The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our condensed consolidated
financial statements and related notes appearing elsewhere in this Quarterly
Report on Form 10-Q and with our audited financial statements and related notes
thereto for the year ended December 31, 2021 included in our Annual Report on
Form 10-K for the year ended December 31, 2021 as filed with the Securities and
Exchange Commission (the “SEC”) on March 16, 2022. As discussed in the section
titled “Special Note Regarding Forward-Looking Statements”, the following
discussion and analysis contains forward-looking statements that involve risks
and uncertainties, as well as assumptions that, if they never materialize or
prove incorrect, could cause our results to differ materially from those
expressed or implied by such forward-looking statements. Factors that could
cause or contribute to these differences include, but are not limited to, those
identified in the section titled “Special Note Regarding Forward Looking
Statements” and those discussed in the section titled “Risk Factors” under Part
II, Item 1A in this Quarterly Report on Form 10-Q.

Unless the context otherwise requires, the terms “Aterian,” the “Company,” “we,”
“us” and “our” in this Quarterly Report on Form 10-Q refer to Aterian, Inc. and
our consolidated subsidiaries, including Aterian Group, Inc.


We are a technology-enabled consumer products platform that uses “data science”
(which includes but is not limited to, machine learning, natural language
processing, and data analytics) to design, develop, market and sell products.
We were founded on the premise that if a company selling consumer packaged goods
was founded today, it would apply data science, the synthesis of massive
quantities of data and the use of social proof to validate high caliber product
offerings as opposed to over-reliance on brand value and other traditional
marketing tactics. Today, we predominantly operate through online retail
channels such as (“Amazon”) and Walmart, Inc.

We have launched and sold hundreds of SKUs on e-commerce platforms. Through the
success of a number of those products we have incubated our own brands. We also
have purchased brands and products when we believe it is advantageous. Today,
we own and operate fourteen brands that sell products in multiple categories,
including home and kitchen appliances, kitchenware, heating, cooling and air
quality appliances (dehumidifiers, humidifiers and air conditioners), health and
beauty products and essential oils. Our fourteen brands include, hOmeLabs;
Vremi; Squatty Potty; Xtava; RIF6; Aussie Health; Holonix; Truweo; Mueller;
Pursteam; Pohl and Schmitt; Spiralizer; Healing Solutions; and Photo Paper

Seasonality of Business and Product Mix

Our individual product categories are typically affected by seasonal sales
trends primarily resulting from the timing of the summer season for certain of
our environmental appliance products and the fall and holiday season for our
small kitchen appliances and accessories. With our current mix of environmental
appliances, the sales of those products tend to be significantly higher in the
summer season. Further, our small kitchen appliances and accessories tend to
have higher sales during the fourth quarter, which includes Thanksgiving and the
December holiday season. As a result, our operational results, cash flows, cash


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