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United States securities and exchange commission logo
September 2, 2021
Arturo Rodriguez
Chief Financial Officer
Aterian, Inc.
37 East 18th Street, 7th Floor
New York, New York 10003
Re: Aterian, Inc.
Form 10-K for the
Fiscal Year Ended December 31, 2020
Filed March 16,
2021
File No. 001-38937
Dear Mr. Rodriguez:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2020
Item1. Business
Overview, page 2
1. We note your
disclosures regarding your proprietary software technology platform known
as AIMEE. Please
enhance your disclosures to address the following:
More fully explain
the specific nature of this technology and how you use it in your
business;
More fully explain
if and how you assess the actual results of the decisions you make
using this
technology relative to the results you expected; and
Disclose the amount
you have invested to develop this technology and address
whether additional
investments are expected. If additional investments are expected,
quantify the
anticipated amounts and disclose the time periods over which they are
expected to occur.
Arturo Rodriguez
FirstName LastNameArturo Rodriguez
Aterian, Inc.
Comapany 2,
September NameAterian,
2021 Inc.
September
Page 2 2, 2021 Page 2
FirstName LastName
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Non GAAP Financial Measures, page 49
2. For each non-GAAP financial measure you present, including each
related non-GAAP
financial measure as a percentage of net revenue, please present the
most directly
comparable GAAP measures with equal or greater prominence as required
by Item
10(e)(1)(i)(A) of Regulation S-K.
3. We note you present a non-GAAP financial measure you identify as
Contribution Margin.
Please explain to us how and why you believe it is appropriate to
eliminate all general and
administrative expenses, all research and development expenses, and
fixed costs included
in sales and distribution expenses, which appear to include salaries
and office
expenses, from a non-GAAP performance measure. It is not clear to us
how you
determined these adjustments are appropriate and comply with the
response to Question
100.01 of the Non-GAAP Financial Measures Compliance and Disclosure
Interpretations.
Results of Operations, page 52
4. We note you attribute increases in net revenue to increased pricing,
growth in existing
products, new product launches, and new products obtained through
acquisitions. Given
the significant acquisitions you completed in 2020 and your intention
to continue to grow
your business through acquisitions, please revise your disclosures to
separately quantify
and discuss the impact growth in existing products, new product
launches, and new
products obtained through acquisitions had on net revenue during each
period presented.
Critical Accounting Policies and Use of Estimates, page 59
5. Please tell us your consideration for disclosing and discussing
impairment testing for
goodwill and intangible assets as a critical accounting policy,
including the following:
The number of reporting units you have and how you allocate
goodwill to reporting
units.
The percentages by which estimated fair values exceed carrying
values as of the most
recent impairment test date, especially to the extent any
reporting units or intangible
assets are at risk of failing their impairment test, as well as
the key assumptions used
and potential events and/or changes in circumstances that could
reasonably be
expected to negatively affect the key assumptions.
How historical negative operating margin results are considered in
your estimates and
a sensitivity analysis for potential changes in operating margins
on your estimates.
Please also tell us if any events during the interim periods triggered
an interim impairment
test, in this regard we note the decline in your stock price and the
going concern
disclosures included in your most recent quarterly filing. If an
interim impairment test was
preformed, please tell us the results, if an interim test has not been
performed, please
explain why.
Arturo Rodriguez
FirstName LastNameArturo Rodriguez
Aterian, Inc.
Comapany 2,
September NameAterian,
2021 Inc.
September
Page 3 2, 2021 Page 3
FirstName LastName
Exhibits 31.1 and 31.2, page 75
6. We note you conducted an evaluation of your internal control over
financial reporting, as
required by Exchange Act Rules, and provided an assessment and
conclusion as to the
effectiveness of your internal control over financial reporting, as
required by Item 308 of
Regulation S-K, in your Form 10-K for the year ended December 31,
2020. We also note
your certifications provided in Exhibits 31.1 and 31.2 do not include
paragraph 4(b) and
the introductory language in paragraph 4, referring to internal
control over financial
reporting, that are now required based on the end of the transition
period that previously
allowed these omissions. Please amend your Form 10-K to provide
revised certifications.
You may file an abbreviated amendment that is limited to the cover
page, explanatory
note, signature page and paragraphs 1, 2, 4 and 5 of the
certifications. Refer to Exchange
Act Rule 13a-14(a) and Item 601(b)(31) of Regulation S-K. Please
ensure the revised
certifications refer to the Form 10-K/A and are currently dated. This
comment is also
applicable to your Form 10-Qs for the quarters ended March 31, 2021
and June 30, 2021.
Financial Statements
16 Acquisitions, page F-28
7. We note you completed two significant asset acquisitions during 2020.
Please address the
following:
More fully explain to us how you determined each asset acquisition
is the acquisition
of a business. Provide your analyses based on the criteria in ASC
805-10-55-3A
through 55-6 and 805-10-55-8 through 55-9.
Provide the significant tests you performed under Rule 8-04 of
Regulation S-X.
More fully explain to us how you determined the fair values of the
intangible assets
you acquired.
More fully explain to us the reasons why the amount of goodwill
you recorded in
each acquisition represents a significant percentage of the
related purchase price.
Provide the disclosures required by ASC 805-10-50-2(h)(1).
Please also comply with this comment as it relates to each asset
acquisition you completed
during 2021.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Arturo Rodriguez
Aterian, Inc.
September 2, 2021
Page 4
You may contact Andi Carpenter at 202-551-3645 or Anne McConnell at
202-551-3709
if you have questions regarding comments.
FirstName LastNameArturo Rodriguez Sincerely,
Comapany NameAterian, Inc.
Division of Corporation
Finance
September 2, 2021 Page 4 Office of Manufacturing
FirstName LastName