UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
For the quarterly period ended March 31, 2025
For the transition period from to
Commission File Number: 001-40457
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
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 x No o
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 (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer | o | Accelerated filer | o | ||||||||
| x | Smaller reporting company | ||||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of May 6, 2025, there were 42,325,298 shares of the registrant’s Class A common stock, par value $0.0001 per share, issued and outstanding and 3,213,678 shares of the registrant’s Class C common stock, par value $0.0001 per share, issued and outstanding.
TABLE OF CONTENTS
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i
PART I—FINANCIAL INFORMATION
ITEM 1. Interim Condensed Consolidated Financial Statements
PSQ HOLDINGS, INC. (dba PublicSquare)
Condensed Consolidated Balance Sheets
| March 31, 2025 | December 31, 2024 | ||||||||||
| (Unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Accounts receivable, net | |||||||||||
Loans held for investment, net of allowance for credit losses of $ | |||||||||||
Lease merchandise, net of accumulated depreciation of $ | |||||||||||
| Interest receivable | |||||||||||
| Inventory | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
Loans held for investment, net of allowance for credit losses of $ | |||||||||||
| Property and equipment, net | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Deposits | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and stockholders’ equity | |||||||||||
| Current liabilities: | |||||||||||
| Revolving line of credit | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Accrued expenses | |||||||||||
| Deferred revenue | |||||||||||
| Operating lease liabilities, current portion | |||||||||||
| Total current liabilities | |||||||||||
Convertible promissory notes, related party (Note 9) | |||||||||||
| Convertible promissory notes | |||||||||||
| Earn-out liabilities | |||||||||||
| Warrant liabilities | |||||||||||
| Operating lease liabilities | |||||||||||
| Total liabilities | |||||||||||
Commitments and contingencies (Note 14) | |||||||||||
| Stockholders’ equity | |||||||||||
Preferred stock, $ | |||||||||||
Class A Common stock, $ | |||||||||||
Class C Common stock, $ | |||||||||||
| Additional paid in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
PSQ HOLDINGS, INC. (dba PublicSquare)
Condensed Consolidated Statements of Operations (Unaudited)
| For the Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Revenues, net | $ | $ | |||||||||
| Costs and expenses: | |||||||||||
| Cost of revenue (exclusive of depreciation and amortization expense shown below) | |||||||||||
| Cost of goods sold (exclusive of depreciation and amortization expense shown below) | |||||||||||
| General and administrative | |||||||||||
| Sales and marketing | |||||||||||
| Research and development | |||||||||||
| Depreciation and amortization | |||||||||||
| Total costs and expenses | |||||||||||
| Operating loss | ( | ( | |||||||||
| Other income (expense): | |||||||||||
| Other income, net | |||||||||||
| Change in fair value of earn-out liabilities | |||||||||||
| Change in fair value of warrant liabilities | |||||||||||
| Interest expense, net | ( | ( | |||||||||
| Loss before income taxes | ( | ( | |||||||||
| Income tax (expense) benefit | ( | ||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Net loss per common share, basic and diluted | $ | ( | $ | ( | |||||||
| Weighted average shares outstanding, basic and diluted | |||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
PSQ HOLDINGS, INC. (dba PublicSquare)
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)
| Preferred Stock | Class A Common Stock | Class C Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock from Employee Stock Purchase Plan | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares for fully vested restricted stock units | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Class A Common Stock | Class C Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock for Credova Merger | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares for consulting arrangement | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares for fully vested restricted stock units | — | — | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
PSQ HOLDINGS, INC. (dba PublicSquare)
Condensed Consolidated Statements of Cash Flows (Unaudited)
| For the Three Months Ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash Flows from Operating Activities | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustment to reconcile net loss to net cash used in operating activities: | |||||||||||
| Change in fair value of warrant liabilities | ( | ( | |||||||||
| Change in fair value of earn-out liabilities | ( | ( | |||||||||
| Share-based compensation | |||||||||||
| Amortization of step-up in loans held for investment | |||||||||||
| Provision for credit losses on loans held for investment and lease merchandise | |||||||||||
| Origination of loans and leases for resale | ( | ( | |||||||||
| Proceeds from sale of loans and leases for resale | |||||||||||
| Gain on sale of loans and leases | ( | ( | |||||||||
| Depreciation and amortization | |||||||||||
| Non-cash operating lease expense | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Interest receivable | ( | ||||||||||
| Inventory | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Deposits | ( | ||||||||||
| Accounts payable | ( | ||||||||||
| Accrued expenses | ( | ||||||||||
| Deferred revenue | ( | ||||||||||
| Operating lease liabilities | ( | ( | |||||||||
| Net cash used in operating activities | ( | ( | |||||||||
| Cash flows from Investing Activities | |||||||||||
| Additions to lease merchandise | ( | ||||||||||
| Software development costs | ( | ( | |||||||||
| Principal paydowns on loans held for investment | |||||||||||
| Disbursements for loans held for investment | ( | ( | |||||||||
| Acquisition of businesses, net of cash acquired | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from Financing Activities | |||||||||||
| Proceeds from revolving line of credit | |||||||||||
| Repayments on revolving line of credit | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Net decrease in cash, cash equivalents and restricted cash | ( | ( | |||||||||
| Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash, end of the period | $ | $ | |||||||||
| Cash and cash equivalents | |||||||||||
| Restricted cash | |||||||||||
| Total cash, cash equivalents and restricted cash, end of the period | $ | $ | |||||||||
| Supplemental Non-Cash Investing and Financing Activity | |||||||||||
| Accrued variable compensation settled with RSU grants | $ | $ | |||||||||
| Shares issued in connection with Credova Merger | $ | $ | |||||||||
| Note Exchange in connection with Credova Merger | $ | $ | |||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
PSQ HOLDINGS, INC. (dba PublicSquare)
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Organization and Business Operations
PSQ Holdings, Inc. (collectively, “PublicSquare", "PSQ", "PSQH", or the "Company") is a technology-enabled Marketplace & Payments ecosystem that serves an audience of consumers and merchants who value life, family, and liberty. PublicSquare operates under three segments: Financial Technology, Marketplace, and Brands ("Financial Technology", "Marketplace", and "Brands"). The Financial Technology ("FinTech") segment comprises Credova, a "Buy Now Pay Later" company focused on the outdoors & shooting sports industry, and PSQ Payments, a payments processing company. The primary mission of the Marketplace segment is to help consumers put purpose behind their purchases by shopping with thousands of small businesses that prioritize quality products and services and traditional American values. PublicSquare leverages data and insights from the Marketplace to assess its customers’ and merchants' needs and provide a suite of wholly-owned Financial Technology services and wholly-owned direct-to-consumer ("D2C") products. The Brands segment includes EveryLife, Inc. ("EveryLife") a premium D2C life-affirming baby products company. Shares of PSQ Holdings Inc. are listed on the New York Stock Exchange and trade under the symbol “NYSE:PSQH”, and warrants are listed under the symbol "NYSE:PSQH.WS".
Credova Merger
On March 13, 2024, the Company entered into an agreement and plan of merger (the “Credova Merger Agreement”) with Cello Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary (“Merger Sub”) of the Company, Credova Holdings, Inc., a Delaware corporation (“Credova”), and Samuel L. Paul, in the capacity as the Seller Representative in accordance with the terms of the Credova Merger Agreement (“Credova Merger”). See Note 4 for further information.
Financial Technology
Our Financial Technology segment consists of PSQ Payments and Credova. PSQ Payments is the leading integrated merchant services solution that facilitates debit card, credit card, and automatic clearing house ("ACH") so the business owners utilizing our services can operate with peace of mind knowing that their economic liberties will always be protected. Credova offers a proprietary retail finance platform and related application programming interfaces (“APIs”) through which Credova is able to offer products in five main categories: (i) Merchant-originated products; (ii) Bank Partner-originated closed-end installment loans; (iii) Credova-originated loan products; (iv) Zero-interest installment products (“Pay-in-4”) and (v) leased merchandise.
Together, PSQ Payments and Credova provide a seamless, unified checkout solution that empowers Merchant customers to grow their business in a safe, secure, and reliable environment, where every transaction is protected and powered by freedom.
Marketplace
The primary mission of the Marketplace segment is to help consumers "shop their values" and put purpose behind their purchases. The PSQ platform (the “Platform”) can be accessed through two primary means:
•Mobile application - Our mobile app is available for both iOS and Android-based devices.
•Web - Users can access our full platform at PublicSquare.com.
Brands
Our brand revenues have been derived primarily from our sale of products. EveryLife, Inc. is a direct-to-consumer baby care company with a mission to provide premium products to every miraculous life. EveryLife is committed to its core values, ensuring product quality, and demonstrating generosity by donating diapers and wipes to moms in need. This commitment has quickly set EveryLife apart, elevating both its brand and products. EveryLife delivers high-performing and price-accessible products that align with the values of our consumers.
Note 2 — Liquidity
The Company's condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
5
Historically, the Company’s primary sources of liquidity have been funds from financing activities. The Company reported net losses of $4.4 million and $12.6 million for the three months ended March 31, 2025 and 2024, respectively, and had negative cash flows from operations of $6.4 million and $6.5 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025 and December 31, 2024, the Company had aggregate unrestricted cash and cash equivalents, of $28.0 million and $36.3 million and net working capital of $30.2 million and $38.2 million, respectively.
The Company believes its existing cash and cash equivalents will be able to fund operations and capital needs for the next year from the date these condensed consolidated financial statements were available to be issued.
The Company’s future capital requirements will depend on many factors including the Company’s revenue growth rate, the timing and extent of spending to support further sales and marketing, and research and development efforts. In order to finance these opportunities, the Company may need to raise additional financing. While there can be no assurances, the Company may need to pursue issuances of additional equity raises and debt rounds of financing. If additional financing is required from outside sources, the Company may not be able to raise it on terms acceptable to the Company or at all. If the Company is unable to raise additional capital when desired, the Company’s business, results of operations and financial condition would be materially and adversely affected.
Note 3 — Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, certain information and footnote disclosures normally included in consolidated financial statements in accordance with U.S. GAAP have been omitted. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.
All significant intercompany balances and transactions have been eliminated in consolidation.
The condensed consolidated balance sheet at December 31, 2024 has been derived from the audited consolidated financial statements at that date, but does not include all disclosures, including notes, required by U.S. GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for its year ended December 31, 2024.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts and disclosures of assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Estimates are adjusted to reflect actual experience when necessary. Such estimates include, but are not limited to, revenue recognition, allowance for credit losses, fair values of net assets acquired, intangible assets, inventory valuation, estimates related to useful lives of long-lived assets, estimation of contingencies, recoverability of deferred tax assets, the incremental borrowing rate applied to lease accounting, valuation of earn out liabilities and warrant liabilities, and estimation of income taxes. These estimates, judgments, and assumptions are reviewed periodically, and the impact of any revisions are reflected in the condensed consolidated financial statements in the period in which such revisions are made. Actual results could differ materially from those estimates, judgments, or assumptions, and such differences could be material to the Company’s consolidated financial position and results of operations.
Earnings (Loss) Per Share
The Company computes basic loss per share (“EPS”) by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the reporting period. All securities that meet the definition of a participating security, irrespective of whether the securities are convertible, nonconvertible, or potential common stock securities, shall be included in the computation of basic EPS using the two-class method. However, when the different classes of units have identical rights and privileges except voting rights, whereby they share equally in dividends and residual net assets on a per unit basis, the classes can be combined and presented as one class for EPS purposes. As such, the Company has combined the Class A and Class C common stock for purposes of the EPS calculation.
6
Diluted loss per share is calculated by dividing net loss by the weighted average number of common shares and dilutive common stock equivalents outstanding. During the periods when there are anti-dilutive, common stock equivalents, these are not considered in the computation. As of March 31, 2025, the Company’s restricted stock units (“RSUs”) and warrants were not considered in the computation as they are anti-dilutive. As of March 31, 2025, there were no anti-dilutive shares or common stock equivalents outstanding.
Revenue Recognition
[1]Financial Technology Revenues
Financing Revenues
The Company principally generates financing revenue from five activities: revenue from sale of loan and lease contracts, revenue from interest earned on loans, revenue from rent payments on leased merchandise, revenue from retailer discounts, and origination fees paid by lending institutions (direct revenue) earned in connection with providing financing on consumer goods. Revenue from leases is recognized over time when the Company satisfies a performance obligation based on the agreed upon financing terms. Revenue from the Company’s sales of loans and leases is recognized at a point in time when the Company satisfies a performance obligation by transferring control of the loans and leases to a third party. Interest on loans is calculated by the simple-interest method on daily balances of the principal amount outstanding. Revenue from rent payments on leased merchandise is recognized over time when the Company satisfies a performance obligation based on the agreed upon financing terms. Revenue from retailer discounts is recognized at a point in time when the Company satisfies performance obligations by purchasing the contract from the merchant in connection with a merchant-originated consumer financing product. Origination fees from lenders are recognized at the time of loan origination.
PSQ Payments generates revenue via its merchant servicer platform to provide its customers with a payments stack to efficiently manage their payment processes. The merchant servicer platform combines the payment processing and gateway into a single, integrated service encompassing all debit and credit card processing and automated clearing house in and out payment processing. The Company recognizes card processing and transaction revenues in connection with customer use of the platform.
[2]Marketplace Revenues
E-commerce Revenues
The Platform features a single cart shopping experience where consumers can purchase a variety of products from multiple vendors in one transaction. The Company is not the seller of record in these transactions. The commissions revenue earned from these arrangements are recognized on a net basis, which equates to the commission and processing fees earned in exchange for the seller marketplace services. The commission and processing fees are recognized net of estimated refunds when the corresponding transaction is confirmed by the buyer and seller. The Company does not take title to inventory sold or assume risk of loss at any point in time during the transaction and is authorized to collect consideration from the buyer and remit net consideration to the seller to facilitate the processing of the confirmed purchase transaction. The Company currently records processing fees from its merchant service providers as a component of Cost of revenues on the condensed consolidated statement of operations.
Advertising Services
The Company enters into advertising subscription arrangements with its customers. Revenue is recognized over-time as the ads are displayed over the subscription period. The Company is providing a service and the service is being consumed by the customer simultaneously over the period of service. In general, the Company reports advertising revenue on a gross basis, since the Company controls the advertising inventory before it is transferred to our customers. Our control is evidenced by our sole ability to monetize the advertising inventory before it is transferred to customers.
The Company also sells push notifications and email blasts and recognizes revenue at a point in time when delivered. Push notifications and email blasts are considered delivered when an ad is displayed to users. When a customer enters into an advertising subscription arrangement that includes push notifications and/or email blasts, the Company allocates a portion of the total consideration to the push notification and email blast performance obligations based on the residual approach.
7
In June 2024, the Company launched its cost per mille (“CPM”) advertising model. The advertising revenue related to CPM is recognized based on the number of impressions received from advertising on websites or mobile device applications, or as the advertiser’s previously agreed-upon performance criteria are satisfied.
[3]Brand Revenues
Product Sales
The Company generates revenue through the sale of diapers, wipes, soaps, lotions, and other baby products to consumers by way of the Company’s Platform. The Company considers customer orders to be the contracts with the customer. There is a single performance obligation, which is the Company’s promise to transfer its product to customers based on specific payment and shipping terms in the arrangement. The entire transaction price is allocated to this single performance obligation. Product revenue is recognized when a customer obtains control of the product, which occurs at shipment. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products.
The Company evaluated principal versus agent considerations to determine whether it is appropriate to record third-party logistics provider fees paid as an expense. These fees are recorded as shipping and handling expenses within cost of goods sold 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 the third-party logistics provider to return the Company’s inventories to any location specified by the Company. It is the Company’s responsibility to process 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 chargebacks), establishes prices of its products, fulfills the goods to the customer and can limit quantities or stop selling the goods at any time.
Product Returns
Consistent with industry practice, the Company generally offers customers a limited right of return for products purchased. The Company reviews its receivables quarterly and records a reserve, if necessary. As of March 31, 2025 and December 31, 2024, the Company had approximately $9,000 and $14,000 , respectively, recorded as an allowance for sales returns.
Loans Held for Investment, net
Loans are unsecured and are stated at the amount of unpaid principal. Interest on loans is calculated by the simple-interest method on daily balances of the principal amount outstanding. Accrued interest on loans is discontinued when management believes that, after considering collection efforts and economic and business conditions, the collection of interest is doubtful. The Company’s policy is to stop accruing interest when the loan becomes 120 days’ delinquent.
All interest accrued but not collected for loans that are placed on non-accrual status or subsequently charged-off is reversed against interest income which is included in revenues, net on the condensed consolidated statements of operations. Income is subsequently recognized on the cash basis until, in management’s judgment, the borrower’s ability to make periodic and future principal and interest payments are reasonably assured, in which case the loan is returned to accrual status. The Company classifies its loans as either current or past due. Amounts are considered past due if a scheduled payment is not paid on its due date. The Company does not modify the terms of its existing loans with customers.
Lease Merchandise, net
The Company leases goods, consisting primarily of sporting goods, to its customers under certain terms agreed to by the customer and recognizes revenue straight-line over the lease term in accordance with Accounting Standards Codification ("ASC") 842, Leases ("ASC 842"). The customer has the right to acquire ownership either through a purchase option or through payment of all required lease payments. Leases typically range between 12 and 24 months. All the Company's customer agreements are considered operating leases. The consumer goods under operating leases are initially recorded at cost and depreciated on a straight-line basis over the term of the related leases to the consumer goods estimated residual value. All lease assets are purchased concurrent with the execution of a lease commitment by the lessee. Thus, the original depreciation period corresponds with the term of the original lease. Upon transfer of ownership of merchandise to customers, resulting from satisfaction of their lease obligations, the related cost and accumulated depreciation are eliminated from lease merchandise. Amounts shown in the condensed consolidated balance sheets are net of accumulated depreciation and allowances for lease losses.
8
The Company applies depreciation to lease merchandise as follows: (i) straight-line over the life of the lease term; (ii) accelerated deprecation for impaired leases and (iii) accelerated depreciation for leases when an early purchase option (buyout) is exercised.
The Company sells certain lease contracts to third parties and records the undepreciated cost of lease merchandise at the time of the sale within the net gain on lease contracts sold on the condensed consolidated statement of operations.
Allowance for Credit Losses - Loans Held for Investment
The Company estimates expected credit losses over the contractual term of loans and leases, incorporating adjustments for anticipated prepayments and defaults when applicable. The contractual term excludes expected extensions, renewals, and modifications unless one of the following conditions is met: (i) management has a more likely than not expectation at the reporting date that an extension or renewal option is included in the original or modified contract, and (ii) such options are not unconditionally cancellable by the Company.
The foundation for the discount rate used in our credit loss estimation is the Secured Overnight Financing Rate ("SOFR"), a widely accepted benchmark for the cost of overnight borrowing collateralized by United States Treasury securities. SOFR is commonly used by traditional credit and warehouse facilities to account for interest rate variability. In addition to SOFR, our discount rate incorporates an interest rate floor, which reflects the minimum rate a market investor would require for a pool of unsecured consumer receivables. This rate is further adjusted based on prevailing market and macroeconomic conditions. The combination of SOFR and the interest rate floor determines the overall discount rate applied to calculate the net present value of expected credit losses. Management reviews the discount rate at each reporting period and updates when applicable.
The discount rate fluctuates in response to macroeconomic market cycles, as determined by management’s assessment of future economic conditions. The macroeconomic cycle is influenced by changes in money supply growth and contraction, which are inversely correlated with the discount rate. This inverse relationship allows for an adjusted present value assessment that accounts for the broader economic environment. Our cash flow model represents historical financial performance, while the discounted cash flow methodology projects future credit losses by adjusting the present value of historical data.
Segment Reporting
Operating segments are defined as components of an entity for which separate discrete financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company has determined that the Company has three reportable segments comprised of Financial Technology, Marketplace, and Brands.
Concentration of Risks
Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents, and accounts receivable. Cash balances may exceed the FDIC insurance limit of $250,000. The Company has not experienced any losses in such accounts.
For the three months ended March 31, 2025, one customer accounted for 14 % of the Company’s revenue. For the three months ended March 31, 2024, no customer accounted for 10% or more of the Company’s revenue.
As of March 31, 2025 and December 31, 2024, no customer accounted for 10% or more of the Company’s accounts receivable.
9
Recent Accounting Pronouncements
Recently Adopted Accounting Standards
In March 2024, the Financial Accounting Standards Board’s (“FASB”) issued Accounting Standards Update ("ASU") No. 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards (“ASU 2024-01”), which intends to improve clarity and comparability without changing the existing guidance. ASU 2024-01 provides an illustrative example intended to demonstrate how entities that account for profits interest and similar awards would determine whether a profits interest award should be accounted for in accordance with ASC 718, Compensation—Stock Compensation ("ASC 718"). Entities can apply the guidance either retrospectively to all prior periods presented in the financial statements or prospectively to profits interest and similar awards granted or modified on or after the date of adoption. ASU 2024-01 is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company adopted ASU 2024-01 effective January 1, 2025, which did not have a material impact on its consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions. ASU 2023-09 will be effective for public companies for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09 on its condensed consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date ("ASU 2025-01"). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of these standards will have on its condensed consolidated financial statements.
The Company has assessed the adoption impacts of recently issued accounting standards by the FASB on the Company’s condensed consolidated financial statements as well as material updates to previous assessments, if any, to the Company’s annual audited consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2024.
Note 4 — Credova Acquisition
On March 13, 2024, the Company entered into the Credova Merger Agreement.
Pursuant to the Credova Merger Agreement, on March 13, 2024, Merger Sub merged with and into Credova. In connection with the Credova Merger, each share of Credova’s equity was converted into the right to receive newly-issued shares of PublicSquare Class A common stock, and was delivered to the Credova stockholders at the closing (“Credova Stockholders”).
Credova Merger Consideration
As consideration for the Credova Merger, Credova Stockholders received 2,920,993 newly-issued shares of Class A common stock (the “Consideration Shares”). A number of Consideration Shares equal to ten percent (10 %) of the Consideration Shares (the “Escrow Shares”) was placed in an escrow account for indemnity claims made under the Credova Merger Agreement. In March 2025, upon the 12-month anniversary of the closing, the Escrow Shares remaining in escrow were released and distributed pro rata to the former Credova Stockholders.
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The acquisition of Credova was accounted for as a business combination using the acquisition method pursuant to ASC 805, Business Combinations ("ASC 805"). As the acquirer for accounting purposes, the Company estimated the purchase price, assets acquired and liabilities assumed as of the acquisition date, with the excess of the purchase price over the fair value of net assets acquired recognized as goodwill.
The purchase price allocation as of the acquisition date is presented as follows:
| March 13, 2024 | |||||
| Purchase consideration: | |||||
| Common stock, at fair value | $ | ||||
| Assumption of notes payable | |||||
| Cash paid | |||||
| Total purchase consideration | $ | ||||
| Purchase price allocation: | |||||
| Cash | $ | ||||
| Loans held for investment | |||||
| Fixed assets | |||||
| Intangible assets | |||||
| Prepaid expenses | |||||
| Goodwill | |||||
| Operating lease right-of-use asset | |||||
| Accounts payable and other current liabilities | ( | ||||
| Operating lease liability | ( | ||||
| Revolving line of credit | ( | ||||
| Fair value of net assets acquired | $ | ||||
The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill and is primarily attributed to the synergies expected from expanded market opportunities when integrating the acquired developed technologies with the Company’s offerings as well as acquiring an assembled workforce. The goodwill balance is not deductible for income tax purposes.
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in years):
| Fair value | Useful life | ||||||||||
| Trademarks and tradenames | $ | ||||||||||
| Internally developed software | |||||||||||
| Merchant relationships | |||||||||||
| State operating licenses | Indefinite | ||||||||||
| Total intangible assets | $ | ||||||||||
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The following unaudited supplemental pro forma combined financial information presents the Company's combined results of operations for the three months ended March 31, 2024 as if the Credova Merger had occurred on January 1, 2024. The pro forma information is presented for comparative purposes only and is not necessarily indicative of the Company's operating results that may have occurred had the Credova Merger been completed on January 1, 2024. In addition, the unaudited pro forma financial information does not give effect to any anticipated cost savings, operating efficiencies or other synergies that may be associated with the merger, or any estimated costs that have been or will be incurred by the Company to integrate the assets and operations of Credova.
| Three months ended March 31, 2024 | |||||
| Revenue | $ | ||||
| Net loss | $ | ( | |||
Note 5 — Goodwill and Intangible Assets, Net
Goodwill as of March 31, 2025 was $10.9 million, which resulted from the Credova Merger (See Note 4) and is included in the Financial Technology segment.
The following table summarizes intangible assets, net:
| Useful Life | March 31, 2025 | December 31, 2024 | |||||||||||||||
| Capitalized software development costs | $ | $ | |||||||||||||||
| Trademark and tradenames | |||||||||||||||||
| Internally developed software | |||||||||||||||||
| Merchant relationships | |||||||||||||||||
| State operating licenses | Indefinite | ||||||||||||||||
| Purchased technology | |||||||||||||||||
| Brand name | |||||||||||||||||
| Total intangible assets | |||||||||||||||||
| Less: Accumulated amortization | ( | ( | |||||||||||||||
| Total intangible assets, net | $ | $ | |||||||||||||||
Amortization expenses were approximately $1.1 million and $0.3 million for the three months ended March 31, 2025 and 2024, respectively.
As of March 31, 2025, estimated future amortization expense is expected as follows:
| Remainder of 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| $ | |||||
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Note 6 — Loans Held for Investment, Net
The Company classifies its loans as either current or past due. The following reflects the credit quality of the Company’s loans held for investment, as delinquency status has been identified as the primary credit quality indicator, based on the recorded amount of the receivable in delinquent status as of March 31, 2025:
| Past Due | |||||||||||||||||||||||||||||
| Current | 30-59 Days | 60-89 days | > 90 days | Total | |||||||||||||||||||||||||
| Loans held for investment | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Allowance for credit losses | ( | ||||||||||||||||||||||||||||
| Loans held for investment, net | $ | ||||||||||||||||||||||||||||
The following reflects the credit quality of the Company’s loans held for investment, as delinquency status has been identified as the primary credit quality indicator, based on the recorded amount of the receivable in delinquent status as of December 31, 2024:
| Past Due | |||||||||||||||||||||||||||||
| Current | 30-59 Days | 60-89 days | > 90 days | Total | |||||||||||||||||||||||||
| Loans held for investment | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Allowance for credit losses | ( | ||||||||||||||||||||||||||||
| Loans held for investment, net | $ | ||||||||||||||||||||||||||||
These loans have a variety of lending terms as well as original maturities ranging from six weeks to thirty-six months. Given that the Company’s loan portfolio focuses on unsecured installment loans, the Company evaluates the portfolio as a single homogeneous loan portfolio and performs further analysis by product type as needed.
The Company closely monitors credit quality for its loans held for investment to manage and evaluate exposure to credit risk. Credit risk management begins with initial underwriting, where a consumer is assessed based on the Company’s underwriting and credit policy. This includes Know Your Customer (“KYC”) identification, traditional credit scoring models, and various Fair Credit Reporting Act (“FCRA”) permissible consumer credit and risk data. Credit quality is monitored subsequent to underwriting based on performance metrics that include, but are not limited to, delinquency and default metrics. The Company uses software that monitors credit quality of the respective portfolio and performs analysis on credit data.
The following tables summarize the balances of and changes in allowance for credit losses on loans held for investment as of March 31, 2025 and December 31, 2024:
| Balance at January 1, 2024 | $ | ||||
| Balance acquired from Credova Merger | |||||
| Charge-offs | ( | ||||
| Provision for credit losses | |||||
| Balance at March 31, 2024 | $ | ||||
| Balance at December 31, 2024 | $ | ||||
| Charge-offs | ( | ||||
| Provision for credit losses | |||||
| Balance at March 31, 2025 | $ | ||||
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Note 7 — Lease Merchandise, Net
The Company's lease merchandise, net of accumulated depreciation and allowance as of March 31, 2025 and December 31, 2024 is as follows:
| March 31, 2025 | December 31, 2024 | ||||||||||
| Lease merchandise | $ | $ | |||||||||
| Less: Accumulated depreciation | ( | ||||||||||
| Less: Allowance for lease merchandise losses | ( | ||||||||||
| Lease merchandise, net | $ | $ | |||||||||
Depreciation expense on lease merchandise for the three months ended March 31, 2025 was $83,000 , which includes $57,000 of accelerated depreciation due to early buyout. Depreciation expense on lease merchandise for the three months ended March 31, 2024 was zero .
The Company's merchandise on operating leases consisted mostly of sporting goods during the three months ended March 31, 2025. All of the Company's customer agreements are considered operating leases, and the Company currently does not have any sales-type or direct financing leases. There were no merchandise leases as of December 31, 2024.
The following table summarizes the balances of and changes in allowance for lease losses on lease merchandise as of March 31, 2025:
| Balance at January 1, 2025 | $ | ||||
| Charge-offs | |||||
| Provision for lease merchandise write-offs | |||||
| Balance at March 31, 2025 | $ | ||||
There was no balance or changes in the allowance for lease losses on lease merchandise during the three months ended March 31, 2024.
Note 8 — Revolving Line of Credit
The Company assumed a $10.0 million revolving loan with a finance company through the Credova Merger (Note 4) which bears interest at a rate of 15 % and requires minimum monthly interest payments. On July 1, 2024 the Company entered into Amendment No. 5 to the Amended and Restated Loan and Security Agreement. The amendment extended the funding period for 12 months beginning July 1, 2024. The line of credit will bear interest at an annual rate of 14.5 % with minimum interest requirement. The borrowing base is set at 89 % of the unpaid principal balance of pledge receivables that are no more than sixty days past due. The amendment contains customary covenants, trigger events, representations and warranties. Certain assets at Credova are assigned as collateral.
The revolving line of credit maturity date is subsequent to the revolving period, which is the earlier of: (a) nine (9) months following the funding termination date (June 30, 2025) and (b) the remittance date on which the aggregate outstanding advances are $1.0 million or below.
Monthly remittance remains in effect with a borrowing base calculation. During the amortization period, the Company will repay the aggregate outstanding advances until such aggregate outstanding advances do not exceed the borrowing base, and then 100 % of the remaining collections until the aggregate outstanding advances have been reduced to zero.
As of March 31, 2025 and December 31, 2024, the outstanding advances under this revolving loan totaled $3.7 million and $3.8 million, respectively.
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Note 9 — Convertible Promissory Notes
Promissory Note Exchange
Prior to the execution of the Credova Merger Agreement, Credova, PublicSquare and certain holders of outstanding subordinated notes (“Subdebt Notes”) issued by Credova (the “Participating Noteholders”) entered into a Note Exchange Agreement (the “Note Exchange Agreement”) pursuant to which, immediately prior to the Closing, the Participating Noteholders delivered their Subdebt Notes of Credova for cancellation, in exchange for newly-issued replacement notes issued by PublicSquare, convertible into shares of Class A common stock (the “Replacement Notes”). The Replacement Notes have 9.75 % simple interest per annum and 10 -year maturity dates.
Pursuant to the terms of the Replacement Notes, at any time after the closing of the transactions contemplated by the Credova Merger Agreement (the “Credova Closing”), Participating Noteholders may elect to convert their Replacement Notes into a number of shares of Class A common stock equal to the quotient obtained by dividing (x) the outstanding principal amount of the Replacement Note to be converted plus accrued and unpaid interest by (y) 4.63641 , subject to adjustment for stock splits and other similar transactions (the “Conversion Price”). At any time, the Company may call the Replacement Notes for a cash amount equal to accrued interest plus (i) between the Credova Closing and the first anniversary of the Credova Closing, 120 % of the then outstanding principal amount, (ii) between the first anniversary and the second anniversary of the Credova Closing, 105 % of the then outstanding principal amount and (iii) after the second anniversary of the Credova Closing, the then outstanding principal amount of the Replacement Note. Further, the Replacement Notes permit the Company, in its discretion, to require conversion of the Replacement Notes into shares of Class A common stock if the daily volume-weighted average trading price of the Company Class A common stock exceeds 140 % of the Conversion Price on each of at least ten consecutive trading days during the twenty trading day period prior to notice of such required conversion. The Company determined the embedded derivatives did not require bifurcation.
Credova Subdebt Notes not exchanged for Replacement Notes at Credova Closing were canceled following payment in full in cash.
As of March 31, 2025 and December 31, 2024, the convertible promissory notes payable was $8.4
Convertible Promissory Notes – Related Party
In March 2024, the Company entered into a note purchase agreement for a 9.75 % private placement convertible note for $10.0 million invested by a Board member and his affiliates. Terms for the note were priced based on notes exchanged as part of the Credova Merger described above.
In August 2024, the Company entered into an agreement for a $10.0 million convertible note in a private placement with a Board member and affiliates. The note has identical terms to the notes offered in March 2024.
Note 10 — Related Parties
In June 2023, the Company signed a consulting agreement with a Board member to provide advisory services to EveryLife. The agreement was subsequently amended and then mutually cancelled in November 2024. For the three months ended March 31, 2025 and 2024, the Company incurred and paid zero and $0.3 million, respectively.
In August 2023, the Company signed a one-year strategic consulting agreement with a consulting company that is controlled by a Board member. The consulting company was engaged by the Company to provide strategic advice and assistance to the Company in connection with capital markets strategy, acquisition strategy, investor relations strategy, and other strategic matters for a fixed fee of $80,000 per month plus expenses. The fixed fee was reduced to $60,000 per month plus expenses in 2024 and the agreement was terminated at the end of November 2024. For the three months ended March 31, 2025 and 2024, the Company incurred and paid zero and $540,000 , respectively, relating to the agreement.
In December 2023, the Company signed another agreement with the same strategic consulting company that is controlled by a Board member. The consulting company was engaged by the Company to provide merger and acquisitions advice in connection with the Credova Merger. The term of the agreement was the earlier of twelve months or the consummation of the Credova Merger, which occurred on March 13, 2024. The fees for these services was $150,000 payable promptly at the closing of the Credova Merger and Class A common stock in the Company of 4 % of the gross enterprise value or total consideration paid with respect to the merger. For the three months ended March 31, 2025 and 2024, the Company incurred and paid zero and $150,000 , respectively, relating to the agreement.
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Note 11 — Share Based Compensation
On July 25, 2023, the Board of Directors (the "Board") of the Company approved the PSQ Holdings, Inc. 2023 Stock Incentive Plan (the “Plan”) as well as the 2023 Employee Stock Purchase Plan (the "ESPP”), whereby it may grant to certain employees, consultants and advisors an award, such as (a) incentive stock options, (b) non-qualified stock options, (c) restricted stock and (d) RSUs, of the Company.
2023 Stock Incentive Plan
Awards may be made under the Plan for up to such number of shares of Class A common stock of the Company as is equal to the sum of:
(A)a number of shares of Class A common stock equal to fifteen percent (15 %) of the outstanding shares of all classes of Company Common Stock, determined immediately following the closing of the business combination between the Company and PublicSq. Inc. (f/k/a PSQ Holdings, Inc.), a Delaware corporation.
(B)an annual increase to be added on the first day of each fiscal year, commencing on January 1, 2024 and continuing for each fiscal year until, and including, January 1, 2033, equal to the lesser of (i) 5 % of the outstanding shares of all classes of Company Common Stock on such date and (ii) the number of shares of Class A common stock determined by the Board.
2023 Employee Stock Purchase Plan
The purpose of this plan is to provide eligible employees opportunities to purchase shares of the Company’s Class A common stock. For this purpose, the Board approved 600,000 shares of Class A common stock, plus an annual increase to be added on the first day of each fiscal year, commencing on January 1, 2024 and continuing for each fiscal year until, and including, January 1, 2033, equal to the least of (i) 425,000 shares of Class A common stock, (ii) 5 % of the outstanding shares of all classes of Company common stock, $0.0001 par value per share, on such date and (iii) a number of shares of Class A common stock determined by the Board. On January 2, 2025, the Company issued 3,995 shares of its of Class A common stock pursuant to scheduled purchases under the ESPP.
Restricted Stock Units
During the three months ended March 31, 2025, and 2024, the Company issued RSU’s under the 2023 Stock Incentive Plan to employees, advisors, and members of the Board. Each RSU entitles the recipient to one share of our common stock upon vesting. The Company measures the fair value of RSUs using the stock price on the date of grant.
Share-based compensation expense for RSUs is recorded ratably over their vesting period.
A summary of the activity with respect to, and status of, RSUs during the three-month period ended March 31, 2025 is presented below:
| Number of RSUs | Weighted Average Grant Date Value | ||||||||||
| Unvested as of January 1, 2025 | $ | ||||||||||
| Granted | |||||||||||
| Forfeited | ( | ||||||||||
| Vested | ( | ||||||||||
| Unvested as of March 31, 2025 | $ | ||||||||||
As of March 31, 2025 and December 31, 2024 there were 4,822,871 and 3,386,082 RSUs outstanding, respectively.
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As of March 31, 2025, unrecognized compensation cost related to the grant of RSUs was approximately $15.6 million. Unvested outstanding RSUs as of March 31, 2025 and December 31, 2024 had a weighted average remaining vesting period of 1.66
Share-based compensation relating to earn-out
In accordance with ASC 718, these are awards granted with a market condition. The effect of this market condition was reflected in the grant-date fair value of an award.
The Company recorded $0.9 11.3 million.
During the three months ended March 31, 2025 and 2024, the Company recorded the following share-based compensation expense, related to RSUs, earn-out shares and Credova Merger:
| For the three months ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cost of sales | $ | $ | |||||||||
| General and administrative | |||||||||||
| Sales and marketing | |||||||||||
| Research and development | |||||||||||
| Transaction costs incurred in connection with Credova Merger | |||||||||||
| Total share-based compensation | $ | $ | |||||||||
Note 12 — Fair Value Measurements
The Company accounts for certain assets and liabilities at fair value and classifies these assets and liabilities within the fair value hierarchy (Level 1, Level 2, or Level 3).
Assets and liabilities subject to fair value measurements are as follows:
| As of March 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and cash equivalents – Money market | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Warrant liabilities – Public Warrants | $ | $ | $ | $ | |||||||||||||||||||
Warrant liabilities – Private placement warrants(1) | |||||||||||||||||||||||
Earn-out liabilities(2) | |||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | |||||||||||||||||||
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| As of December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and cash equivalents – Money market | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Warrant liabilities – Public Warrants | $ | $ | $ | $ | |||||||||||||||||||
Warrant liabilities – Private placement warrants(1) | |||||||||||||||||||||||
Earn-out liabilities(2) | |||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | |||||||||||||||||||
(1)Private Placement Warrants were estimated using a Black-Scholes option pricing model utilizing assumptions related to the contractual term of the instruments, estimated volatility of the price of the common stock and current interest rates.
(2)The fair value of the earn-out liabilities was estimated using Monte Carlo simulation utilizing assumptions related to the contractual term of the instruments, estimated volatility of the price of the common stock and current interest rates.
The following tables summarize the balances of and changes in Level 3 private placement warrants and earn-out liabilities measured at fair value on a recurring basis for the three months ended March 31, 2025 and 2024:
| Private Placement Warrants | Earn-out Liabilities | ||||||||||
| Balance at January 1, 2025 | $ | $ | |||||||||
| Change in fair value | ( | ( | |||||||||
| Balance at March 31, 2025 | $ | $ | |||||||||
| Balance at January 1, 2024 | $ | $ | |||||||||
| Change in fair value | ( | ( | |||||||||
| Balance at March 31, 2024 | $ | $ | |||||||||
Note 13 — Segments
The Company routinely evaluates whether its operating and reportable segments continue to reflect the way the CODM evaluates the business. The determination is based on: (1) how the Company’s CODM evaluates the performance of the business, including resource allocation decisions, and (2) whether discrete financial information for each operating segment is available. The Company considers the Chief Executive Officer to be its CODM.
As of March 31, 2025, the Company’s operating and reportable segments include:
•Financial Technology: Our wholly owned Financial Technology subsidiaries include:
•Credova Holdings, Inc., which generates revenue primarily through five activities: revenue from sale of loan and lease contracts, revenue from interest earned on loans, revenue from rent payments on leased merchandise, revenue from retailer discounts and origination fees paid by lending institutions (direct revenue) earned in connection with providing financing on consumer goods.
•PSQPayments LLC (also referred to as “PSQ Payments”), is a wholly owned subsidiary of PublicSquare which generates revenue via its merchant servicer platform to provide its customers with a payments stack to efficiently manage their payment processes. The merchant servicer platform combines the payment processing and gateway into a single, integrated service encompassing all debit and credit card processing and ACH in and out payment processing.
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•Marketplace: PublicSquare has created a marketplace platform to access consumers that are drawn to patriotic values. The Company generates revenue from advertising and e-commerce transaction revenues.
•Brands: The Company's wholly-owned Brands subsidiaries include EveryLife, Inc., which generates revenue from online and wholesale sales of diapers, wipes, soaps, lotions, and other baby products.
The CODM measures and evaluates the Company’s performance based on segment gross revenue, segment non-GAAP gross profit and segment non-GAAP operating loss.
Segment performance, as defined by the Company, is not necessarily comparable to other similarly titled captions of other companies.
The following tables set forth the Company’s revenues, net and operating loss for the three months ended March 31, 2025 and 2024:
| For the three months ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Revenues, net: | |||||||||||
| Financial Technology | |||||||||||
| Direct revenue | $ | $ | |||||||||
| Interest income on loans | |||||||||||
| Loan and lease contracts sold, net | |||||||||||
| Lease merchandise, net | |||||||||||
| Payments revenue | |||||||||||
| Total Financial Technology revenues, net | |||||||||||
| Marketplace | |||||||||||
| Advertising and e-commerce sales | |||||||||||
| Brands | |||||||||||
| Product sales | |||||||||||
| Returns and discounts | ( | ( | |||||||||
| Total Brand revenues, net | |||||||||||
| Total revenues, net | $ | $ | |||||||||
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| For the three months ended March 31, 2025 | |||||||||||||||||||||||
| Financial Technology | Marketplace | Brands | Total | ||||||||||||||||||||
| Revenues, net | $ | $ | $ | $ | |||||||||||||||||||
Cost of revenues attributable to segments(1) | ( | ( | ( | ( | |||||||||||||||||||
| Cost of goods sold attributable to segments | ( | ( | ( | ||||||||||||||||||||
| Segment non-GAAP Gross Profit | |||||||||||||||||||||||
| Operating expenses attributable to segments | ( | ( | ( | ( | |||||||||||||||||||
| Segment non-GAAP operating loss | ( | ( | ( | ( | |||||||||||||||||||
| Reconciliation of total segment non-GAAP operating loss to operating loss: | |||||||||||||||||||||||
Corporate costs not allocated to segments(1) | ( | ||||||||||||||||||||||
| Share-based compensation | ( | ||||||||||||||||||||||
| Depreciation and amortization | ( | ||||||||||||||||||||||
| Operating loss | ( | ||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Loss before income taxes | $ | ( | |||||||||||||||||||||
(1)$23,471 categorized under “Cost of revenue (exclusive of depreciation and amortization expense shown below)” in the condensed consolidated statements of operations has been included in the "Corporate costs not allocated to segments" line item.
| For the three months ended March 31, 2024 | |||||||||||||||||||||||
| Financial Technology | Marketplace | Brands | Total | ||||||||||||||||||||
| Revenues, net | $ | $ | $ | $ | |||||||||||||||||||
| Cost of revenues attributable to segments | ( | ( | ( | ||||||||||||||||||||
| Cost of goods sold attributable to segments | ( | ( | |||||||||||||||||||||
| Segment non-GAAP Gross Profit | |||||||||||||||||||||||
| Operating expenses attributable to segments | ( | ( | ( | ( | |||||||||||||||||||
| Segment non-GAAP operating loss | ( | ( | ( | ( | |||||||||||||||||||
| Reconciliation of total segment non-GAAP operating loss to operating loss: | |||||||||||||||||||||||
| Corporate costs not allocated to segments | ( | ||||||||||||||||||||||
| Transaction costs incurred in connection with potential acquisitions | ( | ||||||||||||||||||||||
| Share-based compensation (exclusive of what is included in transaction costs above) | ( | ||||||||||||||||||||||
| Depreciation and amortization | ( | ||||||||||||||||||||||
| Operating loss | ( | ||||||||||||||||||||||
| Other income, net | |||||||||||||||||||||||
| Loss before income taxes | $ | ( | |||||||||||||||||||||
No asset information has been disclosed as the CODM does not regularly review asset information by reportable segment.
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Note 14 — Commitments and Contingencies
Other Legal Matters
Credova is responding to inquiries from the Consumer Financial Protection Bureau ("CFPB") regarding Credova’s lease products. In connection with this, the CFPB informed Credova that it is authorized to pursue a resolution or file an enforcement action, and has suggested certain injunctive relief. No assurance can be given that a settlement will be reached or about the terms of any such settlement. At this time, the Company is unable to state the exact nature of any relief that might be sought in any such action or resolution, including monetary relief or penalties, if any.
From time to time in the ordinary course of business, the Company may be subject to various claims, charges, and litigation. At March 31, 2025, except as described in the preceding paragraph, the Company did not have any pending claims, charges or litigation that were expected to have a material adverse impact on its financial position, results of operations or cash flows.
Note 15 — Subsequent Events
The Company has evaluated and recognized or disclosed subsequent events, as appropriate, from the condensed consolidated balance sheet date through the date the condensed consolidated financial statements were available to be issued.
The Company entered into a 37 -month lease for approximately 5,437 square feet of office space in West Palm Beach, Florida, on April 2, 2025 at a monthly rate of $19,483 . The lease expires on May 2, 2028.
On April 18, 2025, the Company acquired certain software assets and intellectual property that it intends to use to enhance the Company’s payments service offerings. The consideration paid by the Company in the transaction was 2,000,000 shares of the Company’s Class A common stock and potential earn-out payments of up to $1,250,000 .
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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes hereto included in Part I, Item 1 of this quarterly report on Form 10-Q and in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 13, 2025. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified below, and those discussed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024, in “Item 1A. Risk Factors” in Part II of this Quarterly Report on Form 10-Q and in any subsequent filing we make with the SEC.
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “PublicSquare,” “we”, “us”, “our”, and the “Company.”
Cautionary Note Regarding Forward-Looking Statements
This report, including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act. These forward-looking statements can be identified by the use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,” “will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in each case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations. Such statements include, but are not limited to, the future financial performance of the company, our growth plans and opportunities, our financial performance, our ability to raise additional funds, and any other statements that are not statements of current or historical facts.
The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in our Form 10-K for the year ended December 31, 2024, which are incorporated by reference herein. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law. These risks and others described under “Risk Factors” may not be exhaustive.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this report. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods.
Overview
PublicSquare is a technology-enabled Marketplace & Payments ecosystem that serves an audience of consumers and merchants who value life, family, and liberty. PublicSquare operates under three segments: Financial Technology, Marketplace, and Brands. The primary mission of the Marketplace segment is to help consumers put purpose behind their purchases by shopping with thousands of small businesses that prioritize quality and classic American values. PublicSquare leverages data and insights from the Marketplace to assess its customers’ and merchants' needs and provide a suite of wholly-owned Financial Technology services and a wholly-owned Direct to Consumer ("D2C") brand. The Financial Technology segment comprises Credova, a "Buy Now Pay Later" ("BNPL") company focused on the outdoors & shooting sports industry, and PSQ Payments, a "cancel-proof" payments processing company. The Brands segment includes EveryLife, a premium D2C life-affirming baby products company.
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Recent Developments
Board of Director Updates
On February 19, 2025, Board member Kelly Loeffler was confirmed as the Administrator of the Small Business Administration ("SBA") by the United States Senate. Per the Company's Corporate Governance Principles, upon her confirmation, Ms. Loeffler submitted her resignation as a member of the Board, effective on February 19, 2025.
On March 10, 2025, the Board appointed Willie Langston to the Audit Committee. Mr. Langston is an audit committee financial expert as defined in Item 407 of Regulation S-K and is financially literate and has accounting or related financial management expertise as such terms are used in Rule 303A.07 of the NYSE rules.
On April 25, 2025, the Board unanimously approved the following committee appointments:
•Willie Langston was appointed to the Compensation Committee
•Blake Masters was appointed to the Nominating Committee
•Nick Ayers was appointed as Chairman of the Nominating Committee
Components of Results of Operations
During the three months ended March 31, 2025 and 2024, our net loss was $4.4 million and $12.6 million, respectively. During the three months ended March 31, 2025, our net loss decreased $8.1 million as compared to the three months ended March 31, 2024, due to a $3.3 million increase in revenues, a $0.8 million reduction in operating expenses, a year over year gain of $5.2 million relating to the change in fair value of the warrant liabilities , and a year over year gain of $0.3 million relating to the change in fair value of the earnout liabilities quarter over quarter. This is offset by a $0.7 million increase in interest expense related to the revolving credit facility and convertible promissory notes issued. Since inception, we have financed our operations primarily through financing activities.
Revenues, net
We generate revenues from our three segments: Financial Technology, Marketplace, and Brands; a summary of each is described below.
Financial Technology
The Company principally generates BNPL revenue from five activities: revenue from sale of loan and lease contracts, revenue from interest earned on loans, revenue from rent payments on leased merchandise, revenue from retailer discounts, and origination fees paid by lending institutions (direct revenue) earned in connection with providing financing on consumer goods. Revenue from the Company’s sales of loans and leases is recognized at a point in time when the Company satisfies a performance obligation by transferring control of the loans and leases to a third party. Interest on loans is calculated by the simple-interest method on daily balances of the principal amount outstanding. Revenue from leases is recognized over time when the Company satisfies a performance obligation based on the agreed upon financing terms. Revenue from retailer discounts is recognized at a point in time when the Company satisfies performance obligations by purchasing the contract from the merchant in connection with a merchant-originated consumer financing product. Origination fees from lenders are recognized at time of loan origination.
PSQ Payments generates revenue via its merchant servicer platform to provide its customers with a payments stack to efficiently manage their payment processes. The merchant servicer platform combines the payment processing and gateway into a single, integrated service encompassing all debit and credit card processing and ACH in and out payment processing. The Company recognizes card processing and transaction revenues in connection with customer use of the platform.
Marketplace
Marketplace revenues are derived from a mix of advertising and e-commerce revenues.
Advertising revenues are generated from digital advertising fees from both local and national advertisers and also through our newly launched Cost per Mille ("CPM") advertising product which allows businesses to deliver more effective ads to consumers.
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E-commerce revenue is derived from a mix of (i) referral fees in the form of commissions, based on the dollar amounts of transactions between the businesses we connect on the PSQ Platform and (ii) transaction-based fees from providing multi-merchant shopping cart and checkout capabilities on the PSQ Platform.
Brands
Our brand revenues have been derived primarily from our sale of products.
The Company generates revenue through the sale of diapers, wipes, soaps, lotions, and other baby products to consumers by way of the Company’s Platform. The Company considers customer orders to be the contracts with the customer. There is a single performance obligation, which is the Company’s promise to transfer the Company’s product to customers based on specific payment and shipping terms in the arrangement.
For a description of our revenue recognition policies, see Note 3, Summary of Significant Accounting Policies, in our unaudited condensed consolidated financial statements.
Cost of Revenue (exclusive of depreciation and amortization)
Cost of revenue (exclusive of depreciation and amortization) consists of underwriting and transaction costs related to the sale of loans and leases, transaction costs incurred in the facilitation of loan and lease origination, and payment processing activities including interchange fees, assessment fees, processing costs and bank settlement charges paid to third-party payment processors and financial institutions in the ordinary course of operations. Additionally, the direct costs incurred in building and running the Marketplace Platform are included in cost of revenue.
Cost of Goods Sold (exclusive of depreciation and amortization)
Cost of goods sold (exclusive of depreciation and amortization) includes the purchase price of merchandise sold to customers, inbound and outbound shipping and handling costs, freight and duties, shipping and packaging supplies and warehouse fulfillment costs incurred.
Operating Expenses
Operating expenses primarily include general and administrative, sales and marketing, research and development, and depreciation and amortization. The most significant component of our operating expenses is personnel-related costs such as salaries, benefits, share-based and variable compensation.
As we are a high-growth company with a focus on cost-saving measures including resource reduction and reallocation, we anticipate that each of the following categories of operating expenses will increase in absolute dollar amounts but decline as a percentage of revenue for the foreseeable future.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel-related expenses for our finance, legal, human resources and administrative personnel, as well as the costs of information technology, professional services, insurance, travel, and other administrative expenses. We expect to continue incurring expenses associated with operating as a public company, including legal, audit, tax and accounting costs, investor relations costs, insurance premiums and compliance costs. As a result of cost-saving measures, we expect that general and administrative expenses will increase in absolute dollars in future periods but decline as a percentage of total revenue over time. Our inability to scale our expenses could negatively impact profitability.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of salaries, employee benefits, consultant fees, commissions, and direct marketing costs related to the promotion of PublicSquare’s platforms/solutions. As a result of cost-cutting efforts, we expect that sales and marketing expenses will remain steady in absolute dollars in future periods as we scale back paid marketing efforts and focus on monetizing current customer base, and decline as a percentage of total revenue over time. Our inability to scale our expenses could negatively impact profitability.
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Research and Development Expenses
Research and development expenses consist primarily of salaries, employee benefits and consultant fees related to our development activities to originate, develop, and enhance the Platform and build the PSQ Payments ecosystem. As this is a large focus of the Company, we expect that research and development expenses will increase in absolute dollars in future periods but decline as a percentage of total revenue over time.
Depreciation and Amortization Expense
Depreciation and amortization expense consists primarily of amortization of capitalized software development costs.
Non-Operating Income and Other Items
Other Income, net
Other income, net primarily relates to interest income earned on the money market accounts for the three months ended March 31, 2025.
Change in fair value of earn-out liabilities
Changes in the fair value of earn-out liabilities are recorded in the condensed consolidated statement of operations. The earn-out liabilities represent a financial instrument other than an outstanding share that embodies a conditional obligation that the issuer must or may settle by issuing a variable number of its equity shares. We record the earn-out liability at its fair value at each reporting period.
Change in fair value of warrant liabilities
Changes in the fair value of warrant liabilities are recorded in the condensed consolidated statement of operations. The warrant liabilities represent a financial instrument other than an outstanding share that embodies a conditional obligation that the issuer must or may settle by issuing a variable number of its equity shares. We record the warrant liabilities at its fair value at each reporting period.
Interest Expense, net
Interest expense incurred consists of interest accrued on revolving line of credit and convertible promissory notes issued.
Income Tax (Expense) Benefit
We are subject to income taxes in the United States, but due to our net operating loss (“NOL”) position, we have recognized a minimal provision or benefit in recent years. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided when it is more likely than not that the deferred tax assets will not be realized. We have established a full valuation allowance to offset our U.S. net deferred tax assets due to the uncertainty of realizing future tax benefits from our NOL carryforwards and other deferred tax assets.
Key Business Metrics and Selected Financial Data
We use the following key metrics and non-GAAP measures to evaluate our performance, identify trends affecting our business, and make strategic decisions:
•Segment Revenue (see Note 13 for more details);
•Segment non-GAAP operating loss (see discussion below in "Non-GAAP Financial Measures");
•Segment non-GAAP gross profit (see discussion below in "Non-GAAP Financial Measures"); and
•Gross Merchandise Volume ("GMV") of Financial Technology Segment.
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For GMV, these metrics are based on internal company data, assumptions, and estimates and are used in managing our business. We believe that these figures are reasonable estimates, and we actively take measures to improve their accuracy, such as eliminating known fictitious or duplicate accounts. There are, however, inherent challenges in gathering accurate data across large online and mobile populations.
GMV of Financial Technology Segment
In addition to revenue, net loss, and other results under U.S. GAAP, the following table sets forth key operating metrics we use to evaluate our Financial Technology segment. The information below represents proforma information for 2024 as if the Credova Merger closed on January 1, 2024:
| Three Months Ended March 31, | |||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||
| Gross merchandise volume (“GMV”) - Credit | $ | 11,398,052 | $ | 16,893,281 | (33) | % | |||||||||||
| Three Months Ended March 31, | |||||||||||||||||
| 2025 | 2024 | % Change | |||||||||||||||
Gross merchandise volume (“GMV”) - PSQ Payments | $ | 36,032,985 | $ | — | 100 | % | |||||||||||
We measure GMV to assess the volume of transactions that take place on our platform. We define GMV as the total dollar amount of all transactions generated from the Financial Technology segment during the applicable period, net of refunds. GMV does not represent revenue earned by us; however, it is an indicator of the success of our merchants and the strength of our platform.
For the three months ended March 31, 2025, GMV was $11.4 million, which represented an approximate change of (33)%, as compared to the same period in 2024.
For the three months ended March 31, 2025, our top five merchants and platform partners represented approximately 58% of total GMV - Credit, as compared to 40% for the three months ended March 31, 2024. GMV - Credit attributable to our largest merchant during the three months ended March 31, 2025 represented 23% of total GMV - Credit, compared to 15% for the same period in 2024. The shift in volume from our top five merchants is primarily due to the overall reductions in sales across the industry.
GMV - Credit declined year-over-year, primarily due to a broader slowdown in the firearm retail industry and our continued emphasis on disciplined underwriting. Industry-wide sales softness impacted many of our merchant partners, with some reporting sales down over 20% year-over-year, aligning with broader market trends. According to the National Shooting Sports Foundation (“NSSF”), U.S. firearm sales declined for the fourth consecutive year in 2024, with approximately 15.2 million adjusted background checks—a 3.5% decrease from 2023—and a 9% year-over-year drop in February 2025 alone, marking one of the weakest February performances in over a decade. In addition to market pressures, our recent credit policy enhancements—including the broader implementation of machine learning—tightened approval rates as part of a long-term strategy to improve portfolio performance. These factors, along with changes to our origination channels and a shift in sales focus, contributed to the overall reduction in GMV - Credit during the period.
For the three months ended March 31, 2025 and 2024, GMV - PSQ Payments was $36.0 million and zero, respectively, which represented an approximate change of 100%, as compared to the same period in 2024. PSQ Payments was launched in October 2024.
As PSQ Payments is currently an emerging business and still in the process of onboarding new customers, only a concentrated number of merchants were actively processing through our solution during the period. Therefore, management believes 2025 GMV - Payments breakdown by merchant would not be beneficial to provide.
Results of Operations
The results of operations presented below should be reviewed in conjunction with the unaudited condensed consolidated financial statements for the three months ended March 31, 2025 and 2024 which can be found elsewhere in this document.
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The following table sets forth our condensed consolidated statement of operations for the three months ended March 31, 2025 and 2024, and the dollar and percentage change between the two periods:
| For the Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024 | Variance ($) | Variance (%) | ||||||||||||||||||||
| Revenues, net | $ | 6,749,621 | $ | 3,465,889 | $ | 3,283,732 | 95 | % | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of revenue (exclusive of depreciation and amortization expense shown below) | 736,245 | 598,361 | 137,884 | 23 | % | ||||||||||||||||||
| Cost of goods sold (exclusive of depreciation and amortization expense shown below) | 2,073,274 | 1,391,408 | 681,866 | 49 | % | ||||||||||||||||||
| General and administrative | 10,524,491 | 10,262,878 | 261,613 | 3 | % | ||||||||||||||||||
| Sales and marketing | 2,456,386 | 4,682,638 | (2,226,252) | (48) | % | ||||||||||||||||||
| Research and development | 1,437,453 | 1,141,958 | 295,495 | 26 | % | ||||||||||||||||||
| Depreciation and amortization | 1,211,110 | 296,597 | 914,513 | 308 | % | ||||||||||||||||||
| Total costs and expenses | 18,438,959 | 18,373,840 | 65,119 | — | % | ||||||||||||||||||
| Operating loss | (11,689,338) | (14,907,951) | 3,218,613 | (22) | % | ||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Other income, net | 287,190 | 103,379 | 183,811 | 178 | % | ||||||||||||||||||
| Change in fair value of earn-out liabilities | 450,000 | 120,000 | 330,000 | 275 | % | ||||||||||||||||||
| Change in fair value of warrant liabilities | 7,381,500 | 2,231,500 | 5,150,000 | 231 | % | ||||||||||||||||||
| Interest expense, net | (868,457) | (124,178) | (744,279) | 599 | % | ||||||||||||||||||
| Loss before income taxes | (4,439,105) | (12,577,250) | 8,138,145 | (65) | % | ||||||||||||||||||
| Income tax (expense) benefit | (8,240) | 419 | (8,659) | (2067) | % | ||||||||||||||||||
| Net loss | $ | (4,447,345) | $ | (12,576,831) | $ | 8,129,486 | (65) | % | |||||||||||||||
Revenues, net
| For the three months ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Revenues, net: | |||||||||||
| Financial Technology | |||||||||||
| Direct revenue | $ | 715,767 | $ | 154,607 | |||||||
| Interest income on loans | 588,496 | 139,398 | |||||||||
| Loan and lease contracts sold, net | 1,062,374 | 83,004 | |||||||||
| Lease merchandise, net | 112,804 | — | |||||||||
| Payments revenue | 571,344 | — | |||||||||
| Total Financial Technology revenues, net | 3,050,785 | 377,009 | |||||||||
| Marketplace | |||||||||||
| Advertising and e-commerce sales | 428,649 | 945,471 | |||||||||
| Brands | |||||||||||
| Product sales | 3,429,562 | 2,350,510 | |||||||||
| Returns and discounts | (159,375) | (207,101) | |||||||||
| Total Brand revenues, net | 3,270,187 | 2,143,409 | |||||||||
| Total revenues, net | $ | 6,749,621 | $ | 3,465,889 | |||||||
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Revenues, net increased by $3.3 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was driven by an increase in FinTech sales of $2.7 million, an increase in Brands sales of $1.1 million and partially offset by a decrease in Marketplace sales by $0.5 million.
Cost of revenue (exclusive of depreciation and amortization)
Cost of revenue (exclusive of depreciation and amortization) increased by $0.1 million, or 23%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was due to an increase of $0.6 million in FinTech transaction fees, offset by a $0.3 million reduction in employee compensation and $0.2 million reduction in other transaction costs.
Cost of goods sold (exclusive of depreciation and amortization)
Cost of goods sold (exclusive of depreciation and amortization) increased by $0.7 million, or 49% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was due to an increase in the sale of products.
General and Administrative Expense
General and administrative expense increased by $0.3 million, or 3%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was due to an increase of $1.5 million in employee and variable compensation, primarily due to the addition of the Credova team. The increase was offset by a decrease in share-based compensation of $0.9 million and a decrease of $0.3 million in other administrative costs.
Sales and Marketing Expense
Sales and marketing expense decreased by $2.2 million, or 48%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was due to a $1.5 million decrease in share-based compensation expense, a $0.6 million decrease in brand awareness and advertising campaigns, partially offset by a $0.1 million increase in employee and contractor compensation.
Research and Development Expense
Research and development expense increased by $0.3 million, or 26%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily due to contractor expenses for development of operating software in the FinTech segment.
Depreciation and Amortization
Depreciation and amortization expense increased $0.9 million, or 308%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily related to the amortization of capitalized software development costs.
Other Income, net
Other income, net increased by $0.2 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to interest income earned on the money market accounts.
Change in Fair Value of Earn-out Liabilities
Changes in the fair value of earn-out liabilities increased by $0.3 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was due to a decrease in the fair value of the earn-out liabilities at the end of the reporting period.
Change in Fair Value of Warrant Liabilities
Changes in the fair value of warrant liabilities increased by $5.2 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was due to a decrease in the fair value of the warrant liabilities at the end of the reporting period.
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Interest Expense, net
Interest expense, net increased by $0.7 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was due to the interest payable in relation to the convertible promissory notes recorded as of the reporting date, along with interest paid on the revolving line of credit.
Income Tax (Expense) Benefit
Income tax expense increased by an insignificant amount for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase was primarily due to state income tax.
Liquidity and Capital Resources
Historically, our primary sources of liquidity have been funds from financing activities. We have reported net losses of $4.4 million and $12.6 million for the three months ended March 31, 2025 and 2024, respectively, and had negative cash flows from operations of $6.4 million and $6.5 million for the three months ended March 31, 2025 and 2024, respectively. As of March 31, 2025 and December 31, 2024, the Company had aggregate unrestricted cash and cash equivalents, of $28.0 million and $36.3 million and net working capital of $30.2 million and $38.2 million, respectively.
During the quarter, management made a strategic decision to invest in its FinTech segment and began taking assignment and holding closed-end consumer leases. This will result in increased revenues in the medium term while negatively impacting cash flow from operations in the short term.
We believe through our existing cash and cash equivalents, the Company will be able to fund operations and capital needs for the next year from the date these condensed consolidated financial statements were available to be issued.
Our future capital requirements will depend on many factors including our revenue growth rate and the timing and extent of spending to support further sales and marketing and research and development efforts. In order to finance these opportunities, we may need to raise additional financing. While there can be no assurances, the Company may need to pursue additional equity raises and debt rounds of financing. If additional financing is required from outside sources, we may not be able to raise it on terms acceptable to the Company or at all. If we are unable to raise additional capital when desired, our business, results of operations and financial condition would be materially and adversely affected.
Comparison of the Three Months Ended March 31, 2025 and 2024
The following table shows our cash flows used in operating activities, investing activities and financing activities for the stated periods:
| For the three months ended March 31, | |||||||||||||||||
| 2025 | 2024 | $ Change | |||||||||||||||
| Net cash used in operating activities | $ | (6,432,267) | $ | (6,524,740) | $ | 92,473 | |||||||||||
| Net cash used in investing activities | $ | (1,807,609) | $ | (358,574) | $ | (1,449,035) | |||||||||||
| Net cash used in financing activities | $ | (72,876) | $ | (215,865) | $ | 142,989 | |||||||||||
Net Cash Used in Operating Activities
Net cash used in operating activities for the three months ended March 31, 2025 was $6.4 million compared to $6.5 million used in operating activities for the three months ended March 31, 2024. The decrease in cash used in operating activities was due primarily to a decrease of $8.1 million in net loss, offset by an increase in fair value of warrant liabilities of $5.2 million, an increase in fair value of earn-out liabilities of $0.3 million, an increase in the net cash used by operating assets and liabilities of $1.9 million and a decrease of $0.6 million in non-cash related expenses.
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Net Cash Used in Investing Activities
Net cash used in investing activities for the three months ended March 31, 2025 was $1.8 million compared to $0.4 million used in investing activities for the three months ended March 31, 2024. Net cash used in investing activities for the three months ended March 31, 2025 primarily related to $1.1 million of additions to lease merchandise, $0.7 million of software development costs and $45,000 of net decrease in loans held for investment. Net cash used in investing activities for the three months ended March 31, 2024 primarily related to $0.8 million of software development costs partially offset by an increase of $0.3 million of net loans held for investment.
Net Cash Used in Financing Activities
Net cash used in financing activities for the three months ended March 31, 2025 was $0.1 million compared to $0.2 million used in financing activities for the three months ended March 31, 2024. The decrease was due to an increase of $2.3 million in proceeds from revolving line of credit partially offset by an increase of $2.1 million of repayments on the line of credit.
Non-GAAP Financial Measures
The non-GAAP financial measures below have not been calculated in accordance with GAAP and should be considered in addition to results prepared in accordance with GAAP and should not be considered as a substitute for, or superior to, GAAP results. We caution investors that non-GAAP financial information, by its nature, departs from traditional accounting conventions. Therefore, its use can make it difficult to compare our current results with our results from other reporting periods and with the results of other companies.
Our management uses these non-GAAP financial measures, in conjunction with GAAP financial measures, as an integral part of managing our business and to, among other things: (i) monitor and evaluate the performance of our business operations and financial performance; (ii) facilitate internal comparisons of the historical operating performance of our business operations; (iii) facilitate external comparisons of the results of our overall business to the historical operating performance of other companies that may have different capital structures and debt levels; (iv) review and assess the operating performance of our management team; (v) analyze and evaluate financial and strategic planning decisions regarding future operating investments; and (vi) plan for and prepare future annual operating budgets and determine appropriate levels of operating investments.
For the periods presented, we define non-GAAP operating loss as GAAP operating loss, adjusted to exclude, as applicable, certain expenses as presented in the table below:
| For the three months ended March 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Reconciliation: | |||||||||||
| GAAP operating loss | $ | (11,689,338) | $ | (14,907,951) | |||||||
| Non-GAAP adjustments | |||||||||||
| Corporate costs not allocated to segments | (1,971,372) | (5,355,542) | |||||||||
| Transaction costs incurred in connection with acquisitions | — | (2,293,594) | |||||||||
| Share-based compensation (exclusive of what is included in transaction costs above) | (3,622,845) | (4,999,014) | |||||||||
| Depreciation and amortization | (1,211,110) | (296,597) | |||||||||
| Non-GAAP operating loss | $ | (4,884,011) | $ | (1,963,204) | |||||||
Off-Balance Sheet Arrangements.
None.
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Critical Accounting Estimates
We prepare our consolidated financial statements in accordance with GAAP. The preparation of consolidated financial statements also requires we make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, balance sheet, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving our management’s judgments and estimates. Critical accounting policies and estimates are those that we consider the most important to the portrayal of our balance sheet and results of operations because they require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.
The preparation of our consolidated financial statements in conformity with GAAP requires us to make estimates and judgments that affect the amounts reported in those consolidated financial statements and accompanying notes. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. Our significant accounting policies are described in Note 3 to our Unaudited Condensed Consolidated Financial Statements for the three-month period ended March 31, 2025 included elsewhere in this report. Our critical accounting policies are described below.
Revenue Recognition
[1]Financial Technology Revenues
Financing Revenues
The Company principally generates financial technology revenues from five activities: revenue from sale of loan and lease contracts, revenue from interest earned on loans, revenue from retailer discounts, and origination fees paid by lending institutions (direct revenue) earned in connection with providing financing on consumer goods. Revenue from leases is recognized over time when the Company satisfies a performance obligation based on the agreed upon financing terms. Revenue from the Company’s sales of loans and leases is recognized at a point in time when the Company satisfies a performance obligation by transferring control of the loans and leases to a third party. Interest on loans is calculated by the simple-interest method on daily balances of the principal amount outstanding. Revenue from retailer discounts is recognized at a point in time when the Company satisfies performance obligations by purchasing the contract from the merchant in connection with a merchant-originated consumer financing product. Origination fees from lenders are recognized at time of loan origination.
PSQ Payments generates revenue via its merchant servicer platform to provide its customers with a payments stack to efficiently manage their payment processes. The merchant servicer platform combines the payment processing and gateway into a single, integrated service encompassing all debit and credit card processing and ACH in and out payment processing. The Company recognizes card processing and transaction revenues in connection with customer use of the platform.
[2]Marketplace Revenues
E-commerce Revenues
The Platform features a single cart shopping experience where consumers can purchase a variety of products from multiple vendors in one transaction. The Company is not the seller of record in these transactions. The commissions revenue earned from these arrangements are recognized on a net basis, which equates to the commission and processing fees earned in exchange for the seller marketplace services. The commission and processing fees are recognized when the corresponding transaction is confirmed by the buyer and seller. The Company does not take title to inventory sold or assume risk of loss at any point in time during the transaction and is authorized to collect consideration from the buyer and remit net consideration to the seller to facilitate the processing of the confirmed purchase transaction. The Company currently records processing fees from its merchant service providers as a component of Cost of sales - services on the consolidated statement of operations.
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Advertising Services
The Company enters into advertising subscription arrangements with its customers. Revenue is recognized over-time as the ads are displayed over the subscription period. The Company is providing a service and the service is being consumed by the customer simultaneously over the period of service. In general, the Company reports advertising revenue on a gross basis, since the Company controls the advertising inventory before it is transferred to our customers. Our control is evidenced by our sole ability to monetize the advertising inventory before it is transferred to customers.
The Company also sells push notifications and email blasts and recognizes revenue at a point in time when delivered. Push notifications and email blasts are considered delivered when an ad is displayed to users. When a customer enters into an advertising subscription arrangement that includes push notifications and/or email blasts, the Company allocates a portion of the total consideration to the push notification and email blast performance obligations based on the residual approach.
In June 2024, the Company launched its CPM advertising model. The advertising revenue related to CPM is recognized based on the number of impressions received based on advertising on websites or mobile device applications or as the advertiser’s previously agreed-upon performance criteria are satisfied.
[3]Brand Revenues
Product Sales
The Company generates revenue through the sale of diapers, wipes and other baby products to consumers by way of the Company’s website. The Company considers customer orders to be the contracts with the customer. There is a single performance obligation, which is the Company’s promise to transfer the Company’s product to customers based on specific payment and shipping terms in the arrangement. The entire transaction price is allocated to this single performance obligation. Product revenue is recognized when a customer obtains control of the Company’s product, which occurs at shipment. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products.
The Company evaluated principal versus agent considerations to determine whether it is appropriate to record third-party logistics provider fees paid as an expense. These fees are recorded as shipping and handling expenses within cost of goods sold 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 the third-party logistics provider to return the Company’s inventories to any location specified by the Company. It is the Company’s responsibility to make 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 chargebacks), establishes prices of its products, fulfills the goods to the customer and can limit quantities or stop selling the goods at any time.
Product Returns
Consistent with industry practice, the Company generally offers customers a limited right of return for products purchased. The Company reviews its receivables quarterly and records a reserve, if necessary.
Loans Held for Investment, net
Loans are unsecured and are stated at the amount of unpaid principal. Interest on loans is calculated by the simple-interest method on daily balances of the principal amount outstanding. Accrued interest on loans is discontinued when management believes that, after considering collection efforts and economic and business conditions, the collection of interest is doubtful. The Company’s policy is to stop accruing interest when the loan becomes 120 days delinquent.
All interest accrued but not collected for loans that are placed on non-accrual status or subsequently charged-off is reversed against interest income. Income is subsequently recognized on the cash basis until, in management’s judgment, the borrower’s ability to make periodic principal and interest payments returns and future payments are reasonably assured, in which case the loan is returned to accrual status. The Company classifies its loans as either current or past due. Amounts are considered past due if a scheduled payment is not paid on its due date. The Company does not modify the terms of its existing loans with customers.
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Lease Merchandise, net
The Company leases goods, consisting primarily of sporting goods, to its customers under certain terms agreed to by the customer and recognizes revenue straight-line over the lease term in accordance with Accounting Standards Codification ("ASC") 842, Leases ("ASC 842"). The customer has the right to acquire ownership either through a purchase option or through payment of all required lease payments. Leases typically range between 12 and 24 months. All the Company's customer agreements are considered operating leases. The consumer goods under operating leases are initially recorded at cost and depreciated on a straight-line basis over the term of the related leases to the consumer goods estimated residual value. All lease assets are purchased concurrent with the execution of a lease commitment by the lessee. Thus, the original depreciation period corresponds with the term of the original lease. Upon transfer of ownership of merchandise to customers, resulting from satisfaction of their lease obligations, the related cost an accumulated depreciation are eliminated from lease merchandise. Amounts shown in the condensed consolidated balance sheets are net of accumulated depreciation and allowances for lease losses.
The Company applies depreciation to lease merchandise as follows: (i) straight-line over the life of the lease term; (ii) accelerated deprecation for impaired leases and (iii) accelerated depreciation for leases when an early purchase option (buyout) is exercised.
The Company sells certain lease contracts to third parties and records the undepreciated cost of lease merchandise at the time of the sale within the net gain on lease contracts sold on the condensed consolidated statement of operations.
Allowance for Credit Losses - Loans Held for Investment
The Company estimates expected credit losses over the contractual term of loans, incorporating adjustments for anticipated prepayments and defaults when applicable. The contractual term excludes expected extensions, renewals, and modifications unless one of the following conditions is met: (i) management has a more likely than not expectation at the reporting date that an extension or renewal option is included in the original or modified contract, and (ii) such options are not unconditionally cancellable by the Company.
The foundation for the discount rate used in our credit loss estimation is the Secured Overnight Financing Rate ("SOFR"), a widely accepted benchmark for the cost of overnight borrowing collateralized by United States Treasury securities. SOFR is commonly used by traditional credit and warehouse facilities to account for interest rate variability. In addition to SOFR, our discount rate incorporates an interest rate floor, which reflects the minimum rate a market investor would require for a pool of unsecured consumer receivables. This rate is further adjusted based on prevailing market and macroeconomic conditions. The combination of SOFR and the interest rate floor determines the overall discount rate applied to calculate the net present value of expected credit losses. Management reviews the discount rate at each reporting period and updates when applicable.
The discount rate fluctuates in response to macroeconomic market cycles, as determined by management’s assessment of future economic conditions. The macroeconomic cycle is influenced by changes in money supply growth and contraction, which are inversely correlated with the discount rate. This inverse relationship allows for an adjusted present value assessment that accounts for the broader economic environment. Our cash flow model represents historical financial performance, while the discounted cash flow methodology projects future credit losses by adjusting the present value of historical data.
When management determines that loans are uncollectible, identified amounts are charged against the allowance for credit losses. Loans are written off in accordance with our charge-off policy, which stipulates charge-offs at 120 days past due or when other specific criteria are met. Any subsequent recoveries of previously charged-off amounts are credited back to the allowance for credit losses.
Allowance for Credit Losses - Lease Merchandise
The allowance for lease losses is established through a provision for lease losses charged to expense. Leases are charged against the allowance for leases losses when management believes the collectibility of the book value of the lease is unlikely. The allowance is an amount management believes will be adequate to absorb possible losses on existing leases that may become uncollectible, based on evaluations of the collectibility of lease payments and prior lease loss experience.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures (as such term is defined in Exchange Act Rule 13a-15(e)) as of March 31, 2025. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of that date, due to the material weakness in our internal control over financial reporting, including controls surrounding the preparation of the unaudited condensed consolidated statement of cash flows. As a result, we performed additional analysis as deemed necessary to ensure that our condensed consolidated financial statements were prepared in accordance with GAAP. Accordingly, management believes that the financial statements included in this Quarterly Report on Form 10-Q present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Management is actively implementing remediation steps to improve our disclosure controls and procedures and our internal control over financial reporting. Specifically, we have expanded and improved our review process for complex transactions. We further improved this process by enacting continuing education seminars for the accounting team, automating processes and systems around complex financial areas such as stock-based compensation expense, and the hiring of additional staff with the requisite experience and training to supplement our existing accounting team.
Changes in Internal Control Over Financial Reporting
During the quarter ended March 31, 2025, the Company onboarded additional staff with requisite experience as accounting professionals, as well as identified and retained third-party professionals with whom to consult regarding complex accounting applications. Management believes these actions will enhance our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act). Except as noted above, and in the preceding two sentences, there was no change in our internal control over financial reporting during the fiscal quarter ended March 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
Refer to Note 14 in the Notes to Unaudited Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors.
There have been no material changes from the risk factors previously disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024.
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Item 6. Exhibits.
The following exhibits are filed as part of, or incorporated by reference into, this Form 10-Q.
| Exhibit | Description | |||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
| 31.1* | ||||||||
| 31.2* | ||||||||
| 32.1** | ||||||||
| 32.2** | ||||||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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 Labels Linkbase Document. | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 104 | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit). | |||||||
*Filed herewith.
**Furnished herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| PSQ Holdings, Inc. | ||||||||
Date: May 8, 2025 | /s/ Michael Seifert | |||||||
| Name: | Michael Seifert | |||||||
| Title: | President and Chief Executive Officer | |||||||
| (Principal Executive Officer) | ||||||||
Date: May 8, 2025 | /s/ Bradley Searle | |||||||
| Name: | Bradley Searle | |||||||
| Title: | Chief Financial Officer | |||||||
| (Principal Financial and Accounting Officer) | ||||||||
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