COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| COMMITMENTS AND CONTINGENCIES | 10. COMMITMENTS AND CONTINGENCIES Legal proceedings and contingencies From time to time, the Company is involved in litigation concerning consumer protection, employment, intellectual property, claims under the securities laws, and other commercial matters related to the conduct and operation of the business and the sale of products on the Company's websites. In connection with such litigation, the Company has been in the past and may be in the future subject to judgments requiring the Company to pay significant damages or associated costs. In some instances, other parties may have contractual indemnification obligations to the Company. However, such contractual obligations may prove unenforceable or non-collectible, and if the Company cannot enforce or collect on indemnification obligations, the Company may bear the full responsibility for damages, fees, and costs resulting from such litigation. As a result of such litigation, the Company may also be subject to penalties and equitable remedies that could force the Company to alter important business practices. Such litigation could be costly and time consuming and could divert or distract the Company's management and key personnel from the business operations. Due to the uncertainty of litigation and depending on the amount and the timing, an unfavorable resolution of some or all of such matters could materially affect the Company's business, results of operations, financial position, or cash flows. The Company establishes liabilities when a particular contingency is probable and estimable which are included in Accrued liabilities on the consolidated balance sheets. At June 30, 2026 and December 31, 2025, the Company's established liabilities were not material. Tariffs The International Emergency Economic Powers Act (IEEPA) was used by the Trump administration to impose tariffs on imports. The U.S. Supreme Court ruled on February 20, 2026, that IEEPA does not authorize the President to impose tariffs, and as a result, on March 4, 2026, the Court of International Trade (CIT) ordered the Trump administration to begin refunding all tariffs imposed under IEEPA. On May 29, 2026, the administration appealed the CIT's ruling requiring universal refunds and reliquidation of finally liquidated entries. However, other entries, that are not finally liquidated are already being processed by U.S. Customs and Border Protection (CBP). The Company participated in the phase one IEEPA claim submissions, which began on April 20, 2026, and submitted a refund request for tariffs previously paid. During May and June 2026, the Company was informed that entries that paid tariffs of $9.2 million were approved for refunds and that the Company would also be paid $0.3 million of accrued interest. The Company received a nominal initial payment in July 2026. The Company believes it is appropriate to apply a loss recovery model to account for the tariff refunds and a gain contingency model to account for the accrued interest, as under the loss recovery model, the amount recognized is limited to the amount of the loss incurred. Under the loss recovery model, a recovery is recognized when it is probable and reasonably estimable. A gain contingency is not recognized until realization, with realization achieved upon resolution of all uncertainties. The administration's appeal relates to finally liquidated entries and does not affect phase one submissions. Therefore, with CBP having confirmed to the Company the specific entries to be refunded and the exact amount of accrued interest to be paid, the total amounts to be received from CBP are probable, estimable, and realized. There are no further uncertainties. As of June 30, 2026, the Company has recorded $9.5 million of tariff refund claims and accrued interest as a component of prepaid and other current assets on the Company's consolidated balance sheet, with no amounts recorded in prior periods. The $9.2 million of tariff refund claims is offset against cost of goods sold, the financial statement caption in which the original tariff cost was recognized, and the $0.3 million of interest income is recorded in interest income, net, on the Company's consolidated statement of operations.
|