), an entity owned by Albert and Elie Fouerti, the Company’s former Chief Executive and Chief Operating Officer, respectively. The Company contends that the lease required the Landlord do certain work at Landlord’s expense to improve the building at a cost of approximately $1.2 million. Landlord has refused to pay for this work, contending that this expense was the Company’s responsibility. In addition, the total remaining amount due on the lease at June 30, 2023 is also approximately $1.2 million. Landlord contends that the Company is in default of the lease for failing to pay rent. The Company disagrees that its rent obligations have been triggered and further contends that Landlord has violated the lease by failing to pay for the work. The Company and the Landlord remain in dispute over these issues.

DMI

The Company is a member of DMI, an appliance purchasing cooperative. DMI purchases consumer electronics and appliances at wholesale prices from various vendors, and then makes such products available to its members, including the Company, who sell such products to end consumers. DMI’s purchasing group arrangement provides its members, including the Company, with leverage and purchasing power with appliance vendors, and increases the Company’s ability to compete with competitors, including big box appliance and electronics retailers. The Company owns an approximate 1.6% interest in DMI.

During the six months ended June 30, 2023, total purchases from DMI represented approximately 65% of total purchases. At June 30, 2023 vendor deposits at DMI totaled $30.5 million.

Lease Agreements

The Company has lease agreements with 1870 Bath Ave. LLC, 812 and 5th Ave Realty LLC. These two entities are owned by the Company’s former Chief Executive Officer and Chief Operating Officer. In addition, the Company has a sublease agreement with DMI. The total rent expense under these related party leases was $0.8 million for the six months ended June 30, 2023.

POLISHED.COM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023 and 2022 (UNAUDITED)

NOTE 8—NOTES PAYABLE

Credit Facilities

Bank of America Credit Agreement

On May 9, 2022, the Company entered into a Credit Agreement (the “Credit Agreement”) with the lenders identified therein (the “Lenders”) and Bank of America, N.A., as administrative agent, swingline lender and letter of credit issuer (the “Agent”), pursuant to which the Lenders agreed to make available to the Borrowers senior secured credit facilities in the aggregate initial amount of $140.0 million, including (i) a $100.0 million term loan (the “Term Loan”) and (ii) a $40.0 million revolving credit facility (the “Revolving Loan”), which revolving credit facility included a $2.00 million swingline sublimit (the “Swing Line Loan” and together with the Term Loan and the Revolving Loan, the “Loans”) and, separately, a $10.0 million letter of credit commitment, in each case, on the terms and conditions contained in the Credit Agreement.

On May 9, 2022, the Company borrowed the entire amount of the Term Loan in the aggregate principal amount of $100.0 million. A portion of the proceeds of the Term Loan were to repay and terminate the M&T Credit Agreement. Commencing on September 30, 2022, through and including June 30, 2023, the Borrowers repaid the principal amount of the Term Loan in quarterly installments of $1,250,000 each, payable on the last business day of each March, June, September and December.

As of June 30, 2023, the carrying value of the Term Loan was $94.1 million, comprised of principal of $95.0 million, net of unamortized loan costs of $0.9 million. Loan costs before amortization included $1.1 million of lender and other fees.

As a result of our technical non-compliance with specified loan covenants for both the Bank of America Term Loan and Revolving Loan, based in part due to our failure to timely deliver financial statements, Bank of America froze the $40.0 million Revolving Loan before any borrowings had been made against the facility.

POLISHED.COM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023 and 2022 (UNAUDITED)

On July 25, 2023, the Company and Bank of America amended the Credit Agreement (the “Amendment”), in part, to waive events of defaults on its existing credit agreement. The Amendment requires the Company to pay the existing Term Facility and Revolving Facility by August 31, 2024 (the “Maturity Date”). The Revolving Loan decreased to $10,000,000 from and after July 25, 2023. The Letter of Credit commitments decreased to $2,000,000 and the Swing Line Loan was eliminated. The Amendment also establishes a new EBITDA covenant and requires the Company to maintain minimum liquidity of $8.0 million including restricted cash and $3.0 million excluding restricted cash. Liquidity as defined in the Amendment includes Cash and certain qualifying customer and credit card accounts receivable.

The Term Loan and Revolving Loan will bear interest on the unpaid principal amount thereof as follows: (i) if it is a loan bearing interest at a rate determined by the Base Rate, then at the Base Rate plus the Applicable Rate for such loan and (ii) if it is a loan bearing interest at a rate determined by Term SOFR, then at Term SOFR plus the Applicable Rate for such loan. The Company may elect to continue or convert the existing interest rate benchmark for the Term Loan from Term SOFR to Base Rate, and may elect the interest rate benchmark for future revolving loans as either Term SOFR or Base Rate (and, with respect to any loan made using Term SOFR, may also select the interest period applicable to any such loan), by notifying the Agent and the Lenders from time to time in accordance with the provisions of the Amendment and Credit Agreement. The Applicable Rate increased from a high of 1.95% and 0.95%, respectively, for Term SOFR and Base Rate in the Credit Agreement to 4.00% for each of Term SOFR and Base Rate as a result of the Amendment. Interest is payable in arrears on each Interest Payment Date (as defined in the Credit Agreement). Notwithstanding the foregoing, following an event of default, the loans under the Credit Facilities will bear interest at a rate that is 2% per annum higher than the interest rate then in effect for the applicable loan.

On May 9, 2022, the Company entered into an interest rate swap agreement to reduce its exposure to fluctuations in the floating interest rate tied to SOFR (see Note 9). The initial notional amount of the swap is $100 million with a termination date of May 31, 2027. As a result of the swap, the Company pays interest at a fixed rate of 2.9%, plus applicable margins.

Commencing on September 30, 2023, through and including June 30, 2024, the Borrowers must repay the principal amount of the Term Loan in quarterly installments of $1,875,000 each, payable on the last business day of each March, June, September and December. Revolving Loans may be repaid and reborrowed at any time until the Maturity Date, subject to the terms and conditions set forth in the Credit Agreement. Mandatory prepayments of Revolving Loans are required if the amount borrowed at any time exceeds the commitment amount. The Company may voluntarily prepay the Loans from time to time in accordance with the provisions of the Credit Agreement, and will be required to prepay the Loans under certain limited circumstances as set forth in the Credit Agreement, including upon receipt of cash proceeds in connection with certain specified asset sales, receipt of loss or condemnation proceeds or other cash proceeds received other than in the ordinary course of business or upon receipt of cash proceeds from the incurrence of indebtedness that is not permitted under the Credit Agreement, all as more specifically set forth in the Credit Agreement. The Loans may from time to time be further evidenced by separate promissory notes issued by the Borrowers.

As a result of the reduced term, the Company has begun discussions with investment bankers to place financing to replace the existing credit agreement by August 31, 2024.

Vehicle Loans

The Company has financed purchases of transportation vehicles with notes payable, which are secured by the vehicles purchased. These notes have five-year terms and interest rates ranging from 3.8% to 5.7%. As of June 30, 2023, the outstanding balance of these vehicle loans is $0.8 million.

POLISHED.COM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023 and 2022 (UNAUDITED)

Maturities of Notes Payable are as follows:

	June 30,
For the years ended December 31,	2023
2023 (Remainder of year)	$	3,946
2024		91,584
2025		201
2026		29
2027		21
Thereafter		-
Total		95,781
Less: Loan costs		(850	)
Total	$	94,931
Amount classified as a current liability	$	7,866
Amount classified as long-term liability		87,065

Total	$	94,931

NOTE 9—DERIVATIVE INSTRUMENTS (INTEREST RATE SWAP):

On May 9, 2022, the Company entered into a Term Loan agreement with Bank of America, N.A. (See Note 11). On the same day, the Company entered into an interest rate swap agreement to reduce its exposure to fluctuations in the floating interest rate tied to SOFR under the Term Loan with a notional amount of $100 million. The interest rate swap became effective on May 9, 2022, and will terminate on May 31, 2027. The Company receives variable interest payments monthly based on a one-month SOFR and pays a fixed rate of 2.93% to the counterparty.

As of June 30, 2023, the fair value of the interest rate swap agreement was $3.8 million and was classified as a derivative asset in our consolidated balance sheet. During the three and six months ended June 30, 2023 the Company recognized a $1.9 million and $0.6 million gain, respectively on the change in fair value of the interest rate swap.

The Company classified the interest rate swap in Level 2 of the fair value hierarchy.

NOTE 10—STOCKHOLDERS' EQUITY

As of June 30, 2023, the Company was authorized to issue 200,000,000 shares of common stock, $0.0001 par value per share, and 20,000,000 shares of “blank check” preferred stock, 0.0001 par value per share. At June 30, 2023 and December 31, 2022, there were 105,469,878 and 105,227,876 shares of common stock outstanding, respectively.

Stock Options

Below is a table summarizing the changes in stock options outstanding during the six months ended June 30, 2023:

				Weighted -Average
	Options			Exercise Price

Outstanding at December 31, 2022		37,500		$	3.10

Granted		86,550		$	0.58
Exercised
Forfeited		(37,500	)		3.10

Outstanding at June 30, 2023		86,550		$	0.58

Exercisable at June 30, 2023		-			-

POLISHED.COM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023 and 2022 (UNAUDITED)

During the six months ended June 30, 2023, 37,500 stock options were forfeited, as a result of employee terminations.

Stock-based compensation expense of $0.2 million was recorded during the Six months ended June 30, 2023. As of June 30, 2023, the remaining unrecognized compensation cost related to non-vested stock options is $0.03 million and is expected to be recognized over 3.5 years. The outstanding stock options have a weighted average remaining contractual life of 9.5 years and a total intrinsic value of $nil.

Warrants

Below is a table summarizing the changes in warrants outstanding during the six months ended June 30, 2023

			Weighted- Average
	Warrants		Exercise Price

Outstanding at December 31, 2022		92,514,423	$	2.30

Granted		-		-
Exercised		-		-
Forfeited		-		-

Outstanding at June 30, 2023		92,514,423	$	2.30

Exercisable at June 30, 2023		92,514,423	$	2.30

As of June 30, 2023, the outstanding warrants have a weighted average remaining contractual life of 2.9 years and a total intrinsic value of $nil.

NOTE 11—EARNINGS (LOSS) PER SHARE

The computation of weighted average shares outstanding and the basic and diluted earnings (loss) per common share for the following periods consisted of the following (in thousands, except share and per share amounts):

	For the Three Months Ended						For the Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2023			2022			2023			2022
Basic Earnings (Loss) Per Share

Net income (loss)	$	1,004		$	(4,292	)	$	(1,757	)	$	1,527
Basic weighted average common shares outstanding		105,469,878			105,774,197			105,425,640			106,080,764
Basic earnings (loss) per share	$	0.01	$		(0.04	)	$	(0.02	)	$	(0.01	)

Effect of dilutive stock options and warrants		-			-			-			-
Diluted weighted average common shares outstanding		105,469,878			105,774,197			105,425,640			106,080,764

Diluted earnings (loss) per share	$	0.01		$	(0.04	)	$	(0.02	)	$	(0.01	)

For the three and six months ended June 30, 2023 and 2022, there were 92,600,973 and 92,664,423, respectively, potentially diluted options and warrants were excluded from the diluted EPS calculations as their effect is anti-dilutive.

POLISHED.COM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023 and 2022 (UNAUDITED)

NOTE 12—COMMITMENTS AND CONTINGENCIES

Legal Proceedings

At the Company’s annual meeting on December 21, 2021, the stockholders were asked to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation, dated July 30, 2020 (the “Certificate of Incorporation”), increasing the number of authorized shares of the Company’s common stock, par value $0.0001 per share (“Common Stock” and such proposal, the “Share Increase Proposal”) by 50,000,000 shares of Common Stock. As reported in a Form 8-K filing on December 28, 2021, the Share Increase Proposal was adopted and a Certificate of Amendment to the Certificate of Incorporation setting forth the amendment adopted pursuant to the Share Increase Proposal (the “Certificate of Amendment”) was filed with the Secretary of State of the State of Delaware (the “Delaware Secretary of State”). To date, none of these newly authorized shares has actually been issued. Three purported beneficial owners of Common Stock subsequently expressed concerns about a statement in the Company’s proxy statement related to the Share Increase Proposal, specifically questioning, in light of the proxy statement, the ability of brokerage firms and other custodians to vote shares of Common Stock held by them for the benefit of their customers in the absence of instructions from the beneficial owners. Based on an examination of the situation performed following receipt of these demands, the Company believes that the vote at the annual meeting was properly tabulated and that the proposed amendment was properly adopted in accordance with Delaware law. In light of the demands, however, and to ensure against any future question as to the validity of these newly authorized shares, the Company elected to seek validation of its Certificate of Amendment through a Petition to the Court of Chancery of the State of Delaware (the “Court of Chancery”) pursuant to Section 205 of the Delaware General Corporation Law (the “205 Petition”). The action, styled In re 1847 Goedeker Inc., C.A. 2022-0219-SG (the “Action”), sought entry by the Court of Chancery of an order validating and declaring effective the Certificate of Amendment, and validating the additional shares of Common Stock authorized under the Share Increase Proposal.

Two purported stockholders objected to the 205 Petition. One such objecting, purported stockholder (the “Stockholder Plaintiff”) filed his own lawsuit (which was then consolidated with the 205 Petition) requesting that such relief not be granted and asserting two claims for relief: first, against the Company for alleged violation of the Delaware General Corporation Law Section 225(b) for improper tabulation of the stockholder vote on the Share Increase Proposal; and second, asserting that the Company’s directors breached their fiduciary duties by incorrectly tabulating the stockholder vote, and by causing a purportedly invalid amendment to our Certificate of Incorporation to be filed with the Delaware Secretary of State. The Court of Chancery held a hearing on May 27, 2022, to consider the Company’s motion for entry of an order under Section 205 and subsequently entered an order denying the motion without prejudice on June 30, 2022. On July 7, 2022, the Company filed a Certificate of Correction with the Secretary of State of the State of Delaware, voiding the Charter Amendment and causing the number of authorized shares of Common Stock to remain at 200,000,000.

On June 12, 2023, the Company submitted to the Court of Chancery a Stipulation and [Proposed] Order Regarding Notice and Closing of the Case regarding the Action (the “Dismissal Order”). As stated in the Dismissal Order, the Company and the other parties to the Action negotiated at arm’s length and resolved the stockholders’ claims to entitlement to a mootness fee award, and the Company agreed to pay $475,000 for attorneys’ fees and expenses to the stockholders’ counsel (the “Attorneys’ Fees”). Pursuant to Court of Chancery Rules 23(e) and 41(a), the parties to the Action stipulated to voluntary dismissal of the Action with prejudice as to the Stockholder Plaintiff and without prejudice as to any actual or potential claims of any other members of the putative class, and such dismissal was granted by the Court on June 13, 2023. As stipulated in the Dismissal Order, the Company paid the Attorneys’ Fees to the stockholders’ counsel on June 28, 2023 and such payment fully satisfied and resolved the stockholders’ and the stockholders’ counsel’s entitlement to any fees or expenses in the Action.

On October 31, 2022, a putative shareholder class action was filed against Polished.com Inc. (the “Company”) and certain of its current and former officers and directors, as well as certain underwriters of the Company’s 2020 initial public offering (the “IPO”). The action was commenced in the United States District Court for the Eastern District of New York court and is captioned Maschhof v. Polished.com Inc., et al., No. 1:22-cv-06606. The complaint asserts violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as well as Sections 10(b) and Rule 10b-5 promulgated thereunder, and 20(a) of the Securities Exchange Act of 1934 arising from alleged misstatements and omissions made in certain of the Company’s SEC filings made in connection with the IPO. On or about December 20, 2022, plaintiffs filed a motion for the appointment of lead plaintiff and lead counsel. Although that motion is fully briefed, to date, oral argument has yet to be scheduled.

POLISHED.COM INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023 and 2022 (UNAUDITED)

On January 26, 2023, a derivative stockholder complaint was filed against certain of the Company’s current and former officers and directors, naming the Company as a nominal defendant. The action was commenced in the United States District Court for the Eastern District of New York court and is captioned Wong v. Moore et al., No. 1:23-cv-00559. The complaint asserts violations of Section 14(a) of the Exchange Act, breaches of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets, arising from alleged misstatements and omissions made in certain of the Company’s SEC filings made in connection with the IPO. On or about March 7, 2023, plaintiff filed a stipulation and proposed order to stay proceedings until any motions to dismiss in the related class action (captioned Maschhoff v. Polished.com Inc. et al., No. 1:22-cv-06606) are decided. On March 23, 2023, the stipulation was so-ordered.

On February 13, 2023, a derivative stockholder complaint was filed against certain of the Company’s current and former officers and directors as well as the Company’s external manager, naming the Company as a nominal defendant. The action was commenced in the United States District Court for the Eastern District of New York court and is captioned Gossett v. Moore, et al., No. 1:23-cv-1168. The complaint asserts claims for breach of fiduciary duty against the former officers and directors and aiding and abetting breaches of fiduciary of duty against the external manager, arising from alleged misstatements and omissions made in certain of the Company’s SEC filings made in connection with the IPO. On or about April 24, 2023, plaintiffs filed a joint stipulation and proposed order consolidating the related derivative actions and appointing co-lead counsel. To date, the stipulation has yet to be ordered.

NOTE 13—SUPPLIER CONCENTRATION

Significant customers and suppliers are those that account for greater than ten percent of the Company’s revenues and purchases.

For the six months June 30, 2023, the Company approximately 65% of purchases were made from DMI.

The Company believes there are numerous other suppliers that could be substituted should the supplier become unavailable or non-competitive.

NOTE 14—SUBSEQUENT EVENTS

Subsequent to December 31, 2022, the Company signed a letter of intent for a sublease from DMI, a related party for a new warehouse in a building being leased by DMI. The new lease will allow the Company to close its two existing New Jersey warehouses and consolidate operations into one new warehouse. The lease, which is expected to be finalized in the fourth quarter of 2023 or the first quarter of 2025 is for 228,000 square feet for seven years at a cost of approximately $15 per square foot, including common area charges with annual increases of 3.75%.

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

Except as otherwise indicated by the context and for the purposes of this Quarterly Report on Form 10-Q, the terms “Company,” “we,” “us,” or “our” refer to Polished.com Inc., a Delaware corporation, and its consolidated subsidiaries, including but not limited to, 1 Stop Electronics Center, Inc., a New York corporation (“1 Stop”), Gold Coast Appliances, Inc., a New York corporation (“Gold Coast”), Superior Deals Inc., a New York corporation (“Superior Deals”), Joe’s Appliances LLC, a New York limited liability company (“Joe’s Appliances”), and YF Logistics LLC, a New Jersey limited liability company (“YF Logistics” and together with 1 Stop, Gold Coast, Superior Deals, and Joe’s Appliances, “Appliances Connection”), and AC Gallery Inc., a Delaware corporation (“AC Gallery”). The following discussion and analysis summarizes the significant factors affecting our operating results, financial condition, liquidity and cash flows as of and for the periods presented below. The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this report. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly in the section “Cautionary Statement Regarding Forward-Looking Statements” and in our Annual Report on Form 10-K for the year ended December 31, 2022 under the heading Item 1A “Risk Factors.”

Overview

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes thereto, which are included in Part I, Item 1 of this Form 10-Q.

We operate a content-driven and technology-enabled shopping destination for appliances, furniture and home goods. With warehouse fulfillment centers in the Northeast and Midwest, as well as showrooms in Brooklyn, New York, and Largo, Florida. We offer one-stop shopping for national and global brands. We carry many household name-brands, including Bosch, Cafe, Frigidaire Pro, Whirlpool, LG, and Samsung, and also carry many major luxury appliance brands such as Miele, Thermador, La Cornue, Dacor, Ilve, Jenn-Air, and Viking, among others. We also sell furniture, fitness equipment, plumbing fixtures, televisions, outdoor appliances, and patio furniture, as well as commercial appliances for builder and business clients.

Recent Developments

Amendment of Bank of America Credit Agreement

On July 25, 2023, the Company and Bank of America amended their Credit Agreement (the “Amendment”), in part, to waive events of defaults on its existing credit agreement. The Amendment requires the Company to pay the existing Term Facility and Revolving Facility by August 31, 2024 (the “Maturity Date”). The Revolving Loan decreased to $10,000,000 from and after July 25, 2023. The Letter of Credit commitments decreased to $2,000,000 and the Swing Line Loan was eliminated. The Amendment also establishes a new EBITDA covenant and requires the Company to maintain minimum liquidity of $8.0 million including restricted cash and $3.0 million excluding restricted cash. Liquidity as defined in the Amendment includes Cash and certain qualifying customer and credit card accounts receivable.

Concurrent with closing of the Bank of America loan, the Company purchased a fixed rate loan swap (See Note 9) capping its interest rate at 2.9%, plus applicable margins.

As a result of the reduced term, the Company has begun discussions with investment bankers to place financing to replace the existing credit agreement by August 31, 2024.

Trends and Principal Factors Affecting Our Financial Performance

Our operating results are primarily affected by the following factors:

●

our ability to acquire new customers or retain existing customers, including those shopping online

●

our ability to offer competitive product pricing;

●

our ability to broaden product offerings;

●

industry demand and competition;

●

market conditions and our market position; and

●

our ability to successfully integrate the operations of Appliances Connection with our business.

Results of Operations

Comparison of Three Months Ended June 30, 2023 and 2022

The following table sets forth key components of our results of operations for the three months ended June 30, 2023 and 2022, in thousands and as a percentage of our revenue.

	For the Three Months Ended						For the Three Months Ended
	June 30, 2023						June 30, 2022
	Amount			% of Net Sales			Amount			% of Net Sales
Product sales, net	$	87,761			100.0	%	$	138,463			100.0	%
Cost of goods sold		68,181			77.7	%		115,438			83.4	%
Gross profit		19,580			22.3	%		23,025			16.6	%

Operating Expenses
Personnel		6,021			6.9	%		7,402			5.3	%
Advertising		4,512			5.1	%		5,363			3.9	%
Bank and credit card fees		3,005			3.4	%		4,600			3.3	%
Depreciation and amortization		1,068			1.2	%		2,887			2.1	%
General and administrative		4,885			5.6	%		3,563			2.6	%

Total Operating Expenses		19,491			22.2	%		23,815			17.2	%

INCOME (LOSS) FROM OPERATIONS		89			0.1	%		(790	)		(0.6	)%

Other Income (Expenses)
Interest income		375			0.4	%		64			0.1	%
Interest expense		(1,053	)		(1.2	)%		(302	)		(0.3	)%

Gain (loss) on change in fair value of derivative instruments		1,899			2.2	%		(936	)		(0.7)	%

Loss on settlement of debt		-			-			(3,241	)		(2.3	)%
Other income (expense)		22			-	%		(41	)		-	%

Total Other Income (Expenses)		1,243			1.4	%		(4,456	)		(3.2	)%

NET INCOME (LOSS) BEFORE INCOME TAXES		1,332			1.5	%		(5,246	)		(3.8	)%

INCOME TAX EXPENSE (BENEFIT)		(328	)		(0.4	)		954			0.7	%

NET INCOME (LOSS)	$	1,004			1.1	%	$	(4,292	)		(3.1	)%

Product sales, net. We generate revenue from the retail sale of appliances, furniture, home goods and related products. Our product sales were $87.8 million for the three months ended June 30, 2023, as compared to $138.5 million for the three months ended June 30, 2022, a decrease of $50.7 million, or 36.6%. The decrease in sales is attributable to several factors including a general slowdown in the economy, inflation, an increase in interest rates which affects the mass market, and a decline in the luxury market, particularly the remodeling business. Also, in 2022, the Company pursued a policy of revenue growth with less emphasis on profitability.

Cost of goods sold. Our costs of goods sold are comprised of product costs and freight costs. Product costs represent the amount we pay the manufacturer for their product. We negotiate special terms and pricing with the manufacturer, which are generally based on the number of products we purchase. Periodically, manufacturers offer special pricing for purchasing a certain volume of products at one time. Funding might also be offered to support our marketing and advertising efforts. Freight is the cost of delivering products to customers. Our cost of goods sold was $68.2 million for the three months ended June 30, 2023, as compared to $115.4 million for the three months ended June 30, 2022, a decrease of $47.3 million, or 40.9%. The decrease is related to reduced sales for the three months ended June 30, 2023.

Gross profit and gross margin. As a result of the foregoing, our gross profit was $19.6 million for the three months ended June 30, 2023, as compared to $23.0 million for the three months ended June 30, 2022, a decrease of $3.4 million, or 15.0%. Our gross margin (gross profit as a percentage of net sales) was 22.3% for the three months ended June 30, 2023and 16.6% for the three months ended June 30, 2022. The improvement in the gross profit percentage is the result of management’s emphasis on profitability as opposed to revenue growth.

Personnel expenses. Personnel expenses include employee salaries and bonuses plus related payroll taxes. It also includes health insurance premiums, 401(k) contributions, training costs and stock compensation expense. Our personnel expenses were $6.0 million for the three months ended June 30, 2023, as compared to $7.4 million for the three months ended June 30, 2022, a decrease of $1.4 million, or 18.7%. As a percentage of net sales, personnel expenses were 6.9% and 5.3% for the three months ended June 30, 2023 and 2022, respectively. In 2023, management made a conscious decision to adjust headcount to match revenue.

Advertising expenses. Advertising expenses include the cost of marketing our products and primarily include online search engine expenses. Our advertising expenses were $4.5 million for the three months ended June 30, 2023, as compared to $5.4 million for the three months ended June 30, 2022, a decrease of $0.9 million, or 15.9%. As a percentage of net sales, advertising expenses were 5.1% and 3.9% for the three months ended June 30, 2023 and 2022, respectively.

Bank and credit card fees. Bank and credit card fees are primarily the fees we pay credit card processors for processing credit card purchases made by customers and to third party sellers on whose websites we sell parts and other small items. Our bank and credit card fees were $3.0 million for the three months ended June 30, 2023, as compared to $4.6 million for the three months ended June 30, 2022, a decrease of $1.6 million, or 34.7%. As a percentage of net sales, bank and credit card fees were 3.4% and 3.3% for the three months ended June 30, 2023 and 2022, respectively. Bank and credit card fees are based on customer orders that are paid with a credit card (substantially all orders), so the decrease was largely due to the decline in sales.

Depreciation and amortization. Depreciation and amortization was $1.1 million, or 1.2% of net sales, for the three months ended June 30, 2023, as compared to $2.9 million, or 2.1% of net sales, for the three months ended June 30, 2022. The decrease is the result of the 2022 impairment charge that reduced the amount of intangible assets to be amortized.

General and administrative expenses. Our general and administrative expenses consist primarily of professional advisor fees, rent expense, insurance, and other expenses incurred in connection with general operations. Our general and administrative expenses were $4.9 million for the three months ended June 30, 2023, as compared to $3.6 million for the three months ended June 30, 2022, an increase of $1.3 million, or 37.1%. As a percentage of net sales, general and administrative expenses were 5.6% and 2.6% for the three months ended June 30,2023 and 2022, respectively. The increase results from higher insurance premiums and professional fees, including the necessity to reaudit and restate 2021.

Following is a summary of general and administrative expenses for the three months ended June 30, 2023 and 2022

	Three Months Ended June 30
	2023		2022
Professional fees	$	1,798	$	1,172
Insurance		1,153		513
Rent		1,109		1,010
All other		825		868

Total	$	4,885	$	3,563

Total other income (expense). We had $1.2 million in total other income, net, for the three months ended June 30, 2023, as compared to total other expense, net, of $4.5 million for the three months ended June 30, 2022. Total other income, net, for the three months ended June 30, 2023 consisted primarily of a gain on the change in fair value of a derivative of $1.9 million and interest income of $0.4 million, offset by interest expense of $1.1 million. Total other expense, net, for the three months ended June 30, 2022 consisted of a loss of $3.2 million on the settlement of a debt obligation, a change in the fair value of a derivative of $0.9 million, and interest expense of $0.3 million offset by interest income of $0.06 million.

Income tax benefit (expense). We had an income tax expense of $0.3 million for the three months ended June 30, 2023, as compared to an income tax benefit of $1.0 million for the three months ended June 30, 2022.

Net income (loss). As a result of the cumulative effect of the factors described above, we had net income of $1.0 million for the three months ended June 30, 2023, as compared to a net loss of $4.3 million for the three months ended June 30, 2022, an increase of $5.3 million, or 123.4%.

Comparison of the six months ended June 30, 2023 and 2022

The following table sets forth key components of our results of operations for the six months ended June 30, 2023 and 2022, in thousands and as a percentage of our revenue.

	Six Months Ended						Six Months Ended
	June 30, 2023						June 30, 2022
	Amount			% of Net Sales			Amount			% of Net Sales
Product sales, net	$	183,200			100.0	%	$	287,144			100.0	%
Cost of goods sold		142,474			77.8	%		233,357			81.3	%
Gross profit		40,726			22.2	%		53,787			18.7	%

Operating Expenses
Personnel		12,505			6.8	%		14,048			4.9	%
Advertising		9,633			5.3	%		10,941			3.8	%
Bank and credit card fees		6,378			3.4	%		9,189			3.2	%
Depreciation and amortization		2,138			1.2	%		5,706			2.0	%
General and administrative		9,872			5.4	%		7,818			2.7	%

Total Operating Expenses		40,526			22.1	%		47,702			16.6	%

INCOME FROM OPERATIONS		200			0.1	%		6,085			2.1	%

Other Income (Expenses)
Interest income		732			0.4	%		108			(0.0	)%
Adjustment in value of contingency		-			-			(2	)		(0.0	)%
Interest expense		(2,935	)		(1.6	)%		(1,243	)		(0.4	)%
Gain (loss) on change in fair value of derivative instruments		574			0.3	%		(936	)		(0.3	)%
Loss on settlement of debt		-			-			(3,241	)		(1.1	)%
Other income (expense)		104			0.1	%		(90	)		(0.0	)%

Total Other Expenses		(1,525	)		(0.8	)%		(5,404	)		(1.9	)%

NET INCOME (LOSS) BEFORE INCOME TAXES		(1,325	)		(0.7	)%		681			0.2	%

INCOME TAX (EXPENSE) BENEFIT		(432	)		(0.3	)%		846			0.3	%

NET INCOME (LOSS)	$	(1,757	)		(1.0	)%	$	1,527			0.5	%

Product sales, net. We generate revenue from the retail sale of appliances, furniture, home goods and related products. Our product sales were $183.2 million for the six months ended June 30, 2023, as compared to $287.1 million for the six months ended June 30, 2022, a decrease of $103.9 million, or 36.2%. The decrease in sales is attributable to several factors including a general slowdown in the economy, inflation, an increase in interest rates which affects the mass market, and a decline in the luxury market, particularly the remodeling business. Also, in 2022, the Company pursued a policy of revenue growth with less emphasis on profitability.

Cost of goods sold. Our costs of goods sold are comprised of product costs and freight costs. Product costs represent the amount we pay the manufacturer for their product. We negotiate special terms and pricing with the manufacturer, which are generally based on the number of products we purchase. Periodically, manufacturers offer special pricing for purchasing a certain volume of products at one time. Funding might also be offered to support our marketing and advertising efforts. Freight is the cost of delivering products to customers. Our cost of goods sold was $142.5 million for the six months ended June 30, 2023, as compared to $233.4 million for the six months ended June 30, 2022, a decrease of $90.9 million, or 39.0%.

Gross profit and gross margin. As a result of the foregoing, our gross profit was $40.7 million for the six months ended June 30, 2023, as compared to $53.8 million for the six months ended June 30, 2022, a decrease of $13.1 million, or 24.3%. Our gross margin (gross profit as a percentage of net sales) was 22.2% for the six months ended June 30, 2023 and 18.7% for the six months ended June 30, 2022. The improvement in the gross profit percentage is the result of management’s emphasis on profitability as opposed to revenue growth. The decrease in gross profit results from reduced sales. The increase in gross margin results from management’s emphasis on profitability in the current period.

Personnel expenses. Personnel expenses include employee salaries and bonuses plus related payroll taxes. It also includes health insurance premiums, 401(k) contributions, training costs and stock compensation expense. Our personnel expenses were $12.5 million for the six months ended June 30, 2023, as compared to $14.0 million for the six months ended June 30, 2022, a decrease of $1.5 million, or 11.0%. As a percentage of net sales, personnel expenses were 6.8% and 4.9% for the six months ended June 30, 2023 and 2022, respectively. In 2023, management made a conscious decision to adjust headcount to match revenue.

Advertising expenses. Advertising expenses include the cost of marketing our products and primarily include online search engine expenses. Our advertising expenses were $9.6 million for the six months ended June 30, 2023, as compared to $10.9 million for the six months ended June 30, 2022, a decrease of $1.3 million, or 12.0%. As a percentage of net sales, advertising expenses were 5.3% and 3.8% for the six months ended June 30, 2023 and 2022, respectively.

Bank and credit card fees. Bank and credit card fees are primarily the fees we pay credit card processors for processing credit card purchases made by customers and to third party sellers on whose websites we sell parts and other small items. Our bank and credit card fees were $6.4 million for the six months ended June 30, 2023, as compared to $9.2 million for the six months ended June 30, 2022, a decrease of $2.8 million, or 30.5%. As a percentage of net sales, bank and credit card fees were 3.5% and 3.2% for the six months ended June 30, 2023 and 2022, respectively. Bank and credit card fees are based on customer orders that are paid with a credit card (substantially all orders), so the decrease was largely due to the decline in sales.

Depreciation and amortization. Depreciation and amortization was $2.1 million, or 1.2% of net sales, for the six months ended June 30, 2023, as compared to $5.7 million, or 2.0% of net sales, for the six months ended June 30, 2022. The decrease is the result of the 2022 impairment charge that reduced the amount of intangible assets to be amortized.

General and administrative expenses. Our general and administrative expenses consist primarily of professional advisor fees, rent expense, insurance, and other expenses incurred in connection with general operations. Our general and administrative expenses were $9.9 million for the six months ended June 30, 2023, as compared to $7.8 million for the six months ended June 30, 2022, an increase of $2.1 million, or 26.3%. As a percentage of net sales, general and administrative expenses were 5.4% and 2.7% for the six months ended June 30,2023 and 2022, respectively. The increase results from higher insurance premiums and professional fees, including the necessity to reaudit 2021.

Following is a summary of general and administrative expenses for the three months ended June 30, 2023 and 2022

	Six Months Ended June 30
	2023		2022
Professional fees	$	3,184	$	2,596
Insurance		2,523		1,682
Rent		2,192		2,056
All other		1,973		1,484

Total	$	9,872	$	7,818

Total other income (expense). We had $1.5 million in total other expense, net, for the six months ended June 30, 2023, as compared to total other expense, net, of $5.4 million for the six months ended June 30, 2022. Total other expense, net, for the six months ended June 30, 2023 consisted primarily of interest expense of $2.9 million, a gain on the change in fair value of a derivative of $0.6 million and interest income of $0.7 million. Total other expense, net, for the six months ended June 30, 2022 consisted of a $3.2 million loss on settlement of a debt obligation, a loss on the fair value of a derivative of $0.9 million, and interest expense of $1.2 million offset by interest income of $0.1 million.

Income tax benefit (expense). We had an income tax expense of $0.4 million for the six months ended June 30, 2023, as compared to an income tax benefit of $1.0 million for the six months ended June 30, 2022.

Net income (loss). As a result of the cumulative effect of the factors described above, we had a net loss of $1.8 million for the six months ended June 30, 2023, as compared to net income of $1.5 million for the six months ended June 30, 2022, a decrease of $3.3 million, or 215.1%.

Liquidity and Capital Resources

As of June 30, 2023, we had cash and cash equivalents of $13.7 million including restricted cash of $4.7 million. For the six months ended June 30, 2023, we had operating income of approximately $0.2 million, cash flows used in operations of $3.9 million and working capital of $22.9 million. As of and for the year ended December 31, 2022, we had an operating loss of $128.3 million (including a non-cash impairment charge of $109.1 million), cash used in operations of $46.7 million, cash and cash equivalents of $20.5 million including restricted cash of $0.95 million and working capital of $25.9 million.

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis under which the Company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business. Management believes that based on relevant conditions and events that are known and reasonably knowable that its forecasts, for one year from the date of the filing of these unaudited condensed consolidated financial statements, indicate improved operations and the Company’s ability to continue operations as a going concern.

Summary of Cash Flow

The following table provides detailed information about our net cash flow for the six months ended June 30, 2023 and 2022 (in thousands).

	Six Months Ended
	June 30,
	2023			2022
Net cash used in operating activities	$	(3,928	)	$	(22,190	)
Net cash used in investing activities		(134	)		(256	)
Net cash (used in) provided by financing activities		(2,773	)		37,774

Net change in cash, cash equivalents, and restricted cash	$	(6,835	)	$	15,328

Cashflows used in operating activities. Our net cash used in operating activities was $3.9 million for the six months ended June 30, 2023, as compared to net cash used in operating activities of $22.2 million for the six months ended June 30, 2022. Significant changes in operating assets and liabilities affecting cash flows during these periods included:

●

Net loss was $1.8 million for the six months ended June 30, 2023 compared to a net income of $1.5 million for the six months ended June 30, 2022,

●

Cash provided (used) by receivables was $4.6 million and ($2.3) million for the six months ended June 30, 2023 and 2022, respectively,

●

Cash used by vendor deposits was $5.4 million and $5.9 million for the six months ended June 30, 2023 and 2022, respectively

●

Cash provided by (used in) inventories was $2.8 million and ($4.5) million for the six months ended June 30, 2023 and 2022, respectively, due to efforts to manage inventory levels to support revenue levels in the respective years,

●

Cash used by accounts payable and accrued expenses was $3.2 million and $10.7 million for the six months ended June 30, 2023 and 2022, respectively, and

●

Cash used by customer deposits was $3.3 million and $12.1 million for the six months ended June 30, 2023 and 2022, respectively. Prior to July 2022, on certain sales transactions, the Company charged a customer’s card when an order was placed. After July 2022, the customer’s card was charged when the order shipped. The large decline in customer deposits results from shipping or refunding customer orders that had previously been paid.

Cashflows provided by investing activities. Our net cash used in investing activities was $0.1 million for the six months ended June 30, 2023, as compared to $0.3 million for the six months ended June 30, 2022. The cash used in both years was for purchases of property and equipment.

Cashflows (used in) provided by financing activities. Our net cash used in financing activities was ($2.8) million for the six months ended June 30, 2023, as compared to net cash provided by financing activities of $37.8 million for the six months ended June 30, 2022.

Significant changes in financing activities affecting cash flows during these years included:

●

Net cash received from notes payable proceeds of $43.0 million for the six months ended June 30, 2022,

●

Repayments of notes payable of $2.7 million and $3.2 million for the six months ended June 30, 2023 and 2022, respectively, and

	●	Stock repurchases of $2.0 million for the six months ended June 30, 2022.

Credit Facilities

Bank of America Credit Agreement

As of June 30, 2023, the carrying value of the Term Loan was $94.1 million, comprised of principal of $95.0 million, net of unamortized loan costs of $0.9 million.

As a result of the reduced term, the Company has begun discussions with investment bankers to place financing to replace the existing credit agreement by August 31, 2024.

Management Services Agreement

On April 5, 2019, the Company entered into a management services agreement with 1847 Partners LLC (the “Manager”), a company owned and controlled by Ellery W. Roberts, the Company’s chairman and prior significant stockholder, which was amended effective on August 4, 2020. Pursuant to the offsetting management services agreement, as amended, the Company appointed the Manager to provide certain services to it for a quarterly management fee equal to $62,500; provided, however, that under certain circumstances specified in the management services agreement, the quarterly fee may be reduced if similar fees payable to the Manager by subsidiaries of the Company’s former parent company, 1847 Holdings LLC, exceed a threshold amount.

The Company shall also reimburse the Manager for all costs and expenses of the Company which are specifically approved by the board of directors of the Company, including all out-of-pocket costs and expenses, that are actually incurred by the Manager or its affiliates on behalf of the Company in connection with performing services under the management services agreement.

The Company expensed management fees of $0.06 and $0.13million for the three and six months ended June 30, 2023 and 2022, respectively.

Leases

On April 5, 2019, the Company entered into a lease agreement with S.H.J., L.L.C. for its prior principal office in Ballwin, Missouri. The lease is for a term of five years and provides for a base rent of $45,000 per month. In addition, the Company is responsible for all taxes and insurance premiums during the lease term. The lease agreement contains customary events of default, representations, warranties, and covenants. The termination date of this lease agreement is April 4, 2024.

On May 31, 2019, YF Logistics entered into a sublease agreement with Dynamic Marketing, Inc. (“DMI”) for its warehouse space in Hamilton, NJ. The initial term of the sublease was for a period commencing on June 1, 2019 and terminating on April 30, 2020, with automatic renewals for successive one-year terms until the earlier of (i) termination by either upon thirty days’ prior written notice or (ii) April 30, 2024. The sublease provides for a base rent equal to 71.43% of the base rent paid by DMI under its lease for the premises, plus 71.43% of any taxes, operating expenses, additional charges or any other amounts due by DMI, for a total of $56,250 per month.

On January 13, 2021, the Company entered into a lease agreement with Westgate 200, LLC, which was amended on March 31, 2021, for its new principal office and showroom in St. Charles, Missouri. The lease terminates on April 30, 2027, with two options to renew for an additional five-year period. The base rent is $20,977 per month until September 30, 2021, and increases to $31,465 per month until April 30, 2022, after which time the base rent increases at approximately 2.5% per year thereafter. The Company must also pay its 43.4% pro rata portion of the property taxes, operating expenses and insurance costs and is also responsible to pay for the utilities used on the premises. The lease contains customary events of default.

On June 2, 2021, 1 Stop entered into a new lease agreement with 1870 Bath Ave. LLC, a related party, for the premises located at 1870 Bath Avenue, Brooklyn, New York. The lease is for a term of ten years and provides for a base rent of $74,263 per month during the first year with annual increases to $96,896 during the last year of the term. 1 Stop is also responsible for all property taxes, insurance costs and the utilities used on the premises. The lease contains customary events of default. This lease replaces the prior lease entered into between the parties on September 1, 2018.

On June 2, 2021, Joe’s Appliances entered into a new lease agreement with 812 5th Ave Realty LLC, a related party, for the premises located at 7812 5th Avenue, Brooklyn, New York. The lease is for a term of ten years and provides for a base rent of $6,365 per month during the first year with annual increases to $8,305 during the last year of the term. Joe’s Appliances is also responsible for all property taxes, insurance costs and the utilities used on the premises. The lease contains customary events of default. This lease replaces the prior lease entered into between the parties on September 1, 2018. The initial ROU asset and liability associated with this lease is $0.7 million.

On July 29, 2021, AC Gallery entered into a lease agreement with Tom’s Flooring, LLC for the showroom and warehouse located in Largo, Florida. The lease is for a term of four months commencing on September 1, 2021 and ending on December 31, 2021 and provides for a base rent of $6,500 per month. The lease is currently month-to-month. AC Gallery must also pay its one-third pro rata portion of the common area maintenance charges, utilities and sales taxes. The lease contains customary events of default. The lease is short term and therefore not recorded as a ROU asset and liability.

On September 9, 2021, the Company entered into a warehouse agreement for a new warehouse in Somerset, New Jersey. The warehouse agreement is for a term of 26 months commencing on October 1, 2021, and ending November 29, 2023, unless the master lease for the premises is terminated earlier. The monthly storage fee is $136,274 for the first year, $140,362 for the second year, and $144,573 for the last two months. The Company also paid a security deposit of $272,549. The lease agreement contains customary events of default, representations, warranties, and covenants. The initial ROU and liability associated with this operating lease is $3.4 million.

On March 15, 2022, the Company entered into a lease for additional office space with 8780 19th Ave LLC (“Landlord”), an entity owned by Albert and Elie Fouerti, the Company’s former Chief Executive and Chief Operating Officer, respectively. The Company contends that the lease required the Landlord do certain work at Landlord’s expense to improve the building at a cost of approximately $1.2 million. Landlord has refused to pay for this work, contending that this expense was the Company’s responsibility. In addition, the total remaining amount due on the lease at June 30, 2023 is also approximately $1.2 million. Landlord contends that the Company is in default of the lease for failing to pay rent. The Company disagrees that its rent obligations have been triggered and further contends that Landlord has violated the lease by failing to pay for the work. As of the date of this report, the Company and the Landlord remain in dispute over these issues.

Critical Accounting Policies and Estimates

For information regarding the Company’s Critical Accounting Policies and Estimates, see the “Critical Accounting Policies and Estimates” section of Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a smaller reporting company, we are not required to disclose information under this item.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

The Company maintains “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, designed to ensure that information required to be disclosed by a company in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Management, with the participation of our Interim Chief Executive Officer and Interim Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2023.

Based on the evaluation performed as of June 30, 2023, as a result of the material weaknesses in internal control over financial reporting that are described below, and as further described in Item 9A of our Annual Report on Form 10-K filed with the SEC on July 31, 2023, our Interim Chief Executive Officer and Interim Chief Financial Officer determined that our disclosure controls and procedures were not effective as of such date.

Material Weaknesses in Internal Control over Financial Reporting

Management has determined that the Company’s ineffective internal control over financial reporting and resulting material weaknesses, stem primarily from management’s inability to maintain appropriately designed controls, which impacts the control environment, risk assessment procedures and ability to detect or prevent material misstatements to the financial statements. The material weaknesses were attributed to:

●

Lack of structure and responsibility, insufficient number of qualified resources and inadequate oversight and accountability over the performance of controls;

●

Ineffective assessment and identification of changes in risk impacting internal control over financial reporting;

●

Inadequate selection and development of effective control activities, general controls over technology and effective policies and procedures;

●

Ineffective evaluation and determination as to whether the components of internal control were present and functioning; and

●

The lack of an accounting system that is required for a company or our size.

Management’s Remediation Plans

Management is actively engaged in the implementation of remediation plans to address the controls contributing to the material weaknesses. The Company has taken, and continues to take, the following remediation actions:

●

Enhance reporting structure and increase the number of qualified resources in roles over internal control over financial reporting;

●

Establish formal risk assessment procedures to identify and monitor changes in the organization that could have an impact on internal control over financial reporting;

●

Develop and document policies and procedures, including related business process and technology controls, assess their effectiveness and establish a program for continuous assessment of their effectiveness; and

●

Implementation of a new ERP

We believe these measures will remediate the control deficiencies, but management is assessing the need for any additional steps to remediate the underlying causes that give rise to these material weaknesses. The material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. There is no assurance that additional remediation steps will not be necessary.

Changes in Internal Control Over Financial Reporting

Except as set forth above, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Derivative Actions

On October 31, 2022, a putative shareholder class action was filed against Polished.com Inc. (the “Company”) and certain of its current and former officers and directors, as well as certain underwriters of the Company’s 2020 initial public offering (the “IPO”). The action was commenced in the United States District Court for the Eastern District of New York court and is captioned Maschhof v. Polished.com Inc., et al., No. 1:22-cv-06606. The complaint asserts violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as well as Sections 10(b) and Rule 10b-5 promulgated thereunder, and 20(a) of the Securities Exchange Act of 1934 arising from alleged misstatements and omissions made in certain of the Company’s SEC filings made in connection with the IPO. On or about December 20, 2022, plaintiffs filed a motion for the appointment of lead plaintiff and lead counsel. Although that motion is fully briefed, to date, oral argument has yet to be scheduled.

Action Against Former Employee

On February 22, 2023, the Company filed an action against a former employee asserting a claim for conversion based on the individual’s retention of profits from sales to the Company’s customers. The action was commenced in the Supreme Court of the State of New York, County of Kings and is captioned Polished.com, Inc. v. Naoulo, No. 505712/2023. On March 5, 2023, the defendant filed an answer and asserted counterclaims for breach of contract, breach of implied contract and defamation. On May 25, 2023, the defendant filed an amended answer and added a counterclaim for tortious interference with prospective business relations. On June 14, 2023, the Company moved to dismiss the amended counterclaims. The opposition has not been filed yet.

From time to time, we may be subject to various legal proceedings and claims arising in the ordinary course of business. All other litigation currently pending against the Company relates to matters that have arisen in the ordinary course of business and we believe that such matters will not have a material adverse effect on our consolidated financial condition, results of operations or cash flows.

ITEM 1A. RISK FACTORS.

Factors that could cause our actual results to differ materially from those in this report include the risk factors described in our Annual Report on Form 10-K filed with the SEC on July 31, 2023. Any of those factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC on July 31, 2023. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

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

We have not sold any equity securities during the six months ended June 30, 2023 that were not previously disclosed in a current report on Form 8-K that was filed during the quarter.

We did not repurchase any shares of our common stock during the six months ended June 30, 2023

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

Exhibit No.		Description
10.1		First Amendment to Credit Agreement, dated as of July 25, 2023, by and among Polished.com Inc., Appliances Connection Inc., certain guarantors party thereto, certain lenders party thereto and Bank of America, N.A (incorporated by reference to Exhibit 10.56 to the Annual Report on Form 10-K filed on July 31, 2023)
31.1*		Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certifications of Principal Financial and Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**		Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certifications of Principal Financial and Accounting Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

	*	Filed herewith
	**	Furnished herewith

SIGNATURES

Pursuant to 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.

Date: August 14, 2023	Polished.com Inc.

	/s/ J. E. “Rick” Bunka
	Name:	J. E. “Rick” Bunka
	Title:	Interim Chief Executive Officer
		(Principal Executive Officer)

	/s/ Robert D. Barry
	Name:	Robert D. Barry
	Title:	Interim Chief Financial Officer, Chief Accounting Officer and Secretary
		(Principal Financial and Accounting Officer)

10-Q false --12-31 Q2 0001810140 0001810140 2023-01-01 2023-06-30 0001810140 pol:CommonStockParValue00001PerShareMember 2023-01-01 2023-06-30 0001810140 pol:WarrantsToPurchaseCommonStockMember 2023-01-01 2023-06-30 0001810140 2023-08-10 0001810140 2023-06-30 0001810140 2022-12-31 0001810140 2022-03-31 0001810140 2021-12-31 0001810140 2023-04-01 2023-06-30 0001810140 2022-04-01 2022-06-30 0001810140 2022-01-01 2022-06-30 0001810140 us-gaap:CommonStockMember 2022-12-31 0001810140 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0001810140 us-gaap:RetainedEarningsMember 2022-12-31 0001810140 us-gaap:TreasuryStockCommonMember 2022-12-31 0001810140 us-gaap:CommonStockMember 2023-01-01 2023-03-31 0001810140 us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-03-31 0001810140 2023-01-01 2023-03-31 0001810140 us-gaap:RetainedEarningsMember 2023-01-01 2023-03-31 0001810140 us-gaap:TreasuryStockCommonMember 2023-01-01 2023-03-31 0001810140 us-gaap:CommonStockMember 2023-03-31 0001810140 us-gaap:AdditionalPaidInCapitalMember 2023-03-31 0001810140 us-gaap:RetainedEarningsMember 2023-03-31 0001810140 2023-03-31 0001810140 us-gaap:TreasuryStockCommonMember 2023-03-31 0001810140 us-gaap:RetainedEarningsMember 2023-04-01 2023-06-30 0001810140 us-gaap:CommonStockMember 2023-04-01 2023-06-30 0001810140 us-gaap:AdditionalPaidInCapitalMember 2023-04-01 2023-06-30 0001810140 us-gaap:TreasuryStockCommonMember 2023-04-01 2023-06-30 0001810140 us-gaap:CommonStockMember 2023-06-30 0001810140 us-gaap:AdditionalPaidInCapitalMember 2023-06-30 0001810140 us-gaap:RetainedEarningsMember 2023-06-30 0001810140 us-gaap:TreasuryStockCommonMember 2023-06-30 0001810140 us-gaap:TreasuryStockCommonMember 2021-12-31 0001810140 us-gaap:CommonStockMember 2021-12-31 0001810140 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001810140 us-gaap:RetainedEarningsMember 2021-12-31 0001810140 us-gaap:CommonStockMember 2022-01-01 2022-03-31 0001810140 us-gaap:RetainedEarningsMember 2022-01-01 2022-03-31 0001810140 us-gaap:TreasuryStockCommonMember 2022-01-01 2022-03-31 0001810140 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-03-31 0001810140 2022-01-01 2022-03-31 0001810140 us-gaap:CommonStockMember 2022-03-31 0001810140 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001810140 us-gaap:RetainedEarningsMember 2022-03-31 0001810140 us-gaap:CommonStockMember 2022-04-01 2022-06-30 0001810140 us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30 0001810140 us-gaap:RetainedEarningsMember 2022-04-01 2022-06-30 0001810140 us-gaap:TreasuryStockCommonMember 2022-04-01 2022-06-30 0001810140 us-gaap:CommonStockMember 2022-06-30 0001810140 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001810140 us-gaap:RetainedEarningsMember 2022-06-30 0001810140 us-gaap:TreasuryStockCommonMember 2022-06-30 0001810140 2022-06-30 0001810140 2022-01-01 2022-12-31 0001810140 pol:ApplianceSalesMember 2023-04-01 2023-06-30 0001810140 pol:ApplianceSalesMember 2022-04-01 2022-06-30 0001810140 pol:ApplianceSalesMember 2023-01-01 2023-06-30 0001810140 pol:ApplianceSalesMember 2022-01-01 2022-06-30 0001810140 pol:FurnitureSalesMember 2023-04-01 2023-06-30 0001810140 pol:FurnitureSalesMember 2022-04-01 2022-06-30 0001810140 pol:FurnitureSalesMember 2023-01-01 2023-06-30 0001810140 pol:FurnitureSalesMember 2022-01-01 2022-06-30 0001810140 us-gaap:TradeAccountsReceivableMember 2023-01-01 2023-06-30 0001810140 us-gaap:TradeAccountsReceivableMember 2022-01-01 2022-12-31 0001810140 pol:VendorRebatesReceivableMember 2023-01-01 2023-06-30 0001810140 pol:VendorRebatesReceivableMember 2022-01-01 2022-12-31 0001810140 pol:OtherReceivablesMember 2023-01-01 2023-06-30 0001810140 pol:OtherReceivablesMember 2022-01-01 2022-12-31 0001810140 pol:WarehouseEquipmentMember 2023-06-30 0001810140 pol:WarehouseEquipmentMember 2022-12-31 0001810140 pol:FinancedWarehouseMember 2023-06-30 0001810140 pol:FinancedWarehouseMember 2022-12-31 0001810140 us-gaap:FurnitureAndFixturesMember 2023-06-30 0001810140 us-gaap:FurnitureAndFixturesMember 2022-12-31 0001810140 us-gaap:TransportationEquipmentMember 2023-06-30 0001810140 us-gaap:TransportationEquipmentMember 2022-12-31 0001810140 us-gaap:LeaseholdImprovementsMember 2023-06-30 0001810140 us-gaap:LeaseholdImprovementsMember 2022-12-31 0001810140 pol:ShowroomInventoryMember 2023-06-30 0001810140 pol:ShowroomInventoryMember 2022-12-31 0001810140 us-gaap:CustomerRelationshipsMember 2023-06-30 0001810140 us-gaap:CustomerRelationshipsMember 2022-12-31 0001810140 us-gaap:MarketingRelatedIntangibleAssetsMember 2023-06-30 0001810140 us-gaap:MarketingRelatedIntangibleAssetsMember 2022-12-31 0001810140 2022-03-15 0001810140 2022-05-09 0001810140 pol:TermLoanMember 2022-05-09 0001810140 us-gaap:RevolvingCreditFacilityMember 2022-05-09 0001810140 2022-05-09 2022-05-09 0001810140 pol:MAndTCreditAgreementMember 2022-05-09 0001810140 pol:ArvestLoanMember 2022-12-31 0001810140 pol:TermLoanMember 2022-01-01 2022-12-31 0001810140 us-gaap:SubsequentEventMember 2023-07-25 2023-07-25 0001810140 srt:ScenarioForecastMember us-gaap:SubsequentEventMember 2023-07-25 2023-07-25 0001810140 srt:ScenarioForecastMember us-gaap:SubsequentEventMember 2023-07-25 0001810140 srt:MaximumMember 2022-01-01 2022-12-31 0001810140 srt:MinimumMember 2022-01-01 2022-12-31 0001810140 2023-05-09 2023-05-09 0001810140 2023-05-09 0001810140 pol:TermLoanMember 2023-09-30 0001810140 srt:MinimumMember 2023-06-30 0001810140 srt:MaximumMember 2023-06-30 0001810140 us-gaap:InterestRateSwapMember 2022-05-09 0001810140 us-gaap:InterestRateSwapMember 2023-06-30 0001810140 us-gaap:InterestRateSwapMember 2023-04-01 2023-06-30 0001810140 us-gaap:InterestRateSwapMember 2023-01-01 2023-06-30 0001810140 us-gaap:PreferredStockMember 2023-06-30 0001810140 2022-04-01 2023-03-31 0001810140 us-gaap:WarrantMember 2022-12-31 0001810140 us-gaap:WarrantMember 2023-01-01 2023-06-30 0001810140 us-gaap:WarrantMember 2023-06-30 0001810140 us-gaap:StockOptionMember 2023-04-01 2023-06-30 0001810140 us-gaap:WarrantMember 2022-01-01 2022-06-30 0001810140 2022-07-07 0001810140 2023-06-01 2023-06-12 0001810140 pol:DMIMember 2023-01-01 2023-06-30 xbrli:shares iso4217:USD iso4217:USD xbrli:shares xbrli:pure utr:sqm

Exhibit 31.1

CERTIFICATION

PURSUANT TO EXCHANGE ACT RULE 13A-14(a) OR RULE 15D-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, J. E. “Rick” Bunka, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Polished.com Inc. (the “registrant”);

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 14, 2023	By:	/s/ J. E. “Rick” Bunka
		J. E. “Rick” Bunka
		Interim Chief Executive Officer
		(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION

PURSUANT TO EXCHANGE ACT RULE 13A-14(a) OR RULE 15D-14(a)

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert D. Barry, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Polished.com Inc. (the “registrant”);

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: August 14, 2023	By:	/s/ Robert D. Barry
		Robert D. Barry
		Interim Chief Financial Officer
		(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Polished.com Inc. (the “Company”) for the period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, J.E. “Rick” Bunka, Interim Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 14, 2023	By:	/s/ J. E. “Rick” Bunka
		J. E. “Rick” Bunka
		Interim Chief Executive Officer
		(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION

PURSUANT TO 18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Polished.com Inc. (the “Company”) for the period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert D. Barry, Interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 14, 2023	By:	/s/ Robert D. Barry
		Robert D. Barry
		Interim Chief Financial Officer
		(Principal Financial Officer)

Document And Entity Information - shares	6 Months Ended
Document And Entity Information - shares	Jun. 30, 2023	Aug. 10, 2023
Document Information Line Items
Entity Registrant Name	Polished.com Inc.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		105,469,878
Amendment Flag	false
Entity Central Index Key	0001810140
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Document Period End Date	Jun. 30, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Shell Company	false
Entity Ex Transition Period	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-39418
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	83-3713938
Entity Address, Address Line One	1870 Bath Avenue
Entity Address, City or Town	Brooklyn
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	11214
City Area Code	800
Local Phone Number	299-9470
Entity Interactive Data Current	Yes
Common Stock, par value $0.0001 per share
Document Information Line Items
Trading Symbol	POL
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Security Exchange Name	NYSE
Warrants to Purchase Common Stock
Document Information Line Items
Trading Symbol	POL WS
Title of 12(b) Security	Warrants to Purchase Common Stock
Security Exchange Name	NYSE

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current Assets
Cash and cash equivalents	$ 8,977	$ 19,549
Restricted cash	4,687	950
Receivables, net	22,089	26,650
Vendor deposits	30,452	25,022
Merchandise inventory, net	39,448	41,766
Prepaid expenses and other current assets	10,141	11,217
Total Current Assets	115,794	125,154
Property and equipment, net	4,671	5,075
Operating lease right-of-use assets	10,019	11,688
Derivative instruments	3,752	3,178
Goodwill	106,173	106,173
Intangible assets, net	8,789	10,296
Deferred tax asset		1
Other long-term assets	350	349
TOTAL ASSETS	249,548	261,914
Current Liabilities
Accounts payable and accrued expenses	78,176	81,537
Customer deposits	4,041	7,292
Current portion of notes payable, net	7,866	6,628
Current portion of finance lease liabilities	111	112
Current portion of operating lease liabilities	2,730	3,726
Total Current Liabilities	92,924	99,295
Notes payable, net of current portion	87,065	90,816
Finance lease liabilities, net of current portion	169	225
Operating lease liabilities, net of current portion	8,108	9,013
Deferred tax liability	286
TOTAL LIABILITIES	188,552	199,349
Stockholders’ Equity
Preferred stock, $0.0001 par value, 20,000,000 shares authorized; none issued and outstanding as of June 30, 2023 and December 31, 2022
Common stock, $0.0001 par value, 200,000,000 shares authorized; 105,469,878 and 105,227,876 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	11	11
Additional paid-in capital	223,015	222,827
Accumulated deficit	(162,030)	(160,273)
TOTAL STOCKHOLDERS’ EQUITY	60,996	62,565
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 249,548	$ 261,914

Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares	Jun. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value (in Dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	105,469,878	105,227,876
Common stock, shares outstanding	105,469,878	105,227,876

Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Product sales, net	$ 87,761	$ 138,463	$ 183,200	$ 287,144
Cost of goods sold	68,181	115,438	142,474	233,357
Gross profit	19,580	23,025	40,726	53,787
Operating Expenses
Personnel	6,021	7,402	12,505	14,048
Advertising	4,512	5,363	9,633	10,941
Bank and credit card fees	3,005	4,600	6,378	9,189
Depreciation and amortization	1,068	2,887	2,138	5,706
General and administrative	4,885	3,563	9,872	7,818
Total Operating Expenses	19,491	23,815	40,526	47,702
INCOME (LOSS) FROM OPERATIONS	89	(790)	200	6,085
Other Income (Expenses)
Interest income	375	64	732	108
Adjustment in value of contingency				(2)
Interest expense	(1,053)	(302)	(2,935)	(1,243)
Gain (loss) on change in fair value of derivative instruments	1,899	(936)	574	(936)
Loss on settlement of debt		(3,241)		(3,241)
Other income (expense)	22	(41)	104	(90)
Total Other Income (Expenses)	1,243	(4,456)	(1,525)	(5,404)
NET INCOME (LOSS) BEFORE INCOME TAXES	1,332	(5,246)	(1,325)	681
INCOME TAX (EXPENSE) BENEFIT	(328)	954	(432)	846
NET INCOME (LOSS)	$ 1,004	$ (4,292)	$ (1,757)	$ 1,527
Income per common share
Basic (in Dollars per share)	$ 0.01	$ (0.04)	$ (0.02)	$ 0.01
Diluted (in Dollars per share)	$ 0.01	$ (0.04)	$ (0.02)	$ 0.01
Weighted average common shares outstanding
Basic (in Shares)	105,469,878	105,774,197	105,425,640	106,080,764
Diluted (in Shares)	105,469,878	105,774,197	105,425,640	106,080,764

Consolidated Statements of Stockholders’ Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Treasury Stock At Cost	Total
Balance at Dec. 31, 2021	$ 11	$ 224,648	$ (34,308)		$ 190,351
Balance (in Shares) at Dec. 31, 2021	106,387,332
Issuance of common stock through equity incentive awards		120			120
Issuance of common stock through equity incentive awards (in Shares)	69,766
Stock compensation expense		33			33
Net income (loss)			5,819		5,819
Balance at Mar. 31, 2022	$ 11	224,801	(28,489)		196,323
Balance (in Shares) at Mar. 31, 2022	106,457,098
Balance at Dec. 31, 2021	$ 11	224,648	(34,308)		190,351
Balance (in Shares) at Dec. 31, 2021	106,387,332
Net income (loss)					1,527
Balance at Jun. 30, 2022	$ 11	224,821	(32,781)	(2,000)	190,051
Balance (in Shares) at Jun. 30, 2022	105,227,876
Balance at Mar. 31, 2022	$ 11	224,801	(28,489)		196,323
Balance (in Shares) at Mar. 31, 2022	106,457,098
Stock compensation expense		20			20
Net income (loss)			(4,292)		(4,292)
Balance at Jun. 30, 2022	$ 11	224,821	(32,781)	(2,000)	190,051
Balance (in Shares) at Jun. 30, 2022	105,227,876
Purchase of treasury stock				(2,000)	(2,000)
Purchase of treasury stock (in Shares)	(1,229,222)
Balance at Dec. 31, 2022	$ 11	222,827	(160,273)		62,565
Balance (in Shares) at Dec. 31, 2022	105,227,876
Issuance of common stock through equity incentive awards		60			60
Issuance of common stock through equity incentive awards (in Shares)	83,011
Issuance of common stock in connection with employment agreements		120			120
Issuance of common stock in connection with employment agreements (in Shares)	158,991
Stock compensation expense		8			8
Net income (loss)			(2,761)		(2,761)
Balance at Mar. 31, 2023	$ 11	223,015	(163,034)		59,992
Balance (in Shares) at Mar. 31, 2023	105,469,878
Balance at Dec. 31, 2022	$ 11	222,827	(160,273)		62,565
Balance (in Shares) at Dec. 31, 2022	105,227,876
Net income (loss)					(1,757)
Balance at Jun. 30, 2023	$ 11	223,015	(162,030)		60,996
Balance (in Shares) at Jun. 30, 2023	105,227,876
Balance at Mar. 31, 2023	$ 11	223,015	(163,034)		59,992
Balance (in Shares) at Mar. 31, 2023	105,469,878
Net income (loss)			1,004		1,004
Balance at Jun. 30, 2023	$ 11	$ 223,015	$ (162,030)		$ 60,996
Balance (in Shares) at Jun. 30, 2023	105,227,876

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$ (1,757)	$ 1,527
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation and amortization	2,138	5,706
Amortization of debt discount	109	406
Loss on settlement of debt		3,241
Stock-based compensation	68	173
Adjustment to contingent liability		2
Inventory reserve	(500)	157
Loss (Gain) on change in fair value of derivative instruments	(574)	936
Bad debt expense	5	175
Deferred tax expense (benefit)	287	(938)
Non-cash lease expense	1,670	1,610
Changes in operating assets and liabilities:
Accounts receivable	4,555	(2,301)
Deposits with vendors	(5,430)	(5,931)
Inventory	2,818	(4,513)
Prepaid expenses and other current assets	1,075	(355)
Accounts payable and accrued liabilities	(3,240)	(10,652)
Due to related party		2,413
Customer deposits	(3,251)	(12,065)
Operating lease liabilities	(1,901)	(1,781)
Net cash (used in) provided operating activities	(3,928)	(22,190)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment	(134)	(256)
Net cash used in investing activities	(134)	(256)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from notes payable		43,045
Repayment of notes payable	(2,716)	(3,223)
Repayments of financing lease liabilities	(57)	(48)
Purchase of treasury stock at cost		(2,000)
Net cash (used in) provided by financing activities	(2,773)	37,774
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(6,835)	15,328
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD	20,499	33,791
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	13,664	49,119
End of the period
Cash and cash equivalents	8,977	47,386
Restricted cash	4,687	1,733
Cash and cash equivalents and restricted cash total	13,664	49,119
Beginning of the period
Cash and cash equivalents	19,549	25,724
Restricted cash	950	8,067
Cash and cash equivalents and restricted cash total	20,499	33,791
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	2,494	1,531
Cash paid for income taxes
NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued in vesting of RSUs
Financed purchases of property and equipment	94	308
Common stock issued in connection with employment agreements	121
Debt discount on notes payable		1,104
Settlement of notes payable and interest through the issuance of a new note		$ 55,851

Basis of Presentation

6 Months Ended

Jun. 30, 2023

Basis of Presentation [Abstract]

BASIS OF PRESENTATION

NOTE 1—BASIS OF PRESENTATION

Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2023

Recent Accounting Pronouncements [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

NOTE 2—RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted

Liquidity and Going Concern Assessment

6 Months Ended

Jun. 30, 2023

Liquidity and Going Concern Assessment [Abstract]

LIQUIDITY AND GOING CONCERN ASSESSMENT

NOTE 3—LIQUIDITY AND GOING CONCERN ASSESSMENT

●

Disaggregation of Revenues

6 Months Ended

Jun. 30, 2023

Revenues [Abstract]

DISAGGREGATION OF REVENUES

NOTE 4—DISAGGREGATION OF REVENUES

The Company’s disaggregated revenue by product type is as follows (in thousands):

	For the Three Months Ended				For the Six Months Ended
	June 30		June 30		June 30		June 30
	2023		2022		2023		2022
Appliance sales	$	77,505	$	128,242	$	164,177	$	266,791
Furniture and other sales		10,256		10,221		19,023		20,353

Total	$	87,761	$	138,463	$	183,200	$	287,144

Supplemental Financial Statement Disclosures

6 Months Ended

Jun. 30, 2023

Supplemental Financial Statement Disclosures [Abstract]

SUPPLEMENTAL FINANCIAL STATEMENT DISCLOSURES

NOTE 5—SUPPLEMENTAL FINANCIAL STATEMENT DISCLOSURES

Recivables

Receivables at June 30, 2023 and December 31, 2022, consisted of the following (in thousands):

	June 30,			December 31,
	2023			2022

Trade accounts receivable	$	13,325		$	13,691
Vendor rebates receivable		8,046			8,514
Other receivables		2,230			5,951

Total receivables		23,601			28,156
Less allowance for doubtful accounts		(1,512	)		(1,506	)

Total receivables, net	$	22,089		$	26,650

Merchandise Inventory

Inventory as June 30, 2023 and December 31, 2022, consisted of the following (in thousands):

	June 30,			December 31,
	2023			2022

Appliances	$	37,625		$	39,702
Furniture and other		3,112			3,853

Total merchandise inventory		40,737			43,555
Less reserve for obsolescence		(1,289	)		(1,789	)

Total merchandise inventory, net	$	39,448		$	41,766

Property and Equipment

Property and equipment at June 30, 2023 and December 31, 2022, consisted of the following (in thousands):

	June 30,			December 31,
	2023			2022

Warehouse equipment	$	291		$	291
Financed warehouse		515			515
Furniture and fixtures		332			324
Transportation equipment		1,566			1,466

Leasehold improvements		3,251			3,131
Showroom inventory		1,037			1,037

Total property and equipment		6,992			6,764
Less: accumulated depreciation		(2,321	)		(1,689	)

Property and equipment, net	$	4,671		$	5,075

Depreciation expense for the three and six months ended June 30, 2023 and 2022, was $0.3 million and $0.6 million, respectively.

Intangible Assets

The following table provides a breakdown of identifiable intangible assets as of June 30, 2023 and December 31, 2022 (in thousands):

	June 30,			December 31,
	2023			2022
Customer relationships	$	3,461		$	3,461
Marketing related - tradename		6,835			6,835
Total intangible assets		10,296			10,296
Accumulated amortization		(1,507	)		(-	)

Intangible assets, net	$	8,789		$	10,296

These assets are being amortized on a straight-line basis over their weighted average estimated useful life of 2.9 years.

At June 30, 2023, estimated annual amortization expense for each of the next five years is as follows (in thousands):

Year ending December 31,	Amount
2023 (Remainder of year)	$	1,507
2024		3,013
2025		3,013
2026		1,256

Total	$	8,789

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at June 30, 2023 and December 31, 2022, consisted of the following (in thousands):

	June 30,		December 31,
	2023		2022

Trade accounts payable	$	38,945	$	34,345
Accrued sales tax		30,397		36,196
Accrued payroll liabilities		697		680
Accrued interest		19		37
Accrued liability for sales returns		3,916		3,916
Credit cards payable		81		32
Accrued insurance		-		1,180
Other accrued liabilities		4,121		5,151

Total accounts payable and accrued expenses	$	78,176	$	81,537

Operating Leases

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

OPERATING LEASES

NOTE 6—OPERATING LEASES

The following was included in our unaudited condensed consolidated balance sheet at June 30, 2023 and December 31, 2022 (in thousands):

	June 30,			December 31,
	2023			2022

Operating lease right-of-use assets	$	10,019		$	11,688

Lease liabilities, current portion		2,730			3,726
Lease liabilities, long-term		8,108			9,013

Total operating lease liabilities	$	10,838		$	12,739

Weighted-average remaining lease term (months)		76			73

Weighted average discount rate		3.9	%		3.9	%

Operating lease expense for the three and six months ended June 30, 2023 and 2022, was $0.9 million and $1.9 million, respectively.

As of June 30, 2023, maturities of operating lease liabilities were as follows, in thousands:

Years Ending December 31,	Amount
2023 – Remainder of year	$	2,029
2024		1,808
2025		1,489
2026		1,532
2027		1,284
Thereafter		4,159

Total		12,301
Less: imputed interest		(1,463	)

Total operating lease liabilities	$	10,838

Finance Leases

The Company has three finance leases. At June 30, 2023, the total amount due on these leases was $0.3 million.

Related Parties

6 Months Ended

Jun. 30, 2023

Related Parties [Abstract]

RELATED PARTIES

NOTE 7—RELATED PARTIES

DMI

During the six months ended June 30, 2023, total purchases from DMI represented approximately 65% of total purchases. At June 30, 2023 vendor deposits at DMI totaled $30.5 million.

Lease Agreements

Notes Payable

6 Months Ended

Jun. 30, 2023

Notes Payable [Abstract]

NOTES PAYABLE

NOTE 8—NOTES PAYABLE

Credit Facilities

Bank of America Credit Agreement

As a result of the reduced term, the Company has begun discussions with investment bankers to place financing to replace the existing credit agreement by August 31, 2024.

Vehicle Loans

Maturities of Notes Payable are as follows:

	June 30,
For the years ended December 31,	2023
2023 (Remainder of year)	$	3,946
2024		91,584
2025		201
2026		29
2027		21
Thereafter		-
Total		95,781
Less: Loan costs		(850	)
Total	$	94,931
Amount classified as a current liability	$	7,866
Amount classified as long-term liability		87,065

Total	$	94,931

Derivative Instruments (Interest Rate Swap)

6 Months Ended

Jun. 30, 2023

Derivative Instruments (Interest Rate Swap) [Abstract]

DERIVATIVE INSTRUMENTS (INTEREST RATE SWAP)

NOTE 9—DERIVATIVE INSTRUMENTS (INTEREST RATE SWAP):

The Company classified the interest rate swap in Level 2 of the fair value hierarchy.

Stockholders' Equity

6 Months Ended

Jun. 30, 2023

Stockholders' Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE 10—STOCKHOLDERS' EQUITY

Stock Options

Below is a table summarizing the changes in stock options outstanding during the six months ended June 30, 2023:

				Weighted -Average
	Options			Exercise Price

Outstanding at December 31, 2022		37,500		$	3.10

Granted		86,550		$	0.58
Exercised
Forfeited		(37,500	)		3.10

Outstanding at June 30, 2023		86,550		$	0.58

Exercisable at June 30, 2023		-			-

During the six months ended June 30, 2023, 37,500 stock options were forfeited, as a result of employee terminations.

Warrants

Below is a table summarizing the changes in warrants outstanding during the six months ended June 30, 2023

			Weighted- Average
	Warrants		Exercise Price

Outstanding at December 31, 2022		92,514,423	$	2.30

Granted		-		-
Exercised		-		-
Forfeited		-		-

Outstanding at June 30, 2023		92,514,423	$	2.30

Exercisable at June 30, 2023		92,514,423	$	2.30

As of June 30, 2023, the outstanding warrants have a weighted average remaining contractual life of 2.9 years and a total intrinsic value of $nil.

Earnings (Loss) Per Share

6 Months Ended

Jun. 30, 2023

Earnings (Loss) Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

NOTE 11—EARNINGS (LOSS) PER SHARE

	For the Three Months Ended						For the Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2023			2022			2023			2022
Basic Earnings (Loss) Per Share

Net income (loss)	$	1,004		$	(4,292	)	$	(1,757	)	$	1,527
Basic weighted average common shares outstanding		105,469,878			105,774,197			105,425,640			106,080,764
Basic earnings (loss) per share	$	0.01	$		(0.04	)	$	(0.02	)	$	(0.01	)

Effect of dilutive stock options and warrants		-			-			-			-
Diluted weighted average common shares outstanding		105,469,878			105,774,197			105,425,640			106,080,764

Diluted earnings (loss) per share	$	0.01		$	(0.04	)	$	(0.02	)	$	(0.01	)

Commitments and Contingencies

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 12—COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Supplier Concentration

6 Months Ended

Jun. 30, 2023

Supplier Concentration [Abstract]

SUPPLIER CONCENTRATION

NOTE 13—SUPPLIER CONCENTRATION

Significant customers and suppliers are those that account for greater than ten percent of the Company’s revenues and purchases.

For the six months June 30, 2023, the Company approximately 65% of purchases were made from DMI.

The Company believes there are numerous other suppliers that could be substituted should the supplier become unavailable or non-competitive.

Subsequent Events

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 14—SUBSEQUENT EVENTS

Disaggregation of Revenues (Tables)

6 Months Ended

Jun. 30, 2023

Revenues [Abstract]

Schedule of Disaggregated Revenue

The Company’s disaggregated revenue by product type is as follows (in thousands):

	For the Three Months Ended				For the Six Months Ended
	June 30		June 30		June 30		June 30
	2023		2022		2023		2022
Appliance sales	$	77,505	$	128,242	$	164,177	$	266,791
Furniture and other sales		10,256		10,221		19,023		20,353

Total	$	87,761	$	138,463	$	183,200	$	287,144

Supplemental Financial Statement Disclosures (Tables)

6 Months Ended

Jun. 30, 2023

Supplemental Financial Statement Disclosures [Abstract]

Schedule of Receivables

Receivables

	June 30,			December 31,
	2023			2022

Trade accounts receivable	$	13,325		$	13,691
Vendor rebates receivable		8,046			8,514
Other receivables		2,230			5,951

Total receivables		23,601			28,156
Less allowance for doubtful accounts		(1,512	)		(1,506	)

Total receivables, net	$	22,089		$	26,650

Schedule of Inventory

Inventory

	June 30,			December 31,
	2023			2022

Appliances	$	37,625		$	39,702
Furniture and other		3,112			3,853

Total merchandise inventory		40,737			43,555
Less reserve for obsolescence		(1,289	)		(1,789	)

Total merchandise inventory, net	$	39,448		$	41,766

Schedule of Property and Equipment

Property and equipment

	June 30,			December 31,
	2023			2022

Warehouse equipment	$	291		$	291
Financed warehouse		515			515
Furniture and fixtures		332			324
Transportation equipment		1,566			1,466

Leasehold improvements		3,251			3,131
Showroom inventory		1,037			1,037

Total property and equipment		6,992			6,764
Less: accumulated depreciation		(2,321	)		(1,689	)

Property and equipment, net	$	4,671		$	5,075

Schedule of Breakdown of Identifiable Intangible Assets

The following table provides a breakdown of identifiable intangible assets as of June 30, 2023 and December 31, 2022 (in thousands):

	June 30,			December 31,
	2023			2022
Customer relationships	$	3,461		$	3,461
Marketing related - tradename		6,835			6,835
Total intangible assets		10,296			10,296
Accumulated amortization		(1,507	)		(-	)

Intangible assets, net	$	8,789		$	10,296

Schedule of Estimated Annual Amortization Expense

estimated annual amortization expense for each of the next five years is as follows

Year ending December 31,	Amount
2023 (Remainder of year)	$	1,507
2024		3,013
2025		3,013
2026		1,256

Total	$	8,789

Schedule of Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses

	June 30,		December 31,
	2023		2022

Trade accounts payable	$	38,945	$	34,345
Accrued sales tax		30,397		36,196
Accrued payroll liabilities		697		680
Accrued interest		19		37
Accrued liability for sales returns		3,916		3,916
Credit cards payable		81		32
Accrued insurance		-		1,180
Other accrued liabilities		4,121		5,151

Total accounts payable and accrued expenses	$	78,176	$	81,537

Operating Leases (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Schedule of Consolidated Balance Sheet

The following was included in our unaudited condensed consolidated balance sheet at June 30, 2023 and December 31, 2022 (in thousands):

	June 30,			December 31,
	2023			2022

Operating lease right-of-use assets	$	10,019		$	11,688

Lease liabilities, current portion		2,730			3,726
Lease liabilities, long-term		8,108			9,013

Total operating lease liabilities	$	10,838		$	12,739

Weighted-average remaining lease term (months)		76			73

Weighted average discount rate		3.9	%		3.9	%

Schedule of Maturities of Operating Lease Liabilities

As of June 30, 2023, maturities of operating lease liabilities were as follows, in thousands:

Years Ending December 31,	Amount
2023 – Remainder of year	$	2,029
2024		1,808
2025		1,489
2026		1,532
2027		1,284
Thereafter		4,159

Total		12,301
Less: imputed interest		(1,463	)

Total operating lease liabilities	$	10,838

Notes Payable (Tables)

6 Months Ended

Jun. 30, 2023

Notes Payable [Abstract]

Schedule of Maturities of Notes Payable

Maturities of Notes Payable are as follows:

	June 30,
For the years ended December 31,	2023
2023 (Remainder of year)	$	3,946
2024		91,584
2025		201
2026		29
2027		21
Thereafter		-
Total		95,781
Less: Loan costs		(850	)
Total	$	94,931
Amount classified as a current liability	$	7,866
Amount classified as long-term liability		87,065

Total	$	94,931

Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2023

Stockholders' Equity [Abstract]

Schedule of Stock Options Outstanding

Below is a table summarizing the changes in stock options outstanding during the six months ended June 30, 2023

				Weighted -Average
	Options			Exercise Price

Outstanding at December 31, 2022		37,500		$	3.10

Granted		86,550		$	0.58
Exercised
Forfeited		(37,500	)		3.10

Outstanding at June 30, 2023		86,550		$	0.58

Exercisable at June 30, 2023		-			-

Schedule of Warrants Outstanding

Below is a table summarizing the changes in warrants outstanding during the six months ended June 30, 2023

			Weighted- Average
	Warrants		Exercise Price

Outstanding at December 31, 2022		92,514,423	$	2.30

Granted		-		-
Exercised		-		-
Forfeited		-		-

Outstanding at June 30, 2023		92,514,423	$	2.30

Exercisable at June 30, 2023		92,514,423	$	2.30

Earnings (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2023

Earnings (Loss) Per Share [Abstract]

Schedule of Weighted Average Shares Outstanding and the Basic Loss per Common Share

	For the Three Months Ended						For the Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2023			2022			2023			2022
Basic Earnings (Loss) Per Share

Net income (loss)	$	1,004		$	(4,292	)	$	(1,757	)	$	1,527
Basic weighted average common shares outstanding		105,469,878			105,774,197			105,425,640			106,080,764
Basic earnings (loss) per share	$	0.01	$		(0.04	)	$	(0.02	)	$	(0.01	)

Effect of dilutive stock options and warrants		-			-			-			-
Diluted weighted average common shares outstanding		105,469,878			105,774,197			105,425,640			106,080,764

Diluted earnings (loss) per share	$	0.01		$	(0.04	)	$	(0.02	)	$	(0.01	)

Liquidity and Going Concern Assessment (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Liquidity and Going Concern Assessment [Abstract]
Cash and cash equivalents	$ 13,700		$ 13,700		$ 20,500
Restricted cash	4,700		4,700		950
Vendor deposits			30,500
Operating income			200
Cash used in operations			3,900		46,700
Working capital	22,900				25,900
Operating loss	89	$ (790)	200	$ 6,085	128,300
Non cash impairment charge					$ 109,100
Loan commitment balance	$ 10,000		$ 10,000

Disaggregation of Revenues (Details) - Schedule of Disaggregated Revenue - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenue, Major Customer [Line Items]
Total	$ 87,761	$ 138,463	$ 183,200	$ 287,144
Appliance Sales [Member]
Revenue, Major Customer [Line Items]
Total	77,505	128,242	164,177	266,791
Furniture and Other Sales [Member]
Revenue, Major Customer [Line Items]
Total	$ 10,256	$ 10,221	$ 19,023	$ 20,353

Supplemental Financial Statement Disclosures (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Supplemental Financial Statement Disclosures [Abstract]
Depreciation expense	$ 0.3	$ 0.6	$ 0.3	$ 0.6
Amortization	$ 0.8	$ 2.6	$ 1.5	$ 5.1

Supplemental Financial Statement Disclosures (Details) - Schedule of Receivables - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Receivables with Imputed Interest [Line Items]
Total receivables	$ 23,601	$ 28,156
Less allowance for doubtful accounts	(1,512)	(1,506)
Total receivables, net	22,089	26,650
Trade Accounts Receivable [Member]
Receivables with Imputed Interest [Line Items]
Total receivables	13,325	13,691
Vendor Rebates Receivable [Member]
Receivables with Imputed Interest [Line Items]
Total receivables	8,046	8,514
Other receivables [Member]
Receivables with Imputed Interest [Line Items]
Total receivables	$ 2,230	$ 5,951

Supplemental Financial Statement Disclosures (Details) - Schedule of Inventory - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Schedule of Inventory [Abstract]
Appliances	$ 37,625	$ 39,702
Furniture and other	3,112	3,853
Total merchandise inventory	40,737	43,555
Less reserve for obsolescence	(1,289)	(1,789)
Total merchandise inventory, net	$ 39,448	$ 41,766

Supplemental Financial Statement Disclosures (Details) - Schedule of Property and Equipment - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment	$ 6,992	$ 6,764
Less: accumulated depreciation	(2,321)	(1,689)
Property and equipment, net	4,671	5,075
Warehouse equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	291	291
Financed warehouse [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	515	515
Financed warehouse [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	332	324
Transportation Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	1,566	1,466
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	3,251	3,131
Showroom Inventory [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	$ 1,037	$ 1,037

Supplemental Financial Statement Disclosures (Details) - Schedule of Breakdown of Identifiable Intangible Assets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Supplemental Financial Statement Disclosures (Details) - Schedule of Breakdown of Identifiable Intangible Assets [Line Items]
Total intangible assets	$ 10,296	$ 10,296
Accumulated amortization	(1,507)
Intangible assets, net	8,789	10,296
Customer Relationships [Member]
Supplemental Financial Statement Disclosures (Details) - Schedule of Breakdown of Identifiable Intangible Assets [Line Items]
Total intangible assets	3,461	3,461
Marketing-Related Intangible Assets [Member]
Supplemental Financial Statement Disclosures (Details) - Schedule of Breakdown of Identifiable Intangible Assets [Line Items]
Total intangible assets	$ 6,835	$ 6,835

Supplemental Financial Statement Disclosures (Details) - Schedule of Estimated Annual Amortization Expense - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022
Schedule of Estimated Annual Amortization Expense [Abstract]
2023 (Remainder of year)		$ 1,507
2024		3,013
2025		3,013
2026		1,256
Total	$ 8,789	$ 8,789	$ 10,296

Supplemental Financial Statement Disclosures (Details) - Schedule of Accounts Payable and Accrued Expenses - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Schedule of Accounts Payable and Accrued Expenses [Abstract]
Trade accounts payable	$ 38,945	$ 34,345
Accrued sales tax	30,397	36,196
Accrued payroll liabilities	697	680
Accrued interest	19	37
Accrued liability for sales returns	3,916	3,916
Credit cards payable	81	32
Accrued insurance		1,180
Other accrued liabilities	4,121	5,151
Total accounts payable and accrued expenses	$ 78,176	$ 81,537

Operating Leases (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
Operating Leases (Details) - USD ($) $ in Millions	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Leases [Abstract]
Operating lease expense	$ 0.9	$ 1.9	$ 0.9	$ 1.9
Total due of leases amount			$ 0.3

Operating Leases (Details) - Schedule of Consolidated Balance Sheet - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Schedule of Consolidated Balance Sheet [Abstract]
Operating lease right-of-use assets	$ 10,019	$ 11,688
Lease liabilities, current portion	2,730	3,726
Lease liabilities, long-term	8,108	9,013
Total operating lease liabilities	$ 10,838	$ 12,739
Weighted-average remaining lease term (months)	76 years	73 years
Weighted average discount rate	3.90%	3.90%

Operating Leases (Details) - Schedule of Maturities of Operating Lease Liabilities $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Schedule of Maturities of Operating Lease Liabilities [Abstract]
2023 – Remainder of year	$ 2,029
2024	1,808
2025	1,489
2026	1,532
2027	1,284
Thereafter	4,159
Total	12,301
Less: imputed interest	(1,463)
Total operating lease liabilities	$ 10,838

Related Parties (Details) - USD ($) $ in Millions	6 Months Ended	12 Months Ended
Related Parties (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022	Mar. 15, 2022
Related Parties [Abstract]
Expense of improvement of building			$ 1.2
Total lease amount due		$ 1.2
Interest rate	1.60%
Total purchase percentage	65.00%
Vendor deposits at DMI	$ 30.5

Notes Payable (Details) - USD ($) $ in Thousands				6 Months Ended	12 Months Ended
Notes Payable (Details) - USD ($) $ in Thousands	Jul. 25, 2023	May 09, 2023	May 09, 2022	Jun. 30, 2023	Dec. 31, 2022	Sep. 30, 2023
Notes Payable (Details) [Line Items]
Line of credit, aggregate initial amount			$ 140,000
Swingline subfacility			2,000
Letter of credit subfacility			10,000
Amortization					$ 1,100
Credit agreement					4.00%
Line of credit interest rate					2.00%
Initial notional amount		$ 100,000
Interest rate percentage		2.90%
Outstanding balance of vehicle loans				$ 800
Maximum [Member]
Notes Payable (Details) [Line Items]
Applicable rate percentage					1.95%
Interest rates				5.70%
Minimum [Member]
Notes Payable (Details) [Line Items]
Applicable rate percentage					0.95%
Interest rates				3.80%
Arvest Loan [Member]
Notes Payable (Details) [Line Items]
Outstanding balance of loan					$ 94,100
Comprised balance amount					95,000
Unamortized loan costs					900
Term Loan [Member]
Notes Payable (Details) [Line Items]
Agreement outstanding amount					$ 40,000
Subsequent Event [Member]
Notes Payable (Details) [Line Items]
Loan decreased	$ 10,000,000
Commitments decreased	2,000,000
Forecast [Member] \| Subsequent Event [Member]
Notes Payable (Details) [Line Items]
Liquidity amount	8,000
Restricted cash	$ 3,000
Term Loan [Member]
Notes Payable (Details) [Line Items]
Line of credit, aggregate initial amount			100,000
Principal loan amount			1,250,000			$ 1,875,000
Revolving Credit Facility [Member]
Notes Payable (Details) [Line Items]
Line of credit, aggregate initial amount			40,000
M and T Credit Agreement [Member]
Notes Payable (Details) [Line Items]
Principal amount			$ 100,000

Notes Payable (Details) - Schedule of Maturities of Notes Payable $ in Thousands	Jun. 30, 2023 USD ($)
Schedule of future minimum principal payments [Abstract]
2023 (Remainder of year)	$ 3,946
2024	91,584
2025	201
2026	29
2027	21
Thereafter
Total	95,781
Less: Loan costs	(850)
Total	94,931
Amount classified as a current liability	7,866
Amount classified as long-term liability	87,065
Total	$ 94,931

Derivative Instruments (Interest Rate Swap) (Details) - Interest Rate Swap [Member] - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2023	May 09, 2022
Derivative Instruments (Interest Rate Swap) (Details) [Line Items]
Derivative notional amount			$ 100.0
Derivative fixed interest			2.93%
Derivative asset fair value	$ 3.8	$ 3.8
Fair value interest rate swap	$ 1.9	$ 0.6

Stockholders' Equity (Details) - USD ($)	6 Months Ended
Stockholders' Equity (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022	Mar. 31, 2022	Dec. 31, 2021
Stockholders' Equity (Details) [Line Items]
Common stock, shares authorized	200,000,000	200,000,000
Common stock, par value (in Dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, par value (in Dollars per share)			$ 0.0001	$ 0.0001
Common stock, shares outstanding	105,469,878	105,227,876
Stock options forfeited shares	37,500
Remaining issuable shares	0.03
Annually percentage
Weighted average remaining contractual life	2 years 10 months 24 days
Total intrinsic value (in Dollars)
Common Stock [Member]
Stockholders' Equity (Details) [Line Items]
Common stock, shares authorized	200,000,000
Common stock, par value (in Dollars per share)	$ 0.0001
Preferred Stock [Member]
Stockholders' Equity (Details) [Line Items]
Preferred stock, shares authorized	20,000,000
Preferred stock, par value (in Dollars per share)	$ 0.0001

Stockholders' Equity (Details) - Schedule of Stock Options Outstanding	12 Months Ended
	Mar. 31, 2023 $ / shares shares
Schedule of Stock Options Outstanding [Abstract]
Outstanding beginning balance, Options \| shares	37,500
Outstanding beginning balance, Weighted Average Exercise Price \| $ / shares	$ 3.1
Granted, Options \| shares	86,550
Granted, Weighted Average Exercise Price \| $ / shares	$ 0.58
Exercised, Options \| shares
Exercised, Weighted Average Exercise Price \| $ / shares
Forfeited, Options \| shares	(37,500)
Forfeited, Weighted Average Exercise Price \| $ / shares	$ 3.1
Outstanding ending balance, Options \| shares	86,550
Outstanding ending balance, Weighted Average Exercise Price \| $ / shares	$ 0.58
Exercisable, Options \| shares
Exercisable, Weighted Average Exercise Price \| $ / shares

Stockholders' Equity (Details) - Schedule of Warrants Outstanding - Warrant [Member]	6 Months Ended
	Jun. 30, 2023 $ / shares shares
Stockholders' Equity (Details) - Schedule of Warrants Outstanding [Line Items]
Outstanding beginning balance, Warrants \| shares	92,514,423
Outstanding beginning balance, Weighted Average Exercise Price \| $ / shares	$ 2.3
Granted, Warrants \| shares
Granted, Weighted Average Exercise Price \| $ / shares
Exercised, Warrants \| shares
Exercised, Weighted Average Exercise Price \| $ / shares
Forfeited, Warrants \| shares
Forfeited, Weighted Average Exercise Price \| $ / shares
Outstanding ending balance, Warrants \| shares	92,514,423
Outstanding ending balance, Weighted Average Exercise Price \| $ / shares	$ 2.3
Exercisable, Warrants \| shares	92,514,423
Exercisable, Weighted Average Exercise Price \| $ / shares	$ 2.3

Earnings (Loss) Per Share (Details) - shares	3 Months Ended	6 Months Ended
Earnings (Loss) Per Share (Details) - shares	Jun. 30, 2023	Jun. 30, 2022
Options [Member]
Earnings (Loss) Per Share (Details) [Line Items]
EPS anti-dilutive shares	92,600,973
Warrant [Member]
Earnings (Loss) Per Share (Details) [Line Items]
EPS anti-dilutive shares		92,664,423

Earnings (Loss) Per Share (Details) - Schedule of Weighted Average Shares Outstanding and the Basic Loss per Common Share - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Basic Earnings (Loss) Per Share
Net income (loss) (in Dollars)	$ 1,004	$ (4,292)	$ (1,757)	$ 1,527
Basic weighted average common shares outstanding	105,469,878	105,774,197	105,425,640	106,080,764
Basic earnings (loss) per share (in Dollars per share)	$ 0.01	$ (0.04)	$ (0.02)	$ (0.01)
Effect of dilutive stock options and warrants
Diluted weighted average common shares outstanding	105,469,878	105,774,197	105,425,640	106,080,764
Diluted earnings (loss) per share (in Dollars per share)	$ 0.01	$ (0.04)	$ (0.02)	$ (0.01)

Commitments and Contingencies (Details) - USD ($) $ / shares in Units, $ in Thousands	Jun. 12, 2023	Jun. 30, 2023	Dec. 31, 2022	Jul. 07, 2022
Commitments and Contingencies (Details) [Line Items]
Common stock, par value (in Dollars per share)		$ 0.0001	$ 0.0001
Common stock remaining shares				200,000,000
Agreed to pay amount (in Dollars)	$ 475,000
Common Stock [Member]
Commitments and Contingencies (Details) [Line Items]
Common stock, par value (in Dollars per share)		$ 0.0001
Shares of common stock		50,000,000

Supplier Concentration (Details)	6 Months Ended
Supplier Concentration (Details)	Jun. 30, 2023
Supplier Concentration [Abstract]
Percentage of revenues and purchases	65.00%

Subsequent Events (Details)		6 Months Ended	12 Months Ended
Subsequent Events (Details)	Jul. 25, 2023 USD ($)	Jun. 30, 2023 USD ($) m²	Dec. 31, 2022 USD ($)
Subsequent Events (Details) [Line Items]
Maturity date		Dec. 31, 2022
Leased space (in Square Meters) \| m²		228,000
Lease cost			$ 1,200,000
Annual charges percentage		3.75%
Commitments of Loans		$ 2,000,000
Restricted cash		4,700,000	$ 950,000
Minimum [Member]
Subsequent Events (Details) [Line Items]
Restricted cash		8,000,000
Maximum [Member]
Subsequent Events (Details) [Line Items]
Restricted cash		3,000,000
Subsequent Event [Member]
Subsequent Events (Details) [Line Items]
Revolving loan	$ 10,000,000
DMI [Member]
Subsequent Events (Details) [Line Items]
Lease cost		$ 15,000

Polished (AMEX:POL)
Gráfica de Acción Histórica
De Abr 2024 a May 2024

Haga Click aquí para más Gráficas Polished.

Polished (AMEX:POL)
Gráfica de Acción Histórica
De May 2023 a May 2024

Datos

Noticias

Herramientas

Mercados

Descubrir

Hot Features

Follow Feed

Flujo de Opciones

Monitor

POL Polished Inc

Noticias sobre Polished Inc POL

Su Consulta Reciente

Empresa

Negocios

Popular

Obtener la aplicación

Tendencias Ahora

Listas Principales

Datos

Noticias

Herramientas

Mercados

Descubrir

Hot Features

Follow Feed

Flujo de Opciones

Monitor

POL Polished Inc

Noticias sobre Polished Inc POL

Su Consulta Reciente

Empresa

Negocios

Popular

Obtener la aplicación