Bark, Inc.BARK
Bark, Inc. Income Taxes Disclosure
INCOME TAXES
A reconciliation of the Company’s effective tax rate to the United States federal income tax rate is as follows:
| March 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Federal statutory rate | 21.00 | % | 21.00 | % | 21.00 | % | |||||||||||
| Permanent differences | (0.22) | (0.19) | (0.23) | ||||||||||||||
| State taxes, net of federal benefits | 3.51 | (0.27) | 3.54 | ||||||||||||||
| Change in valuation allowance | (17.34) | (14.08) | (23.68) | ||||||||||||||
| Interest expense | (1.47) | (2.06) | (1.51) | ||||||||||||||
| Warrant mark-to-market | (0.34) | 1.56 | 1.83 | ||||||||||||||
| Stock-based compensation | (5.01) | (5.71) | (3.84) | ||||||||||||||
| Other deferred adjustments | (0.13) | (0.25) | 2.89 | ||||||||||||||
| Total | — | % | — | % | — | % | |||||||||||
The components of the Company’s deferred taxes are as follows (in thousands):
| As of March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net operating loss carryforwards | $ | 73,456 | $ | 67,974 | |||||||
| Charitable contributions | 1,132 | 1,073 | |||||||||
| Interest expense | 499 | 1,674 | |||||||||
| Lease liabilities | 10,819 | 8,900 | |||||||||
| UNICAP | 3,725 | 3,385 | |||||||||
| Stock compensation | 3,583 | 4,317 | |||||||||
| Accruals and other | 4,932 | 3,572 | |||||||||
| Depreciation | 888 | 329 | |||||||||
| Total deferred tax assets | 99,034 | 91,224 | |||||||||
| Valuation allowance | (91,258) | (85,620) | |||||||||
| Net deferred tax assets | 7,776 | 5,604 | |||||||||
| Lease right-of-use asset | (7,776) | (5,604) | |||||||||
| Total deferred tax liabilities | (7,776) | (5,604) | |||||||||
| Net deferred tax assets | $ | — | $ | — | |||||||
As of March 31, 2025, the Company had federal net operating loss carryforwards (“NOLs”) of approximately $303.3 million, of which $60.5 million begin to expire in 2031 and $242.8 million can be carried forward indefinitely. The Company also had state NOLs of approximately $190.5 million, of which $160.6 million begin to expire at various times in 2025 through 2031 and $30.0 million can be carried forward indefinitely. In addition, the Company has foreign NOLs of approximately $0.1 million, of which $0.1 million begin to expire in 2026 and $0.0 can be carried forward indefinitely.
As of March 31, 2024, the Company had federal NOLs of approximately $281.2 million, of which $60.5 million begin to expire in 2031 and $220.8 million can be carried forward indefinitely. The Company also had state NOLs of approximately $172.1 million, of which $145.2 million begin to expire at various times in 2024 through 2031 and $26.9 million can be carried forward indefinitely. In addition, the Company has foreign NOLs of approximately $0.1 million, of which $0.1 million begin to expire in 2026 and $0.0 which can be carried forward indefinitely.
The utilization of NOLs and tax credit carryforwards to offset future taxable income may be subject to an annual limitation as a result of ownership changes that have occurred previously or may occur in the future. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (“IRC”), a corporation that undergoes an ownership change may be subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes otherwise available to offset future taxable income and/or tax liability. An ownership change is defined as a cumulative change of 50% or more in the ownership positions of certain stockholders during a rolling three-year period. The Company has completed a formal study through March 31, 2025 to determine if any ownership changes within the meaning of IRC Section 382 and 383 have occurred. As a result of the study, it was determined that BarkBox, Inc. experienced an ownership change on July 8, 2014; however, the limitation from the ownership change will not result in any of the NOLs or tax credits expiring unutilized. The Company has not completed a formal study related to Northern Star Acquisition Corp. and its separate NOLs from periods prior to the Merger. However, any potential ownership change is not expected to result in any of the NOLs expiring unutilized.
The Company has recorded a valuation allowance against its deferred tax assets in each of the fiscal years ended March 31, 2025 and 2024, because the Company’s management believes that it is more likely than not that these assets will not be realized. As a result of generating additional net operating losses, the valuation allowance increased by approximately $5.6 million, from $85.6 million as of March 31, 2024 to $91.3 million as of March 31, 2025.
The Company had no unrecognized tax benefits or related interest and penalties accrued for the years ended March 31, 2025, 2024 and 2023. The Company will recognize interest and penalties related to uncertain tax positions in income tax expense.
The Company is subject to U.S. federal income tax and state income tax. The statute of limitations for assessment by the IRS and state tax authorities is open for the tax years since 2021; currently, no federal or state income tax returns are under examination by the respective taxing authorities. To the extent the Company has tax attributes carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the IRS and the state tax authorities to the extent utilized in a future period.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jun 4, 2025 | Showing above |
| 2024 | Jun 3, 2024 | |
| 2023 | Jun 1, 2023 | |
| 2022 | May 31, 2022 | |
| 2021 | Jun 7, 2021 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.