# EDGAR Filing Document

**Accession Number:** 0001757715
**File Stem:** 0001437749-26-009285
**Filing Date:** 2026-3
**Character Count:** 424518
**Document Hash:** 413ff920698509345921299fce8c2cbf
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-26-009285.hdr.sgml**: 20260323

**ACCESSION NUMBER**: 0001437749-26-009285

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 101

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260323

**DATE AS OF CHANGE**: 20260320

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Aterian, Inc.
- **CENTRAL INDEX KEY:** 0001757715
- **STANDARD INDUSTRIAL CLASSIFICATION:** ELECTRIC HOUSEWARES & FANS [3634]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 831739858
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38937
- **FILM NUMBER:** 26779722

**BUSINESS ADDRESS:**
- **STREET 1:** 350 SPRINGFIELD AVENUE
- **STREET 2:** SUITE #200
- **CITY:** SUMMIT
- **STATE:** NJ
- **ZIP:** 07901
- **BUSINESS PHONE:** (347)676-1681

**MAIL ADDRESS:**
- **STREET 1:** 350 SPRINGFIELD AVENUE
- **STREET 2:** SUITE #200
- **CITY:** SUMMIT
- **STATE:** NJ
- **ZIP:** 07901

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Mohawk Group Holdings, Inc.
- **DATE OF NAME CHANGE:** 20181031

?xml version='1.0' encoding='ASCII'? ater20251231_10k.htm

**FORM 10-K**

[**Table of Contents**](#toc)

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**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

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**FORM 10-K**

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(Mark One)

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

**For the fiscal year-ended December 31, 2025**

OR

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; TO&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;** 

**Commission File Number 001-38937**

## Aterian, Inc.
**(Exact name of Registrant as specified in its charter)** 

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| | |
|:---|:---|
| **Delaware** | **83-1739858** |
| **(State or other jurisdiction of**<br> **incorporation or organization)** | **(I.R.S. Employer**<br> **Identification Number)** |

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**350 Springfield Avenue, Suite 200**

**Summit, NJ 07901**

**(Address of principal executive offices and zip code)**

**(347) 676-1681** 

**(Registrant**'**s telephone number, including area code)**

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

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| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| Common stock, par value $0.0001 per share | ATER | The Nasdaq Stock Market LLC |

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

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

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, 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.

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| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☐ |  |  |

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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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b) ☐

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on the Nasdaq Capital Market on June 30, 2025 (the last trading day of the registrant's second fiscal quarter of 2025), was approximately $13.4 million.

The number of shares of Registrant's Common Stock outstanding as of March 12, 2026 was 10,823,802.

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[**Table of Contents**](#toc)

**Table of Contents** 

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| | | |
|:---|:---|:---|
|  |  | **Page** |
| **PART I** |  |  |
| Item 1. | [Business](#partI) | [2](#partI) |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 1A. | [Risk Factors](#riskfactors) | [4](#riskfactors) |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 1B. | [Unresolved Staff Comments](#unresolvedstaffcomments) | [13](#unresolvedstaffcomments) |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 1C. | [Cybersecurity](#cybersecurity) | [13](#cybersecurity) |
| Item 2. | [Properties](#item2) | [13](#item2) |
| Item 3. | [Legal Proceedings](#item3) | [13](#item3) |
| Item 4. | [Mine Safety Disclosures](#item4) | [13](#item4) |
| **PART II** |  |  |
| Item 5. | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#item5) | [14](#item5) |
| Item 6. | [Reserved](#item6) | [14](#item6) |
| Item 7. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#item7) | [15](#item7) |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 7A. | [Quantitative and Qualitative Disclosures About Market Risk](#qaqmarketrisk) | [25](#qaqmarketrisk) |
| Item 8. | [Financial Statements and Supplementary Data](#item8) | [F-1](#item8) |
| Item 9. | [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](#item9) | [F-27](#item9) |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 9A. | [Controls and Procedures](#controlsandprocedures) | [F-27](#controlsandprocedures) |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 9B. | [Other Information](#otherinfo) | [F-28](#otherinfo) |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 9C. | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#foreignjurisdictions) | [F-28](#foreignjurisdictions) |
| **PART III** |  |  |
| Item 10. | [Directors, Executive Officers and Corporate Governance](#item10) | [F-29](#item10) |
| Item 11. | [Executive Compensation](#item11) | [F-32](#item11) |
| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#item12) | [F-35](#item12) |
| Item 13. | [Certain Relationships and Related Transactions, and Director Independence](#item13) | [F-37](#item13) |
| Item 14. | [Principal Accounting Fees and Services](#item14) | [F-38](#item14) |
| **PART IV** |  |  |
| Item 15. | [Exhibits, Financial Statement Schedules](#item15) | [26](#item15) |
| Item 16 | [Form 10-K Summary](#item16) | [29](#item16) |

---

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[**Table of Contents**](#toc)

**CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS**

*This Annual Report on Form 10-K (this* "*Annual Report*"*) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as* "*may,*" "*will,*" "*should,*" "*expects,*" "*plans,*" "*anticipates,*" "*could,*" "*intends,*" "*target,*" "*projects,*" "*contemplates,*" "*believes,*" "*estimates,*" "*predicts,*" "*potential,*" *or* "*continue*" *or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions.* 

*We have based the forward-looking statements contained in this Annual Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and results of operations. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section of this Annual Report entitled* "*Risk Factors*" *and elsewhere in this Annual Report. Moreover, we operate in a highly competitive, dynamic and challenging environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report. We cannot assure you that the results, events and circumstances reflected, or that the plans, intentions or expectations disclosed, in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those expressed or implied by the forward-looking statements.*

*The forward-looking statements made in this Annual Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Annual Report to reflect events or circumstances after the date of this Annual Report, new information or the occurrence of unanticipated events, except as required by law.* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1

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[**Table of Contents**](#toc)

**PART I**

**Item 1. Business.** 

See the sections contained within this Annual Report entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" for further information.

***About Aterian***

Aterian, Inc. (the "Company") is a consumer products company that predominantly operates through online retail channels such as Amazon, Walmart, and Target and its own direct to consumer websites. The Company operates its owned brands, which were either incubated or purchased, selling products in multiple categories, including home and kitchen appliances, kitchenware, air quality appliances, health and beauty products and essential oils.

Our primary brands include Squatty Potty, HomeLabs, Mueller Living, PurSteam, Healing Solutions, and Photo Paper Direct ("PPD"). We generate revenue primarily through the online sales of our various consumer products with substantially all of our sales being made through the Amazon U.S. marketplace.

Headquartered in New Jersey, the Company also maintains offices in China, the Philippines, and the United Kingdom.

***Strategic Alternatives***

On December 8, 2025, we announced that our Board of Directors has authorized the initiation of a process to explore strategic alternatives to maximize shareholder value, which may include a sale of the company, a merger, or other strategic transactions. There can be no assurance that this process will result in any transaction or that any transaction, if pursued, will be on favorable terms. The Company has not established a timetable for completion of a transaction.

***Business Segments***

We operate as one operating segment. Our revenues are derived from the sale of consumer goods. See Note 18, *Segment Information*, in the accompanying notes to our consolidated financial statements for further detail.

***Products***

The Company sells a wide range of products across multiple categories, including home and kitchen appliances, kitchenware, air quality appliances, health and beauty products, and essential oils. These products are sold under the Company's owned brands, which were either incubated or acquired.

***Intellectual Property and Technology***

We rely primarily on a combination of trademarks, employee and third-party nondisclosure agreements and licensing arrangements (including open-source software) to protect our intellectual property. We generally do not pursue patent applications as a means of protecting our intellectual property. We have applied to register or have registered certain of our trademarks in the U.S. and other jurisdictions, and we will pursue additional trademark registrations to the extent we believe they would be beneficial and cost-effective.

We believe that the use of technology allows us to automate and ingest data to create efficiencies within our sales and marketing and our supply chain. This ability to leverage technology is important for our business considering that predominantly all our net revenue is generated via e-commerce marketplaces. Historically, we developed the majority of our technology internally. However, in February 2024, we announced that we have shifted our technology platform away from a fully internally developed model to an integrated third-party, best-of-breed model.

***Customers***

Our customers are mainly individual online consumers who purchase our products primarily on Amazon US, and to a lesser extent on our owned and operated websites and other marketplaces, such as Walmart. In 2025 and 2024, approximately 86% and 92% of our revenue was through the Amazon sales platform, respectively.

***Seasonality***

Our individual product categories are typically affected by seasonal sales trends primarily resulting from the timing of the summer season for certain of our environmental appliance products and the fall and holiday season for our small kitchen appliances and accessories. With our current mix of environmental appliances, the sales of those products tend to be significantly higher in the summer season. Further, our essential oils, small kitchen appliances and accessories tend to have higher sales during the fourth quarter, which includes Thanksgiving and the December holiday season. As a result, our operational results, cash flows, cash and inventory positions may fluctuate materially in any quarterly period depending on, among other things, adverse weather conditions, shifts in the timing of certain holidays and changes in our product mix.

***Sales and Marketing***

Our sales and marketing strategy and approach is focused on online channels and e-commerce platforms. Currently our primary focus on advertising spend is online across Amazon as well as through marketing affiliates.

***Third-Party Manufacturing & Logistics***

During 2025, we purchased the substantial majority of our finished products from suppliers in China. We do not maintain long-term purchase contracts with suppliers and operate mainly on a purchase order basis. We negotiate purchases from our foreign suppliers in U.S. dollars. We purchased our inventory from approximately 33 suppliers, three of which represented 17%, 12%, and 11% of purchases during the year ended December 31, 2025. While we believe the loss of any one supplier would not have a long-term material adverse effect on our business due to the availability of other suppliers, the loss of a supplier could, in the short term, materially and adversely impact our business.

The principal raw materials used by our third-party suppliers to manufacture our products are plastic, glass, steel, copper, aluminum, oil, paper and packaging materials. We believe adequate quantities of raw materials are available from various suppliers.

We use a combination of Amazon warehouses, other third-party warehouses and logistics partners to fulfill direct-to-consumer orders, through agreements or terms of services. In addition to fulfillment by Amazon warehouses, we use geographically distributed third-party warehouses in the U.S. to deliver orders within one to two days through ground shipment to most customers.

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[**Table of Contents**](#toc)

***Competition***

The consumer goods and e-commerce markets are highly competitive and dynamic. We compete primarily against numerous third-party brands and sellers on marketplaces for each of our products. Competition is based on price, product features and quality, strong ratings and reviews, effective marketing, visibility and location on the online shelf and supply chain excellence, which is mostly the ability to deliver products to customers in one to two days. In certain instances, we compete directly with our third-party suppliers who sell their own brands directly to customers, including with respect to certain of our material products.

***Government Regulation***

We are subject to a variety of U.S. federal, state and local laws and international laws, including but not limited to those governing the processing of payments, consumer protection, the privacy of consumer information and other laws regarding unfair and deceptive trade practices. We are also subject to various environmental laws, rules and regulations, such as California's Proposition 65.

The products sold by us are also subject to regulation by U.S. governmental agencies, including the U.S. Consumer Product Safety Commission, the Federal Trade Commission, United States Food and Drug Administration, the U.S. Environmental Protection Agency, the U.S. Department of Energy and similar state and international regulatory authorities, such as the California Energy Commission. We do not estimate any significant capital expenditures for environmental control matters either in the current fiscal year or in the near future.

We are also subject to regulations relating to our supply chain. For example, the California Transparency in Supply Chains Act requires retail sellers that do business in California to disclose their efforts to eradicate slavery and human trafficking in their supply chains. As part of our vendor qualification process, we review suppliers' operations for compliance with applicable labor and workplace standards and other applicable laws, including laws prohibiting child labor, forced labor and unsafe working conditions.

A significant portion of our products are currently manufactured in China. The enactment of new legislation, executive actions, or changes in current laws related to international trade affecting trade agreements, changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements or changes in sourcing patterns could adversely affect the Company's operations and result in additional expenses. Additional information is discussed in Item 1A of Part I, "Risk Factors,"

Although we have not suffered any material restrictions from doing business in the past due to government regulations, significant impediments may arise in the future as we expand product offerings.

From time to time, we dispose of or donate obsolete inventory in compliance with applicable laws and regulations.

***People***

The human capital objectives we focus on in managing our business include attracting, developing, and retaining key personnel. We believe our management team has the experience necessary to effectively implement our growth strategy and continue to drive stockholder value. We provide competitive compensation, which includes a focus on stock-based compensation, and benefits to attract and retain key personnel, while also providing a safe, inclusive and respectful workplace. As of December 31, 2025, we had 74 full-time employees and 22 independent contractors. As of December 31, 2025, our employees and contractors are based in offices, shared workspaces and remote work locations in the U.S., China, the U.K., the Philippines, Serbia, Pakistan, and Poland.

In January 2026, the Company implemented a fixed cost reduction plan that included a workforce reduction affecting approximately 16 employees and independent contractors. The Company expects to substantially complete this reduction by the end of the first quarter of 2026.

***Available Information***

We use our website as a distribution channel of material information about the Company including through press releases, investor presentations, and notices of upcoming events. We utilize the investor relations section of our website at https://ir.aterian.io as a channel of distribution to reach public investors and as a means of disclosing material non-public information for complying with disclosure obligations under Regulation FD. We also intend to use certain social media channels, including, but not limited to, X (formerly Twitter), Facebook, Instagram, TikTok and LinkedIn, as a means of communicating with the public, our customers and investors about our Company, our products, and other matters. While not all the information that the Company posts to its website and brand related social media channels may be deemed to be of a material nature, some information may be and we therefore encourage investors, the media, and others interested in our Company to review the information we make public in these locations.

All periodic and current reports, registration statements and other filings that we have filed or furnished to the Securities and Exchange Commission ("SEC"), including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, are available free of charge from the SEC's website (<u>www.sec.gov</u>) and on our website at <u>https://ir.aterian.io/</u>. Such documents are available as soon as reasonably practicable after electronic filing of the material with the SEC. Any reference to our website or social media channels does not constitute incorporation by reference of the information contained on or available through our website, and you should not consider such information to be a part of the periodic and current reports, registration statements or other filings that we file or furnish with the SEC from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3

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**Item 1A. Risk Factors.** 

We operate in a dynamic and rapidly changing environment that involves numerous risks and uncertainties. Certain factors may have a material adverse effect on our business, financial condition and results of operations, and you should carefully consider them. Accordingly, in evaluating our business, we encourage you to consider the following discussion of risk factors, in its entirety, in addition to other information contained in this Annual Report on Form 10-K and our other public filings with the SEC. Other events that we do not currently anticipate or that we currently deem immaterial may also affect our results of operations and financial condition.

**Risks Relating to Our Business**

***We have historically operated at a loss and we may never achieve or sustain continuous profitability or positive cash flows. Further, we and our independent registered public accounting firm have expressed substantial doubt about our ability to continue as a going concern.***

We have experienced significant after-tax losses for the years ended December 31, 2025 and 2024. In addition, our costs have increased historically and may increase further in future periods, which could negatively affect our future operating results and ability to achieve and sustain long-term ongoing profitability. For example, we may need to continue to expend substantial financial and other resources on the ideation, sourcing and development of products, our technology infrastructure, sales and marketing, international expansion and general administration, including expenses related to being a public company. We have had to rely on a combination of cash flow from operations and new capital to sustain our business. Even though we have raised significant capital, there can be no assurance that we will ever achieve long-term continuous profitability. Even if we do, there can be no assurance that we will be able to maintain or increase profitability on a quarterly or annual basis. Failure to achieve or sustain profitability could have a material adverse effect on our business.

Our growth strategy has resulted in operating losses and negative cash flows from operations that raise substantial doubt about our ability to continue as a going concern. Our independent registered public accounting firm included an explanatory paragraph in its report on our consolidated financial statements as of and for the year ended December 31, 2025, that raised substantial doubt about our ability to continue as a going concern. If we are unable to continue as a going concern or maintain our financial covenants with our lenders, we may have to make significant changes to our operating plan, such as delay expenditures, reduce investments in new products, reduce our sales and distribution infrastructure, or significantly reduce our business. Further, if we are unable to continue as a going concern, we may be forced to liquidate our assets and the values we receive for our assets in liquidation or dissolution could be significantly lower than the values reflected in our financial statements.

***We face intense competition and if we are unable to compete effectively, our market share and revenue could be diminished which may delay or otherwise hinder our efforts to achieve or maintain profitability.***

We cannot assure you that our products will continue to compete favorably or that we will be successful in the face of increasing competition and from new products and enhancements introduced by existing competitors or new companies entering the markets in which we operate. We sell our products primarily on marketplaces and primarily on Amazon in the U.S. Unlike traditional brick and mortar retailers, the customer who is shopping on marketplaces has a significant number of competing products to select from as there are limited barriers to entry. In addition, the Internet facilitates competitive entry and comparison shopping, which enhances the ability of new and existing businesses to compete against us. A number of our current and potential competitors have greater resources, longer histories, and/or greater brand recognition. As a result, they may be able to secure better terms from vendors and devote more resources to technology, infrastructure, fulfillment, and marketing than we may be able to. In addition, some of our competitors aggressively discount their products in order to gain market share, which has resulted in pricing pressures, reduced profit margins and lost market share. Further, social proof for products sold on marketplaces in the form of product ratings and reviews is highly important to our success. In this regard, the majority of our active brands were acquired in late 2020 and early 2021, and their brand reputations may be impacted by the original owners' or founders' new business ventures, personal reputations, or public conduct. Although we have no material ongoing business relationships with the original owners of our brands, their actions, if perceived negatively, could adversely impact our brands' reputations, social proof, and/or net revenue. In certain instances, we have been unable to maintain such social proof, and we may be unable to maintain such social proof in the future, or competitors may be able to attain better social proof for their products which could result in reduced market share and have a material impact on our operating results.

Amazon and other marketplaces frequently launch their own private-label products that compete directly with our highest-volume SKUs. These marketplaces have access to superior consumer data and can provide their own products with preferential search placement and advertising rates that we cannot match, which may permanently depress our margins on those products.

For certain significant products in our portfolio such as certain of the dehumidifiers we sell, we compete directly with our contract manufacturer who sells its own competing private label products on the marketplaces we sell and who has a lower cost structure and significantly better R&D capabilities. These manufacturers could take aggressive actions against us including limiting the availability of productive capacity or limiting our access to newer, more innovative models, which we have experienced from time to time.

As a result of competition, our product offerings, whether in new or existing markets, may not be successful, we may fail to gain or may lose business, and we may be required to increase our marketing spending or lower prices, any of which could materially impact our operating results.

***Our financial projections are highly subjective in nature and our future financial results could vary significantly from our projections from quarter-to-quarter and annually.***

From time to time, we may provide financial projections to our shareholders, lenders, investment community, and other stakeholders. These projections are highly subjective. Our quarterly revenue and other operating results have varied in the past and are likely to continue to vary significantly from quarter-to-quarter in the future. It is difficult for us to accurately predict the demand for many of our products, or the amount and timing of our future revenue and operating results. Our projections are based on management's best estimate of sales using historical sales data and other relevant information available at the time. These projections are highly subjective since product sales can fluctuate substantially. Additionally, changes in consumer demand, affected by competitors, transportation, supplier lead times, costs and availability, raw material costs and availability, and other factors could make our inventory management and sales forecasting more difficult. Further, we base our expense levels and investment plans on sales estimates. A significant portion of our expenses and investments are fixed, and we are not able to adjust our spending quickly if our sales are less than expected. Due to these and other factors described elsewhere in this section, our future operating results could vary materially from our projections and from quarter-to-quarter. Further, we believe that quarter-to-quarter comparisons of our operating results are not necessarily meaningful. Moreover, our operating results may not meet the expectations of our equity research analysts or investors. If this occurs, the trading price of our common stock could fall substantially, either suddenly or over time.

***Our business is sensitive to the strength of the United States consumer market to a meaningful extent, and changes in consumer spending and economic conditions could adversely affect our business.***

The strength of the U.S. economy has a significant impact on our performance. We are dependent on discretionary spending, which is affected by, among other things, unemployment rates, economic and political conditions worldwide, consumer confidence, energy and gasoline prices, interest and mortgage rates, the level of consumer debt and taxation, and financial markets, which are all outside of our control. A continuing softening of demand, whether caused by changes in customer preferences or a weakening of the U.S. or global economies, may result in decreased revenue. We believe we have sustained a decline in the sales of our products in part due to the factors mentioned above, and any continued economic downturn or uncertainties in the U.S. or in other parts of the world could materially and adversely affect our business, operating results, financial condition, and cash flows.

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***Demand for our products is highly seasonal and dependent on weather conditions, which could result in significant variations in our inventory levels, financial condition and operating results.***

Weather and other conditions can materially impact the demand for our products. Demand for our air quality products primarily occurs during the summer months and demand for our essential oils, kitchen appliances and accessories primarily occurs during the fall and holiday season. Natural disasters (such as wildfires, hurricanes and ice storms), public health crises (such as pandemics and epidemics), or an unusually mild or short summer season may result in unanticipated material fluctuations in consumer demand. These factors could have a material adverse effect on our business, operating results, financial condition, and cash flows.

***If we are unable to manage our inventory effectively, our operating results, financial condition, and cash flows could be adversely affected.***

In the past, we have not always accurately forecasted consumer demand for our products resulting in inventory shortages, excess inventory write-offs and lower gross margins. We are exposed to significant inventory risks that have or may adversely affect our operating results, financial condition, and cash flows as a result of seasonality, new product launches, rapid changes in product cycles and pricing, defective merchandise, shrinkage, changes in customer demand and consumer spending patterns, changes in consumer tastes with respect to our products, spoilage, adverse actions taken by marketplaces to remove our products, and other factors. Demand for products can change significantly between the time inventory is ordered and the date of sale. In addition, when we begin selling a new product, it may be difficult to establish vendor relationships, determine appropriate product or component selection, and accurately forecast demand. We carry a broad selection of products and at times we are unable to sell our products in sufficient quantities or to meet demand during the relevant selling seasons. Any of the inventory risk factors set forth above may adversely affect our operating results, financial condition, and cash flows.

***Increased costs of raw materials, energy, labor, transportation and platform fees charged by marketplaces may adversely affect our business, operating results, financial condition, and cash flows.***

Significant increases in the cost and/or reductions in the availability of raw materials, energy, labor, transportation, and increases in tariffs and platform fees charged by marketplaces have negatively impacted our business, operating results, financial condition, and cash flows and may continue to negatively impact such items in the future. Our contract manufacturers purchase significant amounts of metals, plastics and other materials to manufacture our products. In addition, they also purchase significant amounts of electricity to supply the energy required in their production processes. Global political instabilities may result in higher metal, plastic, electric, transportation and product costs, or could impair our ability to obtain products at marketable rates or at all. We are heavily dependent on inbound sea, rail and truck freight. Disruptions in the global supply chain and freight networks, has, and may continue to limit inbound and outbound shipment capacity and increase our cost of goods sold and certain operating expenses. Further, the marketplaces on which we sell our products charge fees for selling, storage, advertising and fulfillment, all of which have historically increased, and we expect will continue to increase. The cost of raw materials, energy, labor, transportation, and the platform fees charged by marketplaces in the aggregate, represents a significant portion of our cost of goods sold and certain other operating expenses, which are not within our control and we have had limited success passing these on to customers. Our business, operating results, financial condition, and cash flows could be adversely affected by future increases in any of these costs. Additionally, the loss or disruption of essential manufacturing and supply elements such as raw materials or other finished product components, restricted transportation or increased freight costs, reduced workforce, or other manufacturing and distribution disruption could adversely impact our ability to meet our customers' needs. Furthermore, it is not practical for us to mitigate our exposure to, nor are we able to accurately project the possible effect of foreign currency exchange rate fluctuations on our operating results due to our constantly changing exposure to various foreign currencies and the difficulty in predicting fluctuations in foreign currency exchange rates relative to the U.S. Dollar.

On February 28, 2026, the United States and Israel initiated major combat operations in Iran, which has led to immediate retaliatory strikes against U.S. military installations and commercial interests in the Persian Gulf. This conflict has resulted in heightened volatility in global energy markets and may lead to significant disruptions in shipping routes, particularly through the Strait of Hormuz. Sustained conflict in the region could result in spiked freight insurance premiums, fuel surcharges, and delays in inbound shipments from our Asian suppliers. If we are unable to mitigate these costs, our operating results and financial condition would be adversely affected.

***We depend on third-party suppliers for all of our products, most of which are located in Asia, and any inability or delay in obtaining products from such suppliers could have a material adverse effect on our business, operating results, financial condition, and cash flow.***

We are dependent on third-party suppliers such as contract manufacturers and third-party logistics providers and carriers for the manufacturing and distribution of our products and any disruption to our supply chain, even for a relatively short period of time, could cause a loss of revenue, which could adversely affect our business, operating results, financial condition, and cash flows. Our ability to select reliable suppliers that provide timely deliveries of quality products will impact our success in meeting customer demand. Further, for a number of our significant products, we only have a single-source of supply (such as for certain dehumidifiers) and in general we do not have contracts with our contract manufacturers covering costs and production that we believe we can enforce without undue effort or cost. Any supplier's inability or unwillingness to timely deliver products that meet desired specifications or any unanticipated changes in suppliers could be disruptive and costly and it is unlikely that we will be able to effect alternative arrangements on a timely basis, or in the case of manufacturing certain of our significant products, at all. Any significant failure by us to obtain quality products, in sufficient quantities, on a timely basis, and at an affordable cost or any significant delays or interruptions of supply would have a material adverse effect on our business, operating results, financial condition, and cash flows.

As most of our product suppliers are based in China, our business is subject to additional risks including, among others: currency fluctuations; labor unrest; potential political, economic and social instability; restrictions on transfers of funds; import duties and quotas; changes in domestic and international customs and tariffs, including embargoes and customs restrictions; uncertainties involving the costs to transport and warehouse products due to the dynamic nature of the global supply chain; unexpected changes in regulatory environments; regulatory issues involved in dealing with foreign suppliers and in exporting and importing products. The foregoing factors could have a material adverse effect on our business, operating results, financial condition, and cash flows.

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***A significant majority of our revenue results from sales of products on Amazon's U.S. marketplace, and any change, limitation, or restriction on our ability to operate on Amazon's platform could have a material adverse impact on our business, operating results, financial condition, and cash flows.***

A substantial percentage of our revenue is from sales of products on Amazon's U.S. marketplace and we are subject to Amazon's terms of service ("ToS") and various other Amazon seller policies. Amazon has the right to terminate or suspend our ability to sell on its platform at any time and for any reason. Amazon may also take other actions against us such as suspending or terminating our seller accounts or product listings and withholding payments owed to us indefinitely. From time to time in the past, we have experienced such adverse actions for products we have launched and products we have acquired and we can provide no assurance that we will be able to comply with Amazon's ToS. Further, in the event any of our seller accounts or product listings are suspended, or our product listings are required to be changed, for noncompliance or any other reason, including UPC brand mismatches, our reinstatement efforts may take significant time and attention or could fail, which could have a material adverse effect on our business, operating results, financial condition, and cash flows. In addition, Amazon has made, and we expect will continue to make, changes to its platform that could require us to change the manner in which we operate, limit our ability to successfully market existing products and to launch new products or increase our costs to operate. Such changes and the efforts required to maintain compliance therewith could have an adverse effect on our business, operating results, financial condition, and cash flows. Examples of past changes from Amazon have included platform fee increases (i.e., storage, advertising, fulfillment and selling commissions), inventory warehouse limitations, restrictions on certain marketing activities and changes to listing requirements that limit the variations of products that can be included in a single listing. Any change, limitation or restriction on our ability to sell on Amazon's platform, even if temporary, could have a material impact on our business, operating results, financial condition, and cash flows. We also rely on services provided by Amazon's fulfillment platform, including its Prime badge program, in which Amazon guarantees expedited shipping of products we sell to the consumer, an important factor in the consumer's buying decision. Further, Amazon allows us to fulfill from our own third-party warehouses directly to customers under the same Prime badge guarantee. Amazon may at any time decide to discontinue allowing us to fulfill sales of our products directly from our warehouse network or limit our ability to advertise on our product listings that such products will receive expedited shipping under its Prime badge program. Any such inability or limitation could have a material impact on our business, results of operations, financial condition, and cash flows. We have historically experienced, and may be subject in the future to, Amazon's removal of the Prime badge guarantee from certain of our seller accounts and in those cases we have had limited success having the Prime badge guarantee reinstated in a timely manner or at all.

***Our Credit Facility contains various restrictions and covenants that could limit our operating flexibility, and we may be unable to refinance or repay our Credit Facility. We also rely on credit export insurance for our vendors in China, the unavailability of which could have a material adverse impact on our business, operating results, financial condition, and cash flows.***

On December 22, 2021, we obtained a revolving credit facility from Midcap Funding IV Trust (the "Credit Facility"). Our Credit Facility contains covenants and other restrictions that, among other things, requires us to satisfy certain liquidity and borrowing availability tests, restricts our ability to execute M&A transactions and to incur additional indebtedness. These restrictions and covenants, and those in other future financing arrangements, may limit our ability to respond to market conditions, to provide for capital investment needs or to take advantage of business opportunities.

On February 23, 2024, the Company amended the Credit Facility to extend the term to December 2026 and provide us with access to $17 million in current commitments which can be increased, subject to certain conditions, to $30.0 million.

On March 25, 2025, the Company amended the Credit Facility to add repurchases of the Company's common stock of up to $1.5 million per year, consisting of up to $1.5 million in repurchases allowed during the period from March 25, 2025 through December 22, 2025, and up to an additional $1.5 million allowed during the period from December 23, 2025 through the maturity date, subject to certain liquidity and compliance conditions.

On August 29, 2025, the Company amended the Credit Facility to include a reduction to the Minimum Credit Party Liquidity covenant to $5.0 million. Upon the Company's delivery of a Liquidity Certificate evidencing liquidity of at least $6.8 million, the Minimum Liquidity Covenant Reduction Period will terminate and the covenant will increase to $6.8 million thereafter, and an Availability Reserve of $2.8 million during the Minimum Liquidity Covenant Reduction Period and $1.0 million thereafter.

On March 13, 2026, the Company and its subsidiaries entered into Amendment No. 5 to its Credit and Security Agreement with MidCap Funding IV Trust. Under the terms of the amendment, the Company's minimum liquidity covenant was reduced from $5.0 million to $3.5 million during the Minimum Liquidity Covenant Reduction Period. This reduction period commenced on the Fifth Amendment Effective Date and is subject to extension at the Company's option on a weekly basis through May 9, 2026, provided it remains in compliance with certain fee payment obligations.

There is no guarantee that we will be available to repay or refinance our Credit Facility. Further, at any time, if we violate the terms of the Credit Facility, we may not be able to obtain a waiver from our lender under satisfactory terms, or at all, which would limit our operating flexibility and/or liquidity and which could have a material adverse effect on our business, operating results, financial condition, and cash flows.

We also rely on the availability of export credit insurance from the China Export & Credit Insurance Corporation ("Sinosure"), a Chinese state-owned enterprise, that provides export credit insurance to our contract manufacturers. From time to time, our contract manufacturers have experienced reductions in the availability of such credit from Sinosure as a result of our failure to timely pay them. While we currently believe our contract manufacturers have insurance at levels that we believe are sufficient to fund our operations, there can be no assurance that such insurance will be available at levels we require for our business, or at all, whether or not we make timely payments to our vendors, which would have a material adverse effect on our business, operating results, financial condition, and cash flows.

In addition, the Company has cash deposits at financial institutions in excess of the insured amount of $0.3 million by the Federal Deposit Insurance Corporation.

***Our efforts to grow our business through new products, marketplace and geographic expansion may not be successful and may place a significant strain on our management and operational, financial and other resources.***

Our long-term success depends on our ability to develop and commercialize a continuing stream of new products, to expand both to new marketplaces and geographies and to leverage new technologies we may incorporate into our business. We have entered and expect to continue to enter new product categories and both new marketplaces and geographies for which we have limited or no experience. In part we rely on Amazon's global reviews program for success in our international expansion. If that program were to be limited, reduced or discontinued, our international expansion would be negatively affected. We also in part rely on our ability to include new products as variations to existing listings on Amazon. If that strategy were no longer possible for whatever reason, our ability to launch new products could be materially affected. That strategy could also have unanticipated or unexpected negative consequences. Our efforts to grow our business place significant strain on our management, personnel, operations, systems, financial resources, and internal financial control and reporting functions, among other things. We have limited personnel and resources and have reduced headcount significantly in recent years. In order to accomplish our growth goals, our team is required to focus on such growth ventures and reallocate their time and other resources, creating risk in all aspects of our business. We face the risk that we will be unable to disrupt incumbents and that our competitors will introduce new and better products that compete with us. There are numerous uncertainties inherent in successfully developing and commercializing new products on a continuing basis and new product launches may not deliver expected growth in sales or operating results. Any new product that we develop and market may not be introduced in a timely or cost-effective manner, may contain defects, errors, quality or other issues, or may not achieve the market acceptance necessary to generate sufficient revenue or may never become profitable. If we are unable to develop and introduce a continuing stream of competitive new products, it may have an adverse effect on our business, operating results, financial condition, and cash flows. Our failure to successfully execute on our growth initiatives can negatively impact our financial results, financial condition, and cash flows.

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***We may be unsuccessful in making investments, unable to make or unsuccessful in integrating acquisitions or in maintaining or growing the financial performance of any investees or acquired businesses which may adversely affect our business and operating results and could impact the price of our common stock and result in dilution to shareholders.***

We have acquired a number of companies, and we may in the future acquire or invest in or enter into joint ventures with additional companies. Such acquisitions have in the past required, and in the future may require, the attention of management in integrating those businesses including increased attention to managing the supply chain of certain acquisitions. In addition, we have been required to in the past, and may be required to in the future, make significant impairment charges relating to the goodwill and intangible assets of such acquired businesses. The market for acquisitions has historically been highly competitive. Our growth strategy may be adversely affected if we face increased competition for or fail to identify suitable targets. In addition, pursuing or completing any such acquisitions or investments could divert management's attention, and otherwise disrupt our operations and adversely affect our operating results, financial condition, and cash flows. Any acquisition or investment, if not favorably received by consumers, shareholders, analysts, and others in the investment community, could have a material adverse effect on the price of our common stock. In addition, any acquisition involves numerous risks, including: failing to identify problems during due diligence, liabilities or other shortcomings or challenges that could cause a target to under-perform post-closing; difficulties in the assimilation of the operations, technologies, products, and personnel associated with the acquisition and unanticipated expenses related to such integration; challenges in integrating distribution channels; diversion of management's attention from other business concerns; difficulties in transitioning and preserving customer, contractor, supplier, and other important third-party relationships; challenges realizing anticipated cost savings, synergies and other benefits; the potential impairment of tangible and intangible assets and goodwill; risks of entering markets in which we have no or limited experience; risks associated with subsequent losses including potential unknown liabilities associated with a company we acquire; and problems retaining key personnel. We provide no assurances that we will be able to complete any acquisitions or that any acquired businesses will experience the same or better level of financial performance as prior to the acquisition.

In order to complete any future acquisitions, we may need to use our cash on hand, raise additional equity or incur or assume debt, any of which could harm our business. Given the Company's current market capitalization, certain of these options may not be available or only be available on unfavorable terms and could result in significant additional dilution to our stockholders.

***Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.***

We have $269.3 million net operating loss carryforwards as of December 31, 2025, which have a full valuation allowance against them. In general, under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), a corporation that undergoes an ownership change, which is generally defined as a greater than 50-percentage-point cumulative change by value in the equity ownership of certain stockholders over a rolling three-year period, is subject to limitations on its ability to utilize its pre-change net operating losses ("NOLs") to offset post-change taxable income. Our existing NOLs may be subject to limitations arising from previous ownership changes, and if we undergo an ownership change, our ability to utilize NOLs could be further limited by Section 382 of the Code and similar state provisions. Future changes in our stock ownership, some of which may be outside of our control, could result in an ownership change under Section 382 of the Code. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. There is also a risk that due to regulatory changes, such as limitations on the use of NOLs, our existing NOLs could expire, decrease in value or otherwise be unavailable to offset future income tax liabilities. For example, the Tax Cuts and Jobs Act resulted in a reduction in the economic benefit of the NOLs and other deferred tax assets available to us. For these reasons, we may not be able to realize a tax benefit from the use of our NOLs, even if we attain profitability. We have not performed a detailed analysis to determine whether an ownership change under Section 382 of the Code has occurred. The effect of a Section 382 ownership change would be the imposition of an annual limitation on the use of net operating loss carryforwards attributable to periods before the change. Any limitation may result in expiration of all, or a portion of the NOLs or other tax attributes, before utilization.

In addition, the IRS is currently conducting an examination of our U.S. federal income tax return for the 2023 fiscal year. While we believe our tax positions and the resulting net operating losses reported for that period are supportable, the final outcome of this examination is uncertain. Any adverse adjustments resulting from this audit could significantly reduce our available net operating loss carryforwards or other tax attributes, which would limit our ability to offset future taxable income and could have a material adverse effect on our financial condition.

***We have recently undergone a management change and reevaluated various aspects of our business including but not limited to a reduction in the number of products we sell, a change in our technology infrastructure and a cost and a fixed cost reduction plan including a reduction in workforce; each of which, individually or in the aggregate, could have a material impact on our results of operations, financial condition, and business.***

Our business has undergone significant leadership transitions and a fundamental shift in our operating model that may adversely affect our results of operations and financial condition. Since July 2023, we have experienced several changes in our executive leadership, including the resignation of our founding CEO , a period of Co-CEO leadership , and the eventual appointment of Arturo Rodriguez as our sole CEO in June 2024. More recently, our Chief Technology Officer resigned effective November 3, 2025. In connection with these transitions, we have rationalized our product offering to focus on the more profitable categories and completed the move from a proprietary technology infrastructure to a model that relies entirely on third-party tools and marketplace data. We have also significantly reduced our workforce to align with our current scale. Managing these leadership vacancies while navigating a smaller organizational structure entails numerous risks, including potential operational disruptions, a decline in profitability, and negative impacts on employee morale. These changes may also divert management's attention from other business concerns, which could have a material adverse effect on our operating results, financial condition, and cash flows.

***If our products experience any recalls, product liability claims, or government, customer or consumer concerns about product safety, our reputation and operating results could be harmed.***

Our products are subject to regulation by the U.S. Consumer Product Safety Commission (the "CPSC") and similar state and international regulatory authorities, and these products sold on our platform could be subject to involuntary recalls and other actions by these authorities. Concerns about product safety including concerns about the safety of products manufactured in developing countries, could lead us to recall selected products. Recalls and government, customer or consumer concerns about product safety could harm our reputation and reduce sales, either of which could have a material adverse effect on our business, results of operations, financial condition and prospects.

In February 2026, we announced a voluntary recall in coordination with the CPSC for approximately 195,000 units of our PurSteam Mighty Lil Steamers and Elite Travel Steamers due to reports of hot water expelling from the nozzle. We have incurred, and expect to continue to incur, costs related to this recall, including refund payments and legal expenses. As a result of this recall, a putative class action complaint, Sarah Brannon v. Aterian, Inc., was filed against us on March 6, 2026, in the U.S. District Court for the District of New Jersey. The complaint alleges various violations, including breach of implied warranty, unjust enrichment, and violations of the New Jersey Products Liability Act. While the Company ceased selling these steamers in 2024, the defense of this existing litigation, and the potential for additional product liability or class action lawsuits, could result in significant legal expenses, settlements, or judgments. Furthermore, these developments could damage the reputation of the PurSteam brand, leading to a loss of consumer trust and a permanent decline in revenue for this product line.

We may be subject to product liability claims if people or property are harmed by the products we sell. Some of the products we sell may expose us to product liability claims and litigation (including class actions) or regulatory action relating to safety, personal injury, and death or environmental or property damage.

Although we maintain liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all. In general, our agreements with members of our supply chain do not indemnify us from product liability for a particular product, and some members of our supply chain may not have sufficient resources or insurance to satisfy their indemnity and defense obligations.

***Any failure by us or our vendors to comply with product safety, consumer protection or other laws, or our standard vendor terms and conditions, or to provide safe factory conditions for our or their workers may damage our reputation and brand and harm our business.***

The products we sell to our clients are subject to regulation by the CPSC, the Federal Trade Commission ("FTC") and similar state and international regulatory authorities. As a result, such products could be in the future subject to recalls and other remedial actions, including the manner in which we market our products. Product safety or labeling concerns may require us to voluntarily remove selected merchandise from our inventory. Such recalls or voluntary removal of merchandise can result in, among other things, suspension of our seller accounts on Amazon and other online marketplaces, lost sales, diverted resources, potential harm to our reputation and increased client service costs and legal expenses, which could have a material adverse effect on our operating results.

Some of the products we sell may expose us to product liability claims and litigation or regulatory action relating to personal injury or environmental or property damage. Although we maintain liability insurance and have implemented a quality assurance program that includes obtaining necessary certifications, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms or at all. In addition, our agreements with our vendors in general do not indemnify us from product liability for a particular vendor's products or our vendors may not have sufficient resources or insurance to satisfy their indemnity and defense obligations.

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***The process of evaluating strategic alternatives may be disruptive to our business and may not result in a transaction or other strategic outcome.***

On December 8, 2025, our Board of Directors announced a formal process to evaluate a range of strategic alternatives aimed at maximizing shareholder value, which may include a potential sale of assets, a merger, a business combination, or other strategic transactions. There can be no assurance that this evaluation process will result in any definitive offer or transaction, or that any transaction, if pursued, will be consummated on favorable terms or at all. The process of exploring these alternatives is time-consuming and involves significant costs, including legal, accounting, and advisory fees, which we will incur regardless of the eventual outcome. This process may also divert the attention of our senior management and key personnel from our day-to-day operations and the execution of our long-term business strategy, including our omni-channel expansion and product development goals. Furthermore, the uncertainty regarding our future ownership or corporate structure may impair our ability to attract, retain, and motivate qualified employees, or may cause our customers, vendors, and strategic partners to delay or defer decisions to do business with us. Such uncertainty could also lead to increased volatility in the market price of our common stock as a result of market speculation or rumors. If we are unable to successfully complete a strategic transaction that creates value for our stockholders, or if the process itself results in significant operational disruptions or loss of key personnel, our business, financial condition, and results of operations could be materially and adversely affected.

***We may be unable to attract, retain or motivate key personnel, which could harm our business.***

Our future success depends on our continuing ability to attract, motivate and retain well qualified employees. Competition for well-qualified employees in all aspects of our business is intense globally. The loss of one or more of our key personnel or our inability to promptly identify a suitable successor to a key role, including through a succession plan, could have an adverse effect on our business. Further, the Company recently announced a restructuring whereby a number of employee positions with the Company were terminated, which could have a negative effect on our ability to retain and motivate our personnel. Additionally, the uncertainty resulting from our announcement that we are exploring strategic alternatives may create significant anxiety regarding our future direction and ownership, which could lead to increased employee attrition and further hinder our ability to attract and motivate key personnel. Each of our executive officers, key personnel and other employees could terminate their employment relationship with us at any time. Moreover, we rely on stock-based compensation as a method to attract, retain and motivate our employees. If our common stock continues to be volatile or depressed, we may be unable to attract, retain and motivate employees, and if this occurs, it could have a material adverse effect on our business, operating results, financial condition, and cash flows. We do not currently maintain key person life insurance policies on any member of our senior management team or any other key employees.

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**Risks Relating to Information and Cyber Security**

***We rely on data provided by third parties and any loss, reduction in access or increased costs related thereto of which could have a material adverse effect on our business.***

We use a combination of technologies in various aspects of our business including for new product launches, forecasting, fulfillment and the automation of sales and marketing of our products, among other things. Our ability to successfully use our technology depends to a large extent on our ability to analyze and utilize data, including search engine results, provided by unaffiliated third parties, primarily, Google and Amazon. In the future, these third parties could change their data sharing policies, including making them more restrictive or expensive, or could alter their algorithms, any of which could result in the loss of, or significant impairment to, our ability to analyze useful data. These third parties could also interpret our service providers' data collection policies or practices as being inconsistent with their policies, which could result in the loss of our ability to collect and use this data.

***Our business, operating results, financial condition, and cash flows could be adversely impacted if our information technology systems or those of third-parties become subject to a data security breach, are disrupted or cease to operate effectively.***

We rely heavily on information technology systems to operate our business and we collect, maintain, transmit and store sensitive data including data about our consumers. We also engage and rely upon third parties who engage in the same activities on our behalf. Accordingly, it is vital to maintain constant operation of these systems and to maintain cybersecurity. Our systems and those of third parties that we use in our operations are vulnerable to security risks, including from viruses and worms, phishing attacks, social engineering, hacking, distributed denial-of-service attacks, ransomware, and similar disruptions from the unauthorized tampering with our servers and computer systems or those of third parties that we use in our operations, which could lead to interruptions, delays, loss of critical and sensitive data, and loss of consumer confidence. In addition, insider actors-malicious or otherwise-could cause technical disruptions and/or confidential data leakage. In addition, if a ransomware attack or other cybersecurity incident occurs, either internally or at our third-party technology service providers, we could be prevented from accessing our data or systems, which may cause interruptions or delays in our business operations, cause us to incur material remediation costs, and could subject us to demands to pay a ransom or damage our reputation. Our failure to prevent or mitigate data loss, theft, misuse, or other security breaches or vulnerabilities affecting our or our vendors' technology and systems, could: expose us or our customers to a risk of loss, disclosure, or misuse of such information; result in litigation, fines, liability, or regulatory action (including under laws related to privacy, data use, data protection, data security, network security, and consumer protection); deter customers from using our stores to buy our products; and harm our business, operating results, financial condition and reputation. We use third party technology and systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, back-office support, hosting, payment processing and other functions. Despite our security efforts, some of our systems have experienced past security breaches, and, although they did not have a material adverse effect on our operations or financial results, there can be no assurance that future incidents, which we expect to have, will not have material adverse effects on our business, operating results or financial condition. The Company's adoption of remote working, initially driven by the pandemic, may also introduce additional threats or disruptions to our information technology networks and infrastructure. Although we have developed systems and processes that we believe are reasonably designed to protect customer data and prevent such incidents, including systems and processes designed to reduce the impact of a security breach at a third-party vendor or customer, such measures cannot provide absolute security and may fail to operate as intended or be circumvented. In addition, our insurance may not provide sufficient coverage to compensate for related losses.

Additionally, we use open source software in our technology platform and our other sophisticated information technologies and systems, and we expect to continue to use open source software in the future. In addition to risks related to license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties, indemnities or other contractual protections with respect to the software (for example, non-infringement or functionality). Our use of open source software may also present additional security risks because the source code for open source software is publicly available, which may make it easier for hackers and other third parties to determine how to breach our sites and systems that rely on open source software.

Our information technology systems and those of our third parties may be vulnerable from time to time to damage, interruptions and other technical malfunctions including but not limited to breaches, human error, power outages, telecommunication or utility failures, systems failures, natural disasters or other catastrophic events. In addition, growth in our transaction volume or surges in online traffic place additional demands on our systems and could cause or exacerbate slowdowns or interruptions. If any such systems are damaged, or fail to function properly, we may have to make monetary investments to repair or replace the systems and could endure delays in operations. From time to time, we have experienced disruptions to our systems and we expect to continue to experience disruptions. Any material disruption or slowdown of such systems, including the failure to successfully upgrade systems, could have a material impact on many aspects of our operations including our ability to operate on e-commerce marketplaces. Such a loss or delay could have a material adverse impact on our business, operating results, financial condition, and cash flows. Our systems are not fully redundant and our disaster recovery planning may not be sufficient.

***The Company's use of artificial intelligence technologies may not achieve intended results and could expose us to operational, competitive, regulatory, and reputational risks that may adversely affect our business, financial condition, and results of operations.***

Our business is increasingly subject to risks associated with third-party artificial intelligence technologies and algorithmic dependencies. While we have made use of Generative AI in areas such as customer service and software development, our completed transition to a model relying entirely on third-party tools has made us disproportionately dependent on external, AI-driven algorithms for search optimization and advertising. These third-party AI systems often function as 'black boxes,' and any updates or shifts in the underlying models used by marketplaces like Amazon or search engines like Google could suddenly de-prioritize our product listings or increase our customer acquisition costs without notice. Furthermore, as competitors increasingly adopt more effective AI-based solutions or use Generative AI to create high volumes of synthetic marketing content and automated product reviews, our 'social proof' and market share could be diluted. There can be no assurance that these third-party AI initiatives will be successful or that they will not lead to unintended consequences that materially and adversely affect our business, financial condition, and results of operations.

Marketplaces are increasingly deploying AI-powered shopping agents, such as Amazon's Rufus, which change the way products are discovered and recommended to consumers. These AI agents utilize proprietary algorithms that may prioritize different data points than traditional search results. If our products are not optimized for these AI agents, or if the agents' recommendations favor competitors or marketplace-owned brands, our organic traffic and sales could decline substantially.

The development, implementation, and oversight of AI technologies involve complexities and potential challenges. Errors, biases, or flaws in AI algorithms, whether developed internally or provided by third parties, could result in inaccurate responses to customers, poor user experiences, or inappropriate or misleading content. These issues could negatively impact our brand reputation, customer trust, and overall business performance.

Additionally, AI is an area of rapid technological advancement and evolving competition. Other e-commerce companies may adopt or develop more effective AI-based solutions, which could place us at a competitive disadvantage. Moreover, the legal and regulatory landscape surrounding AI continues to develop. Emerging laws or regulations could impose new compliance obligations, require changes to how we deploy or monitor AI, or result in unforeseen costs or operational disruptions.

We also rely in part on third-party vendors that integrate AI into the tools and services they provide to us. Because we may have limited visibility or control over these systems, any technical errors, data privacy issues, or regulatory noncompliance by such vendors could negatively affect our operations.

Any of these factors, whether related to internal AI use, reliance on third-party systems, competitive developments, or regulatory changes, could materially and adversely affect our business, financial condition, and results of operations.

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**Risks Relating to the Litigation and Government Regulation**

***Claims, litigation, government investigations, product liability and recalls, and other proceedings may adversely affect our business, operating results, financial condition, and cash flows.***

We are, from time to time, involved in various claims, litigation matters and regulatory proceedings that could have a material adverse effect on us. These matters may include personal injury and other tort claims, deceptive trade practice disputes, intellectual property disputes, product recalls, contract disputes, employment and tax matters and other proceedings and litigation, including class actions lawsuits. It is not possible to predict the outcome of pending or future litigation and any such claims, with or without merit, could be time consuming and expensive, and may require the Company to incur substantial costs and divert the resources of management.

We face exposure to product liability and other claims in the event that one of our products is alleged to have resulted in property damage, bodily injury or other adverse effects. In addition, if we are required to, or voluntarily, repair, replace or refund one or more of our products, it could have a material impact on our business, operating results, financial condition and reputation.

Determining legal reserves or possible losses from claims against us involves judgment and may not reflect the full range of uncertainties and unpredictable outcomes. Until the final resolution of such matters, we may be exposed to losses in excess of the amount recorded, and such excess amounts could have a material effect on our business, results of operations, financial condition, and cash flows. In addition, it is possible that a resolution of any claim, including as a result of a settlement, could require us to make substantial future payments, prevent us from offering certain products or services, or require us to change our business practices each of which could have a material adverse effect on our business, operating results, financial condition, and cash flows.

***We must successfully manage compliance with current and expanding laws and regulations, as well as manage new and pending legal and regulatory matters in the U.S. and abroad.***

We are subject in the ordinary course of our business, in the U.S. and internationally, to many statutes, ordinances, rules and regulations that, if violated by us or the third parties we work with, could have a material adverse effect on our business, operating results, financial condition, and cash flows. These laws and regulations include but are not limited to accounting and financial reporting, advertising, anti-bribery and anti-corruption, consumer protection, data security and privacy, electronic commerce, employment, intellectual property, product liability, and trade (including tariffs). In addition, increasing governmental and societal attention to environmental, social and governance (ESG) matters, including expanding mandatory and voluntary reporting, diligence and disclosure on topics such as climate change, waste production, water usage, human capital, labor and risk oversight, could expand the nature, scope and complexity of matters that we are required to control, assess and report, each of which can be challenging given our reliance on third party suppliers. These and other rapidly changing laws, regulations, policies and related interpretations as well as increased enforcement actions by various governmental and regulatory agencies, create challenges for us, including our compliance and ethics programs, may alter the environment in which we do business and may increase the ongoing costs of compliance, which could adversely impact our business, operating results, financial condition, and cash flows. If we are unable to continue to meet these challenges and to comply with all laws, regulations, policies and related interpretations, it could negatively impact our reputation and our business, operating results, financial condition, and cash flows. Additionally, we may in the future be subject to inquiries, investigations, claims, proceedings and requests for information from governmental agencies or private parties, the adverse outcomes of which could harm our business. Failure to successfully manage these new or pending regulatory and legal matters and to resolve such matters without significant liability or damage to our reputation may materially adversely impact our operating results, financial condition, and cash flows. Furthermore, if new legal or regulatory matters result in fines or costs in excess of the amounts accrued to date, that may also materially impact our operating results and financial position.

***U.S. government trade actions could have a material adverse effect on our business, financial position, and results of operation.***

Over the past several years, the U.S. government has taken a number of trade actions that impact or could impact our operations, including imposing tariffs on certain goods imported into the United States.

Throughout 2025, the U.S. trade environment underwent a period of unprecedented volatility characterized by the implementation of a broad "reciprocal" tariff regime. Utilizing the International Emergency Economic Powers Act (IEEPA), the administration imposed steep duties on nearly all imported goods, including a baseline 10% global tariff and targeted rates on major trading partners like China that reached historic highs before a late-year temporary truce. These actions were compounded by expanded Section 232 duties on industrial metals and the elimination of "de minimis" exemptions for low-value imports, significantly increasing our landed costs and requiring frequent adjustments to our pricing and sourcing strategies. While these measures were the primary drivers of trade policy for much of the year, their legal foundation remained a point of intense litigation until early 2026.

On February 20, 2026, the U.S. Supreme Court ruled in *Learning Resources Inc. v. Trump* that the International Emergency Economic Powers Act does not authorize the President to impose sweeping revenue-raising tariffs. While this decision invalidated several broad reciprocal tariffs previously in effect, the administration immediately transitioned to imposing a 10% baseline tariff under Section 122 of the Trade Act of 1974, effective February 24, 2026. These Section 122 tariffs are subject to a 150-day limit unless extended by Congress. Significant uncertainty remains regarding whether Congress will approve such extensions or if the administration will seek alternative, more restrictive statutory authorities. Any failure to maintain these exemptions or the imposition of new, higher duties could materially increase our cost of goods sold and decrease our profit margins.

These tariff actions, along with the potential for retaliatory measures, create uncertainty and may increase our product costs, disrupt our supply chain, and adversely affect our competitive position. In particular, continued or escalated trade and political tensions with China or other key trading partners could result in retaliatory restrictions that impair our ability to source products and components from contract manufacturers or service providers operating in those countries. Any sustained increase in tariffs, or the imposition of additional trade barriers, could materially and adversely affect our business, financial condition, and results of operations.

In addition to the tariff measures described above, changes in U.S. or foreign trade policy may create ongoing uncertainty in international trade relations. Future actions by the United States or other governments — including the imposition, increase, or extension of tariffs, quotas, or other trade restrictions, or changes to existing trade agreements or policies — could occur at any time and without notice. Any such actions, whether unilateral or in response to geopolitical or economic developments, could reduce demand for our products, increase our costs, disrupt our supply chain, reduce our profitability, or otherwise have a material adverse effect on our business, financial condition, and results of operations.

We are continually evaluating the impact of the current and any possible new tariffs on our supply chain, costs and sales and are considering strategies to mitigate such impact, including reviewing sourcing options and working with our suppliers. We can provide no assurance that any strategies we implement to mitigate the impact of such tariffs or other trade actions will be successful or that any newly sourced products will be of the same quality of those previously sourced elsewhere. Given the uncertainty regarding the scope and duration of these trade actions by the U.S. government or other countries, as well as the potential for additional trade actions, the impact on our operations and results remains uncertain.

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**Risks Relating to the Ownership of our Common Stock**

 ***We are a "smaller reporting company" and the reduced disclosure requirements applicable to smaller reporting companies may make it more difficult to compare our performance with other public companies and make our common stock less attractive to investors.***

We are a "smaller reporting company" as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited consolidated financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held by nonaffiliates exceeds $250 million as of the prior June 30 or (ii) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non affiliates exceeds $700 million as of the prior June 30. To the extent we take advantage of such reduced disclosure obligations, it may also make comparisons of our consolidated financial statement with other public companies difficult or impossible.

***The market price and trading volume of our common stock may fluctuate significantly.***

The market price and trading volume of our common stock has at times experienced substantial price volatility. There has been, and we expect will continue to be, significant volatility in the market price and trading volume of our common stock. In certain instances, these fluctuations have been unrelated or disproportionate to our operating performance, financial condition, and cash flows. In addition, the market price of our common stock may be, and we believe has been, significantly impacted by investors covering large short positions in our common stock. In addition, there are many other factors that have caused and may continue to cause the market price of our common stock to fluctuate, including: our announcement of our Board's temporary suspension of our share repurchase program, actual or anticipated variations in our quarterly operating results, or the operating results, financial condition, and cash flows of companies perceived to be similar to us; deterioration and decline in general economic, industry and/or market conditions; changes in estimates of our financial results or recommendations by equity research analysts, including any decision by equity research analysts to initiate or discontinue coverage; announcements by us or our competitors of significant acquisitions, strategic alliances or joint ventures; and changes in our capital structure, such as future issuances of securities or the incurrence of additional debt.

***We may be limited by our ability to raise the funding we need to support our growth or to maintain our existing business. Also, such funding may be available only by diluting existing stockholders.***

The success of our business depends in part on our ability to invest significant resources in various aspects of our business. To support our business growth, we will likely require additional funds to maintain and grow our business and to respond to business challenges. Accordingly, from time to time we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through issuances of equity or convertible debt securities, that would result in significant dilution to our existing stockholders, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Any debt we may incur may negatively impact our business, financial condition and operating results. We have in the past and may in the future incur debt that allows us to repay such debt using our common stock, which could result in significant dilution. Further, we may not be able to obtain additional financing on terms favorable to us, or at all, whether due to issues related to the Company or unrelated to the Company including but not limited to bank failures. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to grow or to respond to business challenges would be significantly limited, and our business could fail or our operating results, financial condition, and cash flows could be adversely affected.

Any debt financing secured by us in the future could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. In addition, we may not be able to acquire the financing needed in order to pursue future acquisitions or similar transactions or we may not be able to raise sufficient equity or equity-like capital without first seeking stockholder approval, which could limit our ability to complete such financing, or to complete any related transaction on a timely basis or at all.

***Future sales of our common stock by our insiders, or the perception that these sales may occur, may cause the market price of our common stock to decline.***

Our employees, directors and officers, and their affiliates, hold substantial amounts of shares of our common stock which is granted as a portion of their compensation. Sales by these stockholders, or the perception that such sales will occur, may cause the market price of our common stock to decline. Other than our stock ownership guidelines and our restrictions on trading that arise under securities laws (or pursuant to our securities trading policy that is intended to facilitate compliance with securities laws), including the prohibition on trading in securities by or on behalf of a person who is aware of nonpublic material information, we have no restrictions on the right of our employees, directors and officers, and their affiliates, to sell their unrestricted shares of common stock. Our employees, officers and directors periodically sell shares of common stock to cover tax liabilities from prior restricted stock awards.

***Future sales and issuances of our capital stock, or the perception that such sales may occur, could cause our stock price to decline.***

Future sales and issuances of our capital stock or rights to purchase our capital stock could result in substantial dilution to our existing stockholders. We may sell common stock, convertible securities and other debt or equity securities in one or more transactions at prices and in a manner as we may determine from time to time. If we sell any such securities in subsequent transactions, the ownership of existing stockholders will be diluted, possibly materially. New investors in subsequent transactions could also gain rights, preferences and privileges senior to those of existing holders of our common stock. In addition, we issue to our employees equity awards under our equity incentive plans which could be material in amount.

If our existing stockholders sell large numbers of shares of our common stock, or the public market perceives that those existing stockholders might sell shares of common stock, the market price of our common stock could decline significantly. Existing stockholder sales might also make it more difficult for us to sell additional equity securities at a time and price that we deem appropriate, or at all.

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***There is no guarantee of a continuing public market for you to resell our common stock.***

There is no guarantee that we will continue to meet all requirements for continued listing on the Nasdaq Capital Market. We must continue to satisfy Nasdaq's continued listing requirements, including, among other things, a minimum closing bid price requirement of $1.00 per share.

On April 24, 2023,the Company received a notice from The Nasdaq Stock Market LLC ("Nasdaq") indicating that, based upon the closing bid price of the Company's common stock, par value $0.0001 per share ("Common Stock"), for the last 30 consecutive business days, the Company was not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the "Bid Price Notice"). In response to the potential risk of delisting, the Company's stockholders approved granting the Board discretionary authority to implement a reverse stock split, and on March 20, 2024, the Company effected a 1-for-12 reverse stock split of its common stock. The Company subsequently regained compliance with Nasdaq's minimum bid price requirement in April 2024, and the matter was closed.

On December 9, 2025, the Company received a notice from Nasdaq indicating that, based upon the closing bid price of the Company's common stock, par value $0.0001 per share, for the last 30 consecutive business days, the Company is not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2).

The Bid Price Notice has no immediate effect on the continued listing status of the Common Stock on The Nasdaq Capital Market, and, therefore, the Company's listing remains fully effective.

The Company is provided a compliance period of 180 calendar days from the date of the Bid Price Notice, or until June 8, 2026, to regain compliance with the minimum closing bid requirement, pursuant to Nasdaq Listing Rule 5810(c)(3)(A). If at any time before June 8, 2026, the closing bid price of the Common Stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, subject to Nasdaq's discretion to extend this period pursuant to Nasdaq Listing Rule 5810(c)(3)(H) to 20 consecutive business days, Nasdaq will provide written notification that the Company has achieved compliance with the minimum bid price requirement, and the matter would be resolved. If the Company does not regain compliance during the compliance period ending June 8, 2026, then Nasdaq may grant the Company a second 180 calendar day period to regain compliance, provided the Company meets the continued listing requirement for market value of publicly-held shares and all other initial listing standards for The Nasdaq Capital Market, other than the minimum closing bid price requirement, and notifies Nasdaq of its intent to cure the deficiency during the second compliance period.

The Company will continue to monitor the closing bid price of its Common Stock and seek to regain compliance with all applicable Nasdaq requirements within the allotted compliance periods. If the Company does not regain compliance within the allotted compliance periods, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Common Stock will be subject to delisting. The Company would then be entitled to appeal that determination to a Nasdaq hearings panel. There can be no assurance that the Company will regain compliance with the minimum bid price requirement during the 180-day compliance period, secure a second period of 180 days to regain compliance or maintain compliance with the other Nasdaq listing requirements.

In the future, if our Common Stock fails to regain the minimum closing bid price of $1.00 per share or otherwise fails to satisfy any of the Nasdaq continued listing requirements, and if we are unable to cure such deficiency during any subsequent cure period, our Common Stock could be delisted from the Nasdaq. If our Common Stock ultimately were to be delisted for any reason, we could face significant material adverse consequences, including:

• limited availability of market quotations for our Common Stock;

• a limited amount of news and analyst coverage for us;

• a decreased ability for us to issue additional securities or obtain additional financing in the future;

• limited liquidity for our stockholders due to thin trading; and

• the potential loss of confidence by investors and employees.

***The proposed Nasdaq minimum market value rule could result in the immediate suspension and delisting of our common stock without a cure period.***

On January 13, 2026, Nasdaq filed a proposed rule change with the SEC (File No. SR-NASDAQ-2026-004) that would establish a new continued listing requirement. Under the proposal, companies listed on the Nasdaq Global and Capital Markets would be required to maintain a minimum Market Value of Listed Securities ("MVLS") of at least $5 million.

If this rule is approved and we fail to maintain a $5 million MVLS for a period of 30 consecutive business days, our common stock would be subject to immediate suspension and delisting. Unlike other Nasdaq listing deficiencies, such as the $1.00 minimum bid price requirement, which typically allows for a 180-day compliance period, the proposed rule does not provide for a cure or compliance period. Furthermore, the proposal specifies that any appeal of a delisting determination under this rule would not stay the suspension of trading.

If our common stock is delisted from Nasdaq, it would likely trade on the over-the-counter ("OTC") market. Such a move could:

• Significantly reduce the liquidity and market price of our common stock;

• Limit our ability to raise additional capital through the issuance of equity;

• Result in a loss of confidence by investors, suppliers, and employees; and

• Make our stock subject to "penny stock" rules, which impose additional burdens on broker-dealers and further restrict secondary market trading.

There can be no assurance that the SEC will not approve this rule or that we will be able to maintain a market capitalization sufficient to comply with these new requirements. Any such delisting would have a material adverse effect on our financial condition and the value of your investment.

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**Item 1B. Unresolved Staff Comments.**

None.

**Item *1C.* Cybersecurity**

We have processes in place for assessing, identifying, and managing material risks from potential unauthorized occurrences on or through our information systems that could adversely affect the confidentiality, integrity, or availability of our information systems or the information residing on those systems. These include a wide variety of mechanisms, controls, technologies, methods, systems, and other processes that are designed to prevent, detect, or mitigate data loss, theft, misuse, unauthorized access, or other security incidents or vulnerabilities affecting the data. The data includes confidential, proprietary, and business and personal information that we collect, process, store, and transmit as part of our business, including on behalf of third parties. We also use systems and processes designed to reduce the impact of a security incident at a third-party vendor or customer, including assessment and monitoring of security standards and control procedures for external suppliers and vendors, with enhanced engagement or internal controls depending on the results of the assessment.

Additionally, we use processes to oversee and identify material risks from cybersecurity threats associated with our use of third-party technology and systems, including: technology and systems we use for encryption and authentication; employee email; content delivery to customers; back-office support; and other functions. As part of our risk management process, we conduct application security assessments, vulnerability management, security audits, and ongoing risk assessments. We also maintain a variety of incident response plans that are utilized when incidents are detected. We require employees with access to information systems, including all corporate employees, to undertake data protection and cybersecurity training and compliance programs annually. We have a unified and centrally coordinated team, led by our Chief Executive Officer, that is responsible for implementing and maintaining centralized cybersecurity and data protection practices at Aterian in close coordination with senior leadership and other teams across Aterian. In addition to our in-house cybersecurity capabilities, at times we also engage assessors, consultants, auditors, or other third parties to assist with assessing, identifying, and managing cybersecurity risks. These third parties also consult on best practices to address new challenges upon request. Our cybersecurity risks and associated mitigations are evaluated by senior leadership, including as part of our risk assessments that are reviewed by the Audit Committee and our Board of Directors. As of the date of this report, the Company is not aware of any material risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition. Despite the extensive approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on the Company or its stakeholders.

Additional information about cybersecurity risks we face is discussed in Item *1A* of Part I, "Risk Factors," under the heading "Risks Related to Information and Cyber Security," which should be read in conjunction with the information above. The Audit Committee, which is comprised of independent directors, oversees our policies and procedures for protecting our cybersecurity infrastructure and for compliance with applicable data protection and security regulations, and related risks. The Audit Committee receives reports regarding such risks from management and any updates are reported to the Board at least quarterly. The Audit Committee also oversees the Board's response to any significant cybersecurity incidents.

**Item 2. Properties.**

As of December 31, 2025, our principal place of business and corporate headquarters was our Summit, New Jersey office which is leased on a month-to-month basis. Our UK office is a building we own, and our China office is leased for a term of one year expiring in September 2026.

Our other offices are either shared workspaces or leases with a short-term commitment (month to month).

**Item 3. Legal Proceedings.** 

From time to time, we may be involved in various claims and legal proceedings relating to claims arising out of our operations, primarily with respect to the sale of our consumer products. We believe that there are no pending lawsuits or claims that, individually or in the aggregate, may have a material effect on our business, financial condition or operating results.

**Item 4. Mine Safety Disclosures.**

None.

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**PART II**

**Item 5. Market for Registrant**'**s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.** 

**Market Information**

Our common stock is traded on the Nasdaq Capital Market under the symbol "ATER".

**Holders of Record**

As of December 31, 2025, there were approximately 99 holders of record of our common stock. Many shares of common stock are held by brokerage firms, banks, and other financial institutions as nominees for beneficial owners. Accordingly, we are unable to estimate the total number of stockholders represented by these record holders.

**Dividends**

We have never declared or paid any cash dividends on our capital stock. We intend to retain any future earnings, if any, to finance the operation and expansion of our business, and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be made at the discretion of our board of directors or any authorized committee thereof after considering our financial condition, results of operations, capital requirements, business prospects and other factors our board of directors or such committee deems relevant, and subject to the restrictions contained in our current or future financing instruments. Pursuant to the Credit Agreement, dated as of December 22, 2021 and amended as of February 23, 2024, with Midcap Funding IV Trust as Agent ("MidCap") and the lenders party thereto, we are restricted from declaring any dividends or other distributions, subject to exceptions for certain of our subsidiaries.

**Securities Authorized for Issuance Under Equity Compensation Plans**

See Item 12 of Part III of this Annual Report regarding information about securities authorized for issuance under our equity compensation plans.

**Unregistered Sales of Equity Securities**

None

**Purchase of Equity Securities**

On March 14, 2025, the Board of Directors authorized a share repurchase program to acquire up to $3.0 million of the Company's common stock. The Company may purchase common stock on the open market, through privately negotiated transactions, or by other means including through the use of trading plans intended to qualify under Rule 10b-18 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. The share repurchase program will has a term of 24 months and may be suspended or discontinued at any time and does not obligate the Company to acquire any amount of common stock. The objective of this program is to repurchase shares of common stock opportunistically when management believes that the Company's stock is trading below the Company's determination of long-term fair value. As of May 2, 2025, the Company had temporarily suspended its share repurchase program.

**Item 6. Reserved**

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

*The following discussion and analysis of our financial condition and results of operations contains forward-looking statements that involve a number of risks, uncertainties and assumptions. Actual events or results may differ materially from our expectations. Important factors that could cause actual results to differ materially from those stated or implied by our forward-looking statements include, but are not limited to, those set forth in Part I,* "*Item 1A. Risk Factors*" *in this Annual Report. All forward-looking statements included in this Annual Report are based on information available to us as of the time we file this Annual Report and, except as required by law, we undertake no obligation to update publicly or revise any forward-looking statements.* 

**Overview**

We are a consumer products company that predominantly operates through online retail channels such as Amazon, Walmart, and Target and its own direct to consumer websites. The Company operates its owned brands, which were either incubated or purchased, selling products in multiple categories, including home and kitchen appliances, kitchenware, air quality appliances, health and beauty products and essential oils.

Our primary brands include Squatty Potty, HomeLabs, Mueller Living, PurSteam, Healing Solutions, and Photo Paper Direct ("PPD"). We generate revenue primarily through the online sales of our various consumer products with substantially all of our sales being made through the Amazon U.S. marketplace.

***Seasonality of Business and Product Mix***

Our individual product categories are typically affected by seasonal sales trends primarily resulting from the timing of the summer season for certain of our environmental appliance products and the fall and holiday season for our small kitchen appliances and accessories. With our current mix of environmental appliances, the sales of those products tend to be significantly higher in the summer season. Further, our essential oils, small kitchen appliances and accessories tend to have higher sales during the fourth quarter, which includes Thanksgiving and the December holiday season. As a result, our operational results, cash flows, cash and inventory positions may fluctuate materially in any quarterly period depending on, among other things, adverse weather conditions, shifts in the timing of certain holidays and changes in our product mix.

Product mix can affect our gross profit and the variable portion of our sales and distribution expenses. We rely heavily on a global supply chain in which the cost, lead times, and delays, as well as global and geopolitical events can ultimately have a direct impact to our margins. Further, impacts on our supply chain may force us to hold more inventory, which not only affects working capital but also requires us to increase our storage capacity, through our warehouse network, which of itself has a capital impact.

**Financial Operations Overview**

**Net Revenue**—We derive our revenue from the sale of consumer products, primarily in the U.S. We sell products directly to consumers through online retail channels and through wholesale channels. Direct-to-consumer sales (i.e., direct net revenue), which is currently the majority of our revenue, is done through various online retail channels. We sell on Amazon.com, Walmart.com, Target.com and our own websites, with the large majority of our sales being made through Amazon.com. For all of our sales and distribution channels, revenue is recognized when control of the product is transferred to the customer (i.e., when our performance obligation is satisfied), which typically occurs at the shipment date.

**Cost of Goods Sold**—Cost of goods sold consists of the book value of inventory sold to customers during the reporting period. Book value of inventory includes the amounts we pay manufacturers for product, tariffs and duties associated with transporting product across national borders, and freight costs associated with transporting the product from our manufacturers to our warehouses, as applicable. Shrinkage costs are also recognized within the cost of goods sold. When circumstances dictate that we use net realizable value as the basis for recording inventory, we base our estimates on expected future selling prices, less expected disposal costs.

During 2025, the U.S. government announced a series of new tariff policies affecting imports from several countries, including China. While these actions impact a range of global trade flows, the new tariffs targeting imports from China are the most significant for our business. As a result of these tariffs, we experienced an increase in our cost of goods sold during the year ended December 31, 2025. In response, we implemented targeted price increases across affected product categories to partially offset the higher input costs. These pricing actions, however, contributed to a decline in unit volumes as consumer demand responded to the higher retail prices. We have implemented a range of mitigation strategies to address the impact of these tariffs on our supply chain and margins. These efforts include diversifying sourcing outside of China, renegotiating supplier terms, redesigning certain products to reduce tariff exposure, and implementing selective price increases where appropriate. We continue to evaluate additional structural and operational measures to further reduce tariff-related exposure.

**Expenses:**

**Sales and Distribution Expenses**—Sales and distribution expenses consist of online advertising costs, marketing and promotional costs, sales and ecommerce platform commissions, fulfillment, including shipping and handling, and warehouse costs (i.e., sales and distribution variable expenses). Sales and distribution expenses also include employee cash and stock compensation and benefits and other related fixed costs. Shipping and handling expenses are included in our consolidated statements of operations in sales and distribution expenses. This includes inbound, pick and pack costs and outbound transportation costs to ship goods to customers performed by e-commerce platforms or incurred directly by us, through our own direct fulfillment platform, which leverages our technology platform and third-party logistics partners. Our sales and distribution expenses, specifically our logistics expenses and online advertising, will vary quarter to quarter as they are dependent on our sales volume, our product mix and whether we fulfill products ourselves, i.e., fulfillment by merchant ("FBM"), or through e-commerce platform service providers, i.e., fulfillment by Amazon ("FBA") or fulfilled by Walmart ("WFS"). Products with less expensive fulfillment costs as a percentage of net revenue may allow for a lower gross margin, while still maintaining their targeted profitability level. Conversely, products with higher fulfillment costs will need to achieve a higher gross margin to maintain their targeted level of profitability. We are FBM One Day and Two Day Prime certified, allowing us to deliver our sales through Amazon to most customers within one or two days. We periodically review the locations and capacity of our third-party warehouses to ensure we have the appropriate geographic reach, which helps to reduce the average last mile shipping zones to the end customer and as such our speed of delivery improves while our shipping costs to customers decrease, prior to the impacts on shipping providers' rates.

**General and Administrative Expenses**—General and administrative expenses include cash and stock compensation and employee benefits for executive management, finance administration, legal, technology, and human resources, facility costs, insurance, travel, professional service fees, and other general overhead costs, including the costs of being a public company.

**Interest Expense, Net**—Interest expense, net includes the interest cost from our credit facility and term loans, and includes amortization of deferred finance costs and debt discounts from our credit facility (the "Credit Facility") with MidCap Funding IV Trust ("MidCap").

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**Results of Operations** 

***Comparison of Years Ended December 31, 2025 and 2024***

The following table summarizes our results of operations for the years ended December 31, 2025 and 2024, together with the changes in those items in dollars and percentage:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
|  | (in thousands, except percentages) | (in thousands, except percentages) | (in thousands, except percentages) | (in thousands, except percentages) |
| Net revenue | $68975 | $99045 | $(30070) | (30.4)% |
| Cost of goods sold | 29825 | 37550 | (7725) | (20.6)% |
| Gross profit | 39150 | 61495 | (22345) | (36.3)% |
| Operating expenses: |  |  |  |  |
| Sales and distribution<sup>(1)</sup> | 41455 | 55979 | (14524) | (25.9)% |
| General and administrative<sup>(1)</sup> | 11846 | 17339 | (5493) | (31.7)% |
| &nbsp;&nbsp;&nbsp; Impairment loss on intangibles | 3822 |  | 3822 | 100.0% |
| Total operating expenses | 57123 | 73318 | (16195) | 42.4% |
| Operating loss | (17973) | (11823) | (6150) | (52.0)% |
| Interest expense, net | 851 | 949 | (98) | (10.3)% |
| Change in fair value of warrant liabilities | (109) | (924) | 815 | 88.2% |
| Other expense, net | 228 | 61 | 167 | 273.8% |
| Loss before income taxes | (18943) | (11909) | (7034) | (59.1)% |
| Provision (benefit) for income taxes | 41 | (47) | 88 | 187.2% |
| Net loss | $(18984) | $(11862) | $(7122) | (60.0)% |

---

(1) Amounts include stock-based compensation expense as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
|  | (in thousands, except percentages) | (in thousands, except percentages) | (in thousands, except percentages) | (in thousands, except percentages) |
| Sales and distribution expenses | $427 | $1783 | $(1356) | (76.1)% |
| General and administrative expenses | 1753 | 5727 | (3974) | (69.4)% |
| Total stock-based compensation expense | $2180 | $7510 | $(5330) | (71.0)% |

---

The following table sets forth the components of our results of operations as a percentage of net revenue:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Net revenue | 100.0% | 100.0% |
| Cost of goods sold | 43.2 | 37.9 |
| Gross profit | 56.8 | 62.1 |
| Operating expenses: |  |  |
| Sales and distribution | 60.1 | 56.5 |
| General and administrative | 17.2 | 17.5 |
| &nbsp;&nbsp;&nbsp; Impairment loss on intangibles | 5.5 |  |
| Total operating expenses | 82.8 | 74 |
| Operating loss | (26.0) | (11.9) |
| Interest expense, net | 1.2 | 1 |
| Change in fair value of warrant liabilities | (0.2) | (0.9) |
| Other expense, net | 0.4 | 0.1 |
| Loss before income taxes | (27.4) | (12.0) |
| Provision (benefit) for income taxes | 0.1 | (0.0) |
| Net loss | (27.5)% | (12.0)% |

---

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***Net Revenue***

*Revenue by Product Categories*:

The following table sets forth our net revenue disaggregated by product categories:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
|  | (in thousands, except percentages) | (in thousands, except percentages) | (in thousands, except percentages) | (in thousands, except percentages) |
| Direct | $65764 | $97341 | $(31577) | (32.4)% |
| Wholesale | 3211 | 1704 | 1507 | 88.4% |
| Net revenue | $68975 | $99045 | $(30070) | (30.4)% |

---

Net revenue decreased $30.1 million, or 30.4%, during the year ended December 31, 2025 to $69.0 million, compared to $99.1 million for the year ended December 31, 2024. The decrease in net revenue was primarily attributable to a decrease in direct net revenue of $31.6 million, or 32.4%, related to the newly implemented tariffs which increased our cost of goods sold, prompting us to raise prices to mitigate the impact. These pricing actions, combined with the broader challenging macroeconomic environment, led to a reduction in unit volume as consumer demand softened at elevated price levels.

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
|  | (in thousands) | (in thousands) |
| Heating, cooling and air quality | $13945 | $26398 |
| Kitchen appliances | 8468 | 9565 |
| Health and beauty | 10620 | 13467 |
| Cookware, kitchen tools and gadgets | 2620 | 5924 |
| Home office | 6265 | 8017 |
| Housewares | 14904 | 22521 |
| Essential oils and related accessories | 12139 | 12719 |
| Other | 14 | 434 |
| Total net revenue | $68975 | $99045 |

---

Every category of business had a reduction in sales compared to the prior year primarily related to the newly implemented tariffs which increased our cost of goods sold, prompting us to raise prices to mitigate the impact. These pricing actions, combined with the broader challenging macroeconomic environment, led to a reduction in unit volume as consumer demand softened at elevated price levels.

***Cost of Goods Sold and Gross Profit***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
|  | (in thousands, except percentages) | (in thousands, except percentages) | (in thousands, except percentages) | (in thousands, except percentages) |
| Cost of goods sold | $29825 | $37550 | $(7725) | (20.6)% |
| Gross profit | $39150 | $61495 | $(22345) | (36.3)% |

---

Cost of goods sold decreased by $7.7 million to $29.8 million for the year ended December 31, 2025 from $37.6 million for the year ended December 31, 2024 primarily from reduced sales volume. The decrease in cost of goods sold was primarily attributable to a decrease of $9.5 million in cost of goods sold from our direct businesses, partially offset by an increase of $1.8 million in cost of goods sold from our wholesale businesses.

Gross profit decreased to 56.8% for the year ended December 31, 2025 from 62.1% for the year ended December 31, 2024. The decrease in gross profit was due primarily to product mix, as well as higher cost of goods sold resulting from the impact of newly implemented tariffs, partially offset by the benefit of price increases taken to mitigate these costs. During the year ended December 31, 2025, the Company accrued approximately $0.4 million for estimated costs associated with a product recall and related remediation activities involving certain houseware appliances that the Company ceased selling during the year ended December 31, 2024. These costs are included in cost of goods sold on the Consolidated Statement of Operations.

***Sales and Distribution Expenses***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%**  |
|  | (in thousands, except percentages) | (in thousands, except percentages) | (in thousands, except percentages) | (in thousands, except percentages) |
| Sales and distribution expenses | $41455 | $55979 | $(14524) | (25.9)% |

---

Sales and distribution variable expenses which included e-commerce platform commissions, online advertising and logistics expenses, decreased to $41.5 million for the year ended December 31, 2025 from $56.0 million for the year ended December 31, 2024. This decrease is primarily attributable to the decrease in the volume of products sold during the year ended December 31, 2025, as our ecommerce platform commissions, online advertising, selling and logistics expenses decreased to $32.4 million during the year ended December 31, 2025 as compared to $44.6 million in the prior year period.

Our sales and distribution fixed costs (e.g., salary and office expenses) including stock-based compensation decreased to $9.0 million for the year ended December 31, 2025, from $11.4 million for the year ended December 31, 2024. This decrease is primarily attributable to lower stock-compensation expense of $1.4 million, lower headcount expense of $1.3 million, and lower miscellaneous expenses of $0.6 million, partially offset by higher restructuring costs of $0.9 million.

As a percentage of net revenue, sales and distribution expenses increased to 60.1% for the year ended December 31, 2025, from 56.5% for the year ended December 31, 2024. E-commerce platform commissions, online advertising, selling and logistics expenses included within sales and distribution expenses, as a percentage of net revenue, were 47.0% for the year ended December 31, 2025 as compared to 45.0% for the year ended December 31, 2024. This increase in sales and distribution expenses as a percentage of revenue is primarily due to product mix and an increase in marketing costs.

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***General and Administrative Expenses***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
|  | (in thousands, except percentages) | (in thousands, except percentages) | (in thousands, except percentages) |  |
| General and administrative expenses | $11846 | $17339 | $(5493) | (31.7)% |

---

The decrease in general and administrative expenses was primarily the result of a decrease of $4.0 million in stock-compensation expense, a decrease of $1.6 million in headcount expense, and a decrease of $0.4 million in other miscellaneous costs, partially offset by an increase of $0.5 million in restructuring costs.

***Interest expense, net***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
|  | (in thousands, except percentages) | (in thousands, except percentages) | (in thousands, except percentages) |  |
| Interest expense, net | $851 | $949 | $(98) | (10.3)% |

---

The decrease in interest expense, net of $0.1 million is primarily related to a decrease in interest expense of $0.3 million due to lower average borrowings and a decrease in interest income of $0.2 million compared to the prior period.

***Impairment loss on intangibles***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,**  | **December 31,**  | **Change** | **Change** |
|  | **2025** | **2024** | **Amount**  | **%** |
|  | (in thousands, except percentages) | (in thousands, except percentages) | (in thousands, except percentages) |  |
| Impairment loss on intangibles | $3822 | $— | $(3822) | 100% |

---

In December 2025, the Company announced that its Board of Directors had initiated a process to explore strategic alternatives to maximize shareholder value. This announcement constituted a triggering event under ASC 350, Intangibles—Goodwill and Other, requiring the Company to perform an interim impairment assessment of its definite-lived brand intangible assets. The Company estimated the fair value of its definite-lived brand assets using market-based inputs, including indicative valuations from market participants obtained during the strategic alternative process. Based on this assessment, the Company determined that the carrying value of certain brand intangible assets exceeded their estimated fair value. Accordingly, the Company recorded a non-cash impairment charge of approximately $3.8 million during the fourth quarter of 2025. The impairment charge is included within impairment loss on intangibles on the Consolidated Statement of Operations.

***Change in fair value of warrant liabilities***

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **Change** | **Change** |
|  | **2025** | **2024** | **Amount** | **%** |
|  | (in thousands, except percentages) | (in thousands, except percentages) | (in thousands, except percentages) |  |
| Change in fair value of warrant liabilities | $(109) | $(924) | $815 | 88.2% |

---

The 2025 and 2024 activity is related to the change in fair value of the warrant liabilities from the common stock warrants from our March 2022 equity raise of capital. The change in fair value of warrant liabilities during the year ended December 31, 2025 primarily relates to the reduced share price compared to the prior period.

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**Liquidity and Capital Resources**

***Cash Flows for Years-Ended December 31, 2025 and 2024***

The following table provides information regarding our cash flows for the years-ended December 31, 2025 and 2024:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
|  | (in thousands) | (in thousands) |
| Cash (used in) provided by operating activities | $(10895) | $2165 |
| Cash used in investing activities | (51) | (242) |
| Cash used in financing activities | (2518) | (4914) |
| Effect of exchange rate on cash | 323 | (61) |
| Net change in cash and restricted cash for the period | $(13141) | $(3052) |

---

*Net Cash (Used in) Provided by Operating Activities*

Net cash used in operating activities was $10.9 million for the year ended December 31, 2025, primarily driven by net cash losses from operations of $10.8 million and a $0.1 million outflow from changes in working capital, mainly related to changes in accounts receivable, purchases of inventory, and payments of accounts payable.

Net cash provided by operating activities was $2.2 million for the year ended December 31, 2024, resulting primarily from our net cash losses from operations of $6.0 million, offset by an inflow from working capital of $8.2 million from changes in accounts receivable, purchases of inventory and payments of accounts payable. The working capital benefit primarily relates to a decrease in inventory due to a reduction in purchases for the period.

*Net Cash Used in Investing Activities*

Net cash used in investing activities was $0.1 million for the year ended December 31, 2025, primarily related to the purchase of fixed assets during the year ended December 31, 2025.

Net cash used in investing activities was $0.2 million for the year ended December 31, 2024, resulting primarily from the purchase of a minority equity investment in 4th and Heart during the year ended December 31, 2024.

*Net Cash Used in Financing Activities*

For the year ended December 31, 2025, cash used in financing activities of $2.5 million primarily from the net repayments for our MidCap credit facility of $2.9 million and repayment of notes payable of $0.1 million, partially offset by net proceeds from insurance financing of $0.5 million.

For the year ended December 31, 2024, cash used in financing activities of $4.9 million primarily from the net repayments for our MidCap credit facility of $4.3 million and repayment of seller notes of $0.6 million.

***Liquidity and Going Concern*** 

As a company in the early commercialization stage of its lifecycle, we are subject to inherent risks and uncertainties associated with the development of our enterprise. In this regard, substantially all of our efforts to date have been devoted to the development and sale of our products in the marketplace, which includes our investment in organic growth at the expense of short-term profitability, our investment in incremental growth through mergers & acquisitions ("M&A strategy"), our recruitment of management and technical staff, and raising capital to fund the development of our enterprise. As a result of these efforts, we have incurred significant losses and negative cash flows from operations since our inception and expect to continue to incur such losses, at a reduced level, and negative cash flows in the near term. However, we anticipate improvements over time as we work toward achieving a sustainable scale of profitability. We have also experienced declining revenues due to macroeconomic factors, including increased interest rates and reduced consumer discretionary spending, and other factors, and we intend to focus our efforts on a more limited number of products. In addition, our recent financial performance has been adversely impacted by inflationary pressures, reduced consumer spending, and tariffs.

Our 2025 results have been impacted by recent changes to U.S. trade policy, including the imposition and expansion of tariffs on imports, specifically from China. A substantial portion of our products are sourced from China, and as such, the increased tariff rates have materially raised our cost of goods sold and have placed pressure on our margins. While we have actively pursued mitigation strategies, including supplier negotiations, selective price adjustments, geographic diversification of sourcing and fixed cost reductions, there is significant uncertainty regarding the effectiveness of these mitigation efforts. Moreover, any future changes in tariff policy or implementation of additional trade barriers could further impact our business. These trade-related uncertainties, in conjunction with our existing financial condition, raise concern about our ability to remain in compliance with financial covenants under our credit agreements and may adversely impact our liquidity position.

In order to execute our growth strategy, we have historically relied on outside capital through the issuance of equity, debt, and borrowings under financing arrangements (collectively "outside capital") to fund our cost structure, and we expect to continue to rely on outside capital for the foreseeable future, specifically if we pursue material M&A opportunities. While we believe we will eventually reach a level of profitability to sustain our operations, there can be no assurance we will be able to achieve such profitability or do so in a manner that does not require our continued reliance on outside capital. Moreover, while we have historically been successful in raising outside capital, there can be no assurance we will be able to continue to obtain outside capital in the future or do so on terms that are acceptable to us.

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As of the date the accompanying Consolidated Financial Statements were issued (the "issuance date"), we evaluated the significance of the following adverse financial conditions in accordance with Accounting Standard Codification 205-40, Going Concern:

• Since our inception, we have incurred significant losses and used cash flows from operations to fund our enterprise. In this regard, during the year ended December 31, 2025, we incurred a net loss of $19.0 million and used net cash flows from operations of $10.9 million. In addition, as of December 31, 2025, we had unrestricted cash and cash equivalents of $4.9 million available to fund our operations and an accumulated deficit of $730.7 million.

• We are required to remain in compliance with certain financial covenants required by the MidCap Credit facility (See Note 9, *Credit Facility, Term Loans and Warrants*). We were in compliance with these financial covenants as of December 31, 2025, and expect to remain in compliance through at least March 31, 2027. However, if our mitigation strategies to address the impact of tariffs are unsuccessful, we can provide no assurances that we will remain in compliance with our financial covenants. On March 13, 2026, the Company and its subsidiaries entered into Amendment No. 5 to its Credit and Security Agreement with MidCap Funding IV Trust. Under the terms of the amendment, the Company's minimum liquidity covenant was reduced from $5.0 million to $3.5 million during the Minimum Liquidity Covenant Reduction Period. This reduction period commenced on the Fifth Amendment Effective Date and is subject to extension at the Company's option on a weekly basis through May 9, 2026, provided it remains in compliance with certain fee payment obligations. Further, absent of our ability to generate cash inflows from our operations or secure additional outside capital, we will be unable to remain in compliance with these financial covenants. In the event we are unable to remain in compliance with these financial covenants (or other non-financial covenants required by the MidCap Credit Facility), and we are unable to secure a waiver or forbearance, MidCap may, at its discretion, exercise any and all of its existing rights and remedies, which may include, among others, accelerating repayment of the outstanding borrowings and/or asserting its rights in the assets securing the loan.

• As of the issuance date, we have no firm commitments to secure additional outside capital from lenders or investors. While we expect to continue to explore raising additional outside capital, there can be no assurance we will be able to obtain capital or do so on terms that are acceptable to us. Accordingly, absent our ability to generate cash inflows from our operations and/or secure additional outside capital in the near term, we may be unable to meet our obligations as they become due over the next twelve months beyond the issuance date.

• On May 14, 2025, the Company announced a fixed cost reduction plan, which included a workforce reduction affecting approximately 20 employees. The Company has substantially completed this reduction as of the year ended December 31, 2025. In connection with this plan, the Company recognized restructuring charges of approximately $1.9 million, of which $1.1 million is recorded in Sales and Distribution expenses and $0.8 million is recorded in General and Administrative expenses, primarily related to severance, during the year ended December 31, 2025. Severance payments are expected to be made through the second quarter of 2026. In January 2026, the Company implemented a fixed cost reduction plan that included a workforce reduction affecting approximately 16 employees and independent contractors. The Company expects to substantially complete this reduction by the end of the first quarter of 2026. The Company expects to recognize restructuring charges in connection with the plan, primarily related to severance, of $0.3 million. The Company expects the charges will be recognized and paid in the first quarter of 2026.

• The Company's plan is to continue to closely monitor our operating forecast, to pursue additional sources of outside capital on terms that are acceptable to us, and to secure a waiver or forbearance from MidCap if we are unable to remain in compliance with one or more of the covenants required by the MidCap Credit Facility. If some or all of our plans prove unsuccessful, we may need to implement short-term changes to our operating plan, including but not limited to delaying expenditures, reducing investments in new products, or reducing our sale and distribution infrastructure. We may also need to seek long-term strategic alternatives, such as a significant curtailment of our operations, a sale of certain of our assets, a divestiture of certain product lines, a sale of the entire enterprise to strategic or financial investors, and/or allow our enterprise to become insolvent. On December 8, 2025, we announced that our Board of Directors has authorized the initiation of a process to explore strategic alternatives to maximize shareholder value, which may include a sale of the company, a merger, or other strategic transactions. There can be no assurance that this process will result in any transaction or that any transaction, if pursued, will be on favorable terms.

Although significant strides have been made in reducing our operating losses and strengthening our balance sheet, uncertainties persist in our business operations and the forecasting of our business. These uncertainties raise substantial doubt about our ability to continue as a going concern. The accompanying Consolidated Financial Statements have been prepared on the basis that we will continue to operate as a going concern, which contemplates that we will be able to realize assets and settle liabilities and commitments in the normal course of business for the foreseeable future. Accordingly, the accompanying Consolidated Financial Statements do not include any adjustments that may result from the outcome of these uncertainties.

**Nasdaq Listing**—On December 9, 2025, Aterian, Inc. (the "Company") received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC ("Nasdaq") indicating that, based upon the closing bid price of the Company's common stock, par value $0.0001 per share ("Common Stock"), for the last 30 consecutive business days, the Company is not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the "Bid Price Notice").

The Bid Price Notice has no immediate effect on the continued listing status of the Common Stock on The Nasdaq Capital Market, and, therefore, the Company's listing remains fully effective.

The Company is provided a compliance period of 180 calendar days from the date of the Bid Price Notice, or until June 8, 2026, to regain compliance with the minimum closing bid requirement, pursuant to Nasdaq Listing Rule 5810(c)(3)(A). If at any time before June 8, 2026, the closing bid price of the Common Stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, subject to Nasdaq's discretion to extend this period pursuant to Nasdaq Listing Rule 5810(c)(3)(H) to 20 consecutive business days, Nasdaq will provide written notification that the Company has achieved compliance with the minimum bid price requirement, and the matter would be resolved. If the Company does not regain compliance during the compliance period ending June 8, 2026, then Nasdaq may grant the Company a second 180 calendar day period to regain compliance, provided the Company meets the continued listing requirement for market value of publicly-held shares and all other initial listing standards for The Nasdaq Capital Market, other than the minimum closing bid price requirement, and notifies Nasdaq of its intent to cure the deficiency during the second compliance period.

The Company will continue to monitor the closing bid price of its Common Stock and seek to regain compliance with all applicable Nasdaq requirements within the allotted compliance periods. If the Company does not regain compliance within the allotted compliance periods, including any extensions that may be granted by Nasdaq, Nasdaq will provide notice that the Common Stock will be subject to delisting. The Company would then be entitled to appeal that determination to a Nasdaq hearings panel. There can be no assurance that the Company will regain compliance with the minimum bid price requirement during the 180-day compliance period, secure a second period of 180 days to regain compliance or maintain compliance with the other Nasdaq listing requirements.

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**MidCap Credit Facility**—On December 22, 2021, we entered into a Credit Facility with MidCap, pursuant to which, among other things, (i) the lenders party thereto as lenders (the "Lenders") agreed to provide a revolving credit facility in a principal amount of up to $40.0 million subject to a borrowing base consisting of, among other things, inventory and sales receivables (subject to certain reserves), and (ii) we agreed to issue to MidCap Funding XXVII Trust a warrant to purchase up to an aggregate of 16,667 shares of our common stock, in exchange for the Lenders extending loans and other extensions of credit to us under the Credit Facility.

Prior to the February 2024 amendment, the Credit Facility contained a financial covenant that required us to maintain a minimum unrestricted cash balance of (a) $12.5 million during the period from February 1st through and including May 31st of each calendar year, and (b) $15.0 million at all other times.

On February 23, 2024, the Company amended its asset backed credit facility with MidCap Financial Trust. The Credit Facility term has been extended to December 2026 and gives Aterian access to $17 million in current commitments which can be increased, subject to certain conditions, to $30.0 million. The Credit Facility extension reduces the minimum liquidity financial covenant from a peak of $15.0 million to $6.8 million of cash on hand and/or availability in the Credit Facility. The extension fee was less than $0.1 million. At our election, we may elect to comply with an alternative financial covenant that would require us to maintain a minimum borrowing availability under the credit facility of $5.0 million at all times. We currently do not anticipate electing the alternative financial covenant over the next twelve months and are in compliance with the minimum liquidity covenant as of the date these Consolidated Financial Statements were issued.

On March 25, 2025 (the "Third Amendment Effective Date") the Company entered into Amendment No. 3 (the "3<sup>rd</sup> Amendment") to the Credit Agreement. Material changes contained in the 3<sup>rd</sup> Amendment include, among other things, adding repurchase of the Company's common stock of up to $1.5 million per year, consisting of up to $1.5 million in repurchases allowed during the period from March 25, 2025 through December 22, 2025, and up to an additional $1.5 million allowed during the period from December 23, 2025 through the maturity date, subject to certain liquidity and compliance conditions.

On August 29, 2025 (the "Fourth Amendment Effective Date") the Company entered into Amendment No. 4 to the Credit Agreement. Material changes contained in Amendment No. 4 include a reduction to the Minimum Credit Party Liquidity covenant to $5.0 million, upon the Company's delivery of a Liquidity Certificate evidencing liquidity of at least $6.8 million, the Minimum Liquidity Covenant Reduction Period will terminate and the covenant will increase to $6.8 million thereafter, and an Availability Reserve of $2.8 million during the Minimum Liquidity Covenant Reduction Period and $1.0 million thereafter.

On March 13, 2026, the Company and its subsidiaries entered into Amendment No. 5 to its Credit and Security Agreement with MidCap Funding IV Trust. Under the terms of the amendment, the Company's minimum liquidity covenant was reduced from $5.0 million to $3.5 million during the Minimum Liquidity Covenant Reduction Period. This reduction period commenced on the Fifth Amendment Effective Date and is subject to extension at the Company's option on a weekly basis through May 9, 2026, provided it remains in compliance with certain fee payment obligations.

The outstanding balance on the MidCap credit facility as of December 31, 2025 and December 31, 2024 was $4.3 million and $6.9 million, respectively. The Company had $0.2 million availability on the Midcap credit facility as of December 31, 2025. We are in compliance with the financial covenants contained within the Credit Agreement as of December 31, 2025.

**Share Repurchase**—On March 14, 2025, the Board of Directors authorized a share repurchase program to acquire up to $3.0 million of the Company's common stock. The Company may purchase common stock on the open market, through privately negotiated transactions, or by other means including through the use of trading plans intended to qualify under Rule 10b-18 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. The share repurchase program has a term of 24 months and may be suspended or discontinued at any time and does not obligate the company to acquire any amount of common stock. The objective of this program is to repurchase shares of common stock opportunistically when management believes that the Company's stock is trading below the Company's determination of long-term fair value. As of May 2, 2025, the Company had temporarily suspended its share repurchase program.

**Trade Policy—**During 2025, the U.S. government announced a series of new tariff policies affecting imports from several countries, including China. While these actions impact a range of global trade flows, the new tariffs targeting imports from China are the most significant for our business. As a result of these tariffs, we experienced an increase in our cost of goods sold during the year ended December 31, 2025. In response, we implemented targeted price increases across affected product categories to partially offset the higher input costs. These pricing actions, however, contributed to a decline in unit volumes as consumer demand responded to the higher retail prices. We have implemented a range of mitigation strategies to address the impact of these tariffs on our supply chain and margins. These efforts include diversifying sourcing outside of China, renegotiating supplier terms, redesigning certain products to reduce tariff exposure, and implementing selective price increases where appropriate. We have implemented a range of mitigation strategies to address the impact of these tariffs on our supply chain and margins. These efforts include diversifying sourcing outside of China, renegotiating supplier terms, redesigning certain products to reduce tariff exposure, and implementing selective price increases where appropriate. We continue to evaluate additional structural and operational measures to further reduce tariff-related exposure.

**Open Inventory Purchase Orders**—As of December 31, 2025 and 2024, the Company had open inventory purchase orders of $2.9 million and $9.2 million, respectively, placed with vendors waiting to be fulfilled.

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**Non-GAAP Financial Measures**

We believe that our financial statements and the other financial data included in this Annual Report have been prepared in a manner that complies, in all material respects, with generally accepted accounting principles in the U.S. ("GAAP"). However, for the reasons discussed below, we have presented certain non-GAAP measures herein.

We have presented the following non-GAAP measures to assist investors in understanding our core net operating results on an on-going basis: (i) Contribution margin; (ii) Contribution margin as a percentage of net revenue; (iii) EBITDA (iv) Adjusted EBITDA; and (v) Adjusted EBITDA as a percentage of net revenue. These non-GAAP financial measures may also assist investors in making comparisons of our core operating results with those of other companies.

As used herein, Contribution margin represents gross profit less e-commerce platform commissions, online advertising, selling and logistics expenses (included in sales and distribution expenses). As used herein, Contribution margin as a percentage of net revenue represents Contribution margin divided by net revenue. As used herein, EBITDA represents net loss plus depreciation and amortization, interest expense, net and provision for income taxes. As used herein, Adjusted EBITDA represents EBITDA plus stock-based compensation expense, changes in fair-market value of warrant liabilities, impairment on intangibles, product remediation costs, restructuring expenses, and other expenses, net. As used herein, Adjusted EBITDA as a percentage of net revenue represents Adjusted EBITDA divided by net revenue. Contribution margin, EBITDA and Adjusted EBITDA do not represent and should not be considered as alternatives to loss from operations or net loss, as determined under GAAP.

We present Contribution margin and Contribution margin as a percentage of net revenue, as we believe each of these measures provides an additional metric to evaluate our operations and, when considered with both our GAAP results and the reconciliation to gross profit, provides useful supplemental information for investors. Specifically, Contribution margin and Contribution margin as a Non-GAAP Financial Measure percentage of net revenue are two of our key metrics in running our business. All product decisions made by us, from the approval of launching a new product and to the liquidation of a product at the end of its life cycle, are measured primarily from Contribution margin and/or Contribution margin as a percentage of net revenue. Further, we believe these measures provide improved transparency to our stockholders to determine the performance of our products prior to fixed costs as opposed to referencing gross profit alone.

In the reconciliation to calculate contribution margin, we add e-commerce platform commissions, online advertising, selling and logistics expenses ("sales and distribution variable expense") to gross profit to inform users of our financial statements of what our product profitability is at each period prior to fixed costs (such as sales and distribution expenses and general administrative expenses). By excluding these fixed costs, we believe this allows users of our financial statements to understand our products performance and allows them to measure our products performance over time.

We present EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue because we believe each of these measures provides an additional metric to evaluate our operations and, when considered with both our GAAP results and the reconciliation to net loss, provide useful supplemental information for investors. We use these measures with financial measures prepared in accordance with GAAP, such as sales and gross margins, to assess our historical and prospective operating performance, to provide meaningful comparisons of operating performance across periods, to enhance our understanding of our operating performance and to compare our performance to that of our peers and competitors. We believe EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue are useful to investors in assessing the operating performance of our business without the effect of non-cash items.

Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue should not be considered in isolation or as alternatives to net loss, loss from operations or any other measure of financial performance calculated and prescribed in accordance with GAAP. Neither EBITDA, Adjusted EBITDA or Adjusted EBITDA as a percentage of net revenue should be considered a measure of discretionary cash available to us to invest in the growth of our business. Our Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue may not be comparable to similar titled measures in other organizations because other organizations may not calculate Contribution margin, Contribution margin as a percentage of net revenue, EBITDA, Adjusted EBITDA or Adjusted EBITDA as a percentage of net revenue in the same manner as we do. Our presentation of Contribution margin and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from such terms or by unusual or non-recurring items.

We recognize that EBITDA, Adjusted EBITDA and Adjusted EBITDA as a percentage of net revenue, have limitations as analytical financial measures.

For example, neither EBITDA nor Adjusted EBITDA reflects:

• our capital expenditures or future requirements for capital expenditures or mergers and acquisitions;

• the interest expense or the cash requirements necessary to service interest expense or principal payments, associated with indebtedness;

• depreciation and amortization, which are non-cash charges, although the assets being depreciated and amortized will likely have to be replaced in the future, or any cash requirements for the replacement of assets;

• changes in cash requirements for our working capital needs; or

• changes in warrant liabilities.

Additionally, Adjusted EBITDA excludes non-cash stock-based compensation expense, which is and is expected to remain a key element of our overall long-term incentive compensation package.

We also recognize that Contribution margin and Contribution margin as a percentage of net revenue have limitations as analytical financial measures. For example, Contribution margin does not reflect:

• general and administrative expense necessary to operate our business;

• the fixed costs portion of our sales and distribution expenses including stock-based compensation expense; or

• changes in warrant liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 22

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*Contribution Margin*

The following table provides a reconciliation of Contribution margin to gross profit and Contribution margin as a percentage of net revenue to gross profit as a percentage of net revenue, which are the most directly comparable financial measures presented in accordance with GAAP:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Gross Profit | $39150 | $61495 |
| Less: |  |  |
| Product remediation costs <sup>(1)</sup> | 425 |  |
| E-commerce platform commissions, online advertising, selling and logistics expenses | (32392) | (44553) |
| Contribution margin | $7183 | $16942 |
| Gross Profit as a percentage of net revenue | 56.8% | 62.1% |
| Contribution margin as a percentage of net revenue | 10.4% | 17.1% |

---

(1) During the year ended December 31, 2025, the Company accrued approximately $0.4 million for estimated costs associated with a voluntary product recall involving certain houseware appliances that the Company ceased selling during the year ended December 31, 2024. These costs are included in cost of goods sold on the Consolidated Statement of Operations.

*Adjusted EBITDA*

The following table provides a reconciliation of EBITDA and Adjusted EBITDA to net loss, which is the most directly comparable financial measure presented in accordance with GAAP:

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Net loss | $(18984) | $(11862) |
| Add: |  |  |
| Provision (benefit) for income taxes | 41 | (47) |
| Interest expense, net | 851 | 949 |
| Depreciation and amortization | 1619 | 1689 |
| EBITDA | (16473) | (9271) |
| Other expense, net | 228 | 61 |
| Impairment loss on intangibles | 3822 |  |
| Change in fair value of warrant liabilities | (109) | (924) |
| Restructuring expense<sup>(1)</sup> | 1906 | 565 |
| Product remediation costs<sup>(2)</sup> | 425 |  |
| Stock-based compensation expense | 2180 | 7510 |
| Adjusted EBITDA | $(8021) | $(2059) |
| Net loss as a percentage of net revenue | (27.5)% | (12.0)% |
| Adjusted EBITDA as a percentage of net revenue | (11.6)% | (2.1)% |

---

(1) Restructuring expenses include non-recurring employee severance costs relating to the Company reorganization executed during the years ended December 31, 2025 and 2024.

(2) During the year ended December 31, 2025, the Company accrued approximately $0.4 million for estimated costs associated with a voluntary product recall involving certain houseware appliances that the Company ceased selling during the year ended December 31, 2024. These costs are included in cost of goods sold on the Consolidated Statement of Operations.

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**Critical Accounting Estimates**

Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosures. We base our estimates on historical experience and on other assumptions that we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in the notes to our financial statements appearing elsewhere in this Annual Report, we believe the following accounting policies used in the preparation of our financial statements require the most significant judgments and estimates.

**Inventory valuation**—Inventories, consisting of products available for sale, are primarily accounted for using the first-in first-out method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on available information such as historical data, about the likely method of disposition, such as through sales to individual customers or liquidations, and expected recoverable values of each disposition category. Changes to the relevant assumptions and projections would impact our consolidated financial results in periods subsequent to recording these estimates. If we anticipate a change in assumptions such as future demand or market conditions to be less favorable than our previous estimates, additional inventory write-downs may be required. Conversely, if we are able to sell inventories that had been written down to a level below the ultimate realized selling price in a previous period, sales would be recorded with a lower or no offsetting charge to cost of sales. A 10% change to our current reserve for excess and obsolete inventory would not result in a material change to our consolidated financial statements; however, given the value of inventory on hand, a significant change in demand or market conditions could result in a material adjustment to our reserve in future periods.

**Warrant Liabilities**—The fair values of the outstanding warrants were measured using the Black Scholes model. Inputs used to determine estimated fair value of the warrant liabilities include the fair value of the underlying stock at the valuation date, the term of the warrants, and the expected volatility of the underlying stock. The significant unobservable input used in the fair value measurement of the warrant liabilities is the estimated term of the warrants. Generally, increases (decreases) in the fair value of the underlying stock and estimated term result in a directionally similar impact to the periodic fair value measurement of the outstanding warrant liabilities, and are recorded within the Change in fair value of warrant liabilities line item on the statement of operations.

The fair value of warrant liabilities was zero and $0.1 million at December 31, 2025 and 2024, which is included in accrued expenses and other current liabilities on the Consolidated Balance Sheets.

**Intangible asset valuation** —We review long-lived assets for impairment when performance expectations, events, or changes in circumstances indicate that the asset's carrying value may not be recoverable. The evaluation is performed at the lowest level of identifiable cash flows by comparing the carrying value of the asset group to the undiscounted cash flows. If the evaluation indicates that the carrying amount of the assets may not be recoverable, any potential impairment is measured based upon the fair value of the related asset or asset group as determined by an appropriate market appraisal or other valuation technique.

In December 2025, the Company announced that its Board of Directors had initiated a process to explore strategic alternatives to maximize shareholder value. This announcement constituted a triggering event under ASC 350, Intangibles—Goodwill and Other, requiring the Company to perform an interim impairment assessment of its definite-lived brand intangible assets. The Company estimated the fair value of its definite-lived brand assets using market-based inputs, including indicative valuations from market participants obtained during the strategic alternative process. Based on this assessment, the Company determined that the carrying value of certain brand intangible assets exceeded their estimated fair value.

Accordingly, the Company recorded a non-cash impairment charge of approximately $3.8 million during the fourth quarter of 2025. The impairment charge is included within impairment loss on intangibles on the Consolidated Statement of Operations. As of December 31, 2025, the remaining balance of intangible assets was $4.4 million.

There were no triggering events to test intangibles for impairment loss during the year ended December 31, 2024.

We will continue to closely monitor actual results versus expectations as well as whether and to what extent any significant changes in current events or conditions result in corresponding changes to our expectations about future estimated cash flows. If our adjusted expectations of the operating results do not materialize, we may be required to record intangible impairment charges, which may be material.

While we believe our conclusions regarding the estimates of recoverability of our asset groupings are appropriate, these estimates are subject to uncertainty and by nature include judgments and estimates regarding various factors. These factors include the rate and extent of growth in the markets that our asset groups serve, the realization of future sales price and volume increases, fluctuations in exchange rates, fluctuations in price and availability of key raw materials, fluctuations in discount rate, future operating efficiencies, and strategic alternative processes.

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**Adopted Accounting Standards and** R**ecent Accounting Pronouncements**

See Note 2, *Summary of Significant Accounting Policies* for more information.

**Item 7A. Quantitative and Qualitative Disclosures About Market Risk.**

We are exposed to market risk related to changes in interest rates. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments, including cash equivalents, are in the form, or may be in the form of, money market funds or marketable securities and are or may be invested in U.S. Treasury and U.S. government agency obligations. Due to the short-term maturities and low risk profiles of our investment, an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our investments. We do not currently use or plan to use financial derivatives in our investment portfolio or engage in hedging transactions to manage our exposure to interest rate risk.

In addition, we have outstanding debt under the Credit Facility with MidCap that bears interest. As of December 31, 2025, our outstanding indebtedness under the Credit Facility was $4.3 million, which bears interest at a rate of Term Secured Overnight Financing Rate ("Term SOFR"), which is defined as SOFR plus 0.10%, plus 5.50%. We do not believe that an immediate 10% increase in interest rates would have a material effect on interest expense for the Credit Facility, and therefore we do not expect our operating results or cash flows to be materially affected to any degree by a sudden change in market interest.

We are currently exposed to market risk related to changes in foreign currency exchange rates. We do not currently engage in hedging transactions to manage our exposure to foreign currency exchange rate risk as we do not currently believe our exposure is material. Sales outside of the U.S. represented approximately 8% and 6% of our net revenue for the years-ended December 31, 2025 and 2024, respectively. Currently, our revenue-producing transactions are primarily denominated in U.S. dollars; however, as we continue to expand internationally, our results of operations and cash flows may increasingly become subject to fluctuations due to changes in foreign currency exchange rates. In periods when the U.S. dollar declines in value as compared to foreign currencies in which we incur expenses, our foreign-currency based expenses will increase when translated into U.S. dollars. In addition, future fluctuations in the value of the U.S. dollar may affect the price at which we sell our products outside the U.S. To date, our foreign currency risk has been minimal, and we have not historically hedged our foreign currency risk; however, we may consider doing so in the future.

Inflation would generally affect us by increasing our cost of labor and overhead costs. We do not believe that inflation had a material effect on our business, financial condition or results of operations for the years-ended December 31, 2025 and 2024.

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**Item 8. Financial Statements and Supplementary Data.** 

**ATERIAN, INC.** 

**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;** 

**Index to Consolidated Financial Statements** 

---

| | |
|:---|:---|
| [Report of Independent Registered Public Accounting Firm](#uhy) (PCAOB ID No. 1195) | [F-2](#uhy) |
| [Consolidated Balance Sheets as of December 31, 2025 and 2024](#bs) | [F-4](#bs) |
| [Consolidated Statements of Operations for the Years-Ended December 31, 2025 and 2024](#soo) | [F-5](#soo) |
| [Consolidated Statements of Comprehensive Loss for the Years-Ended December 31, 2025 and 2024](#socl) | [F-6](#socl) |
| [Consolidated Statements of Stockholders' Equity for the Years-Ended December 31, 2025 and 2024](#se) | [F-7](#se) |
| [Consolidated Statements of Cash Flows for the Years-Ended December 31, 2025 and 2024](#cf) | [F-8](#cf) |
| [Notes to Consolidated Financial Statements for the Years-Ended December 31, 2025 and 2024](#notes) | [F-9](#notes) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-1

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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Board of Directors and

Stockholders of Aterian, Inc.

 **Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of Aterian, Inc. (the Company) as of December 31, 2025 and 2024, and the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

**The Company's Ability to Continue as a Going Concern**

The accompanying consolidated financial statements have been prepared assuming the Company will be able to continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred recurring losses from operations and recurring negative operating cash flows since inception and may be unable to fund day-to-day` operations and remain in compliance with certain financial covenants required by the agreement governing the Company's credit facility which raises substantial doubt about its ability to continue as a going concern. Management's plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**Basis for Opinion**

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-2

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**Critical Audit Matters**

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

 *Inventory Valuation*

As described in Note 2 to the consolidated financial statements the Company estimates the net realizable value for inventory based on past and future sales, which involves a high level of judgement on the part of management. Inventories, consisting of products available for sale, are primarily accounted for using the first-in first-out method, and are valued at the lower of cost and net realizable value. This valuation requires the Company to make judgments, based on available information, such as historical sales data and forecasted future sales data for the next twelve months, about the likely method of disposition, such as through sales to individual customers or liquidations, and expected recoverable values of each disposition category. Changes to the relevant assumptions and projections would impact the consolidated financial results in periods subsequent to the recording these estimates.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures related to the evaluation of the Company's inventory valuation included the following, among others:

• Obtaining an understanding of the Company's accounting policy related to inventory, specifically as it relates to the excess and obsolete inventory reserve and ensure it is relevant to the accounting standards and consistently applied to prior periods.

• Recalculate the inventory reserve based on the Company's policy and our knowledge obtained above. Ensure mathematical accuracy and test the computations for a sample of inventory items.

• Evaluating management's methodology and process for developing the excess and obsolete inventory reserve, including estimating assumptions related to future product sales based on historical usage and current market conditions.

• Testing management's calculation of the excess and obsolete inventory reserve, which included evaluating the completeness and accuracy of underlying data used by management in the calculation, principally inputs such as actual sales of products and management's determination of future estimated sales of inventory and comparing them to historical sale amounts.

• Perform observations of inventory at various locations to ensure the quantities are in working order and identify damaged or poor conditioned inventory and confirmed balances at various third-party warehouses.

/s/ UHY LLP

We have served as the Company's auditor since 2024.

Melville, New York

March 20, 2026

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-3

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**ATERIAN, INC.** 

**Consolidated Balance Sheets**

***(in thousands, except share and per share data)***

---

| | | |
|:---|:---|:---|
|  | ***December 31, 2025*** | ***December 31, 2024*** |
| **<u>ASSETS</u>** |  |  |
| Current assets: |  |  |
| Cash | $4857 | $17998 |
| Accounts receivable, net | 2460 | 3782 |
| Inventory | 13776 | 13749 |
| Prepaid and other current assets | 2982 | 3190 |
| Total current assets | 24075 | 38719 |
| Property and equipment, net | 729 | 685 |
| Intangibles, net | 4371 | 9757 |
| Other non-current assets | 389 | 381 |
| Total assets | $29564 | $49542 |
| **<u>LIABILITIES AND STOCKHOLDERS' EQUITY</u>** |  |  |
| Current liabilities: |  |  |
| Credit facility | $4259 | $6948 |
| Accounts payable | 3120 | 3080 |
| Seller notes | 368 | 466 |
| Accrued and other current liabilities | 6382 | 8804 |
| Total current liabilities | 14129 | 19298 |
| Other liabilities | 225 | 227 |
| Total liabilities | 14354 | 19525 |
| Commitments and contingencies (Note 12) |  |  |
| Stockholders' equity: |  |  |
| Common stock, $0.0001 par value, 500,000,000 shares authorized and 10,027,046 and 8,750,741 shares outstanding at December 31, 2025 and December 31, 2024, respectively | 9 | 9 |
| Additional paid-in capital | 746414 | 742591 |
| Accumulated deficit | (730661) | (711677) |
| Accumulated other comprehensive loss | (552) | (906) |
| Total stockholders' equity | 15210 | 30017 |
| Total liabilities and stockholders' equity | $29564 | $49542 |

---

See notes to Consolidated Financial Statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-4

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**ATERIAN, INC.** 

**Consolidated Statements of Operations** 

***(in thousands, except share and per share data)***

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| Net revenue | $68975 | $99045 |
| Cost of goods sold | 29825 | 37550 |
| Gross profit | 39150 | 61495 |
| Operating expenses: |  |  |
| Sales and distribution | 41455 | 55979 |
| General and administrative | 11846 | 17339 |
| &nbsp;&nbsp;&nbsp; Impairment loss on intangibles | 3822 |  |
| Total operating expenses | 57123 | 73318 |
| Operating loss | (17973) | (11823) |
| Interest expense, net | 851 | 949 |
| Change in fair value of warrant liabilities | (109) | (924) |
| Other expense, net | 228 | 61 |
| Loss before income taxes | (18943) | (11909) |
| Provision (benefit) for income taxes | 41 | (47) |
| Net loss | $(18984) | $(11862) |
| Net loss per share, basic and diluted | $(2.39) | $(1.68) |
| Weighted-average number of shares outstanding, basic and diluted | 7932889 | 7069404 |

---

See notes to Consolidated Financial Statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-5

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**ATERIAN, INC.** 

**Consolidated Statements of Comprehensive Loss** 

***(in thousands)***

---

| | | |
|:---|:---|:---|
|  | ***Year Ended December 31,*** | ***Year Ended December 31,*** |
|  | ***2025*** | ***2024*** |
| Net loss | $(18984) | $(11862) |
| Other comprehensive loss: |  |  |
| Foreign currency translation adjustments | 354 | (68) |
| Other comprehensive income (loss) | 354 | (68) |
| Comprehensive loss | $(18630) | $(11930) |

---

See notes to Consolidated Financial Statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-6

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**ATERIAN, INC.** 

**Consolidated Statements of Stockholders**' **Equity**

***(in thousands, except share and per share data)***

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | ***Common Stock*** | ***Common Stock*** | ***Additional Paid-in*** | ***Accumulated*** | ***Accumulated Other Comprehensive*** | ***Total Stockholders'*** |
|  | ***Shares (\*)*** | ***Amount*** | ***Capital*** | ***Deficit*** | ***Loss*** | ***Equity*** |
| BALANCE—December 31, 2023 | 7508246 | $9 | $736675 | $(699815) | $(838) | $36031 |
| Net loss | *—* |  |  | (11862) |  | (11862) |
| Issuance of shares of restricted common stock | 1395974 |  |  |  |  |  |
| Forfeiture of shares of restricted common stock | (332259) | *—* | *—* | *—* | *—* | *—* |
| Issuance of common stock | 178780 |  | 670 |  |  | 670 |
| Stock-based compensation expense | *—* |  | 5246 |  |  | 5246 |
| Other comprehensive income | *—* |  |  |  | (68) | (68) |
| BALANCE—December 31, 2024 | 8750741 | $9 | $742591 | $(711677) | $(906) | $30017 |
| Net loss | *—* |  |  | (18984) |  | (18984) |
| Issuance of shares of restricted common stock | 1618653 |  |  |  |  |  |
| Forfeiture of shares of restricted common stock | (342348) | *—* | *—* | *—* | *—* | *—* |
| Stock-based compensation expense | *—* |  | 3823 |  |  | 3823 |
| Other comprehensive income | *—* |  |  |  | 354 | 354 |
| BALANCE—December 31, 2025 | 10027046 | $9 | $746414 | $(730661) | $(552) | $15210 |

---

See notes to Consolidated Financial Statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-7

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**ATERIAN, INC.** 

**Consolidated Statements of Cash Flows**

***(in thousands)***

---

| | | |
|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** |
|  | **2025** | **2024** |
| OPERATING ACTIVITIES: |  |  |
| Net loss | $(18984) | $(11862) |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |  |  |
| Depreciation and amortization | 1619 | 1689 |
| Provision for sales returns | (102) | 57 |
| Amortization of deferred financing cost and debt discounts | 165 | 198 |
| Stock-based compensation | 2180 | 7510 |
| Deferred tax expense |  | (5) |
| Change in inventory provisions | 767 | (2738) |
| Change in fair value of warrant liabilities | (109) | (924) |
| &nbsp;&nbsp;&nbsp; Impairment loss on intangibles | 3822 |  |
| Allowance for credit losses | (147) | 16 |
| Changes in assets and liabilities: |  |  |
| Accounts receivable | 1469 | 427 |
| Inventory | (794) | 9378 |
| Prepaid and other current assets | 183 | 762 |
| Accounts payable, accrued and other liabilities | (964) | (2343) |
| Cash (used in) provided by operating activities | (10895) | 2165 |
| INVESTING ACTIVITIES: |  |  |
| Purchase of fixed assets | (51) | (42) |
| Purchase of minority equity investment |  | (200) |
| Cash used in investing activities | (51) | (242) |
| FINANCING ACTIVITIES: |  |  |
| Repayments on seller notes | (113) | (633) |
| Borrowings from MidCap credit facilities | 43313 | 60866 |
| Repayments for MidCap credit facilities | (46203) | (65165) |
| Insurance obligation payments | (711) | (682) |
| Insurance financing proceeds | 1196 | 700 |
| Cash used in financing activities | (2518) | (4914) |
| Foreign currency effect on cash and restricted cash | 323 | (61) |
| Net change in cash and restricted cash for the period | (13141) | (3052) |
| Cash and restricted cash at beginning of year | 19143 | 22195 |
| Cash and restricted cash at end of period | $6002 | $19143 |
| RECONCILIATION OF CASH AND RESTRICTED CASH: |  |  |
| Cash | 4857 | 17998 |
| Restricted cash—Prepaid and other current assets | 1015 | 1015 |
| Restricted cash—Other non-current assets | 130 | 130 |
| TOTAL CASH AND RESTRICTED CASH | $6002 | $19143 |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION |  |  |
| Cash paid for interest | $882 | $1141 |
| Cash paid for taxes | $50 | $152 |
| NON-CASH INVESTING AND FINANCING ACTIVITIES: |  |  |
| Non-cash consideration paid to contractors | $— | $620 |
| Non-cash minority equity investment | $— | $50 |

---

See notes to Consolidated Financial Statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-8

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**Aterian, Inc.** 

**Notes to Consolidated Financial Statements** 

**FOR THE YEARS-ENDED December 31, 2025 and 2024**

**(In thousands, except share and per share data)** 

***1.*** **COMPANY OVERVIEW**

Aterian, Inc. (the "Company") is a consumer products company that predominantly operates through online retail channels such as Amazon, Walmart, and Target and its own direct to consumer websites. The Company operates its owned brands, which were either incubated or purchased, selling products in multiple categories, including home and kitchen appliances, kitchenware, air quality appliances, health and beauty products and essential oils. Our primary brands include Squatty Potty, HomeLabs, Mueller Living, PurSteam, Healing Solutions, and Photo Paper Direct ("PPD"). Headquartered in New Jersey, the Company also maintains offices in China, the Philippines, and the United Kingdom.

***Liquidity and Going Concern***

As a company in the early commercialization stage of its lifecycle, we are subject to inherent risks and uncertainties associated with the development of our enterprise. In this regard, substantially all of our efforts to date have been devoted to the development and sale of our products in the marketplace, which includes our investment in organic growth at the expense of short-term profitability, our investment in incremental growth through mergers & acquisitions ("M&A strategy"), our recruitment of management and technical staff, and raising capital to fund the development of our enterprise. As a result of these efforts, we have incurred significant losses and negative cash flows from operations since our inception and expect to continue to incur such losses, at a reduced level, and negative cash flows in the near term. However, we anticipate improvements over time as we work toward achieving a sustainable scale of profitability. We have also experienced declining revenues due to macroeconomic factors, including increased interest rates and reduced consumer discretionary spending, and other factors, and we intend to focus our efforts on a more limited number of products. In addition, our recent financial performance has been adversely impacted by inflationary pressures, reduced consumer spending, and tariffs.

Our *2025* results have been impacted by recent changes to U.S. trade policy, including the imposition and expansion of tariffs on imports, specifically from China. A substantial portion of our products are sourced from China, and as such, the increased tariff rates have materially raised our cost of goods sold and have placed pressure on our margins. While we have actively pursued mitigation strategies, including supplier negotiations, selective price adjustments, geographic diversification of sourcing and fixed cost reductions, there is significant uncertainty regarding the effectiveness of these mitigation efforts. Moreover, any future changes in tariff policy or implementation of additional trade barriers could further impact our business. These trade-related uncertainties, in conjunction with our existing financial condition, raise concern about our ability to remain in compliance with financial covenants under our credit agreements and *may* adversely impact our liquidity position.

In order to execute our growth strategy, we have historically relied on outside capital through the issuance of equity, debt, and borrowings under financing arrangements (collectively "outside capital") to fund our cost structure, and we expect to continue to rely on outside capital for the foreseeable future, specifically if we pursue material M&A opportunities. While we believe we will eventually reach a level of profitability to sustain our operations, there can be *no* assurance we will be able to achieve such profitability or do so in a manner that does *not* require our continued reliance on outside capital. Moreover, while we have historically been successful in raising outside capital, there can be *no* assurance we will be able to continue to obtain outside capital in the future or do so on terms that are acceptable to us.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *9*

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As of the date the accompanying Consolidated Financial Statements were issued (the "issuance date"), we evaluated the significance of the following adverse financial conditions in accordance with Accounting Standard Codification *205*-*40,* Going Concern:

• Since our inception, we have incurred significant losses and used cash flows from operations to fund our enterprise. In this regard, during the year ended *December 31, 2025*, we incurred a net loss of $19.0 million and used net cash flows from operations of $10.9 million. In addition, as of *December 31, 2025*, we had unrestricted cash and cash equivalents of $4.9 million available to fund our operations and an accumulated deficit of $730.7 million.

• We are required to remain in compliance with certain financial covenants required by the MidCap Credit facility (See Note *9, Credit Facility, Term Loans and Warrants*). We were in compliance with these financial covenants as of *December 31, 2025,* and expect to remain in compliance through at least *March 31, 2027.* However, if our mitigation strategies to address the impact of tariffs are unsuccessful, we can provide *no* assurances that we will remain in compliance with our financial covenants. On *March 13, 2026,* the Company and its subsidiaries entered into Amendment *No. 5* to its Credit and Security Agreement with MidCap Funding IV Trust. Under the terms of the amendment, the Company's minimum liquidity covenant was reduced from $5.0 million to $3.5 million during the Minimum Liquidity Covenant Reduction Period. This reduction period commenced on the Fifth Amendment Effective Date and is subject to extension at the Company's option on a weekly basis through *May 9, 2026,* provided it remains in compliance with certain fee payment obligations. Further, absent of our ability to generate cash inflows from our operations or secure additional outside capital, we will be unable to remain in compliance with these financial covenants. In the event we are unable to remain in compliance with these financial covenants (or other non-financial covenants required by the MidCap Credit Facility), and we are unable to secure a waiver or forbearance, MidCap *may,* at its discretion, exercise any and all of its existing rights and remedies, which *may* include, among others, accelerating repayment of the outstanding borrowings and/or asserting its rights in the assets securing the loan.

• As of the issuance date, we have *no* firm commitments to secure additional outside capital from lenders or investors. While we expect to continue to explore raising additional outside capital, there can be *no* assurance we will be able to obtain capital or do so on terms that are acceptable to us. Accordingly, absent our ability to generate cash inflows from our operations and/or secure additional outside capital in the near term, we *may* be unable to meet our obligations as they become due over the next *twelve* months beyond the issuance date.

• On *May 14, 2025,* the Company announced a fixed cost reduction plan, which included a workforce reduction affecting approximately 20 employees. The Company has substantially completed this reduction as of the year ended *December 31, 2025.* In connection with this plan, the Company recognized restructuring charges of approximately $1.9 million, of which $1.1 million is recorded in Sales and Distribution expenses and $0.8 million is recorded in General and Administrative expenses, primarily related to severance, during the year ended *December 31, 2025.* Severance payments are expected to be made through the *second* quarter of *2026.* In *January 2026,* the Company implemented a fixed cost reduction plan that included a workforce reduction affecting approximately 16 employees and independent contractors. The Company expects to substantially complete this reduction by the end of the *first* quarter of *2026.* The Company expects to recognize restructuring charges in connection with the plan, primarily related to severance, of $0.3 million. The Company expects the charges will be recognized and paid in the *first* quarter of *2026.*

• The Company's plan is to continue to closely monitor our operating forecast, to pursue additional sources of outside capital on terms that are acceptable to us, and to secure a waiver or forbearance from MidCap if we are unable to remain in compliance with *one* or more of the covenants required by the MidCap Credit Facility. Further, the Company has enacted a strategy to reduce the number of SKUs it sells and will *no* longer be pursuing future sales of SKUs that are either *not* profitable or *not* core to the Company's strategy. If some or all of our plans prove unsuccessful, we *may* need to implement short-term changes to our operating plan, including but *not* limited to delaying expenditures, reducing investments in new products, or reducing our sale and distribution infrastructure. We *may* also need to seek long-term strategic alternatives, such as a significant curtailment of our operations, a sale of certain of our assets, a divestiture of certain product lines, a sale of the entire enterprise to strategic or financial investors, and/or allow our enterprise to become insolvent. On *December 8, 2025,* we announced that our Board of Directors has authorized the initiation of a process to explore strategic alternatives to maximize shareholder value, which *may* include a sale of the company, a merger, or other strategic transactions. There can be *no* assurance that this process will result in any transaction or that any transaction, if pursued, will be on favorable terms.

Although significant strides have been made in reducing our operating losses and strengthening our balance sheet, uncertainties persist in our business operations and the forecasting of our business. These uncertainties raise substantial doubt about our ability to continue as a going concern. The accompanying Consolidated Financial Statements have been prepared on the basis that we will continue to operate as a going concern, which contemplates that we will be able to realize assets and settle liabilities and commitments in the normal course of business for the foreseeable future. Accordingly, the accompanying Consolidated Financial Statements do *not* include any adjustments that *may* result from the outcome of these uncertainties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *10*

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**Nasdaq Listing**—On *December 9, 2025,* the Company received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC ("Nasdaq") indicating that, based upon the closing bid price of the Company's common stock, par value *$0.0001* per share ("Common Stock"), for the last *30* consecutive business days, the Company is *not* currently in compliance with the requirement to maintain a minimum bid price of *$1.00* per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule *5550*(a)(*2*) (the "Bid Price Notice").

The Bid Price Notice has *no* immediate effect on the continued listing status of the Common Stock on The Nasdaq Capital Market, and, therefore, the Company's listing remains fully effective.

The Company is provided a compliance period of *180* calendar days from the date of the Bid Price Notice, or until *June 8, 2026,* to regain compliance with the minimum closing bid requirement, pursuant to Nasdaq Listing Rule *5810*(c)(*3*)(A). If at any time before *June 8, 2026,* the closing bid price of the Common Stock closes at or above *$1.00* per share for a minimum of *10* consecutive business days, subject to Nasdaq's discretion to extend this period pursuant to Nasdaq Listing Rule *5810*(c)(*3*)(H) to *20* consecutive business days, Nasdaq will provide written notification that the Company has achieved compliance with the minimum bid price requirement, and the matter would be resolved. If the Company does *not* regain compliance during the compliance period ending *June 8, 2026,* then Nasdaq *may* grant the Company a *second 180* calendar day period to regain compliance, provided the Company meets the continued listing requirement for market value of publicly-held shares and all other initial listing standards for The Nasdaq Capital Market, other than the minimum closing bid price requirement, and notifies Nasdaq of its intent to cure the deficiency during the *second* compliance period.

The Company will continue to monitor the closing bid price of its Common Stock and seek to regain compliance with all applicable Nasdaq requirements within the allotted compliance periods. If the Company does *not* regain compliance within the allotted compliance periods, including any extensions that *may* be granted by Nasdaq, Nasdaq will provide notice that the Common Stock will be subject to delisting. The Company would then be entitled to appeal that determination to a Nasdaq hearings panel. There can be *no* assurance that the Company will regain compliance with the minimum bid price requirement during the *180*-day compliance period, secure a *second* period of *180* days to regain compliance or maintain compliance with the other Nasdaq listing requirements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *11*

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***2.*** **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Basis of Presentation**—The Consolidated Financial Statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

**Use of Estimates**—Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period covered by the financial statements and accompanying notes. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ from those estimates.

**Principles of Consolidation**—The Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

**Restricted Cash**—As of *December 31, 2025* and *2024,* the Company has classified the following as restricted cash: $0.1 million related to its Chinese subsidiary within "Other Noncurrent Assets" on the Consolidated Balance Sheets and $1.0 million related to a letter of credit within "Prepaid and Other Current Assets" on the Consolidated Balance Sheets

**Accounts Receivable**—Accounts receivable are stated at historical cost less allowance for credit losses. On a periodic basis, management evaluates its accounts receivable and determines whether to provide an allowance or if any accounts should be written off based on a past history of write-offs, collections and current credit conditions. A receivable is considered past due if the Company has *not* received payments based on agreed-upon terms. The Company generally does *not* require any security or collateral to support its receivables. The Company performs ongoing evaluations of its customers and maintains an allowance for credit losses. As of *December 31, 2025,* the Company did not have an allowance for credit losses. As of *December 31, 2024,* the Company had an allowance for credit losses of $0.1 million.

**Concentration of Credit Risk**—Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company maintains cash and restricted cash with various domestic and foreign financial institutions of high credit quality. The Company performs periodic evaluations of the relative credit standing of all of the aforementioned institutions. The Company does have cash deposits at financial institutions in excess of the insured amount of $0.3 million by the Federal Deposit Insurance Corporation.

The Company's accounts receivables are derived from sales contracts with a large number of customers. The Company maintains reserves for potential credit losses on customer accounts when deemed necessary. Significant customers are those which represent more than *10%* of the Company's total net revenue or gross accounts receivable balance at the balance sheet date. During the years-ended *December 31, 2025* and *2024,* the Company had *no* customers that accounted for *10%* or more of total net revenue. As of *December 31, 2025,* three customers accounted for approximately 46%, 14%, and 11% of gross accounts receivable. As of *December 31, 2024,* three customers accounted for approximately 37%, 20%, and 11% of gross accounts receivable. As of *December 31, 2025* and *2024,* approximately 26% and 31%, respectively, of its accounts receivable is held by the Company's sales platform vendor, Amazon, which collects money on the Company's behalf from its customers.

The Company's business is reliant on *one* key vendor which currently provides the Company with its sales platform, logistics and fulfillment operations, including certain warehousing for the Company's net goods, and invoicing and collection of its revenue from the Company's end customers. In *2025,* approximately 86% of the Company's revenue was through or with the Amazon sales platform and in *2024,* 92% of its net revenue was through or with the Amazon sales platform.

**Property and Equipment**—Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is provided for using the straight-line method over the estimated useful lives of the assets. Capital leases and leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset. Costs of maintenance and repairs that do *not* improve or extend the lives of the respective assets are expensed as incurred.

**Income Taxes**—The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to operating loss carry-forwards and temporary differences between financial statement bases of existing assets and liabilities and their respective income tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in the income tax rates on deferred tax asset and liability balances is recognized in income in the period that includes the enactment date of such rate change. A valuation allowance is recorded for loss carry-forwards and other deferred tax assets when it is determined that it is more likely than *not* that such loss carry-forwards and deferred tax assets will *not* be realized. The Company recognizes the tax benefits on any uncertain tax positions taken or expected to be taken in the Consolidated Financial Statements when it is more likely than *not* the position will be realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The tax benefits recognized in the Consolidated Financial Statements from such a position are measured based on the largest benefit that has a greater than *50%* likelihood of being realized upon ultimate settlement. The Company recognizes estimated interest and penalties related to uncertain tax positions as a part of the provision for income taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *12*

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**Revenue Recognition**—The Company accounts for revenue in accordance with Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") Topic *606,* Revenue from Contracts with Customers ("ASC Topic *606"*). The Company derives its revenue from the sale of consumer products. The Company sells its products directly to consumers through online retail channels and through wholesale channels.

For direct-to-consumer sales, the Company considers customer order confirmations to be a contract with the customer. Customer confirmations are executed at the time an order is placed through *third*-party online channels. For wholesale sales, the Company considers the customer purchase order to be the contract.

For all of the Company's sales and distribution channels, revenue is recognized when control of the product is transferred to the customer (i.e., when the Company's performance obligation is satisfied), which typically occurs at shipment date. As a result, the Company has a present and unconditional right to payment and record the amount due from the customer in accounts receivable.

Revenue from consumer product sales is recorded at the net sales price (transaction price), which includes an estimate of future returns based on historical return rates. There is judgment in utilizing historical trends for estimating future returns. The Company's refund liability for sales returns was $0.2 million and $0.3 million at *December 31, 2025* and *2024,* which is included in accrued expenses and other current liabilities on the Consolidated Balance Sheets and represents the expected value of the refund that will be due to its customers.

The Company evaluated principal versus agent considerations to determine whether it is appropriate to record platform fees paid to Amazon as an expense or as a reduction of revenue. Platform fees are recorded as sales and distribution expenses and are *not* recorded as a reduction of revenue because the Company owns and controls all the goods before they are transferred to the customer. The Company can, at any time, direct Amazon, or similarly, direct other *third*-party logistics providers ("Logistics Providers"), to return the Company's inventory to any location specified by the Company. It is the Company's responsibility to make customers whole following any returns made by customers directly to Logistic Providers and the Company retains the back-end inventory risk. Further, the Company is subject to credit risk (i.e., credit card charge backs), establishes prices of its products, can determine who fulfills the goods to the customer (Amazon or the Company) and can limit quantities or stop selling the goods at any time. Based on these considerations, the Company is the principal in this arrangement.

*Performance Obligations*. A performance obligation is a promise in a contract to transfer a distinct good to the customer and is the unit of account in ASC Topic *606.* A contract's transaction price is recognized as revenue when the performance obligation is satisfied. Each of the Company's contracts have a single distinct performance obligation, which is the promise to transfer individual goods.

For consumer product sales, the Company has elected to treat shipping and handling as fulfillment activities, and *not* a separate performance obligation. Accordingly, the Company recognizes revenue for its single performance obligation related to product sales at the time control of the merchandise passes to the customer, which is generally at the time of shipment. The Company bills customers for charges for shipping and handling on certain sales and such charges are recorded as part of net revenue. Shipping and handling revenue for each of the years-ended *December 31, 2025* and *2024* were de minimis.

For each contract, the Company considers the promise to transfer products to be the only identified performance obligation. In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled.

*Sales taxes*—Consistent with prior periods, sales taxes collected from customers are presented on a net basis and as such are excluded from net revenue.

*Net Revenue by Category*: The following tables set forth the Company's net revenue disaggregated by sales channel and geographic region based on the billing addresses of its customers:

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| | | | |
|:---|:---|:---|:---|
|  | ***December 31, 2025*** | ***December 31, 2025*** | ***December 31, 2025*** |
|  | (in thousands) | (in thousands) | (in thousands) |
|  | ***Direct*** | ***Wholesale/Other*** | ***Total*** |
| North America | $60452 | $3211 | $63663 |
| Other | 5312 |  | 5312 |
| Total net revenue | $65764 | $3211 | $68975 |

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| | | | |
|:---|:---|:---|:---|
|  | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** |
|  | (in thousands) | (in thousands) | (in thousands) |
|  | ***Direct*** | ***Wholesale/Other*** | ***Total*** |
| North America | $91815 | $1704 | $93519 |
| Other | 5526 |  | 5526 |
| Total net revenue | $97341 | $1704 | $99045 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *13*

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*Net Revenue by Product Categories*: The following table sets forth the Company's net revenue disaggregated by product categories:

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| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
|  | (in thousands) | (in thousands) |
| Heating, cooling and air quality | $13945 | $26398 |
| Kitchen appliances | 8468 | 9565 |
| Health and beauty | 10620 | 13467 |
| Cookware, kitchen tools and gadgets | 2620 | 5924 |
| Home office | 6265 | 8017 |
| Housewares | 14904 | 22521 |
| Essential oils and related accessories | 12139 | 12719 |
| Other | 14 | 434 |
| Total net revenue | $68975 | $99045 |

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**Fair Value of Financial Instruments**—The Company's financial instruments, including net accounts receivable, accounts payable, and accrued and other current liabilities are carried at historical cost. As of *December 31, 2025* and *2024,* the carrying amounts of these instruments approximated their fair values because of their short-term nature. The Company's credit facility is carried at amortized cost at *December 31, 2025* and *2024* and the carrying amount approximates fair value as the stated interest rate approximates market rates currently available to the Company.

The fair value of the stock purchase warrants issued in connection with the Company's common stock offering on *March 1, 2022* were measured using the Black-Scholes model. Inputs used to determine the estimated fair value of the warrant liabilities include the fair value of the underlying stock at the valuation date, the term of the warrants, and the expected volatility of the underlying stock. The significant unobservable input used in the fair value measurement of the warrant liabilities is the estimated term of the warrants. Upon the issuance of the stock purchase warrants, the Company evaluated the terms of each warrant to determine the appropriate accounting and classification pursuant to FASB ASC Topic *480, Distinguishing Liabilities from Equity ("ASC *480"*)*, and FASB Accounting Standards Codification Topic *815, Derivatives and Hedging ("ASC *815"*)*. Based on the Company's evaluation and due to certain terms in the warrant agreements, it concluded the stock purchase warrants should be classified as liability with subsequent remeasurement as long as such warrants continue to be classified as liabilities.

Assets and liabilities recorded at fair value on a recurring basis in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance on fair value measurements establishes a *three*-tier fair value hierarchy for disclosure of fair value measurements as follows:

*Level *1*—Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

*Level *2*—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are *not* active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

*Level *3*—Unobservable inputs that are supported by little or *no* market data for the related assets or liabilities.

**Intangibles**—We review long-lived assets for impairment when performance expectations, events, or changes in circumstances indicate that the asset's carrying value *may not* be recoverable. The evaluation is performed at the lowest level of identifiable cash flows by comparing the carrying value of the asset group to the undiscounted cash flows. If the evaluation indicates that the carrying amount of the assets *may not* be recoverable, any potential impairment is measured based upon the fair value of the related asset or asset group as determined by an appropriate market appraisal or other valuation technique.

In *December 2025,* the Company announced that its Board of Directors had initiated a process to explore strategic alternatives to maximize shareholder value. This announcement constituted a triggering event under ASC *350,* Intangibles—Goodwill and Other, requiring the Company to perform an interim impairment assessment of its definite-lived brand intangible assets. The Company estimated the fair value of its definite-lived brand assets using market-based inputs, including indicative valuations from market participants obtained during the strategic alternative process. Based on this assessment, the Company determined that the carrying value of certain brand intangible assets exceeded their estimated fair value.

Accordingly, the Company recorded a non-cash impairment charge of approximately $3.8 million during the *fourth* quarter of *2025.* The impairment charge is included within impairment loss on intangibles on the Consolidated Statement of Operations. As of *December 31, 2025,* the remaining balance of intangible assets was $4.4 million.

There were *no* triggering events to test intangibles for impairment loss during the year ended *December 31, 2024.*

We will continue to closely monitor actual results versus expectations as well as whether and to what extent any significant changes in current events or conditions result in corresponding changes to our expectations about future estimated cash flows. If our adjusted expectations of the operating results do *not* materialize, we *may* be required to record intangible impairment charges, which *may* be material.

While we believe our conclusions regarding the estimates of recoverability of our asset groupings are appropriate, these estimates are subject to uncertainty and by nature include judgments and estimates regarding various factors. These factors include the rate and extent of growth in the markets that our asset groups serve, the realization of future sales price and volume increases, fluctuations in exchange rates, fluctuations in price and availability of key raw materials, fluctuations in discount rate, future operating efficiencies, and strategic alternative processes.

**Inventory and Cost of Goods Sold**—The Company's inventory consists almost entirely of finished goods. The Company currently records inventory on its balance sheet on a *first*-in *first*-out basis, or net realizable value, if it is below the Company's recorded cost. The Company's costs include the amounts it pays manufacturers for product, tariffs and duties associated with transporting product across national borders, and freight costs associated with transporting the product from its manufacturers to its warehouses, as applicable. The valuation of our inventory requires us to make judgments, based on available information such as historical data, about the likely method of disposition, such as through sales to individual customers or liquidations, and expected recoverable values of each disposition category. Changes to the relevant assumptions and projections would impact our consolidated financial results in periods subsequent to recording these estimates. If we anticipate a change in assumptions such as future demand or market conditions to be less favorable than our previous estimates, additional inventory write-downs *may* be required. Conversely, if we are able to sell inventories that had been written down to a level below the ultimate realized selling price in a previous period, sales would be recorded with a lower or *no* offsetting charge to cost of sales.

The "Cost of goods sold" line item in the consolidated statements of operations consists of the book value of inventory sold to customers during the reporting period. When circumstances dictate that the Company use net realizable value as the basis for recording inventory, it bases its estimates on expected future selling prices less expected disposal costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *14*

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**Sales and Distribution**—Sales and distribution variable expenses consist of online advertising costs, marketing and promotional costs, sales and ecommerce platform commissions, fulfillment, including shipping and handling, and warehouse costs. Sales and distribution expenses also include employee compensation and benefits and other related fixed costs. Shipping and handling expenses are included in our consolidated statements of operations in sales and distribution expenses. This includes inbound, pick and pack costs and outbound transportation costs to ship goods to customers performed by e-commerce platforms or incurred directly by us, through our own direct fulfillment platform, which leverages our technology platform and *third*-party logistics partners. The Company's expense for shipping and handling was $12.1 million and $19.0 million during fiscal years *2025* and *2024,* respectively. Our sales and distribution expenses, specifically our logistics expenses and online advertising, will vary quarter to quarter as they are dependent on our sales volume, our product mix and whether we fulfill products ourselves, i.e., fulfillment by merchant ("FBM"), or through e-commerce platform service providers, i.e., fulfillment by Amazon ("FBA") or fulfilled by Walmart ("WFS"). Products with less expensive fulfillment costs as a percentage of net revenue *may* allow for a lower gross margin, while still maintaining their targeted profitability level. Conversely, products with higher fulfillment costs will need to achieve a higher gross margin to maintain their targeted level of profitability. We are FBM One Day and Two Day Prime certified, allowing us to deliver our sales through Amazon to most customers within *one* or *two* days. We periodically review the locations and capacity of our *third*-party warehouses to ensure we have the appropriate geographic reach, which helps to reduce the average last mile shipping zones to the end customer and as such our speed of delivery improves while our shipping costs to customers decrease, prior to the impacts on shipping providers' rates. For the years-ended *December 31, 2025* and *2024,* the Company recognized $7.3 million and $7.4 million, respectively, for advertising costs, which consists primarily of online advertising expense.

**General and Administrative**—General and administrative expenses include compensation and employee benefits for executive management, finance administration, legal, technology, and human resources, facility costs, insurance, travel, professional service fees, and other general overhead costs, including the costs of being a public company.

**Stock-Based Compensation**—Stock-based compensation expense to employees is measured based on the grant-date fair value of the awards and recognized in the consolidated statements of operations over the period during which the employee is required to perform services in exchange for the award (the vesting period of the award). The fair value of restricted stock awards is based on the stock price on the date of the grant.

**Foreign Currency**—The functional currency of the Company's foreign subsidiaries is the local currency. All assets and liabilities of foreign subsidiaries are translated at the current exchange rate as of the end of the period, and revenues and expenses are translated at the average exchange rates in effect during the period. The gain or loss resulting from the process of translating foreign currency financial statements into U.S. dollars is reflected as a foreign currency cumulative translation and reported as a component of accumulated other comprehensive income loss. Foreign currency transaction gains and losses resulting from or expected to result from transactions denominated in a currency other than the functional currency are recognized in other expense, net in the consolidated statements of operations. The Company recorded net loss from foreign currency transactions of $0.3 million for the year ended *December 31, 2025* and a net gain from foreign currency transactions of $0.1 million for the year ended *December 31, 2024.*

**Net Loss Per Share**—The Company computes basic earnings per share using the weighted-average number of shares of common stock outstanding during the period. For periods in which the Company reports net losses, diluted net loss per share attributable to stockholders is the same as basic net loss per share attributable to stockholders, because potentially dilutive common shares are *not* assumed to have been issued if their effect is anti-dilutive.

**Segment Information**—The Company reports segment information in accordance with ASC Topic *No. 280* "Segment Reporting." The Company has one reportable segment. See Note *18, Segment Information*, in the accompanying notes to our consolidated financial statements for further detail.

**Warrant Liabilities**—The fair values of the outstanding warrants were measured using the Black Scholes model. Inputs used to determine estimated fair value of the warrant liabilities include the fair value of the underlying stock at the valuation date, the term of the warrants, and the expected volatility of the underlying stock. The significant unobservable input used in the fair value measurement of the warrant liabilities is the estimated term of the warrants. Generally, increases (decreases) in the fair value of the underlying stock and estimated term result in a directionally similar impact to the periodic fair value measurement of the outstanding warrant liabilities, and are recorded within the Change in fair value of warrant line item on the consolidated statement of operations.

The fair value of warrant liabilities was zero and $0.1 million at *December 31, 2025* and *2024,* which is included in accrued expenses and other current liabilities on the Consolidated Balance Sheets.

R**ecent Accounting Pronouncements** 

In *August 2023,* the FASB finalized ASU *2023*-*09,* Income Taxes (Topic *740*). This ASU provides for certain updates to enhance the transparency about companies' exposure to changes in tax legislation and the global tax risk they *may* face. Under the guidance, companies will be required to provide a breakout of amounts paid for taxes between federal, state, and foreign taxing jurisdictions, rather than a lump sum amount. Further, the rate reconciliation will require disaggregation into *eight* specific categories, with these categories further disaggregated by jurisdiction and for amounts exceeding *5* percent of their domestic tax rate. The rate reconciliation will need to also disclose both dollar amounts and percentages. This standard is effective for fiscal years beginning after *December 15, 2024.* The Company adopted ASU *2023*-*09* during the year ended *December 31, 2025.* See Note *13, Income Taxes* in the accompanying notes to the consolidated financial statements for further detail.

In *November 2024,* the FASB issued ASU *2024*-*03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic *220*-*40*)*: Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU *2024*-*03* is effective for fiscal years beginning after *December 15, 2026,* and for interim periods beginning after *December 15, 2027,* with early adoption permitted. The Company is currently evaluating the impact of adopting ASU *2024*-*03.*

On *July 30, 2025,* the FASB issued ASU *2025*-*05,* Financial Instruments - Credit Losses (Topic *326*): *Measurement of Credit Losses for Accounts Receivable and Contract Assets*, which provides a practical expedient for all entities and an accounting policy election for all entities, other than public business entities, that elect the practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC *606.* The amendments will be effective for annual reporting periods beginning after *December 15, 2025,* with early adoption permitted. The Company is currently evaluating the impact of adopting ASU *2025*-*05.*

On *December 8, 2025,* the FASB issued ASU *2025*-*11,* Interim Reporting (Topic *270*): *Narrow-Scope Improvements*, which updates the current guidance by improving navigability of the required interim disclosures, clarifying when that guidance is applicable and adding a principle that requires entities to disclose events since the last annual reporting period that have a material impact on the entity. The amendments will be effective for interim periods beginning after *December 15, 2027,* with early adoption permitted. The Company is currently evaluating the impact of adopting ASU *2025*-*11.*

We have reviewed all other recently issued accounting pronouncements and concluded that they were either *not* applicable or *not* expected to have a significant impact to the consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *15*

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***3.*** **INVENTORY** 

Inventory consisted of the following as of *December 31, 2025* and *2024* (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | ***2025*** | ***2024*** |
| Inventory on-hand | $12760 | $12484 |
| Inventory in-transit | 1016 | 1265 |
| Inventory | $13776 | $13749 |

---

The Company's inventory on-hand is held either with Amazon or the Company's other *third*-party warehouses. The Company does *not* have any contractual right of returns with its contract manufacturers. The Company's inventory on-hand held by Amazon was approximately $4.5 million and $3.5 million as of *December 31, 2025* and *December 31, 2024,* respectively.

***4.*** **ACCOUNTS RECEIVABLE, NET**

Accounts receivable consisted of the following as of *December 31, 2025* and *2024* (in thousands):

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Trade accounts receivable | $2460 | $3929 |
| Allowance for credit losses |  | (147) |
| Accounts receivable, net | $2460 | $3782 |

---

***5.*** **PROPERTY AND EQUIPMENT** 

Property and equipment consisted of the following as of *December 31, 2025* and *2024* (in thousands):

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Computer equipment and software | $482 | $455 |
| Furniture, fixtures and equipment | 60 | 24 |
| Building | 841 | 783 |
| Subtotal | 1383 | 1262 |
| Less: accumulated depreciation and amortization | (654) | (577) |
| Property and equipment–net | $729 | $685 |

---

Depreciation expense for property and equipment totaled $0.1 million during the years-ended *December 31, 2025* and *2024,* respectively.

***6.*** **FAIR VALUE MEASUREMENTS**

The following tables summarize the fair value of the Company's financial assets that are measured at fair value as of *December 31, 2025* and *December 31, 2024 (*in thousands):

---

| | | | |
|:---|:---|:---|:---|
|  | ***December 31, 2025*** | ***December 31, 2025*** | ***December 31, 2025*** |
|  | ***Fair Value Measurement Category*** | ***Fair Value Measurement Category*** | ***Fair Value Measurement Category*** |
|  | ***Level 1*** | ***Level 2*** | ***Level 3*** |
| Liabilities: |  |  |  |
| &nbsp;&nbsp;&nbsp; Fair value of warrant liabilities |  |  |  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** | ***December 31, 2024*** |
|  | ***Fair Value Measurement Category*** | ***Fair Value Measurement Category*** | ***Fair Value Measurement Category*** | ***Fair Value Measurement Category*** |
|  | ***Level 1*** | ***Level 2*** | ***Level 3*** | ***Level 3*** |
| Liabilities: |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Fair value of warrant liabilities |  |  |  | 109 |

---

The following table summarizes the Company's warrant activity during the year ended *December 31, 2025* (in thousands):

---

| | |
|:---|:---|
|  | ***December 31, 2025*** |
| Warrants liabilities as of January 1, 2025 | $109 |
| Change in fair value of warrants | (109) |
| Warrants liabilities as of December 31, 2025 | $— |

---

The fair value of the stock purchase warrants issued in connection with the Company's common stock offering on *March 1, 2022* were measured using the Black-Scholes model. Inputs used to determine the estimated fair value of the warrant liabilities include the fair value of the underlying stock at the valuation date, the term of the warrants, and the expected volatility of the underlying stock. The significant unobservable input used in the fair value measurement of the warrant liabilities is the estimated term of the warrants. Upon the issuance of the stock purchase warrants, the Company evaluated the terms of each warrant to determine the appropriate accounting and classification pursuant to FASB ASC Topic *480, Distinguishing Liabilities from Equity ("ASC *480"*)*, and FASB Accounting Standards Codification Topic *815, Derivatives and Hedging ("ASC *815"*)*. Based on the Company's evaluation and due to certain terms in the warrant agreements, it concluded the stock purchase warrants should be classified as liability with subsequent remeasurement as long as such warrants continue to be classified as liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *16*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *17*

Prepaid and other current assets consisted of the following as of *December 31, 2025* and *2024* (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | ***2025*** | ***2024*** |
| Prepaid inventory | $461 | $904 |
| Restricted cash | 1015 | 1015 |
| Prepaid insurance | 916 | 528 |
| Prepaid freight forwarder | 35 | 145 |
| Other | 555 | 598 |
| Prepaid and Other Current Assets | $2982 | $3190 |

---

***8.*** **ACCRUED AND OTHER CURRENT LIABILITIES** 

Accrued expenses and other current liabilities consisted of the following as of *December 31, 2025* and *2024* (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | ***2025*** | ***2024*** |
| Accrued compensation costs | $55 | $2500 |
| Accrued restructuring costs | 532 |  |
| Accrued accounting fees and consultants | 310 | 235 |
| Accrued logistics costs | 89 | 98 |
| Product related accruals | 98 | 312 |
| Sales tax payable | 863 | 989 |
| Sales return reserve | 188 | 290 |
| Accrued fulfillment expense | 476 | 499 |
| Accrued insurance premium financing | 695 | 305 |
| Federal payroll taxes payable | 453 | 1063 |
| Accrued interest payable | 44 | 81 |
| Accrued legal fees | 1125 | 447 |
| Accrued marketing fees | 197 | 358 |
| Warrant liabilities |  | 109 |
| All other accruals | 1257 | 1518 |
| Accrued and current liabilities | $6382 | $8804 |

---

The Company sponsors, through its professional employer organization provider, a *401*(k) defined contribution plan covering all eligible U.S. employees. Contributions to the *401*(k) plan are discretionary. Currently, the Company does *not* match or make any contributions to the *401*(k) plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *18*

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***9.*** **CREDIT FACILITY AND WARRANTS**

**Midcap Credit Facility**

On *December 22, 2021,* the Company entered into a Credit and Security Agreement (the "Credit Agreement") together with certain of its subsidiaries party thereto as borrowers, the entities party thereto as lenders, and Midcap Funding IV Trust, as administrative agent, pursuant to which, among other things, (i) the Lenders agreed to provide a three year revolving credit facility in a principal amount of up to $40.0 million subject to a borrowing base consisting of, among other things, inventory and sales receivables (subject to certain reserves), and (ii) the Company agreed to issue to MidCap Funding XXVII Trust a warrant (the "Midcap Warrant") to purchase up to an aggregate of 16,667 shares of common stock of the Company, par value $0.0001 per share, in exchange for the Lenders extending loans and other extensions of credit to the Company under the Credit Agreement. The obligations under the Credit Agreement are a senior secured obligation of the Company and rank senior to all indebtedness of the Company. Borrowings under the Credit Agreement bear interest at a rate of Term Secured Overnight Financing Rate ("Term SOFR"), which is defined as SOFR plus 0.10%, plus 5.50%. The Company will also be required to pay a commitment fee of 0.50% in respect of the undrawn portion of the commitments, which is generally based on average daily usage of the facility during the immediately preceding fiscal quarter. The Credit Agreement does *not* require any amortization payments.

The Midcap Warrant has an exercise price of $56.40 per share, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions, is immediately exercisable, has a term of ten years from the date of issuance and is exercisable on a cash or cashless basis.

On *February 23, 2024,* the Company amended its asset backed credit facility with MidCap Financial Trust. The Credit Facility term was extended to *December 2026* and gives the Company access to $17 million in current commitments which can be increased, subject to certain conditions, to $30.0 million. The Credit Facility extension reduced the minimum liquidity financial covenant from a peak of $15.0 million to $6.8 million of U.S. cash on hand and/or availability in the Credit Facility. The extension fee was less than $0.1 million.

On *March 25, 2025 (*the "Third Amendment Effective Date") the Company entered into Amendment *No. 3* (the *"3*<sup>rd</sup> Amendment") to the Credit Agreement. Material changes contained in the *3*<sup>rd</sup> Amendment include, among other things, adding repurchase of the Company's common stock of up to *$1.5* million per year, consisting of up to $1.5 million in repurchases allowed during the period from *March 25, 2025* through *December 22, 2025,* and up to an additional $1.5 million allowed during the period from *December 23, 2025* through the maturity date, subject to certain liquidity and compliance conditions.

On *August 29, 2025 (*the "Fourth Amendment Effective Date") the Company entered into Amendment *No. 4* to the Credit Agreement. Material changes contained in Amendment *No. 4* include a reduction to the Minimum Credit Party Liquidity covenant to $5.0 million, upon the Company's delivery of a Liquidity Certificate evidencing liquidity of at least $6.8 million, the Minimum Liquidity Covenant Reduction Period will terminate and the covenant will increase to $6.8 million thereafter, and an Availability Reserve of $2.8 million during the Minimum Liquidity Covenant Reduction Period and $1.0 million thereafter.

On *March 13, 2026,* the Company and its subsidiaries entered into Amendment *No. 5* to its Credit and Security Agreement with MidCap Funding IV Trust. Under the terms of the amendment, the Company's minimum liquidity covenant was reduced from $5.0 million to $3.5 million during the Minimum Liquidity Covenant Reduction Period. This reduction period commenced on the Fifth Amendment Effective Date and is subject to extension at the Company's option on a weekly basis through *May 9, 2026,* provided it remains in compliance with certain fee payment obligations.

The Company is in compliance with the financial covenants contained within the Credit Agreement as of *December 31, 2025.* As of *May 2, 2025,* the Company had temporarily suspended its share repurchase program.

The Company's credit facility consisted of the following as of *December 31, 2025* and *2024* (in thousands):

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | ***2025*** | ***2024*** |
| MidCap Credit Facility | $4449 | $7252 |
| Less: deferred debt issuance costs | (134) | (192) |
| Less: discount associated with issuance of warrants | (56) | (112) |
| Total MidCap Credit Facility | $4259 | $6948 |

---

**Interest Expense, Net** 

Interest expense, net consisted of the following for the years-ended *December 31, 2025* and *2024* (in thousands):

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Interest expense | $957 | $1218 |
| Interest income | (106) | (269) |
| Total interest expense, net | $851 | $949 |

---

**Securities Purchase Agreement and Warrants**

In *March 2022,* the Company raised approximately $27.5 million through a private placement involving common stock and accompanying stock purchase warrants. The 590,637 common stock warrants issued in the transaction were classified as liabilities with subsequent remeasurement each quarter. As of *December 31, 2025,* these warrants remain outstanding and have no associated liability recorded on the Company's Consolidated Balance Sheet due to the decline in the Company's share price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *19*

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***10.*** **STOCKHOLDERS**' **EQUITY** 

**Common Shares**—The Company has *one* class of common shares issued and available. Each share of common stock has the right to *one* vote per share.

***11.*** **STOCK-BASED COMPENSATION**

The Company has *three* equity plans:

***2014* Amended and Restated Equity Incentive Plan** 

The board of directors of Aterian Group, Inc., a subsidiary of the Company ("AGI"), adopted, and AGI's stockholders approved, the Aterian Group, Inc. *2014* Equity Incentive Plan on *June 11, 2014.* On *March 1, 2017,* AGI's board of directors adopted, and AGI's stockholders approved, an amendment and restatement of the *2014* Equity Incentive Plan (as amended, the "Aterian *2014* Plan"). As of *December 31, 2025*, there were no shares reserved for future issuance under the Aterian *2014* Plan.

***2018* Equity Incentive Plan** 

The Company's board of directors (the "Board") adopted the Aterian, Inc. *2018* Equity Incentive Plan (the *"2018* Plan") on *October 11, 2018.* The *2018* Plan was approved by its stockholders on *May 24, 2019.* As of *December 31, 2025*, 828,316 shares were reserved for awards available for future issuance under the *2018* Plan.

Options granted to date under the Aterian *2014* Plan and the *2018* Plan generally vest either: (i) over a four-year period with 25% of the shares underlying the options vesting on the *first* anniversary of the vesting commencement date with the remaining 75% of the shares vesting on a pro-rata basis over the succeeding *thirty-six* months, subject to continued service with the Company through each vesting date, or (ii) over a three-year period with 33 *1/3%* of the shares underlying the options vesting on the *first* anniversary of the vesting commencement date with the remaining 66 *2/3%* of the shares vesting on a pro-rata basis over the succeeding *twenty-four* months, subject to continued service with the Company through each vesting date. Options granted are generally exercisable for up to 10 years subject to continued service with the Company.

**Inducement Equity Incentive Plan**

On *May 27, 2022,* the Compensation Committee of the Board (the "Compensation Committee") adopted the Aterian, Inc. *2022* Inducement Equity Incentive Plan (the "Inducement Plan"). The Inducement Plan will serve to advance the interests of the Company by providing a material inducement for the best available individuals to join the Company as employees by affording such individuals an opportunity to acquire a proprietary interest in the Company.

The Inducement Plan provides for the grant of equity-based awards in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares solely to prospective employees of the Company or an affiliate of the Company provided that certain criteria are met. Awards under the Inducement Plan *may* only be granted to an individual, as a material inducement to such individual to enter into employment with the Company or an affiliate of the Company, who (i) has *not* previously been an employee or director of the Company or (ii) is rehired following a bona fide period of non-employment with the Company. The maximum number of shares available for grant under the Inducement Plan is 225,000 shares of the Company's common stock (subject to adjustment for recapitalizations, stock splits, reorganizations and similar transactions). The Inducement Plan is administered by the Compensation Committee and expires ten years from the date of effectiveness. As of *December 31, 2025*, 193,476 shares were reserved for future issuance under the Inducement Plan.

The Inducement Plan has *not* been and will *not* be approved by the Company's stockholders. Awards under the Inducement Plan will be made pursuant to the exemption from Nasdaq stockholder approval requirements for equity compensation provided by Nasdaq Listing Rule *5635*(c)(*4*), which permits Nasdaq listed companies to make inducement equity awards to new employees without *first* obtaining stockholder approval of the award.

**Reverse Stock Split**

On *March 20, 2024,* the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation of the Company with the Secretary of State of Delaware (the "Certificate of Amendment") to effect a *1*-for-12 reverse stock split (the "Reverse Stock Split") of the shares of the Company's common stock, par value $0.0001 per share (the "Common Stock"). The Certificate of Amendment did *not* decrease the number of authorized shares of Common Stock or change the par value thereof. No fractional shares were issued in connection with the Reverse Stock Split. Any fractional shares that would otherwise have resulted from the Reverse Stock Split were rounded up to the nearest whole number. The Reverse Stock Split impacted all holders of the Common Stock proportionally and did *not* impact any stockholder's percentage ownership of Common Stock (except to the extent the Reverse Stock Split results in any stockholder owning fractional shares).

The reverse stock split is deemed an equity restructuring pursuant to ASC *718,* Compensation - Stock Compensation. The Company's equity plans incorporate anti-dilutive provisions for existing equity awards, including restricted stock and stock options, to maintain the value of all awards post-reverse stock split. Consequently, there were *no* changes in the fair value of the awards attributable to the reverse stock split, and *no* impact on stock-based compensation for the year ended *December 31, 2025* and *2024.*

The following is a summary of stock options activity during the year ended *December 31, 2025*:

---

| | | | |
|:---|:---|:---|:---|
|  | ***Options Outstanding*** | ***Options Outstanding*** | ***Options Outstanding*** |
|  | ***Number of Options*** | ***Weighted- Average Exercise Price*** | ***Weighted- Average Remaining Contractual Life (years)*** |
| Balance—January 1, 2025 | 13051 | $109.62 | 4.00 |
| Options granted |  | $— | *—* |
| Options exercised |  | $— | *—* |
| Options canceled |  | $— | *—* |
| Balance—December 31, 2025 | 13051 | $109.62 | 2.55 |
| Exercisable as of December 31, 2025 | 13051 | $109.62 | 2.55 |
| Vested and expected to vest as of December 31, 2025 | 13051 | $109.62 | 2.55 |

---

As of *December 31, 2025*, all options have been fully expensed.

A summary of restricted stock activity within the Company's equity plans and changes for the year ended *December 31, 2025*, is as follows:

---

| | | |
|:---|:---|:---|
| **Restricted Stock Awards** | ***Shares*** | **Weighted Average**<br> **Grant- Date Fair Value** |
| Nonvested at January 1, 2025 | 1310989 | $3.43 |
| Granted | 1618653 | $1.43 |
| Vested | (1249194) | $2.80 |
| Forfeited | (342348) | $2.63 |
| Nonvested at December 31, 2025 | 1338100 | $1.80 |

---

As of *December 31, 2025*, the total unrecognized compensation expense related to unvested shares of restricted common stock was $1.8 million, which the Company expects to recognize over an estimated weighted-average period of 1.51 years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *20*

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Stock-based compensation expense is allocated based on the cost center to which the award holder belongs. The following table summarizes the total stock-based compensation expense by function, including expense related to consultants for years-ended *December 31, 2025* and *2024.*

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
|  | (in thousands) | (in thousands) |
| Sales and distribution expenses | $427 | $1783 |
| General and administrative expenses | 1753 | 5727 |
| Total stock-based compensation expense | $2180 | $7510 |

---

***12.*** **COMMITMENT AND CONTINGENCIES** 

**Inventory Purchases**—As of *December 31, 2025* and *2024,* the Company had $2.9 million and $9.2 million, respectively, of inventory purchase orders placed with vendors waiting to be fulfilled.

**Sales or Other Similar Taxes**—Based on the location of the Company's current operations, the majority of sales tax is collected and remitted either by the Company or on its behalf by e-commerce marketplaces in most states within the U.S. To date, the Company has had *no* actual or threatened sales and use tax claims from any state where it does *not* already claim nexus or any state where it sold products prior to claiming nexus. However, the Company believes that the likelihood of incurring a liability as a result of sales tax nexus being asserted by certain states where it sold products prior to claiming nexus is probable. As of *December 31, 2025* and *2024,* the Company estimates that the potential liability, including current sales tax payable is approximately $0.9 million and $1.0 million, which has been recorded in accrued and other current liabilities on the Consolidated Balance Sheets. The Company believes this is the best estimate of an amount due to taxing agencies, given that such a potential loss is an unasserted liability that would be contested and subject to negotiation between the Company and the state, or decided by a court.

**Product Remediation Costs—**During the year ended *December 31, 2025,* the Company accrued approximately $0.4 million for estimated costs associated with addressing a product performance matter involving certain houseware appliances that the Company ceased selling during the year ended *December 31, 2024.* These costs are included in cost of goods sold on the Consolidated Statement of Operations.

In *February 2026,* we announced a voluntary recall in coordination with the CPSC for approximately 195,000 units of our PurSteam Mighty Lil Steamers and Elite Travel Steamers due to reports of hot water expelling from the nozzle. We have incurred, and expect to continue to incur, costs related to this recall, including refund payments and legal expenses. As a result of this recall, a putative class action complaint, Sarah Brannon v. Aterian, Inc., was filed against us on *March 6, 2026,* in the U.S. District Court for the District of New Jersey. The complaint alleges various violations, including breach of implied warranty, unjust enrichment, and violations of the New Jersey Products Liability Act. While the Company ceased selling these steamers in *2024,* the defense of this existing litigation, and the potential for additional product liability or class action lawsuits, could result in significant legal expenses, settlements, or judgments.

**Leases**—The Company's minimum lease liabilities are *not* material to the Company's consolidated financial statements as of *December 31, 2025* and *2024.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *21*

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***13.*** **INCOME TAXES** 

Loss before provision for income taxes consisted of the following for the periods indicated (in thousands):

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Domestic | $(18389) | $(11896) |
| International | (554) | (13) |
| Total | $(18943) | $(11909) |

---

The components of the Company's income tax provision were as follows for the periods indicated (in thousands):

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Current: |  |  |
| Federal | $— | $— |
| State | 41 | 37 |
| Foreign |  | (79) |
| Total current income tax expense | 41 | (42) |
| Deferred: |  |  |
| Federal |  |  |
| State |  |  |
| Foreign |  | (5) |
| Total deferred income tax benefit |  | (5) |
| Total income tax benefit | $41 | $(47) |

---

For the year ended *December 31, 2025,* we adopted ASU *2023*-*09* prospectively. A reconciliation of the U.S. federal statutory income tax rate to our effective tax rate pursuant to the disclosure requirements of ASU *2023*-*09* for the year ended *December 31, 2025* is as follows (in thousands):

---

| | |
|:---|:---|
|  | **December 31, 2025** |
|  | **%** |
| U.S. federal statutory tax rate) | 21.0% |
| State and local income taxes, net of federal income tax effects<sup>(1)</sup> | (0.2)% |
| Foreign tax effects: |  |
| UK | (0.6)% |
| Canada | —% |
| Ireland | —% |
| China | —% |
| Effect of changes in tax laws or rates | —% |
| Effect of cross-border tax laws | —% |
| Tax credits | —% |
| Changes in valuation allowances | (15.5)% |
| Nontaxable or nondeductible items: |  |
| Stock based compensation | (2.1)% |
| Other | (0.2)% |
| Change in unrecognized tax benefits | —% |
| Other adjustments: |  |
| Deferred true up - intangibles | (3.1)% |
| Other) | 0.5% |
| Total income tax benefit | (0.2)% |

---

(*1*) The majority of the Company's state and local income tax expense is attributable to operations in California, New York, New York City and Texas, which collectively represent more than *50%* of the total state and local income tax rate reconciliation category. The Company files income tax returns in multiple state jurisdictions; however, its primary state tax exposure is concentrated in these jurisdictions due to the location of its operations and apportionment factors.

The reconciliation of taxes at the federal statutory rate to our provision for (benefit from) income taxes for the year ended *December 31, 2024* in accordance with the guidance prior to the adoption of ASU *2023*-*09* was as follows:

---

| | |
|:---|:---|
|  | **December 31, 2024** |
| Income tax benefit at statutory rates | $(2501) |
| Warrant liabilities | (177) |
| Stock compensation | 883 |
| Other permanent differences |  |
| Foreign rate differential | (1) |
| State income taxes, net of federal tax benefit | (311) |
| Other | 404 |
| Prior year true-up adjustments | (2194) |
| Valuation allowance | 3850 |
| Total income tax benefit | $(47) |

---

The Company's effective tax rate was (0.2)% and 0.4% for the years ended *December 31, 2025* and *December 31, 2024,* respectively. The effective tax rate for *2025* was principally due to tax benefits incurred related to the operations of the Company's UK business, non-deductible executive stock compensation expense, and the change in the fair value of the warrant liabilities. The effective tax rate for *2024* was principally due to tax benefits incurred related to the operations of the Company's UK business, the change in fair value of the warrant liabilities, and true-up adjustments recorded in connection with the Company's filed tax returns, primarily offset by the impact of non-deductible executive stock compensation expense and changes in the valuation allowance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *22*

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The Company's deferred tax assets and liabilities as of the dates indicated were as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | ***December 31, 2025*** | ***December 31, 2024*** |
| Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp; Allowance for credit losses | $— | $35 |
| Inventory Reserve | 455 | 325 |
| &nbsp;&nbsp;&nbsp; Other Accruals |  | 320 |
| &nbsp;&nbsp;&nbsp; Accrued Bonus |  | 618 |
| Net operating loss carryforwards | 65734 | 58459 |
| Stock options | 554 | 567 |
| Interest expense limitation | 11548 | 11058 |
| Intangibles (definite life) | 9781 | 8909 |
| Intangibles (indefinite life) | 16882 | 19669 |
| Other | 1694 | 2211 |
| Total deferred tax assets before valuation allowance | 106648 | 102171 |
| Valuation allowance | (106221) | (101890) |
| Net deferred tax assets | 427 | 281 |
| Deferred tax liabilities: |  |  |
| Prepaid expenses | (419) | (281) |
| Depreciation | (5) |  |
| Other | (3) |  |
| Net deferred tax liabilities | (427) | (281) |
| Deferred tax liability, net | $— | $— |

---

For the year ended *December 31, 2025,* we adopted ASU *2023*-*09* prospectively. The amount of cash income taxes paid by the Company were as follows (in thousands):

---

| | |
|:---|:---|
|  | ***December 31, 2025*** |
| Federal | $— |
| State and local: |  |
| New Jersey | 5 |
| &nbsp;&nbsp;&nbsp; Texas | 40 |
| &nbsp;&nbsp;&nbsp; Other | 5 |
| Foreign: |  |
| United Kingdom |  |
| Canada |  |
| Ireland |  |
| China |  |
| Income taxes paid, net | $50 |

---

For the year ended *December 31, 2024,* cash income taxes paid by the company were $0.2 million.

The Company has temporary differences due to differences in recognition of revenue and expenses for tax and financial reporting purposes, principally related to net operating losses, inventory, depreciation, and other expenses that are *not* currently deductible or realizable. As of *December 31, 2025,* the Company had federal net operating loss carryforwards of approximately $269.3 million, $31 million of which, if *not* utilized, begin to expire in *2034* and approximately $237.9 million can be carried forward indefinitely but are limited to *80%* of Federal taxable income. The Company also had state and local net operating losses of $200.8 million that expire between *2026* and *2036,* depending on the state, if *not* used. As of *December 31, 2024,* the Company had federal net operating loss carryforwards of approximately $241.7 million, $31.1 million of which, if *not* utilized, begin to expire in *2034* and approximately $210.6 million can be carried forward indefinitely but are limited to *80%* of Federal taxable income. The Company also had state and local net operating losses of $150.3 million that expire between *2035* and *2044,* depending on the state, if *not* used. The Company's ability to utilize its NOL carryforwards *may* be limited pursuant to Section *382* of the Internal Revenue Code of *1986,* as amended (the "Code"), if the Company has had a change in ownership of more than *50%* of its capital stock over a *three*-year period pursuant to Section *382* of the Code. These complex changes of ownership rules generally focus on ownership changes involving stockholders owning directly or indirectly *5%* or more of a company's stock, including certain public "groups" of stockholders as set forth by Section *382* of the Code, including those arising from new stock issuances and other equity transactions.

In response to COVID-*19,* various governments worldwide have enacted, or are in the process of enacting, measures to provide relief to businesses negatively affected by the pandemic. On *March 27, 2021,* the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") was signed into law in the U.S. The CARES Act provides relief to U.S. corporations through financial assistance programs and modifications to certain payroll and income tax provisions. In connection with the CARES Act and other financial relief measures worldwide, the Company received $1.3 million of payroll related credits, of which $0.6 million has been utilized during the year ended *December 31, 2025,* with the remaining credits to be utilized over the next *two* years. The payroll related credits are recorded in accrued and other current liabilities within the consolidated balance sheets.

The Company regularly assesses the realizability of its deferred tax assets and establishes a valuation allowance if it is more-likely-than-*not* that some portion of the deferred tax assets will *not* be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Due primarily to the Company's history of net operating losses, the Company believes it is more likely than *not* its federal, state and foreign deferred tax assets will *not* more likely than *not* be realized as of *December 31, 2025.* Accordingly, the deferred tax assets have been fully offset by a valuation allowance. The valuation allowance for the year ended *December 31, 2025* increased by $4.3 million.

The Company's major taxing jurisdictions are New Jersey, New York, New York City, Florida, Texas, Pennsylvania, Tennessee, Virginia, California, and the United Kingdom. The Company files a U.S. Consolidated income tax return as well as tax returns in certain foreign jurisdictions. The Company is subject to examination in these jurisdictions for all years since inception. Fiscal years outside the normal statute of limitations remain open to audit due to tax attributes generated in the early years which have been carried forward and *may* be audited in subsequent years when utilized. The Company is currently under examination by the Internal Revenue Service for its *2023* federal income tax return. The Company *may* be subject to audits covering a variety of tax matters by taxing authorities in any taxing jurisdiction where the Company conducts business. While the Company believes that the tax returns filed, and tax positions taken are supportable and accurate, some tax authorities *may not* agree with the positions taken. This can give rise to tax uncertainties which, upon audit, *may not* be resolved in the Company's favor. As of *December 31, 2025* and *2024,* the Company has not recorded any tax contingency accruals for uncertain tax positions.

The Company had no unrecognized tax benefits as of *December 31, 2025* and 2024.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *23*

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***14.*** **RELATED PARTY TRANSACTIONS**

*None.*

***15.*** **NET LOSS PER SHARE** 

Basic net loss per share is determined by dividing net loss by the weighted-average shares of common stock outstanding during the period. Diluted net loss per share is determined by dividing net loss by diluted weighted-average shares outstanding. Diluted weighted-average shares reflect the dilutive effect, if any, of potentially dilutive shares of common stock, such as options to purchase common stock calculated using the treasury stock method and convertible notes using the "if-converted" method. In periods with reported net operating losses, all options to purchase common stock are deemed anti-dilutive such that basic net loss per share and diluted net loss per share are equal.

The Company's shares of restricted common stock are entitled to receive dividends and hold voting rights applicable to the Company's common stock, irrespective of any vesting requirement. Accordingly, although the vesting commences upon the elimination of the contingency, the shares of restricted common stock are considered a participating security and the Company is required to apply the *two*-class method to consider the impact of the shares of restricted common stock on the calculation of basic and diluted earnings per share. The Company is currently in a net loss position and is therefore *not* required to present the *two*-class method; however, in the event the Company is in a net income position, the *two*-class method must be applied by allocating all earnings during the period to shares of common stock and shares of restricted common stock.

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share data):

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Net loss | $(18984) | $(11862) |
| Weighted-average number of shares used in computing net loss per share, basic and diluted | 7932889 | 7069404 |
| Net loss per share, basic and diluted | $(2.39) | $(1.68) |
| Anti-dilutive shares excluded from computation of net loss per share (in shares) | 2245766 | 2007676 |

---

***16.*** **INTANGIBLES** 

The following tables summarize the changes in the Company's intangible assets as of *December 31, 2025* and *December 31, 2024 (*in thousands):

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | ***January 1, 2025*** | ***Year Ended December 31, 2025*** | ***Year Ended December 31, 2025*** | ***December 31, 2025*** | ***December 31, 2025*** |
|  | ***Gross Carrying Amount*** | ***Additions*** | **Impairments<sup>(2)</sup>** | ***Accumulated Amortization*** | ***Net Book Value*** |
| Trademarks<sup>(1)</sup> | $21285 | $— | $(2401) | $(16148) | $2736 |
| Non-competition agreement | 11 |  |  | (11) |  |
| Transition services agreement | 12 |  |  | (12) |  |
| Customer relationships<sup>(1)</sup> | 5700 |  | (1421) | (2660) | 1619 |
| Software | 38 |  |  | (22) | 16 |
| Other | 700 |  |  | (700) |  |
| Total intangibles<sup>(1)</sup> | $27746 | $— | $(3822) | $(19553) | $4371 |

---

(*1*) As of *December 31, 2025*, the weighted-average remaining amortization period for Trademarks and Customer Relationships was 5.25 years and 5.33 years, respectively. The weighted-average remaining amortization period for total intangibles was 5.28 years.

(*2*) In *December 2025,* the Company announced that its Board of Directors had initiated a process to explore strategic alternatives to maximize shareholder value. This announcement constituted a triggering event under ASC *350,* Intangibles—Goodwill and Other, requiring the Company to perform an interim impairment assessment of its definite-lived brand intangible assets. The Company estimated the fair value of its definite-lived brand assets using market-based inputs, including indicative valuations from market participants obtained during the strategic alternative process. Based on this assessment, the Company determined that the carrying value of certain brand intangible assets exceeded their estimated fair value. Accordingly, the Company recorded a non-cash impairment charge of approximately $3.8 million during the *fourth* quarter of *2025.* The impairment charge is included within impairment loss on intangibles on the Consolidated Statement of Operations.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **January 1, 2024** | **Year-Ended December 31, 2024** | **Year-Ended December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Gross Carrying Amount** | **Additions** | **Impairments** | **Accumulated Amortization** | **Net Book Value** |
| Trademarks | $21285 |  | $— | $(15166) | $6119 |
| Non-competition agreement | 11 |  |  | (11) |  |
| Transition services agreement | 12 |  |  | (12) |  |
| Customer relationships | 5700 |  |  | (2090) | 3610 |
| Software |  | 38 |  | (10) | 28 |
| Other | 700 |  |  | (700) |  |
| Total intangibles | $27708 | $38 | $— | $(17989) | $9757 |

---

The Company's intangible assets are amortized on a straight-line basis over their estimated useful lives, which are 5 to 15 years for trademarks, 3 to 5 years for non-competition agreements, the term of the contract for transition services agreements, 5 to 15 years for customer relationships, and 3 to 5 years for software.

The Company recognized $1.6 million in intangibles amortization expense during the year ended *December 31, 2025* and *December 31, 2024.*

The following table sets forth the estimated aggregate amortization of our in-place intangible assets and favorable intangible assets for the next *five* years and thereafter (amounts in thousands):

---

| | |
|:---|:---|
| 2026 | $839 |
| 2027 | 829 |
| 2028 | 826 |
| 2029 | 826 |
| 2030 | 814 |
| Thereafter | 237 |
| Total | $4371 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *24*

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***17.*** **RESTRUCTURING**

On *May 14, 2025,* the Company announced a fixed cost reduction plan, which included a workforce reduction affecting approximately 20 employees. The Company has substantially completed this reduction as of the year ended *December 31, 2025.* In connection with this plan, the Company recognized restructuring charges of approximately $1.9 million, of which $1.1 million is recorded in Sales and Distribution expenses and $0.8 million is recorded in General and Administrative expenses, primarily related to severance, during the year ended *December 31, 2025.* Severance payments are expected to be made through the *second* quarter of *2026.*

On *February 8, 2024,* the Company committed to a fixed cost-cutting plan, including a reduction in workforce which resulted in the termination of approximately 17 employees and 26 contractors globally. The Company incurred $0.6 million of restructuring charges during the year ended *December 31, 2024.* The accounting for the restructuring costs follows the provisions of ASC *420,* "Accounting for Costs Associated with Exit or Disposal Activities," which requires the recognition of a liability once the restructuring plan is communicated to affected employees and meets the criteria of being probable and reasonably estimable. The Company recognizes a liability for employee severance, other benefits, and involuntary terminations on the communication date.

The following table provides a summary of the restructuring costs incurred:

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
|  | *(in thousands)* | *(in thousands)* |
| Employee severance | $1906 | $674 |
| Other restructuring costs<sup>(1)</sup> |  | (109) |
| Total restructuring costs | $1906 | $565 |

---

(*1*) Includes reversal of costs associated with a contract settlement during the year ended *December 31, 2024.*

The following table provides a summary of the Company's total restructuring reserve:

---

| | |
|:---|:---|
|  | ***Employee Severance*** |
| Balance – December 31, 2024 | $— |
| Charges | 1906 |
| Usage-cash | (1373) |
| Usage-noncash | (1) |
| Balance – December 31, 2025 | $532 |

---

As of *December 31, 2025,* the Company had a liability of $0.5 million for restructuring costs, which was included in accrued and other current liabilities on the Consolidated Balance Sheet.

As of *December 31, 2024,* the Company did not have any liability for restructuring costs.

***18.*** **Segment Information**

Aterian, Inc. is a consumer products company that predominantly operates through online retail channels such as Amazon, Walmart, and Target and its own direct to consumer websites. The Company operates its owned brands, which were either incubated or purchased, selling products in multiple categories, including home and kitchen appliances, kitchenware, air quality appliances, health and beauty products and essential oils.

The Company has determined that it has one operating segment. The Company's chief operating decision maker ("CODM") is its chief executive officer, who reviews financial information presented on a consolidated basis. The CODM uses consolidated operating margin and net income (loss) to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the determination of the rate at which the Company seeks to grow operating margin and the allocation of budget between cost of goods sold, variable sales costs, and other vendor and payroll expenses.

---

| | | |
|:---|:---|:---|
|  | ***December 31,*** | ***December 31,*** |
|  | ***2025*** | ***2024*** |
| Net revenue | $68975 | $99045 |
| Less: |  |  |
| Cost of goods sold | 29825 | 37550 |
| &nbsp;&nbsp;&nbsp; Variable sales costs <sup>(1)</sup> | 32392 | 44553 |
| &nbsp;&nbsp;&nbsp; Other vendor and payroll expenses | 17110 | 19566 |
| Depreciation and amortization | 1619 | 1689 |
| &nbsp;&nbsp;&nbsp; Impairment loss on intangibles | 3822 |  |
| Stock-based compensation expense | 2180 | 7510 |
| Other segment items<sup>(2)</sup> | 1011 | 39 |
| Net loss | $(18984) | $(11862) |

---

(*1*) Variable sales costs primarily include e-commerce platform commissions, online advertising, and selling and logistics expenses.

(*2*) Other segment items primarily include income taxes, interest expense, other (income) expense, and the change in fair value of warrant liabilities.

The CODM does *not* use total assets as a financial metric when making key operating decisions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *25*

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***19.*** **SUBSEQUENT EVENTS**

***<u>Restructuring</u>***

In *January 2026,* the Company implemented a fixed cost reduction plan that included a workforce reduction affecting approximately 16 employees and independent contractors. The Company expects to substantially complete this reduction by the end of the *first* quarter of *2026.* The Company expects to recognize restructuring charges in connection with the plan, primarily related to severance, of $0.3 million. The Company expects the charges will be recognized and paid in the *first* quarter of *2026.*

***<u>Tariffs</u>***

On *February 20, 2026,* the U.S. Supreme Court ruled in Learning Resources Inc. v. Trump that the International Emergency Economic Powers Act (IEEPA) does *not* authorize the President to impose tariffs. This ruling effectively invalidated several tariff regimes in effect during *2025* under which the Company paid significant duties. While this decision *may* entitle the Company to refunds for previously paid IEEPA tariffs, the timing and process for such refunds remain uncertain, and *no* asset has been recognized as of *December 31, 2025.*

Furthermore, on *February 24, 2026,* the U.S. government implemented a new *10%* baseline global tariff under Section *122* of the Trade Act of *1974* for a period of *150* days, unless extended by Congress. The Company is currently evaluating the impact of these new tariffs on its *2026* cost of goods sold and overall financial condition.

**<u>*Product Recall*</u>**

In *February 2026,* the Company announced a voluntary recall in coordination with the CPSC for approximately 195,000 units of our PurSteam Mighty Lil Steamers and Elite Travel Steamers due to reports of hot water expelling from the nozzle, which has resulted in reported burn injuries.

In *March 2026,* a purported class action complaint was filed against the Company in the United States District Court for the District of New Jersey (Sarah Brannon v. Aterian, Inc.) relating to the recalled products. The complaint alleges, among other things, breach of warranty, consumer protection violations, and product liability claims and seeks unspecified damages and other relief. The Company intends to vigorously defend itself in this matter. At this time, the Company is unable to reasonably estimate a potential loss or range of loss associated with this litigation.

<u>***Midcap Credit Facility Amendment***</u>

On *March 13, 2026,* the Company and its subsidiaries entered into Amendment *No. 5* to its Credit and Security Agreement with MidCap Funding IV Trust. Under the terms of the amendment, the Company's minimum liquidity covenant was reduced from $5.0 million to $3.5 million during the Minimum Liquidity Covenant Reduction Period. This reduction period commenced on the Fifth Amendment Effective Date and is subject to extension at the Company's option on a weekly basis through *May 9, 2026,* provided it remains in compliance with certain fee payment obligations.

The Company conducted a review for additional subsequent events and determined that *no* additional subsequent events had occurred through the issuance date that would require additional disclosures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F- *26*

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**Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.**

&nbsp;&nbsp;&nbsp;&nbsp; None.

**Item 9A. Controls and Procedures.**

***Evaluation of Disclosure Controls and Procedures***

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). Our principal executive officer and principal financial officer have concluded, based on their evaluation, that our disclosure controls and procedures were effective as of December 31, 2025. This Annual Report does not include an attestation report of our registered public accounting firm.

***Management Report on Internal Control over Financial Reporting***

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this Annual Report. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in "Internal Control-Integrated Framework." Based on management's assessment using the COSO criteria, management has concluded that our internal control over financial reporting was effective as of December 31, 2025.

***Changes in Internal Control over Financial Reporting***

There were no changes in our internal control over financial reporting that occurred during the year ended December 31, 2025, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

***Limitations on Effectiveness of Controls and Procedures***

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-27

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**Item *9B.* Other Information.** 

*Insider Trading Arrangements and Related Disclosure*

During the *three* months ended *December 31, 2025*, none of our directors or officers adopted or terminated a "Rule *10b5*-*1* trading arrangement" or "non-Rule *10b5*-*1* trading arrangement," as each term is defined in Item *408*(a) of Regulation S-K.

*Executive Severance & Change in Control Policy* 

On *March 21, 2025, (*the "Effective Date"), the Board of Directors of the Company adopted the Aterian, Inc. Executive Severance Plan (the "Plan") to provide Participants, as defined therein, with the opportunity to receive severance benefits in the event of certain terminations of employment. The Plan is intended to be a Top Hat welfare benefit plan under the Employee Retirement Income Security Act of *1974,* as amended ("ERISA") and is designed to attract and retain qualified executives. The Administrator of the Plan is the Board of Directors or a duly authorized committee thereof. The Administrator has the exclusive right, power and authority, in its sole and absolute discretion, to administer and interpret the Plan. The Administrator has the exclusive power to determine who is eligible to receive benefits under the Plan and to designate Participants.

The Plan specifically provides that eligibility to receive benefits under the Plan is limited to a select group of management or highly compensated employees within the meaning of Sections *201, 301,* and *404* of ERISA, each an "Eligible Employee." Eligible Employee is more specifically defined as a full time executive of the Company who is designated a Participant by the Administrator and identified on Appendix A of the Plan. Appendix A is to be updated from time to time and remain current at all times. As of the Effective Date, all of the named executive officers are designated as Participants under the Plan on Appendix A.

The Plan provides for certain severance benefits to be paid to Participants when they experience a "Qualifying Termination" or a "Change in Control Qualifying Termination" (as both terms are defined in the Plan and described below).

A Qualifying Termination means the termination of a Participant's employment either (a) by the Company other than for Cause, the Participant's death, or the Participant's Disability; or (b) by the Participant for Good Reason; in each case, other than a termination of employment that qualifies as a "Change in Control Qualifying Termination.

Similarly, a Change in Control Qualifying Termination means the termination of a Participant's employment either (a) by the Company other than for Cause, the Participant's death, or the Participant's Disability; or (b) by the Participant for Good Reason that occurred either (i) after a Change in Control and on or before the *first* anniversary thereof or (ii) at the request of a *third* party who had taken steps reasonably calculated to effect a Change in Control or in connection with or anticipation of a Change in Control.

The terms "Cause", "Good Reason," and "Change in Control" are all more specifically defined either in an in-force employment agreement entered into between the Company and the executive, or in the absence thereof, in the Plan.

In the event a Participant experiences a Qualifying Termination after the Effective Date, that Participant is entitled to severance in an amount equal to the Participant's annual base salary in effect immediately prior to the date of the Qualifying Termination ("Severance"), plus a prorated annual bonus equal to the product of (i) the Annual Target Bonus, if any, for the Participant for the entire fiscal year in which the Qualifying Termination occurs; and (ii) a fraction, the numerator of which is the number of days the Participant was employed by the Company during the fiscal year in which the Qualifying Termination occurs and the denominator of which is the number of days in such year (a "Pro-Rata Bonus").

Additionally, subject to certain terms and conditions, for the *twelve* months following the date of Qualifying Termination, the Company shall cause the Company's welfare plans to continue medical and dental benefits to the Participant and/or the Participant's family on the same terms applicable to similarly situated active employees.

In the event a Participant experiences a Change in Control Qualifying Termination, the Participant shall be entitled to receive severance in an amount equal to the Participant's base salary in effect immediately prior to the date of the Change in Control Qualifying Termination plus the Participant's Annual Target Bonus for the year in which the Change in Control Qualifying Termination occurs ("Change in Control Severance"), plus a prorated annual bonus equal to the product of (i) the Annual Target Bonus, if any, for the Participant for the entire fiscal year in which the Change in Control Qualifying Termination occurs; and (ii) a fraction, the numerator of which is the number of days the Participant was employed by the Company during the fiscal year in which the Change in Control Qualifying Termination occurs and the denominator of which is the number of days in such year (a "Change in Control Pro-Rata Bonus").

Additionally, subject to certain terms and conditions, for the *twelve* months following the date of the Change in Control Qualifying Termination, the Company shall cause the Company's welfare plans to continue medical and dental benefits to the Participant and/or the Participant's family on the same terms applicable to similarly situated active employees.

For any equity awards outstanding at the time of a Qualifying Termination, such awards shall *not* be terminated but shall continue to vest during the *twelve* month period following the Qualifying Termination. Notwithstanding the foregoing, for the Participant serving as the Company's Chief Executive Officer at the Effective Date, any outstanding equity awards shall *not* be terminated and shall immediately become fully vested upon a Qualifying Termination. If a Participant experiences a Change in Control Qualifying Termination, the Participant's outstanding unvested time-based equity awards shall become fully vested.

Payments under the Plan are designed, if applicable, to comply with Section *280G* and *4999* of Internal Revenue Code of *1986,* as amended (the "Code"). Nothing in the Plan provides for any "gross up" or similar payment for any excise taxes that *may* become payable in connection with a change in control, and payments *may* under certain circumstances be reduced in an effort to provide the Participant the best after-tax benefit. The Plan is intended to comply with Section *409A* of the Code or an exemption thereunder and shall be construed and administered accordingly. Notwithstanding any other provision of the Plan, payments provided under the Plan *may* only be made upon an event and in a manner that complies with Section *409A* of the Code or an applicable exemption. Lastly, amounts payable under the Plan are also subject to any policy established by the Company at any time, providing for clawback or recovery of amounts that were paid to the Participant. All benefits provided under the Plan are further conditioned on the Participant executing customary releases of liability and restrictive covenants in favor of the Company.

The foregoing is only a summary of the Plan and is qualified in its entirety by reference to the full and complete terms of the Plan, a copy of which is attached to this Annual Report on Form *10*-K as Exhibit *10.30* and is incorporated herein by reference.

**Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.** 

Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-28

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**PART III**

**Item 10. Directors, Executive Officers and Corporate Governance.** 

The following table provides information regarding our executive officers and directors as of *December 31, 2025*:

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position(s)** |
| *Executive Officers*: |  |  |
| Arturo Rodriguez | *50* | Chief Executive Officer |
| Joshua Feldman | *48* | Chief Financial Officer |
| *Non-Employee Directors*: |  |  |
| Bari A. Harlam | *64* | Director |
| William Kurtz | *68* | Director |
| Susan Lattmann | *58* | Director |

---

There are *no* family relationships among any of the directors or executive officers.

***Executive Officers***

***Arturo Rodriguez*** has served as our Chief Executive Officer since *June 2024.* Mr. Rodriguez also served as our Co-CEO from *July 2023* until *June 2024* and our Chief Financial Officer from *March 2021* until *June 2024.* Prior to that, he served as our Senior Vice President of Finance since *September 2017.* Prior to joining the Company, Mr. Rodriguez served as Chief Accounting Officer and Global Controller for Piksel, Inc. from *July 2012* to *September 2017* and also held the role of Interim Chief Operating Officer in *2017.* From *2000* to *2011,* Mr. Rodriguez held several financial leadership roles with the Atari Group, most notably Acting Chief Financial Officer of Atari, Inc. (Nasdaq: ATAR) from *2007* to *2008,* and Deputy CFO of Atari SA (Euronext: ATA) from *2008* to *2010.* Mr. Rodriguez started his career at Arthur Andersen LLP in *1997* and is a Certified Public Accountant in the State of New York. Mr. Rodriguez holds a Bachelor of Business Administration – Accounting from Hofstra University.

***Joshua Feldman*** has served as our Chief Financial Officer since *June 2024* and our Senior Vice President of Finance since *May 2022.* Prior to joining the Company, Mr. Feldman was the Head of Finance for Olivela Inc., a luxury goods e-commerce company, from *February 2021* to *May 2022.* Previously, he served as Vice President of Financial Operations for Hugo Boss North America from *January 2018* to *October 2020.* From *2007* to *2018,* Mr. Feldman held several senior finance roles at Saks Fifth Avenue and Hudson's Bay Company. Prior to joining Saks Fifth Avenue, Mr. Feldman was an Assurance Manager at KPMG. Mr. Feldman is a Certified Public Accountant in New York.

***Non-Employee Directors***

***Bari A. Harlam*** has served as a director since *February 2020,* and is a business leader, marketer, educator, and author. In *February 2020,* she co-founded Trouble LLC, a pro-social, experience brand. Ms. Harlam has served on the Boards of Directors of Eastern Bank since *February 2014,* OneWater Marine Inc. (Nasdaq: ONEW) since *May 2020,* Mattress Warehouse since *February 2023,* and Rite Aid (NYSE: RAD) from *September 2020* through *August 2024.Ms.* Harlam currently serves as the chair of the Compensation Committee for OneWater Marine Inc., as the chair of the Trust, and a member of the Nominating & Governance, Innovation, and Charitable Foundation Committees of Eastern Bank, and a member of the Nominating & Governance Committee of Rite Aid until the end of her tenure in *August 2024.* From *April 2018* to *March 2020,* she served as EVP, Chief Marketing Officer North America at Hudson's Bay Company (TSX: HBC). Prior to her time at Hudson's Bay Company, she was EVP, Membership, Marketing & Analytics at BJ's Wholesale Club (NYSE: BJ) from *July 2012* to *December 2016.* Before joining BJ's Wholesale Club, she served as Chief Marketing Officer at Swipely, now called Upserve, from *August 2011* to *July 2012,* and prior to that, she served as SVP, Marketing at CVS Health (NYSE: CVS) from *2000* to *August 2011.* Early in her career, she was a Professor at Columbia University from *July 1989* to *July 1992* and The University of Rhode Island from *July 1992* to *July 2000.* In addition, she was an Adjunct Professor at The Wharton School at The University of Pennsylvania from *January 2015* to *May 2018.* She received a Bachelor of Science, a Master of Science, and a Ph.D. in Marketing from the University of Pennsylvania, The Wharton School. We believe Ms. Harlam is qualified to serve as a member of our Board due to her experience in the consumer packaged goods and retail industries as well as her expertise in marketing.

***William Kurtz*** has served as a director since *August 2019.* Mr. Kurtz is a senior financial and operations executive with over *30* years of experience operating as chief financial officer or chief operating officer at several private and public technology companies on the East Coast and in Silicon Valley. From *2016* to *Nov 2025,* he has served as a member of the board of directors of Verint Systems Inc., a customer experience software SaaS company, and served as its lead independent director from *July 2024* to *November 2025,* and as a member of the Audit Committee and the Nominating & Governance Committee from *Oct 2016* to *November 2025.* Since *May 2023,* he has served as a member of the board of directors of Sportradar Group, AG, a data analytics and content provider to sports betting operators, and he currently serves as the chairman of the Audit Committee. Mr. Kurtz has served as the interim Chief Financial Officer of LightForce Orthodontics Inc since *October 2024* and has served as a member of the board of directors of LightForce Orthodontics Inc since *January 2024* and is chairman of its Audit Committee. Mr. Kurtz has served as the Chief Financial and Commercial Officer for Ripcord, Inc., since *January 2021* and as its Chief Commercial Officer since *April 2021,* and served as its interim Chief Executive Officer from *June 2021* through *January 2022* while the company conducted a search for a chief executive officer. He is also a member of the Board of Ripcord Inc. Mr. Kurtz also served as a Strategic Advisor for Bloom Energy Corporation, a manufacturer of on-site power generation platforms, from *January 2019* to *January 2021* and previously served as its Chief Commercial Officer (from *May 2015* to *December 2018)* and Chief Commercial & Financial Officer (from *March 2008* to *May 2015).* Mr. Kurtz has also held several CFO or other senior finance and operations roles at a variety of organizations, including Novellus Systems, Inc. (from *September 2005* to *February 2008),* Engenio Information Technologies, Inc. (from *March 2004* to *August 2005), 3PARdata,* Inc. (from *July 2001* to *February 2004),* Scient Corporation (from *August 1998* to *June 2001),* AT&T Corporation (from *July 1983* to *July 1998)* and Price Waterhouse & Co./Brout & Company (from *June 1979* to *July 1983).* Mr. Kurtz also served as a member of the board of directors and chair of the audit committee of Violin Memory Inc. (from *November 2014* to *February 2017),* PMC-Sierra, Inc. (from *April 2003* to *January 2016),* AuraSound, Inc. (from *August 2010* to *April 2012),* ONStor, Inc. (from *January 2008* to *July 2009)* and Redback Networks Inc. (from *October 1999* to *January 2007).* Mr. Kurtz holds a Bachelor of Science in Commerce from Rider University and a Master of Science in Management Sciences from Stanford University. We believe Mr. Kurtz is qualified to serve as a member of our Board due to his experience as chief financial officer and chief operating officer and his experience in private and public technology companies.

***Susan Lattmann*** has served as a director since *February 2022.* She currently serves on the Boards of Superior Group of Companies (Nasdaq: SGC) since *February 2024* and Farmer Focus, a privately held organic poultry company, since *November 2021.* At SGC, she is a member of the Nominating and Governance, Compensation, and Audit Committees, and she serves as Chair of the Audit Committee at Farmer Focus. Ms. Lattmann previously served on the Board of Landsea Homes Corporation (Nasdaq: LSEA) from *January 2022* to *June 2023* and again from *January 2025* through *July 2025,* where she was Co-Chair of the Compensation Committee. Since *July 2021,* Ms. Lattmann has been the Chief Financial Officer of The Row, an international luxury apparel retailer. From *1996* to *2019,* she held senior leadership roles at Bed Bath & Beyond Inc., including Chief Financial Officer and Chief Administrative Officer. She began her career with Arthur Andersen LLP. Ms. Lattmann holds a Bachelor of Science degree with honors from Bucknell University and is a Certified Public Accountant. We believe she is qualified to serve on our Board due to her extensive financial acumen and leadership experience across both public and private companies.

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**Legal Proceedings with Directors or Executive Officers**

There are *no* legal proceedings related to any of our directors or executive officers that require disclosure pursuant to Items *103* or *401*(f) of Regulation S-K.

**Code of Conduct and Ethics**

Our Board has adopted a Code of Conduct and Ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer and other employees. We have posted the Code of Conduct and Ethics on our website at https://ir.aterian.io/corporate-governance/governance-highlights under "Governance Documents". The Code of Conduct and Ethics can only be amended by the approval of our audit committee of the Board (the "Audit Committee") and any waiver to the Code of Conduct and Ethics for an executive officer or director *may* only be granted by the Audit Committee and must be timely disclosed as required by applicable law. We expect that any amendments to the Code of Conduct and Ethics, or any waivers of its requirements, will be disclosed on our website.

**Stock Ownership Guidelines**

The Board of Directors believes that it is in the best interests of the Company and its shareholders that directors and executive officers have a meaningful proprietary stake in the Company so that their interests are aligned with the interests of shareholders. Accordingly, the Compensation Committee of the Board has adopted Stock Ownership Guidelines applicable to our non-employee directors and our Section *16* executive officers (the "Participants").

Under our Stock Ownership Guidelines, the Participants are expected to hold stock in accordance with the below table:

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| | |
|:---|:---|
| Chief Executive Officer | Three times the individual's annual base salary |
| Board Members | Two times the individual's annual cash retainer (*not* including any chair, lead independent director, committee or committee chair service retainers)  |
| Other Officers | Two times the individual's annual base salary |

---

Under our Stock Ownership Guidelines, the Participants are required to achieve the applicable stock ownership level within *five* years of *first* becoming subject to the Stock Ownership Guidelines. If an individual becomes subject to a greater ownership amount due to promotion or an increase in base salary, such individual is expected to meet the higher ownership amount within *five* years from the effective date of such promotion or increase in base salary.

**Audit Committee**

We have a separately designated standing Audit Committee established in accordance with Section *3*(a)(*58*)(A) of the Exchange Act. Our Audit Committee is comprised of Mr. Kurtz, Ms. Lattmann and Ms. Harlam. Ms. Lattmann serves as Chairperson of the committee. Each member of the Audit Committee must be independent as defined under the applicable rules and listings standards of The Nasdaq Stock Market LLC (the "Nasdaq Rules") and SEC rules and financially literate under the Nasdaq Rules. Our Board has determined that each member of the Audit Committee is "independent" and "financially literate" under the Nasdaq Rules and the SEC rules and that Ms. Lattmann is an "audit committee financial expert" under the rules of the SEC. The responsibilities of the Audit Committee are included in a written charter. The Audit Committee acts on behalf of our Board in fulfilling our Board's oversight responsibilities with respect to our accounting and financial reporting processes, the systems of internal control over financial reporting and audits of financial statements and reports, and also assists our Board in its oversight of the quality and integrity of our financial statements and reports and the qualifications, independence and performance of our independent registered public accounting firm. For this purpose, the Audit Committee performs several functions. The Audit Committee's responsibilities include, among others:

• appointing, determining the compensation of, retaining, overseeing and evaluating our independent registered public accounting firm and any other registered public accounting firm engaged for the purpose of performing other review or attest services for us;

• prior to commencement of the audit engagement, reviewing and discussing with the independent registered public accounting firm a written disclosure by the prospective independent registered public accounting firm of all relationships between us, or persons in financial oversight roles with us, and such independent registered public accounting firm or their affiliates;

• determining and approving engagements of the independent registered public accounting firm, prior to commencement of the engagement, and the scope of and plans for the audit;

• monitoring the rotation of partners of the independent registered public accounting firm on our audit engagement;

• reviewing with management and the independent registered public accounting firm any fraud that includes management or other employees who have a significant role in our internal control over financial reporting and any significant changes in internal controls;

• establishing and overseeing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters;

• reviewing the results of management's efforts to monitor compliance with our programs and policies designed to ensure compliance with laws and rules; and

• reviewing and discussing with management and the independent registered public accounting firm the results of the annual audit and the independent registered public accounting firm's assessment of the quality and acceptability of our accounting principles and practices and all other matters required to be communicated to the Audit Committee by the independent registered public accounting firm under generally accepted accounting standards, the results of the independent registered public accounting firm's review of our quarterly financial information prior to public disclosure and our disclosures in our periodic reports filed with the SEC.

The Audit Committee reviews, discusses and assesses its own performance and composition at least annually. The Audit Committee also periodically reviews and assesses the adequacy of its charter, including its role and responsibilities as outlined in its charter, and recommends any proposed changes to our Board for its consideration and approval.

Typically, the Audit Committee meets at least quarterly and with greater frequency if necessary. Our Board has adopted a written charter of the Audit Committee that is available to stockholders on our internet website at https://ir.aterian.io/corporate-governance/governance-highlights under "Governance Charters".

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**Director Nominations**

*No* material changes have been made to the procedures by which security holders *may* recommend nominees to our Board from those that were described in our Definitive Proxy Statement for our *2025* Annual Meeting of Stockholders that was filed with the SEC on *June 25, 2025.*

**Insider Trading Arrangements and Policies**

The Company has adopted an Insider Trading Policy governing the purchase, sale, and other dispositions of its securities by its directors, officers, and employees. We believe this policy is reasonably designed to promote compliance with insider trading laws, rules, and regulations, as well as the standards of the Nasdaq Stock Exchange. A copy of the policy is attached hereto as Exhibit *19.1.* Additionally, it is our policy to comply with applicable securities laws when engaging in transactions involving our own securities.

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**Item 11. Executive Compensation.** 

The following overview describes the material elements of compensation for the following individuals who served as our named executive officers for the year that ended on *December 31, 2025* ("Named Executive Officer"), which consists of our Chief Executive Officer, up to *two* other most highly compensated executive officers who were serving as executive officers as of *December 31, 2025*, and up to *two* additional individuals who would have been most highly compensated executive officers but for the fact that such individual was *not* serving as an executive officer as of *December 31, 2025* are:

• Arturo Rodriguez, our Chief Executive Officer;

• Joshua Feldman, our Chief Financial Officer; and

• Roi Zahut, our Former Chief Technology Officer

**Summary Compensation Table**

The following table sets forth certain information with respect to the compensation paid to our Named Executive Officers for the fiscal years-ended *December 31, 2025* and *2024:*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | **Salary/Fees** | **Bonus** | **Stock Awards** | **All Other Compensation** | **Total** |
| <u>**Name and principal position**</u> | <u>**Year**</u> | **$** | **$** | **$<sup>(*1*)</sup>** | **$** | **$** |
| Arturo Rodriguez | *2025* | *378778* |  | *405417* | *759* | *784954* |
| *Chief Executive Officer*  | *2024* | *342916* | *264308* | *774400* | *759* | *1382383* |
| Joshua Feldman | *2025* | *310018* |  | *193056* | *23905* | *526979* |
| *Chief Financial Officer* | *2024* | *296124* | *151733* | *271895* | *21443* | *741195* |
| Roi Zahut <sup>(*2*)</sup> | *2025* | *259508* |  | *125486* | *3291* | *388285* |
| *Former Chief Technology Officer* | *2024* |  |  |  |  |  |

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(*1*) The amounts in this column represent the aggregate grant date fair value of the restricted stock awards computed in accordance with Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") Topic *718.* Assumptions used in the calculation of these amounts are included in Note *11* to our Consolidated Financial Statements included in this Annual Report on Form *10*-K. These amounts do *not* reflect the actual economic value that will be realized by the Named Executive Officer upon the vesting of the restricted stock awards or the sale of the common stock underlying such restricted stock awards.

(*2*) On *October 30, 2025,* Roi Zahut resigned as Chief Technology Officer of the Company, effective as of *November 3, 2025.*

**Narrative Disclosure to Summary Compensation Table**

***Employment and Severance Agreements***

***Arturo Rodriguez*** —We entered into an offer letter with Mr. Rodriguez, dated *September 18, 2017.* Pursuant to the offer letter, Mr. Rodriguez's base salary was initially *$250,000* per year. During his employment, Mr. Rodriguez has received various base salary adjustments and his salary at the beginning of *2025* was *$360,000* annually. Effective *April 1, 2025,* Mr. Rodriguez received an increase in base salary to *$385,000.*

***Joshua Feldman*** —We entered into an offer letter with Mr. Feldman, dated *March 30, 2022.* Pursuant to the offer letter, Mr. Feldman's base salary was initially *$270,000* per year. During his employment, Mr. Feldman has received various base salary adjustments and his salary at the beginning of *2025* was *$310,000* annually.

***Roi Zahut*** —We entered into an offer letter with Mr. Zahut, dated *January 14, 2019.* Pursuant to the offer letter, Mr. Zahut's base salary was initially *$225,000* per year. During his employment, Mr. Zahut received various base salary adjustments and his salary at the beginning of *2025* was *$310,000* annually.

***Base Salaries/Compensation***

Our salaries recognize the experience, skills, knowledge, and responsibilities required of all employees, including our Named Executive Officers. Base salaries and base compensation are reviewed annually, typically in connection with our annual performance review process, and adjusted from time to time to realign salaries and compensation with market levels after taking into account individual responsibilities, performance and experience.

***Equity Compensation***

Although we do *not* have a formal policy with respect to the grant of equity incentive awards to our executive officers, we believe that equity grants provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives and our stockholders. In addition, we believe that equity grants with a time-based vesting feature promote executive retention because this feature incentivizes our executive officers to remain in our employment during the vesting period. Accordingly, our Board periodically reviews the equity incentive compensation of our Named Executive Officers and from time to time *may* grant equity incentive awards to them.

On *June 11, 2025,* we granted *291,667* restricted shares to Mr. Rodriguez, *138,889* restricted shares to Mr. Feldman, and *90,278* restricted shares to Mr. Zahut pursuant to the Aterian, Inc. *2018* Equity Incentive Plan (the *"2018* Plan"). One-*third* of the restricted shares shall vest on *June 11, 2026,* and *1/12th* of the restricted shares shall vest each quarterly period thereafter, as described in more detail in the "Outstanding Equity Awards at *December 31, 2025"* table below. All *90,278* shares granted to Mr. Zahut were forfeited on *November 3, 2025* when he resigned from the Company.

On *June 11, 2025,* in settlement of the executive's *2024* performance bonus, we granted *190,150* restricted shares to Mr. Rodriguez pursuant to the Aterian, Inc. *2018* Equity Incentive Plan (the *"2018* Plan"). All *190,150* of the restricted shares vested on *March 11, 2026,* as described in more detail in the "Outstanding Equity Awards at *December 31, 2025"* table below.

On *June 11, 2025,* in settlement of the executive's *2024* performance bonus, we granted *109,160* restricted shares to Mr. Feldman pursuant to the Aterian, Inc. *2018* Equity Incentive Plan (the *"2018* Plan"). All *109,160* of the restricted shares vested on *December 11, 2025.*

On *June 11, 2025,* in settlement of the executive's *2024* performance bonus, we granted *109,160* restricted shares to Mr. Zahut pursuant to the Aterian, Inc. *2018* Equity Incentive Plan (the *"2018* Plan"). All *109,160* of the restricted shares vested on *December 11, 2025,* pursuant to Mr. Zahut's separation agreement .

**Perquisites, Health, Welfare and Retirement Plans and Benefits**

We provide healthcare coverage to our employees. In addition, we have adopted a *401*(k) plan for eligible employees. However, we do *not* currently match any portion of the contributions made by our employees to the *401*(k) plan.

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**Outstanding Equity Awards at *December 31, 2025***

The following table presents certain information concerning outstanding equity awards held by each of the Named Executive Officers at *December 31, 2025*:

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | **Option awards** | **Option awards** | **Option awards** | **Option awards** | **Stock awards** | **Stock awards** |
| **Name** | **Grant date** | **Number of securities underlying unexercised options (#) exercisable** | **Number of securities underlying unexercised options (#) unexercisable** | **Option exercise price per share ($)** | **Option expiration date** | **Number of shares or units of stock that have *not* vested (#)** | **Market value of shares or units of stock that have *not* vested <sup>(*1*)</sup> ($)** |
| Arturo Rodriguez | *9/15/2018* | *1895* |  | *81.48* | *9/15/2028* |  |  |
|  | *12/28/2018* | *8547* |  | *116.64* | *12/28/2028* |  |  |
|  | *6/12/2023* |  |  |  |  | *12840* | $*8937* |
|  | *9/13/2023* |  |  |  |  | *19708* | $*13717* |
|  | *4/26/2024* |  |  |  |  | *88000* | $*61248* |
|  | *6/26/2024* |  |  |  |  | *88000* | $*61248* |
|  | *6/11/2025* |  |  |  |  | *291667* | $*203000* |
|  | *6/11/2025* |  |  |  |  | *190150* | $*132344* |
| Joshua Feldman | *6/12/2023* |  |  |  |  | *3126* | $*2176* |
|  | *10/16/2023* |  |  |  |  | *3488* | $*2428* |
|  | *5/6/2024* |  |  |  |  | *20834* | $*14500* |
|  | *6/26/2024* |  |  |  |  | *30667* | $*21344* |
|  | *6/11/2025* |  |  |  |  | *138889* | $*96667* |
| Roi Zahut <sup>(*2*)</sup> | *6/12/2023* |  |  |  |  |  |  |
|  | *4/26/2024* |  |  |  |  |  |  |
|  | *6/11/2025* |  |  |  |  |  |  |

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(*1*) Represents the market value of the unvested shares underlying the restricted stock awards as of *December 31, 2025*, based on the closing price of our common stock on such date, as reported on the Nasdaq Capital Market, which was *$0.70* per share. These amounts do *not* reflect the actual economic value that will be realized by the Named Executive Officer upon the vesting of the restricted stock awards or the sale of the common stock underlying such restricted stock awards.

(*2*) On *October 30, 2025,* Roi Zahut resigned as Chief Technology Officer of the Company, effective as of *November 3, 2025.*

**Non-Employee Director Compensation**

Effective *August 1, 2021,* our compensation committee of the Board (the "Compensation Committee") approved a formal non-employee director compensation policy, which was amended on *August 16, 2024.* Pursuant to such policy, our non-employee directors were paid the amounts in the table below for the year ended *December 31, 2025*. As revised on *August 16, 2024,* non-employee director compensation (prorated for service for a partial year), which, at each director's election was payable *one*-*third* in cash and *two*-thirds in shares of restricted common stock, was as follows: (i) *$150,000* per year to each director; (ii) *$55,000* per year to the chairperson of the Board; (iii) *$20,000* per year to the chairperson of the Audit Committee; (iv) *$15,000* per year to the chairperson of the Compensation Committee ; (v) *$10,000* per year to other members of the Audit Committee; and (vi) *$7,500* to other members of the Compensation Committee.

On *August 16, 2024,* Mr. William Kurtz and the Company entered into an Advisor Agreement effective *August 1, 2024 (*the "Advisor Agreement"), pursuant to which Mr. Kurtz acts as an advisor to senior management of the Company. The initial term of the Advisor Agreement was for *six* months and, subject to the agreement of the Company and Mr. Kurtz, *may* be extended for an additional *six*-month period. Mr. Kurtz is paid *$8,750* per month for his services pursuant to the Advisor Agreement. Upon expiration of the initial term, the Advisor Agreement was extended on a month-to-month basis.

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The following table sets forth summary information concerning compensation paid or accrued to the members of our Board for services rendered to us for the fiscal year ended *December 31, 2025*:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Fees Earned or Paid in Cash** | **Option Awards** | **Stock Awards** | **All Other Compensation** | **Total** |
| **Name<sup>(*1*)</sup>** | **$** | **$** | **$<sup>(*2*)</sup>** | **$** | **$** |
| William H. Kurtz | $*227500* |  | $*99884* |  | $*327384* |
| Bari A. Harlam <sup>(*4*)</sup> | $*73859* |  | $*99884* |  | $*173743* |
| Sarah Liebel<sup>(*3*)</sup> | $*37011* |  | $— |  | $*37011* |
| Susan Lattmann | $*77500* |  | $*99884* |  | $*177384* |

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(*1*) Arturo Rodriguez, our Chief Executive Officer did *not* receive compensation for services as a director as he was an employee of the Company while serving on the Board. Mr. Rodriguez's compensation is included in the section entitled "Summary Compensation Table" of this Annual Report on Form *10*-K above.

(*2*) The amounts in this column represent the aggregate grant date fair value of the restricted stock awards computed in accordance with FASB ASC Topic *718.* Assumptions used in the calculation of these amounts are included in Note *11* to our Consolidated Financial Statements included in this Annual Report on Form *10*-K. These amounts do *not* reflect the actual economic value that will be realized by the director upon the vesting of the restricted stock awards or the sale of the common stock underlying such restricted stock awards. As of *December 31, 2025*, our non-employee directors held the following number of shares of restricted common stock: Ms. Harlam *137,260* shares; Ms. Lattmann *136,910* shares; and Mr. Kurtz *115,528* shares. 

(*3*) On *June 24, 2025,* Sarah Liebel notified the Board of Directors of her intent to *not* stand for reelection at the Company's *2025* Annual Meeting of Stockholders and to retire from the Board effective as of the conclusion of the Annual Meeting on *August 12, 2025.*

(*4*) Director fees for Ms. Harlam include an excess payment of approximately *$3* thousand, which the Company will offset against her scheduled compensation for the *second* quarter of *2026.*

***Compensation Committee Interlocks and Insider Participation***

Our Compensation Committee consists of *three* directors, each of whom is a non-employee director: Ms. Harlam, Mr. Kurtz and Ms. Lattmann with Ms. Harlam serving as the Chairperson of the Compensation Committee. During *2025, none* of the foregoing were an officer or employee of ours, was formerly an officer of ours or had any relationship requiring disclosure by us under Item *404* of Regulation S-K. *No* interlocking relationship as described in Item *407*(e)(*4*) of Regulation S-K exists between any of our executive officers or Compensation Committee members, on the *one* hand, and the executive officers or compensation committee members of any other entity, on the other hand, nor has any such interlocking relationship existed in the past.

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**Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.** 

**Securities Authorized for Issuance under Equity Compensation Plans**

The following table sets forth additional information as of December 31, 2025 with respect to the shares of common stock that may be issued upon the exercise of options and other rights under our existing equity compensation plans and arrangements in effect as of December 31, 2025. The information includes the number of shares covered by, and the weighted average exercise price of, outstanding options and the number of shares remaining available for future grant, excluding the shares to be issued upon exercise of outstanding options.

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| | | | |
|:---|:---|:---|:---|
|  | **Number of securities to be issued upon exercise of outstanding options, warrants and rights(a)** | **Weighted-average exercise price of outstanding options, warrants and rights(b)<sup>(1)</sup>** | **Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column(a)(c)(2)** |
| Equity compensation plans approved by security holders<sup>(3)(4)</sup> | 10633 | $117.19 | 828316 |
| Equity compensation plans not approved by security holders<sup>(5)</sup> | 2418 | $76.32 | 193476 |
| Total | 13051 | $109.62 | 1021792 |

---

(1) Consists of the weighted average exercise price of outstanding options as of December 31, 2025.

(2) Consists entirely of shares of common stock that remain available for future issuance under the 2018 Plan as of December 31, 2025.

(3) Consists of options outstanding as of December 31, 2025 under the 2018 Plan.

(4) The number of shares of our common stock available for issuance under the 2018 Plan will automatically increase on January 1st of each year, for a period of not more than nine years, beginning January 1, 2020 and ending on (and including) January 1, 2028 by the lesser of (i) 15% of the shares deemed outstanding as of the preceding December 31, minus the number of shares in the share reserve (which for this purpose includes shares issued and issuable pursuant to the Aterian Group, Inc. Amended and Restated 2014 Equity Incentive Plan (the "2014 Plan") as of immediately prior to the increase, or (ii) such number of shares as determined by our Board.

(5) Consists of options outstanding as of December 31, 2025 under the 2014 Plan and securities remaining available for future issuance for the Inducement Equity Incentive Plan.

**Security Ownership of Certain Beneficial Owners and Management**

The following table sets forth information as of March 12, 2026, with respect to the beneficial ownership of shares of our common stock by:

• each of our directors;

• each of the Named Executive Officers;

• all of our current directors and executive officers as a group; and

• each person, or group of affiliated persons, known to us to be the beneficial owner of more than five percent of our common stock.

This table is based upon information supplied by officers, directors and principal stockholders and a review of Section 16 filings and/or Schedules 13D and 13G, if any, filed with the SEC. Other than as set forth below, we are not aware of any beneficial owner of more than five percent of our common stock as of March 12, 2026. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.

We have determined beneficial ownership in accordance with the rules of the SEC. We have deemed shares of our common stock subject to warrants and options that are currently exercisable or exercisable within 60 days of March 12, 2026 to be outstanding and to be beneficially owned by the person holding the option for the purpose of computing the percentage ownership of that person but have not treated them as outstanding for the purpose of computing the percentage ownership of any other person. Percentage ownership of our common stock is based on 10,823,802 shares of our common stock outstanding as of March 12, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-35

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Unless otherwise noted below, the address of each beneficial owner listed in the table is c/o Aterian, Inc., 350 Springfield Avenue, Suite 200, Summit, NJ 07901.

---

| | | | |
|:---|:---|:---|:---|
|  | **Beneficial Ownership of Common Stock** | **Beneficial Ownership of Common Stock** | **Beneficial Ownership of Common Stock** |
|  | **Number of Shares** |  | **%<sup>(1)</sup>** |
| **Greater than 5% Stockholders:** |  |  |  |
| Armistice Capital Master Fund Ltd. | 1173359 | (2) | 9.8% |
| **Named Executive Officers and Directors:** |  |  |  |
| Arturo Rodriguez | 1022780 | (3) | 9.4% |
| Joshua Feldman | 497442 | (4) | 4.6% |
| William Kurtz | 155922 | (5) | 1.4% |
| Bari A. Harlam | 161991 | (6) | 1.5% |
| Susan Lattmann | 162465 | (7) | 1.5% |
| All current executive officers and directors as a group (5 persons) | 2000601 | (8) | 18.4% |

---

(1) For each person and group included in this table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group by the sum of the number of shares of common stock outstanding as of March 12, 2026, plus the number of shares of common stock that such person or group had the right to acquire within 60 days after March 12, 2026.

(2) Comprises 1,173,359 warrants that are exercisable within 60 days after March 12, 2026. The securities are directly held by Armistice Capital Master Fund Ltd. (the "Master Fund"), a Cayman Islands exempted company, and may be deemed to be indirectly beneficially owned by (i) Armistice Capital, LLC ("Armistice"), as the investment manager of the Master Fund; and (ii) Steven Boyd, as the Managing Member of Armistice Capital. Armistice and Steven Boyd disclaim beneficial ownership of the reported securities except to the extent of their respective pecuniary interest therein. The address of Armistice Capital Master Fund Ltd. is c/o Armistice Capital, LLC, 510 Madison Avenue, 7th Floor, New York, NY 10022.

(3) Mr. Rodriguez's holdings consist of (i) 503,254 shares of common stock held directly, (ii) 10,442 shares of common stock issuable pursuant to stock options that are exercisable within 60 days after March 12, 2026, (iii) 507,894 shares of restricted common stock that are subject to vesting, and (iv) 1,190 of warrants that are exercisable within 60 days after March 12, 2026. The shares of restricted common stock have voting rights irrespective of any vesting requirements.

(4) Mr. Feldman's holdings consist of (i) 222,759 shares of common stock held directly, and (ii) 274,683 shares of restricted common stock that are subject to vesting. The shares of restricted common stock have voting rights irrespective of any vesting requirements.

(5) Mr. Kurtz's holdings consist of (i) 97,397 shares of common stock held directly, and (ii) 58,525 shares of restricted common stock that are subject to vesting. The shares of restricted common stock have voting rights irrespective of any vesting requirements.

(6) Ms. Harlam's holdings consist of (i) 103,466 shares of common stock held directly, and (ii) 58,525 shares of restricted common stock that are subject to vesting. The shares of restricted common stock have voting rights irrespective of any vesting requirements.

(7) Ms. Lattmann's holdings consist of (i) 103,940 shares of common stock held directly, and (ii) 58,525 shares of restricted common stock that are subject to vesting. The shares of restricted common stock have voting rights irrespective of any vesting requirements.

(8) Comprised of shares included under "Named Executive Officers and Directors".

**Changes in Control** 

The Company is not aware of any arrangements, including by pledge by any person of securities of the Company, of any operation which may at a subsequent date result in a change in control of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-36

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**Item 13. Certain Relationships and Related Transactions, and Director Independence.** 

**Related Party Transactions**

Other than the director and executive officer compensation arrangements discussed in Part II, Item 8 of this Annual Report on Form 10-K, there have not been any transactions since January 1, 2025 that need to be reported.

*Policies and Procedures for Related Party Transactions*

Our Board has adopted a written related person transaction policy, effective as of June 14, 2019, administered by the Audit Committee. This policy applies, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act of 1933, as amended (the "Securities Act"), to any transaction or series of transactions in which the Company is a participant, the amount involved exceeds the lesser of $120,000 and the average of our total assets at year-end for the last two completed fiscal years, and a related person has or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. A related person is any individual who is, or who has been at any time since the beginning of our last fiscal year, one of our directors or executive officers, or a nominee to become one of our directors, any person known to be the beneficial owner of more than 5% of any class of our voting securities or any immediate family member of any of the foregoing persons. Additionally, any firm, corporation or other entity by which any of the foregoing persons is employed or in which such person is a general partner or principal, or in a similar position, or in which such person has a 10% or greater beneficial ownership interest, will also be deemed to be a related person. Transactions involving compensation for services provided to us as an employee, consultant or director are not considered related-person transactions under this policy. As provided by our audit committee charter, our Audit Committee is responsible for reviewing and approving in advance any related party transaction.

Transactions requiring review are referred to the Audit Committee for approval, ratification or other action.

**Corporate Governance**

*Director Independence*

Under the Nasdaq Rules, a majority of the members of our Board must satisfy the Nasdaq criteria for "independence." No director qualifies as independent under the Nasdaq Rules unless our Board affirmatively determines that the director does not have a relationship with us that would impair independence (directly or as a partner, stockholder or officer of an organization that has a relationship with us). Our Board has determined that Mses. Harlam, Lattmann, and Mr. Kurtz are independent directors as defined under the Nasdaq Rules. Mr. Rodriguez is not independent under the Nasdaq Rules as a result of his position as our Chief Executive Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-37

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**Item 14. Principal Accounting Fees and Services**

On June 26, 2024, the Audit Committee of the Board of Directors of Aterian, Inc. (the "Company") approved the dismissal of Deloitte LLP ("Deloitte") as the Company's independent registered public accounting firm and engaged UHY LLP ("UHY") as the Company's independent registered public accounting firm.

The following table represents aggregate fees billed to us for the fiscal years-ended December 31, 2025 and December 31, 2024 by Deloitte and UHY, our independent registered public accounting firms for such periods, as well as CBIZ, Inc, our tax consultant. All fees described below were approved by the Audit Committee.

---

| | | |
|:---|:---|:---|
|  | **Fiscal Year Ended December 31,** | **Fiscal Year Ended December 31,** |
|  | **2025** | **2024** |
| Audit Fees<sup>(1)</sup> | $703888 | $678764 |
| Tax Fees<sup>(2)</sup> | 142821 | 48675 |
| Total Fees | $846709 | $727439 |

---

(1) Audit fees consist of actual fees for professional services performed by UHY LLP and Deloitte LLP for the audit of our 2025 and 2024 annual financial statements and the review of quarterly financial statements for 2025 and 2024. During year ended December 31, 2025, we incurred $583,606 in audit fees related to professional services performed by UHY LLP and $100,282 in audit fees related to professional services performed by Deloitte LLP. For the year ended December 31, 2024, we incurred $528,250 in audit fees related to professional services performed by UHY LLP and $90,514 in audit fees related to professional services performed by Deloitte LLP. For the year ended December 31, 2025, audit fees also include $20,000 of 2025 fees for professional services performed by UHY LLP for reviews of registration statements and issuances of consents, comfort letters and services that are normally provided in connection with regulatory filings or engagements. For the year ended December 31, 2024, audit fees also include $60,000 of 2024 fees for professional services performed by Deloitte LLP for reviews of registration statements and issuances of consents, comfort letters and services that are normally provided in connection with regulatory filings or engagements. 

(2) Consists of fees for tax compliance and consulting.

**Audit Committee**'**s Pre-Approval Policies and Procedures**

The Audit Committee has adopted a policy for the pre-approval of audit and non-audit services rendered by our independent registered public accounting firm, UHY LLP. The policy generally allows for pre-approval of specified services in the defined categories of audit services, audit-related services and tax services up to specified amounts. Pre-approval may also be given as part of the Audit Committee's approval of the scope of the engagement of the independent registered public accounting firm or on an individual case-by-case basis before the independent registered public accounting firm is engaged to provide each service. The pre-approval of services may be delegated to one or more of the Audit Committee's members, but the decision must be reported to the full Audit Committee at its next scheduled meeting. By the adoption of this policy, the Audit Committee has delegated the authority to pre-approve services to the Chairperson of the Audit Committee, subject to certain limitations.

The Audit Committee has determined that the rendering of the services other than audit services by UHY LLP is compatible with maintaining the independent registered public accounting firm's independence.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; F-38

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**PART IV**

**Item 15. Exhibits, Financial Statement Schedules.** 

***Financial Statements***

&nbsp;&nbsp;&nbsp;&nbsp; The Company's consolidated financial statements are included beginning on page F-1.

***Financial Statement Schedules***

Financial statement schedules have been omitted because they are not applicable, not required or the information required is included in the Company's consolidated financial statements or notes thereto.

***Exhibits***

The following exhibits have been filed or are being filed herewith and are numbered in accordance with Item 601 of Regulation S-K:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| **Exhibit**<br> **Number** | **Description** | **Form** | **File Number** | **Filing Date** | **Exhibit** |
| 2.1+ | [Asset Purchase Agreement, dated December 1, 2020, by and among (i) Aterian, Inc. and Truweo, LLC, as Purchaser, (ii) 9830 Macarthur LLC, Reliance Equities Group, LLC and ZN Direct LLC, as Sellers and (iii) Jelena Puzovic, as Founder.](http://www.sec.gov/Archives/edgar/data/1757715/000119312520307364/d61785dex21.htm) | 8-K | 001-38937 | 12/1/2020 | 2.1 |
| 2.2+ | [Asset Purchase Agreement, dated February 2, 2021, by and among (i) Aterian, Inc. and Truweo, LLC, as Purchaser, (ii) Healing Solutions, LLC, (iii) Jason R. Hope, and (iv) for the purposes of Section 5.11 and Article VII, Super Transcontinental Holdings LLC.](http://www.sec.gov/Archives/edgar/data/1757715/000119312521026328/d101467dex21.htm) | 8-K | 001-38937 | 2/3/2021 | 2.1 |
| 2.3+ | [Asset Purchase Agreement, dated May 5, 2021, by and among (i) the Company and Truweo, LLC, as Purchaser, (ii) Squatty Potty, LLC, and (iii) for the purposes of Section 5.7, Section 5.8, Section 5.11, Section 5.13 and Article VII, Edwards SP Holdings, LLC, Team Lindsey, LLC, SLEKT Investments, LLC, Sachs Capital Fund II, LLC, Sachs Capital-Squatty, LLC and Bevel Acquisition II, LLC.](http://www.sec.gov/Archives/edgar/data/1757715/000119312521156839/d404633dex21.htm) | 8-K | 001-38937 | 5/11/2021 | 2.1 |
| 2.4+ | [Stock Purchase Agreement, dated May 5, 2021, by and among (i) the Company and Truweo, LLC, as Purchaser, (ii) Photo Paper Direct Ltd, (iii) Josef Eitan, and (iv) Ran Nir.](http://www.sec.gov/Archives/edgar/data/1757715/000119312521156839/d404633dex22.htm) | 8-K | 001-38937 | 5/11/2021 | 2.2 |
| 3.1 | [Certificate of Correction of Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Aterian, Inc.](http://www.sec.gov/Archives/edgar/data/1757715/000119312521142247/d180974dex32.htm) | 8-K | 001-38937 | 4/30/2021 | 3.2 |
| 3.2 | [Amended and Restated Certificate of Incorporation of Aterian, Inc.](http://www.sec.gov/Archives/edgar/data/1757715/000119312521142247/d180974dex31.htm) | 8-K | 001-38937 | 4/30/2021 | 3.1 |
| 3.3 | [Third Amended and Restated Bylaws of Aterian, Inc.](http://www.sec.gov/Archives/edgar/data/1757715/000119312522165200/d339752dex31.htm) | 8-K | 001-38937 | 6/1/2022 | 3.1 |
| 4.1 | [Form of Common Stock Certificate.](http://www.sec.gov/Archives/edgar/data/1757715/000119312519157090/d639806dex41.htm) | S-1/A | 333-231381 | 5/24/2020 | 4.1 |
| 4.2+ | [Form of Registration Rights Agreement, dated as of April 6, 2018, among Aterian, Inc. and the purchasers party thereto.](http://www.sec.gov/Archives/edgar/data/1757715/000119312519144273/d639806dex42.htm) | S-1 | 333-231381 | 5/10/2019 | 4.2 |
| 4.3 | [Warrant to Purchase Stock, issued to MidCap Financial Trust on September 4, 2018.](http://www.sec.gov/Archives/edgar/data/1757715/000119312519144273/d639806dex43.htm) | S-1 | 333-231381 | 5/10/2019 | 4.3 |
| 4.4 | [Form of Warrant, issued to Katalyst Securities LLC and its assigns on September 4, 2018.](http://www.sec.gov/Archives/edgar/data/1757715/000119312519144273/d639806dex44.htm) | S-1 | 333-231381 | 5/10/2019 | 4.4 |
| 4.5 | [Form of Warrant, issued to Horizon Technology Finance Corporation on December 31, 2018.](http://www.sec.gov/Archives/edgar/data/1757715/000119312519144273/d639806dex45.htm) | S-1 | 333-231381 | 5/10/2019 | 4.5 |
| 4.6 | [Amendment No. 1 to Registration Rights Agreement, dated as of March 2, 2019, among Aterian, Inc. and the investors party thereto.](http://www.sec.gov/Archives/edgar/data/1757715/000119312519144273/d639806dex46.htm) | S-1 | 333-231381 | 5/10/2019 | 4.6 |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| **Exhibit**<br> **Number** | **Description** | **Form** | **File Number** | **Filing Date** | **Exhibit** |
| 4.7 | [Warrant to Purchase Shares of Common Stock, issued to Third Creek Advisors, LLC on August 18, 2020.](http://www.sec.gov/Archives/edgar/data/1757715/000156459020052585/mwk-ex47_108.htm) | 10-Q | 001-38937 | 11/9/2021 | 4.6 |
| 4.8 | [Form of Warrant to Purchase Stock, dated December 22, 2022.](http://www.sec.gov/Archives/edgar/data/1757715/000119312521367017/d280987dex41.htm) | 8-K | 001-38937 | 12/27/2021 | 4.1 |
| 4.9 | [Description of Securities of Aterian, Inc.](http://www.sec.gov/Archives/edgar/data/1757715/000095017023008509/ater-ex4_9.htm) | 10-K | 001-38937 | 03/16/2023 | 4.9 |
| 10.1# | [Form of Indemnification Agreement.](http://www.sec.gov/Archives/edgar/data/1757715/000119312519157090/d639806dex101.htm) | S-1/A | 333-231381 | 5/24/2019 | 10.1 |
| 10.2# | [2014 Amended and Restated Equity Incentive Plan.](http://www.sec.gov/Archives/edgar/data/1757715/000119312519144273/d639806dex102.htm) | S-1 | 333-231381 | 5/10/2019 | 10.2 |
| 10.3# | [Form of Stock Option Grant Notice and Form of Stock Option Agreement (2014 Amended and Restated Equity Incentive Plan).](http://www.sec.gov/Archives/edgar/data/1757715/000119312519144273/d639806dex103.htm) | S-1 | 333-231381 | 5/10/2019 | 10.3 |
| 10.4# | [Amended and Restated 2018 Equity Incentive Plan.](http://www.sec.gov/Archives/edgar/data/1757715/000119312519171607/d762301dex103.htm) | S-8 | 333-232087 | 5/28/2021 | 4.2 |
| 10.5# | [Form of Notice of Stock Option Grant and Form of Stock Option Award Agreement (2018 Equity Incentive Plan).](http://www.sec.gov/Archives/edgar/data/1757715/000119312519144273/d639806dex105.htm) | S-1 | 333-231381 | 5/10/2019 | 10.17 |
| 10.6# | [Form of Notice of Grant of Restricted Shares and Form of Restricted Share Award Agreement (2018 Equity Incentive Plan).](http://www.sec.gov/Archives/edgar/data/1757715/000119312519171607/d762301dex104.htm) | S-1 | 333-232087 | 5/10/2019 | 10.4 |
| 10.9 | [<u>Aterian, Inc. 2022 Inducement Equity Incentive Plan.</u>](http://www.sec.gov/Archives/edgar/data/1757715/000156459022021643/ater-ex101_19.htm) | 8-K | 001-38937 | 05/27/2022 | 10.1 |
| 10.10 | [<u>Form of Stock Option Agreement under the Aterian, Inc. 2022 Inducement Equity Incentive Plan.</u>](http://www.sec.gov/Archives/edgar/data/1757715/000156459022021688/ater-ex43_46.htm) | S-8 | 333-265298 | 05/27/2022 | 4.3 |
| 10.11 | [<u>Form of Restricted Stock Unit Agreement under the Aterian, Inc. 2022 Inducement Equity Incentive Plan.</u>](http://www.sec.gov/Archives/edgar/data/1757715/000156459022021688/ater-ex44_44.htm) | S-8 | 333-265298 | 05/27/2022 | 4.4 |
| 10.12 | [<u>Form of Restricted Stock Award Agreement under the Aterian, Inc. 2022 Inducement Equity Incentive Plan.</u>](http://www.sec.gov/Archives/edgar/data/1757715/000156459022021688/ater-ex45_48.htm) | S-8 | 333-265298 | 05/27/2022 | 4.5 |
| 10.14#+ | [Employment Agreement dated November 27, 2018, by and between Aterian Group, Inc. and Roi Zahut.](http://www.sec.gov/Archives/edgar/data/1757715/000119312519144273/d639806dex1016.htm) | S-1 | 333-231381 | 5/10/2019 | 10.16 |
| 10.15 | [Restated Voting Agreement dated March 13, 2020, by and among MV II, LLC, Maximus Yaney, Larisa Storozhenko and Aterian, Inc.](http://www.sec.gov/Archives/edgar/data/1757715/000119312519144273/d639806dex1019.htm) | S-1 | 333-231381 | 5/10/2019 | 10.19 |
| 10.16 | [Lock-Up, Voting and Standstill Agreement, dated December 1, 2020, by and between Aterian, Inc. and 9830 Macarthur LLC.](http://www.sec.gov/Archives/edgar/data/1757715/000119312520307364/d61785dex103.htm) | 8-K | 001-38937 | 12/1/2020 | 10.3 |
| 10.17+ | [Non-Negotiable Promissory Note, dated December 1, 2020, from Aterian, Inc. to 9830 Macarthur LLC.](http://www.sec.gov/Archives/edgar/data/1757715/000119312520307364/d61785dex104.htm) | 8-K | 001-38937 | 12/1/2020 | 10.4 |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| **Exhibit**<br> **Number** | **Description** | **Form** | **File Number** | **Filing Date** | **Exhibit** |
| 10.18+ | [Transition Services Agreement, dated February 2, 2021, by and between Healing Solutions, LLC and Truweo, LLC.](http://www.sec.gov/Archives/edgar/data/1757715/000119312521026328/d101467dex108.htm) | 8-K | 001-38937 | 2/3/2021 | 10.8 |
| 10.19 | [Voting and Standstill Agreement, dated May 5, 2021, by and between Aterian, Inc. and Squatty Potty, LLC.](http://www.sec.gov/Archives/edgar/data/1757715/000119312521156839/d404633dex101.htm) | 8-K | 001-38937 | 5/11/2021 | 10.1 |
| 10.20+ | [Transition Services Agreement, dated May 5, 2021, by and between Squatty Potty, LLC and Truweo, LLC.](http://www.sec.gov/Archives/edgar/data/1757715/000119312521156839/d404633dex105.htm) | 8-K | 001-38937 | 5/11/2021 | 10.5 |
| 10.21 | [Shareholder Agreement, dated May 5, 2021, by and between Aterian, Inc. and Josef Eitan.](http://www.sec.gov/Archives/edgar/data/1757715/000119312521156839/d404633dex106.htm) | 8-K | 001-38937 | 5/11/2021 | 10.6 |
| 10.22 | [Shareholder Agreement, dated May 5, 2021, by and between Aterian, Inc. and Ran Nir.](http://www.sec.gov/Archives/edgar/data/1757715/000119312521156839/d404633dex107.htm) | 8-K | 001-38937 | 5/11/2021 | 10.7 |
| 10.23 | [Amendment to Lock-Up, Voting and Standstill Agreement, dated as of May 31, 2021, by and between Aterian, Inc. and Healing Solutions LLC.](http://www.sec.gov/Archives/edgar/data/1757715/000156459021042357/ater-ex1015_89.htm) | 10-Q | 001-38937 | 8/9/2021 | 10.15 |
| 10.24 | [Amendment to Lock-Up, Voting and Standstill Agreement, dated as of May 31, 2021, by and between Aterian, Inc. and 9830 Macarthur LLC.](http://www.sec.gov/Archives/edgar/data/1757715/000156459021042357/ater-ex1016_86.htm) | 10-Q | 001-38937 | 8/9/2021 | 10.16 |
| 10.25+ | [Credit and Security Agreement, dated as December 22, 2021, by and Aterian, Inc. and its subsidiaries party thereto as "Credit Parties", the lenders party thereto from time to time and Midcap Funding IV Trust, as administrative agent](http://www.sec.gov/Archives/edgar/data/1757715/000119312521367017/d280987dex101.htm) | 8-K | 001-38937 | 12/27/2021 | 10.1 |
| 10.27# | [Amendment to Arturo Rodriguez Employment Agreement](http://www.sec.gov/Archives/edgar/data/1757715/000143774923030994/ex_592886.htm) | 10-Q | 001-38937 | 11/08/2023 | 10.2 |
| 10.29 | [Advisor Agreement, dated August 16, 2024, by and between Aterian, Inc. and William Kurtz.](http://www.sec.gov/Archives/edgar/data/1757715/000143774924027096/ex_715730.htm) | 8-K | 001-38937 | 08/16/2024 | 10.1 |
| 10.30 | [Executive Severance Plan](http://www.sec.gov/Archives/edgar/data/1757715/000143774925009139/ex_791102.htm) | 10-K | 001-38937 | 03/25/2025 | 10.30 |
| 10.31 | [Amendment No. 3 to that certain Credit and Security Agreement, dated as March 25, 2025, by and Aterian, Inc. and its subsidiaries party thereto as "Credit Parties," the lenders party thereto from time to time and Midcap Funding IV Trust, as administrative agent.](http://www.sec.gov/Archives/edgar/data/1757715/000143774925009139/ex_791883.htm) | 10-K | 001-38937 | 03/25/2025 | 10.31 |
| 10.32 | [Amendment No. 4 to that certain Credit and Security Agreement, dated as August 29, 2025, by and Aterian, Inc. and its subsidiaries party thereto as "Credit Parties," the lenders party thereto from time to time and Midcap Funding IV Trust, as administrative agent.](http://www.sec.gov/Archives/edgar/data/1757715/000143774925028059/ex_858212.htm) | 8-K | 001-38937 | 08/29/2025 | 10.1 |
| 10.33 | [Amendment No. 5 to that certain Credit and Security Agreement, dated as March 13, 2026, by and Aterian, Inc. and its subsidiaries party thereto as "Credit Parties," the lenders party thereto from time to time and Midcap Funding IV Trust, as administrative agent.](http://www.sec.gov/Archives/edgar/data/1757715/000143774926008614/ex_933149.htm) | 8-K | 001-38937 | 03/17/2026 | 10.1 |
| 19.1\* | [Insider Trading Policy](ex_865480.htm) | 10-K | 001-38937 | 03/21/2024 | 19.1 |
| 21.1\* | [List of Subsidiaries of the Registrant.](ex_865481.htm) |  |  |  |  |
| 23.2\* | [Consent of UHY LLP, Independent Registered Public Accounting Firm.](ex_865483.htm) |  |  |  |  |
| 24.1\* | [Power of Attorney (included on the signature page to this Annual Report on Form 10-K).](#poa) |  |  |  |  |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 28

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[**Table of Contents**](#toc)

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| **Exhibit**<br> **Number** | **Description** | **Form** | **File Number** | **Filing Date** | **Exhibit** |
| 31.1\* | [Certifications of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.](ex_865484.htm) |  |  |  |  |
| 31.2\* | [Certifications of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.](ex_865485.htm) |  |  |  |  |
| 32.1\*\* | [Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.](ex_865486.htm) |  |  |  |  |
| 97.1\* | [Policy Relating to Recovery of Erroneously Awarded Compensation.](ex_865487.htm) |  |  |  |  |
| 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 | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL) | Cover Page Interactive Data File (embedded within the Inline XBRL) | Cover Page Interactive Data File (embedded within the Inline XBRL) | Cover Page Interactive Data File (embedded within the Inline XBRL) | Cover Page Interactive Data File (embedded within the Inline XBRL) |

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\* Filed herewith.

\*\* Furnished herewith.

# Indicates management contract or compensatory plan or arrangement.

---

| | |
|:---|:---|
| + | Non-material schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission. |

---

**Item 16. Form 10-K Summary.** 

None.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 29

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[**Table of Contents**](#toc)

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
| **ATERIAN, INC.** | **ATERIAN, INC.** |
| By: | /s/ Arturo Rodriguez |
|  | Arturo Rodriguez |
|  | *Chief Executive Officer*  |
| Date: | March 20, 2026 |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 30

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**POWER OF ATTORNEY**

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints, jointly and severally, Arturo Rodriguez and Joshua Feldman, and each of them acting individually, as his or her attorney-in-fact, each with full power of substitution and resubstitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| /s/ Arturo Rodriguez | Chief Executive Officer and Director | March 20, 2026 |
| Arturo Rodriguez | *(Principal Executive Officer)* |  |
| /s/ Joshua Feldman | Chief Financial Officer | March 20, 2026 |
| Joshua Feldman | *(Principal Financial Officer and Principal Accounting Officer)* |  |
| /s/ William Kurtz | Director and Chairman of the Board | March 20, 2026 |
| William Kurtz |  |  |
| /s/ Susan Lattmann | Director | March 20, 2026 |
| Susan Lattmann |  |  |
| /s/ Bari Harlam | Director | March 20, 2026 |
| Bari Harlam |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 31

## Exhibit 19.1

**Exhibit 19.1**

Last amended November 2024

**ATERIAN, INC.** 

**INSIDER TRADING POLICY** 

**AND GUIDELINES WITH RESPECT TO** 

**CERTAIN TRANSACTIONS IN COMPANY SECURITIES** 

_________________

This Insider Trading Policy (this "***Policy***") provides guidelines to employees, officers and directors of **Aterian, INC.** and each of its subsidiaries, branches, representative offices and similar entities (collectively, the "***Company***") with respect to transactions in the Company's securities. The Company has adopted this Policy, and the procedures set forth herein to help prevent insider trading and to assist the Company's employees, officers and directors in complying with their obligations under the federal securities laws. Employees, officers and directors are individually responsible for understanding and complying with this Policy.

**A. APPLICABILITY OF POLICY**.

This Policy applies to all transactions in the Company's securities, including common stock, restricted stock, restricted stock units, stock appreciation rights, performance units, deferred share units, options and warrants to purchase common stock and any other debt or equity securities the Company may issue from time to time, such as bonds, preferred stock and convertible notes and debentures, as well as to derivative securities relating to the Company's securities, whether or not issued by the Company, such as exchange-traded options. This Policy applies to all directors, officers and employees (including part-time and temporary employees) of the Company and members of their immediate families who reside with them or anyone else who lives in their household, and family members who live elsewhere but whose transactions in the Company's securities are directed by them or subject to their influence and control (collectively referred to herein as "***Family Members***"). This Policy also applies to any entities controlled by individuals subject to this Policy, including any corporations, partnerships or trusts, and transactions by such entities should be treated for purposes of this Policy and applicable securities laws as if they were for the individual's own account. The Company may also determine that other persons should be subject to this Policy, such as contractors or consultants who receive or have access to Material Nonpublic Information (as defined below). Furthermore, this Policy imposes specific blackout period and pre-clearance procedures on directors, officers and certain other designated employees of the Company who receive or have access to Material Nonpublic Information and/or are subject to the reporting provisions and trading restrictions of Section 16 ("***Section 16***") of the Securities Exchange Act of 1934, as amended (the "***Exchange Act***").

The current "***Insider Trading Compliance Officer***" referred to herein is the General Counsel of the Company; *provided that*, in the General Counsel's absence or with respect to a proposed transaction in the Company's securities by the General Counsel, the Insider Trading Compliance Officer is the Chief Executive Officer of the Company.

------

**B. DEFINITION OF MATERIAL NONPUBLIC INFORMATION**.

It is not possible to define all categories of material information. However, information should be regarded as material if there is a substantial likelihood that it would be considered important to a reasonable investor in making a voting decision or an investment decision to buy, hold or sell securities. Any information that could be expected to affect the market price of the Company's securities, whether such information is positive or negative, should be considered material. Because trading that receives scrutiny will be evaluated after the fact with the benefit of hindsight, questions as to the materiality of information should be resolved in favor of materiality, and trading should be avoided. Directors, officers and certain other employees of the Company are subject to the Blackout Period provisions described in Section F.1 of this Policy.

While it may be difficult under this standard to determine whether particular information is material, there are various categories of information that are particularly sensitive and, as a general rule, should always be considered material. Examples of such information may include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Financial results and forecasts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Significant changes in financial performance outlook or liquidity of the Company as a whole or of a reporting segment of the Company's business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Projections of future earnings or losses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Changes to previously announced earnings guidance, or the decision to suspend earnings guidance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Communications with government agencies, such as the Securities and Exchange Commission (the "***SEC***");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Notice of issuance of patents or the acquisition or disposition of other material intellectual property rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• News of, or developments in, a pending or proposed merger, acquisition or tender offer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• News of, or developments in, a pending or proposed acquisition or disposition of significant assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• News of, or developments in, strategic partnerships, joint ventures, collaborations or other relationships;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Major discoveries or significant changes or developments in products or product lines, research or technologies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Important business developments, such as research results or developments regarding strategic collaborators;

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Regulatory actions, approvals or rejections or material correspondence from regulatory bodies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Impending bankruptcy or financial liquidity problems;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Defaults on borrowings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Significant expansion or curtailment of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Significant pricing changes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• New major contracts, customers, suppliers or orders, or the loss hereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Significant write-downs in assets or increases or decreases in revenues;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Stock splits and stock repurchase programs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• New equity or debt offerings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Significant cybersecurity incidents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Actual or threatened major litigation, or the resolution of such litigation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Significant related party transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A change in auditors or notification that an auditor's report may no longer be relied upon; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Changes in directors or senior management.

***"Material Nonpublic Information***" is material information about the Company that (1) has not been previously disclosed to the general public through the Dow Jones "broad tape," newswire services, a broadcast on widely-available radio or television programs, publication in a widely-available newspaper, magazine or news website, or in a document filed with the SEC that is available on the SEC's website or (2) has not been available to the general public for at least two (2) Trading Days. As used in this Policy, the term "***Trading Day***" shall mean a day on which The Nasdaq Stock Market LLC ("***Nasdaq***"), or the primary quotation system or national securities exchange on which the Company's common stock is then traded or listed, is open for trading. For purposes of this Policy, if such public disclosure occurs on a Trading Day before the markets close, then that day shall be considered the first Trading Day. If such public disclosure occurs after the markets close on a Trading Day, then the date of public disclosure shall not be considered the first trading Day following the date of public disclosure.

------

**<u>STATEMENT OF POLICY</u>** 

**C. GENERAL POLICY**.

It is the policy of the Company to prohibit the unauthorized disclosure of any nonpublic information acquired in the workplace, the use of Material Nonpublic Information in securities trading, and any other violation of applicable securities laws.

**D. SPECIFIC POLICIES**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. Trading on Material Nonpublic Information**. No employee, officer or director of the Company and no Family Member of any such person (or any other person designated by this Policy or by the Insider Trading Compliance Officer as subject to this Policy), shall engage in any transaction involving a purchase or sale of the Company's securities, including any offer to purchase or offer to sell (other than pursuant to a trading plan that complies with SEC Rule 10b5-

1 and is implemented in accordance with Section G of this Policy), during any period commencing with the date that he or she possesses Material Nonpublic Information and ending at the close of business on the second Trading Day following the date of public disclosure of that information, or at such time as such nonpublic information is no longer material. If, for example, the Company were to make an announcement of previously Material Nonpublic Information on a Monday, employees, officers and directors who had access to such information prior to such time shall not trade in the Company's securities prior to that Thursday. "Purchase" and "sale" are defined broadly under the federal securities laws. "***Purchase***" includes not only the actual purchase of a security, but any contract to purchase or otherwise acquire a security. "***Sale***" includes not only the actual sale of a security, but also any contract to sell or otherwise dispose of a security. These definitions extend to a broad range of transactions, including conventional cash-for-stock transactions, conversions, the exercise of stock options and acquisitions and exercises of warrants or puts, calls or other derivative securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. Tipping**. No employee, officer or director of the Company shall disclose or pass on ("***tip***") Material Nonpublic Information to any other person, including a Family Member or friend, nor shall such person make recommendations or express opinions on the basis of Material Nonpublic Information with respect to trading in the Company's securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. Confidentiality of Nonpublic Information**. Nonpublic information relating to the Company is the property of the Company and the unauthorized disclosure of such information is forbidden.

**E. POTENTIAL CRIMINAL AND CIVIL LIABILITY AND/OR DISCIPLINARY ACTION**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. Liability for Insider Trading**. Any employee, officer or director of the Company who engages in a transaction in the Company's securities at a time when he or she has knowledge of Material Nonpublic Information may be subject to an SEC civil investigation, cease and desist order or other administrative action, and incur federal and state law penalties and sanctions, including but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• up to 20 years in jail;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a criminal fine of up to $5,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a civil penalty of up to three (3) times the profit gained or loss avoided as a result of the insider trading;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• SEC civil enforcement injunctions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Permanent bar from serving as an officer or director of a public company.

There is no *de minimis* exception to the rule against insider trading. Use of inside information to gain personal benefit is as illegal with respect to one share of stock as it is with respect to a large number of shares.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. Liability for Tipping**. Any employee, officer or director of the Company who tips ("***tippers***") a third party (commonly referred to as a "***tippee***") may also be liable for improper transactions by tippees to whom they have tipped Material Nonpublic Information regarding the Company or to whom they have made recommendations or expressed opinions on the basis of such information as to trading in the Company's securities. Tippers and tippees would be subject to the same penalties and sanctions as described above, and the SEC has imposed large penalties even when the tipper or tippee did not profit from the trading. The SEC and the national securities

exchanges use sophisticated electronic surveillance techniques to assess and uncover insider trading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. Control Persons**. The Company and its supervisory personnel, if they fail to take appropriate steps to prevent illegal insider trading, may in certain circumstances be subject to the following penalties, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a civil penalty of up to the greater of $1,000,000 (subject to adjustment) or three (3) times the profit gained or loss avoided as a result of the employee's violation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a criminal penalty for individuals of up to $5,000,000 and for entities of up to $25,000,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4. Possible Company-Imposed Disciplinary Actions**. Violations of this Policy will not be tolerated. Any employee who violates the standards in this Policy may be subject to disciplinary action, which, depending on the nature of the violation and the history of the employee, may range from a warning or reprimand up to and including ineligibility for future participation in the Company's equity incentive plans, termination of the employment relationship and, in appropriate cases, civil legal action or referral for regulatory or criminal prosecution.

**F. MANDATORY GUIDELINES**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. Trading Blackout Period.** To ensure compliance with this Policy and applicable securities laws, and to avoid even the appearance of trading on the basis of inside information, the Company requires that its directors and executive officers, each of whom is set forth on **APPENDIX A** attached hereto, any other employees in the finance department of the Company set forth on **APPENDIX B** attached hereto, and any other employees designated by the Insider Trading Compliance Officer as subject to the Blackout Period (as defined below) prohibitions because of their access to the Company's internal financial statements or other Material Nonpublic Information regarding the Company's performance during annual and quarterly fiscal periods, which employees are set forth on **APPENDIX C** attached hereto (each of the individuals identified in **APPENDICES A through C** are collectively referred to herein as the "***Designated Insiders***"), and Family Members of the foregoing, refrain from conducting transactions involving the purchase or sale of the Company's securities during the Blackout Periods established below. Each of the following periods will constitute a "Blackout Period":

The period commencing 15 days prior to the end of each fiscal quarter and ending at the close of business on the second Trading Day following the date of public disclosure of the Company's financial results for that quarter. For purposes of clarification, the 15th day of such 15-day period shall be the last date of such fiscal quarter, such that the first day of the Blackout Period each year for (a) the first quarter shall be March 17th; (b) the second quarter shall be June 16th; (c) the third quarter shall be September 16th; and (d) the fourth quarter shall be December 17th. If such public disclosure occurs on a Trading Day before the markets close, then that day shall be considered the first Trading Day. If such public disclosure occurs after the markets close on a Trading Day, then the date of public disclosure shall not be considered the first Trading Day following the date of public disclosure.

In addition to the Blackout Periods described above, the Company may announce "special" Blackout Periods from time to time if, in the judgment of the Company's Chief Executive Officer or the Insider Trading Compliance Officer, there are nonpublic developments that would be considered material for insider trading law purposes, such as, among other things, developments relating to regulatory matters, litigation or a major corporate transaction. Depending on the circumstances, a "special" Blackout Period may apply to all Designated Insiders or only to a specific group of Designated Insiders. The Insider Trading Compliance Officer will provide written notice to Designated Insiders subject to a "special" Blackout Period. Any person made aware of the existence of a "special" Blackout Period should not disclose the existence of the "special" Blackout Period to any other person. The failure of the Company to designate a person as being subject to a "special" Blackout Period will not relieve that person of the obligation not to trade while he or she is aware of Material Nonpublic Information. As used in this Policy, the term "Blackout Period" shall mean all periodic Blackout Periods and all "special" Blackout Periods announced by the Company.

The purpose behind the Blackout Period is to help establish a diligent effort to avoid any improper transactions. Trading in the Company's securities outside a Blackout Period should not be considered a "safe harbor," and all employees, officers and directors of the Company and other persons subject to this Policy should use good judgment at all times. Even outside a Blackout Period, any person possessing Material Nonpublic Information concerning the Company should not engage in any transactions in the Company's securities until such information has been known publicly for at least two Trading Days after the date of announcement. Although the Company may from time to time impose "special" Blackout Periods, because of developments known to the Company and not yet disclosed to the public, each person is individually responsible at all times for compliance with the prohibitions against insider trading.

Transactions effected pursuant to a SEC Rule 10b5-1 trading plan implemented in accordance with Section G of this Policy are not subject to Blackout Periods.

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. Pre-clearance of Trades**. Subject to Sections G and H of this Policy, the Company has determined that all directors and executive officers and their Family Members must refrain from transacting in the Company's securities without first complying with the Company's "pre-clearance" process. Each director or executive officer must contact the Insider Trading Compliance Officer prior to commencing any such transaction, or before any of their Family Members commences any transaction, in the Company's securities. This pre-clearance requirement applies to any transaction or transfer involving the Company's securities, including a gift, transfer to a trust or any other transfer.

The Company may also find it necessary, from time to time, to require compliance with the pre-clearance process from other employees designated as Designated Insiders. In such event, the Company will provide notice to such employees of their need to comply with the Company's pre-clearance process.

No Designated Insider may engage in any transaction in the Company's securities unless the transaction is pre-cleared by the Insider Trading Compliance Officer (provided that transactions in the Company's securities by the Insider Trading Compliance Officer are subject to approval by the Company's Chief Legal Officer). The Insider Trading Compliance Officer

and the Company's Chief Legal Officer are not under any obligation to approve a transaction submitted for pre-clearance, and each may determine not to permit a transaction.

To facilitate the process, the Insider Trading Compliance Officer will email all employees when they may request pre-clearance. Employees may then email the Insider Trading Compliance Officer seeking approval of trades noting whether they plan to buy or sell stock and the number of shares they plan to buy or sell. After approval, the employee will then be cleared to trade on the Company's stock administration portal, E\*TRADE for a period not to exceed the start of a Blackout Period. No transaction may be effected until the employee has received approval from the Insider Trading Compliance Officer. If, upon requesting pre-clearance or otherwise, a director or executive officer or a Family Member of a director or executive officer is advised that Company securities may not be traded or transferred, such director, executive officer or Family Member may not buy, sell or otherwise trade or transfer any Company securities under any circumstance, and may not inform anyone of such restriction. This trading and transfer restriction will apply until the director, officer or Family Member receives a subsequent pre-clearance to trade or transfer his or her Company securities.

Transactions effected pursuant to a SEC Rule 10b5-1 trading plan implemented in accordance with Section G of this Policy will not require further pre-clearance at the time of each such transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. Hardship Exceptions.** Any Designated Insider or Family Member of such insider who has an unexpected and urgent need to sell Company securities in order to generate cash may, in appropriate circumstances, be permitted to sell Company securities even during a Blackout Period. Hardship exceptions may be granted only by the Insider Trading Compliance Officer and must be requested at least two (2) days in advance of the proposed trade. A hardship exception may be granted only if the Insider Trading Compliance Officer concludes that the Company's earnings information for the applicable quarter does not constitute Material Nonpublic Information. Under no circumstances will a hardship exception be granted during a "special" Blackout Period or to a director or executive officer of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4. Individual Responsibility**. Every director, officer and employee of the Company has the individual responsibility (and must take appropriate measures to cause such person's Family Members) to comply with this Policy regardless of whether a transaction is executed outside a Blackout Period or is pre-cleared by the Insider Trading Compliance Officer. The restrictions and procedures are intended to help avoid inadvertent instances of improper insider trading, but appropriate judgment should always be exercised by each director, officer and employee of the Company in connection with any transaction in the Company's securities.

A director, officer or employee of the Company, or a Family Member of any such individual, may, from time to time, need to forego a proposed transaction in the Company's securities even if he or she planned to make the transaction before learning of Material Nonpublic Information and even though the individual believes he or she may suffer an economic loss or forego anticipated profit by waiting. **Employees, officers and directors of the Company are responsible for ensuring compliance with this Policy by their Family Members.** 

**G. RULE 10B5-1 TRADING PLANS**.

SEC Rule 10b5-1 provides an affirmative defense from insider trading liability under the federal securities laws for trading plans that meet certain requirements. It does not prevent someone from bringing a lawsuit. This Policy permits individuals to adopt SEC Rule 10b5-1 trading plans with brokers that outline a pre-set plan for transacting in the Company's securities, including the exercise of equity awards.

As required by SEC Rule 10b5-1, a director, executive officer or other employee of the Company identified as a Designated Insider may implement a trading plan under SEC Rule 10b5- 1 only when he or she is not in possession of Material Nonpublic Information. In addition, a trading plan may not be entered into or once entered into, changed, during a Blackout Period. Any officer or other employee of the Company identified as a Designated Insider who wishes to implement a trading plan under SEC Rule 10b5-1 must first pre-clear the plan with the Insider Trading Compliance Officer at least five (5) days prior to the entry into the plan, and also must pre-clear any amendment to such plan and any termination of a plan in advance of its expiration date, with the Insider Trading Compliance Officer. Except as set forth above, no further pre-approval of transactions conducted pursuant to trading plan under SEC Rule 10b5-1 will be required.

Establishing a trading plan under SEC Rule 10b5-1 does not exempt transactions from the short-swing profit provisions of Section 16.

------

**H. CERTAIN EXCEPTIONS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. Equity Award Exercises**. For purposes of this Policy, the Company considers the exercise of equity awards under the Company's equity incentive plans, including any net exercise of an equity award pursuant to which you have elected to have the Company withhold shares of stock to satisfy tax withholding requirements or the exercise price of the equity award, to be exempt from this Policy. This Policy does apply, however, to any sale of stock as part of a broker.

assisted "cashless" exercise of an equity award, any market sale for the purpose of generating the cash needed to pay the exercise price of an equity award and any other sale of the underlying stock received upon exercise of any equity award.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. Restricted Stock Awards.** This Policy does not apply to the vesting of restricted stock, or the exercise of a tax withholding right pursuant to which an individual elects to have the Company withhold shares of stock to satisfy tax withholding requirements upon the vesting of any restricted stock. The Policy does apply, however, to any market sale of restricted stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. 401(k) Plan**. This Policy does not apply to purchases of Company stock in the Company's 401(k) plan resulting from periodic contributions of money to the plan pursuant to payroll deduction elections. This Policy does apply, however, to certain elections that may be made under the 401(k) plan, including: (i) an election to increase or decrease the percentage of periodic contributions that will be allocated to the Company stock fund, if any; (ii) an election to make an intra-plan transfer of an existing account balance into or out of the Company stock fund; (iii) an election to borrow money against a 401(k) plan account if the loan will result in a liquidation of some or all of a participant's Company stock fund balance; and (iv) an election to pre-pay a plan loan if the pre-payment will result in allocation of loan proceeds to the Company stock fund.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4. Employee Stock Purchase Plan.** This Policy does not apply to purchases of Company stock in any employee stock purchase plan of the Company resulting from periodic contributions of money to the plan pursuant to the elections made at the time of enrollment in the plan. This Policy also does not apply to purchases of Company stock resulting from lump sum contributions to the plan; *provided that* the participant elected to participate by lump-sum payment at the beginning of the applicable enrollment period. This Policy does apply to a participant's election to participate, or increase his or her participation, in the plan, and to a participant's sales of Company stock purchased pursuant to the plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5. Dividend Reinvestment Plan**. This Policy does not apply to purchases of Company stock under any dividend reinvestment plan of the Company resulting from reinvestment of dividends paid on Company securities. This Policy does apply, however, to voluntary purchases of Company stock that result from additional contributions a participant chooses to make to the plan, and to a participant's election to participate in the plan or increase his or her level of participation in the plan. This Policy also applies to his or her sale of any Company stock purchased pursuant to the plan.

**I. APPLICABILITY OF POLICY TO INSIDE INFORMATION REGARDING OTHER COMPANIES**.

This Policy and the guidelines described herein also apply to material nonpublic information relating to other companies, including the Company's customers, vendors or suppliers (collectively, "***business partners***"), when that information is obtained in the course of employment with, or other services performed on behalf of, the Company. Civil and criminal penalties, and termination of employment or removal from our Board of Directors, may result from trading on inside information regarding the Company's business partners. All Company employees should treat material nonpublic information about the Company's business partners with the same care required with respect to information related directly to the Company.

**J. SECTION 16 LIABILITY - DIRECTORS AND OFFICERS**.

Directors and certain officers of the Company must also comply with the reporting obligations and limitations on short-swing profit transactions set forth in Section 16. The practical effect of these provisions is that these officers and directors who purchase and sell the Company's securities within a six-month period must disgorge all profits to the Company whether or not they had knowledge of any Material Nonpublic Information. Under these provisions, and so long as certain other criteria are met, neither the receipt of stock or stock options under the Company's stock plans, nor the exercise of options nor the receipt of stock under a Company dividend reinvestment plan or the Company's 401(k) retirement plan is deemed a purchase that can be matched against a sale for Section 16(b) short-swing profit disgorgement purposes; however, the sale of any such shares so obtained is a sale for these purposes. The Company will provide separate memoranda and other appropriate materials to the affected officers and directors regarding compliance with Section 16 and its related rules upon request.

**The rules on recovery of short-swing profits are absolute and do not depend on whether a person has Material Nonpublic Information.** 

**K. SHORT SALES**.

No director, officer, other employee or consultant of the Company may engage in short sales of the Company's securities, including a "sale against the box," at any time. Short sales of the Company's securities evidence an expectation on the part of the seller that the securities will decline in value, and therefore signal to the market that the seller has no confidence in the Company or its short-term prospects. In addition, short sales may reduce the seller's incentive to improve the Company's performance. Furthermore, Section 16(c) of the Exchange Act expressly prohibits directors and certain officers of the Company from making short sales of the Company's securities.

**L. PUBLICLY TRADED OPTIONS**.

A transaction in a publicly-traded option is, in effect, a bet on the short-term movement of the Company's stock and therefore creates the appearance that the director or employee is trading based on inside information. Transactions in options also may focus the trader's attention on short-term performance at the expense of the Company's long-term objectives. Accordingly, transactions in puts, calls or other derivative securities, on an exchange or in any other organized market, are prohibited. Option positions arising from certain types of hedging transactions are governed by Section M of this Policy.

------

**M. HEDGING OR MONETIZATION TRANSACTIONS**.

Certain forms of hedging or monetization transactions, such as zero-cost collars and forward sale contracts, allow a director, officer or employee to lock in much of the value of his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. These transactions would allow them to continue to own the covered securities, but without the full risks and rewards of ownership. When that occurs, their interests and the interests of the Company and its stockholders may be misaligned and may signal a message to the trading market when disclosed in Section 16 reports that may not be in the best interests of the Company and its stockholders at the time it is conveyed. Accordingly, transactions in hedging or monetization transactions involving Company securities are prohibited.

**N. MARGIN ACCOUNTS AND PLEDGES**.

Securities held in a margin account may be sold by the broker without the customer's consent if the customer fails to meet a margin call. Similarly, securities pledged (or hypothecated) as collateral for a loan may be sold in foreclosure if the borrower defaults on the loan. A margin sale or foreclosure sale may occur at a time when the pledgor is aware of Material Nonpublic Information or otherwise is not permitted to trade in Company securities pursuant to a Blackout Period restriction. Thus, unless pre-cleared by the Insider Trading Compliance Officer, directors, officers and employees are prohibited from pledging Company securities as collateral for a loan.

Any director, officer or employee of the Company preparing to pledge his or her Company securities must clearly demonstrate his or her financial capacity to repay the loan without resort to the pledged securities. Any person proposing to pledge Company securities as collateral for a loan must submit a request for approval to the Insider Trading Compliance Officer at least two (2) weeks prior to the proposed execution of documents evidencing the proposed pledge.

**O. STANDING ORDERS**.

Standing orders should be used only for a very brief period. A standing order placed with a broker or other nominee to sell or purchase stock at a specified price leaves an employee, officer or director of the Company with no control over the timing of the transaction. A standing order transaction executed by the broker or other nominee when such employee, officer or director of the Company is aware of Material Nonpublic Information may result in unlawful insider trading.

**P. GIFTS**.

Because charitable and other nonprofit organizations may sell securities given to them very soon after receiving them, and because there is also the potential for manipulation (or perceived manipulation) by the donor to gain a larger tax deduction by donating securities before the release of material negative news, charitable gifts may not be made at a time when the donor is aware of Material Nonpublic Information.

**Q. POST-TERMINATION TRANSACTIONS**.

In the event a director, officer or employee of the Company resigns or terminates employment or service with the Company, this Policy shall continue to apply to transactions in Company securities by such individual for so long as he or she remains in possession of any Material Nonpublic Information possessed by such director, officer or employee as of his or her resignation or termination. Notwithstanding the foregoing, all former directors, officers and employees shall remain subject to the prohibitions against insider trading set forth under federal and state securities laws any time they engage in transactions in Company securities following their resignation or termination.

**R. COMMUNICATIONS WITH THE PUBLIC**.

The Company is subject to the SEC's Regulation FD (Fair Disclosure) and must avoid selective disclosure of Material Nonpublic Information. The Company has established procedures for releasing material information in a manner that is designed to achieve broad public dissemination of the information immediately upon its release. Pursuant to Company policy, only the executive officers who have been authorized to engage in communications with the public may disclose information to the public regarding the Company and its business activities and financial affairs. The public includes, without limitation, research analysts, portfolio managers, financial and business reporters, news media and investors. In addition, because of the risks associated with the exchange of information through such communications media, Company employees must adhere to the Company's Social Media Policy in posting or responding to messages containing information regarding the Company on Internet "bulletin boards," Internet "chat rooms," "blogs", finance message boards and chat rooms or in similar online forums. Employees who inadvertently disclose any Material Nonpublic Information must immediately advise the Insider Trading Compliance Officer so the Company can assess its obligations under Regulation FD and other applicable securities laws.

------

**S. INQUIRIES**.

Please direct questions as to any of the matters discussed in this Policy to the Insider Trading Compliance Officer:

General Counsel

Aterian, Inc.

E-mail: chris@aterian.io

**T. SUSPECTED VIOLATIONS**.

Any director, officer, other employee or consultant of the Company who knows of or suspects a violation of this Policy should report the violation immediately to the Insider Trading Compliance Officer or through the procedures for reporting outlined in the Company's Code of Conduct and Ethics. The Company will comply with all requests from the SEC, The Financial Industry Regulatory Authority, Inc., Nasdaq and any other quotation system or national securities exchange on which the Company's common stock is then traded or listed, and other agencies for information related to insider trading investigations.

**U. CERTIFICATION**.

All directors, officers and employees of the Company must certify their understanding of, and intent to comply with, this Policy by executing the Certification form attached hereto as EXHIBIT **A** and returning it to the Insider Trading Compliance Officer. By executing the Certification form, each director, officer and employee indicates that he or she received, read, understands and agrees to comply with this Policy. The Certification form must be returned to the Insider Trading Compliance Officer promptly following commencement of employment or directorship.

**V. ADDITIONAL** I**NFORMATION** 

Nothing in this Policy creates or implies an employment contract or term of employment. Employment at the Company is employment at-will unless otherwise expressly provided in an employment contract signed by the employee and the Company's Chief Executive Officer (or another authorized officer of the Company). Employment at-will may be terminated with or without cause and with or without notice at any time by the employee or the Company. Nothing in this Policy shall limit the right to terminate employment at-will. No one other than the Company's Chief Executive Officer is authorized to change this at-will employment relationship, or to enter into an agreement to employ employees for a specified period of time. If the Company's Chief Executive Officer makes this kind of different agreement with an employee, it will not be effective unless it is in writing, clearly states that the at-will employment relationship is changed, and is signed by the employee and the Company's Chief Executive Officer (or another authorized officer of the Company).

**W. AMENDMENTS**.

This Policy will be subject to the periodic review of our Board of Directors. The Company anticipates that modifications to this Policy will be necessary from time to time as the Company's needs and circumstances evolve, and as applicable legal or listing standards change. The Company reserves the right to amend, supplement or discontinue this Policy and the matters addressed herein, without prior notice, at any time. However, employees are expected to adhere to this Policy, and the procedures established under it, until they receive any contrary instruction from the Insider Trading Compliance Officer.

*Adopted on May 22, 2019* 

*Amended on November 1, 2024*

------

**EXHIBIT A** 

**ATERIAN, INC.** 

**INSIDER TRADING POLICY** 

**CERTIFICATION** 

I have received and read, and I understand, Insider Trading Policy (the "***Policy***") of Aterian, Inc. (the "***Company***"). I understand the standards and policies contained in the Policy and understand that there may be additional policies or laws specific to me depending on my role with the Company.

I further agree, as a condition of my employment (or continued employment) with the Company or appointment (or future nomination for election) to the Board of Directors of the Company, to comply with the Policy.

I further understand that I should contact the Insider Trading Compliance Officer if I have any questions about the Policy generally. I understand that the Policy sets forth, in Section T thereof, specific ways to report an actual or potential violation of the Policy, or of any rule, law, regulation or other Company policy. I agree that I will ask the Insider Trading Compliance Officer if I have any questions about how to make such reports, or about any potential conflict of interest. This signed "Insider Trading Policy Certification" page must be returned to the Insider Trading Compliance Officer, who is also the Company's Chief Operating Officer, within ten (10) business days of my receipt of the Policy and otherwise as may be required by the Company.

_______________________________________

[SIGNATURE]

_______________________________________

[PRINT NAME]

_______________________________________

[DATE]

------

**APPENDIX A** 

**MEMBERS OF THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS** 

**NON-EMPLOYEE DIRECTORS: ALL** 

**EXECUTIVE OFFICERS: ALL**

------

**APPENDIX B** 

**EMPLOYEES IN THE FINANCE DEPARTMENT** 

ALL.

------

**APPENDIX C** 

**OTHER EMPLOYEES** 

ALL EMPLOYEES, AND CONTRACTORS WHO DO OR MAY HAVE ACCESS TO POWERBI

## Exhibit 21.1

**Exhibit 21.1**

**List of Subsidiaries of Aterian, Inc.**

---

| | |
|:---|:---|
| **Name of Subsidiary** | **Jurisdiction** |
| Aterian Group, Inc. | Delaware |
| Xtava LLC | Delaware |
| RIF6 LLC | Delaware |
| Vremi LLC | Delaware |
| hOmelabs LLC | Delaware |
| Punched LLC | Delaware |
| KitchenVox LLC | Delaware |
| Aussie Health Co, LLC | Delaware |
| Truweo, LLC | Delaware |
| Spiralizer, LLC | Delaware |
| PurSteam, LLC | Delaware |
| Pohl & Schmidt, LLC | Delaware |
| Mueller Austria, LLC | Delaware |
| KNDirect, LLC | Delaware |
| Kitchen Products, LLC | Delaware |
| Healing Solutions (Remedy) LLC | Delaware |
| Squatty Potty USA LLC | Delaware |
| Step and Go LLC | Delaware |
| Photo Paper Direct, LLC | Delaware |
| Photo Paper Direct Limited | United Kingdom |
| Shenzhen Mohawk Technology Ltd. Co. | China |
| Mohawk Innovations Canada Inc. | Canada |
| Mohawk Group Poland Sp. z.o.o. | Poland |
| Mohawk Research & Development Ltd. | Israel |
| Mohawk Group Inc. Philippines Branch | Philippines |

---

## Exhibit 23.2

**Exhibit 23.2**

**<u>INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</u>**<u>'</u>**<u>S CONSENT</u>**

We consent to the incorporation by reference in the Registration Statement of Aterian Inc, on Form S-8 (File Nos. 333-296092, 333-278147, 333-270669, 333-265298, 333-263906, 333-256612, 333-251295 and 333-232087) of our report dated March 20, 2026, which includes an explanatory paragraph as to the Company's ability to continue as a going concern, with respect to our audits of the consolidated financial statements of Aterian Inc. and Subsidiaries as of December 31, 2025 and for each of the two years in the period ended December 31, 2025, which report is included in this Annual Report on Form 10-K Aterian Inc. for the year ended December 31, 2025.

---

| |
|:---|
| /s/ UHY LLP |
| Melville, NY<br> March 20, 2026 |

---

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF FINANCIAL EXECUTIVE OFFICER PURSUANT**

**TO RULE 13a-14(a) UNDER**

**THE SECURITIES EXCHANGE ACT OF 1934**

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

I, Arturo Rodriguez, certify that:

1. I have reviewed this Annual Report on Form 10-K of Aterian, Inc.;

2. 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;

3. 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;

4. The registrant's other certifying officer 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 15(d)-15(f)) for the registrant and have:

a. 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;

b. 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;

c. 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

d. 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

5. The registrant's other certifying officer 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):

a. 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

b. 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

Date: March 20, 2026

---

| |
|:---|
| /s/ Arturo Rodriguez |
| Arturo Rodriguez |
| *Chief Executive Officer*<br> *(Principal Executive Officer)* |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF FINANCIAL EXECUTIVE OFFICER PURSUANT**

**TO RULE 13a-14(a) UNDER**

**THE SECURITIES EXCHANGE ACT OF 1934**

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

I, Joshua Feldman, certify that:

1. I have reviewed this Annual Report on Form 10-K of Aterian, Inc.;

2. 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;

3. 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;

4. The registrant's other certifying officer 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 15(d)-15(f)) for the registrant and have:

a. 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;

b. 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;

c. 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

d. 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

5. The registrant's other certifying officer 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):

a. 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

b. 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

Date: March 20, 2026

---

| |
|:---|
| /s/ Joshua Feldman |
| Joshua Feldman |
| *Chief Financial Officer*<br> *(Principal Financial Officer)* |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report on Form 10-K of Aterian, Inc. (the "Company") for the period ended December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to their knowledge that:

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

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

---

| | |
|:---|:---|
| /s/ Arturo Rodriguez | /s / Joshua Feldman |
| Arturo Rodriguez | Joshua Feldman |
| Chief Executive Officer | Chief Financial Officer |
| *(Principal Executive Officer)* | *(Principal Financial Officer)* |
| March 20, 2026 | March 20, 2026 |

---

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Report, is not deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Report), irrespective of any general incorporation language contained in such filing.

## Exhibit 97.1

**Exhibit 97.1**

**Aterian, Inc.**

**COMPENSATION RECOVERY POLICY**

**Adopted as of November 3, 2023**

Aterian, Inc., a Delaware corporation (the "<u>Company</u>"), has adopted a Compensation Recovery Policy (this "<u>Policy</u>") as described below.

**1. Overview**

The Policy sets forth the circumstances and procedures under which the Company shall recover Erroneously Awarded Compensation from current and former Executive Officers and any other designated employees of the Company in accordance with rules issued by the United States Securities and Exchange Commission (the "<u>SEC</u>") under the Securities Exchange Act of 1934, as amended (the "<u>Exchange Act</u>") and the Nasdaq Stock Market. Please refer to Section 3 below for definitions of capitalized terms used and not otherwise defined herein.

**2. Compensation Recovery Requirement**

In the event the Company is required to prepare a Material Financial Restatement, the Company shall reasonably promptly recover all Erroneously Awarded Compensation with respect to such Material Financial Restatement, and each Covered Person shall be required to take all actions necessary to enable such recovery.

**3. Definitions**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. <u>"Applicable Recovery Period</u> " means with respect to a Material Financial Restatement, the three completed fiscal years immediately preceding the Restatement Date for such Material Financial Restatement. In addition, in the event the Company has changed its fiscal year: (i) any transition period of less than nine months occurring within or immediately following such three completed fiscal years shall also be part of such Applicable Recovery Period and (ii) any transition period of nine to 12 months will be deemed to be a completed fiscal year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. <u>"Applicable Rules</u> " means any rules or regulations adopted by the Exchange pursuant to Rule 10D-1 under the Exchange Act and any applicable rules or regulations adopted by the SEC pursuant to Section 10D of the Exchange Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. <u>"Board</u> " means the Board of Directors of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. <u>"Committee</u> " means the Compensation Committee of the Board or, in the absence of such committee, a majority of independent directors serving on the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. A " <u>Covered Person</u> means any Executive Officer and any other person designated by the Board or the Committee as being subject to this Policy . A person's status as a Covered Person with respect to Erroneously Awarded Compensation shall be determined as of the time of receipt of such Erroneously Awarded Compensation regardless of their current role or status with the Company (e.g., if a person began service as an Executive Officer after the beginning of an Applicable Recovery Period, that person would not be considered a Covered Person with respect to Erroneously Awarded Compensation received before the person began service as an Executive Officer, but would be considered a Covered Person with respect to Erroneously Awarded Compensation received after the person began service as an Executive Officer where such person served as an Executive Officer at any time during the performance period for such Erroneously Awarded Compensation).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. <u>"Effective Date</u> " means October 2, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. <u>"Erroneously Awarded Compensation</u> " means, with respect to a Material Financial Restatement, the amount of any Incentive-Based Compensation received by a Covered Person on or after the Effective Date during the Applicable Recovery Period that exceeds the amount that otherwise would have been received by the Covered Person had such compensation been determined based on the restated amounts in the Material Financial Restatement, computed without regard to any taxes paid. Calculation of Erroneously Awarded Compensation with respect to Incentive-Based Compensation based on stock price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in a Material Financial Restatement, shall be based on a reasonable estimate of the effect of the Material Financial Restatement on the stock price or total shareholder return upon which the Incentive-Based Compensation was received, and the Company shall maintain documentation of the determination of such reasonable estimate and provide such documentation to the Exchange in accordance with the Applicable Rules.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. <u>"Exchange</u> " means The Nasdaq Stock Market LLC

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. An " <u>Executive Officer</u> " means any person who served the Company in any of the following roles, received Incentive-Based Compensation after beginning service in any such role (regardless of whether such Incentive-Based Compensation was received during or after such person's service in such role) and served in such role at any time during the performance period for such Incentive-Based Compensation: the president, the principal financial officer, the principal accounting officer (or if there is no such accounting officer the controller), any vice president in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy making function, or any other person who performs similar policy making functions for the issuer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j. <u>"Financial Reporting Measures</u> " mean measures that are determined and presented in accordance with the accounting principles used in preparing the Company's financial statements, any measures that are derived wholly or in part from such measures (including, for example, a non-GAAP financial measure), and stock price and total shareholder return.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k. <u>"Incentive-Based Compensation</u> " means any compensation provided, directly or indirectly, by the Company or any of its subsidiaries that is granted, earned, or vested based, in whole or in part, upon the attainment of a Financial Reporting Measure. Incentive-Based Compensation is deemed received, earned or vested when the Financial Reporting Measure is attained, not when the actual payment, grant or vesting occurs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l. A " <u>Material Financial Restatement</u> " means an accounting restatement of previously issued financial statements of the Company due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously-issued financial statements that is material to the previously-issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m. <u>"Restatement Date</u> " means, with respect to a Material Financial Restatement, the earlier to occur of: (i) the date the Board or the Audit Committee of the Board<sup></sup>concludes, or reasonably should have concluded, that the Company is required to prepare the Material Financial Restatement or (ii) the date a court, regulator or other legally authorized body directs the Company to prepare the Material Financial Restatement.

**4. Exception to Compensation Recovery Requirement**

The Company may elect not to recover Erroneously Awarded Compensation pursuant to this Policy if the Committee determines that recovery would be impracticable, and one or more of the following conditions, together with any further requirements set forth in the Applicable Rules, are met: (i) the direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered, and the Company has made a reasonable attempt to recover such Erroneously Awarded Compensation or (ii) recovery would likely cause an otherwise tax-qualified retirement plan to fail to be so qualified under applicable regulations.

**5. Tax Considerations**

To the extent that, pursuant to this Policy, the Company is entitled to recover any Erroneously Awarded Compensation that is received by a Covered Person, the gross amount received (i.e., the amount the Covered Person received, or was entitled to receive, before any deductions for tax withholding or other payments) shall be returned by the Covered Person.

**7. Method of Compensation Recovery**

The Committee shall determine, in its sole discretion, the method for recovering Erroneously Awarded Compensation hereunder, which may include, without limitation, any one or more of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. requiring reimbursement of cash Incentive-Based Compensation previously paid;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer or other disposition of any equity-based awards;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. canceling or rescinding some or all outstanding vested or unvested equity-based awards;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. adjusting or withholding from unpaid compensation or other set-off;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. canceling or setting-off against planned future grants of equity-based awards; and/or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. any other method permitted by applicable law or contract.

Notwithstanding the foregoing, a Covered Person will be deemed to have satisfied such person's obligation to return Erroneously Awarded Compensation to the Company if such Erroneously Awarded Compensation is returned in the exact same form in which it was received; provided that equity withheld to satisfy tax obligations will be deemed to have been received in cash in an amount equal to the tax withholding payment made.

**8. Policy Interpretation**

This Policy shall be interpreted in a manner that is consistent with the Applicable Rules and any other applicable law and shall otherwise be interpreted (including in the determination of amounts recoverable) in the business judgment of the Committee. The Committee shall take into consideration any applicable interpretations and guidance of the SEC in interpreting this Policy, including, for example, in determining whether a financial restatement qualifies as a Material Financial Restatement hereunder. To the extent the Applicable Rules require recovery of Incentive-Based Compensation in additional circumstances besides those specified above, nothing in this Policy shall be deemed to limit or restrict the right or obligation of the Company to recover Incentive-Based Compensation to the fullest extent required by the Applicable Rules. This Policy shall be deemed to be automatically amended, as of the date the Applicable Rules become effective with respect to the Company, to the extent required for this Policy to comply with the Applicable Rules.

**9. Policy Administration**

This Policy shall be administered by the Committee. The Committee shall have such powers and authorities related to the administration of this Policy as are consistent with the governing documents of the Company and applicable law. The Committee shall have full power and authority to take, or direct the taking of, all actions and to make all determinations required or provided for under this Policy and shall have full power and authority to take, or direct the taking of, all such other actions and make all such other determinations not inconsistent with the specific terms and provisions of this Policy that the Committee deems to be necessary or appropriate to the administration of this Policy. The interpretation and construction by the Committee of any provision of this Policy and all determinations made by the Committee under this policy shall be final, binding and conclusive.

**10. Compensation Recovery Repayments not Subject to Indemnification**

Notwithstanding anything to the contrary set forth in any agreement with, or the organizational documents of, the Company or any of its subsidiaries, Covered Persons are not entitled to indemnification for Erroneously Awarded Compensation recovered under this Policy and, to the extent any such agreement or organizational document purports to provide otherwise, Covered Persons hereby irrevocably agree to forego such indemnification.