(Former name, former address and former fiscal year, if changed since last report)

~~Registrant’s telephone number, including area code:~~
(~~917~~) ~~214-6371~~

~~Not Applicable~~

~~(Former name or former address, if changed since last report)~~

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting ~~company, or an emerging growth~~ company. See the definitions of “large accelerated filer,” “accelerated ~~filer,”~~filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

~~SEVEN OAKS ACQUISITION CORP.~~

~~Form 10-Q~~

~~For the Quarter Ended September 30, 2021~~

TABLE OF CONTENTS

Table of Contents

~~PART I. FINANCIAL INFORMATION~~

~~Item 1.~~~~Condensed Consolidated Financial Statements (Unaudited)~~

~~SEVEN OAKS ACQUISITION CORP.~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

September 30, 2021

December 31, 2020

(Unaudited)

Assets:

Current assets:

Cash

$
535,518

$
1,764,324
Prepaid expenses

501,641

759,541
Total current assets

1,037,159

2,523,865
Investments held in Trust Account

258,804,731

258,749,858
Total Assets

$
259,841,890

$
261,273,723

Liabilities and Stockholders' Deficit:




Current liabilities:

Accounts payable

$
41

$
52,319
Accrued expenses

1,861,478

103,335
Franchise tax payable

116,701

54,695
Total current liabilities

1,978,220

210,349
Derivative warrant liabilities

14,801,473

22,415,255
Total Liabilities

16,779,693

22,625,604




Commitments and Contingencies (Note 5)





Class A common stock subject to possible redemption, $0.0001 par value; 25,875,000 shares at $10.00 per share as of September 30, 2021 and December 31, 2020

258,750,000

258,750,000




Stockholders' Deficit:




Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding

—

—
Class A common stock, $0.0001 par value; 380,000,000 shares authorized as of September 30, 2021 and December 31, 2020, respectively

—

—
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 6,468,750 shares issued and outstanding as of September 30, 2021 and December 31, 2020

647

647
Accumulated deficit

(15,688,450)

(20,102,528)
Total stockholders' deficit

(15,687,803)

(20,101,881)
Total Liabilities, Class A common stock subject to possible redemption and Stockholders' Deficit

$
259,841,890

$
261,273,723

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

~~Seven Oaks Acquisition Corp.~~

~~STATEMENT OF OPERATIONS~~

For the Three Months Ended

For the Nine Months Ended

September 30, 2021

September 30, 2021
General and administrative expenses

$
891,974

$
2,924,988
General and administrative expenses - related party

60,000

180,000
Franchise tax expenses

77,868

149,589
Loss from operations

(1,029,842)

(3,254,577)
Change in fair value of derivative warrant liabilities

7,058,027

7,613,782
Income from investments held in Trust Account

3,331

54,873
Net income

$
6,031,516

$
4,414,078

Weighted average number of shares outstanding of Class A common stock

25,875,000

25,875,000
Basic and diluted net income per share, Class A

$
0.19

$
0.14
Weighted average number of shares outstanding of Class B common stock

6,468,750

6,468,750
Basic and diluted net income per share, Class B

$
0.19

$
0.14

~~The accompanying notes are an integral part of these financial statements.~~

~~Table of Contents~~

~~SEVEN OAKS ACQUISITION CORP.~~

~~UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY~~

~~FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021~~

Common Stock

Total

Class A

Class B

Accumulated

Stockholders’


Shares

Amount

Shares

Amount

Deficit

Deficit
Balance — December 31, 2020

—

$
—

6,468,750

$
647

$
(20,102,528)

$
(20,101,881)
Net income

—

—

—

—

4,644,993

4,644,993
Balance — March 31, 2021 (unaudited)

0

—

6,468,750

647

(15,457,535)

(15,456,888)
Net loss

—

—

—

—

(6,262,431)

(6,262,431)
Balance - June 30, 2021 (unaudited)

—

—

6,468,750

647

(21,719,966)

(21,719,319)
Net income

—

—

—

—

6,031,516

6,031,516
Balance - September 30, 2021 (unaudited)

—

$
—

6,468,750

$
647

$
(15,688,450)

$
(15,687,803)

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~Table of Contents~~

~~SEVEN OAKS ACQUISITION CORP.~~

~~UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS~~

~~FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021~~

Cash Flows from Operating Activities:

Net income

$
4,414,078
Adjustments to reconcile net income to net cash used in operating activities:

Change in fair value of derivative warrant liabilities

(7,613,782)
Income from investments held in Trust Account

(54,873)
Changes in operating assets and liabilities:

Prepaid expenses

257,900
Accounts payable

(52,278)
Accrued expenses

1,758,143
Franchise tax payable

62,006
Net cash used in operating activities

(1,228,806)

Net decrease in cash

(1,228,806)

Cash - beginning of the period

1,764,324
Cash - end of the period

$
535,518

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~Table of Contents~~

~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Note 1—Description of Organization, Business Operations~~

~~Organization and General~~

Seven Oaks Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on September 23, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with 1 or more businesses (the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to allSection 27A of the ~~risks associated with emerging growth companies.~~

AsSecurities Act of September 30, 2021, the Company had not commenced any operations. All activity for the period from September 23, 2020 (inception) through September 30, 2021, relates to the Company’s formation and the initial public offering (the “Initial Public Offering”) described below, and, since the initial public offering, the search for a target for its initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest and investment income on investments held in trust account from the proceeds derived from the Initial Public Offering. The Company’s fiscal year end is December 31.

~~Sponsor and Financing~~

The Company’s sponsor is Seven Oaks Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on December 17, 2020. On December 22, 2020, the Company consummated its Initial Public Offering of 25,875,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), including 3,375,000 additional Units to cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of approximately $258.8 million, and incurring offering costs of approximately $3.1 million.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 5,587,500 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant to the Sponsor, generating proceeds of approximately $5.6 million (Note 4).

~~Trust Account~~

Upon the closing of the Initial Public Offering and the Private Placement, approximately $258.8 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was held in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act 1940,1933, as amended (the ~~“Investment Company~~“Securities Act”), ~~which will be invested only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination~~ and ~~(ii) the distribution of the Trust Account as described below.~~

~~Table of Contents~~

~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Initial Business Combination~~

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (excluding advisory fees and taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial Business Combination. However, the Company only intends to complete a Business Combination if the post-transaction company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.

The Company will provide the holders of the Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.00 per Public Share). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). These Public Shares are recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity” (“ASC 480”) If the Company seeks stockholder approval, the Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. The Company will not redeem the Public Shares in connection with a Business Combination in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem the Public Shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the initial stockholders (as defined below) agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. In addition, the initial stockholders agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.

The Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 1321E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), ~~will~~that express Boxed, Inc.’s (the “Company,” “we,” “us,” “our,” “Boxed,” or “New Boxed” opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results. These forward-looking statements can generally be ~~restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares, without the prior consent of the Company.~~

The holders of the Founder Shares (the “initial stockholders”) agreed not to propose an amendment to the Certificate of Incorporation (A) to modify the substance or timing of the Company’s obligation to allow redemption in connection with a Business Combination or to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (B) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.

~~Table of Contents~~

~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

If the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or December 22, 2022 (the “Combination Period”), or any extended period of time that the Company may have to consummate an initial Business Combination as a result of an amendment to the amended and restated certificate of incorporation, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes (less up to $100,000 of interest to pay dissolution expenses), dividedidentified by the ~~number~~use of ~~then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including~~forward-looking terminology, including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, liquidate and dissolve, subject,terms “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecast,” “intends,” “may,” “projects,” “plans,” “seeks,” “should,” “would,” or “will,” in each case, ~~to the Company’s obligations under Delaware law to provide for claims~~their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They may appear in a number of ~~creditors~~places throughout this Quarterly Report, including Part II, Item 1A, “Risk Factors,” and ~~the requirements~~Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and include statements regarding our intentions, beliefs, or current expectations concerning, among other ~~applicable law.~~

The initial stockholders agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters agreed to waive their rights to the deferred underwriting commission (see Note 4) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Periodthings, our future results of operations, financial condition, and ~~in such event, such amounts will be included with the other funds held in the Trust Account that will be~~liquidity.

These forward-looking statements are based on information available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement (a “Target”), reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) the lesser amount per Public Share held in the Trust Account as of the date of this Quarterly Report and current expectations, forecasts and assumptions, which involve a number of judgments, risks and uncertainties, including without limitation, risks related to:

•responding to market conditions and global and economic factors beyond our control, including the ~~liquidation~~ongoing impact and severity of the ~~Trust Account due to reductions~~COVID-19 pandemic on our business, including evolving and future variants, and potential changes in the ~~value~~nature in which businesses are operated in response to the pandemic;

•employing the capital we received through the Business Combination (as defined below) to develop and expand marketing and sales capabilities and to grow brand recognition and customer loyalty;

•maintaining the listing of our common stock and warrants on the ~~trust assets,~~New York Stock Exchange (the “NYSE”);

•our ability to remediate existing and potential future material weaknesses in ~~each case net~~our internal control over financial reporting and to maintain effective internal control over financial reporting, which, if unsuccessful, may result in material misstatements of ~~interest which may be withdrawn~~our consolidated financial statements or failure to ~~pay taxes, provided that such liability will not apply to any claims by a third party~~meet periodic reporting obligations or ~~Target that executed a waiver of any and all rights to seek~~impair access to the ~~Trust Account nor will it apply~~capital markets;

•our ability to expand our Software & Services (or “Spresso”) business;

•retaining or recruiting, or making changes with respect to, officers, key employees, or directors;

•managing litigation and adequately protecting our intellectual property rights;

•growing market share in our existing markets or any ~~claims~~new markets we may enter;

•our capital needs and the ability to secure financing on reasonable terms, or at all;

•competing in the global e-commerce and consumer delivery industry;

•attracting and retaining successful relationships with customers and suppliers in a cost-effective manner;

•the impact of changes in customer spending patterns, customer preferences, local, regional and national economic conditions, crime, weather, demographic trends, and employee availability;

•managing intense competition and competitive pressures from other companies worldwide in the industries in which we operate;

Table of Contents

•complying with laws and regulations applicable to our business;

•our ability to achieve and maintain profitability in the future;

•the success of strategic relationships with third parties; and

•other factors described in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and in our subsequent filings with the Securities and Exchange Commission (the “SEC”).

The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the important factors discussed under Part 1, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the ~~Company’s indemnity~~fiscal year ended December 31, 2021, as updated in our subsequent filings with the SEC, and in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Quarterly Report. The forward-looking statements in this Quarterly Report are based upon information available to us as of the ~~underwriters~~date of this Quarterly Report and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed as exhibits to this Quarterly Report with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the ~~Initial Public Offering against certain liabilities, including liabilities~~date of this Quarterly Report.

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WHERE YOU CAN FIND MORE INFORMATION

Investors and others should note that we announce material financial information to our investors using our corporate website, press releases, SEC filings and public conference calls and webcasts. We also use the following social media channels as a means of disclosing information about our company, products, planned financial and other announcements, attendance at upcoming investor and industry conferences and other matters, as well as for complying with our disclosure obligations under Regulation FD promulgated under the Securities Exchange Act of ~~1933,~~1934, as ~~amended (the “Securities Act”~~amended:

•our Investor Relations page (https://investors.boxed.com);

•our Facebook page (https://www.facebook.com/BoxedWholesale/);

•our LinkedIn page (https://www.linkedin.com/company/boxed-com);

•our Instagram page (https://www.instagram.com/boxedwholesale/); and

•our company blog (https://www.boxed.com/blog).

The information we post through these channels may be deemed material. Accordingly, investors should monitor these channels in addition to following our press releases, SEC filings and public conference calls and webcasts. This list may be updated from time to time. The information we post through these channels is not a part of this Quarterly Report.

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CERTAIN DEFINED TERMS

Each of the terms the “Company,” “we,” “our,” “us,” “Boxed,” “New Boxed,” and similar terms used herein refer collectively to Boxed, Inc., a Delaware Corporation, and its consolidated subsidiaries, unless otherwise stated.

In this Quarterly Report, unless otherwise stated or unless the ~~event that an executed waiver is deemed~~context otherwise requires:

“ACM” refers to ~~be unenforceable against~~ACM ART VII D LLC.

“AEON” refers to AEON Co., Ltd.

“AOV” means average order value.

“ASC” means Accounting Standards Codification.

“B2B” means business to business.

“B2C” means business to consumers.

“Board” means the board of directors of the Company.

“Boxed Market,” formerly known as “MaxDelivery,” refers to BOXEDMAX, LLC, a ~~third party, our sponsor will not be responsible to~~wholly-owned subsidiary of the ~~extent~~Company.

“Business Combination” means the consummation of ~~any liability for such third-party claims. The Company will seek to reduce~~ the ~~possibility that~~business combination and the ~~Sponsor will have to indemnify~~other transactions contemplated by the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

~~Proposed~~ Business Combination Agreement.

“Business Combination Agreement” means the Agreement and ~~Proposed Private Placement~~

OnPlan of Merger, dated as of June 13, 2021, ~~the Company (“SVOK”), entered into an agreement and plan of merger~~ by and among ~~SVOK,~~the Company (f/k/a Seven Oaks), Blossom Merger Sub, Inc., Boxed, LLC (f/k/a ~~direct, wholly-owned subsidiary of SVOK (“~~Blossom Merger ~~Sub”~~Sub II, LLC) and Giddy Inc. (d/b/a Boxed).

“Closing” means the closing date of the Business Combination, December 8, 2021.

“Common Stock Purchase Agreement,” “Purchase Agreement,” or “Equity Financing” refers to the common stock purchase agreement, dated as of May 9, 2022, by and between The Jones Group Ventures LLC and Boxed, Inc.

“Earnout liability” refers to the associated liability with the Sponsor Earnout Shares as well as with the contingent consideration related to the acquisition of Boxed Market (formerly known as MaxDelivery).

“Forward Purchase Agreement” means the agreement entered into by Seven Oaks and ACM for an OTC Equity Prepaid Forward Transaction.

“Forward Purchase Transaction” means the OTC Equity Prepaid Forward Transaction pursuant to the terms of the Forward Purchase Agreement.

“IPO” means the initial public offering, with respect to Seven Oaks’ IPO.

“New Term Loan” refers to the term loan agreement entered into on August 4, 2021.

“NYSE” means the New York Stock Exchange.

“Old Boxed” refers to the pre-merger Company, also known as Giddy Inc. (d/b/a Boxed).

“Palantir” refers to Palantir Technologies Inc.

“PIK Interest” refers to the interest that is capitalized with, or added to, the principal amount of the PIPE Convertible Notes.

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“PIPE Convertible Notes” or “Convertible Notes” refers to the $87,500,000 in principal amount of convertible notes pursuant to Subscription Agreements between the Company and PIPE Investors.

“PIPE Investment” means the issuance and sale to the PIPE Investors, an aggregate of 3,250,000 shares of common stock for an aggregate purchase price of $32,500,000 and an aggregate of $87,500,000 in principal amount of convertible notes pursuant to Subscription Agreements between the Company and the PIPE Investors.

“PIPE Investors” means certain third-party investors in the PIPE.

“Prepayment Amount” means the amount paid by the Company with funds from Seven Oaks’ trust account to ACM pursuant to the terms of the Forward Purchase Agreement, equal to the redemption price per share multiplied by the number of subject shares on the date of prepayment.

“Private Warrants” or “Private Placement Warrants” means warrants originally issued in private placement in connection with Seven Oaks’ IPO.

“Public Warrants” means warrants originally issued in the IPO of Seven Oaks.

“Redemptions” refers to the holders of shares of common stock sold in Seven Oaks’ IPO who have exercised their right to have such shares redeemed.

“Retail” refers to our e-commerce retail business unit.

“SEC” means the U.S. Securities and Exchange Commission.

“Seven Oaks” means Seven Oaks Acquisition Corp.

“Software & Services” refers to all sales generated through the Company’s software and services business unit.

“SPAC Warrants” means the Private Warrants and Public Warrants.

“SPAC warrant liabilities” refers to the liabilities recorded in connection with the SPAC Warrants.

“Sponsor” means the Company’s former sponsor, Seven Oaks Sponsor LLC.

“Sponsor Earnout Shares” refers to the portion of shares held by the Sponsor that are subject to certain vesting conditions.

“Spresso” refers to the Company’s branding for its Software & Services business segment.

“U.S. GAAP” means United States generally accepted accounting principles, consistently applied, as in effect from time to time.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BOXED, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of June 30, 2022 (Unaudited) and December 31, 2021

(in thousands except share and per share amounts)


	June 30, 2022		December 31, 2021
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	39,892	$	105,027
Restricted cash	2,768		2,768
Marketable securities	6,958		—
Accounts receivable, net	3,933		3,122
Inventories	15,010		11,428
Prepaid expenses and other current assets	11,793		4,915
Deferred contract costs, current	1,317		7,580
TOTAL CURRENT ASSETS	81,671		134,840
Property and equipment, net	6,858		7,019
Unbilled receivables	11,031		8,891
Forward purchase receivable	58,546		60,050
Operating lease right-of-use asset (1)	9,719		—
Goodwill	7,420		7,444
Prepaid expenses, noncurrent	9,299		—
Deferred contract costs, noncurrent	—		11,847
Other long-term assets	1,435		1,514
TOTAL ASSETS	$	185,979	$	231,605
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable	$	17,209	$	28,936
Accrued expenses	8,214		6,392
Deferred revenue	2,154		2,020
Operating lease liabilities, current (1)	2,997		—
Other current liabilities	15,981		21,899
Earnout liability, current	692		—
SPAC warrant liabilities	3,890		22,045
TOTAL CURRENT LIABILITIES	51,137		81,292
PIPE Convertible Notes, net of transaction costs	80,612		77,047
Long-term debt	43,486		43,287
Forward purchase option derivative	49,055		4,203
Earnout liability, noncurrent	2,962		27,134
Operating lease liabilities, noncurrent (1)	7,137		—
Other long-term liabilities	85		217
TOTAL LIABILITIES	234,474		233,180
STOCKHOLDERS’ DEFICIT
Common stock, $0.0001 par value per share; 600,000,000 shares authorized as of both June 30, 2022 and December 31, 2021; 70,552,272 and 66,647,242 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively	7		7
Additional paid-in capital	404,194		383,066
Accumulated other comprehensive income (loss)	(20)		—
Accumulated deficit	(452,676)		(384,648)
TOTAL STOCKHOLDERS’ DEFICIT	(48,495)		(1,575)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	185,979	$	231,605

(1) Figures as of June 30, 2022 reflect the Company’s January 1, 2022 adoption of Accounting Standards Update (“ASU”) No. 2016-02, Leases. For additional details, see Note 1.

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

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BOXED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the three and six months ended June 30, 2022 and 2021 (Unaudited)

(in thousands except share and per share amounts)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Net revenue:
Retail	$	43,567	$	39,192	$	87,963	$	79,067
Software & Services(1)	99		3,159		2,329		4,141
Total net revenue	43,666		42,351		90,292		83,208
Cost of sales:
Retail	(40,321)		(36,479)		(80,370)		(72,142)
Software & Services(1)	(477)		(753)		(959)		(1,018)
Total cost of sales	(40,798)		(37,232)		(81,329)		(73,160)
Gross profit	2,868		5,119		8,963		10,048
Advertising expense	(8,091)		(3,737)		(19,786)		(9,444)
Selling, general, and administrative expense	(22,870)		(13,532)		(46,280)		(26,046)
Loss from operations	(28,093)		(12,150)		(57,103)		(25,442)
Other income (expense), net	(3,724)		1,983		(10,925)		1,070
Loss before income taxes	(31,817)		(10,167)		(68,028)		(24,372)
Income taxes	—		—		—		—
Net loss	$	(31,817)	$	(10,167)	$	(68,028)	$	(24,372)
Other comprehensive income (loss):
Net unrealized gain (loss) on available-for-sale securities	(20)		—		(20)		—
Net comprehensive loss	$	(31,837)	$	(10,167)	$	(68,048)	$	(24,372)
Net loss per share, basic and diluted	$	(0.47)	$	(0.89)	$	(1.01)	$	(2.44)
Weighted average shares outstanding, basic and diluted	67,221,398		9,434,526		67,041,502		9,426,915

(1) For information related to related party transactions, see Note 17.

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

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BOXED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

For the three and six months ended June 30, 2022 and 2021 (Unaudited)

(in thousands except share and per share amounts)


	Total Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Deficit
	Shares	Amount		Shares	Amount
Balances at March 31, 2022	—	$	—	66,915,204	$	7	$	391,257	$	—	$	(420,859)	$	(29,595)
Stock-based compensation	—	—		—	—		4,444		—		—		4,444
Exercises of common stock options				388,083	—		763		—		—		763
Exercises of warrants	—	—		1	—		—		—		—		—
Conversion of Convertible Notes	—	—		24,999	—		274		—		—		274
Shares issued from Equity Financing	—	—		3,223,985	—		7,456		—		—		7,456
Net unrealized gain (loss) on available-for-sale securities	—	—		—	—		—		(20)		—		(20)
Net loss	—	—		—	—		—		—		(31,817)		(31,817)
Balances at June 30, 2022	—	$	—	70,552,272	$	7	$	404,194	$	(20)	$	(452,676)	$	(48,495)

Balances at March 31, 2021	42,383,516	$	325,602	9,927,206	$	—	$	7,025	$	—	$	(329,630)	$	(322,605)
Retroactive application of recapitalization	(2,127,590)	—		(498,319)	1		(1)		—		—		—
Adjusted beginning balance	40,255,926	$	325,602	9,428,887	$	1	$	7,024	$	—	$	(329,630)	$	(322,605)
Stock-based compensation	—	—		—	—		479		—		—		479
Exercises of common stock options	—	—		8,429	—		20		—		—		20
Retroactive application of recapitalization	—	—		(423)	—		—		—		—		—
Series C-3 preferred stock remeasurement	—	(1,733)		—	—		1,733		—		—		1,733
Net loss	—	—		—	—		—		—		(10,167)		(10,167)
Balances at June 30, 2021	40,255,926	$	323,869	9,436,893	$	1	$	9,256	$	—	$	(339,797)	$	(330,540)

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	Total Convertible Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Deficit
	Shares	Amount		Shares	Amount
Balances at December 31, 2021	—	$	—	66,647,242	$	7	$	383,066	$	—	$	(384,648)	$	(1,575)
Stock-based compensation	—	—		—	—		9,624		—		—		9,624
Exercises of common stock options				388,083	—		763		—		—		763
Exercises of warrants	—	—		822	—		11		—		—		11
Issuance of awards related to acquisition	—	—		267,141	—		3,000		—		—		3,000
Conversion of Convertible Notes				24,999	—		274		—		—		274
Shares issued from Equity Financing	—	—		3,223,985	—		7,456		—		—		7,456
Net unrealized gain (loss) on available-for-sale securities	—	—		—	—		—		(20)		—		(20)
Net loss	—	—		—	—		—				(68,028)		(68,028)
Balances at June 30, 2022	—	$	—	70,552,272	$	7	$	404,194	$	(20)	$	(452,676)	$	(48,495)

Balances at December 31, 2020	42,383,516	$	325,201	9,888,776	$	—	$	6,983	$	—	$	(315,425)	$	(308,442)
Retroactive application of recapitalization	(2,127,590)	—		(496,415)	1		(1)		—		—		—
Adjusted beginning balance	40,255,926	$	325,201	9,392,361	$	1	$	6,982	$	—	$	(315,425)	$	(308,442)
Stock-based compensation	—	—		—	—		855		—		—		855
Exercises of common stock options	—	—		46,859	—		87		—		—		87
Retroactive application of recapitalization	—	—		(2,327)	—		—		—		—		—
Series C-3 preferred stock remeasurement	—	(1,332)		—	—		1,332		—		—		1,332
Net loss	—	—		—	—		—		—		(24,372)		(24,372)
Balances at June 30, 2021	40,255,926	$	323,869	9,436,893	$	1	$	9,256	$	—	$	(339,797)	$	(330,540)

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

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BOXED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2022 and 2021 (Unaudited)

(in thousands except share and per share amounts)


	For the Six Months Ended June 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(68,028)	$	(24,372)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,208		2,464
Stock-based compensation	9,624		855
Noncash Common Stock Purchase Agreement costs	1,000		—
Bad debt expense/(change in reserve)	95		(115)
Change in fair value of warrants and derivative instruments	3,217		(1,300)
Amortization of debt discount	867		—
PIK Interest	3,171		—
Net amortization/accretion on available-for-sale securities	(17)		—
Unrealized gain/(loss) on available-for-sale securities	(4)		—
Noncash operating lease expense	1,579		—
Other noncash items	—		99
Changes in assets and liabilities:
Receivables, net	(906)		(339)
Inventories	(3,583)		1,045
Prepaid expenses and other current assets	(6,877)		(1,980)
Unbilled receivables	(2,140)		—
Deferred contract costs	18,111		—
Prepaid expenses, noncurrent	(9,299)		—
Other long-term assets	78		—
Accounts payable	(11,726)		4,252
Accrued expenses	1,822		1,513
Deferred revenue	134		1,720
Operating lease liabilities	(1,608)		—
Other liabilities	(2,571)		2,008
Net cash used in operating activities	(64,853)		(14,150)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(2,046)		(839)
Forward purchase payments	(936)		—
Forward purchase receipts	2,441		—
Purchase of available-for-sale securities	(6,958)		—
Other investing activities	24		14
Net cash used in investing activities	(7,475)		(825)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on finance lease obligations	(37)		(39)
Proceeds from option exercises	763		87
Proceeds from warrant exercises	11		—
Proceeds from Common Stock Purchase Agreement	6,456		—
Repayments from borrowings	—		(1,875)
Net cash provided by (used in) financing activities	7,193		(1,827)
Total change in cash, cash equivalents and restricted cash	(65,135)		(16,802)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH BEGINNING OF PERIOD	107,795		30,043
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	42,660	$	13,241

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Cash paid for taxes	$	61	$	2
Cash paid for interest	$	2,149	$	221

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Shares issued related to equity consideration of acquisition	$	3,000	$	—
Conversion of Convertible Notes	$	274	$	—
Deferred transaction costs included in accrued expense & accounts payable	$	—	$	1,312

Cash and cash equivalents at end of period	$	39,892	$	13,241
Restricted cash at end of period	2,768		—
Cash, cash equivalents and restricted cash at end of period	$	42,660	$	13,241

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

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BOXED, INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

For the three and six months ended June 30, 2022 and 2021 (Unaudited)

(in thousands except share and per share amounts)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Description — Boxed, Inc. (the “Company”) is an e-commerce retailer and e-commerce enabler.The Company operates an e-commerce retail (“Retail”) service that provides bulk pantry consumables to businesses and household customers within the continental United States.The Company generates net revenue through direct retail sales of third-party and private-labeled goods, which includes all sales generated primarily through the Company’s website, mobile-optimized website, mobile applications, and software and services (“Software & Services” or “Spresso”) offerings of its enterprise-level e-commerce platform.

Business Combination — On December 8, 2021 (the “Closing”), the Company (formerly known as Seven Oaks Acquisition Corp. or Seven Oaks) completed the acquisition of Giddy Inc. (“Old Boxed”) pursuant to the definitive agreement dated June 13, 2021 (the “Business Combination Agreement”), by and among, Seven Oaks, two of its wholly-owned subsidiaries, Blossom Merger Sub, Inc. and Blossom Merger Sub II, LLC, ~~a direct, wholly-owned subsidiary of SVOK (“~~and Old Boxed. Upon the Closing, Old Boxed merged with Blossom Merger Sub, ~~II”), and Giddy~~ Inc., a Delaware corporation (“Boxed”) (as it may be amended and/or restated from time to time, the “Merger Agreement”). The Merger Agreement has been approved by SVOK’s and Boxed’s board of directors and adopted by Boxed’s stockholders. If the Merger Agreement is approved by SVOK’s stockholders, and the transactions contemplated by the Merger Agreement are consummated, (a) Blossom Merger Sub will merge with and into Boxed (the “First Merger”), with Old Boxed ~~being~~surviving the ~~surviving entity in the First Merger and continuing (immediately following the First Merger)~~merger as a wholly-owned subsidiary of the ~~Company (the “Surviving Corporation”), and (b) immediately~~Company. Immediately following ~~the First Merger and as part of the same overall transaction as the First Merger, the Surviving Corporation will merge~~this initial merger, Old Boxed merged with and into Blossom Merger Sub II, ~~(the “Second Merger” and, together with the First Merger, the “Mergers”),~~LLC, with Blossom Merger Sub II, ~~being~~LLC surviving the ~~surviving entity in the Second Merger~~merger and ~~continuing (immediately following the Second Merger) as a wholly-owned subsidiary of~~changing its name to “Boxed LLC.” Also upon Closing, the Company ~~(the “Business Combination”). In addition, in connection with the consummation of the Business Combination, SVOK will be renamed~~changed its name from “Seven Oaks Acquisition Corp.” to “Boxed, Inc.” and is referred to herein as “New ~~Boxed” as of~~Boxed,” or the ~~time following such change of name.~~

“Company.” Unless the context otherwise requires, references to “Seven Oaks” herein refer to the Company prior to Closing.

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~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Concurrently with the execution and delivery of~~Under the Business Combination Agreement, ~~certain institutional accredited investors (the “PIPE Investors”) entered into subscription agreements pursuant to which~~ the PIPE Investors have committed to subscribe for and purchase up to an aggregate of 3,250,000 shares of Parent common stock (the “PIPE Shares”) at a purchase price per share of $10.00. Certain of the Company’s officers and directors have committed to purchase an aggregate of 100,000 of the PIPE Shares as part of the PIPE Investment. The purchase of the PIPE Shares will be consummated concurrently with the closing.

~~Under the Merger Agreement, SVOK has~~Company agreed to acquire all ~~of the~~ outstanding equity ~~interests~~interest of Old Boxed for ~~approximately $550 million~~$550,000 in aggregate consideration, ~~to be paid at the effective time of the Business Combination. Such consideration will be paid in stock in New Boxed, calculated based on the per share merger consideration value formula as set forth~~which Old Boxed’s stockholders would receive in the ~~Merger Agreement and, in the case~~form of ~~the~~ shares of common stock of ~~New Boxed, calculated based on a price~~the Company (the consummation of ~~$10 per share (the “Closing Price”).~~

~~Pursuant to~~ the ~~Merger Agreement, at~~business combination and the ~~effective time of~~other transactions contemplated by the Business Combination ~~each option exercisable~~Agreement, collectively, the “Business Combination”).

The Business Combination was accounted for as a reverse recapitalization with Old Boxed ~~equity that~~as the accounting acquirer and as the acquired company for accounting purposes. Accordingly, all historical financial information presented in the unaudited condensed consolidated financial statements represents the accounts of Old Boxed and its wholly-owned subsidiaries as Old Boxed is ~~outstanding and unexercised immediately prior~~the predecessor to the ~~effective time~~Company.

New Boxed common stock and warrants commenced trading on the New York Stock Exchange (“NYSE”) under the symbols “BOXD” and “BOXD WS,” respectively, on December 9, 2021. See Note 2, “Business Combination,” for additional details.

Boxed Market (formerly known as MaxDelivery) Acquisition — On December 9, 2021, the Company completed an acquisition of substantially all of the assets and operations of MaxDelivery, LLC (“MaxDelivery”), an on-demand grocery delivery business in New York City, which as of the second quarter of 2022 has been rebranded as “Boxed Market.” Consideration for the acquisition consisted of $4,000 in cash consideration, $3,000 in equity consideration, and a future potential earnout, or contingent consideration, discussed below. The acquisition was accounted for as a business combination under the acquisition method in accordance with guidance found in ASC 805, Business ~~Combination shall be assumed~~Combinations, and ~~converted into a newly issued option exercisable~~the related fair value considerations and purchase price allocation are detailed within the Company’s Annual Report on Form 10-K for ~~Class A common stock~~the fiscal year ended December 31, 2021. Operating results for this acquisition have been included in the Company’s Condensed Consolidated Statements of ~~New Boxed.~~

~~The parties~~Operations and Comprehensive Loss since the date of acquisition and are reflected within the Retail segment. For discussion on the accounting treatment of acquired intangible assets and goodwill, refer to the ~~Merger Agreement have made customary representations, warranties~~Intangible Assets and ~~covenants~~Goodwill discussion below.

The Company recorded a contingent consideration liability of $1,711 as of the acquisition date, representing the estimated fair value of the contingent payable to former shareholders. The fair value of the contingent consideration is remeasured at each reporting period, as discussed in Note 15, and is included within earnout liability in the ~~Merger Agreement, including, among others, covenants with respect to the conduct~~Company’s Condensed Consolidated Balance Sheets.

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Principles of Consolidation — The accompanying Condensed Consolidated Financial Statements of Boxed, Inc. include its wholly owned subsidiaries, Boxed, LLC, BOXED MAX LLC, Jubilant LLC, and ~~SVOK~~Ashbrook Commerce Solutions LLC. Any intercompany accounts and ~~its subsidiaries prior to~~transactions have been eliminated in consolidation.

Basis of Presentation — The accompanying Condensed Consolidated Financial Statements of Boxed, Inc. are unaudited and, in the ~~closing~~opinion of management, reflect all normal recurring adjustments considered necessary for a fair statement of the ~~Business Combination.~~

~~The closing~~Company’s Condensed Consolidated Financial Statements in accordance with generally accepted accounting principles in the United States of ~~the Business Combination is subject to certain customary conditions, including, among other things: (i) approval by SVOK’s stockholders of the Merger Agreement, the Business Combination~~America (“U.S. GAAP”) and certain other actions related thereto; (ii) the expiration or termination of the waiting period (or any extension thereof) applicable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976; (iii) SVOK having at least $175 million of cash at the closing of the Business Combination, consisting of cash held in its trust account and the aggregate amount of cash actually invested in (or contributed to) the Company pursuant to the ~~Subscription Agreements (as defined below), after giving effect to redemptions of public shares, if any,~~ ~~but before giving effect to the consummation~~accounting and disclosure rules and regulations of the ~~closing~~SEC. They do not include all information and notes required by U.S. GAAP for annual financial statements.

The unaudited results of operations for the ~~Business Combination~~three and ~~the payment~~six months ended June 30, 2022 are not necessarily indicative of ~~Boxed’s and certain of SVOK’s outstanding transaction expenses as contemplated by the Merger Agreement (the “Minimum Cash Condition”);~~ ~~and (iv) the shares of Class A common stock of New Boxed~~future results or results to be ~~issued~~expected for the full fiscal year ended December 31, 2022.

These unaudited Condensed Consolidated Financial Statements, including the Company’s significant accounting policies, should be read in ~~connection~~conjunction with the ~~Business Combination having been approved~~audited consolidated financial statements for ~~listing~~the year ended December 31, 2021 and related notes thereto included in the Annual Report on ~~the Nasdaq Capital Market (“Nasdaq”) subject only to official notice of issuance thereof.~~

~~For further details on the contemplated merger, please see the~~ Form ~~8-K~~10-K, as filed with the ~~Securities~~SEC on March 15, 2022.

Considerations Related to COVID-19 — The ongoing spread of COVID-19 and ~~Exchange Commission on June 14, 2021,~~emerging and future variants throughout the United States and internationally, as well as measures implemented by government authorities to minimize transmission of the virus have had, and continue to have, negative and positive implications for the Company’s ~~Form S-4/A filing~~business. Though many areas have begun relaxing such restrictions, varying levels of restrictions remain and may be increased, particularly in light of the proliferation of the Delta, Omicron, BA.4, and BA.5 variants.

In the preparation of these Condensed Consolidated Financial Statements and related disclosures we have assessed the impact that the COVID-19 pandemic has had on ~~October 22, 2021.~~

the Company’s estimates, assumptions, forecasts, and accounting policies and made additional disclosures, as necessary. As the COVID-19 pandemic and its impacts are unprecedented and ever evolving, future events and effects related to the pandemic cannot be determined with precision and actual results could significantly differ from estimates or forecasts.

Going Concern, Liquidity and ~~Capital Resources~~

Management’s Plan —As of ~~September~~June 30, ~~2021,~~2022, the Company had ~~approximately $536,000 in its operating bank accounts~~total cash and ~~a negative working capital~~cash equivalents of ~~approximately $824,000, (not taking into account tax obligations~~$39,892, restricted cash of ~~approximately $117,000 that may be paid using investment income earned from Trust Account).~~

~~The Company’s liquidity needs prior to the consummation~~$2,768, short-term marketable securities of ~~the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor~~$6,958, and Jones & Associates, Inc. (“Jones & Associates”) to purchase Founder Shares (as defined in Note 4), and loan proceeds from the Sponsor of $105,000 under the Note (as defined in Note 4). The Company repaid the Note in full on December 22, 2020.an accumulated deficit. In addition, ~~in order to finance transaction costs in connection with a Business Combination,~~ the Company’s ~~officers, directors~~net loss and ~~Initial Shareholders may, but are not obligated,~~net cash used in operating activities amounted to ~~provide~~$(68,028) and $(64,853), respectively, for the six months ended June 30, 2022. As an emerging growth company, the Company ~~Working Capital Loans (see Note 5). To date, there were no amounts outstanding under any Working Capital Loans. Subsequent from~~is dependent on outside capital to execute its strategy of investing in growth at the ~~consummation~~expense of the Initial Public Offering, the Company’s liquidity has been satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account.

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~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

In addition, as disclosed in Note 8, the Company entered into a term loan agreement (the “New Term Loan”) in August 2021 for principal of $45,000. The New Term Loan contains a certain number of financial covenants, which requires the Company to (i) maintain minimum unrestricted cash balance of $15,000, (ii) maintain minimum net Retail revenue based upon agreed quarterly targets; and (iii) maintain a Retail gross margin percentage of at least 8%. In order to achieve these targets, the Company expects to invest in growth initiatives including sales, marketing, and promotional spend. The Company expects these investments, among others, to result in a continued net use of cash from operating activities over the next twelve months.

As of June 30, 2022, the Company was in compliance with the financial covenants required by its New Term Loan. However, the inherent uncertainties described above may impact the Company’s ability to remain in compliance with these covenants over the next twelve months. If the Company breaches its financial covenants and fails to secure a waiver or forbearance from the third-party lender, such breach or failure could accelerate the repayment of the outstanding borrowings under the New Term Loan or the exercise of other rights or remedies the third-party lender may have under applicable law. No assurance can be provided a waiver or forbearance will be granted or the outstanding borrowings under the New Term Loan will be successfully refinanced on terms that are acceptable to the Company.

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To date, the Company has raised a substantial amount of capital from outside investors and lenders through ~~one year from~~ the issuance of ~~these financial statements. If a business combination is not consummated by~~stock and borrowings, including under its term loans and revolving credit facilities, as well as through the consummation of the Business Combination, and expects this ~~date, there~~reliance to continue for the foreseeable future. However, as of June 30, 2022, the Company had no additional capital available for borrowing and no firm commitment from current or prospective investors to provide the Company additional capital to fund operations in the foreseeable future. While management believes the Company will be ~~a mandatory liquidation and subsequent dissolution of~~able to obtain additional capital, no assurance can be provided that such capital will be obtained or on terms that are acceptable to the Company. ~~Management has determined that the liquidity condition and mandatory liquidation, should a business combination not occur, and potential subsequent dissolution, raises~~These uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. ~~No adjustments have been made~~If management is unsuccessful in securing additional capital and/or executing its strategy of growth whereby the Company realizes profits and generates sufficient cash inflows from operations to fund the ~~carrying amounts of assets or liabilities should the Company~~Company’s obligations as they become due, management may be required to ~~liquidate after December 22, 2022.~~ seek other strategic alternatives such as a further reduction in the Company’s current cost structure, or a recapitalization of the Company’s balance sheet, including related outstanding debt and equity securities.

The accompanying Condensed Consolidated Financial Statements have been prepared on the basis that the Company ~~intends~~will continue to ~~complete the proposed Business Combination before the mandatory liquidation date. However, there can be no assurance~~operate as a going concern, which contemplates that the Company will be able to ~~consummate its~~realize assets and settle liabilities and commitments in the normal course of business ~~combination described above by December 22, 2022. In addition,~~for the Company may need to raise additional capital through loans or additional investments from our Sponsor, stockholders, officers, directors or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs.foreseeable future. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, the Company may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through the liquidation date of December 22, 2022.

Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that the specific impact is not readily determinable as of the date of the financial statements. The financial statementsaccompanying Condensed Consolidated Financial Statements do not include any adjustments that ~~might~~may result from the outcome of ~~this uncertainty.~~

~~Risk and Uncertainties~~

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.these uncertainties.

Estimates — The ~~full impact~~preparation of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s results of operations, financial position and cash flows may be materially adversely affected. Additionally, the Company’s ability to complete an Initial Business Combination may be materially adversely affected due to significant governmental measures being implemented to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an Initial Business Combination in a timely manner. The Company’s ability to consummate an Initial Business Combination may also be dependent on the ability to raise additional equity and debt financing, which may be impacted by the COVID-19 outbreak and the resulting market downturn.

~~Note 2—Summary of Significant Accounting Policies and Basis of Presentation~~

~~Basis of Presentation and Principles of Consolidation~~

~~The accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars~~Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the period presented. Operating results for the three and nine months ended September 30, 2021, are not necessarily indicative of the results that may be expected through December 31, 2021.

~~Table of Contents~~

~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

The condensed consolidated financial statements of the Company include its wholly owned subsidiary in connection with the planned merger. All inter-company accounts and transactions are eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Amended and Restated Annual Report on Form 10-K for the period ended December 31, 2020, filed with the SEC on June 3, 2021.

~~Revision to Previously Reported Financial Statements~~

In preparation of the Company’s unaudited condensed financial statements as of and for quarterly period ended September 30, 2021, the Company concluded it should revise its financial statements to classify all Class A common stock subject to possible redemption in temporary equity. In accordance with the SEC and its staff’s guidance on redeemable equity instruments, ASC 480, paragraph 10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of its Class A common stock in permanent equity, or total stockholders’ equity. Although the Company did not specify a maximum redemption threshold, its charter currently provides that, the Company will not redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001. The Company considered that the threshold would not change the nature of the underlying shares as redeemable and thus would be required to be disclosed outside equity. As a result, the Company revised its previously filed financial statements to classify all of its Class A common stock as temporary equity and to recognize accretion from the initial book value to redemption value at the time of its Initial Public Offering and in accordance with ASC 480. The change in the carrying value of the redeemable shares of Class A common stock at the Initial Public Offering resulted in a decrease of approximately $5.2 million in additional paid-in capital and a charge of approximately $15.9 million to accumulated deficit, as well as a reclassification of 2,111,354 shares of Class A common stock from permanent equity to temporary equity.

The impact of the revision to the unaudited condensed balance sheets as of March 31, 2021, and June 30, 2021, is a reclassification of $20.5 million and $26.7 million, respectively, from total stockholders’ equity to Class A common stock subject to possible redemption.

~~The impact on the revision on the audited balance sheet as of December 31, 2020, is presented below:~~

As of December 31, 2020

As Previously

Restatement

Reported

Adjustment

As Restated
Total liabilities

22,625,604

—

22,625,604
Class A common stock, $0.0001 par value; shares subject to possible redemption

233,648,110

25,101,890

258,750,000
Stockholders’ equity






Preferred stock- $0.0001 par value

—

—

—
Class A common stock - $0.0001 par value

251

(251)

—
Class B common stock - $0.0001 par value

647

—

647
Additional paid-in-capital

9,216,854

(9,216,854)

—
Accumulated deficit

(4,217,743)

(15,884,785)

(20,102,528)
Total stockholders’ equity

5,000,009

(25,101,890)

(20,101,881)
Total liabilities and stockholders’ equity

$
261,273,723

$
—

$
261,273,723

There is no impact to the reported amounts for total assets, total liabilities, cash flows, or net income (loss). In connection with the change in presentation for the Class A ordinary shares subject to possible redemption, the Company also revised its earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of shares share pro rata in the income and losses of the Company.

The impact on the reported amounts of basic and diluted net income (loss) per share was a decrease of $0.13 per redeemable share and an increase of $0.60 per non-redeemable share to a loss of $0.13 per share for both redeemable and non-redeemable shares, and increase of $0.14 per redeemable share and a decrease of $0.51 per non-redeemable share to $0.14 per share for both redeemable and non-

~~Table of Contents~~

~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

redeemable shares, a decrease of $0.19 per redeemable share and an increase of $0.54 per non-redeemable share to a loss of $0.19 per share for both redeemable and non-redeemable shares, and a decrease of $0.05 per redeemable share and an increase of $0.13 per non-redeemable share to a loss of $0.05 per share for both redeemable and non-redeemable shares, for the audited period from September 23, 2020 (inception) through December 31, 2020, the three months ended March 31, 2021, the three months ended June 30, 2021, and for the six months ended June 30, 2021, respectively.

~~Emerging Growth Company~~

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s financial statements with those of another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

The Company will remain an emerging growth company until the earliest of (i) the last day of the first fiscal year (a) following the fifth anniversary of the completion of the Public Offering, (b) in which the Company’s total annual gross revenue is at least $1.07 billion or (c) when the Company is deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th and (ii) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

~~Use of Estimates~~

~~The preparation of financial statements in conformity with~~U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the ~~financial statements~~Condensed Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period.

~~Making~~ Significant estimates ~~requires~~include (i) revenue recognition and deferral in accordance with ASC 606 and (ii) the fair values of derivative instruments within the scope of ASC 815. On a regular basis, management ~~to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of~~reviews its estimates utilizing currently available information, changes in fact and circumstances, ~~that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events.~~historical experience, and reasonable assumptions. After such review, those estimates are adjusted accordingly. Actual results could differ from those estimates.

Segment Information — The Company manages and reports its operating results through 2 reportable segments defined by its products and services: Retail and Software & Services (which the Company recently branded as “Spresso”). See Note 18, “Segment Reporting,” for the three and six months ended June 30, 2022 and 2021.

Cash and Cash Equivalents —

The Company considers all ~~short-term~~highly liquid investments purchased with an original maturity (at the date of purchase) of three months or less ~~when purchased~~ to be the equivalent of cash ~~equivalents. The~~for the purpose of balance sheet presentation. Cash equivalents, which consist primarily of money market accounts, are carried at cost, which approximates market value. In addition, as discussed below within Marketable Securities, the Company ~~had 0~~also has available-for-sale marketable securities that are carried at estimated fair value. Some of these marketable securities, including both money market accounts and commercial paper, are classified as cash and cash equivalents ~~at September~~due to their original maturities of less than three months.

Restricted Cash — The Company’s restricted cash is comprised of cash that is restricted as to withdrawal or use under the terms of certain contractual agreements.Restricted cash as of June 30, ~~2021 or~~2022 and December 31, ~~2020.~~

2021 was $2,768 for both periods, respectively, and consists of collateral for letters of credit related to the Company’s relationships with certain product vendors, and letters of credit issued in lieu of deposits on certain real estate and facility leases.

Marketable Securities— The Company’s marketable securities are investments in available-for-sale marketable securities that are carried at estimated fair value. The Company’s valuations of available-for-sale securities are generally derived from independent pricing services based upon quoted prices in active markets for similar securities, with prices adjusted for yield and number of days to maturity, or based on industry models using data inputs, such as interest rates and prices that can be directly observed or corroborated in active markets. Management determines the appropriate classification of its investments in debt securities at the time of purchase. Investments with original maturities beyond three months at the date of purchase and which mature at, or less than 12 months from, the balance sheet date are classified as marketable securities. Investments with original maturities of three months or less at the date of purchase are classified as cash and cash equivalents.

Table of Contents

~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Concentration~~Unrealized gains and losses are excluded from earnings and are reported as components of ~~Credit Risk~~

~~Financial instruments that potentially subject~~comprehensive loss. The Company periodically evaluates whether declines in fair values of its available-for-sale securities below their book value are other-than-temporary. This evaluation consists of several qualitative and quantitative factors regarding the severity and duration of the unrealized loss as well as the Company’s ability and intent to hold the available-for-sale security until a forecasted recovery occurs. Additionally, the Company assesses whether it has plans to ~~concentration~~sell the security or it is more likely than not that it will be required to sell any available-for-sale securities before recovery of ~~credit risk consist~~its amortized cost basis. No sales of ~~cash~~these securities have been made to date.

Accounts Receivable, Net — Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company estimates that the allowance for doubtful accounts ~~in a financial institution which,~~based on historical losses, existing economic conditions, and other information available at ~~times, may exceed~~ the ~~Federal depository insurance coverage~~balance sheet date. Uncollectable accounts are written off against the allowance after all collection efforts have been exhausted.

Accounts receivable includes $2,757 and $2,318 of ~~$250,000,~~trade receivables at June 30, 2022 and ~~investments held in Trust Account.~~December 31, 2021, respectively. The Company has ~~not experienced losses on these accounts~~recorded an allowance of $130 and ~~management believes the Company is not exposed to significant risks on such accounts. The Company’s investments held in the Trust Account~~$96 as of ~~September~~June 30, ~~2021,~~2022 and December 31, 2020, are comprised of investments in U.S. Treasury securities with an original maturity of 185 days or less or investments in a money market funds that comprise only U.S. treasury securities money market funds.

~~Investments Held in the Trust Account~~

The Company’s portfolio of investments held in the Trust Account is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities are included in income from investments held in Trust Account in the accompanying unaudited condensed consolidated statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information.

2021, respectively.

Fair Value of Financial Instruments —

~~The~~ Assets and liabilities are measured at fair value, ~~of the Company’s assets and liabilities,~~ which ~~qualify as financial instruments under FASB ASC Topic 820, “Fair Value Measurements,” equal or approximate the carrying amounts represented in the balance sheet due to their short-term nature.~~

~~Fair Value Measurements~~

~~Fair value~~ is defined as the price that would be received ~~for sale of~~to sell an asset or paid ~~for~~to transfer of a liability in an orderly transaction between market participants at the measurement ~~date. U.S. GAAP establishes a three-tier~~date (exit price). The three levels of inputs used to measure fair value ~~hierarchy, which prioritizes the inputs used in measuring fair value.~~

~~The hierarchy gives the highest priority to unadjusted~~are as follows:

Level 1 — Unadjusted quoted prices in active markets for identical assets or ~~liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:~~

●

~~Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;~~

●

~~Level 2, defined as inputs other than~~liabilities.

Level 2 — Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable or can be corroborated by observable market data for substantially the full-term of the asset or liability.

Level 3 — Unobservable inputs that are supported by little or no market activity that are ~~either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and~~

●

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value ~~measurement.~~

of the asset of liability.

Concentrations of Risk — Certain financial instruments potentially subject us to concentrations of credit risk. Financial instruments that subject the Company to credit risk consist of cash and cash equivalents and accounts receivable. The Company’s cash balances are primarily on deposit at high credit quality financial institutions. The cash balances in all accounts held at financial institutions are insured up to $250 thousand by the Federal Deposit Insurance Corporation (“FDIC”) through June 30, 2022. At times, cash balances may exceed federally insured amounts and potentially subject the Company to a concentration of credit risk. Management believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of the respective financial institutions.

The risk with respect to accounts receivable is managed by the Company through its policy of monitoring the creditworthiness of its customers to which it grants credit terms in the normal course of business. As of June 30, 2022 and December 31, 2021, one third-party seller accounted for approximately 27.5% and 40.9% of the Company’s outstanding receivables, respectively.

Leases — The Company determines whether an arrangement is a lease at inception and classifies the leases as either operating or finance leases. Operating leases are recorded within right-of-use (“ROU”) assets and operating lease liabilities, both current and noncurrent, on the Company’s Condensed Consolidated Balance Sheets. Finance leases are recorded within property and equipment, net and other liabilities, both current and noncurrent, on the Company’s Condensed Consolidated Balance Sheets.

Table of Contents

~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Derivative Warrant Liabilities~~

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term. ROU assets are also adjusted for prepaid rent, initial indirect costs, and lease incentives. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise or not exercise that option, respectively. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company ~~does~~elected to exclude from its balance sheets the recognition of leases having a term of 12 months or less (short-term leases) and elected to not ~~use derivative instruments to hedge exposures to cash flow, market,~~separate lease components and non-lease components for its long-term real-estate leases.

Inventories — Inventories consisting of finished goods are stated at the lower of cost or ~~foreign currency risks.~~ net realizable value. Inventory costs are determined using the first in, first out method. Inventory costs include price reductions and allowances offered by vendors.

The Company ~~evaluates all of its financial instruments, including issued stock purchase warrants,~~reviews inventories to determine ~~if such instruments~~the necessity of write-offs for excess, obsolete, or unsellable inventory.The Company estimates write-offs for inventory obsolescence based on its judgment of future realization.These reviews require the Company to assess customer and market demand.There were no material write-offs for the three and six months ended June 30, 2022 or 2021.

Property and Equipment, Net — Property and equipment are ~~derivatives~~stated at cost, less accumulated depreciation and amortization. Depreciation and amortization are provided for using the straight-line method over the estimated useful lives of the assets, which range from 3-7 years (see table below). Leasehold improvements are amortized over the shorter of their estimated useful lives or ~~contain features that qualify~~the term of the respective leases. Improvements are capitalized while expenditures for maintenance and repairs are expensed as ~~embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815~~~~, Derivatives and Hedging~~ ~~(“ASC 815”)~~~~, Embedded Derivatives~~ ~~(“ASC 815-15”).~~incurred.


			Estimated Useful Lives
Leasehold improvements			7 years
Warehouse equipment			5 years
Computers and small tools			3 years
Furniture and fixtures			7 years
Finance lease assets			7 years
Software development			4 years

Software Development Costs — The ~~classification of derivative instruments, including whether such instruments should be recorded~~Company classifies software development costs as ~~liabilities~~either internal-use software or ~~as equity, is re-assessed at the end of each reporting period.~~

external-use software. The Company accounts for ~~its 18,525,000 warrants issued in connection with its Initial Public Offering (12,937,500) and Private Placement (5,587,500) as derivative warrant liabilities~~costs incurred to develop internal-use software in accordance with ASC ~~815-40,~~ ~~Contracts in Entity’s Own Equity~~ ~~(“ASC 815-40”)~~350-40, Internal Use Software. ~~Accordingly,~~Consequently, the Company ~~recognizes~~capitalizes certain external costs and internal labor-related costs associated with the ~~warrant instruments~~development of its platforms and internal-use software products after the preliminary project stage is complete and until the software is ready for its intended use. Costs incurred in the preliminary stages of development, after the software is ready for its intended use and for maintenance of internal-use software are expensed as ~~liabilities~~incurred. Upgrades and enhancements are capitalized to the extent they will result in added functionality. Capitalized software costs are included in property and equipment, net within the Condensed Consolidated Balance Sheets and are amortized over the remaining useful life of four years.

In accordance with ASC 985-20, Costs of Software to be Sold, Leased or Marketed, the software development costs incurred in the research and development of software products or the software component of products to be sold, leased, or marketed to external users are expensed as incurred until technological feasibility has been established. Technological feasibility is established upon the completion of a working model. Software development costs incurred after the establishment of technological feasibility and until the product is available for general release are capitalized, provided recoverability is reasonably assured. Software development costs are stated at the lower of unamortized cost or net realizable value. Net realizable value for each software product is assessed based on anticipated profitability applicable to revenues of the related product in future periods. Amortization of capitalized software costs begins when the related product is available for general release to customers and is provided for using the straight-line method over the estimated life of the respective product. Technological feasibility is typically reached shortly before the release of such products and as a result, development costs that meet the criteria for capitalization were not material for the periods presented in this report.

Impairment of Long-Lived Assets — The Company periodically evaluates the need to recognize impairment losses relating to long-lived assets in accordance ASC 360, Property, Plant, and Equipment. Long-lived assets are evaluated for recoverability whenever events or circumstances indicate that an asset may have been impaired. In evaluating an asset for recoverability, the Company estimates the future cash flows, on an undiscounted basis, expected to result from the use of the asset and eventual disposition. If the sum of the expected future cash flows is less than the carrying amount of the asset, the Company would write the asset down to fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s statementrecord an impairment charge accordingly. As of ~~operations. At the Initial Public Offering date~~June 30, 2022 and December 31, ~~2020,~~2021, there were no such events or circumstances that indicate a need for such evaluation.

Deferred Contract Costs — The Company defers contract costs when there is a known current obligation that is not yet paid. In these instances, the Company records deferred contract costs to recognize the asset in its Condensed Consolidated Balance Sheets to offset the Company’s related liability. Deferred contract costs as of December 31, 2021 were related to the asset associated with the Company's contract with Palantir as described in Note 12 as well as insurance premiums related to becoming a public company. These obligations were paid in the first quarter of 2022 and the related assets have been reclassified to prepaid expenses, both current and noncurrent, on the Company’s Condensed Consolidated Balance Sheets. As of June 30, 2022, additional deferred contract costs were recorded for Palantir.

Forward Purchase Receivable and Forward Purchase Option Derivative — On December 8, 2021, upon the closing of the Forward Purchase Agreement, as discussed in Note 2, the Company recorded a Forward Purchase Receivable on its Condensed Consolidated Balance Sheets of $65,062 to account for the Prepayment Amount. The Prepayment Amount will be held in a deposit account until the Valuation Date (the second anniversary of the closing of the Business Combination, subject to certain acceleration provisions). On the Valuation Date, the Company will receive a pro rata portion of the then remaining Prepayment Amount. As of June 30, 2022, there was $58,546 remaining, gross of interest, as ACM sold 744,654 shares after Closing and through June 30, 2022.

Also in connection with the Forward Purchase Agreement, the Company recognized a liability for a freestanding derivative, referred to herein as the “forward purchase option derivative,” on its Condensed Consolidated Balance Sheets. See Note 2, “Business Combination,” and Note 13, “Forward Purchase Transaction,” for further detail. In accordance with ASC 815, Derivatives and Hedging, and as discussed in Note 15, “Fair Value Measurements,” the Company remeasures the fair value of the ~~Public Warrants~~forward purchase option derivative liability at each reporting period. As of June 30, 2022 the forward purchase option derivative liability was $49,055.

Intangible Assets and ~~Private Placement Warrants were estimated using a Binomial Lattice in a risk-neutral framework. Specifically, the future stock price~~Goodwill — As part of the acquisition of Boxed Market (formerly known as MaxDelivery), as discussed above, the Company recorded intangible assets and goodwill on its Condensed Consolidated Balance Sheets. The intangible assets acquired relate to MaxDelivery’s customer relationships, trademarks, and internally developed technology which were valued via (i) the multi-period excess-earnings method (ii) relief-from-royalty method and (iii) cost replacement method, respectively, all of which are under the income approach in accordance with ASC 805, Business Combinations. Also in accordance with ASC 805, the Company allocated the purchase price to the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. Any excess of the purchase price over the fair values of assets acquired, including intangibles and liabilities assumed, was ~~modeled assuming~~recognized as goodwill. As the Company views Boxed Market as part of its Retail segment, the goodwill recorded is included within its Retail business unit. The Company’s goodwill is subject to annual impairment testing. Further discussion on the purchase price allocation is detailed within the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Debt — The Company defers costs directly associated with acquiring third-party financing. Debt issuance costs related to the Company’s long-term debt, including its PIPE Convertible Notes and New Term Loan (as defined in Note 7 and Note 8, respectively), are recorded as a ~~Geometric Brownian Motion in a risk-neutral framework. For each modeled future price,~~direct deduction from the ~~Warrant payoff~~carrying amount of the debt. Amortization of debt issuance costs was ~~calculated~~$444 and $867 for the three and six months ended June 30, 2022, respectively. There were no corresponding costs for the prior year periods. Interest expense for total long-term debt was $3,090 and $98 for the three months ended June 30, 2022 and 2021, respectively, and $6,112 and $209 for the six months ended June 30, 2022 and 2021, respectively.

Equity — Prior to the closing of the Business Combination, the Company’s equity structure consisted of common stock, Series A preferred stock, Series B preferred stock, Series C preferred stock, Series D preferred stock, and Series E preferred stock. The Company analyzed the relevant provisions of ASC 480, Distinguishing Liabilities from Equity, and determined the preferred shares should be recognized as temporary equity.

Immediately prior to Closing, all Series of Old Boxed preferred stock was converted into Old Boxed common stock based on the ~~contractual terms (incorporating any optimal early exercise / redemption),~~applicable conversion rate for each security and then ~~discounted~~upon Closing converted into the right to receive approximately 0.9498 shares of New Boxed common stock. As of December 31, 2021, the Company no longer had temporary equity on its Condensed Consolidated Balance Sheets.

Employee Benefit Plan — The Company sponsors a qualified 401(k) defined contribution plan covering eligible employees. Participants may contribute a portion of their annual compensation limited to a maximum annual amount set by the Internal Revenue Service. There were no employer contributions under this plan for the three and six months ended June 30, 2022 and 2021.

Stock-Based Compensation — The Company measures and records the expense related to stock-based awards based upon the fair value at the ~~term-matched risk-free rate.~~date of grant.

Employee stock-based compensation awards are recorded in accordance with ASC 718, Compensation — Stock Compensation. ASC 718 requires all stock-based payments to employees to be recognized as expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss based on their grant date fair values. The Company has granted stock options, restricted stock units, and restricted stock awards. Restricted stock units and awards are determined based on the fair market value of the ~~Warrants~~common stock on the date of the grant.

The use of the Black-Scholes Merton model requires management to make the following assumptions:

Expected Volatility — The Company estimates volatility for option grants by evaluating the average historical volatility of a peer group of companies for the period immediately preceding the option grant for a term that is ~~calculated as~~approximately equal to the ~~probability-weighted present value over all future modeled payoffs.~~

options’ expected term.

Expected Term — Derived from the life of the options granted under the option plan and is based on the simplified method which is essentially the weighted average of the vesting period and contractual term.

Risk-Free Interest Rate — The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues, with a term that is equal to the options’ expected term at the grant date.

Dividend Yield — The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As ~~of September 30, 2021,~~such, the dividend yield has been estimated to be 0.

Prior to becoming a public company, the Company used market observed prices to determine fair value. Additionally, as the transfer of Private Placement Warrants to anyone who is not a permitted transferee would result in the Private Placement Warrants having substantially the same terms as the Public Warrants, the Company determined thatestimated the fair value of ~~each Private Placement Warrant is equivalent~~its common stock. The Board of Directors considered numerous objective and subjective factors to ~~that of each Public Warrant.~~

~~Offering Costs Associated with~~determine the ~~Initial Public Offering~~

Offering costs consisted of legal, accounting, underwriting fees and other costs incurred that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities were expensed as incurred and presented as non-operating expenses in the unaudited condensed statements of operations. Offering costs associated with the Public Shares were charged against the carrying value of the Class A common stock. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.

~~Class A Common Stock Subject to Possible Redemption~~

The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) is classified as a liability instrument and measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock ~~features certain redemption rights that~~at each meeting in which awards are approved. The factors considered ~~to be outside~~included, but were not limited to: (i) the results of contemporaneous independent third-party valuations of the Company’s ~~control~~common stock; (ii) the prices, rights, preferences, and subject to the occurrence of uncertain future events. Accordingly, as of September 30, 2021, and December 31, 2020, 25,875,000 shares of common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity sectionprivileges of the Company’s ~~condensed consolidated balance sheets.~~

~~Immediately upon~~convertible preferred stock relative to those of its common stock; (iii) the lack of marketability of the Company’s common stock; (iv) actual operating and financial results; (v) current business conditions and projections; (vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions; and (vii) precedent transactions involving the Company’s shares.

Since the Company’s common shares began trading on the New York Stock Exchange, the Company utilizes the closing share trade price of its shares as the ~~Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying~~fair value of the ~~redeemable Class A~~Company’s common ~~stock subject to possible redemption resulted in charges against additional paid-in capital and accumulated deficit.~~

stock.

~~Table of Contents~~

~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Net ~~Income (Loss)~~Loss Per Share ~~of Common Stock~~—

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income (loss) Basic net loss per common share is calculated by dividing the net ~~income (loss)~~loss attributable to common stockholders by the ~~weighted average~~weighted-average number of common shares outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock and potentially dilutive securities outstanding for the ~~respective~~ period.

~~The calculation~~ For purposes of the diluted net ~~income does not consider~~loss per share calculation, the ~~effect of the warrants underlying the Units sold in the Initial Public Offering~~SPAC Warrants, PIPE Convertible Notes, restricted stock units, and ~~the private placement warrants to purchase an aggregate of 18,525,000 shares of Class A~~ common stock inoptions outstanding are considered to be potentially dilutive securities for the ~~calculation of diluted income per share, because their inclusion would be anti-dilutive under the treasury stock method. As~~current period presented, and as a result, diluted net ~~income (loss)~~loss per common share is the same as basic net loss per share for the current period. Similarly, for the prior period presented, the convertible preferred stock, common stock warrants, preferred stock warrants, and common stock options outstanding are considered to be potentially dilutive securities, and as a result, diluted net loss per common share is the same as basic net loss per share for the prior period.

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Historically, basic and diluted net loss per share attributable to common stockholders was presented in conformity with the two-class method required for participating securities as the convertible preferred stock was considered to be participating securities. The two-class method determines net income (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income (loss) available to common stockholders for the ~~three~~period to be allocated between common and ~~nine months ended September 30, 2021. Accretion associated~~participating securities based upon their respective rights to share in undistributed earnings as if all income (loss) for the period had been distributed. The Company’s participating securities do not have a contractual obligation to share in the Company’s losses. Accordingly, the Company’s net loss was attributed entirely to common stockholders. As all of the Company's convertible preferred stock converted to common stock immediately prior to the Closing, the Company is no longer required to present its net loss per share in conformity with the ~~redeemable Class A common stock~~two-class method as it no longer has participating securities.

Income Taxes — In accordance with ASC 740, Income Taxes, the Company applies the guidance accounting for uncertainty in income taxes, which prescribes a recognition threshold and a measurement attribute for the balance sheet recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination be taxing authorities. The amount recognized is ~~excluded from earnings per share~~measured as the ~~redemption value approximates fair value.~~

~~The following table reflects~~largest amount of benefit that is greater than 50% likely of being realized upon the ~~calculation of basic and diluted net income (loss) per share of common stock:~~

ultimate settlement.

For the Three Months Ended

For the Nine Months Ended

September 30, 2021

September 30, 2021


Class A

Class B

Class A

Class B
Basic and diluted net income per common share:

Numerator:

Allocation of net income

$
4,825,213

$
1,206,303

$
3,531,262

$
882,816

Denominator:

Basic and diluted weighted average common shares outstanding

25,875,000

6,468,750

25,875,000

6,468,750
Basic and diluted net income per common share

$
0.19

$
0.19

$
0.14

$
0.14

~~Income Taxes~~

~~The Company follows the asset and liability method of accounting for income taxes under FASB ASC Topic 740, “Income Taxes.”~~

Deferred tax assets and liabilities are recognized for the ~~estimated~~ future tax consequences attributable ~~to differences~~ between the financial ~~statements~~statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The ~~effect on deferred tax assets and liabilities of~~Company records a ~~change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary,~~valuation allowance to reduce deferred income tax assets to the amount ~~expected to be realized. As of September 30, 2021, and December 31, 2020, the Company had deferred tax assets with a full valuation allowance against them.~~

FASB ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must bethat is more likely than not to be ~~sustained upon examination by taxing authorities.~~realized.

Revenue Recognition — In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The Company ~~recognizes accrued interest~~adopted ASU No. 2014-09 and ~~penalties~~its related amendments (collectively, known as ASC 606, Revenue from Contracts with Customers) effective January 1, 2019, using the modified retrospective approach to all contracts not completed at the date of initial application. Adoption of ASC 606 did not have an impact on the timing of revenue recognition in the Company’s Condensed Consolidated Financial Statements. The Company elects to apply the practical expedient to exclude from this disclosure revenue related to ~~unrecognized tax benefits~~performance obligations that are part of a contract whose original expected duration is less than one year. See Note 9, “Revenue Recognition,” for details about the Company’s revenue streams and respective revenue recognition policies, including remaining performance obligations.

Other Income (Expense), Net — Other income (expense), net, consists primarily of gains (losses) resulting from fair value valuations and adjustments of the Public and Private Warrants and the Company’s derivative instruments, including the Sponsor Earnout Shares, forward purchase option derivative, and contingent consideration related to the Boxed Market acquisition. Also included in other income (expense), net is (i) interest incurred from the Company’s PIPE Convertible Notes and New Term Loan and (ii) transaction costs related to the Common Stock Purchase Agreement.

Customer Incentives — The Company offers its customers various sales incentives including sales discounts, loyalty rewards, and free items with purchases. The Company records a reduction of net revenue at the time the discount is taken and at the time loyalty rewards are earned. Historically loyalty rewards have been immaterial to the Company.

Vendor Rebates — The Company has agreements with its suppliers to receive funds for promotions, volume rebates, and marketing. Amounts earned and due from suppliers under these agreements are included in prepaid expenses and other current assets in the condensed consolidated balance sheet. Vendor rebates received by the Company reduce the carrying cost of inventory and are recognized in cost of sales in the condensed consolidated statements of operations when the related inventory is sold.

Cost of Sales — Cost of sales consists of the costs of merchandise, expenses for shipping to and from clients and inbound freight, inventory write-offs and changes in the Company’s inventory reserve, payment processing fees, and packaging materials costs, offset by vendor funded promotions and various vendor allowances. Also included in cost of sales are wages of employees who provide promised services directly to the customer, including wages attributable to implementation and maintenance services for the Company’s Software & Services customers as ~~income tax expense.~~well as wages attributable to delivery fulfillment services provided to the Company’s Boxed Market customers.

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Delivery Costs — Outbound shipping and handling costs incurred to deliver merchandise to customers amounted to $6,907 and $6,663 for the three months ended June 30, 2022 and 2021, respectively, and $14,179 and $13,296 for the six months ended June 30, 2022 and 2021, respectively. The ~~Company’s~~delivery costs are included in cost of sales in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Selling, General and Administrative Expense — Selling, general and administrative expense consists primarily of salaries and benefits for warehouse employees as well as all regional and home office employees, including buying personnel. Selling, general and administrative expense also includes substantially all building and equipment depreciation, research and development expense, bank service charges, utilities, as well as other operating costs incurred to support e-commerce website operations. In accordance with ASC 730-10-25, Research and Development, research and development costs are ~~generally considered start-up costs~~charged to expense as and ~~are not currently deductible. NaN amounts were accrued~~when incurred in the development of software products to be sold, leased, or marketed to external parties. Research and development expense incurred was $450 and $335 for the ~~payment~~three months ended June 30, 2022 and 2021, respectively, and $926 and $811 for the six months ended June 30, 2022 and 2021, respectively.

Advertising Expense — The Company expenses advertising as incurred. Advertising expense was $8,091 and $3,737 for the three months ended June 30, 2022 and 2021, respectively, and $19,786 and $9,444 for the six months ended June 30, 2022 and 2021, respectively. These costs are included in advertising expense in the Condensed Consolidated Statements of ~~interest~~Operations and ~~penalties~~Comprehensive Loss. Included in prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2021,~~2022 and December 31, ~~2020. The~~2021 are prepayments for future advertising expenses of approximately $1,555 and $78, respectively. In addition, beginning in the first quarter of 2022, the Company ~~is currently not aware~~started to incur advertising costs related to a television commercial production. In accordance with ASC 720-35, Advertising Costs, the Company has elected to defer production advertising costs for its commercial production activities until the first-time the advertisement takes place, while the costs of ~~any issues under review that could result~~communicating advertising are expensed as services are received. As the commercial production first aired in ~~significant~~March 2022, the costs were both deferred and recognized within the first quarter.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASC 842”), as subsequently amended, which requires a lessee to recognize in its balance sheet an asset and liability for most leases with a term greater than 12 months. These assets, or ROU assets, represent the Company’s right to use an underlying asset for the lease term and the lease liabilities represent the Company’s obligation to make lease payments ~~accruals or material deviation~~arising from ~~its position. The Company is subject to income tax examinations by major taxing authorities since inception.~~

~~Recent Accounting Pronouncements~~

the lease. In ~~August~~June 2020, the FASB issued Accounting Standards Update ~~(“ASU”)~~ No. ~~2020-06,~~ ~~Debt—Debt~~2020-5 which deferred the effective date of ASC 842 for privately-held companies. According to the update, the standard is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022, with ~~Conversion~~early adoption permitted. In accordance with guidance in Topic 10 of the SEC Division of Corporate Finance’s Financial Reporting Manual, an EGC may elect to comply with new or revised accounting standards as of the effective date for a private company; thus, the Company elected to use the extended transition period for private companies to adopt the standard effective January 1, 2022 using the “modified retrospective transition effective date method” which resulted in a cumulative-effect adjustment to the Condensed Consolidated Balance Sheets at January 1, 2022.

Upon adoption of ASC 842 the Company recognized operating lease ROU assets and ~~Other Options (Subtopic 470-20)~~operating lease liabilities related to its office leases and ~~Derivatives~~fulfillment centers of $11,298 and ~~Hedging—Contracts~~$11,742, respectively. The difference in ~~Entity’s Own Equity (Subtopic 815-40):~~the initial operating lease ROU assets and operating lease liabilities balances is $444 related to the de-recognition of existing deferred rent and incentive balances.

The Company elected the “package of practical expedients,” which permitted the Company to not reassess prior conclusions about whether any expired or existing arrangements are or contain a lease, lease classification and the treatment of initial direct costs under the new guidance. The Company did not elect the use-of-hindsight practical expedient.

The Company’s accounting for lessee finance leases remains substantially unchanged from legacy guidance. All prior periods are presented in accordance with legacy guidance for both operating and finance leases. The standard did not have a significant impact on the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss or Statements of Cash Flows.

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In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for ~~Convertible Instruments and Contracts~~Income Taxes (“ASC 740”). This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an ~~Entity’s Own Equity~~ ~~(“ASU 2020-06”), which~~interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for ~~convertible instruments by~~

~~Table~~franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of ~~Contents~~

~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~removing major separation models required under current GAAP.~~goodwill. The ~~ASU also removes certain settlement conditions that are required~~standard is effective for ~~equity-linked contracts to qualify for the derivative scope exception,~~fiscal years beginning after December 15, 2021 and ~~it simplifies the diluted earnings per share calculation in certain areas.~~interim periods within fiscal years beginning after December 15, 2022. The Company adopted ASU ~~2020-06~~2018-15 as of December 31, 2021 on ~~January 1, 2021. Adoption~~a prospective basis.The adoption of ~~the~~this ASU did not ~~impact the Company’s financial position, results of operations or cash flows.~~

~~The Company’s management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would~~ have a material ~~effect~~impact on the ~~accompanying condensed consolidated~~Company’s Condensed Consolidated Financial Statements.

Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This new guidance will change how entities account for credit impairment for trade and other receivables, as well as for certain financial ~~statements.~~

assets and other instruments. ASU 2016-13 will replace the current “incurred loss” model with an “expected loss” model. Under the “incurred loss” model, a loss (or allowance) is recognized only when an event has occurred (such as a payment delinquency) that causes the entity to believe that a loss is probable (i.e., that it has been “incurred”). Under the “expected loss” model, an entity will recognize a loss (or allowance) upon initial recognition of the asset that reflects all future events that will lead to a loss being realized, regardless of whether it is probable that the future event will occur. The “incurred loss” model considers past events and current conditions, while the “expected loss” model includes expectations for the future which have yet to occur. ASU 2016-13 is effective for private companies beginning after December 15, 2022, including interim periods within those fiscal years. The Company is currently evaluating the impact of adoption of the new standard on the Condensed Consolidated Financial Statements.

~~Note 3—Initial Public Offering~~

2. BUSINESS COMBINATION

On December ~~22, 2020,~~8, 2021, the Company consummated its ~~Initial Public Offering~~Business Combination pursuant to the terms of ~~25,875,000 Units, including 3,375,000 Over-Allotment Units, at $10.00 per Unit, generating gross proceeds~~the Business Combination Agreement, by and among the Company, Blossom Merger Sub, Inc., Blossom Merger Sub II, LLC, and Old Boxed.

Upon consummation of ~~approximately $258.8 million,~~the Business Combination and ~~incurring offering costs~~other transactions, the following occurred:

•The Company changed its name from “Seven Oaks Acquisition Corp.” to “Boxed, Inc.” and is referred to herein as “New Boxed,” or the “Company.” Unless the context otherwise requires, references to “Seven Oaks” herein refer to the Company prior to Closing.

•Holders of ~~approximately $3.1 million.~~

~~Each Unit consists~~18,098,335 shares of ~~1 share of~~Seven Oaks Class A common stock ~~and~~ ~~one-half~~sold in its initial public offering exercised their right to have such shares redeemed (the “Redemptions”) for a full pro rata portion of ~~one redeemable warrant (each, a “Public Warrant”~~the trust account holding the proceeds from Seven Oaks’ initial public offering. The remaining 7,776,665 shares of Seven Oaks Class A common stock were each automatically reclassified into 1 share of New Boxed common stock.

•The 6,468,750 shares of Seven Oaks Class B common stock held by Seven Oaks Sponsor LLC (the “Sponsor”) were each automatically reclassified into 1 share of New Boxed common stock, of which 1,940,625 are subject to vesting under certain conditions (the “Sponsor Earnout Shares”). ~~Each Public Warrant entitles~~The Sponsor Earnout Shares will be considered outstanding for legal purposes prior to the ~~holder~~achievement of the vesting conditions but will not be considered outstanding for accounting purposes until such vesting conditions are achieved. See Note 15, “Fair Value Measurements,” for detail on the Company’s valuation of these shares.

•Pursuant to subscription agreements entered into in connection with the Business Combination Agreement (the “Subscription Agreements”), certain investors (the “PIPE Investors”) subscribed to purchase ~~1 share~~an aggregate of 3,250,000 shares of Class A common stock at ~~a price of $11.50~~$10.00 per share ~~subject to adjustment (see Note 6).~~

~~Note 4—Related Party Transactions~~

~~Founder Shares~~

~~On October 13, 2020, the Sponsor~~ and Jones & Associates, an affiliate of one of the underwriters of the Initial Public Offering, purchased 4,715,000 and 1,035,000 shares of the Company’s Class B common stock, par value $0.0001 per share, respectively, for an aggregate of ~~5,750,000~~87,500 in principal amount of convertible notes (the “PIPE Convertible Notes” or “Convertible Notes”) upon consummation of the Business Combination (collectively, the “PIPE Investment”). At Closing, the Company consummated the PIPE Investment and 3,250,000 shares of New Boxed common stock were issued. See Note 7, “Convertible Notes,” for terms and details of the PIPE Convertible Notes.

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•After giving effect to the transactions described above, including the Redemptions and the consummation of the PIPE Investment, there were 15,554,790 shares of New Boxed common stock issued and outstanding (excluding the Sponsor Earnout Shares).

Prior to the Closing, on November 28, 2021, Seven Oaks entered into an agreement (the ~~“Founder Shares”~~“Forward Purchase Agreement”) with ACM AART VII D LLC (“ACM”) for a ~~total purchase price~~cash-settled OTC Equity Prepaid Forward Transaction (the “Forward Purchase Transaction”). Pursuant to the terms of ~~$25,000. On December 17, 2020,~~ the ~~Company effected a 1.125-for-1 stock split of its Class B common stock, resulting in an aggregate of 6,468,750~~Forward Purchase Agreement, ACM purchased approximately 6,504,768 shares of Class B common stock outstanding. All shares and associated amounts have been retroactively restated to reflect the stock split. Of the 6,468,750 Founder Shares outstanding, up to 843,750 shares were subject to forfeiture to the extent that the over-allotment option was not exercised in full by the underwriters, so that the Founder Shares would represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. The underwriters exercised their over-allotment option in full on December 22, 2020; thus, these 843,750 Founder Shares were no longer subject to forfeiture.

The initial stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (i) one year after the completion of the initial Business Combination and (ii) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction after the initial Business Combination that results in all of the stockholders having the right to exchange theirSeven Oaks’ Class A common stock (the “Forward Purchase shares”) and, one business day following the closing of the Business Combination, the Company paid out to ACM an amount (such amount, as adjusted under the Forward Purchase Agreement, the “Prepayment Amount”) equal to the redemption price per share multiplied by the number of subject shares on the date of prepayment. The Prepayment Amount of $65,062 was paid out of the funds received by the Company from Seven Oaks’ trust account and will be held in deposit account for ~~cash, securities or other property; except~~the benefit of ACM until the “Valuation Date” (the second anniversary of the closing of the Business Combination, subject to certain ~~permitted transferees and under certain circumstances. Any permitted transferees will be subject~~acceleration provisions). At any time prior to the ~~same restrictions and other agreements~~Valuation Date, ACM may elect an optional early termination to sell some or all of the ~~initial stockholders with respect~~Forward Purchase shares in the open market. If ACM sells any shares prior to ~~any Founder Shares. Notwithstanding~~ the ~~foregoing, if (1) the closing price~~Valuation Date, a pro-rata portion of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30- trading day period commencing at least 150 days after the initial Business Combination or (2) if the Company consummates a transaction after the initial Business Combination which results in the stockholders having the right to exchange their shares for cash, securities or other property, the Founder SharesPrepayment Amount will be released from the ~~lock-up.~~

deposit account and paid to the Company. As of June 30, 2022, ACM has sold 744,654 shares, for which the Company received net proceeds of $6,516, after paying related fees to ACM. Depending on the manner in which the Forward Purchase Transaction is settled, the Company may never have access to the full remaining Prepayment Amount of $58,546. See Note 13, “Forward Purchase Transaction,” for further detail on the Forward Purchase Agreement and the related settlement scenarios.

As discussed above, a total of 18,098,335 shares of Seven Oaks Class A common stock were presented for redemption in connection with the Business Combination (the “Redemptions”). As a result, there was approximately $77,784 remaining in Seven Oaks’ trust account, following Redemptions. Combined with the total PIPE Investment of $120,000, comprised of $32,500 in equity and $87,500 in Convertible Notes, and after deducting combined company transaction fees of $47,667, there was approximately $150,117 of cash proceeds received by the Company from the transaction. After paying the Prepayment Amount of $65,062 on December 9, 2021, the day after the Closing, the Company had $85,054 in net proceeds remaining. As discussed above, as of June 30, 2022, $6,516 of the amount initially subject to settlement under the Forward Purchase Transaction had been recovered by the Company, net of applicable fees paid to ACM.

Public and Private ~~Placement~~ Warrants

~~Simultaneously~~ — In December 2021, in connection with the closing of the Initial Public Offering, the Company consummated the Private Placement of 5,587,500 Private Placement Warrants at a price of $1.00 per Private Placement Warrant to the Sponsor, generating proceeds of approximately $5.6 million.

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~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Each Private Placement Warrant is exercisable for 1 whole share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants to the Sponsor was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless.

The purchasers of the Private Placement Warrants agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants (except to permitted transferees) until 30 days after the completion of the initial Business Combination.

~~Related Party Loans~~

On October 13, 2020, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”). This loan was non-interest bearing and payable upon the completion of the Initial Public Offering. The Company borrowed $105,000 under the Note and repaid the Note in full on December 22, 2020.

In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company ~~would repay the Working Capital Loans out~~assumed a total of ~~the proceeds~~18,525,000 outstanding warrants to purchase 1 share of ~~the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out~~Boxed common stock with an exercise price of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held$11.50. Of these warrants, 12,937,500 warrants (the “Public Warrants”) were originally issued in the ~~Trust Account would be used to repay~~initial public offering (“IPO”) of Seven Oaks and 5,587,500 warrants (the “Private Warrants”) were originally issued in a private placement in connection with the ~~Working Capital Loans.~~ IPO.The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lenders’ discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would bePrivate Warrants are identical to the Public Warrants, except the Private Placement Warrants. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As of September 30, 2021, and December 31, 2020, the Company had no borrowings under the Working Capital Loans.

~~Service and Administrative Fees~~

~~Commencing on the date that the Company’s securities were first listed on the Nasdaq through the earlier of consummation of the initial Business Combination~~Warrants and the Company’s liquidation, the Company agreed to pay an affiliate of the Sponsor a total of $20,000 per month for office space, secretarial and administrative services provided to members of the management team. For the three and nine months ended on September 30, 2021, Company incurred and paid approximately $60,000 and $180,000 in expenses for these services, respectively, included as general and administrative expenses, related party on the accompanying condensed consolidated statement of operations.

In addition, the Sponsor, executive officers and directors, or any of their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. The audit committee will review on a quarterly basis all payments that were made to the Sponsor, executive officers or directors, or their affiliates. Any such payments prior to an initial Business Combination will be made from funds held outside the Trust Account.

~~Note 5—Commitments and Contingencies~~

~~Registration Rights~~

~~The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any~~ shares of common stock issuable upon the exercise of the Private ~~Placement~~ Warrants ~~or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares),~~ were entitled to registration rights pursuant to a registration rights agreement signed upon the consummation of the Initial Public Offering. These holders will be entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that we will not ~~be required to effect or permit any~~

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~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

registration or cause any registration statement to become effective until termination of the applicable lock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

~~Underwriting Agreement~~

~~The underwriters were entitled to an underwriting discount of $0.10 per Unit, or approximately $2.6 million, paid upon the closing of the Initial Public Offering.~~

~~Business Combination Marketing Agreement~~

The Company engaged certain underwriters in connection with the Business Combination to assist the Company in holding meetings with the stockholders to discuss the potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities in connection with the initial Business Combination, assist the Company in obtaining stockholder approval for the Business Combination and assist the Company with its press releases and public filings in connection with the Business Combination. The scope of engagement excludes identifying and/or evaluating possible acquisition candidates. Pursuant to the agreement with underwriters, the marketing fee payable to the underwriters will be 3.5% of the gross proceeds of the Initial Public Offering. The marketing fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of such agreement.

~~Note 6 — Derivative Warrant Liabilities~~

~~As of September 30, 2021, and December 31, 2020, the Company had 12,937,500 Public Warrants and 5,587,500 Private Warrants outstanding.~~

Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of its initial Business Combination, the Company will use its commercially reasonable efforts to file with the SEC and have an effective registration statement covering the shares of Class A common stock issuable upon exercise of the warrants and will use its commercially reasonable efforts to cause the same to become effective within 60 business days after the closing of the Company’s initial Business Combination and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. If the shares issuable upon exercise of the warrants are not registered under the Securities Act in accordance with the above requirements, the Company will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding the above, if the Company’s shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, it will not be required to file or maintain in effect a registration statement, and in the event the Company does not so elect, it will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

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~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

The warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to the initial stockholders or their affiliates, without taking into account any Founder Shares held by the initial stockholders or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”) (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Class A common stock during the 20 trading day period starting on the trading day after the day on which the Company consummates the initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price described under “Redemption of warrants when the price per share of Class A common stock equals or exceeds $18.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described under “Redemption of warrants when the price per share of Class A common stock equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.

The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until ~~30 days~~ after the completion of athe Business Combination, subject to certain limited exceptions.Additionally, the Private ~~Placement~~ Warrants ~~will be~~are exercisable on a cashless basis, at the holder’s option, and are non-redeemable ~~(except as described below in “Redemption of warrants when~~by the ~~price per share of Class A common stock equals or exceeds $10.00”)~~Company so long as they are held by the ~~Sponsor~~initial purchasers or ~~its~~their permitted transferees.If the Private ~~Placement~~ Warrants are held by someone other than the ~~Sponsor~~initial purchases or ~~its permitted~~their transferees, the Private ~~Placement~~ Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

~~Redemption~~The Company evaluated its warrants under ASC 815-40, Derivatives and Hedging, and concluded that they do not meet the criteria to be classified in stockholders’ equity. Therefore, the Company recorded these warrants as current liabilities on the Condensed Consolidated Balance Sheets at fair value upon Closing, with subsequent changes in their respective fair values to be recognized in other income (expense), net in the Condensed Consolidated Statements of Operations during future reporting periods. See Note 15, “Fair Value Measurements,” for further disclosure on the change in fair value of Public and Private Warrant liabilities.

During the six months ended June 30, 2022, 822 warrants ~~when~~were exercised, leaving 18,524,178 outstanding.

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3. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the ~~price~~following at June 30, 2022 and December 31, 2021:


	June 30, 2022		December 31, 2021
Leasehold improvements	$	8,780	$	8,716
Warehouse equipment	3,286		3,056
Computers and small tools	1,480		1,337
Furniture and fixtures	86		85
Software development	14,177		14,091
Work in progress	1,321		7
	29,130		27,292
Less: Accumulated depreciation and amortization	(22,272)		(20,273)
Property and equipment, net	$	6,858	$	7,019

The Company recorded depreciation and amortization expense of $1,192 and $1,234 for the three months ended June 30, 2022 and 2021, respectively, of which $498 and $494 related to software development costs as well as costs for other intangibles, respectively. The Company recorded depreciation and amortization expense of $2,208 and $2,464 for the six months ended June 30, 2022 and 2021, respectively, of which $803 and $993 related to software development costs as well as costs for other intangibles, respectively.

4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

As of June 30, 2022 and December 31, 2021, the major components of prepaid expenses and other current assets consisted of the following:


	June 30, 2022		December 31, 2021
Prepaid insurance	$	3,252	$	476
Prepaid services (1)	4,195		1,918
Vendor funds receivable	1,143		1,058
Other prepaid expenses	3,022		806
Other receivables	181		657
Total	$	11,793	$	4,915

(1) Prepaid services represent the current portion paid to Palantir in 2022 in accordance with the Company’s Master Service Agreement, as discussed and defined in Note 12. The noncurrent portion of $9,299 is recorded as prepaid expenses, noncurrent on the Company’s Condensed Consolidated Balance Sheets.

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5. MARKETABLE SECURITIES

The Company began investing in certain available-for-sale securities during the second quarter of 2022. The fair value and amortized costs of available-for-sale securities by major security type as of June 30, 2022 were as follows:


	June 30, 2022
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Commercial paper	$	13,965	$	—	$	(16)	$	13,949
Corporate bonds	1,002		—		(4)		$	998
Money market funds	5,068		—		—		5,068
Total marketable securities, including those classified as cash equivalents	$	20,035	$	—	$	(20)	$	20,015

These available-for-sale securities were classified on the Company’s balance sheets as of June 30, 2022:


	Fair Value
Cash equivalents	$	13,057
Short-term marketable securities	6,958
Long-term marketable securities	—
Total marketable securities, including those classified as cash equivalents	$	20,015

As of June 30, 2022, all of the available-for-sale securities have contractual maturities of less than one year. Those with original maturities of less than three months are recorded on the Company’s Condensed Consolidated Balance Sheets as cash equivalents and still fall under the disclosure requirements within ASC 320-10, Investments — Debt Securities. There have been no significant realized gains or losses on available-for-sale securities in the periods presented in the accompanying financial statements. Based on the Company’s review of its available-for-sale securities, the Company believes that it had no other-than-temporary impairments on these securities as of June 30, 2022 because the Company does not intend to sell these securities nor does it believe that it will be required to sell these securities before the recovery of their amortized cost basis.

As of June 30, 2022, unrealized losses on available-for-sale investments are not attributed to credit risk. The Company believes that an allowance for credit losses is unnecessary because the unrealized losses on certain of the Company’s marketable securities are due to market factors.

6. OTHER CURRENT LIABILITIES

As of June 30, 2022 and December 31, 2021, the major components of other current liabilities consisted of the following:


	June 30, 2022		December 31, 2021
Credit card payable	$	11,251	$	13,738
Accrued sales tax payable	1,845		1,708
Deferred rent – short term	—		451
Credits liability	655		641
Obligation for equity consideration(1)	—		3,000
Other accrued liabilities	2,230		2,362
Total	$	15,981	$	21,899

(1) For further detail on the equity consideration, refer to Note 1 within the discussion on the Boxed Market (formerly known as MaxDelivery) Acquisition. The equity consideration was issued in March 2022.

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7. CONVERTIBLE NOTES

Concurrently with the execution of the Business Combination and for the purposes of raising the cash portion of the consideration for the Business Combination, Seven Oaks entered into Subscription Agreements with the PIPE Investors.Pursuant to these agreements, upon the Closing on December 8, 2021, the Company issued an aggregate of $87,500 in principal amount of PIPE Convertible Notes.The PIPE Convertible Notes will bear interest at a rate of 7.00% per ~~share~~annum payable semi-annually on June 15 and December 15 of ~~Class A~~each year, commencing June 15, 2022.The PIPE Convertible Notes will mature on December 15, 2026, unless earlier repurchased by the Company or converted at the option of the holders.Upon conversion, the Company will settle conversions of PIPE Convertible Notes through payment or delivery, as the case may be, of cash, shares of its common stock, ~~equals~~ or ~~exceeds $18.00:~~

~~Once~~a combination of cash and shares of its common stock, at the ~~warrants become exercisable,~~Company’s election.

The initial conversion rate for the PIPE Convertible Notes is 83.333 shares of common stock per $1 thousand principal amount of the PIPE Convertible Notes (which represents an initial conversion of approximately $12.00 per share).The conversion rate for the PIPE Convertible Notes will be subject to adjustment upon the occurrence of certain specified events but will not be adjusted for accrued and unpaid interest.In addition, if a make-whole fundamental change (as defined in the indenture governing the PIPE Convertible Notes) or a redemption with respect to the PIPE Convertible Notes occurs prior to the maturity date, under certain circumstances as specified in the relevant indenture, the Company will increase the conversion rate for the PIPE Convertible Notes by a number of additional shares of the Company’s common stock for a holder that elects to convert its notes in connection with such make-whole fundamental change or redemption.

The Company is required to repurchase the PIPE Convertible Notes upon a fundamental change (as defined in the indenture governing the PIPE Convertible Notes) at a fundamental repurchase price equal to 101% of the principal amount plus any accrued and unpaid interest.On or after December 20, 2024, respectively, the Company may redeem for cash all or any portion of the ~~outstanding warrants for cash:~~

●

~~in whole and not in part;~~

●

~~at a price of $0.01 per Warrant;~~

●

~~upon a minimum of 30 days’ prior written notice of redemption; and~~

●

~~if, and only~~PIPE Convertible Notes, at the Company’s option if the last reported sale price of Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities as described above) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

The Company will not redeem the warrants as described above unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption period. If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.

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~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Redemption of warrants for when the price per share of Class A common stock equals or exceeds $10.00:~~

~~Once the warrants become exercisable, the Company may redeem the outstanding warrants:~~

●

~~in whole and not in part;~~

●

~~at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption~~ ~~provided~~ that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A common stock;

●

~~if, and only if, the closing price of the Class A common stock equals or exceeds $10.00 per Public Share (as adjusted) for any 20 trading days within the 30-trading day period ending~~ ~~three~~ ~~trading days before the Company sends notice of redemption to the warrant holders; and~~

●

if the closing price of the shares of Class A common stock for any 20 trading days within a 30- trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted), the Private Placement Warrants must also be concurrently called for redemption on the same terms as the outstanding Public Warrants, as described above.

~~The “fair market value” of Class A common stock shall mean the volume-weighted average~~ price of the ~~Class A~~Company’s common stock ~~during~~has been at least 130% of the 10conversion price in effect for at least 20 trading days ~~ending on~~(whether or not consecutive) during any 30-consecutive trading-day period.

To the third trading day immediately following the date on which the notice of redemption is sent to the holders of warrants. In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 shares of Class A common stock per warrant (subject to adjustment). In no event will the Company be required to net cash settle any warrant. Ifextent that the Company is unable to ~~complete a~~pay cash interest on the PIPE Convertible Notes on each interest payment date because of restrictions in the Company’s new term loan agreement (as discussed in Note 8), or at the election of the Company to defer interest payments, an amount equal to the unpaid interest then due will be added to the principal amount, without any action by the Company or the lender of the new term loan.The interest that is capitalized with, or added to, the principal amount is known as “PIK Interest.”As of June 30, 2022, the Company elected to defer $3,171 in interest to PIK Interest.

Of the total transaction costs incurred as part of the Business Combination, ~~within~~$10,534 was allocated to the ~~Combination Period~~PIPE Convertible Notes and treated as debt issuance costs. As of June 30, 2022, the remaining period over which the debt issuance costs will be amortized was 4.46 years. There were no material write-offs of the debt issuance costs during the period.

The indenture related to the Subscription Agreements includes customary affirmative and negative covenants including, among other things, compliance with applicable law, payment terms, events of default, and the terms surrounding the ability to repurchase the PIPE Convertible Notes.

As of June 30, 2022, (i) $300 of the principal PIPE Convertible Notes were converted into 24,999 shares of common stock and (ii) the PIK Interest was added to the outstanding principal, increasing the remaining principal to $90,371.

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8. DEBT

On August 4, 2021, the Company entered into a new term loan agreement (the “New Term Loan”). The New Term Loan will provide the Company with $45,000 at a floating per annum rate of LIBOR plus 8.5%, with a maturity date of August 4, 2025. Should LIBOR no longer be published, the agreement provides for an alternative rate of interest based on the per annum rate equal to the greatest of the Prime Rate or the Federal Funds Effective Rate plus 1/2 of 1% in effect on such day. The agreement provides the lender with a first priority security interest in all of the Company’s assets and contains a certain number of financial covenants, which requires the Company to (i) maintain minimum unrestricted cash balance of $15,000, (ii) maintain minimum net Retail revenue based upon agreed upon quarterly targets, and (iii) maintain a Retail gross margin percentage of at least 8%. These net Retail revenue and Retail gross margin targets are tested quarterly on a trailing twelve-month basis. The agreement also includes other affirmative and negative covenants, which, among other things, restricts the Company’s ability to pay dividends or make any distributions, incur indebtedness, incur liens, and sell substantially all of its assets. The agreement also subjects the Company to certain reporting covenants. The Company is required to provide monthly, quarterly and annual financial statements, operating budget and metrics, and other financial information as requested. Also in connection with the New Term Loan, the Company issued 126,993 warrants to purchase common stock at an exercise price of $7.0871, which were cashless exercised immediately prior to the closing of the Business Combination.

Further, on August 4, 2021, the Company repaid the outstanding principal balance of the Seventh Amendment of its existing term loan and security agreement (the “Credit Agreement”) of $5,000 and recognized a loss on extinguishment of debt in the amount of $203. In connection with the loan repayment, the Company’s letter of credit was modified and the Company ~~liquidates~~is now required to maintain cash collateral for the ~~funds held~~outstanding letters of credit. As a result, the cash collateral related to the outstanding letters of credit are segregated in restricted cash accounts as of June 30, 2022. Refer to the ~~Trust Account, holders~~Notes to the Annual Report on Form 10-K for further detail on the Seventh Amendment and corresponding Credit Agreement.

As of ~~warrants~~both June 30, 2022 and December 31, 2021, the Company had approximately $2,768 of letters of credit issued, respectively, of which none were drawn.

Amounts outstanding under long-term debt, including the PIPE Convertible Notes (discussed in Note 7), consisted of the following as of June 30, 2022 and December 31, 2021. The estimated fair value of long-term debt is approximated at its carrying value as of these reporting dates.


	June 30, 2022		December 31, 2021
Term Loan, matures August 2025	$	43,486	$	43,287
PIPE Convertible Notes (1)	80,612		77,047
Total debt	124,098		120,334
Less: current portion	—		—
Long-term debt	$	124,098	$	120,334

Aggregate maturities of long-term debt as of June 30, 2022 are as follows:


	June 30, 2022
2022 (remaining six months)	$	—
2023	—
2024	—
2025	43,486
2026	80,612
Total	$	124,098

(1) As discussed in Note 7, the PIPE Convertible Notes will ~~not receive any~~mature in 2026, unless earlier repurchased by the Company or converted at the option of ~~such funds with respect~~the holders.

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9. REVENUE RECOGNITION

As discussed in Note 1, the Company adopted ASC 606 as of January 1, 2019, using a modified retrospective approach.The Company elects to ~~their warrants, nor will they receive any distribution~~apply the practical expedient to forego the disclosure of revenue related to performance obligations that are part of a contract whose original expected duration is less than one year.This practical expedient applies to all revenue streams except revenue generated from the Company’s ~~assets held outside~~software license revenue, as the term of software is greater than one year.The related remaining performance obligations for software license revenue are discussed below.

Retail Revenue — The Company’s Retail revenue is generated from the following revenue streams:

Merchandise Sales — The Company offers merchandise in the following core merchandise categories: grocery, snacks, beverages, and household and cleaning products. Revenue generated through the Company’s e-commerce platform is recognized when control of the ~~Trust Account~~goods ordered are transferred to the customer, which generally occurs upon delivery to the customer. Deferred revenue consists of payments received from customers for goods not yet shipped by the end of the period. As the shipments in-transit represent unsatisfied performance obligations, the revenue is deferred until delivery to the customer is complete.

Subscription Sales— The Company charges a membership fee to customers who sign up for the Company’s Boxed Up program. That fee allows customers to earn cash back on every purchase, access to exclusive discounts, and free shipping over a minimum order amount. The duration of the membership is generally 12 months. Because the Company has the obligation to provide access to its website for the duration of the membership term, the Company recognizes membership fees on a straight-line basis over the life of the membership. The Company’s deferred revenue related to membership fees was $690 and $752 as of June 30, 2022 and December 31, 2021, respectively.

Outbound delivery fees — Outbound delivery fees are included in customer billing and are recorded as revenue as control of the product is transferred to customers upon delivery. Delivery charges to customers were $306 and $356 for the three months ended June 30, 2022 and 2021, respectively, and $625 and $828 for the six months ended June 30, 2022 and 2021, respectively. Outbound delivery fees are included in net revenue in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Marketing fees — The Company provides a mix of marketing services to merchants. The Company provides merchants access to its e-commerce platform where merchants display and sell their products to users. The Company also provides advertising services to help merchants promote their products within the Company’s platform. The Company recognizes revenue when a user’s order is processed, and the related order information has been made available to the merchant. Revenue from marketing fees charged to vendors and partners was $404 and $385 for the three months ended June 30, 2022 and 2021, respectively, and $775 and $744 for the six months ended June 30, 2022 and 2021, respectively. Marketing fees are included in net revenue in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Returns and Refunds — The Company’s contracts with customers are generally sold with a right of return. Historically the returns have been immaterial and recognized in the period in which the products are returned.

Tax Collected — In the ordinary course of business, the Company collects sales tax on items purchased by our customers that are taxable in the jurisdictions when the purchases take place. These taxes are then remitted to the appropriate taxing authority. The Company excludes these taxes collected from net revenue in its financial statements.

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Software & Services Revenue — The Company’s Software & Services revenue is generated from its software licensing agreements.

Software License Revenue — The Company generates revenue through software license agreements, which allow the customers the Company engages with to take possession of the software for usage of the Company’s IP, and host that software in an on-premise, or cloud-based infrastructure environment, at the customer’s election. A software license contract with multiple performance obligations typically includes the following elements: implementation services, software license, training services, and maintenance and support services. The total transaction price of a software license contract includes a fixed fee and may include forms of variable consideration, such as platform usage fees. Revenue is recognized as the performance obligations are satisfied. Specifically, implementation revenue is recognized over time utilizing the input method, based on a cost-to-cost analysis; software license revenue is recognized at the point in time at the go-live date of the software and upon settlement of variable fees, accounted using the sales-based royalty exception; training revenue is recognized when the training is delivered to the customer without regard to a detailed evaluation of the point in time criteria due to the short-term nature of the training services (completed within the same quarterly reporting period); and maintenance and support revenue is recognized over time on a straight-line basis over the contract period. For contracts with multiple performance obligations, the Company allocates the contract price to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices using a cost plus a margin approach. The total transaction price for the Company’s current contract related to software license revenue includes fixed and variable consideration.

For software license, revenue allocated to remaining performance obligations, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods, was $983 as of June 30, 2022 for maintenance fees for the remainder of the initial contract term of five years. The Company recognized $1,668 and $120 in implementation and maintenance fees during the first half of 2022, respectively, and expects to recognize approximately $240 in maintenance fees, respectively, over the next 12 months.

Contract Assets and Liabilities

The difference in the opening and closing balances of the Company’s contract assets (unbilled receivables) and contract liabilities (deferred revenue) results from the timing differences between the Company’s performance and the customer’s payment.The Company fulfills its obligations under contracts with customers by transferring goods and services in exchange for consideration from the customer.The Company recognizes a contract asset when it transfers products or services to a customer for which the billings occur in a future period.As of June 30, 2022, the Company recognized contract assets (unbilled receivables) related to its software licensing agreement under its Software & Services segment.The Company recognizes a contract liability when consideration is received from customers in advance of revenue recognition as described within the revenue streams above.


	June 30, 2022		December 31, 2021
Contract assets (unbilled receivables)	$	11,031	$	8,891
Contract liabilities (deferred revenue)	$	2,154	$	2,020

The unbilled receivables and deferred revenue for the Company’s Software & Services segment are presented net at the contract level. The remaining deferred revenue that is presented separately on the Company’s Condensed Consolidated Balance Sheets as of June 30, 2022 is related to the Company’s Retail segment.

The increase in unbilled receivables as of June 30, 2022 is driven by the recognition of the remaining deferred revenue related to AEON’s implementation, which previously offset a portion of the unbilled receivables. The unbilled receivables balance is attributable to the satisfaction of certain performance obligations for which billings were not yet invoiced as of June 30, 2022, partially offset by an increase in new billings for other certain performance obligations that were not yet satisfied.

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Revenue Disaggregation

The Company had total revenue of $43,666 and $42,351 for the three months ended June 30, 2022 and 2021, respectively, and $90,292 and $83,208 for the six months ended June 30, 2022 and 2021, respectively. The Company manages and reports operating results through 2 reportable segments defined by its products and services: Retail and Software & Services. The Company’s Retail operations represent the majority of its consolidated total revenues.

The following table summarizes the Company’s net revenue disaggregated by sales channel:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Direct Sales(1)	$	39,325	$	33,821	$	79,148	$	70,094
Channel Sales(2)	$	4,242	$	5,371	$	8,815	$	8,973
Software & Services(3)	$	99	$	3,159	$	2,329	$	4,141

(1) Direct Sales includes retail direct to consumer sales on the Company’s e-commerce platform.

(2) Channel Sales includes retail sales on other third-party platforms.

(3) Software & Services includes revenue generated from software licensing agreements.

10. INCOME TAXES

The Company had an effective tax rate of 0.00% for all periods presented.

The Company has evaluated the available evidence supporting the realization of its deferred tax assets, including the amount and timing of future taxable income, and has determined that it is more likely than not that its net deferred tax assets will not be realized. Due to uncertainties surrounding the realization of the deferred tax assets, the Company maintains a full valuation allowance against substantially all of its net deferred tax assets. When the Company determines that it will be able to realize some portion or all of its deferred tax assets, an adjustment to its valuation allowance on its deferred tax assets would have the effect of increasing net income in the period such determination is made.

The Company has applied ASC 740, Income Taxes, and has determined that it has an uncertain position that resulted in a tax reserve of $1,349 for each of the three and six months ended June 30, 2022 and 2021. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. The Company is subject to U.S. federal and state authority examinations.

11. LEASES

The Company leases its principal offices in New York, New York and maintains fulfillment centers and office space in various locations throughout the United States under operating leases which expire on various dates through January 2030. Certain of these arrangements have escalating rent payment provisions or optional renewal clauses. The table below only considers lease obligations through the committed term as the Company is not reasonably certain to elect the option to extend its leases beyond the option date.

The Company also entered into various finance lease arrangements for fulfillment center equipment. These agreements range from three years to approximately six years.

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Supplemental balance sheet information related to operating and finance leases as of June 30, 2022 was as follows:

Leases

Balance Sheet Classification

June 30, 2022

Assets

Operating lease assets

Operating right-of-use assets

9,719

Finance lease assets

Property and equipment, net

132

Total lease assets

9,851

Liabilities

Current:

Operating lease liabilities

Operating lease liabilities, current

2,997

Finance

Other current liabilities

Noncurrent:

Operating lease liabilities

Operating lease liabilities, noncurrent

7,137

Finance

Other long-term liabilities

Total lease liabilities

10,274

As of June 30, 2022, for operating leases, the weighted-average remaining lease term is 5.0 years and the weighted-average discount rate is 11.18%. As of June 30, 2022, for finance leases, the weighted-average remaining lease term is 1.9 years, and the weighted-average discount rate is 8.84%.

The components of lease cost for the three and six months ended June 30, 2022 were as follows:


Lease Cost	Statements of Operations Classification	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
Finance lease cost:
Amortization of right-of-use assets	General and administrative expense	$	25	$	50
Interest on lease liabilities	General and administrative expense	4		7
Total finance lease cost		$	29	$	57
Operating lease cost	General and administrative expense	1,088		2,176
Variable lease cost	General and administrative expense	538		574
Total lease cost		$	1,655	$	2,807

For office and fulfillment center leases and leased equipment, the variable lease cost primarily represents variable payments such as common area maintenance, utilities and equipment maintenance.

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The following represents a schedule of maturing lease commitments for operating and finance leases as of June 30, 2022:


	June 30, 2022
	Operating		Finance
Maturity of lease liabilities
2022 (remaining six months)	$	2,270	$	41
2023	2,922		77
2024	1,742		34
2025	1,771		—
2026	1,707		—
thereafter	2,926		—
Total future minimum lease payments	$	13,338	$	152
Less: interest	(3,204)		(12)
Present value of lease liabilities	$	10,134	$	140

Future minimum lease payments under non-cancelable operating leases as of December 31, 2021 under ASC 840 were as follows:


	December 31, 2021
2022	$	4,478
2023	2,920
2024	1,742
2025	1,769
2026	1,711
thereafter	2,921
Total future minimum lease payments	$	15,541

Other supplemental cash flow information for the six months ended June 30, 2022 was as follows:


	June 30, 2022
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash used for operating leases	$	2,205
Operating cash used for finance leases	46
Financing cash used for finance leases	37
Total	$	2,288

There were no right-of-use assets obtained in exchange for new finance lease or new operating lease liabilities during the period.

12. COMMITMENTS AND CONTINGENCIES

Sales or Other Similar Taxes— Based on the location of the Company’s current operations, sales tax is collected and remitted. To date, the Company has had no actual or threatened sales and use tax claims from any state where it does not already claim nexus or any state where it sold products prior to claiming nexus. However, the Company believes that the likelihood of incurring a liability as a result of sales tax nexus being asserted by certain states where it sold products prior to claiming nexus is reasonably possible. As of June 30, 2022 and December 31, 2021, the Company estimates that the potential liability is approximately $1,349. All periods have been recorded as an accrued liability. Although it is reasonably possible that a change in this estimate will occur in the near term, the Company believes this is the best estimate of an amount due to taxing agencies, given that such a potential loss is an unasserted liability that would be contested and subject to negotiation between the Company and the respective state, or decided by a court.

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Legal Proceedings— The Company is not currently subject to any legal proceedings or currently aware of any claims that it believes will have, individually or in the aggregate, a material adverse effect on the Company’s financial position as of June 30, 2022 and December 31, 2021.

On February 8, 2022, a putative stockholder of the Company filed a complaint in the Delaware Chancery Court alleging that he is entitled to attorney’s fees and expenses in connection with a demand he made on the Company regarding the ability of Seven Oaks Class A common stockholders to vote on certain charter amendments in connection with the ~~respect~~Business Combination, which closed on December 8, 2021. On July 22, 2022, the plaintiff filed a Motion for Summary Judgment and Application for an Award of Attorneys’ Fees and Expenses. Pursuant to ~~such warrants. Accordingly,~~an order entered June 14, 2022, the ~~warrants may expire worthless.~~

Company’s answering brief is due on or before September 8, 2022, and plaintiff's reply brief is due on or before September 23, 2022. Oral argument on the motion is scheduled for October 4, 2022. As of June 30, 2022, no estimate of reasonably possible losses was available due to the early stage of this matter and the uncertainty inherent in litigation and investigations.

Service Agreements

~~Note 7~~ — ~~Class A Common Stock Subject~~The Company is currently engaged in the below service agreements under which it has certain long-term commitments in exchange for the described services:

On June 13, 2021, the Company executed a Master Subscription Agreement with Palantir Technologies Inc. (“Palantir”) under which it will pay $20,000 over five years for access to ~~Possible Redemption~~

~~The~~Palantir’s Foundry software platform and related services for advanced data management and analytics to be used for the Company’s strategic initiatives. In exchange for this agreement, Palantir agreed to purchase, and the Company agreed to sell to Palantir, an aggregate of 2,000,000 shares of Seven Oaks Class A common stock, ~~feature certain redemption rights that are considered to be outside~~for a purchase price of $10.00 per share and an aggregate purchase price of $20,000, in connection with the PIPE Investment. On December 8, 2021, upon the Closing (as discussed in Notes 1 and 2), $15,000 of the ~~Company’s control and subject~~$20,000 was due to Palantir, pursuant to the ~~occurrence~~terms of ~~future events.~~the Master Subscription Agreement, thirty days after Closing. The ~~Company is authorized~~initial $15,000 was fully paid to ~~issue 380,000,000 shares~~Palantir during the first quarter of 2022. Also upon the Closing, each share of Seven Oaks Class A common stock was reclassified into 1 share of New Boxed common stock.

The Company received access to Palantir’s Foundry software platform on June 25, 2021; however, no software expense was recognized until after the consummation of the Business Combination as the Company could cancel the agreement if the Business Combination was not consummated.

On December 1, 2021, the Company entered into an addendum to a prior service agreement with Google LLC for access to the Google Cloud Platform. The addendum includes 3 commitment periods, with the first commitment period beginning on the implementation date and lasting 12 months and the next two commitment periods beginning at the end of the preceding period and lasting 12 months each. The minimum commitments for the first, second, and third commitment periods are $2,000, $4,500, and $8,500, respectively. Any fees the Company incurs in a single commitment period (other than the final commitment period) that in total exceed the minimum commitment for such period will apply towards the Company’s minimum commitment for the following commitment period. As of June 30, 2022, the total remaining commitment, gross of discounts, was approximately $13,640, with a ~~par value~~minimum of ~~$0.0001 per share. Holders~~approximately $3,500 due within the next 12 months.

13. FORWARD PURCHASE TRANSACTION

As discussed in Note 2, prior to the Closing, on November 28, 2021, Seven Oaks entered into a Forward Purchase Agreement with ACM for a Forward Purchase Transaction. Pursuant to the terms of the ~~Company’s~~Forward Purchase Agreement, ACM purchased approximately 6,504,768 shares of Seven Oaks’ Class A common stock in exchange for the Prepayment Amount of $65,062, which was paid out of the funds received by the Company from Seven Oaks’ trust account and will be held in a deposit account for the benefit of ACM until the Valuation Date. There are ~~entitled~~a few scenarios in which the Forward Purchase Agreement can be settled either before or on the Valuation Date:

i.At any time prior to the Valuation Date, ACM may elect an optional early termination to sell some or all of the Forward Purchase shares in the open market. If ACM sells any shares prior to the Valuation Date, a pro-rata portion of the Prepayment Amount will be released from the deposit account and paid to the Company. ACM shall retain any proceeds from the sale of such shares in excess of such pro-rata portion paid to the Company. For example, if ACM chooses to exercise its right to an optional early termination and sells the common stock for $7.00 per share, it will be required to return $10.00 per share, plus accrued interest, back to the Company in cash from the deposit account. Similarly, if ACM sells its shares at $12.00 per share, it will be required to return $10.00 per share, plus accrued interest, back to the Company.

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ii.On the Valuation Date, if any shares subject to the Forward Purchase Agreement remain unsold and there is a remaining balance in the deposit account corresponding to the unsold shares, the settlement amount of the remaining funds in the deposit account will be allocated based on the difference between ACM’s purchase price of $10.00 and the trading price of the shares over a specified valuation period, the length of which is based on the daily trading volume of the shares. Assuming the shares are trading above $10.00, the Company will receive the entire remaining Prepayment Amount held in the deposit account, less any applicable fees. To the extent there is any shortfall between ACM’s purchase price of approximately $10.00 (adjusted for accrued interest) and the trading price, there will be a proportionate reduction in the cash from the deposit account that the Company will receive.

iii.If the volume weighted average share price (“VWAP”) of the shares falls below $5.00 per share for 20 out of any 30 consecutive trading days (a “VWAP Trigger Event”), then ACM may elect to accelerate the Valuation Date to the date of such VWAP Trigger Event. If ACM elects to accelerate the Valuation Date, the settlement amount returned to the Company would be approximately equal to the VWAP of the shares on such date of the VWAP Trigger Event, net of $0.20 per share in fees.

The VWAP Trigger Event occurred in July 2022, after the quarter ended June 30, 2022. As of the date of filing these Condensed Consolidated Financial Statements, ACM has not elected to accelerate the Valuation Date. Refer to Note 19, “Subsequent Events,” for further detail surrounding this subsequent event.

As of June 30, 2022, ACM has sold 744,654 shares, for which the Company received net proceeds of $6,516, after paying related fees to ACM. Of this amount, 243,545 was sold during the six months ended June 30, 2022 for net proceeds of $1,504, after paying related fees to ACM. Depending on the manner in which the Forward Purchase Transaction is settled, the Company may never have access to all of the remaining Prepayment Amount.

In accordance with ASC 815, Derivatives and Hedging, the Company has determined that the forward option within the Forward Purchase Agreement is (i) a freestanding financial instrument and (ii) a derivative. This derivative, referred to throughout as the “forward purchase option derivative” is recorded as a liability on the Company’s Consolidated Balance Sheets. The Company has performed fair value measurements for this derivative as of Closing and remeasures the fair value at each reporting period, which is described in Note 15, “Fair Value Measurements.”

14. STOCKHOLDERS’ DEFICIT AND STOCK-BASED COMPENSATION

Common Stock and Preferred Stock

Common Stock— As of June 30, 2022 and December 31, 2021, the Company was authorized to issue 600,000,000 shares of common stock at $0.0001 par value per share, respectively. As of June 30, 2022 and December 31, 2021, there was 70,552,272 and 66,647,242 common shares outstanding, respectively. Each share of common stock has the right to 1 vote ~~for each~~per share.

Preferred Stock — As of ~~September~~June 30, ~~2021, there were 25,875,000 shares of Class A common stock outstanding subject to possible redemption.~~

~~The Class A common stock subject to possible redemption reflected on the balance sheet as of~~2022 and December 31, ~~2020, and September 30,~~ 2021, ~~is reconciled on~~ the ~~following table:~~

Gross proceeds

$
258,750,000
Less:


Fair value of Public Warrants at issuance

(12,937,500)
Offering costs allocated to Class A common stock subject to possible redemption

(2,971,639)
Plus:


Accretion of carrying value to redemption value

15,909,139
Class A common stock subject to possible redemption

$
258,750,000

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~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Note 8—Stockholders’ Deficit~~

~~Preferred Stock— The~~ Company iswas authorized to issue ~~1,000,000~~60,000,000 shares of preferred stock at $0.0001 par value ~~$0.0001~~ per share, respectively. As of June 30, 2022 and December 31, 2021, there were no shares of preferred stock outstanding.

Common Stock Purchase Agreement

In May 2022, the Company entered into a common stock purchase agreement (the “Purchase Agreement”) with ~~such designations, voting and other rights and preferences as may be determined~~an investor related to a committed capital on demand facility (the “CCOD Facility”). Pursuant to the Purchase Agreement, the Company will have the right from time to time byat its option to sell to the investor up to the lesser of (i) $100,000 of the Company’s ~~board~~common stock and (ii) the Exchange Cap which, under the applicable rules of ~~directors. As~~the NYSE, states that in no event may the Company issue more than 19.99% of ~~September 30, 2021, and December 31, 2020, there were 0~~the voting power or number of shares of ~~preferred stock issued or outstanding.~~

~~Class A Common Stock— The Company is authorized to issue 380,000,000 shares of Class A~~ common stock outstanding, unless certain stipulations are met. Proceeds from the sale of shares will go towards the Company to be used to support funding of ongoing operations and working capital.

In accordance with ASC 815, Derivatives and Hedging, the Company has determined that the right to sell additional shares represents a freestanding put option, and as such, the financial instrument was classified as a derivative asset with a ~~par value~~nominal fair value.

Table of ~~$0.0001 per share. As~~Contents

In May 2022, we issued 114,585 of ~~September 30, 2021, and December 31, 2020, there were 25,875,000~~upfront commitment shares of ~~Class A common stock issued and outstanding subject to possible redemption that were classified as temporary equity in the accompanying unaudited condensed consolidated balance sheets. See Note 7.~~

~~Class B Common Stock— The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. On October 13, 2020, the Company issued 5,750,000 shares of Class B~~ common stock to the ~~Sponsor~~investor which had a fair value of $1,000 upon issuance. The $1,000 in commitment costs, along with an additional $678 in other related transaction costs, were recorded in other income (expense), net on the Company’s Condensed Consolidated Statements of Operations and ~~Jones & Associates for an aggregate price~~Comprehensive Loss.

In the second quarter of ~~$25,000. On December 17, 2020,~~2022, the Company ~~effected a 1.125-for-1 stock split of its Class B common stock, resulting in an aggregate of 6,468,750~~sold 3,109,400 shares ~~of Class B common stock outstanding. All shares and associated amounts have been retroactively restated to reflect the stock split.~~

Holders of record of the Class A common stock and holders of record of the Class B common stock will vote together as a single class on all matters submitted to a vote of the stockholders, with each share of common stock ~~entitling~~to the ~~holder~~investor, pursuant to the terms of the Purchase Agreement, for cash proceeds of $6,457.

Equity Award Plans

Equity Incentive Plan —The Company historically had 1 ~~vote except as required~~Equity Incentive Plan, the 2013 Equity Incentive Plan (the “2013 Plan”), under which the Company had issued equity awards to the Company’s officers, directors, employees, and consultants.The option exercise price was determined by ~~law.~~

~~The Class B~~the Board of Directors based on the estimated fair value of the Company’s common ~~stock will automatically convert into Class A common stock concurrently with or immediately following~~stock.

Incentive Award Plan — In December 2021, the Board of Directors adopted the Company’s 2021 Incentive Award Plan (the “2021 Plan”), upon consummation of the ~~initial~~ Business Combination ~~on a one-for-one basis, subject~~. No new awards will be issued under the 2013 Plan following the approval of the 2021 Plan.

Under the 2021 Plan, the Company has the ability to ~~adjustment for~~issue incentive stock ~~splits,~~options, non-qualified stock ~~dividends, reorganizations, recapitalizations~~options, stock appreciation rights, restricted stock awards, and restricted stock units to selected employees, officers, directors and consultants of the ~~like, and subject~~Company as an incentive to ~~further adjustment as provided herein. In the case that additional~~such persons. The Company has initially reserved 10,024,848 shares of ~~Class A~~ common stock ~~or equity-linked securities~~for issuance to officers, directors, employees, and consultants of the Company pursuant to the 2021 Plan. The number of shares initially available for issuance will be increased on January 1 of each calendar year beginning in 2022 and ending in 2031, by an amount equal to the lesser of (a) 5% of the shares of common stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as determined by the Board. For fiscal year 2022, the Board elected not to increase the initial reserve under the 2021 Plan as it was only adopted in December of 2021.

Of such reserved shares of common stock, as of June 30, 2022, 3,174,600 options and restricted stock units have been granted and are ~~issued or deemed issued in~~currently outstanding, leaving 6,525,748 shares of common stock remain available for issuance pursuant to the 2021 Plan.

Employee Stock Purchase Plan — In connection with the ~~initial~~ Business Combination, the Company adopted the 2021 Employee Stock Purchase Plan (the “ESPP”), which will allow eligible employees to acquire a stock ownership in the Company. A total of 2,004,969 shares of common stock were initially reserved for issuance under the ESPP. In addition, the number of shares available for issuance under the ESPP will be annually increased on January 1 of ~~Class A~~each calendar year beginning in 2022 and ending on and including January 31, 2031, by an amount equal to the lesser of (a) 1% of the aggregate number of common stock ~~issuable upon conversion of all Founder Shares will equal, in~~outstanding on the ~~aggregate, on an as-converted basis, 20%~~final day of the ~~total~~immediately preceding calendar year and (b) such smaller number of shares as is determined by the Board. For fiscal year 2022, the Board elected not to increase the initial reserve under the ESPP as it was only adopted in December of ~~Class A common~~2021. As of June 30, 2022, there have been 0 issuances under the ESPP.

Equity Awards and Stock-Based Compensation

Stock Options — Stock options granted under both the 2013 Plan and 2021 Plan are generally granted at a price per share not less than the fair value at the date of the grant. Options granted to date generally vest over a four-year period with 25% of the shares underlying the options vesting on the first anniversary of the vesting commencement date with the remaining 75% of the shares vesting on a pro-rata basis over the succeeding thirty-six months, subject to continued service with the Company through each vesting date. Options granted are generally exercisable for up to 10 years, also subject to continued service with the Company.

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The following is a summary of stock ~~outstanding after such conversion (after giving effect~~options activity during the six months ended June 30, 2022:


	Number of options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Outstanding as of December 31, 2021	5,832,519	$	3.30	5.62
Granted	324,500	7.68		4.89
Exercised	(388,083)	1.97
Forfeited	(202,698)
Outstanding as of June 30, 2022	5,566,238	$	3.62	5.35
Vested and expected to vest as of June 30, 2022	5,566,238	$	3.62	5.35
Exercisable as of June 30, 2022	4,220,504	$	3.04	4.29

Stock-based compensation expense related to ~~any redemptions~~stock options was $648 and $1,695 for the three and six months ended June 30, 2022, respectively. All stock-based compensation expense is recorded within selling, general, and administrative expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

As of June 30, 2022, total unrecognized compensation costs related to unvested stock options was approximately $5,256, which is expected to be recognized over a weighted-average period of 2.33 years. The total fair value of options vested during the six months ended June 30, 2022 was $2,422.

Restricted Stock Units — Certain executive officers are eligible for (i) time-based restricted stock units (“RSUs”) and (ii) performance-based RSUs under a three-year long-term incentive program (“LTIP”) through which these individuals will be granted shares of ~~Class A~~RSUs eligible to vest over a three-year period (the “LTIP period”). For each individual, certain portions of the RSUs granted (i) will vest over time based on continued service over the LTIP period (ii) will vest based on the achievement of certain gross profit targets over the LTIP period, and (iii) will vest based on the achievement of certain share price hurdles for the Company’s common ~~stock by Public Stockholders), including~~stock. Each of these grant types will be subject to the ~~total number~~officers’ continuous employment through each vesting date. Further, as part of ~~shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity- linked securities or rights issued or deemed issued, by~~its overall compensation strategy, the Company ~~in connection with or in relation~~grants RSUs to ~~the consummation~~its employees as part of the ~~initial Business Combination, excluding any~~new-hire process as well as ongoing equity refresh cycles. RSUs granted to employees typically vest over a four-year period with 25% of the shares underlying the grant vesting on the first anniversary of ~~Class A common stock or equity-linked securities or rights exercisable for or convertible into~~the vesting commencement date, with the remaining 75% of the shares vesting on a pro-rata basis over the succeeding thirty-six months, subject to continued service with the Company through each vesting date.

As of ~~Class A common stock issued, or~~June 30, 2022, 1,984,600 time-based RSUs and 1,190,000 share-price target RSUs have been granted, respectively, to ~~be issued, to any seller in~~certain of the ~~initial Business Combination~~Company’s executive officers, employees, non-employee directors, and ~~any private placement warrants~~third party consultants. Of these grants, 1,474,600 time-based RSUs and 420,000 share-price target RSUs were granted during the six months ended June 30, 2022. Of the RSUs issued to the ~~Sponsor,~~Company’s executive officers, ~~or directors upon conversion~~the time-based RSUs will vest annually over a three-year LTIP period, subject to the executives’ continued service at each vesting date. The executive officer share-price target RSUs are subject to vesting based on the achievement of ~~Working Capital Loans, provided that such conversion~~certain share price hurdles over the LTIP period. For the time-based RSUs, the stock-based compensation expense will be recognized evenly over the three-year LTIP period, with $1,483 and $2,795 being recognized for the three and six months ended June 30, 2022, respectively.

A valuation to determine the fair values for the share-price target RSUs was performed using a Monte-Carlo Simulation, which includes the probability of ~~Founder Shares will never occur~~reaching the share price hurdles in determining the fair value of the award. Total stock-based compensation to be recognized for these share-price target RSUs is based on a ~~less than one-for-one basis.~~

derived service period, calculated by the model. Total stock-based compensation expense related to these awards recognized for the three and six months ended June 30, 2022 was $2,313 and $5,134, respectively.

As of June 30, 2022, total unrecognized compensation costs related to unvested time-based RSUs and share-price target RSUs was approximately $15,192 and $3,050, respectively, which is expected to be recognized over a weighted-average period of 3.03 years and 1.90 years, respectively. No RSUs have vested as of June 30, 2022. To date, the Company has not yet granted RSUs which vest based on the achievement of certain gross profit targets.

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~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Note 9—Fair Value Measurements~~

15. FAIR VALUE MEASUREMENTS

The ~~following tables present~~table below presents information ~~about the Company’s~~regarding financial assets and liabilities that are measured at fair value on a recurring basis and ~~indicates~~indicate the level within the fair value hierarchy ofreflecting the valuation techniques ~~that the Company~~ utilized to determine ~~such~~ fair value.

Fair Value Measured as of September 30, 2021

Quoted Prices in

Significant Other

Significant Other

Active Markets

Observable Inputs

Unobservable Inputs
Description

(Level 1)

(Level 2)

(Level 3)
Assets:

Investments held in Trust Account

$
258,804,731

$
—

$
—
Liabilities:

Derivative warrant liabilities - public warrants

$
10,337,063

$
—

$
—
Derivative warrant liabilities - private warrants

—

$
4,464,410

—

Fair Value Measured as of December 31, 2020

Quoted Prices in

Significant Other

Significant Other

Active Markets

Observable Inputs

Unobservable Inputs
Description

(Level 1)

(Level 2)

(Level 3)
Assets:




Investments held in Trust Account

$
258,749,858

$
—

$
—
Liabilities:




Derivative warrant liabilities - public warrants

$
—

$
—

$
15,654,375
Derivative warrant liabilities - private warrants

—

—

$
6,760,880

Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. In the nine months ended September 30, 2021, the estimated fair value of the Public Warrants transferred from a


	Fair Value Hierarchy
June 30, 2022	Level 1		Level 2		Level 3
Financial assets:
Cash and certain cash equivalents	$	26,835	$	—	$	—
Commercial paper	13,056		0		0
Restricted cash	2,768		—		—
Short-term marketable securities	6,958		0		0
Total financial assets	$	49,617	$	—	$	—
Financial liabilities:
Forward purchase option derivative	$	—	$	—	$	49,055
Earnout liability	—		—		3,654
Public Warrants	2,717		—		—
Private Warrants	—		1,173		—
Total financial liabilities:	$	2,717	$	1,173	$	52,709


December 31, 2021	Level 1		Level 2		Level 3
Financial assets:
Cash & cash equivalents	$	105,027	$	—	$	—
Restricted cash	2,767		—		—
Total financial assets	$	107,795	$	—	$	—
Financial liabilities:
Forward purchase option derivative	$	—	$	—	$	4,203
Earnout liability	—		—		27,134
Common stock warrants	15,396		—		—
Preferred stock warrants	—		6,649		—
Total financial liabilities	$	15,396	$	6,649	$	31,337


Level 3 Rollforward	Forward purchase option derivative		Earnout liability
Beginning balances	$	4,203	$	27,134
Additions	—		—
Changes in fair value	44,852		(23,480)
Ending balances	$	49,055	$	3,654

The Company’s Level 3 ~~measurement~~financial liabilities include the forward purchase option derivative and earnout liability, which is comprised of (i) the contingent consideration related to ~~a Level 1 fair value measurement~~the Boxed Market (formerly known as MaxDelivery) acquisition (See Note 1) and (ii) the ~~Public Warrants were separately listed and traded beginning in February 2021.~~

~~Level 1 assets include investments in mutual funds invested in government securities.~~Sponsor Earnout Shares (See Note 2). The ~~Company uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.~~

In the nine months ended September 30, 2021, the estimated fair value of the Private Warrants transferred from a Level 3 measurement to a Level 2 fair value measurement, as the transfer of Private Placement Warrants to anyone who is not a permitted transferee would result in the Private Placement Warrants having substantially the same terms as the Public Warrants, the Company determined that the fair value of each ~~Private Placement Warrant is equivalent to that of each Public Warrant. As such, the Private Placement Warrants are classified as Level 2.~~

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~~SEVEN OAKS ACQUISITION CORP.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

instrument was estimated using a Monte-Carlo Simulation. The ~~change in~~Company measures the fair value at each reporting period, with subsequent revisions to be recorded in the Condensed Consolidated Statements of ~~derivative warrant liabilities~~Operations and Comprehensive Loss. Refer to Application of Critical Accounting Policies and Estimates within the Company’s Annual Report on Form 10-K for further detail on the valuations.

There were no transfers between levels during the reporting periods. All significant Level 3 fair value hierarchy were recorded during the periods ended June 30, 2022 and December 31, 2021.

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16. NET LOSS PER SHARE

The Company uses the two-class method to compute basic and diluted earnings per common share. In periods of net loss, no effect is given to the Company’s participating securities as they do not contractually participate in the losses of the Company. The following table sets forth the computation of basic and diluted net income (loss) per share:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Numerator
Net loss	$	(31,817)	$	(10,167)	$	(68,028)	$	(24,372)
Less: accretion adjustment	—		(1,733)		—		(1,332)
Less: earnings allocated to participating securities	—		—		—		—
Net loss attributable to common shareholders	$	(31,817)	$	(8,434)	$	(68,028)	$	(23,040)
Less: undistributed earnings allocated to participating securities	—		—		—		—
Denominator
Weighted-average shares–basic and diluted	67,221,398		9,434,526		67,041,502		9,426,915
Net loss per common share–basic and diluted	$	(0.47)	$	(0.89)	$	(1.01)	$	(2.44)

The following securities were excluded from the computation of diluted loss per share in the periods presented, as their effect would be anti-dilutive:


	As of June 30,
	2022	2021
Series preferred stock, outstanding	—	41,289,914
Common stock warrants, outstanding	—	35,719
Preferred stock warrants, outstanding	—	1,188,848
Common stock options, outstanding	5,566,238	5,268,097
PIPE Convertible Notes, if-converted (1)	7,266,667	—
Restricted stock units, outstanding	3,174,600	—
Private Warrants, outstanding	12,936,678	—
Public Warrants, outstanding	5,587,500	—

(1) The PIPE Convertible Notes are presented using a conversion rate of $12.00, in line with the if-converted method under ASC 260, Earnings Per Share.

17. RELATED PARTY TRANSACTIONS

In 2021 and prior, the Company identified 3 related parties, including (i) the employer of the Director elected by the shareholders of the Series C-1 class of preferred stock, (ii) a shareholder of the Series D-1 class of preferred stock, and (iii) AEON Integrated Business Services Co., Ltd, a wholly-owned subsidiary of AEON Co., Ltd. (“AEON”).

Immediately prior to the consummation of the Business Combination in December 2021, all shares of Old Boxed preferred stock converted into shares of Old Boxed common stock. Upon Closing, each share of Old Boxed common stock then converted into the right to receive approximately 0.9498 shares of New Boxed common stock.

As a result of the Business Combination and the related transactions, (i) the majority holder of the Series C-1 class was no longer a related party as of Closing as this holder no longer holds more than 10% of the Company’s voting interest and the elected Director is no longer on the Board of Directors and (ii) the holder of the Series D-1 class, was no longer a related party.

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As of June 30, 2022, the Company identified AEON as its only remaining related party. The following discussion includes related party transactions with AEON as well as prior year period related party transactions for the previously identified related parties related to holders of Series C-1 and Series D-1 preferred stock.

AEON

On February 12, 2021, the Company entered into an agreement with AEON Integrated Business Services Co., Ltd., a wholly-owned subsidiary of AEON Co., Ltd. (“AEON”), a Series D-1 shareholder, to license its e-commerce platform through a software licensing arrangement. The objective of the agreement is for the Company to design, develop and support the e-commerce platform customized for the digital marketplace operations of AEON and AEON affiliates. The services provided include implementation services, license of the e-commerce software platform, training, and maintenance and support. The Company has been engaged to provide services to AEON and AEON Malaysia. The total transaction price for the contract includes fixed and variable consideration. Based on the Company’s estimates of the standalone selling prices of the performance obligations identified in the contract, the Company has allocated $7,300 to implementation services specific to AEON, $4,500 to the implementation services specific to AEON Malaysia, and $20 per month to software maintenance services with respect to the licensed software for AEON Malaysia. The transaction price attributable to the software license to AEON Malaysia is variable and consists of sales and usage-based royalties. Yuki Habu, a director of Boxed, is affiliated with AEON. See Note 9, “Revenue Recognition,” for further details. Immediately prior to the consummation of the Business Combination in December 2021, all shares of Old Boxed preferred stock converted into shares of Old Boxed common stock, which then upon Closing converted into the right to receive approximately 0.9498 shares of New Boxed common stock.

Holders of Series C-1 and Series D-1 preferred stock

For the three and ~~nine~~six months ended ~~September~~June 30, 2021, the majority holder of the Series C-1 class of preferred stock was a vendor from whom the Company purchases inventory. The collective shareholders of the Series C-1 class of preferred stock had the right to elect 1 Director to the Board of Directors and the elected Director was an employee of this vendor. In connection with the inventory purchases, the Company receives various volume rebates and incentives to continue doing business. Total inventory purchases for the three and six months ended June 30, 2021 were approximately $3,417 and $6,597, respectively. Total volume rebates and incentives for the three and six months ended June 30, 2021 were approximately $101 and $204, respectively.

For the three and six months ended June 30, 2021, a holder of the Series D-1 class of preferred stock was a vendor from whom the Company purchases inventory. The collective shareholders of the Series D-1 class of preferred stock had the right to elect 2 Directors to the Board of Directors. The Directors elected by the collective Series D-1 shareholders were not employees of this vendor. In connection with the inventory purchases, the Company receives various volume rebates and incentives to continue doing business. For the three and six months ended June 30, 2021, total inventory purchases were $354 and $937, respectively. For the three and six months ended June 30, 2021, total dunnage purchases were $545 and $1,162, respectively. Volume rebates and incentives received for the three and six months ended June 30, 2021 were each approximately $5, respectively.

18. SEGMENT REPORTING

Operating segments are defined as components of an entity for which separate financial information is ~~summarized as follows:~~

Public Warrants

Private Warrants

Total
Derivative warrant liabilities at January 1, 2021

$
15,654,375

$
6,760,880

$
22,415,255
Change in fair value of derivative warrant liabilities

(3,881,250)

(1,676,250)

(5,557,500)
Derivative warrant liabilities at March 31, 2021

11,773,125

5,084,630

16,857,755
Change in fair value of derivative warrant liabilities

3,493,125

1,508,620

5,001,745
Derivative warrant liabilities at June 30, 2021

15,266,250

6,593,250

21,859,500
Change in fair value of derivative warrant liabilities

(4,929,187)

(2,128,840)

(7,058,027)
Derivative warrant liabilities at September 30, 2021

$
10,337,063

$
4,464,410

$
14,801,473

~~Note 10—Subsequent Events~~

available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The profitability measure employed by the Company’s CODM for allocating resources to operating segments and assessing operating segment performance is operating loss. The CODM does not receive or regularly review asset information when allocating resources and assessing segment performance.

Therefore, asset information by segment has not been disclosed. Substantially all of the Company’s identifiable assets are located in the United States. The Company currently does not have substantial sales outside the United States, nor does any customer represent more than 10 percent of total revenues for any period presented.

There were no material inter-segment net sales and expenses to be eliminated in computing total revenue and operating income. In addition, the Company allocates its selling, general and administrative expenses to its segment results based on usage, which is generally reflected in the segment in which the costs are incurred. The following table provides information for the Company’s reportable segments, including product category disaggregation for its Retail segment:

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Information about Reported Segment Profit or Loss


	Retail		Software & Services		Total
For the Three Months Ended June 30, 2022
Grocery net revenue	$	30,032	$	—	$	30,032
Home & Household net revenue	12,385		—		12,385
Other net revenue (1)	1,150		—		1,150
Software & Services net revenue	—		99		99
Total net revenue	$	43,567	$	99	$	43,666
Operating income (loss)	$	(27,383)	$	(710)	$	(28,093)
For the Three Months Ended June 30, 2021
Total net revenue	$	39,192	$	3,159	$	42,351
Operating income (loss)	$	(14,222)	$	2,072	$	(12,150)


	Retail		Software & Services		Total
For the Six Months Ended June 30, 2022
Grocery net revenue	$	60,572	$	—	$	60,572
Home & Household net revenue	25,073		—		25,073
Other net revenue (1)	2,318		—		2,318
Software & Services net revenue	—		2,329		2,329
Total net revenue	$	87,963	$	2,329	$	90,292
Operating income (loss)	$	(57,665)	$	562	$	(57,103)
For the Six Months Ended June 30, 2021
Total net revenue	$	79,067	$	4,141	$	83,208
Operating income (loss)	$	(27,755)	$	2,313	$	(25,442)

(1) Includes revenues related to our subscription services program, advertising and marketing fees, and third-party marketplace service fees.

19. SUBSEQUENT EVENTS

Management has evaluated subsequent events ~~and transactions that occurred after~~to determine if events or transaction occurring through the ~~balance sheet~~filing date upof this Quarterly Report require adjustments to or disclosures in the ~~date that~~Company’s Condensed Consolidated Financial Statements. Aside from the ~~condensed consolidated financial statements were issued. Based upon this review,~~items discussed below, the Company did not ~~identify~~have any subsequent events that ~~would have~~ required ~~adjustment~~recognition or disclosure in the ~~condensed consolidated financial statements.~~

Condensed Consolidated Financial Statements for the three and six months ended June 30, 2022.

1.As discussed in Note 13, if the VWAP of the shares falls below $5.00 per share for 20 out of any 30 consecutive trading days (a “VWAP Trigger Event”), then ACM may elect to accelerate the Valuation Date to the date of such VWAP Trigger Event. If ACM elects to accelerate the Valuation Date, the settlement amount returned to the Company would be approximately equal to the VWAP of the shares on such date of the VWAP Trigger Event, net of $0.20 per share in fees, subject to certain terms as outlined in the Forward Purchase Agreement. For further detail on the terms, refer to the Forward Purchase Agreement, as filed with the SEC on November 30, 2021. The VWAP Trigger Event occurred on July 6, 2022, giving ACM the right to elect to accelerate the Valuation Date at its option. As of the date of issuance of this Quarterly Report, ACM has not elected to accelerate the Valuation Date.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Item 2.~~~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~

~~References to~~You should read the ~~“Company,” “Seven Oaks Acquisition Corp.,” “Seven Oaks,” “our,” “us” or “we” refer to Seven Oaks Acquisition Corp. The~~ following discussion and analysis of ~~the Company’s~~ financial condition and results of operations ~~should be read~~together with our Condensed Consolidated Financial Statements and the related notes and other financial information of Boxed included elsewhere in ~~conjunction with the unaudited interim condensed~~this Quarterly Report, as well as our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the ~~notes thereto contained~~year ended December 31, 2021. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors”section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as updated in our subsequent filings with the SEC, and in other parts of this Quarterly Report.Please read the information under the caption entitled “Cautionary Note Under Forward Looking Statements.”

Overview

Boxed is an e-commerce retailer and an e-commerce enabler. We operate an e-commerce Retail service that provides bulk pantry consumables to businesses and household customers. This service is powered by our own purpose-built storefront, marketplace, analytics, fulfillment, advertising, and robotics technologies. We further enable e-commerce through our Software & Services business (which we have branded as “Spresso”), which offers customers in need of an enterprise-level e-commerce platform access to our end-to-end technology. Included in our Retail segment is revenue generated through our expanding on-demand grocery delivery business, now known as Boxed Market, which began in December 2021 when we purchased substantially all of the assets and operations of MaxDelivery, LLC.

Founded in 2013 by an experienced group of tech pioneers, we have been a technology-first organization since our inception. The founders (including our Chief Executive Officer Chieh Huang and Chief Operating Officer Jared Yaman) had a simple idea: make shopping for bulk, household essentials easy, convenient and fun so customers can focus their time and energy on the things that really matter, instead of spending their weekends traveling to and shopping in traditional brick-&-mortar wholesale clubs with their families. From that initial concept, we grew into the e-commerce technology company that it is today, with our own purpose-built storefront, analytics, fulfillment, advertising, and robotics technologies. Now, in addition to offering B2C and B2B customers with bulk consumables, such as paper products, snacks, beverages, and cleaning supplies, we have also begun to drive high-margin revenue through our Spresso business, helping the world to stock up through our technology.

Since our inception, we have been engaged in developing and expanding our Retail and Spresso businesses. We have incurred net operating losses and have generated negative cash flows from operations in each year since our inception. For the six months ended June 30, 2022, we had a net operating loss and negative cash flows from operations of $68.0 million and $64.9 million, respectively. Since our inception, beyond sales of our product and services, we have funded our operations primarily with proceeds from the issuance of stock and borrowings, including under our term loans and revolving credit facilities, as well as through the consummation of the Business Combination.

Business Combination and Public Company Costs

On December 8, 2021, we consummated our previously announced Business Combination, at which time (i) Old Boxed merged with a subsidiary of Seven Oaks and became a wholly-owned subsidiary of Seven Oaks and (ii) Seven Oaks changed its name from Seven Oaks Acquisition Corp. to Boxed, Inc., and is referred to herein as “New Boxed” or “us” or “we.” In connection with the Closing, among other things:

•We became an SEC-registrant and our common stock and warrants commenced trading on the NYSE on December 9, 2021 under the symbols “BOXD” and “BOXD WS,” respectively.

•Immediately prior to Closing, each share of Old Boxed preferred stock was converted into Old Boxed common stock based on the conversion ratios of each respective series. Then upon Closing, each share of Old Boxed common stock was converted into the right to receive approximately 0.9498 shares of New Boxed common stock, par value $0.0001 per share.

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•The 6,468,750 shares of Seven Oaks Class B common stock held by the Sponsor, JTCM Ventures and related parties were each automatically reclassified into one share of New Boxed common stock (of which 1,940,625 shares are subject to vesting under certain conditions).
•PIPE Investors contributed a total of $120.0 million, comprised of $32.5 million for 3,250,000 shares of New Boxed common stock and an aggregate of $87.5 million in PIPE Convertible Notes.
•An aggregate of $181.0 million was paid from Seven Oaks’ trust account to holders that exercised their right to have initial shares redeemed. In addition, on December 9, 2021, one day following the Closing, we paid the Prepayment Amount of $65.1 million to ACM utilizing funds from Seven Oaks’ trust account, pursuant to the terms of a Forward Purchase Agreement entered into by Seven Oaks and ACM on November 28, 2021 for an OTC Equity Prepaid Forward Transaction.
The Business Combination is accounted for as a reverse capitalization in accordance with U.S. GAAP. Under the guidance in ASC 805, Business Combinations, Seven Oaks is treated as the “acquired” company for financial reporting purposes. See Note 2, “Business Combination,” of our Condensed Consolidated Financial Statements included elsewhere in this ~~report. Certain information contained~~Quarterly Report for additional detail about the Business Combination as well as Note 13, “Forward Purchase Transaction,” therein for further detail about the Forward Purchase Agreement.
As a result of becoming a public company, we have begun, and will continue to need to hire additional staff and implement processes and procedures to address public company regulatory requirements and customary practices. We incurred and expect to continue to incur additional annual expenses for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources and fees.
Factors Affecting our Performance
We believe that our performance and future success depend on many factors. While we believe that each of these factors present significant opportunities for our business, each factor also poses risks and challenges that we must successfully address in order to sustain our growth and continue to improve our results of operations.
COVID-19. During 2020, the COVID-19 pandemic had a mixed impact on our results of operations. Throughout the pandemic our fulfillment centers largely remained open as they were deemed as “essential businesses” in our locations. While we experienced increased demand from B2C customers, as many individuals adopted online shopping during the pandemic, that increase was offset by a decline in demand from our B2B customers, as many businesses reverted to work-from-home environments. The result of these two counteracting trends was slight growth in 2020 sales compared to 2019. Further, during 2020, we experienced a significant increase in organic new customer traffic to our web properties as a result of COVID-19. This rapid and variable surge in traffic put significant stress on our supply chain, with industry-wide inventory supply shortages limiting our ability to provide the products in demand from our customers. As such, during this period, we significantly reduced our growth-related investments (i.e. promotional spend and advertising expense) and temporarily shut down service to certain new customers in specific states. While industry-wide demand for e-commerce services remains elevated compared to pre-pandemic levels, the surge in organic new customer traffic we experienced in 2020 did not persist at the same levels in 2021 or 2022, and we began to meaningfully increase our investments in advertising expense and promotional spend in order to drive additional demand. In addition, the waves of COVID-19 virus variants, including the proliferation of the Delta and Omicron variants, further delayed the return-to-office plans of many of our B2B customers in 2021, which yielded a slower recovery from our B2B customers than originally anticipated throughout 2021. While we remain optimistic on the recovery of B2B, the demand from our B2B customers may not fully recover to the levels that existed during 2019. These changes could adversely affect our business, financial condition, and results of operations.
Additionally, the higher propensity for online shopping has led to increased demand for our technology, which we began to monetize in 2021, but could also reverse in the future as customer behavior changes. Overall, the COVID-19 pandemic is unprecedented and continuously evolving and the long-term impacts on our financial condition and results of operations are still uncertain. We are continuing to monitor the impact of the pandemic on the overall macro-economic environment, as well as the impact on cost inflation in consumable products and transportation, which continues to increase our operating costs.
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The COVID-19 pandemic may impact many of the factors discussed in this section, including, among others, overall economic trends including inflation, consumer preferences and demand, product mix, competitive dynamics, and sourcing and distribution, which in turn could adversely affect our business, financial condition and results of operations.
Inflation and the macroeconomic environment. We believe that the combination of inflation and the broader macroeconomic environment, including supply chain disruptions from the COVID-19 pandemic, tight labor markets, pricing volatility, rising interest rates, may put downward pressure on our net revenues and gross profit. In addition, rapid and significant changes in the price of our merchandise may negatively affect our profit margins if we are unable to mitigate any inflationary increases through various pricing actions and cost reduction initiatives. See “COVID-19” for a further discussion of the impact of the COVID-19 pandemic on our performance.
Acquisition of new customers and ~~analysis set~~retention of existing customers. The size of our customer base and our customers’ level of engagement and retention are critical to our success. Our ability to continue to attract and retain customers depends, in part, on our ability to consistently provide our customers with a convenient, high-quality experience with competitive pricing for consumer goods, groceries, household products, and other bulk or discounted products. If our customers preferences change or they do not perceive our service and the products we sell to be convenient, competitively priced, and of high quality, we may not be able to attract and retain customers, and as a result, our revenue may be adversely impacted.
Brand recognition and customer loyalty. Our ability to succeed in a crowded e-commerce marketplace will depend on our continued success at attracting and retaining a large number of high-value customers to the Boxed Sites who have traditionally purchased bulk consumer packaged goods from our larger competitors. We may be required to incur significantly higher advertising and promotional expenditures to differentiate Boxed Sites from that of our competitors. If our branding efforts are not successful, our operating results and our ability to attract and retain customers may be adversely impacted. In addition, we sell many products under the Prince & Spring private-label brand. Increasing the portfolio of private-label products offered is essential to developing and maintaining customer loyalty. Prince & Spring private-label products also generally carry higher margins than national brand products offered on the Boxed Sites, representing a growth portion of our overall sales. If the Prince & Spring brand experiences a loss of customer acceptance or confidence, our sales and gross margin results could decline.
Competition. We operate in a market that is rapidly evolving and in which we face competition, especially from larger and more well-established companies. These more well-established competitors may have longer operating histories, greater financial, technical, marketing, and other resources, greater name and brand recognition, a larger base of vendors, or faster shipping times or lower-cost shipping. These factors may allow our competitors to derive greater revenue and profits, acquire customers at lower costs, or respond more quickly to emerging technologies and evolving consumer trends. If we are unable to compete successfully, or if competing successfully requires us to expend greater resources, our financial condition and results of operating could be adversely affected.
Effective sourcing and distribution of products. Our net revenues and gross profit are affected by our ability to purchase our products in sufficient quantities at competitive prices. While we believe our vendors have adequate capacity to meet our current and anticipated demand, our level of net revenues could be adversely affected in the event of constraints in our supply chain, including our inability to procure and stock sufficient quantities of some merchandise in a manner that is able to match market demand from our customers, leading to lost sales. We have, from time to time, experienced inventory allocations or shipping delays from our vendors which have resulted in lost sales due to out-of-stocks.
Software & Services (or “Spresso”) offerings. Our Spresso business, encompassing the licensing of our software and technology assets, is expected to be an increasing part of our revenue and profitability as we expand. We began to successfully deliver and market these services to customers in the second half of 2021, but if we are not able to continue and expand such services, we would fail to achieve the anticipated benefits of our Spresso offering. The success of our early operations of our Spresso offering may significantly impact our future business, results of operations and financial condition. Our results of operations and future revenue prospects will be harmed if we are unable to increase the adoption of our offerings.
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Seasonality. Our Retail business is moderately seasonal, with a meaningful portion of our sales and promotional campaigns dedicated to back-to-school and back-to-work time periods, typically resulting in higher customer demand in the first and third fiscal quarters. Due to the importance of our peak sales periods, which include the post-holiday winter and fall seasons, the first and third fiscal quarters have historically contributed, and are expected to continue to contribute, significantly to our operating results for the entire fiscal year. In anticipation of seasonal increases in sales activity during these periods, we incur additional expense prior to and during our peak seasonal periods. These expenses may include the acquisition of additional inventory, seasonal staffing needs and other similar items. As a result, any factors negatively affecting us during these periods, including adverse weather, spread of seasonal infectious diseases and unfavorable economic conditions, could have a material adverse effect on our results of operations for the entire fiscal year.
Key Performance Indicators
We measure our business using both financial and operating data and use the following metrics and measures to assess the near-term and long-term performance of our overall business, including identifying trends, formulating financial projections, making strategic decisions, assessing operational efficiencies and monitoring our business. Key performance indicators (“KPIs”) are typically operational in nature, are not measures of financial performance in accordance with U.S. GAAP and may exclude items that are significant in understanding and assessing the Company’s financial results. Therefore, these measures should not be considered in isolation or as an alternative to net revenue, cash flows from operations or other measures of growth, profitability, liquidity or performance under U.S. GAAP. You should be aware that our presentation of these measures may not be comparable to similarly-titled measures used by other companies.
We present the following KPIs to assist investors in understanding our operating results on an on-going basis: (i) Retail Active Customers, (ii) Retail Average Order Value (Retail “AOV”), (iii) Retail Net Revenue per Retail Active Customer (“RPAC”) and (iv) Gross Merchandise Value (“GMV”). Beginning in the first quarter of 2022, we have elected to update our disclosures from presenting information on a last-twelve-month basis to a quarterly basis in order to provide shareholders and investors with further insight into our quarterly trends and seasonal variability. We believe this disclosure change supports increased interpretability of our operating results. Further, we have elected to update our disclosures to not include Advertising Expenses within KPIs as it is discussed within Results of Operations, below.

This table sets forth ~~below includes forward-looking statements that involve risks~~our key performance indicators for the three months ended June 30, 2022 and ~~uncertainties.~~

~~Cautionary Note Regarding Forward-Looking Statements~~

~~This Quarterly Report on Form 10-Q includes forward-looking statements~~2021. Figures disclosed for Retail Active Customers and Retail AOV reflect Retail segment metrics only, and do not aggregate metrics from Software & Services (or “Spresso”) customers who are leveraging our software or technology for their own retail operations.

Three Months Ended June 30,
2022 2021
Retail Active Customers (in thousands) 167 153
Retail AOV (in whole dollars) $ 132 $ 123
RPAC (in whole dollars) $ 261 $ 256
GMV (in millions) $ 52.7 $ 44.2

Retail Active Customers

We define active customers as the distinct number of customers in our Retail segment who placed at least one order in the referenced respective time-period (“Retail Active Customers”). The change in Retail Active Customers in a reporting period captures both the inflow of new customers as well as the outflow of customers who have not made a purchase in the time period. We view the number of Retail Active Customers as a key indicator of our performance, which is influenced by the level of investment in Advertising Expenses, the number of new customers acquired during a given time period, as well as the churn of previous Retail Active Customers.

The increase in our Retail Active Customers when comparing the three months ended June 30, 2022 to the three months ended June 30, 2021 was primarily due to an increase in marketing investment and brand awareness during the more recent period compared to the prior period, along with the continued momentum within the ~~meaning~~B2B customer channel as customers return to work post-COVID-19 restrictions.

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Retail AOV
We define Retail AOV as the GMV for the respective time-period divided by the total number of orders placed by customers during the same period. We believe Retail AOV is an important indicator of business performance as it is supported by our proprietary e-commerce technology, where our mobile app, website, and personalization engine provide a seamless shopping experience, enabling customers to easily discover new and relevant products and categories. This results in a trend where on average, Retail AOVs expand over the course of a customer’s lifecycle. Further, larger orders are on average more profitable, helping to drive margin improvement from shipping, packaging, and labor efficiencies.
Total Retail AOV increased when comparing the three months ended June 30, 2022 to the three months ended June 30, 2021 as the result of (i) an increasing percentage of orders from our B2B customers who have, on average, significantly higher Retail AOVs than our B2C customers, (ii) ongoing pricing optimizations and price inflation, and (iii) adjustments to the user experience designed to help drive Retail AOV increases across both our new and repeat customers.
We measure Retail AOV on a gross basis, comparable to the way that we measure GMV. As a result, it does not account for any discounts, promotions, or rewards that are offered to or redeemed by our customers, and therefore it is not intended for use as an alternative to net revenue recorded in accordance with GAAP.
RPAC
We define Retail Net Revenue per Active Customer as total Retail net revenue for the respective time-period divided by the total number of Retail Active Customers during the same period. We believe RPAC is an important indicator of business performance as it demonstrates customer engagement within our Retail business, combining the impact of both our Retail AOV as well as the order frequency of customers shopping our Retail e-Commerce offerings.
RPAC increased by $4.4, or 1.7%, when comparing the three months ended June 30, 2022 to the three months ended June 30, 2021 as the result of (i) an increasing mix of orders from our B2B customers who have, on average, significantly higher spend per customer than our B2C customer bases (ii) higher Retail AOVs and (iii) higher order frequency within both our B2C and B2B customer bases. These increases were somewhat offset by (i) a higher percentage mix of new customers which, on average, have lower RPAC than our repeat customer base, as well as (ii) higher promotions and price discounts.
GMV
We define GMV as (i) the total value of Boxed goods sold, (ii) 3rd party goods sold on Boxed Sites, gross of any customer promotions, price discounts, credits, or rewards used, and (iii) goods sold on 3rd party (i.e. AEON) websites which are leveraging our Spresso technology, all of which are inclusive of shipping fees, service fees and taxes. We believe our ability to expand GMV is an indicator of the ~~Securities Act~~global scale of ~~1933,~~our technology services platform in any given period, and an indicator of end-customer engagement on our technology services platform worldwide. GMV is not intended for use as ~~amended,~~an alternative to net revenue recorded in accordance with GAAP.
GMV increased by $8.6 million, or 19.4%, in the three months ended June 30, 2022 compared to the three months period June 30, 2021. The increase was largely attributable to accelerating B2B customer demand, combined with increases in GMV from the Boxed Market and ~~Section 21E~~Spresso customer bases. We believe that the COVID-19 pandemic primarily impacted our GMV through the Retail Active Customer count, as discussed above.
Components of our Results of Operations
We operate in two reportable segments: Retail and Software & Services, to reflect the way our chief operating decision maker (“CODM”) reviews and assesses the performance of the ~~Exchange Act.~~ business. Our Retail segment engages in the sale of consumer products and goods in bulk sizes to consumers and businesses in the continental United States. Our Retail segment includes net revenue from merchandising sales, subscription sales, and outbound delivery and marketing fees, as discussed below and within Note 1, “Description of Business and Summary of Significant Accounting Policies,” to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report. Our Software & Services segment primarily relates to our research, development, marketing, and production of our propriety software for sale to third parties. Both our Retail and Software & Services segments are recorded within net revenue in our Condensed Consolidated Statements of Operations and Comprehensive Loss.
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Net Revenue
We derive net revenue primarily from the sale of both third-party brand and private-label brand merchandise through our e-commerce platform on which we offer merchandise in the following core categories: groceries, snacks, beverages, and household and cleaning products. Revenue generated through our e-commerce platform is generally recognized upon delivery to the customer, net of promotional discounts and refund allowances. Outbound delivery fees (if applicable) are included in customer billing and are also recorded as revenue upon delivery. Taxes collected from customers are excluded from net revenue.
We earn additional Retail segment revenue through membership fees from customers who sign up for our Boxed Up subscription loyalty program. Membership fees allow customers to earn cash back on every purchase, gain access to exclusive discounts, and enjoy free shipping on all eligible orders. Because we have ~~based~~the obligation to provide access to our website for the duration of the membership term, we recognize membership fees on a straight-line basis over the life of the membership.
We also earn revenue through a mix of marketing services offered to merchants, including vendors, manufacturers, and other partners. We provide these ~~forward-looking statements~~merchants access to our e-commerce platform where merchants display and sell their products to users through our third-party marketplace offering. We also provide advertising services to help merchants promote their products within our platform. While these additional revenue streams have not historically been material, they generate higher margins and we believe there is substantial opportunity to expand these offerings to drive growth in both net revenue and profitability in the future.
Our revenue earned through our Software & Services segment is generated through software license agreements with customers. A software license contract with multiple performance obligations typically includes the following elements: implementation services, software license, training services, and maintenance and support services.
Refer to the Notes to our Condensed Consolidated Financial Statements for additional definitions of our financial statement line items included within our Condensed Consolidated Statements of Operations and Comprehensive Loss.
The following tables presents our results of operations for the periods indicated:
Three Months Ended June 30, Six Months Ended June 30,
(in thousands) 2022 2021 2022 2021
Net revenue:
Retail $ 43,567 $ 39,192 $ 87,963 $ 79,067
Software & Services 99 3,159 2,329 4,141
Total net revenue 43,666 42,351 90,292 83,208
Cost of sales:
Retail (40,321) (36,479) (80,370) (72,142)
Software & Services (477) (753) (959) (1,018)
Cost of sales (40,798) (37,232) (81,329) (73,160)
Gross profit 2,868 5,119 8,963 10,048
Advertising expense (8,091) (3,737) (19,786) (9,444)
Selling, general, and administrative expense (22,870) (13,532) (46,280) (26,046)
Loss from operations (28,093) (12,150) (57,103) (25,442)
Other income (expense), net (3,724) 1,983 (10,925) 1,070
Loss before income taxes (31,817) (10,167) (68,028) (24,372)
Income taxes — — — —
Net loss $ (31,817) $ (10,167) $ (68,028) $ (24,372)
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Comparison of Three Months Ended June 30, 2022 and 2021
Net Revenue
Three Months Ended June 30,
(in thousands) 2022 2021 $ Change % Change
Net revenue:
Retail $ 43,567 $ 39,192 $ 4,375 11.2 %
Software & Services 99 3,159 (3,060) (96.9) %
Total net revenue $ 43,666 $ 42,351 $ 1,315 3.1 %
Total net revenue for the three months ended June 30, 2022 increased by $1.3 million, or 3.1%, to $43.7 million as compared to $42.4 million for three months ended June 30, 2021. The total $1.3 million increase was attributable to an increase of $4.4 million in Retail revenue, offset by a decrease in Software & Services revenue of $3.1 million.
The $4.4 million increase in Retail net revenue was primarily driven by a $5.3 million increase in merchandise sales generated through our e-commerce platform, partially offset by a $0.9 million increase in mark-downs (including refunds, promotions, and price discounts) during the period. This increase in merchandising sales primarily resulted from growth in Retail Active Customers and an increase in RPAC in the three months ended June 30, 2022 compared to the three months ended June 30, 2021; as businesses have begun to return to in-person office environments, there has been an increase in demand from our B2B customers, who have begun to order at a higher frequency and in larger order quantities. This trend compared favorably to lower demand experienced during the prior year period due to the impacts of COVID-19 and a corresponding increase in work-from-home environments. Retail net revenue also benefited from the inclusion of Boxed Market revenue in the three months ended June 30, 2022, which is not included in the comparable prior year period.
Software & Services net revenue decreased by $3.1 million for the three months ended June 30, 2022 as we did not recognize any revenue from implementation services or up-front license fees in the current period. Net revenue was higher in the three months ended June 30, 2021 as we were recognizing implementation services revenue related to the AEON licensing agreement in accordance with the work performed. Revenue within the Software & Services segment is expected to remain variable from quarter to quarter in the near-to-medium term as revenue recognition is sensitive to the timing of the deployment of enterprise contracts and the ongoing implementation services work performed.
Cost of Sales and Gross Profit
Three Months Ended June 30,
(in thousands) 2022 2021 $ Change % Change
Cost of sales:
Retail $ (40,321) $ (36,479) $ (3,842) 10.5 %
Software & Services (477) (753) 276 (36.7) %
Total cost of sales $ (40,798) $ (37,232) $ (3,566) 9.6 %
Gross profit:
Retail $ 3,246 $ 2,714 $ 532 19.6 %
Software & Services (378) 2,405 (2,783) (115.7) %
Total gross profit $ 2,868 $ 5,119 $ (2,251) (44.0) %
Gross margin:
Retail 7.5 % 6.9 %
Software & Services (381.7) % 76.1 %
Total gross margin 6.6 % 12.1 %
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Cost of sales for our Retail segment increased by $3.8 million, or 10.5%, to $40.3 million for the three months ended June 30, 2022 as compared to $36.5 million for the three months ended June 30, 2021. The increase in cost of sales is primarily driven by a $2.9 million increase in in product costs as we experienced a higher volume of sales and vendors passed on ongoing cost inflation. Also contributing to this increase is $0.4 million in wages attributable to delivery fulfillment services provided to our Boxed Market customers. Retail gross profit as a percentage of Retail net revenue (Retail gross margin) increased to 7.5% for the three months ended June 30, 2022 from 6.9% for the three months ended June 30, 2021. The increase in Retail gross margin was primarily a result of ongoing pricing optimizations to combat cost inflation, combined with the impact of our renewed alliance with FedEx, which resulted in shipping cost savings beginning in May 2022.
Cost of sales for our Software & Services segment decreased by $0.3 million to $0.5 million for the three months ended June 30, 2022 as compared to $0.8 million for the three months ended June 30, 2021. The decrease in cost of sales is the result of a decrease in wages incurred related to hours spent on implementation and maintenance services for our Software & Services segment. We are however still incurring costs for maintenance services during the second quarter of 2022 given the significant and strategic nature of the AEON partnership, for which we continue to provide meaningful ongoing support.
Total gross profit decreased by $2.3 million, or 44.0%, to $2.9 million for the three months ended June 30, 2022 compared to $5.1 million for the three months ended June 30, 2021 primarily due to higher Retail sales, offset by an increase in product costs as well as a decrease in Software & Services revenue. Total gross margin decreased to 6.6% for the three months ended June 30, 2022 compared to 12.1% for the three months ended June 30, 2021, primarily resulting from the decrease in Software & Services revenue as AEON implementation services for the current contract were completed in the first quarter of 2022. The gross margin for Software & Services in the second quarter of 2022 is not indicative of recent historical quarterly trends.
Advertising Expense
Three Months Ended June 30,
(in thousands) 2022 2021 $ Change % Change
Advertising expense $ (8,091) $ (3,737) $ (4,354) 116.5 %
Percentage of net revenue 18.6 % 9.5 %
Advertising expense for the three months ended June 30, 2022 increased by $4.4 million to $8.1 million as compared to $3.7 million for the three months ended June 30, 2021. The increase was primarily driven by an increase in advertising media costs used to acquire and retain customers.
Selling, General and Administrative Expense
Three Months Ended June 30,
(in thousands) 2022 2021 $ Change % Change
Selling, general and administrative expense $ (22,870) $ (13,532) $ (9,338) 69.0 %
Percentage of net revenue 52.5 % 34.5 %
Selling, general and administrative expense for the three months ended June 30, 2022 increased by $9.3 million to $22.9 million as compared to $13.5 million for the three months ended June 30, 2021 primarily due to a $3.1 million increase in salary and compensation costs, a $4.0 million increase in stock-based compensation, and a combined $2.5 million increase in third-party software and insurance costs. These increased costs are due to our overall growth and expansion initiatives as well as costs incurred as a newly public company. The increase in stock-based compensation is primarily driven by upfront recognition of expense associated with new executive employment agreements, which were executed with the management team as part of our public company process.
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Operating Income (Loss)
Three Months Ended June 30,
(in thousands) 2022 2021 $ Change % Change
Operating income (loss):
Retail $ (27,383) $ (14,222) $ (13,161) 92.5 %
Software & Services (710) 2,072 (2,782) (134.3) %
Total operating income (loss) $ (28,093) $ (12,150) $ (15,943) 131.2 %
Percentage of net revenue
Retail (62.9) % (36.3) %
Software & Services (717.2) % 65.6 %
Total operating loss for the three months ended June 30, 2022 increased by $15.9 million to $28.1 million as compared to $12.1 million for the three months ended June 30, 2021. The total $15.9 million increase was attributable to increases in our operating loss of $13.2 million and $2.8 million in our Retail and Software & Services segments, respectively.
The increase in operating loss of $13.2 million in our Retail segment was driven by an increase in Retail gross profit, which was more than offset by increases in advertising expense and selling, general and administrative costs. The factors contributing to our increases in Retail gross profit, advertising expense, and selling, general and administrative costs are discussed above.
The increase in operating loss of $2.8 million for our Software & Services segment was primarily driven by a reduction in net revenue in the segment, as we did not recognize any implementation service or up-front license fee revenue for the three months ended June 30, 2022, which were recognized in prior reporting periods.
Other Income (Expense), Net
Three Months Ended June 30,
(in thousands) 2022 2021 $ Change % Change
Other income (expense), net $ (3,724) $ 1,983 $ (5,707) (287.8) %
Percentage of net revenue (8.5) % 5.1 %
Other expense increased by $5.7 million to $3.7 million for the three months ended June 30, 2022 compared to $2.0 million of other income for the three months ended June 30, 2021. The $3.7 million of other expense for the second quarter of 2022 was primarily attributable to a $31.4 million increase in the fair value of the forward purchase option derivative liability, offset by a combined $32.4 million decrease in the fair value of our earnout liability and SPAC warrant liabilities. In addition, we incurred interest expense of $3.1 million related to our New Term Loan and our PIPE Convertible Notes and $1.7 million in transaction costs related to the Common Stock Purchase Agreement. The $2.0 million of other income for the second quarter of 2021 was driven by the fair value adjustments of our then outstanding common stock warrants and preferred stock warrants.
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Comparison of Six Months Ended June 30, 2022 and 2021
Net Revenue
Six Months Ended June 30,
(in thousands) 2022 2021 $ Change % Change
Net revenue:
Retail $ 87,963 $ 79,067 $ 8,896 11.3 %
Software & Services 2,329 4,141 (1,812) (43.7) %
Total net revenue $ 90,292 $ 83,208 $ 7,084 8.5 %
Total net revenue for the six months ended June 30, 2022 increased by $7.1 million, or 8.5%, to $90.3 million as compared to $83.2 million for six months ended June 30, 2021. The total $7.1 million increase was attributable to an increase of $8.9 million in Retail revenue, offset by a decrease in Software & Services revenue of $1.8 million.
The $8.9 million increase in Retail net revenue was primarily driven by a $11.1 million increase in merchandise sales generated through our e-commerce platform, partially offset by a $2.0 million increase in mark-downs (including refunds, promotions, and price discounts) during the period. This increase in merchandising sales primarily resulted from growth in demand from B2B customers in the six months ended June 30, 2022 compared to the six months ended June 30, 2021; as businesses have begun to return to in-person office environments, there has been an increase in demand from our B2B customers, who have begun to order at a higher frequency and in larger order quantities. This trend compared favorably to lower demand experienced during the prior year period due to the impacts of COVID-19 and a corresponding increase in work-from-home environments. We also began to see the benefits of ongoing increases in marketing investments in 2022, which helped support active customer growth during the first half of 2022.
The decrease in Software & Services net revenue of $1.8 million for the six months ended June 30, 2022 was primarily the result of a comparable year-over-year decline in implementation services revenue related to the AEON licensing agreement.
Cost of Sales and Gross Profit
Six Months Ended June 30,
(in thousands) 2022 2021 $ Change % Change
Cost of sales:
Retail $ (80,370) $ (72,142) $ (8,228) 11.4 %
Software & Services (959) (1,018) 59 (5.8) %
Total cost of sales $ (81,329) $ (73,160) $ (8,169) 11.2 %
Gross profit:
Retail $ 7,593 $ 6,925 $ 668 9.7 %
Software & Services 1,370 3,123 (1,753) (56.1) %
Total gross profit $ 8,963 $ 10,048 $ (1,085) (10.8) %
Gross margin:
Retail 8.6 % 8.8 %
Software & Services 58.8 % 75.4 %
Total gross margin 9.9 % 12.1 %
Cost of sales for our Retail segment increased by $8.2 million, or 11.4%, to $80.4 million for the six months ended June 30, 2022 as compared to $72.1 million for the six months ended June 30, 2021. The increase in cost of sales is primarily driven by a $6.1 million increase in in product costs as we experienced a higher volume of sales and vendors passed on ongoing cost inflation. Also contributing to this increase is $0.9 million in wages attributable to delivery fulfillment services provided to our Boxed Market customers. Retail gross profit as a percentage of Retail net revenue (Retail gross margin) remained relatively flat at 8.6% for the six months ended June 30, 2022, compared to 8.8% for the six months ended June 30, 2021. We saw improvements in product and shipping costs as a percentage of Retail net revenue, which were offset by a decline in vendor discounts and rebate allowances.
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Cost of sales for our Software & Services segment remained flat at $1.0 million for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.
Total gross profit decreased slightly by $1.1 million, or 10.8%, to $9.0 million for the six months ended June 30, 2022 compared to $10.0 million. The decrease in total gross profit is primarily due to higher Retail gross profit, driven by an increase in sales volume, which was more than offset by a decrease in Services & Services gross profit due to a decline in net revenue, as discussed above. Total gross margin decreased to 9.9% for the six months ended June 30, 2022 compared to 12.1% for the six months ended June 30, 2021, primarily resulting from the decrease in net revenue from our Software & Services segment, which is historically a higher margin business segment and typically has an outsized impact on our ~~current expectations~~overall gross margin.
Advertising Expense
Six Months Ended June 30,
(in thousands) 2022 2021 $ Change % Change
Advertising expense $ (19,786) $ (9,444) $ (10,342) 109.5 %
Percentage of net revenue 21.9 % 11.3 %
Advertising expense for the six months ended June 30, 2022 increased by $10.3 million to $19.8 million as compared to $9.4 million for the six months ended June 30, 2021. The increase was primarily driven by an increase in advertising media costs used to acquire and ~~projections about future events.~~retain customers, including costs for television and advertising commercial content.
Selling, General and Administrative Expense
Six Months Ended June 30,
(in thousands) 2022 2021 $ Change % Change
Selling, general and administrative expense $ (46,280) $ (26,046) $ (20,234) 77.7 %
Percentage of net revenue 51.3 % 31.3 %
Selling, general and administrative expense for the six months ended June 30, 2022 increased by $20.2 million to $46.3 million as compared to $26.0 million for the six months ended June 30, 2021 primarily due to a $5.2 million increase in salary and compensation costs, a $8.8 million increase in stock-based compensation, and a combined $4.5 million increase in legal fees and third-party consulting, insurance, and software costs. These ~~forward-looking statements~~increased costs are ~~subject~~due to ~~known~~our overall growth and ~~unknown risks, uncertainties~~expansion initiatives as well as costs incurred as a newly public company. The increase in stock-based compensation was primarily driven by upfront recognition of expense associated with new executive employment agreements, which were executed with the management team as part of our public company process.
Operating Income (Loss)
Six Months Ended June 30,
(in thousands) 2022 2021 $ Change % Change
Operating income (loss):
Retail $ (57,665) $ (27,755) $ (29,910) 107.8 %
Software & Services 562 2,313 (1,751) (75.7) %
Total operating income (loss) $ (57,103) $ (25,442) $ (31,661) 124.4 %
Percentage of net revenue
Retail (65.6) % (35.1) %
Software & Services 24.1 % 55.8 %
Total operating loss for the six months ended June 30, 2022 increased by $31.7 million to $57.1 million as compared to $25.4 million for the six months ended June 30, 2021. The total $31.7 million increase was attributable to increases in operating losses in our Retail and ~~assumptions about us that may cause~~Software & Services segments of $29.9 million and $1.8 million, respectively.
The increase in operating loss of $29.9 million in our ~~actual~~Retail segment was primarily driven by increases in advertising expense and selling, general and administrative costs, which were partially offset by an increase in Retail gross profit. The
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factors contributing to our increases in Retail gross profit, advertising expense, and selling, general and administrative costs are discussed above.
The increase in operating loss of $1.8 million for our Software & Services segment was driven by a decrease in net revenue in the segment, resulting from a reduction in implementation service fees related to the AEON licensing agreement.
Other Income (Expense), Net
Six Months Ended June 30,
(in thousands) 2022 2021 $ Change % Change
Other income (expense), net $ (10,925) $ 1,070 $ (11,995) (1120.6) %
Percentage of net revenue (12.4) % 1.4 %
Other expense increased by $12.0 million to $10.9 million for the six months ended June 30, 2022 compared to $1.1 million of other income for the six months ended June 30, 2021. The $10.9 million of other expense for the first half of 2022 was primarily attributable to a $44.9 million increase in the fair value of the forward purchase option derivative liability, offset by a combined $41.6 million decrease in the fair value of our earnout liability and SPAC warrant liabilities. In addition, we incurred interest expense of $6.1 million related to our New Term Loan and our PIPE Convertible Notes and $1.7 million in transaction costs related to the Common Stock Purchase Agreement. The $1.1 million of other income for the first half of 2021 was driven by the fair value adjustments of our then outstanding common stock warrants and preferred stock warrants.
Non-U.S. GAAP Financial Measures

We utilize Adjusted EBITDA, a non-GAAP financial measure, to budget, make operating and strategic decisions and evaluate our performance, and believe it is useful to investors as it provides additional information to facilitate comparisons of historical operating results, ~~levels~~identify trends in our underlying operating results and provide additional insight and transparency on how we evaluate our business. We calculate Adjusted EBITDA as GAAP net loss adjusted for interest income (expense), taxes, depreciation and amortization, stock-based compensation, other costs associated with the Business Combination and other debt financing transactions, gains (losses) attributable to the change in fair value of ~~activity,~~our warrants and derivatives, and other income (expense) outside of the fair value adjustments. Adjusted EBITDA is supplemental to our operating performance ~~or achievements~~measures calculated in accordance with GAAP and has important limitations. For example, Adjusted EBITDA excludes the impact of certain costs required to be ~~materially different~~recorded under GAAP and could differ substantially from ~~any future results, levels of activity, performance or achievements expressed or implied~~similarly titled measures presented by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other ~~similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described~~companies in our industry or companies in other ~~SEC filings.~~

~~Overview~~

~~We are~~industries. Accordingly, this measure should not be considered in isolation or as a ~~blank check company incorporated in Delaware on September 23, 2020. We were formed~~substitute for analysis of our results as reported under GAAP.

The following table presents a reconciliation of our Adjusted EBITDA to our GAAP net loss, which is the most directly comparable GAAP measure, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities (the “Business Combination”).

Our sponsor is Seven Oaks Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the initial public offering (the “Initial Public Offering”) was declared effective on December 17, 2020. On December 22, 2020, we consummated the Initial Public Offering of 25,875,000 units (the “Units”periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Net loss	$	(31,817)	$	(10,167)	$	(68,028)	$	(24,372)
Adjusted to exclude the following:
Depreciation and amortization	1,192		1,234		2,208		2,464
Change in fair value of warrants and derivative instruments (2)(3)	(976)		(2,155)		3,218		(1,369)
Interest income (expense)	3,060		102		6,085		218
Other income (expense)	(37)		70		(56)		81
Stock-based compensation	4,444		479		9,624		854
Other costs (1)	1,678		2,190		2,331		2,911
Adjusted EBITDA	$	(22,456)	$	(8,247)	$	(44,618)	$	(19,213)

(1) Other costs represent consulting and advisory costs with respect to the ~~Class A common stock included~~Business Combination and other equity and debt financing transactions.

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(2) Included in the ~~Units being offered,~~change in fair value of warrants and derivative instruments for the ~~“Public Shares”),~~three months ended June 30, 2022 is an increase to other expense of $31.4 million from the increase in fair value of the forward purchase option derivative liability, more than offset by a combined increase to other income of $32.4 million from the decrease in fair value of our earnout liability and SPAC warrant liabilities. Included in the change in fair value of warrants for the three months ended June 30, 2021 is the changes in fair values of our historical common and preferred stock warrants.

(3) Included in the change in fair value of warrants and derivative instruments for the six months ended June 30, 2022 is an increase to other expense of $44.9 million from the increase in fair value of the forward purchase option derivative liability, offset by a combined increase to other income of $41.6 million from the decrease in fair value of our earnout liability and SPAC warrant liabilities. Included in the change in fair value of warrants for the six months ended June 30, 2021 is the changes in fair values of our historical common and preferred stock warrants.

The decrease in Adjusted EBITDA for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 was primarily due to an increase in net loss related to the increases in advertising expense and selling, general and administrative expense, offset by increases in interest expense and stock-based compensation, which are part of the reconciling items.

The decrease in Adjusted EBITDA for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was primarily due to an increase in net loss related to the increases in advertising expense and selling, general and administrative expense, offset by increases in (i) changes in fair value of our warrants and derivative instruments (ii) interest expense and (iii) stock-based compensation, all of which are part of the reconciling items.

Liquidity and Capital Resources

Overview and Funding Requirements

As of June 30, 2022, we had a total cash balance plus marketable securities of $49.6 million, including ~~3,375,000 additional Units~~restricted cash of $2.8 million and$7.0 million in short-term marketable securities, and an accumulated deficit. In addition, we also had $58.5 million in receivables, gross of interest, remaining related to ~~cover over-allotments (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds~~the Forward Purchase Agreement entered into in connection with the Business Combination. The timing and terms of ~~approximately $258.8~~any recoupment of the receivables (or some portion thereof) are influenced by our stock price performance over the remaining term of the Forward Purchase Agreement. Notwithstanding the foregoing, our net loss and net cash used in operating activities amounted to $68.0 million and ~~incurring offering costs~~$64.9 million, respectively, for the six months ended June 30, 2022. As an emerging growth company, we are dependent on outside capital to execute our strategy of ~~approximately $3.1 million.~~

~~Simultaneously~~investing in growth at the expense of short-term profits. As a result, we have incurred significant losses and net cash outflows from operating activities since our inception and expect to incur such losses and remain dependent on outside capital for the foreseeable future until such time that we can realize our growth strategy by generating profits and reducing our reliance on outside capital. Given the inherent uncertainties associated with executing our growth strategy, we can provide no assurance that we will be able to obtain sufficient outside capital or generate sufficient cash from operations to fund our obligations as they become due over the next twelve months.

In addition, in August 2021 we entered into a new term loan agreement for principal of $45.0 million, as discussed below. The term loan contains a certain number of financial covenants, which requires us to (i) maintain minimum unrestricted cash balance of $15.0 million, (ii) maintain minimum net Retail revenue based upon agreed quarterly targets, and (iii) maintain a Retail gross margin percentage of at least 8%. In order to achieve these targets, we expect to invest in growth initiatives including substantially increasing and maintaining higher levels of our marketing spend compared to historical periods. We expect these investments, among others, to result in an increase in cash used in operating activities over the next twelve months.

As of June 30, 2022, we were in compliance with the ~~closing~~financial covenants required by our new term loan agreement. However, the inherent uncertainties described above may impact our ability to remain in compliance with these covenants over the next twelve months. If we breach our financial covenants and fail to secure a waiver or forbearance from the third-party lender, such breach or failure could accelerate the repayment of the ~~Initial Public Offering,~~outstanding borrowings under the ~~Company consummated~~new term loan agreement or the ~~private placement (“Private Placement”)~~exercise of ~~5,587,500 warrants (each,~~other rights or remedies the third-party lender may have under applicable law. No assurance can be provided a ~~“Private Placement Warrant”~~waiver or forbearance will be granted or the outstanding borrowings under the new term loan agreement will be successfully refinanced on terms that are acceptable us.

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Despite the substantial amount of capital that we have raised from outside investors and ~~collectively,~~lenders, as well as our Business Combination, as of June 30, 2022, we had no additional capital available for borrowing and no firm commitment from current or prospective investors to provide us additional capital to fund operations in the ~~“Private Placement Warrants”~~foreseeable future. While management believes the that we will be able to obtain additional capital, no assurance can be provided that such capital will be obtained or on terms that are acceptable to us. These uncertainties raise substantial doubt about our ability to continue as a going concern. If we are unsuccessful in securing additional capital and/or executing our strategy of growth whereby we realize profits and generate sufficient cash inflows from operations to fund our obligations as they become due, we may be required to seek other strategic alternatives such as a further reduction in our current cost structure, or a recapitalization of our balance sheet, including related outstanding debt and equity securities.

Debt and Convertible Debt Financing

New Term Loan

On August 4, 2021, we entered into a new term loan agreement (the “New Term Loan”). The New Term Loan provided us with $45.0 million at a floating per annum rate of LIBOR plus 8.5%, with a maturity date of August 4, 2025. The agreement provides the lender with a first priority security interest in all of our assets and contains a certain number of financial covenants, which requires us to (i) maintain minimum unrestricted cash balance of $15.0 million, (ii) maintain minimum net Retail revenue based upon agreed upon quarterly targets, and (iii) maintain a Retail gross margin percentage of at least 8%. These net Retail revenue and Retail gross margin targets are tested quarterly on a trailing twelve-month basis. The agreement also includes other affirmative and negative covenants, which, among other things, restrict our ability to pay dividends or make any distributions, incur indebtedness, make investments, incur liens, sell substantially all of its assets, and consummate fundamental changes. The agreement also subjects us to certain reporting covenants. We are required to provide monthly, quarterly, and annual financial statements, operating budget and metrics, and other financial information as requested. Also in connection with the term loan agreement, we issued 126,993 warrants to purchase preferred stock at an exercise price of ~~$1.00 per Private Placement Warrant~~$7.0871. These warrants were cashless exercised immediately prior to the ~~Sponsor, generating proceeds of approximately $5.6 million.~~

Upon the closing of the Initial Public Offering and the Private Placement, $258.8 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a trust account (“Trust Account”), located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”) having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, until the earlier of (i) the completionconsummation of the Business Combination and ~~(ii)~~are no longer outstanding. As of June 30, 2022, we were in compliance with all covenants and reporting requirements under the ~~distribution~~New Term Loan. There was $45.0 million in principal remaining as of June 30, 2022.

On August 4, 2021, we also paid down the ~~Trust Account as described below.~~

If$5.0 million in remaining principal under our prior term loan. In connection with the loan repayment, our letter of credit was modified and we are ~~unable~~required to ~~complete~~maintain cash collateral for the outstanding letters of credit. As a ~~Business Combination within 24 months from~~result, the ~~closing of the Initial Public Offering, or December 22, 2022 (as such period may be extended pursuant~~cash collateral related to the ~~Certificate~~outstanding letters of ~~Incorporation, the “Combination Period”), we will (i) cease all operations except for the purpose~~credit are segregated in restricted cash accounts. Approximately $2.8 million of ~~winding up, (ii)~~letters of credit were issued to us as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, liquidate and dissolve, subject, in each case, to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

June 30, 2022.

PIPE Convertible Notes

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~~Results of Operations~~

Our entire activity since inception through September 30, 2021, related to our formation, the preparation for the Initial Public Offering, and since the closing of the Initial Public Offering, the search for a prospective initial Business Combination. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our initial Business Combination. We generate non-operating income in the form of interest income on cash and cash equivalents. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the three months ended September 30, 2021, we had net income of approximately $6.0 million, which consisted of approximately $7.1 million in change in fair value of warrant liabilities, approximately $3,000 of net gain from investments held in Trust Account, partially offset by approximately $0.9 million in general and administrative expenses, $60,000 in related party administrative fee, and approximately $78,000 in franchise tax expense.

For the nine months ended September 30, 2021, we had net income of approximately $4.4 million, which consisted of approximately $7.6 million in change in fair value of warrant liabilities, approximately $55,000 of net gain from investments held in Trust Account, partially offset by approximately $2.9 million in general and administrative expenses, $180,000 in related party administrative fee, and approximately $150,000 in franchise tax expense.

~~Proposed Business Combination~~

As more fully described in Note 1 to the condensed consolidated financial statements provided by Item 1 to this Form 10-Q, On June 13, 2021, we (“SVOK”), entered into an agreement and plan of merger by and among SVOK, Blossom Merger Sub Inc., a direct, wholly-owned subsidiary of SVOK (“Blossom Merger Sub”), Blossom Merger Sub II, LLC, a direct, wholly-owned subsidiary of SVOK (“Blossom Merger Sub II”), and Giddy Inc., a Delaware corporation (“Boxed”) (as it may be amended and/or restated from time to time, the “Merger Agreement”).

~~The closing~~Upon consummation of the Business Combination, ispursuant to the Subscription Agreements, we issued an aggregate of $87.5 million of principal amount of PIPE Convertible Notes. The PIPE Convertible Notes mature five years after their initial issuance. The Convertible Notes are convertible, at our election, for shares of common stock, cash or a combination of cash and such shares, based on a conversion price of $12.00 per share (subject to customary anti-dilution adjustments) in accordance with the terms thereof. The PIPE Convertible Notes bear interest at a rate of 7.00% per annum, paid-in-kind or in cash at our option and accruing semi-annually. We may redeem the PIPE Convertible Notes after the third anniversary of their issuance, subject to ~~certain customary conditions, including, among other things:~~a holder’s right to convert prior to the redemption date, if (i) ~~approval by SVOK’s stockholders~~the trading price of the ~~Merger Agreement,~~shares of common stock exceeds 130% of the ~~Business Combination~~conversion price on at least twenty out of the preceding thirty consecutive trading days ending on, and including, the trading day immediately before we issue a redemption notice, and (unless we elect to settle conversions in connection with such redemption in cash) if (ii) certain ~~other actions~~conditions related ~~thereto;~~to the ability of the converting holders to resell the conversion shares without restrictions under the U.S. securities laws are satisfied.

As of June 30, 2022, (i) $0.3 million of the principal PIPE Convertible Notes were converted into 24,999 shares of common stock and (ii) the ~~expiration or termination~~PIK Interest was added to the outstanding principal, increasing the remaining principal to $90.4 million. For further detail regarding the terms of the ~~waiting period (or any extension thereof) applicable under~~PIPE Convertible Notes, refer to Note 7, “Convertible Notes,” in our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.

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Forward Purchase Agreement

As discussed above, prior to the ~~Hart-Scott-Rodino Antitrust Improvements Act~~Closing, on November 28, 2021, Seven Oaks entered into the Forward Purchase Agreement with ACM for an OTC Equity Prepaid Forward Transaction. Pursuant to the terms of ~~1976; (iii) SVOK having at least $175 million~~the Forward Purchase Agreement, ACM purchased approximately 6,504,768 shares of ~~cash at~~Seven Oaks’ Class A common stock (the “Forward Purchase shares”) and, one business day following the closing of the Business Combination, ~~consisting~~the Prepayment Amount of ~~cash~~$65.1 million was paid out of the funds we received from Seven Oaks' trust account, which will be held in ~~its trust~~a deposit account ~~and~~for the ~~aggregate amount~~benefit of ~~cash actually invested in (or contributed to)~~ACM until the ~~Company pursuant to the Subscription Agreements (as defined below), after giving effect to redemptions of public shares, if any,~~ ~~but before giving effect to the consummation~~“Valuation Date” (the second anniversary of the closing of the Business Combination, ~~and the payment of Boxed’s and~~subject to certain ~~of SVOK’s outstanding transaction expenses as contemplated by the Merger Agreement (the “Minimum Cash Condition”);~~ and (iv) the shares of Class A common stock of New Boxed to be issued in connection with the Business Combination having been approved for listing on the Nasdaq Capital Market (“Nasdaq”) subject only to official notice of issuance thereof.

~~For further details on the contemplated merger, please see the Form 8-K filed with the Securities and Exchange Commission on June 14, 2021, and our Form S-4 /A filing on October 22, 2021.~~

~~Liquidity and Capital Resources~~

As of September 30, 2021, the Company had approximately $536,000 in its operating bank accounts and a negative working capital of approximately $824,000, (not taking into account tax obligations of approximately $117,000 that may be paid using investment income earned from Trust Account)acceleration provisions).

~~The Company’s liquidity needs~~ At any time prior to the ~~consummation of the Initial Public Offering were satisfied through the payment of $25,000 from the Sponsor and Jones & Associates, Inc. (“Jones & Associates”)~~Valuation Date, ACM may elect an optional early termination to purchase Founder Shares (as defined in Note 4), and loan proceeds from the Sponsor of $105,000 under the Note (as defined in Note 4). The Company repaid the Note in full on December 22, 2020. Subsequent from the consummation of the Initial Public Offering, the Company’s liquidity has been satisfied through the net proceeds from the consummation of the Initial Public Offering and the Private Placement held outside of the Trust Account.

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In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until December 22, 2022 to consummate the proposed Business Combination. It is uncertain that the Company will be able to consummate the proposed Business Combination by this time. Additionally, the Company may not have sufficient liquidity to fund the working capital needs of the Company through one year from the issuance of these financial statements. If a business combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the liquidity condition and mandatory liquidation, should a business combination not occur, and potential subsequent dissolution, raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assetssell some or liabilities should the Company be required to liquidate after December 22, 2022. The Company intends to complete the proposed Business Combination before the mandatory liquidation date. However, there can be no assurance that the Company will be able to consummate its business combination described above by December 22, 2022. In addition, the Company may need to raise additional capital through loans or additional investments from our Sponsor, stockholders, officers, directors or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. If the Company is unable to raise additional capital, the Company may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going concern through the liquidation date of December 22, 2022.

Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that the specific impact is not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Related Party Transactions~~

~~Founder Shares~~

On October 13, 2020, our Sponsor and Jones & Associates, an affiliate of one of our underwriters of the Initial Public Offering, purchased 4,715,000 and 1,035,000 shares of our Class B common stock, par value $0.0001 per share, respectively, for an aggregate of 5,750,000 shares (the “Founder Shares”) for a total purchase price of $25,000. On December 17, 2020, we effected a 1.125-for-1 stock split of its Class B common stock, resulting in an aggregate of 6,468,750 shares of Class B common stock outstanding. Of the 6,468,750 Founder Shares outstanding, up to 843,750 shares are subject to forfeiture to the extent that the over-allotment option was not exercised in full by the underwriters, so that the Founder Shares would represent 20.0% of our issued and outstanding shares after the Initial Public Offering. The underwriters exercised their over-allotment option in full on December 22, 2020; thus, these 843,750 Founder Shares were no longer subject to forfeiture.

deposit account and paid to us. As of June 30, 2022, ACM has sold 744,654 shares, for which we received net proceeds of $6.5 million, after paying related fees to ACM. Of the total net proceeds received to date, $1.5 million was received during the first half of 2022, after paying related fees to ACM. Depending on the manner in which the Forward Purchase Transaction is settled, we may never have access to the full Prepayment Amount.

As discussed in Note 13, “Forward Purchase Transaction,” in our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report, if the VWAP of the shares falls below $5.00 per share for 20 out of any 30 consecutive trading days (a “VWAP Trigger Event”), then ACM may elect to accelerate the Valuation Date to the date of such VWAP Trigger Event. If ACM elects to accelerate the Valuation Date, the settlement amount returned to us would be approximately equal to the VWAP of the shares on such date of the VWAP Trigger Event, net of $0.20 per share in fees. The VWAP Trigger Event occurred on July 6, 2022, giving ACM the election to accelerate the Valuation Date. As of the date of issuance of this Quarterly Report, ACM has not elected to accelerate. In the event ACM elects to accelerate the Valuation Date, we would expect to receive approximately $8.3 million of cash proceeds to our Condensed Consolidated Balance Sheets, based on our share price on July 6, 2022, of the remaining $58.5 million of forward purchase receivable currently on the Condensed Consolidated Balance Sheets.

Equity Financing

Common Stock Purchase Agreement

On May 9, 2022, we entered into a common stock purchase agreement (the “Purchase Agreement”) with an investor related to a committed capital on demand facility (the “CCOD Facility”). Pursuant to the Purchase Agreement, we have the right from time to time at its option to sell to the investor up to the lesser of (i) $100.0 million of our common stock and (ii) the Exchange Cap which, under the applicable rules of the NYSE, states that in no event may we issue more than 19.99% of the voting power or number of shares of common stock outstanding, unless certain stipulations are met.

~~Private Placement Warrants~~In accordance with ASC 815,

~~Simultaneously~~Derivatives and Hedging, we have determined that the right to sell additional shares represents a freestanding put option, and as such, the financial instrument was classified as a derivative asset with a nominal fair value.

In May 2022, we issued 114,585 of upfront commitment shares to the investor which had a fair value of $1.0 million upon issuance. The $1.0 million in commitment costs, along with $0.7 million in other related transaction costs, were recorded in other income (expense), net on our Condensed Consolidated Statements of Operations and Comprehensive Loss.

In the second quarter of 2022 we sold 3,109,400 shares of common stock to the investor, pursuant to the terms of the Purchase Agreement, for cash proceeds of $6.5 million.

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Cash Flows

The following table shows a summary of our cash flows for the periods presented:


	Six Months Ended June 30,
(in thousands)	2022		2021
Net cash used in operating activities	$	(64,853)	$	(14,150)
Net cash used in investing activities	$	(7,475)	$	(825)
Net cash provided by (used in) financing activities	$	7,193	$	(1,827)

Operating Activities

Cash used in operating activities consisted of net loss adjusted for non-cash items, including depreciation and amortization, stock-based compensation expense, the change in fair value of warrants and derivative instruments, and other non-cash items, as well as the effect of the changes in operating assets and liabilities.

Net cash used in operating activities was $64.9 million for the six months ended June 30, 2022, primarily consisting of $68.0 million net loss, adjusted for certain non-cash items, which primarily included $9.6 million of stock-based compensation, $3.2 million in the change in fair value of warrants and derivative instruments, and $2.2 million in depreciation and amortization, as well as a $18.6 million net decrease in operating assets and liabilities.

A significant driver for the net decrease in operating assets and liabilities was the $15.0 million payment for the Palantir software licenses, which per the terms of the related Master Subscription Agreement discussed below, was required to be paid 30 days after the closing of the ~~Initial Public Offering, we consummated the Private Placement of 5,587,500 Private Placement Warrants at a price of $1.00 per Private Placement Warrant~~Business Combination. The payment largely attributed to the ~~Sponsor, generating proceeds~~decrease of ~~approximately $5.6 million.~~

~~Each Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share. A portion~~$11.7 million in accounts payable. The payment also resulted in the reclassification of the ~~proceeds~~associated asset from deferred contract costs to prepaid expenses, and as such, is the ~~sale~~primary driver of the ~~Private Placement Warrants~~decrease in deferred contract costs of $18.1 million and increases in current and noncurrent prepaid expenses of $6.9 million and $9.3 million, respectively. Also contributing to the ~~Sponsor~~net decrease in operating assets and liabilities is (i) an increase of $2.1 million in unbilled receivables related to our software licensing agreements, (ii) an increase of $3.6 million in inventories as part of a renewed effort to eliminate out-of-stocks for staple items to support customer retention (iii) as well as other changes to our net operating assets and liabilities of $3.1 million.

Net cash used in operating activities was ~~added to~~$14.2 million for the ~~proceeds from the Initial Public Offering~~

~~Table~~six months ended June 30, 2021, primarily consisting of ~~Contents~~

~~held~~a $24.4 million net loss, adjusted for certain non-cash items, which primarily included $2.5 million of depreciation and amortization, $1.3 million in the ~~Trust Account. If~~change in fair value of warrants, and $0.9 million in stock-based compensation, as well as a $8.2 million net increase in operating assets and liabilities. The increase in our net operating assets and liabilities was primarily driven by the ~~Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless.~~

~~The purchasers~~change in accrued expense of ~~the Private Placement Warrants agreed, subject~~$1.5 million and change in prepaid and other current assets of $2.0 million, both related to ~~limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants (except to permitted transferees) until 30 days after the completion of the initial Business Combination.~~

~~Related Party Loans~~

~~On October 13, 2020, the Sponsor, a related party, agreed to loan us an aggregate of up to $300,000 to cover expenses~~increased expenditures primarily related to the ~~Initial Public Offering pursuant~~Business Combination as well as ordinary course business operations and the change in accounts payable and other current liabilities of $6.7 million related to ~~a promissory note (the “Note”).~~our cash conservation efforts. Also contributing to the net increase in operating assets and liabilities is the change in deferred revenue of $1.7 million related to our software licensing agreement. These changes were offset by the other changes to our net operating assets and liabilities of $0.3 million.

Investing Activities

For the six months ended June 30, 2022, net cash used in investing activities was $7.5 million, primarily due to the $7.0 million in purchases of available-for-sale securities as well as $2.0 million spent in fixed asset capital expenditures and $0.9 million in interest paid to ACM related to the Forward Purchase Transaction. This ~~loan was non-interest bearing and payable upon~~is partially offset by the ~~completion~~receipt of $2.4 million in funds which were recollected from the Prepayment Amount of the ~~Initial Public Offering. As of December 15, 2020, we borrowed $105,000 from~~Forward Purchase Transaction, as discussed above, for the ~~related party under~~shares ACM sold during the ~~Note and repaid~~period.

For the ~~Note~~six months ended June 30, 2021, net cash used in ~~full on December 22, 2020.~~

In addition, in order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of our officers and directors may, but are not obligated to, loan us funds as may be required (“Working Capital Loans”). If we complete a Business Combination, we may repay the Working Capital Loans out of the proceeds of the Trust Account released to us. Otherwise, the Working Capital Loans could be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, we may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lenders’ discretion, up to $1.5investing activities was $0.8 million, ~~of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would be identical~~due to the ~~Private Placement Warrants. Except for~~purchase of fixed assets.

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Financing Activities

For the ~~foregoing,~~three months ended June 30, 2022, net cash provided by financing activities was $7.2 million, primarily as the ~~terms~~result of ~~such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As~~$6.5 million in proceeds from issuance of ~~September 30, 2021, we had no borrowings under the Working Capital Loans.~~

~~Contractual Obligations~~

~~Registration Rights~~

~~The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any (and any shares of common~~ stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares), were entitled to registration rights pursuant to a registration rights agreement signed upon the consummation of the Initial Public Offering. These holders will be entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that we will not be required to effect or permit any registration or cause any registration statement to become effective until termination of the applicable lock-up period. We will bear the expenses incurred in connection with the filing of any such registration statements.

~~Business Combination Marketing Agreement~~

We engaged certain underwriters in connection with the Business Combination to assist us in holding meetings with the stockholders to discuss the potential Business Combination and the target business’ attributes, introduce us to potential investors that are interested in purchasing our securities in connection with the initial Business Combination, assist us in obtaining stockholder approval for the Business Combination and assist us with press releases and public filings in connection with the Business Combination. The scope of engagement excludes identifying and/or evaluating possible acquisition candidates. Pursuant to the agreement with underwriters, the marketing fee payable to the underwriters will be 3.5% of the gross proceeds of the Initial Public Offering. The marketing fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of ~~such agreement.~~

~~Administrative Services~~the Common Stock Purchase Agreement

as well as $0.8 million in proceeds from the exercise of stock options.

For the six months ended June 30, 2021, net cash used in financing activities was $1.8 million, primarily due to repayments of the term loan of $1.9 million.

Other Commitments

We maintain our principal offices in New York, New York and maintain fulfillment centers and office space in various locations throughout the United States. Our future minimum rental commitments under non-cancelable leases was $15.5 million as of December 31, 2021.

In June 2021, we entered into ~~an agreement~~a Master Subscription Agreement with Palantir Technologies Inc. (“Palantir”) under which we are contracted to pay ~~an affiliate~~$20.0 million over five years for access to Palantir’s Foundry platform, $15.0 million of ~~our Sponsor a total~~which was due thirty days after the closing of ~~up to $20,000 per month for office space, secretarial and administrative services provided to members of our management team. Upon completion of~~ the ~~Initial~~ Business Combination, or ~~our liquidation,~~on January 8, 2022. The initial $15.0 million was fully paid to Palantir during the first quarter of 2022.

In December 2021, we signed an addendum to a prior service agreement with Google LLC for access to the Google Cloud Platform. Under the addendum, we are required to pay $2.0 million, $4.5 million, and $8.5 million for the first, second, and third commitment periods, respectively. The first commitment period commenced December 1, 2021 and will ~~cease paying these monthly fees. For~~last 12 months. The next two commitment periods begin at the ~~three~~end of the preceding period and ~~nine months ended on September~~each last 12 months. As of June 30, ~~2021, Company incurred and paid~~2022, the total remaining commitment, gross of discounts, was approximately ~~$60,000 and $180,000 in expenses for these services, respectively.~~

$13.6 million, with a minimum of $3.5 million due within the next 12 months.

New Accounting Pronouncements

~~Table~~See Note 1, “Description of ~~Contents~~

Business and Summary of Significant Accounting Policies,” to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for a discussion of new accounting standards.

Application of Critical Accounting Policies and Estimates

~~The preparation of financial statements and related disclosures in conformity with~~

There have been no material changes to the critical accounting ~~principles generally accepted in the United States requires management to make~~ estimates and assumptions ~~that affect~~disclosed in our Annual Report on Form 10-K for the ~~reported amounts~~fiscal year ended December 31, 2021.

For a discussion of ~~assets and liabilities, disclosure~~all of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following asour significant accounting policies, including our critical accounting ~~policies:~~

~~Derivative Warrant Liabilities~~

~~We do not use derivative instruments~~policies, see Note 1, Description of Business and Summary of Significant Accounting Policies,” to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report.~~, Derivatives and Hedging~~ ~~(“ASC 815”)~~~~, Embedded Derivatives~~ ~~(“ASC 815-15”). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at~~

JOBS Act Accounting Election

In April 2012, the ~~end of each reporting period.~~

We account for our 18,525,000 warrants issued in connection with its Initial Public Offering (12,937,500) and Private Placement (5,587,500) as derivative warrant liabilities in accordance with ASC 815-40, ~~Contracts in Entity’s Own Equity~~ (“ASC 815-40”). Accordingly, we recognize the warrant instruments as liabilities at fair value and adjusts the instruments to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. ~~At the Initial Public Offering date and December 31, 2020, the~~ ~~fair value~~JOBS Act was enacted. Section 107 of the Public Warrants and Private Placement Warrants were estimated using a Binomial Lattice in a risk-neutral framework. Specifically, the future stock price of our Company was modeled assuming a Geometric Brownian Motion in a risk-neutral framework. For each modeled future price, the Warrant payoff was calculated based on the contractual terms (incorporating any optimal early exercise / redemption), and then discounted at the term-matched risk-free rate. The value of the Warrants is calculated as the probability-weighted present value over all future modeled payoffs.

As of September 30, 2021, we used market observed prices to determine fair value. Additionally, as the transfer of Private Placement Warrants to anyone who is not a permitted transferee would result in the Private Placement Warrants having substantially the same terms as the Public Warrants, the Company determined that the fair value of each Private Placement Warrant is equivalent to that of each Public Warrant.

~~Class A Common Stock Subject to Possible Redemption~~

We account for Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any) is classified as a liability instrument and measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our outstanding common stock features certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events.

Immediately upon the closing of the Initial Public Offering, we recognized the accretion from initial book value to redemption amount value. The change in the carrying value of the redeemable Class A common stock subject to possible redemption resulted in charges against additional paid-in capital and accumulated deficit.

~~Net Income (Loss) Per Share of Common Stock~~

We comply with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” We have two classes of shares, which are referred to as Class A common stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income per common shares is calculated by dividing the net income by the weighted common shares outstanding for the respective period.

The calculation of diluted net income does not consider the effect of the warrants underlying the Units sold in the Initial Public Offering and the private placement warrants to purchase an aggregate of 18,525,000 shares of Class A common stock in the calculation of diluted income per share, because their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income (loss)

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per share is the same as basic net income (loss) per share for the three and nine months ended September 30, 2021. Accretion associated with the redeemable Class A common stock is excluded from earnings per share as the redemption value approximates fair value.

~~Recent Accounting Pronouncements~~

~~In August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06,~~ Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The Company adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.

The Company’s management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed consolidated financial statements.

~~Off-Balance Sheet Arrangements~~

~~As of September 30, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.~~

JOBS Act

~~The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions~~ provides that ~~among other things, relax certain reporting requirements for qualifying public companies. We qualify as~~ an “emerging growth company” ~~and under~~may take advantage of the ~~JOBS~~extended transition period provided in Section 7(a)(2)(B) of the Securities Act ~~are allowed to comply~~for complying with new or revised accounting ~~pronouncements based on the effective date for private (not publicly traded) companies. We are electing to~~standards. Therefore, an emerging growth company can delay the adoption of ~~new or revised~~certain accounting standards ~~and as a result,~~until those standards would otherwise apply to private companies.

Boxed is an emerging growth company. Therefore, we ~~may not comply with new or revised accounting standards on~~have elected to use the ~~relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result,~~extended transition period under the JOBS Act. Accordingly, our financial statements may not be comparable to the financial statements of public companies that comply with such new or revised accounting ~~pronouncements as~~standards.

Table of ~~public company effective dates.~~

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.

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~~Item~~

ITEM 3.~~Quantitative and Qualitative Disclosures About Market Risk~~

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are ~~a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required~~exposed to ~~provide the information otherwise required under this item. The net proceeds of the Initial Public Offering, including amounts~~market risks in the ~~Trust Account, will be invested~~ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in ~~U.S. government securities with a maturity~~financial market prices and rates. Our market risk exposure is primarily the result of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, that invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate fluctuations and inflation risk.

Interest Rate Risk

We had a total cash balance plus marketable securities of approximately $49.6 million, including $2.8 million of restricted cash and $7.0 million of marketable securities, as of June 30, 2022 and a total cash balance of $107.8 million, including $2.8 million of restricted cash, as of December 31, 2021. We have not ~~engaged~~been exposed, nor do we anticipate being exposed, to material risks due to changes in interest rates. A hypothetical 10% increase in interest rates during any ~~hedging activities since~~of the periods presented would not have had a material impact on our ~~inception and~~Condensed Consolidated Financial Statements.

While the majority of our interest rate is fixed, we ~~do not expect~~are still exposed to ~~engage~~certain changes in ~~any hedging activities~~interest rates with respect to our cost of borrowing under our existing New Term Loan. We monitor our cost of borrowing under our New Term Loan, taking into account our funding requirements, and our expectations for short-term rates in the ~~market risk~~future. A hypothetical 10% change in the floating portion of the interest rate on our New Term Loan for all periods presented would not have a material impact on our Condensed Consolidated Financial Statements.

Inflation Risk

We have experienced and expect to ~~which~~continue to experience an increase in commodity prices, labor costs, input costs and transportation costs. In response to these rising costs, in 2022, we ~~are exposed.~~

have continued to optimize and raise prices across a significant portion of our product offerings. These price increases could impact the demand for our products. Our inability to offset these changing costs could harm our business, financial condition, and results of operations. For a discussion of recent increases in product, transportation, and wage costs, related, in part, to inflationary pressures, see “Components of our Results of Operations” in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

~~Item~~

ITEM 4.~~Controls and Procedures~~

~~Evaluation~~ CONTROLS AND PROCEDURES

Inherent Limitations on the Effectiveness of Disclosure Controls and Procedures

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~~Under the supervision~~In designing and ~~with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of~~evaluating our disclosure controls and procedures, ~~as of the end of the fiscal quarter ended September 30, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon~~management recognizes that evaluation and in light of the SEC Staff Statement, our Certifying Officers concluded that, solely due to the Company’s misapplication of the accounting for the Company’s warrants as liabilities, our disclosure controls and procedures were not effective as of September 30, 2021.

~~We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure~~any controls and procedures, no matter how well ~~conceived~~designed and operated, can provide only reasonable ~~not absolute,~~ assurance ~~that~~of achieving the ~~objectives of the disclosure controls and procedures are met. Further,~~desired control objectives. In addition, the design of the disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits ~~must be considered~~of possible controls and procedures relative to their costs. ~~Because~~

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the ~~inherent limitations in all~~Company’s disclosure controls and procedures no(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures ~~can provide absolute~~were not effective at the reasonable assurance ~~that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about~~level due to the ~~can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.~~

~~On April 12, 2021, the staff~~existence of the Securities and Exchange Commission (the “SEC Staff”) issued a public statement entitled “Staff Statement on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”) (the “Public Statement”). In the Public Statement, the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified as liabilities on SPACs’ balance sheets as opposed to equity. Since their issuance on December 22, 2020,material weaknesses described below.

However, our ~~warrants to purchase common stock (the “Warrants”) were accounted for as equity within~~management, including our balance sheets and, based on our application of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 815-40, Derivatives and Hedging, Contracts in Entity’s Own Equity (“ASC 815-40”), our statement of operations did not include subsequent non-cash changes in estimated fair value of the Warrants. The views expressed in the Public Statement were not consistent with our historical interpretation of specific provisions within our warrant agreement, dated as of October 6, 2021 (“warrant agreement”),Chief Executive Officer and our ~~application of ASC 815-40 to~~Chief Financial Officer, has concluded that, notwithstanding the warrant agreement. As a result of these developments, the Company has reviewed its treatment of the Warrants and has filed its Amendment No. 1 to the Annual Report on Form 10-K filed on June 3, 2021 (the “10-K/A”). The 10-K/A provided for the restatement of the warrants as a liability for the affected period as described therein. As a result of the SEC’s Public Statement, the Company has changed their go-forward treatment of the Warrants. The results found in this Form 10-Q are consistent with this treatment.

~~Changes in Internal Control over Financial Reporting~~

~~During the most recently completed fiscal quarter, there were no change~~identified material weaknesses in our internal control over financial reporting, the financial statements in this Quarterly Report fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

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Material Weaknesses in Internal Control over Financial Reporting

As previously reported, we and our predecessor identified material weaknesses in our internal control over financial reporting in the prior year. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

During the prior year, we determined that we had material weaknesses because we did not design and maintain an effective control environment and control activities commensurate with our financial reporting requirements. Specifically, we did not maintain a sufficient complement of personnel with an appropriate degree of technical knowledge commensurate with our accounting and reporting requirements or effectively select and develop control activities that mitigate risk that involve more complex accounting judgments. These material weaknesses contributed to deficiencies surrounding the controls related to the preparation, review, and analysis of accounting information and financial statements. Our controls were not adequately designed or appropriately implemented to identify material misstatements in financial reporting on a timely basis.

Management’s Plan to Remediate the Material Weaknesses

With the oversight of senior management and our audit committee, we have hired and will continue hiring additional accounting personnel with technical accounting and financial reporting experience and have implemented improved process level and management review controls with respect to the completeness, accuracy, and validity of complex accounting measurements on a timely basis. We also have supplemented internal accounting resources with external advisors to assist with performing technical accounting activities. Furthermore, we are implementing a process of formalizing procedures to ensure appropriate internal communications between the accounting department and other operating departments necessary to support the internal controls. The remediation measures are ongoing, and are expected to result in future costs for the Company. While we are implementing a plan to remediate these material weaknesses, we cannot predict the success of such plan or the outcome of our assessment of these plans at this time. These improvements to our internal control infrastructure are ongoing, including during the preparation of our financial statements as of the end of the period covered by this report. As such, management has concluded that the remediation initiatives outlined above are not sufficient to fully remediate the material weaknesses in internal control over financial reporting, and will remain insufficient until the applicable controls have operated for an adequate period of time, and further, that through testing, management can conclude that the controls are designed and operating effectively. We are committed to continuing to improve our internal control processes and will continue to diligently review our financial reporting controls and procedures.

Changes in Internal Control Over Financial Reporting

Except for continuing to take steps to remediate the material weakness in our internal control over financial reporting as described above, there were no changes in our internal control over financial reporting (as defined by 13a-15(f) and 15d-15(f) under the Exchange Act) during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. In light of the restatement of our financial statements included in our Form 10-K/A, we enhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. We have enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The remediation has not been fully tested as of September 30, 2021. While we took considerable action to remediate the material weakness, such remediation has not been fully evidenced. Accordingly, we continue to test our controls implemented over the past two quarters to assess whether our controls are operating effectively.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On February 8, 2022, a putative stockholder of the Company filed a complaint in the Delaware Chancery Court alleging that he is entitled to attorneys’ fees and expenses in connection with a demand he made on the Company regarding the ability of Class A common stockholders to vote on certain charter amendments in connection with the Business Combination on December 8, 2021. Garfield v. Boxed, Inc., C.A. No. 2022-0132-VCZ (Del. Ch.). The stockholder did not specify in its complaint the amount of attorneys’ fees and expenses sought. Pursuant to an order entered June 14, 2022, the Company's answering brief is due on or before September 8, 2022, and plaintiff's reply brief is due on or before September 23, 2022. Oral argument on the motion is scheduled for October 4, 2022. Given the early stage of this matter and the uncertainty inherent in litigation and investigations, we do not believe it is possible to develop estimates of reasonably possible losses (or a range of possible losses) for this matter.

From time to time, we may become involved in actions, claims, suits and other legal proceedings arising in the ordinary course of our business, including assertions by third parties relating to personal injuries sustained using our services, intellectual property infringement, breaches of contract or warranties or employment-related matters. We continually assess the likelihood of adverse judgments or outcomes in such matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. We are not currently a party to any actions, claims, suits or other legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate have a material adverse effect on our business, financial condition and results of operations. Because most contingencies are resolved over long periods of time, potential liabilities are subject to change due to new developments, changes in settlement strategy or the impact of evidentiary requirements. Any of these claims could subject us to costly litigation, and, while we generally believe that we have adequate insurance to cover many different types of liabilities, our insurance carriers may deny coverage, may be inadequately capitalized to pay on valid claims, or our policy limits may be inadequate to fully satisfy any damage awards or settlements. If this were to happen, the payment of any such awards could have a material adverse effect on our business, financial condition and results of operations. Additionally, any such claims, whether or not successful, could damage our reputation and business.

ITEM 1A. RISK FACTORS

Besides the risk factor described below, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and this Quarterly Report.

The price of our common stock and warrants may be volatile or may decline regardless of our operating performance, resulting in substantial losses for our stockholders and warrant holders.

The market price of our common stock, as well as our warrants, may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

•actual or anticipated fluctuations in our results of operations;

•the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

•failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors;

•announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations or capital commitments;

•changes in operating performance and stock market valuations of other retail companies generally, or those in our industry in particular;

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•price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;

•changes in our Board or management;

•sales of large blocks of our common stock or warrants, including sales by us or by our executive officers and directors;

•lawsuits threatened or filed against us;

•changes in laws or regulations applicable to our business;

•changes in our capital structure, such as future issuances of debt or equity securities;

•short sales, hedging and other derivative transactions involving our capital stock;

•general economic conditions in the United States, including increasing interest rates and inflation;

•other events or factors, including those resulting from war, geopolitical instability, natural disasters, incidents of terrorism or responses to these events; and

•the other factors described in the sections of our Annual Report on Form 10-K titled “Risk Factors” and our Annual Report on Form 10-K and this Quarterly Report titled “Cautionary Note Regarding Forward-Looking Statements.”

The stock market has recently experienced extreme price and volume fluctuations. The market prices of securities of companies have experienced fluctuations that often have been unrelated or disproportionate to their operating results. Market fluctuations could result in extreme volatility in the price of shares of our common stock or warrants, which could cause a decline in the value of your investment. Price volatility may be greater if the public float and trading volume of shares of our common stock is low. Furthermore, in the past, stockholders have sometimes instituted securities class action litigation against companies following periods of volatility in the market price of their securities. Any similar litigation against us could result in substantial costs, divert management’s attention and resources, and harm our business, financial condition, and results of operations.

Our securities are currently listed on the “NYSE.” For continued listing, we are required to meet specified listing standards, including a minimum stock price, market capitalization, and stockholders’ equity. If we are unable to meet the NYSE’s listing standards, including the requirement that our common stock continue to trade at over $1.00 per share, the NYSE would delist our securities. At that point, it is possible that our securities could be quoted on the over-the-counter bulletin board or the pink sheets. This could have negative consequences, including a negative effect on the price of our securities, reduced liquidity for stockholders, reduced trading levels for our securities, limited availability of market quotations or analyst coverage of our securities; stricter trading rules for brokers trading our securities, and reduced access to financing alternatives for us. We also would be subject to greater state securities regulation if our common stock was no longer listed on a national securities exchange. In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our securities to become listed again, stabilize the market price or improve the liquidity of our securities, prevent our securities from dropping below the NYSE minimum share price requirement or prevent future non-compliance with NYSE’s listing requirements.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

~~Item 2.~~~~Unregistered Sales~~Table of ~~Equity Securities and Use~~Contents

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

Exhibit
No. Description Form File No. Exhibit Filing Date Filed/Furnished Herewith
2.1†
Agreement and Plan of Merger, dated as of June 13, 2021, by and among the Registrant, Blossom Merger Sub, Inc., Blossom Merger Sub II, LLC and Giddy Inc.
8-K 001-39817 2.1† 6/14/2021
2.1(a)
Amendment to Agreement and Plan of Merger, dated as of November 26, 2021, by and among the Registrant, Blossom Merger Sub, Inc., Blossom Merger Sub II, LLC, and Giddy Inc.
8-K 001-39817 2.1 11/26/2021
3.1
Amended and Restated Certificate of Incorporation of Boxed, Inc.
8-K 001-39817 3.1 12/14/2021
3.2
Amended and Restated Bylaws of Boxed, Inc.
S-1 3.2 12/22/2021
4.1
Specimen Common Stock Certificate.
8-K 001-39817 4.1 12/14/2021
4.2
Warrant Agreement between the Registrant and Continental Stock. Transfer & Trust Company, dated as of December 17, 2020.
8-K 001-39817 4.1 12/23/2020
4.3
Form of Warrant Certificate.
8-K 001-39817 4.3 12/14/2021
10.1
Common Stock Purchase Agreement, dated May 9, 2022, by and between The Jones Group Ventures LLC and Boxed, Inc.
8-K 001-39817 10.1† 5/10/2022
10.2
Registration Rights Agreement, dated May 9, 2022, by and between The Jones Group Ventures LLC and Boxed, Inc.
8-K 001-39817 10.2† 5/10/2022
31.1
Certification of the Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*
31.2
Certification of the Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*
32.1
Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**
101.INS Inline XBRL Instance Document *
101.SCH Inline XBRL Taxonomy Extension Schema Document *

Table of ~~Proceeds.~~

~~None~~

Contents

~~Item 6.~~~~Exhibits.~~

~~Exhibit~~
~~Number~~

101.CAL

~~Description~~

31.1*

Certification of Chairman and Co-Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

~~Certification of Chairman and Co-Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

32.2*

~~Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101.INS~~

~~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~~

~~XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

________________

* Filed herewith.

** Furnished herewith.

~~SIGNATURE~~

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 ~~hereunto~~thereunto duly authorized.

~~June~~

~~Dated: November 10, 2021~~

~~SEVEN OAKS ACQUISITION CORP.~~

BOXED, INC.

Date: August 9, 2022

~~By:~~

By:

/s/ ~~Gary Matthews~~

Chieh Huang

~~Name:~~

~~Gary Matthews~~

Name:

Chieh Huang

~~Title:~~

Title:

Chief Executive Officer

Date: August 9, 2022

By:

/s/ Mark Zimowski

Name:

Mark Zimowski

Title:

Chief Financial Officer

~~Delaware~~	~~001-39817~~			85-3316188
(State or other jurisdiction of incorporation or organization)			~~(Commission File Number)~~			(I.R.S. Employer Identification ~~Number)~~

	No.)
~~445 Park Avenue, 17th Floor~~ ~~New York~~, NY		~~10022~~
451 Broadway, Floor 2 New York, NY 10013 (646) 586-5599
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)			~~(Zip Code)~~


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~SEVEN OAKS ACQUISITION CORP.~~
~~(Exact name of registrant as specified in its charter)~~

~~Item 1.~~	~~Condensed Consolidated Financial Statements (Unaudited)~~	1
Item 1.			Financial Statements	8
			Condensed Consolidated Balance Sheets ~~as of September 30, 2021 (unaudited) and December 31, 2020~~	1 8
			~~Unaudited~~ Condensed Consolidated Statements of Operations ~~for The Three~~ and ~~Nine Months Ended September 30, 2021~~Comprehensive Loss	2 9
			Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit	~~Unaudited~~ 10
			Condensed Consolidated Statements of ~~Changes in Stockholders’ Deficit for The Three and Nine Months Ended September 30, 2021~~Cash Flows	3 12
			~~Unaudited Condensed Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2021~~	4
	Notes to ~~Unaudited~~ Condensed Consolidated Financial Statements	5 13
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations	23 41
Item 3.			Quantitative and Qualitative Disclosures About Market Risk	28 58
Item 4.			Controls and Procedures	28 58
			PART II. OTHER INFORMATION
Item 1.			Legal Proceedings	60
Item 1A.			Risk Factors	60
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds ~~from Registered Securities~~	30 61
Item 3.			Defaults Upon Senior Securities	61
Item 4.			Mine Safety Disclosures	62
Item 5.			Other Information	62
Item 6.			Exhibits	30 62
Signatures				64


	September 30, 2021		December 31, 2020
	(Unaudited)
Assets:
Current assets:
Cash	$	535,518	$	1,764,324
Prepaid expenses		501,641		759,541
Total current assets		1,037,159		2,523,865
Investments held in Trust Account		258,804,731		258,749,858
Total Assets	$	259,841,890	$	261,273,723

Liabilities and Stockholders' Deficit:
Current liabilities:
Accounts payable	$	41	$	52,319
Accrued expenses		1,861,478		103,335
Franchise tax payable		116,701		54,695
Total current liabilities		1,978,220		210,349
Derivative warrant liabilities		14,801,473		22,415,255
Total Liabilities		16,779,693		22,625,604

Commitments and Contingencies (Note 5)

Class A common stock subject to possible redemption, $0.0001 par value; 25,875,000 shares at $10.00 per share as of September 30, 2021 and December 31, 2020		258,750,000		258,750,000

Stockholders' Deficit:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding		—		—
Class A common stock, $0.0001 par value; 380,000,000 shares authorized as of September 30, 2021 and December 31, 2020, respectively		—		—
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 6,468,750 shares issued and outstanding as of September 30, 2021 and December 31, 2020		647		647
Accumulated deficit		(15,688,450)		(20,102,528)
Total stockholders' deficit		(15,687,803)		(20,101,881)
Total Liabilities, Class A common stock subject to possible redemption and Stockholders' Deficit	$	259,841,890	$	261,273,723


	For the Three Months Ended		For the Nine Months Ended
	September 30, 2021		September 30, 2021
General and administrative expenses	$	891,974	$	2,924,988
General and administrative expenses - related party		60,000		180,000
Franchise tax expenses		77,868		149,589
Loss from operations		(1,029,842)		(3,254,577)
Change in fair value of derivative warrant liabilities		7,058,027		7,613,782
Income from investments held in Trust Account		3,331		54,873
Net income	$	6,031,516	$	4,414,078

Weighted average number of shares outstanding of Class A common stock		25,875,000		25,875,000
Basic and diluted net income per share, Class A	$	0.19	$	0.14
Weighted average number of shares outstanding of Class B common stock		6,468,750		6,468,750
Basic and diluted net income per share, Class B	$	0.19	$	0.14


	Common Stock								Total
	Class A			Class B			Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Deficit		Deficit
Balance — December 31, 2020	—	$	—	6,468,750	$	647	$	(20,102,528)	$	(20,101,881)
Net income	—		—	—		—		4,644,993		4,644,993
Balance — March 31, 2021 (unaudited)	0		—	6,468,750		647		(15,457,535)		(15,456,888)
Net loss	—		—	—		—		(6,262,431)		(6,262,431)
Balance - June 30, 2021 (unaudited)	—		—	6,468,750		647		(21,719,966)		(21,719,319)
Net income	—		—	—		—		6,031,516		6,031,516
Balance - September 30, 2021 (unaudited)	—	$	—	6,468,750	$	647	$	(15,688,450)	$	(15,687,803)


	As of December 31, 2020
	As Previously		Restatement
	Reported		Adjustment		As Restated
Total liabilities		22,625,604		—		22,625,604
Class A common stock, $0.0001 par value; shares subject to possible redemption		233,648,110		25,101,890		258,750,000
Stockholders’ equity
Preferred stock- $0.0001 par value		—		—		—
Class A common stock - $0.0001 par value		251		(251)		—
Class B common stock - $0.0001 par value		647		—		647
Additional paid-in-capital		9,216,854		(9,216,854)		—
Accumulated deficit		(4,217,743)		(15,884,785)		(20,102,528)
Total stockholders’ equity		5,000,009		(25,101,890)		(20,101,881)
Total liabilities and stockholders’ equity	$	261,273,723	$	—	$	261,273,723


Gross proceeds	$	258,750,000
Less:
Fair value of Public Warrants at issuance		(12,937,500)
Offering costs allocated to Class A common stock subject to possible redemption		(2,971,639)
Plus:
Accretion of carrying value to redemption value		15,909,139
Class A common stock subject to possible redemption	$	258,750,000


	Fair Value Measured as of September 30, 2021
	Quoted Prices in		Significant Other		Significant Other
	Active Markets		Observable Inputs		Unobservable Inputs
Description	(Level 1)		(Level 2)		(Level 3)
Assets:
Investments held in Trust Account	$	258,804,731	$	—	$	—
Liabilities:
Derivative warrant liabilities - public warrants	$	10,337,063	$	—	$	—
Derivative warrant liabilities - private warrants		—	$	4,464,410		—


	Public Warrants		Private Warrants		Total
Derivative warrant liabilities at January 1, 2021	$	15,654,375	$	6,760,880	$	22,415,255
Change in fair value of derivative warrant liabilities		(3,881,250)		(1,676,250)		(5,557,500)
Derivative warrant liabilities at March 31, 2021		11,773,125		5,084,630		16,857,755
Change in fair value of derivative warrant liabilities		3,493,125		1,508,620		5,001,745
Derivative warrant liabilities at June 30, 2021		15,266,250		6,593,250		21,859,500
Change in fair value of derivative warrant liabilities		(4,929,187)		(2,128,840)		(7,058,027)
Derivative warrant liabilities at September 30, 2021	$	10,337,063	$	4,464,410	$	14,801,473