SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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

For the quarterly period ended September 30, ~~2021~~

2023

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

For the transition period from ____________________ to

____________________

Commission File ~~Number~~ Number: 001-40764


~~CHW ACQUISITION CORPORATION~~ Delaware			88-3590180
~~(Exact name of registrant as specified in its charter)~~

~~Cayman Islands~~

~~N/A~~

(State or other jurisdiction of

~~incorporation or organization)~~

incorporation)

(IRS Employer

Identification No.)

~~2 Manhattanville Road~~

55 Francisco Street, Suite ~~403~~

~~Purchase~~, NY~~10577~~

360

San Francisco, California

94133

(Address of principal executive ~~offices and zip code)~~

offices)

(Zip Code)

(707) 324-4219

(Registrant’s telephone number, including area code)

Not applicable

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

(~~914~~) ~~603-5016~~

~~(Registrant’s telephone number, including area code)~~

~~N/A~~

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

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

~~Units, each consisting of one Ordinary Share,~~Common Stock, par value $0.0001 per share ~~and one Redeemable Warrant~~

~~CHWAU~~PET

The Nasdaq ~~Stock~~Global Market ~~LLC~~

~~Ordinary Shares, par value $0.0001 per share, included as part of the Units~~

~~CHWA~~

~~The Nasdaq Stock Market LLC~~

~~Redeemable~~ Warrants, ~~included as part of the Units,~~ each whole warrant exercisable for ~~Ordinary Share for~~one share of Common Stock at an exercise price of $11.50 per share

~~CHWAW~~PETWW

The Nasdaq ~~Stock~~Global Market ~~LLC~~

~~CHW ACQUISITION CORPORATION~~

~~FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2021~~

TABLE OF CONTENTS

Table of Contents

~~CHW Acquisition Corporation~~

~~CONDENSED BALANCE SHEET (UNAUDITED)~~

September 30, 2021

ASSETS

CURRENT ASSETS

Cash

$
897,818
Due from related party

68,591
Prepaid expenses and other current assets

287,500

Total current assets

1,253,909

OTHER ASSETS

Prepaid expense – non-current portion

263,542
Investments held in trust account

125,000,000

TOTAL ASSETS

$
126,517,451

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)



CURRENT LIABILITIES

Accounts payable

$
111,054
Promissory note – related party

43,000

Total current liabilities

154,054

LONG-TERM LIABILITIES

Deferred underwriting fee payable

4,375,000
Total long-term liabilities

4,375,000

Total liabilities

4,529,054


COMMITMENTS AND CONTINGENCIES


Ordinary shares subject to possible redemption, $0.0001 par value, 12,500,000 shares at redemption value of $10.00 per share.

125,000,000


SHAREHOLDERS’ EQUITY (DEFICIT)


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

—
Ordinary Shares; $0.0001 par value; 110,000,000 shares authorized; 3,187,500 shares issued and outstanding (excluding 12,500,000 shares subject to possible redemption), as of September 30, 2021.

318
Additional paid-in capital

—
Accumulated deficit

(3,011,921)

Total shareholders’ equity (deficit)

(3,011,603)

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

$
126,517,451

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

Cautionary Note Regarding Forward-Looking Statements

~~Table~~This Quarterly Report on Form 10-Q, including, without limitation, statements under the headings “Management's Discussion and Analysis of ~~Contents~~

~~CHW Acquisition Corporation~~

~~CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)~~

For the period

January 12, 2021

For the three months ended

(inception) through

September 30,

September 30,

2021

2021
OPERATING EXPENSES

General and administrative

$
104,249

$
120,121
Total operating expenses

104,249

120,121
NET LOSS

$
(104,249)

$
(120,121)

Weighted average shares outstanding of redeemable ordinary shares

3,983,516

1,388,889
Basic and diluted net income per share, redeemable ordinary shares

$
(0.01)

$
(0.03)

Weighted average shares outstanding of non-redeemable ordinary shares

3,170,467

3,165,278
Basic and diluted net income per share, non-redeemable ordinary shares

$
(0.01)

$
(0.03)

~~The accompanying notes are an integral part~~Financial Condition and Results of ~~these unaudited condensed financial statements.~~

~~Table of Contents~~

~~CHW Acquisition Corporation~~

~~CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)~~

~~For the period January 12, 2021 (inception) through September 30, 2021~~

For the period January 12, 2021 (inception) through September 30, 2021 (unaudited)

Additional

Total

Ordinary Shares

paid-in

Accumulated

shareholders’


Shares

Amount

capital

deficit

equity (deficit)
Balance, January 12, 2021 (inception)

0

$
0

$
0

$
0

$
0

Issuance of Ordinary shares to Sponsor

3,162,500

316

24,684

—

25,000

Sale of private placement warrants

—

—

4,238,636

—

4,238,636

Issuance of representative shares

62,500

6

460,119

—

460,125

Accretion to Redeemable Ordinary shares to redemption value

—

—

(4,723,443)

(2,891,800)

(7,615,243)

Net loss

—

—

—

(120,121)

(120,121)

Forfeiture of founder shares

(37,500)

(4)

4

—

—

Balance, September 30,2021

3,187,500

$
318

$
—

$
(3,011,921)

$
(3,011,603)

~~For the period Three Months Ended September 30, 2021~~

Additional

Total

Ordinary shares

paid-in

Accumulated

shareholders’


Shares

Amount

capital

deficit

equity (deficit)
Balance, July 1, 2021

3,162,500

$
316

$
24,684

$
(15,872)

9,128

Sale of private warrants under fair value

—

—

4,238,636

—

4,238,636

Issuance of representative shares

62,500

6

460,119

—

460,125

Accretion to Redeemable Ordinary shares to redemption value

—

—

(4,723,443)

(2,891,800)

(7,615,243)

Forfeiture of founder shares

(37,500)

(4)

4

—

—

Net loss

—

—

—

(104,249)

(104,249)

Balance, September 30, 2021

3,187,500

$
318

$
—

$
(3,011,921)

$
(3,011,603)

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

~~Table of Contents~~

~~CHW Acquisition Corporation~~

~~CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)~~

For the period

January 12, 2021

(inception) through

September 30,


2021
CASH FLOWS FROM OPERATING ACTIVITIES



Net loss

$
(120,121)
Adjustments to reconcile net income to net cash used in operating activities:

Changes in operating assets and liabilities:

Due from related party

(68,591)
Prepaid expenses and other assets-current and non current

(551,042)
Accounts payable

111,054
Net cash flows used in operating activities

(628,700)

CASH FLOWS FROM INVESTING ACTIVITIES

Cash deposited to Trust Account

(125,000,000)

Net cash flows used in investing activities

(125,000,000)


CASH FLOWS FROM FINANCING ACTIVITIES


Proceeds from sale of private placement warrants

4,238,636
Sale of Units, net of underwriting discounts paid of $2,187,500

122,812,500
Proceeds from issuance of ordinary shares to Sponsor

25,000
Payment of offering costs

(592,618)
Proceeds from note payable – related party

132,296
Repayment of note payable – related party

(89,296)
Net cash flows provided by financing activities

126,526,518


NET INCREASE (DECREASE) IN CASH

897,818

CASH, BEGINNING OF PERIOD

0

CASH, END OF PERIOD

$
897,818

Supplemental disclosure of noncash activities:

Initial classification of Ordinary shares subject to redemption

$
125,000,000
Deferred underwriting fee payable

$
4,375,000

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

~~Table of Contents~~

~~CHW Acquisition Corporation~~

~~NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS~~

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

CHW Acquisition Corporation (the “Company”) was incorporated in the Cayman Islands on January 12, 2021. The Company was formed for the purpose of effecting a merger, capital share exchange, asset acquisition, share purchase, reorganization or similar Business Combination with 1 or more businesses (the “Business Combination”).

The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.

As of September 30, 2021, the Company had not commenced any operations. All activity from January 12, 2021 (inception) through September 30, 2021 relates to the Company’s formation and initial public offering (the “Initial Public Offering”), which is described below, and, since the offering, the search for a prospective 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 will generate non-operating income in the form of interest income earned on investments from the proceeds derived from the Initial Public Offering. The registration statement for the Company’s Initial Public Offering was declared effective on August 30, 2021. On September 1, 2021, the Company consummated the Initial Public Offering of 11,000,000 units (the “Units”) with respect to the Ordinary shares (the “Ordinary Shares”) included in the Units being offered (the “Public Shares”) at $10.00 per Unit generating gross proceeds of $110,000,000, which is discussed in Note 4.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 4,000,000 warrants (“Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to the Company’s sponsor, CHW Acquisition Sponsor, LLC and underwriters generating gross proceeds of $4,000,000, which is described in Note 5.

On August 30, 2021, the underwriters notified the Company of their intention to partially exercise their over-allotment option and will forfeit the remaining balance on September 1, 2021. On September 1, 2021, the Company consummated the sale of an additional 1,500,000 Units, at $10.00 per Unit, and the sale of an additional 238,686 Private Placement Warrants, at $1.00 per Private Placement Warrants, generating total gross proceeds of $15,238,636.

Offering costs for the Initial Public Offering and underwriters’ partial exercise of the over-allotment option amounted to $13,130,743, consisting of $2,187,500 of underwriting fees, $4,375,000 of deferred underwriting fees payable (which are held in the Trust Account (defined below)), $5,975,625 for the fair value of shares issued to the anchor investors and representative shares (see Note 4 and Note 7) and $592,618 of other costs. As described in Note 7, the $4,375,000 of deferred underwriting fee payable is contingent upon the consummation of a Business Combination by October 20, 2022, subject to the terms of the underwriting agreement.

Following the closing of the Initial Public Offering on September 1, 2021, an amount of $125,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement Warrants was placed in a trust account (“Trust Account”) and will be invested in U.S. government securities,” contains certain forward-looking statements within the meaning ~~set forth~~of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section ~~2(a)(16)~~27A of the ~~Investment Company~~Securities Act of ~~1940,~~1933, as amended (the ~~“Investment Company~~“Securities Act”), ~~with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3)~~ and (d)(4) of Rule 2a-7 of the Investment Company Act, 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~~

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 the 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 1 or more initial Business Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the 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 outstanding Public Shares (the “Public Shareholders”) 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 shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest then in the Trust Account, net of taxes payable). There will be no redemption rights with respect to the Company’s warrants.

All of the Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with the Company’s liquidation, if there is a shareholder vote or tender offer in connection with the Company’s Business Combination and in connection with certain amendments to the Company’s amended and restated certificate of incorporation (the “Certificate of Incorporation”). In accordance with the rules of the U.S. Securities and Exchange Commission (the “SEC”) and its guidance on redeemable equity instruments, which has been codified in Accounting Standards Codification (“ASC”) 480-10-S99, redemption provisions not solely within the control of a company require ordinary shares subject to redemption to be classified outside of permanent equity. Given that the Public Shares will be issued with other freestanding instruments (i.e., public warrants), the initial carrying value of the Public Shares classified as temporary equity will be the allocated proceeds determined in accordance with ASC 470-20. The Public Shares are subject to ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, the Company has the option to either (i) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or (ii) recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The Company has elected to recognize the changes immediately. The accretion or remeasurement will be treated as a deemed dividend (i.e., a reduction to retained earnings, or in absence of retained earnings, additional paid-in capital). While redemptions cannot cause the Company’s net tangible assets to fall below $5,000,001, the Public Shares are redeemable and will be classified as such on the balance sheet until such date that a redemption event takes place.

Redemptions of the Company’s Public Shares may be subject to the satisfaction of conditions, including minimum cash conditions, pursuant to an agreement relating to the Company’s Business Combination. If the Company seeks shareholder approval of the Business Combination, the Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination, or such other vote as required by law or share exchange rule. If a shareholder vote is not required by applicable law or share exchange listing requirements and the Company does not decide to hold a shareholder vote for business or other reasons, the Company will, pursuant to its Certificate of Incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC and file tender offer documents with the SEC prior to completing a Business Combination. If, however, shareholder approval of the transaction is required by applicable law or share exchange listing requirements, or the Company decides to obtain shareholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks shareholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 6) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.

Subsequent to the consummation of the Initial Public Offering, the Company will adopt an insider trading policy which will require insiders to: (i) refrain from purchasing shares during certain blackout periods and when they are in possession of any material non-public information and (ii) to clear all trades with the Company’s legal counsel prior to execution. In addition, the initial shareholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.

~~Table of Contents~~

Notwithstanding the foregoing, the Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such shareholder or any other person with whom such shareholder 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 be restricted from redeeming its shares with respect to more than an aggregate of 15% or more~~. Some of the ~~Ordinary shares sold~~forward-looking statements can be identified by the use of forward-looking words. Statements that are not historical in nature, including the ~~Initial Public Offering, without the prior consent of the Company.~~

~~The Company’s Sponsor, officers~~words “anticipate,” “expect,” “suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,” “projects,” “should,” “could,” “would,” “may,” “will,” “forecast,” and ~~directors (the “Initial Shareholders”) have agreed not~~other similar expressions are intended to ~~propose an amendment~~identify forward-looking statements. These statements include those related to the ~~Certificate of Incorporation~~Company’s ability to further develop and advance its pet service offerings and achieve scale; ability to attract personnel; and market opportunity, anticipated growth, and future financial performance, including management’s financial outlook for the future. Forward-looking statements are predictions, projections, and other statements about future events that ~~would affect~~are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the ~~substance or timing~~forward-looking statements in this Quarterly Report on Form 10-Q, including but not limited to: market adoption of the Company’s pet service offerings and solutions; the ability of the Company to protect its intellectual property; changes in the competitive industries in which the Company operates; changes in laws and regulations affecting the Company’s business; the Company’s ability to implement its business plans, forecasts, and other expectations, and identify and realize additional partnerships and opportunities; and the risk of downturns in the market and the technology industry. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties, including information described under Part II, Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q and other documents filed by the Company from time to time with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and except as required by law, the Company assumes no obligation and does not intend to ~~redeem 100%~~update or revise these forward-looking statements, whether as a result of ~~its Public Shares if the~~new information, future events, or otherwise. The Company does not ~~complete~~give any assurance that it will achieve its expectations.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

WAG! GROUP CO.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2023		December 31, 2022
	(in thousands, except par value amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	22,304	$	38,966
Accounts receivable, net	8,485		5,872
Prepaid expenses and other current assets	3,496		2,585
Total current assets	34,285		47,423
Property and equipment, net	71		88
Operating lease right-of-use assets	1,119		695
Intangible assets, net	8,036		2,590
Goodwill	4,646		1,451
Other assets	63		64
Total assets	$	48,220	$	52,311
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,686	$	7,174
Accrued expenses and other current liabilities	4,404		4,765
Deferred revenue	1,768		2,232
Deferred purchase consideration – current portion	724		750
Operating lease liabilities – current portion	300		306
Notes payable – current portion	1,589		1,264
Total current liabilities	17,471		16,491
Operating lease liabilities – non-current portion	899		435
Notes payable – non-current portion, net of debt discount and warrant allocation of $5,037 and $7,008 as of September 30, 2023 and December 31, 2022, respectively	25,709		24,970
Deferred purchase consideration – non-current portion	—		493
Other non-current liabilities	218		—
Total liabilities	44,297		42,389
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock, $0.0001 par value; 110,000 shares authorized as of both September 30, 2023 and December 31, 2022; 39,238 and 36,849 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	4		4
Additional paid-in capital	162,188		158,335
Accumulated deficit	(158,269)		(148,417)
Total stockholders’ equity	3,923		9,922
Total liabilities and stockholders’ equity	$	48,220	$	52,311

See the accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

WAG! GROUP CO.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(in thousands, except per share amounts)
Revenues	$	21,800	$	15,379	$	62,243	$	37,829
Costs and expenses:
Cost of revenues (exclusive of depreciation and amortization shown separately below)	1,441		1,021		3,710		3,027
Platform operations and support	2,968		5,641		9,630		11,035
Sales and marketing	12,755		11,290		36,788		24,656
Royalty	—		—		1,791		—
General and administrative	4,682		23,781		14,487		28,546
Depreciation and amortization	414		134		1,170		431
Total costs and expenses	22,260		41,867		67,576		67,695
Interest expense, net	1,683		735		4,972		784
Other expense, net	12		13,708		21		13,708
Loss before income taxes and equity in net earnings of affiliate	(2,155)		(40,931)		(10,326)		(44,358)
Income taxes	41		—		79		13
Equity in net earnings of equity method investments	—		—		553		—
Net loss	$	(2,196)	$	(40,931)	$	(9,852)	$	(44,371)
Loss per share, basic and diluted	$	(0.06)	$	(1.67)	$	(0.26)	$	(3.60)
Weighted-average common shares outstanding used in computing loss per share, basic and diluted	38,987		24,534		38,061		12,322

See the accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

WAG! GROUP CO.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)


	Redeemable Preferred Stock			Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity
	(in thousands)			(in thousands)
Balance as of December 31, 2022	—	$	—	36,849	$	4	$	158,335	$	(148,417)	$	9,922
Issuance of common stock from exercise of stock options and restricted stock units				580	—		54				54
Stock-based compensation							1,342				1,342
Net loss									(3,787)		(3,787)
Balance as of March 31, 2023	—	—		37,429	4		159,731		(152,204)		7,531
Issuance of common stock from exercise of stock options and restricted stock units				1,298	—		36				36
Stock-based compensation							1,121				1,121
Shares issued for acquisition				49	—		225				225
Net loss									(3,869)		(3,869)
Balance as of June 30, 2023	—	$	—	38,776	$	4	$	161,113	$	(156,073)	$	5,044
Issuance of common stock from exercise of stock options and restricted stock units				462	—		10				10
Stock-based compensation							1,065				1,065
Net loss									(2,196)		(2,196)
Balance as of September 30, 2023	—	$	—	39,238	$	4	$	162,188	$	(158,269)	$	3,923


	Redeemable Preferred Stock			Common Stock
	Shares	Amount		Shares	Amount		Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity (Deficit)
	(in thousands)			(in thousands)
Balance as of December 31, 2021	24,545	$	110,265	6,297	$	1	$	3,736	$	(109,850)	$	(106,113)
Reverse recapitalization	(686)	—		(176)	—						—
As adjusted, beginning of period	23,859	110,265		6,121	1		3,736		(109,850)		(106,113)
Issuance of Series P preferred stock, net of issuance costs	1,100	10,925									—
Stock-based compensation							54				54
Net loss									(2,350)		(2,350)
Balance as of March 31, 2022	24,959	121,190		6,121	1		3,790		(112,200)		(108,409)
Issuance of common stock from exercise of stock options				20	—		—				—
Stock-based compensation							40				40
Net loss									(1,090)		(1,090)
Balance as of June 30, 2022	24,959	121,190		6,141	1		3,830		(113,290)		(109,459)
Issuance of common stock from exercise of stock options and restricted stock units				49	—		—				—
Stock-based compensation							23,922				23,922
Conversion of preferred stock to common stock	(24,959)	(121,190)		24,959	2		121,188				121,190
Business Combination with CHW, net of transaction costs and other related shares				6,646	1		10,543				10,544
Issuance of Community Shares				300	—		1,971				1,971
Net loss									(40,931)		(40,931)
Balance as of September 30, 2022	—	$	—	38,095	$	4	$	161,454	$	(154,221)	$	7,237

See the accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

WAG! GROUP CO.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended
	September 30, 2023		September 30, 2022
	(in thousands)
Cash flow from operating activities:
Net loss	$	(9,852)	$	(44,371)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	3,528		24,016
Non-cash interest expense	2,021		224
Depreciation and amortization	1,170		431
Change in fair value of derivative liability	—		13,708
Issuance of Community Shares	—		1,971
Equity in net earnings of equity method investments	(553)		—
Other	12		—
Changes in operating assets and liabilities, net of effect of acquired business:
Accounts receivable	(2,573)		(3,698)
Prepaid expenses and other current assets	(463)		(512)
Operating lease right-of-use assets and liabilities	48		19
Other assets	1		—
Accounts payable	2,762		2,662
Accrued expenses and other current liabilities	(452)		1,674
Deferred revenue	(491)		298
Other non-current liabilities	218		—
Net cash used in operating activities	(4,624)		(3,578)
Cash flows from investing activities:
Proceeds from sale and maturity of short-term investments	—		2,550
Cash paid for acquisitions, net of cash acquired	(9,152)		—
Cash paid for equity method investment	(1,470)		—
Purchase of property and equipment	(40)		(36)
Other	—		(562)
Net cash provided by (used in) investing activities	(10,662)		1,952
Cash flows from financing activities:
Proceeds from exercises of stock options	100		—
Proceeds from debt, net of discount	—		29,445
Repayment of debt	(907)		(331)
Proceeds from issuance of Series P preferred stock, net of issuance costs	—		10,925
Proceeds from Business Combination with CHW, net of transaction costs	—		11,485
Other	(569)		—
Net cash provided by (used in) financing activities	(1,376)		51,524
Net change in cash, cash equivalents, and restricted cash	(16,662)		49,898
Cash, cash equivalents, and restricted cash, beginning of period	38,966		2,845
Cash, cash equivalents, and restricted cash, end of period	$	22,304	$	52,743
Supplemental disclosures of cash flow information:
Interest paid	$	3,724	$	784
Income taxes paid	$	23	$	14
Noncash investing and financing activities:
Conversion of preferred stock to common stock	$	—	$	121,188
Forward Share Purchase Agreements	$	—	$	5,242

See the accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

WAG! GROUP CO.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Description of Business

Wag! Group Co. (“Wag!,” “Wag,” the “Company,” “we,” or “our”), formerly known as CHW Acquisition Corporation (“CHW”), is incorporated in Delaware with headquarters in San Francisco, California. The Company develops and supports proprietary marketplace technologies available as a website and mobile app (“platform” or “marketplace”) that enable independent pet caregivers (“PCG”) to connect with Pet Parents (“Services”) and third-party service partners to provide a suite of pet wellness services and products (“Wag! Wellness” or “Wellness”), including pet expert advice, pet wellness plans, and a pet insurance comparison tool. The platform allows Pet Parents (also referred to as “end-user(s)”), who require specific pet care services, to make service requests on the platform, which are then fulfilled by PCGs. The Company operates in the United States.

On August 9, 2022 (the “Closing Date” or “Merger Date”), Wag! Labs, Inc. (“Legacy Wag!”), CHW , and CHW Merger Sub, Inc. (“Merger Sub”) pursuant to the terms of the Business Combination ~~unless~~Agreement and Plan of Merger (the “CHW Business Combination Agreement”) dated February 2, 2022, completed the ~~Company provides~~business combination of Legacy Wag! and CHW which was effected by the ~~Public Shareholders~~merger of Merger Sub with and into Legacy Wag!, with Legacy Wag! surviving the Merger as a wholly owned subsidiary of CHW (the “Merger,” and, together with the ~~opportunity to redeem their shares of Ordinary shares in conjunction with any such amendment.~~

Ifother transactions contemplated by the ~~Company is unable to complete a~~CHW Business Combination ~~by November 1, 2022, 15 months from~~Agreement, the ~~closing~~“CHW Business Combination”). Upon completion of the ~~Initial Public Offering~~Merger on August 9, 2022, following the approval at the extraordinary general meeting of the stockholders of CHW held on July 28, 2022 (the ~~“Combination Period”~~“Special Meeting”), the Company ~~will (i) cease~~changed its name to Wag! Group Co. (“Post-Combination Company”) and effectively assumed 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~~CHW’s material operations. Refer 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 us to pay the Company’s franchise and income 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 Shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and the Company’s board of directors, dissolve and liquidate, 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.

~~The Initial Shareholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a~~ Note 3, Business Combination ~~within~~with CHW, for more information regarding the Combination Period. However, if the Initial Shareholders should 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 have agreed to waive their rights to its deferred underwriting commission (see Note 7) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be 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 per shares held in the Trust Account. 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 vendor 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, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business execute agreements waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

~~Emerging Growth Company~~

The Company is an emerging growth company as defined in Section 102 (b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), which 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.

Merger.

2. Significant Accounting Policies

~~This may make comparison of the Company’s~~The unaudited condensed consolidated interim financial statement with 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.

~~Note 2 — Restatement of Prior Period Financial Statements~~

In further consideration of the guidance in ASC 480-10-S99 - Distinguishing Liabilities from. Equity, the Company concluded that amounts previously accounted for as permanent equity should have been treated as temporary equity on the Company’s balance sheet. Specifically, redemption provisions not solely within the control of a company require ordinary shares subject to redemption to be classified outside of permanent equity. As the Company’s Class A ordinary shares have a feature whereby the shareholder can redeem the shares which is not in controlinformation of the Company ~~it was concluded that these Class A ordinary shares are subject to ASC 480-10-S99.~~

The Company’s management and the audit committee of the Company’s Board of Directors concluded that it is appropriate to restate certain items on the Company’s previously issued balance sheet dated as of July 20, 2020, the date that the Initial Public Offering closed, that were previously reported on a Current Report on Form 8-K filed with the SEC on July 26, 2021. The restated classification and reported values of ordinary shares subject to redemption as accounted for under ASC 480-10-S99 are included in the financial statements herein.

~~The following tables summarize the effect of the restatement on each financial statement line item as of the dates, and for the period, indicated:~~

As Reported

Adjustment

As Restated
Balance Sheet






Ordinary shares subject to redemption

$
117,092,620

$
7,907,380

$
125,000,000
Ordinary shares, $0.0001 par value

397

(85)

312
Additional paid-in-capital

5,015,501

(5,015,501)

—
Retained earnings

(15,897)

(2,891,794)

(2,907,691)
Total liabilities and shareholders’ equity

$
122,092,621

$
—

$
122,092,621

~~Note 3 — Summary of Significant Accounting Policies~~

~~Basis of Presentation~~

The accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC.

~~The Company~~ has sufficient liquidity to meet its anticipated obligations over the next year from the date of issuance of these financial statements. In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, management has determined that the Company has access to funds from the closing of Initial Public Offering that are sufficient to fund the working capital needs of the Company until the earlier of the consummation of a Business Combination and one year from the date of the issuance of these financial statements.

~~The accompanying unaudited condensed financial statements have~~ been prepared in accordance with ~~U.S. GAAP for interim financial information~~Article 10 of the Securities and ~~in accordance with the instructions to Form 10-Q and~~Exchange Commission’s (“SEC”) Regulation S-X. Accordingly, as permitted by Article 810 of Regulation S-X, it does not include all of the ~~SEC. Certain~~ information ~~or footnote disclosures normally included~~required by generally accepted accounting principles in the U.S. (“U.S. GAAP”) for complete financial statements. The condensed consolidated balance sheet as of December 31, 2022 was derived from the audited financial statements ~~prepared in accordance with GAAP have been condensed or omitted pursuant to the rules~~at that date and ~~regulations of the SEC for interim financial reporting. Accordingly, they do~~does not include all the ~~information~~disclosures required by U.S. GAAP, as permitted by Article 10 of Regulation S-X. The Company’s unaudited condensed consolidated financial statements as of September 30, 2023 and ~~footnotes necessary~~ for ~~a comprehensive presentation~~the three and nine months ended September 30, 2023 and 2022 include Wag! Group Co. and all of ~~financial position, results of operations or cash flows.~~its subsidiaries. In the opinion of management, the accompanying ~~unaudited condensed~~ financial ~~statements include~~information contains all adjustments, consisting of a normal ~~and~~ recurring ~~nature, which are~~adjustments, necessary ~~for a fair presentation~~to state fairly the Company’s unaudited condensed consolidated financial statements as of ~~the financial position, operating results~~September 30, 2023 and ~~cash flows~~ for the ~~periods presented. Interim~~three and nine months ended September 30, 2023 and 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, or the 2022 10-K. Operating results for the three and nine months ended September 30, 2023 and 2022 are not necessarily indicative of the results that may be expected for ~~a full year.~~

the year ending December 31, 2023.

~~Table of Contents~~

Use of Estimates

The preparation of ~~unaudited~~ condensed consolidated financial statements in conformity with U.S. GAAP requires ~~the Company’s~~ management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and ~~disclosure~~disclosures as of ~~contingent assets and liabilities at~~ the date of the ~~unaudited~~ condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. ~~Actual results could differ from those estimates.~~

~~Cash and Cash Equivalents~~

The Company ~~considers all short-term investments with an original maturity of three months or less when purchased~~bases its estimates on various factors, including historical experience, and on various other assumptions that are believed to be ~~cash equivalents. The Company did 0t have any cash equivalents as of September 30, 2021.~~

~~Investments Held in Trust Account~~

~~The Company’s portfolio of investments held in~~reasonable under the ~~Trust Account is comprised of investments in money market funds that invest in U.S. government securities. The Company’s investments held in the Trust Account~~circumstances, when these carrying values are ~~classified as trading securities. Trading securities~~not readily available from other sources.

Significant items subject to estimates and assumptions include, but are presented on the unaudited condensed balance sheet 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 interest earned on marketable securities held in Trust Account in the accompanying unaudited condensed statement of operations. The estimatednot limited to, fair values of ~~investments held~~financial instruments, assumptions used in the ~~Trust Account are determined using available market information. At September 30, 2021, substantially all~~valuation of common and preferred stock, valuation of stock-based compensation and warrants, and the ~~assets held in the Trust Account were held in U.S. Treasury securities.~~

~~Ordinary Shares Subject to Possible Redemption~~

~~The Company accounts~~valuation allowance for ~~its Ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities~~deferred income taxes. Actual results may differ from Equity.”. Ordinary shares subject to mandatory redemption, if any, are classified as a liability instrument and is measured at fair value. Conditionally redeemable Ordinary shares (including Ordinary shares 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) are classified as temporary equity. At all other times, Ordinary shares are classified as shareholders’ equity. The Company’s Public Shares features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2021, 12,500,000 shares of Ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the Company’s condensed balance sheet.

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of the redeemable ordinary shares are affected by charges against additional paid-in capital and accumulated deficit.

~~At September 30, 2021, the Class A ordinary shares reflected in the condensed balance sheet is reconciled in the following table:~~

Gross proceeds

$
125,000,000
Less:


Fair value of Public Warrants at issuance

(16,548,464)
Redeemable shares issuance costs

(6,187,584)
Plus:


Accretion of carrying value to redemption value

22,736,048
Class A ordinary shares subject to possible redemption

$
125,000,000

~~Warrant Instruments~~

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the instruments’ specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own ordinary shares and whether the instrument holders

Table of Contents

could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the instruments are outstanding. As discussed in Note 9, the Company determined that upon further review of the warrant agreement, management concluded that the Public Warrants and Private Placement Warrants issued pursuant to the warrant agreement qualify for equity accounting treatment.

~~Concentration of Credit Risk~~

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the federal depository insurance coverage of $250,000. At September 30, 2021, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such account.

~~Financial Instruments~~

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying condensed balance sheet, primarily due to their short-term nature.

~~Net Income (Loss) Per Share~~

The Company has 2 classes of shares, which are referred to as Redeemable Ordinary Shares (the “Ordinary Shares”) and Non-Redeemable Ordinary Shares (the “Founder Shares”). Earnings and losses are shared pro rata between the 2 classes of shares. Public and private warrants to purchase 15,625,000 Ordinary Shares at $11.50 per share were issued on September 1, 2021. At September 30, 2021, 0 warrants have been exercised. The 15,625,000 potential Ordinary shares for outstanding warrants to purchase the Company’s stock were excluded from diluted earnings per share for the period ended September 30, 2021 because the warrants are contingently exercisable, and the contingencies have not yet been met. Specifically, the warrants have traded below $16.50 per shares since they were issued through September 30, 2021. As a result, diluted net income/(loss) per common share is the same as basic net income/(loss) per common share for the period. The table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net loss per share for each class of common stock:

For the period January 12,

For the three months ended

2021 (inception) through

September 30,

September 30,

2021

2021
Basic and diluted net income per share:








Numerator:

Allocation of net income, including accretion of temporary equity

$
(58,048)

$
(46,201)

$
(36,633)

$
(83,488)

Denominator:

Weighted average shares outstanding

3,983,516

3,170,467

1,388,889

3,165,278

Basic and dilution net income per share

$
(0.01)

$
(0.01)

$
(0.03)

$
(0.03)

~~Income Taxes~~

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial 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 a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Deferred tax assets and liabilities were deemed to be de minimis as of September 30, 2021.

FASB ASC 740, “Income Taxes”, 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 be more likely than not to be sustained upon examination by taxing authorities. There were 0 unrecognized tax benefits

~~Table of Contents~~

as of September 30, 2021. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company is not currently aware of any issues under review that could result in significant payments, accruals, or material deviation from its position. The Company is subject to tax examinations by major taxing authorities since inception. There is currently no taxation imposed by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the Company’s financial statements. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

There is currently no taxation imposed by the Government of the Cayman Islands. The Company has no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. Consequently, income taxes are not reflected in the Company’s financial statements.

~~Recent~~Recently Adopted Accounting Pronouncements

In ~~August 2020,~~June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU changes the impairment model for most financial assets, requiring the use of an expected loss model which requires entities to estimate the lifetime expected credit loss on financial assets measured at amortized cost. Such credit losses will be recorded as an allowance to offset the amortized cost of the financial asset, resulting in a net presentation of the amount expected to be collected on the financial asset. In addition, credit losses relating to available-for-sale debt securities will now be recorded through an allowance for credit losses rather than as a direct write-down to the security. The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of this guidance during the first quarter of 2023 did not have a material impact on the Company’s condensed consolidated financial statements.

New Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, ~~Debt —~~ Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and ~~Hedging —~~ 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”) ~~to simplify~~. This ASU simplifies the accounting for convertible instruments by eliminating certain ~~financial instruments. ASU 2020-06 eliminates the current~~accounting models, ~~that require separation of beneficial conversion and cash~~resulting in fewer embedded conversion features being separately recognized from ~~convertible instruments~~the host contract, and ~~simplifies~~also amends the ~~derivative~~guidance for derivatives scope exception ~~guidance pertaining to equity classification of~~for contracts in an entity’s own ~~equity. The new standard also introduces additional disclosures~~equity to reduce form-over-substance-based accounting conclusions. Additionally, the amendments in this ASU affect the diluted EPS calculation for convertible ~~debt and freestanding instruments~~instruments. It requires that ~~are indexed to and~~the effect of potential share settlement be included in the diluted EPS calculation when a convertible instrument may be settled in ~~an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use~~cash or shares; the if-converted method as opposed to the treasury stock method is required to calculate diluted EPS for ~~all~~these types of convertible instruments. ~~ASU 2020-06 is~~The amendments in this update are effective for fiscal years beginning after December 15, ~~2021, and should be applied on a full or modified retrospective basis. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020,~~2023, including interim periods within those fiscal ~~years.~~years, with early adoption permitted. The Company ~~adopted~~is evaluating the potential impact of this adoption on its condensed consolidated financial statements.

In August 2023, the FASB issued ASU ~~2020-06~~No. 2023-05, Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement (“ASU 2023-05”). This ASU requires a joint venture to recognize and initially measure its assets and liabilities using a new basis of accounting upon formation, i.e. at fair value (with exceptions to fair value measurement that are consistent with the business combinations guidance). The amendments in this update are effective for all newly-formed joint venture entities with a formation date on or after January 1, ~~2021.~~2025, with early adoption permitted. Joint ventures formed prior to the adoption date may elect to apply the new guidance retrospectively back to their original formation date. The Company is evaluating the potential impact of this adoption on its condensed consolidated financial statements.

Equity Method Investment

During the fourth quarter of ~~ASU 2020-06~~2022, the Company’s subsidiary, Compare Pet Insurance Services, Inc. entered into an agreement to invest $1.5 million for 49% ownership in a new limited liability company, which was funded in the first quarter of 2023. The investment was accounted for as an equity method investment, as the Company had less than 50% ownership and did not control the entity. During the nine months ended September 30, 2023, the Company recognized $1.8 million of Royalty expenses within its condensed consolidated statements of operations related to fees payable to the equity method investee.

During the third quarter of 2023, the Company acquired the outstanding 51% ownership of the limited liability company for an aggregate purchase price of approximately $2.2 million. The Company accounted for the transaction as an asset acquisition using the cost accumulation model to determine the cost to be allocated to the assets acquired, which resulted in the derecognition of royalties payable to the equity method investee of approximately $1.8 million and the recognition of intangible assets acquired of approximately $0.2 million. As a result of the transaction, the limited liability company became a wholly-owned subsidiary of the Company and the Company began consolidating the entity as part of its condensed consolidated financial statements.

Table of Contents

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Through its Services offerings, the Company principally generates Services revenue from service fees charged to PCGs to successfully complete a pet care service to a Pet Parent via the platform. The Company also generates revenue from subscription fees paid by Pet Parents for Wag! Premium and fees paid by PCGs to join the platform. Additionally, through its Wellness and Pet Food & Treat offerings, the Company generates revenue through commission fees paid by third-party service partners in the form of ‘revenue-per-action’ or conversion activity defined in our agreements with the respective third-party service partner. For some of the Company’s arrangements with third-party service partners, the transaction price is considered variable, and an estimate of the transaction price is recorded when the action occurs. The estimated transaction price used in the variable consideration is based on historical data with the respective third-party service partner and the consideration is measured and settled monthly.

The Company enters into terms of service with PCGs and Pet Parents to use the platform (“Terms of Service Agreements”), as well as an Independent Contractor Agreement (“ICA”) with PCGs (the ICA, together with the Terms of Service Agreements, the “Agreements”). The Agreements govern the fees the Company charges the PCGs and Pet Parents, where applicable, for each transaction. Upon acceptance of a transaction, PCGs agree to perform the services that are requested by a Pet Parent. The acceptance of a transaction request combined with the Agreements establishes enforceable rights and obligations for each transaction. A contract exists between the Company and its customers after both the PCGs and Pet Parent accept a transaction request and the PCGs ability to cancel the transaction lapses. For Wag! Wellness and Pet Food & Treat revenues, the Company enters into agreements with third-party service partners which define the action by a Pet Parent that results in the Company earning and receiving a commission fee from the third-party service partner.

Wag!’s service obligations are performed, and revenue is recognized for fees earned related to the facilitation and completion of a pet service transaction between the Pet Parent and the PCG through the use of our platform. Revenue generated from the Company’s Wag! Premium subscription is recognized on a ratable basis over the contractual period, which is generally one month to one year depending on the type of subscription purchased by the Pet Parent. Unused subscription amounts are included in Deferred revenue within the Company’s condensed consolidated balance sheets. Revenue related to the fees paid by the PCG to join the platform are recognized upon processing of the applications. Wag! Wellness and Pet Food & Treat revenue performance obligation is completed, and revenue is recognized when an end-user completes an action or conversion activity.

Principal vs. Agent Considerations

Judgment is required in determining whether the Company is the principal or agent in transactions with PCGs and Pet Parents. The Company evaluated the presentation of revenues on a gross or net basis based on whether the Company controls the service provided to the Pet Parent and is the principal (i.e., “gross”), or whether the Company arranges for other parties to provide the service to the Pet Parent and is an agent (i.e. “net”).

The Company’s role in a transaction on the platform is to facilitate PCGs finding, applying, and completing a successful pet care service for a Pet Parent. The Company has concluded it is the agent in transactions with PCGs and Pet Parents because, among other factors, the Company’s role is to facilitate pet service opportunities and it is not responsible for nor controls the delivery of pet services provided by the PCGs to the Pet Parents.

Gift Cards

The Company sells gift cards that can be redeemed by Pet Parents through the platform. Proceeds from the sale of gift cards are deferred and recorded as contract liabilities in Deferred revenue within the Company’s condensed consolidated balance sheets until Pet Parents use the card to place orders on our platform. When gift cards are redeemed, revenue is recognized on a net basis as the difference between the amounts collected from the purchaser less amounts remitted to PCGs. Unused gift cards are included in Deferred revenue within the Company’s consolidated balance sheets.

The Company recognizes breakage revenue based on historical redemption patterns.

Table of Contents

Incentives

The Company offers discounts and promotions to encourage use of the Company’s platform. These promotions are generally pricing actions in the form of discounts that reduce the price Pet Parents pay PCGs for services. These promotions result in a lower fee earned by the Company from the PCG. Accordingly, the Company records the cost of these promotions as a reduction of revenues at the time the PCG service is completed. Discounts on services offered through our subscription program are also recorded as a reduction of revenues.

Loss Per Share

The Company follows the two-class method when computing loss per share when shares issued meet the definition of participating securities. The two-class method determines loss per share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

For periods in which the Company reports net losses, diluted loss per share is the same as basic loss per share because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

3. Business Combination with CHW

As described in Note 1, Organization and Description of Business, the Merger with CHW was consummated on August 9, 2022. The CHW Business Combination was accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America. Under this method of accounting, CHW was treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the CHW Business Combination was treated as the equivalent of Wag! issuing shares for the net assets of CHW, accompanied by a recapitalization. The shares and net earnings (loss) per common share prior to the Merger have been retroactively restated as shares reflecting the exchange ratio established in the Merger (0.97 shares of the Company’s common stock for each share of Legacy Wag! common stock). The net assets of CHW have been recognized at carrying value, with no goodwill or other intangible assets recorded. Wag! accounted for the acquisition of CHW based on the amount of net assets acquired upon consummation.

Wag! has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

•Wag!’s shareholders have a majority of the voting power of the Post-Combination Company;

•Wag! appointed the majority of the board of directors of the Post-Combination Company;

•Wag!’s existing management comprises the management of the Post-Combination Company;

•Wag! comprises the ongoing operations of the Post-Combination Company; and

•Wag! is the larger entity based on historical revenue and has the larger employee base.

In connection with the Special Meeting and the CHW Business Combination, the holders of 9,593,970 shares of CHW’s ordinary shares, par value $0.0001 per share, exercised their right to redeem their shares for cash at a redemption price of approximately $10.00 per share, for an aggregate redemption amount of $95,939,700. As a result, the Company received approximately $29.1 million, of which $23.9 million was placed in escrow (and classified as Restricted Cash) in accordance with the Forward Share Purchase Agreements (see section below titled “Forward Share Purchase Agreements” for additional information). As of the date of the Merger, the Company also entered into a financing arrangement Blue Torch Finance, LLC and received net proceeds of $29.4 million from a Secured Note (see Note 8, Long-Term Debt, for additional information). Additionally, the Company received $5 million from a PIPE and Backstop Investor as a result of the agreement entered into by CHW with the PIPE and Backstop Investor party on February 2, 2022 that closed immediately prior to the Merger.

Upon the consummation of the Merger, the following transactions occurred (the “Conversion”):

i.all outstanding shares of Legacy Wag!’s preferred stock, except for Legacy Wag! Series P Shares (as described in part (vi) below), were converted into shares of the Company’s common stock, par value $0.0001 per share, at the then-effective conversion rate as calculated pursuant to the CHW Business Combination Agreement;

Table of Contents

ii.the cancellation of each issued and outstanding share of Legacy Wag!’s common stock and the conversion into the right to receive a number of shares of the Company’s common stock equal to the exchange ratio of 0.97 shares of the Company’s common stock for each share of Legacy Wag! common stock;

iii.the conversion of 91,130 warrants issued and outstanding by Legacy Wag! in 2017 to two lenders (the “Legacy Wag! Common Warrants”) into warrants exercisable for shares of the Company’s common stock with the same terms except for the number of shares exercisable and the exercise price, each of which were adjusted using an exchange ratio of 0.97 for Legacy Wag! Common Warrants (further described in Note 10, Redeemable Preferred Stock and Stockholders’ Deficit);

iv.the conversion of all outstanding vested and unvested options to purchase shares of Legacy Wag! common stock (the “Legacy Wag! Options”) into options exercisable for shares of the Company’s common stock with the same terms and conditions as were applicable to the Legacy Wag! Options immediately prior to the Conversion, except for the number of shares exercisable and the exercise price, each of which were adjusted using the exchange ratio of 0.97 for Legacy Wag! Options;

v.the conversion of the outstanding restricted stock unit award covering shares of Legacy Wag! common stock (each, a “Legacy Wag! RSU Award”) into awards covering a number of shares of Wag! common stock (rounded down to the nearest whole number) with the same terms and conditions as were applicable to the Legacy Wag! RSU Awards immediately prior to the Conversion, except for the number of shares subject to the award, which was adjusted using the exchange ratio of 0.97 for Legacy Wag! RSU Awards;

vi.the conversion of 1,100,000 shares of Legacy Wag! Series P Shares into the Company’s common stock on a one-for-one basis;

vii.the issuance and sale of 500,000 CHW ordinary shares for a purchase price of $10.00 per share and an aggregate purchase price of $5,000,000 immediately prior to or substantially concurrently with the Merger Date;

viii.immediately prior to the Effective Time, each CHW ordinary share (including any Sponsor Shares (as defined below) not forfeited) was converted into shares of the Company’s common stock;

ix.the cancellation of 13,327 founder shares held by the Sponsor in accordance with the terms of the CHW Founders Stock Letter (as defined below) and the CHW Business Combination Agreement;

x.the issuance of 300,000 Wag! Community Shares (“Community Shares”) that the Company may distribute to members of the pet wellness and welfare community as identified by our officers and directors; and

xi.the cancellation of 20,000 founder shares held by Sponsor in connection with the CHW Business Combination and in accordance with the CHW Founders Stock Letter and the CHW Business Combination Agreement.

Forward Share Purchase Agreements

Simultaneously with the closing of the CHW Business Combination, the Company deposited $24.7 million into an escrow account pursuant to Forward Share Purchase Agreements (“FPAs”) entered into by CHW on August 5, 2022. In accordance with the FPAs, on the date of the purchase by the Company of the Investor Shares (“Put Date”), the participating investors could elect to sell and transfer to the Company, and the Company would purchase, in the aggregate, up to 2,393,378 shares of common stock of the Company, consisting of shares of common stock then held by the Investors and not sold and repurchased by the Investor since the Merger Date. In conjunction with the sale of the Investor Shares to the Company, each Investor was obligated to notify the Company and the Escrow Agent in writing five business days prior to the Put Date whether or not such Investor was exercising its right to sell the Investor Shares that such Investor held to the Company pursuant to the FPAs (each, a “Shares Sale Notice”). If a Shares Sale Notice was timely delivered by an Investor to the Company and the Escrow Agent, the Company was obligated to purchase from such Investor the Investor Shares held by such Investor on the Put Date. If the Investor sold any Investor Shares in the open market after the Merger Date and prior to Put Date (such sale, the “Early Sale” and such shares, the “Early Sale Shares”), the Escrow Agent would release from the escrow account to the Company an amount equal to $10.30 per Early Sale Share sold in such Early Sale.

Table of Contents

The Company’s purchase of the Investor Shares will be made with funds from the escrow account attributed to the Investor Shares. In the event that an Investor sold any Investor Shares in an Early Sale, it was required to provide notice to the Company and the Escrow Agent within three business days of such sale, and the Escrow Agent would release from the escrow account for the Company’s use without restriction an amount equal to the pro rata portion of the escrow attributed to the Investor Shares which the Investor has sold. In the event that the Investor chooses not to sell to the Company any Investor Shares that the Investor owned as of the three-month anniversary of the Merger Date, the Escrow Agent would release all remaining funds from the escrow account for the Company’s use without restriction. The Company accounts for the FPAs as a derivative liability, remeasured to fair value on a recurring basis, with changes in fair value recorded to earnings. For more information, see Note 4, Fair Value Measurements.

On November 1, 2022, the Company entered into an amendment to an FPA (the “Amended Agreement”) for approximately 1.0 million shares. The Amended Agreement modified the date by which such holders may elect to have the Company repurchase their shares to November 23, 2022. No other terms were modified. Effective November 9, 2022, holders of 1.4 million shares subject to Forward Share Purchase Agreements, elected to have the Company repurchase their remaining shares for an aggregate repurchase price of $14.8 million. The remaining investor and holder of 1.0 million shares did not elect to sell its shares to the Company as of the extension date per the Amended Agreement and, as such, the Escrow Agent released the corresponding funds from the escrow account for the Company’s use without restriction in total of $9.8 million.

Financing Agreement

On the Merger Date, the Company entered into a financing agreement with Blue Torch Finance, LLC. See Note 8, Long-Term Debt, for additional information.

Reverse Recapitalization

The following table reconciles the elements of the CHW Business Combination, accounted for as a reverse recapitalization, to the Condensed Consolidated Statements of Cash Flows and the Condensed Consolidated Statements of Stockholders' Deficit for the year ended December 31, 2022):


	Reverse Recapitalization
	(in thousands)
Cash – CHW’s trust (net of redemptions)	$	28,330
Cash – PIPE and Backstop Investor	5,202
Payment of transaction costs and other related expenses	(12,488)
Payment of deferred transaction costs	(9,318)
Proceeds from merger with CHW, net of issuance costs as of the Merger Date	11,726
Reversal of APIC impact recorded upon issuance of Forward Share Purchase Agreements (“FPAs”) in August 2022	(23,203)
Cash received from FPA at Put Date	9,837
APIC impact of FPA at Put Date, net of cash received	4,229
Proceeds from merger with CHW, net of issuance costs as of December 31, 2022	$	2,589

Table of Contents


						Number of Shares
						(in thousands)
CHW public shares, prior to redemptions(1)						12,500
Less redemption of CHW shares						(9,594)
CHW public shares, net of redemptions						2,906
Sponsor Shares						3,118
PIPE and Backstop Shares						500
CHW Business Combination and Financing Shares						6,524
Other share activity (Analyst Shares(2), Warrant Exercises)						122
CHW Business Combination, Financing Shares and Other Related Shares						6,646
Legacy Wag! Shares(3)						31,100
Total shares of common stock immediately after CHW Business Combination						37,746

(1) Includes 2,393,378 shares of common stock of the Company subject to the Forward Share Purchase Agreements.

(2) 50,000 shares were issued to Craig-Hallum Capital Group LLC at a price of $4.83 per share.

(3) The number of Legacy Wag! shares was determined from the shares of Legacy Wag! common and preferred stock outstanding immediately prior to the closing of the CHW Business Combination of 30,863,283, which are presented net of the common and preferred stock redeemed, converted at the exchange ratio of approximately 0.97 shares of the Company’s common stock for each share of Legacy Wag! common and preferred stock, with the exception of 1,100,000 Legacy Wag! Series P Shares which converted into the Company’s common stock on a one-for-one basis.

Earnout Compensation

In connection with the CHW Business Combination, Legacy Wag! stockholders and certain members of management and employees of Legacy Wag! that held either a share of common stock, a Legacy Wag! Option or a Legacy Wag! RSU Award (collectively “Eligible Company Equityholders”) at the date of the Merger have the contingent right to Earnout Shares. The aggregate number of Earnout Shares and Management Earnout Shares is 10,000,000 and 5,000,000 shares of Wag! common stock, respectively. The Earnout Shares will be issued following the CHW Business Combination, only if certain Wag! share price conditions are met over a three-year period from the effective Merger Date. The Earnout Shares are subject to the occurrence of certain triggering events based on a three year period from the Merger Date as defined in the CHW Business Combination Agreement as:

1.5,000,000 shares are earned if the stock price of the Company is or exceeds $12.50 for 20 out of any 30 consecutive trading days (“Triggering Event I”)

2.5,000,000 shares are earned if the stock price of the Company is or exceeds $15.00 for 20 out of any 30 consecutive trading days (“Triggering Event II”); and

3.5,000,000 shares are earned if the stock price of the Company is or exceeds $18.00 for 20 out of any 30 consecutive trading days (“Triggering Event III”) (collectively, the “Triggering Events”).

Additionally, if there is a change of control transaction, the agreed upon selling price of the Company on a per share basis, would be the fair value of the shares inclusive of the resulting triggered Earnout Shares upon consummation of the proposed transaction. The per share price in a change in control would be used to determine whether the Triggering Events have been met, and depending on the per share price, a certain number of shares will be issued.

The Earnout Shares and Management Earnout Shares are classified as equity transactions at initial issuance and at settlement when and if the triggering conditions are met. The Earnout Shares are equity-classified since they do not meet the liability classification criteria outlined in ASC 480, Distinguishing Liabilities from Equity, and are both (i) indexed to the Company’s own shares and (ii) meet the criteria for equity classification. Until the shares are issued upon a Triggering Event, the Earnout Shares are not included in shares outstanding. As of the date of the CHW Business Combination, the Earnout Share awards had a total fair value of $23.9 million determined using a Monte Carlo fair value methodology in each of the $12.50, $15.00, and $18.00 Earnout tranches multiplied by the number of Earnout Shares allocated to each individual pursuant to the calculation defined in the CHW Business Combination Agreement. The following table provides a range of assumptions used to determine fair value:

Table of Contents


	Stock Price		Dividend Yield		Volatility		Risk-Free Interest Rate		Expected Term
Earnout Shares	$	8.28	—	%	44.00	%	3.20	%	3 years

As a result of the issuance of Community Shares, stock-based compensation expense incurred in connection with the Earnout Shares, and fair value measurement of the FPAs, the Company incurred $39.5 million in transaction-related charges during the three and nine months ended September 30, 2022 in Platform operations and support, Sales and marketing, General and administrative, and Other expense, net within its condensed consolidated statements of operations.

4. Fair Value Measurements

The following tables provide information about the Company’s financial instruments that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques utilized to determine such values as of September 30, 2023 and December 31, 2022:


	September 30, 2023
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Cash equivalents:
Money market funds	$	13,797	$	—	$	—	$	13,797
Total cash equivalents	13,797		—		—		13,797
Total assets at fair value	$	13,797	$	—	$	—	$	13,797


	December 31, 2022
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Cash equivalents:
Money market funds	$	31,690	$	—	$	—	$	31,690
Total cash equivalents	31,690		—		—		31,690
Total assets at fair value	$	31,690	$	—	$	—	$	31,690

The Company’s money market funds were valued using Level 1 inputs because they were valued using quoted prices in active markets. As of September 30, 2023 and December 31, 2022, the Company’s cash equivalents approximated their estimated fair value. As such, there are no unrealized gains or losses related to the Company’s cash equivalents.

5. Leases

The Company leases office space under non-cancellable lease agreements which expire between 2023 and 2028. Certain of these arrangements have free rent, escalating rent payment provisions, lease renewal options, and tenant allowances. Rent expense is recognized on a straight-line basis over the noncancellable lease term.

In June 2023, the Company entered into a non-cancellable agreement to lease office space in Phoenix, Arizona to replace its existing office space in Phoenix. The base rent is approximately $0.9 million in the aggregate over the original lease term of 65 months from the commencement date.

Table of Contents

As of September 30, 2023, maturities of operating lease liabilities were as follows:


	Amount
	(in thousands)
2023	$	20
2024	414
2025	424
2026	216
2027	175
2028	163

Total lease payments	1,412
Less: imputed interest	(213)
Present value of lease liabilities	$	1,199

As the implicit rate in the Company's leases is generally unknown, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The Company gives consideration to its existing credit arrangements, term of the lease, total lease payments and adjust for the impacts of collateral, as necessary, when calculating its incremental borrowing rates. The lease terms may include options to extend or terminate the lease when it is reasonably certain the Company will exercise any such options. The weighted-average remaining lease term and the weighted-average discount rate used to calculate the present value of lease liabilities are as follows:


	September 30, 2023		December 31, 2022
Weighted-average remaining lease term	4.0 years		2.3 years
Weighted-average discount rate	7.8	%	8.6	%

6. Goodwill and Other Intangible Assets

Goodwill recorded in connection with the Company’s acquisitions is primarily attributable to the assembled workforce and anticipated operational synergies. Goodwill is reviewed for impairment at least annually, absent any interim indicators of impairment. Goodwill was $4.6 million and $1.5 million as of September 30, 2023 and December 31, 2022, respectively. The increase in goodwill during the nine months ended September 30, 2023 was due to the acquisitions of businesses during 2023 as further discussed in Note 14, Acquisitions.

The gross carrying amounts and accumulated amortization of the Company’s intangible assets with determinable lives as of September 30, 2023 and December 31, 2022 were as follows:


	September 30, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in thousands)
Finite-lived intangible assets:
Customer relationships and licenses	$	7,686	$	(1,268)	$	6,418
Developed technology	1,073		(415)		658
Trademarks	1,052		(141)		911
Pharmacy board licenses	5		(5)		—
Total finite-lived intangible assets	9,816		(1,829)		7,987
Indefinite-lived intangible assets	49		—		49
Total intangible assets	$	9,865	$	(1,829)	$	8,036

Table of Contents


	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in thousands)
Finite-lived intangible assets:
Customer relationships and licenses	$	2,166	$	(422)	$	1,744
Developed technology	783		(226)		557
Trademarks	291		(56)		235
Pharmacy board licenses	5		—		5
Total finite-lived intangible assets	3,245		(704)		2,541
Indefinite-lived intangible assets	49		—		49
Total intangible assets	$	3,294	$	(704)	$	2,590

Amortization expense related to customer relationships and licenses, developed technology, trademarks, and pharmacy board licenses is recorded in depreciation and amortization within the Company’s condensed consolidated statements of operations. Amortization expense of intangible assets with determinable lives was $0.4 million and $0.1 million for the three months ended September 30, 2023 and 2022, respectively, and $1.1 million and $0.4 million for the nine months ended September 30, 2023 and 2022, respectively.

7. Contract Liabilities

The timing of services revenue recognition may differ from the timing of invoicing to or collections from customers. The Company’s contract liabilities balance, which is included in Deferred revenue within the Company’s condensed consolidated balance sheets, is primarily comprised of unredeemed gift cards, prepayments received from consumers for Wag! Premium subscriptions, and certain consumer credits for which the revenue is recognized over time as they are used for services on its platform. The contract liabilities balance was $1.8 million and $2.2 million as of September 30, 2023 and December 31, 2022, respectively. Revenues recognized related to the Company’s contract liabilities as of the beginning of the year was $0.6 million and $0.3 million for the three months ended September 30, 2023 and 2022, respectively, and $1.5 million and $0.8 million for the nine months ended September 30, 2023 and 2022, respectively.

8. Long-Term Debt

Paycheck Protection Program Loan

On August 5, 2020, the Company received loan proceeds of approximately $5.1 million from a financial institution pursuant to the Paycheck Protection Program (the “PPP Loan”) established by the Coronavirus Aid, Relief, and Economic Security Act, of which $3.5 million was subsequently forgiven. The PPP Loan matures on August 5, 2025 and bears interest at a fixed rate of 1.00%. Principal and interest payments are payable monthly.

During the nine months ended September 30, 2023 and 2022, the Company repaid a total amount of $0.3 million and $0.3 million, respectively, on amounts outstanding under the PPP Loan. As of September 30, 2023 and December 31, 2022, the amount outstanding under the PPP Loan was $0.9 million and $1.2 million, respectively.

During the three months ended September 30, 2023 and 2022, the Company recognized $2 thousand and $3 thousand, respectively, of interest expense relating to the PPP Loan. During the nine months ended September 30, 2023 and 2022, the Company recognized $8 thousand and $11 thousand, respectively, of interest expense relating to the PPP Loan.

Table of Contents

Blue Torch Financing and Warrant Agreement

On August 9, 2022, Legacy Wag! entered into a financing agreement and warrant agreement with Blue Torch Finance, LLC (together with its affiliated funds and any other parties providing a commitment thereunder, including any additional lenders, agents, arrangers or other parties joined thereto after the date thereof, collectively, the “Debt Financing Sources”), pursuant to which, among other things, the Debt Financing Sources agreed to extend an approximately $32.2 million senior secured term loan credit facility (the “Credit Facility”). Legacy Wag! is the primary borrower under the Credit Facility, the Company is a parent guarantor and substantially all of the Company’s existing and future subsidiaries are subsidiary guarantors. The Credit Facility is secured by a first priority security interest in substantially all assets of the Company and the guarantors.

The Credit Facility bears interest at a floating rate of interest equal to, at Legacy Wag’s option, Secured Overnight Financing Rate (“SOFR”) plus 10.00% per annum or the reference rate plus 9.00% per annum, with the reference rate defined as the greatest of:

•2.00% per annum;

•the federal funds effective rate plus 0.50% per annum;

•one-month SOFR plus 1.00% per annum; and

•the prime rate announced by the Wall Street Journal from time to time.

SOFR will be subject to a floor of 1.00% per annum, and the reference rate will be subject to a floor of 2.00% per annum. Interest will be payable in arrears at the end of each SOFR interest period (but at least every three months) for SOFR borrowings and quarterly in arrears for reference rate borrowings.

The Credit Facility matures in three years after the Closing Date and is subject to quarterly amortization payments of principal, in an aggregate amount equal to 2.00% of the principal amount of the Credit Facility in the first year after closing, 3.00% of the principal amount of the Credit Facility in the second year after closing, and 5.00% of the principal amount of the Credit Facility in the third year after closing. The remaining outstanding principal balance of the Credit Facility is due and payable in full on the maturity date. In addition to scheduled amortization payments, the Credit Facility contains customary mandatory prepayment provisions that require principal prepayments of the Credit Facility upon certain triggering events, including receipt of asset sale proceeds outside of the ordinary course of business, receipt of certain insurance proceeds, and receipt of proceeds of non-permitted debt. The Credit Facility may also be voluntarily prepaid at any time, subject to the payment of a prepayment premium. The prepayment premium is payable for voluntary payments and certain mandatory prepayments, and is equal to an interest make-whole payment plus 3.00% of the principal amount of such prepayment in the first year after closing, 2.00% of the principal amount of such prepayment in the second year after closing, and 0% thereafter.

The Credit Facility contains customary representations and warranties, affirmative covenants, financial reporting requirements, negative covenants and events of default. The negative covenants included in the Financing Agreement impose restrictions on the ability of Legacy Wag, the guarantors, and their subsidiaries to incur indebtedness, grant liens, make investments, make acquisitions, declare and pay restricted payments, prepay junior or subordinated debt, sell assets, and enter into transactions with affiliates, in each case, subject to certain customary exceptions. In addition, the Credit Facility requires compliance with certain financial covenants, specifically a monthly minimum revenue covenant and a minimum liquidity covenant.

Legacy Wag’s obligations under the Blue Torch Financing Agreement are guaranteed by certain of its subsidiaries meeting materiality thresholds set forth in the Blue Torch Financing Agreement (the "Financing Agreement"). Such obligations, including the guarantees, are secured by substantially all of the personal property of the Company and its subsidiary guarantors, including pursuant to a Security Agreement entered into on August 9, 2022. The Blue Torch Financing Agreement establishes the following financial covenants: (i) Legacy Wag's trailing annual aggregate revenue shall exceed certain thresholds as of the end of each monthly computation period as defined therein; and (ii) Liquidity shall not be less than $5 million at any time. The Company was in compliance with these covenants as of September 30, 2023. During the first quarter of 2023, the Company received a waiver regarding covenants for timely reporting and execution of agreements with respect the creation of a new wholly owned subsidiary to hold the Dog Food Advisor assets. The facility was fully drawn upon as of September 30, 2023.

As of September 30, 2023 and December 31, 2022, the interest rate for borrowings under the Term Loan was 15.65% and 14.84%, respectively.

Table of Contents

During the nine months ended September 30, 2023 and 2022, the Company repaid a total amount of $0.6 million and zero, respectively, on amounts outstanding under the Credit Facility. As of September 30, 2023 and December 31, 2022, the amount outstanding under the Credit Facility was $31.4 million and $32.0 million, respectively.

During the three months ended September 30, 2023 and 2022, the Company recognized $1.2 million and $0.6 million, respectively, of interest expense relating to the Credit Facility. During the nine months ended September 30, 2023 and 2022, the Company recognized $3.7 million and $0.6 million, respectively, of interest expense relating to the Credit Facility.

On the closing of the Credit Facility, Legacy Wag! also entered into the Lender Warrant Agreement with Vstock Transfer, LLC as warrant agent, pursuant to which affiliates of Blue Torch Capital LP (“Blue Torch”) received 1,896,177 warrants to acquire common stock of the Company, par value $0.0001 per share (“Common Stock”), for $11.50 per whole share (such warrants, the “Lender Warrants”). The Lender Warrants were issued pursuant to the SPAC Warrant Agreement (as defined in the CHW Business Combination Agreement) and are subject to the terms and conditions thereof, as modified (whether reflected in the terms of the Lender Warrants issued on the Merger Date, or in an amendment to or exchange for the Lender Warrants consummated after the Merger Date) to provide that (i) the exercise period of the Lender Warrants will terminate on the earliest to occur of (x) the date that is ten years after completion of the CHW Business Combination, (y) liquidation of the Company, and (z) redemption of the Lender Warrants as provided in the SPAC Warrant Agreement (the “Lender Warrant Expiration Date”), (ii) Blue Torch has the ability to net exercise the Lender Warrants (based on the fair value of the stock at the time of net exercise, fair value being equal to the public trading price at the time of exercise) on a cashless basis, (iii) Blue Torch received the benefit of certain customary representations and warranties from the Company, and (iv) the Lender Warrants are not required to be registered under the Securities Act.

At the date of issuance, the Company classified the Lender Warrants as equity and recognized them in additional paid-in capital within its consolidated balance sheet. As the Lender Warrants were classified as equity, the Company will not remeasure the Lender Warrants each accounting period. The Company estimated the fair value of warrants exercisable for common stock using the Black-Scholes option valuation model. The Black-Scholes option valuation model inputs are based on the estimated fair value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrant, the risk-free interest rates, the expected dividends, and the expected volatility of the price of the Company’s underlying stock.

As the Lender Warrants were classified as equity, the proceeds were allocated based on the relative fair values of the financial instruments issued as a whole.

Total Debt

As of September 30, 2023, annual scheduled principal payments of debt were as follows:


	Amount
	(in thousands)
2023	$	357
2024	1,751
2025	30,227
Total principal payments	$	32,335

9. Commitments and Contingencies

Legal and Other Contingencies

From time to time, the Company may be a party to litigation and subject to claims, including non-income tax audits, in the ordinary course of business. The Company accrues a liability when management believes information available to it prior to the issuance of the consolidated financial statements indicates it is probable a loss has been incurred as of the date of the consolidated financial statements and the amount of loss can be reasonably estimated. The Company adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Legal costs are expensed as incurred. Although the results of litigation and claims cannot be predicted with certainty, management concluded that there was not a reasonable probability that it had incurred a material loss during the periods presented related to such loss contingencies. Therefore, the Company has not recorded a reserve for any such contingencies.

Table of Contents

Given the inherent uncertainties and unpredictability of litigation, the ultimate outcome of ongoing matters cannot be predicted with certainty but the Company believes it has valid defenses with respect to the legal matters pending against it. Nevertheless, the consolidated financial statements could be materially adversely affected in a particular period by the resolution of one or more of these contingencies. Regardless of the outcome, litigation can have an adverse impact on the Company because of judgment, defense, and settlement costs, diversion of management resources, and other factors. Liabilities established to provide for contingencies are adjusted as further information develops, circumstances changes, or contingencies are resolved; such changes are recorded in the accompanying statements of operations during the period of the change and reflected in accrued expenses and other current liabilities on the accompanying consolidated balance sheets.

The Company has been and continues to be involved in numerous legal proceedings related to PCG classification. In California, Assembly Bill No. 5 (AB-5) implemented a presumption that workers are employees. However, AB-2257 exempts agencies providing referrals for certain animal services, including dog walking, from AB-5. The Company believes that it falls within this exemption. Nevertheless, the interpretation or enforcement of the exemption could change. The United States Department of Labor announced on October 11, 2022 that it would publish a Notice of Proposed Rulemaking regarding the classification of workers as independent contractors or employees. We are monitoring the development of the proposed rule and will evaluate any potential impact of the final rule on our operations.

The Company is subject to audits by taxing authorities and other forms of investigation, audit, or inquiry conducted by federal, state, or local governmental agencies. Due to the inherent uncertainties in the final outcome of such matters, the Company can give no assurance that it will prevail in such matters, which could have an adverse effect on the Company’s ~~financial statement.~~

~~Management does~~business. In addition, the Company may be subject to greater risk of legal claims or regulatory actions as it increases and continues its operations in jurisdictions where the laws and regulations governing online marketplaces or the employment classification of service providers who use online marketplaces are uncertain or unfavorable.

In November 2019, California issued an assessment alleging various violations and penalties related to alleged misclassification of pet caregivers who use the Company’s platform as independent contractors. The Company has challenged both the legal basis and the amount of the assessment, of $1.7 million in unemployment insurance contributions for our independent contractors. In April 2022, the California Employment Development Department ("CA EDD") initiated a routine employment tax audit of the Company. We are engaged in ongoing discussions with the CA EDD, including providing additional data that has been requested, in order to determine what, if any, additional assessments are warranted. CA EDD alleges the Company owes approximately $1.3 million in unemployment insurance contributions for our independent contractors. In response, we submitted a Petition for Reassessment and intend to defend ourselves vigorously in this pending matter. The Company believes given the inherent uncertainties of litigation, the outcome of this matter is not considered probable nor estimable and, therefore, the Company has not recorded a reserve.

In August 2018, the New York State Department of Labor (“DOL”) issued an Investigation Report assessing the Company with approximately $0.2 million in unemployment insurance contributions for our independent contractors. In August 2023, the Company completed payments of $0.4 million to the DOL, which represented the amount of the assessment plus interest and was recognized in general and administrative expenses within the Company’s condensed consolidated statement of operations during the third quarter of 2023.

In December 2019, Wag Hotels, Inc. filed a lawsuit against the Company alleging various claims related to breach of contract and trademark infringement. On June 29, 2023, the parties agreed to a settlement amount of $0.5 million to resolve all claims, with an initial payment up front and the remaining payments over 25 months. The settlement was executed on August 30, 2023. The $0.5 million has been recognized in general and administrative expenses within the Company’s condensed consolidated statement of operations during the second quarter of 2023 and the Company has recorded a corresponding liability in Accrued expenses and other current liabilities and Other non-current liabilities within its condensed consolidated balance sheet as of September 30, 2023.

As of September 30, 2023, management did not believe that ~~any recently issued, but not yet effective, accounting pronouncements, if currently adopted,~~the outcome of pending matters would have a material effect on the Company’s financial ~~statement.~~

position, results of operations, or cash flows.

10. Redeemable Preferred Stock and Stockholders’ Equity (Deficit)

Accumulated Other Comprehensive Income

There were no changes in accumulated other comprehensive income for the three and nine months ended September 30, 2023 and 2022.

Table of Contents

~~Note 4 — Initial Public Offering~~

Preferred Stock

On January 28, 2022, Legacy Wag! issued 1.1 million convertible preferred shares (“Series P”) in exchange for $11 million of cash. Series P was issued on substantially similar terms to Legacy Wag!’s other convertible preferred share issuances, except for the Series P convertible share agreement, which contained an adjustment provision that provided for additional shares to be issued based on a formula if the proposed Merger was not completed, as defined in the Company’s Certificate of Incorporation. Upon consummation of the Merger, the Series P shares converted into the Company’s common stock on a one-for-one basis.

In connection with the Merger, all redeemable convertible preferred stock were converted to common stock of the Company. As such, all outstanding shares of Legacy Wag!’s preferred stock, except for Legacy Wag! Series P Shares (as described above), were converted into shares of the Company’s common stock, par value $0.0001 per share, at the then-effective conversion rate of approximately 0.97.

Pursuant to the ~~Initial Public Offering,~~Company’s Certificate of Incorporation, the Company ~~sold 11,000,000 units at a price of $10.00 per Unit for aggregate purchase price of $110,000,000. Each Unit consists of 1 Ordinary shares (such~~is authorized to issue 1,000,000 shares of ~~Ordinary~~preferred stock having a par value of $0.0001 per share. The Company’s board of directors has the authority to issue preferred stock and to determine the rights, preferences, privileges, and restrictions, including voting rights, of those shares. As of September 30, 2023, no shares ~~included~~of preferred stock were issued and outstanding.

Common Stock Warrants

Legacy Wag! Common Warrants

Prior to January 2019, the Company granted 91,310 warrants to purchase common stock. The weighted average exercise price for the warrants were $1.54, and the term of the warrants were 10 years. The warrants were valued on the date of grant using the Black-Scholes Merton (“Black-Scholes”) option pricing model. Upon consummation of the Merger, these warrants were unexercised at the date of the Merger and, as a result, were adjusted using an exchange ratio of 0.97 for Legacy Wag! Common Warrants. During the quarter ended September 30, 2022, the two Legacy Wag! holders net exercised their warrants on a cashless basis for 72,434 shares.

CHW Public and Private Placement Warrants

Prior to the Merger, CHW issued 12,500,000 of Public Warrants and 4,238,636 of Private Warrants (together, the “Warrants”) in connection with its initial public offering to CHW Acquisition Sponsor, LLC, the ~~Units being offered,~~sponsor of CHW. After consummation of the ~~“Public Shares”),~~Merger on August 9, 2022, the 4,238,636 Private Warrants held by the Sponsor were exchanged for 3,895,564 warrants to purchase shares of common stock of the Company issuable upon the exercise of Private Placement Warrants originally issued to CHW and ~~1 redeemable~~the 12,500,000 shares of common stock that are issuable upon the exercise of Public Warrants remained outstanding. Each whole warrant ~~(each, a “Public Warrant”). Each Public Warrant~~ entitles the registered holder to purchase 1one share of ~~Ordinary shares~~common stock at a price of $11.50 per share, subject to adjustment, ~~(see Note 8).~~

~~NaN qualified institutional buyers or institutional accredited investors which are not affiliated with the Company, the Sponsor, the Company’s directors, or~~at any member of the Company’s management (the “anchor investors”), have each purchased units in the Initial Public Offering at varying amounts not exceeding 9.9% of the units subject to the Initial Public Offering. Upon each anchor investor purchasing the full amount of Units it had expressed an interest in, the anchor investors collectively own approximately 11% of the outstanding shares following the Initial Public Offering, which includes the Founder Shares purchased by the anchor investors, and the Sponsor owns approximately 19% of the outstanding shares following the Initial Public Offering (see Note 6).

~~On August 30, 2021, the underwriters notified the Company of their intention to partially exercise their over-allotment option and will forfeit the remaining balance~~time commencing on September ~~1, 2021. On September 1, 2021,~~8, 2022, which was the ~~Company consummated the sale~~later of ~~an additional 1,500,000 Units to the public, at $10.00 per Unit for an aggregate purchase price of $15,000,000.~~

~~Note 5 — Private Placement~~

Concurrently with the closing of the Initial Public Offering, the Sponsor and underwriter purchased an aggregate of 4,000,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant for an aggregate purchase price of $4,000,000. Each whole Private Placement Warrant is exercisable for 1 whole share of Ordinary shares at a price of $11.50 per share, subject to adjustment (see Note 8). The proceeds from the Private Placement Warrants at the Initial Public Offering are 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.

~~Table of Contents~~

~~On August~~ 30 2021, the underwriters notified the Company of their intention to partially exercise their over-allotment option and will forfeit the remaining balance on September 1, 2021. On September 1, 2021, the Company consummated the sale of an additional 238,686 Private Placement Warrants, at $1.00 per Private Placement Warrant for an aggregate purchase price of $238,686.

~~Note 6 — Related Party Transactions~~

~~Founder Shares~~

On January 18, 2021, the Sponsor paid $25,000 to cover certain of the Company’s offering costs in exchange for 2,875,000 ordinary shares (the “Founder Shares”). On August 30, 2021, the Company effectuated a 1.1-for-1 share split, resulting in an aggregate of 3,162,500 Founder Shares outstanding. The Founder Shares included an aggregate of up to 412,500 ordinary shares subject to forfeiture by the Sponsor to the extent that the underwriters’ overallotment is not exercised in full or in part, so that the Sponsor will own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering.

~~The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earliest of: (A) six months~~days after the completion of ~~a Business Combination and (B) subsequent to a Business Combination, (x) if~~ the ~~closing price of the shares of Ordinary shares equals or exceeds $12.50 per share (as adjusted) for any 20 trading days within any 30-trading day period commencing at least 150 days after a~~CHW Business Combination or (y) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of Ordinary shares for cash, securities or other property.

In conjunction with each anchor investor purchasing 100% of the Units allocated to it, in connection with the closing of the Initial Public Offering the Sponsor sold 60,000 Founder Shares (or 30,000 Founder Shares, as applicable) to each anchor investor (750,000 founder shares in the aggregate) at their original purchase price; provided, however, that in the event that an anchor investor sells any of Units or Ordinary Shares purchased in the Initial Public Offering within 30 days following the closing of the Initial Public Offering, the number of Founder Shares transferred to such anchor investor would be reduced to 50,000 Founder Shares (or 25,000 Founder Shares, as applicable). The Company estimated the excess aggregate fair value over the amount paid by the anchor investors of the Founder Shares attributable to the Anchor Investors to be $5,515,500, or $7.362 per share. The excess of the fair value of the Founder Shares over the purchase price of $6,750 was determined to be a contribution to the Company from the founders in accordance with Staff Accounting Bulletin (SAB)Topic 5T and an offering cost in accordance with SAB Topic 5A. Accordingly, the offering cost were recorded against additional paid in capital in accordance with the accounting of other offering costs.

~~Promissory Note — Related Party~~

On January 18, 2021, the Company issued an unsecured promissory note (the “Promissory Note”) to the Sponsor, pursuant to which the Company may borrow up to an aggregate principal amount of $300,000. As of September 30, 2021, there was $43,000 outstanding under the Promissory Note. The Promissory Note will be repaid from the funds deposited into the operating account.

~~Related Party Loans~~

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 may repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans may be repaid only out 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 in the Trust Account would be used to repay the Working Capital Loans. 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. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 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 to the Private Placement Warrants. As of September 30, 2021, the Company had 0 outstanding borrowings under the Working Capital Loans.

~~Table of Contents~~

~~Due from related party~~

~~As of September 30, 2021, the Sponsor held $68,591 from the closing of the Initial Public Offering that will be deposited as soon as practical from the Company’s operating account.~~

~~Administrative Services Fee~~

The Company entered into an agreement, commencing on the effective date of the Initial Public Offering through the earlier of the consummation of a Business Combination and the Company’s liquidation, to pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, secretarial and administrative services. As of September 30, 2021, $10,000 has been paid under this arrangement.

~~Note 7 — 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, are entitled to registration rights (in the case of the Founder Shares, only after conversion of such shares to shares of Ordinary shares) pursuant to a registration rights agreement dated September 1, 2021. These holders are entitled to certain demand and “piggyback” registration rights. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until the termination of the applicable lock-up period for the securities to be registered. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

~~Underwriting Agreement~~

The Company granted the underwriters a 45-day option from the final prospectus relating to the Initial Public Offering to purchase up to 1,650,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions.

The underwriters were paid a cash underwriting discount of $0.175 per unit, or $2,187,500 in the aggregate at the closing of the Initial Public Offering (which includes amounts related to the partial exercise of the over-allotment option). In addition, the underwriters are entitled to a deferred underwriting commissions of $0.35 per unit, or $4,375,000 in the aggregate from the closing of the Initial Public Offering ((which includes amounts related to the partial exercise of the over-allotment option). The deferred 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 the underwriting agreement.

~~Representative Shares~~

In September 2021, the Company issued to the designees of the underwriter 62,500 ordinary shares (the “Representative Shares”). The Company accounted for the Representative Shares as an offering cost of the Initial Public Offering, with a corresponding credit to shareholders’ equity. The Company estimated the fair value of the Representative Shares to be $7.362 per share ($460,125 in the aggregate) based upon the price of the Founder Shares issued to the anchor investors (see Note 6). The holders of the Representative Shares have agreed not to transfer, assign, or sell any such shares until the completion of a Business Combination. In addition, the holders have agreed (i) to waive their conversion rights (or right to participate in any tender offer) with respect to such shares in connection with the completion of a Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete a Business Combination within the Combination Period.

The Representative Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the effective date of the registration statement related to the Initial Public Offering pursuant to FINRA Rule 5110(e)(1). Pursuant to FINRA Rule 5110(e)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statements related to the Initial Public Offering, nor may they be sold, transferred, assigned, pledged

~~Table of Contents~~

or hypothecated for a period of 180 days immediately following the effective date of the registration statements related to the Initial Public Offering except to any underwriter and selected dealer participating in the Initial Public Offering and their officers or partners, associated persons or affiliates.

~~Note 8 - Shareholders’ Equity~~

~~Preference Shares~~—The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At September 30, 2021, there were 0 preference shares issued or ~~outstanding~~.

~~Ordinary shares~~ - The Company is authorized to issue 110,000,000 shares of Class B Ordinary shares with a par value of $0.0001 per share. As of September 30, 2021, there were 3,187,500 shares of Ordinary shares outstanding (excluding 12,500,000 shares subject to redemption) and after giving affect to the forfeiture of 37,500 Ordinary shares since the underwriters’ did not exercise of the over-allotment option.

~~Note 9 - Warrants~~

Public Warrants may only be exercised for a whole number of shares. NaN fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) the completion of a Business Combination and (b) 12 months from ~~the~~CHW's IPO closing ~~of the Initial Public Offering.~~date. The ~~Public~~ Warrants will expire ~~five years from~~on the ~~completion~~fifth anniversary of athe CHW Business Combination, or earlier upon redemption or liquidation.

~~The Company will not be obligated to deliver any ordinary shares~~

Management has concluded that the Warrants issued pursuant to the ~~exercise~~CHW's IPO qualify for equity accounting treatment. The Warrants were not subject to revaluation at the Merger Date, and as such, the original valuation performed by CHW in connection with its IPO in September 2021 still applies. The following table provides quantitative information regarding fair value measurements at issuance on September 1, 2021:


	Share Price		Exercise Price		Dividend Yield		Volatility		Risk-Free Interest Rate		Expected Term

CHW Warrants	$	10.00	$	11.50	—	%	22.00	%	1.31	%	5 years

The fair value as of September 1, 2021 was $1.32 per share. As of September 30, 2023, the Company had 12,500,000 of Public Warrants and 3,895,564 of Private Warrants outstanding, respectively.

The Company may call the Warrants for redemption:

•in whole or in part;

Table of Contents

•at a ~~warrant~~price of $0.01 per warrant;

•upon a minimum of 20 days’ prior written notice of redemption; and ~~will have no obligation to settle such warrant exercise unless~~

•if, and only if, the reported last sale price of the Public Shares equals or exceeds $16.50 per share (as adjusted for share subdivisions, share consolidations, share capitalizations, rights issuances, reorganizations, recapitalizations and the like) for any 20 trading days within a ~~registration statement under~~30-trading day period ending on the ~~Securities Act with respect~~third trading day prior to the ~~ordinary shares underlying~~date the ~~warrants is then effective and a prospectus relating thereto is current, subject~~Company sends the notice of redemption to the ~~Company satisfying its obligations with respect to registration. NaN~~ 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 is available.

The Company has agreed that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, it will use its best efforts to file, and within 60 business days following a Business Combination to have declared effective, a registration statement covering the offer and sale of the ordinary shares issuable upon exercise of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. NaN warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the offer and sale of the ordinary shares issuable upon exercise of the warrants and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing, if a registration statement covering the offer and sale of the ordinary shares issuable upon exercise of the warrants is not effective within a specified period following the consummation of a Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis.

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

●

~~in whole and not in part;~~

●

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

●

~~upon not less than 30 days’ prior written notice of redemption, to each warrant holder; and~~

●

if, and only if, the reported last sale price of the Public Shares equals or exceeds $16.50 per share (as adjusted for share subdivisions, share consolidations, share capitalizations, rights issuances, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date the Company sends the notice of redemption to the warrant holders.

~~Table of Contents~~

If and when the warrants become redeemable by the Company, the Company may not exercise its redemption right if the issuance of shares upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or the Company is unable to effect such registration or qualification.

If the Company calls the ~~Public~~ Warrants for redemption, management will have the option to require all holders that wish to exercise the ~~Public Warrants~~public warrants to do so on a “cashless basis,” as described in the warrant agreement.

The exercise price and number of ~~ordinary~~ shares of common stock issuable upon exercise of the ~~warrants~~Warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, ~~except as described below,~~ the ~~warrants~~Warrants will not be adjusted for ~~issuances~~issuance of ~~ordinary shares~~common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the ~~warrants. If~~Warrants.

11. Revenues

The following table presents the Company’s revenues disaggregated by offering:


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(in thousands)
Services revenue	$	6,551	$	5,866	$	18,159	$	15,973
Wellness revenue	13,546		9,513		39,426		21,856
Pet food & treats revenue	1,703		—		4,658		—
Total revenues	$	21,800	$	15,379	$	62,243	$	37,829

12. Stock-Based Compensation

The Company has stock-based compensation plans, which are more fully described in Note 2, Summary of Significant Accounting Policies, and Note 11, Stockholders’ Equity (Deficit) and Mezzanine Equity, to the Consolidated Financial Statements included in the 2022 10-K. During the nine months ended September 30, 2023, the Company ~~is unable~~granted restricted stock units subject to ~~complete a Business Combination within~~service conditions.

The following table provides information about stock-based compensation expense by financial statement line item:


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
	(in thousands)
Platform operations and support	$	209	$	2,856	$	815	$	2,874
Sales and marketing	174		2,068		533		2,073
General and administrative	682		18,998		2,180		19,069
Total stock-based compensation expense	$	1,065	$	23,922	$	3,528	$	24,016

Table of Contents

Stock Options

The following table summarizes the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution fromactivities for all stock options under the Company’s ~~assets held outside~~stock-based compensation plans for the nine months ended September 30, 2023:


	Number of Options Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life	Aggregate Intrinsic Value(1)
	(in thousands)				(in thousands)
Outstanding as of December 31, 2022	7,194	$	0.40	7.19 years	$	19,292
Granted	—	$	—
Exercised	(986)	$	0.10
Forfeited or expired	(22)	$	2.75
Outstanding as of September 30, 2023	6,186	$	0.45	6.43 years	$	10,051

(1) The intrinsic value is the amount by which the current market value of the ~~Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.~~

In addition, if (x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.50 per Public Share (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor 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 Company’s initial Business Combination on the date of the consummation of such initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.50 per share,underlying stock exceeds the exercise price of the ~~warrants will be adjusted (to~~stock awards.

Restricted Stock Units

The following table summarizes the ~~nearest cent)~~activities for all restricted stock units (“RSUs”) under the Company’s stock-based compensation plans for the nine months ended September 30, 2023:


	Number of Shares	Weighted-Average Grant Date Fair Value Per Share
	(in thousands)
Outstanding and nonvested as of December 31, 2022	4,195	$	2.44
Granted	1,999	$	2.34
Vested	(1,354)	$	2.45
Forfeited	(130)	$	2.36
Outstanding and nonvested as of September 30, 2023	4,710	$	2.39

As of September 30, 2023, the total unrecognized compensation cost related to all nonvested restricted stock units was $10.7 million and the related weighted-average period over which it is expected to be ~~equal to 115%~~recognized was approximately 2.33 years.

13. Income Taxes

The quarterly income tax provision reflects an estimate of the greater of the Market Value and the Newly Issued Price and the $16.50 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 165% of the greater of the Market Value and the Newly Issued Price.

~~The Private Placement Warrants are identical to the Public Warrants underlying the Units being sold~~corresponding quarter’s state taxes in the ~~Initial Public Offering, except that~~United States. The provision for income tax expense for the ~~Private Placement Warrants~~three and ~~the ordinary shares issuable~~nine months ended September 30, 2023 and 2022 was determined based upon ~~the exercise of the Private Placement Warrants will not be transferable, assignable, or saleable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.~~

~~Note 10 — Fair Value Measurements~~

~~The fair value~~estimates of the Company’s ~~financial assets~~annual effective tax rate for the years ending December 31, 2023 and ~~liabilities reflects management’s estimate of amounts that~~2022, respectively. Since the Company ~~would have received~~is in a full valuation allowance position due to losses incurred since inception, the provision for taxes consists solely of certain state income taxes.

Table of Contents

14. Acquisitions

Acquisition of Compare Pet Insurance

On August 3, 2021, the Company acquired Compare Pet Insurance, Inc. (“CPI”) for $3.5 million in cash consideration, and $0.2 million in common stock consideration, consisting of a total of 639,000 units of common stock. Of the cash consideration purchase price, $1.5 million was paid on the acquisition date and the remaining $2.0 million paid pro-rata quarterly over the next three years starting in the fourth quarter of 2021. The deferred purchase consideration, which was recorded at its fair value on the acquisition date, is presented in accrued expenses and other current liabilities, as well as other non-current liabilities on the condensed consolidated balance sheet. As of September 30, 2023 and December 31, 2022, the amounts included in accrued expenses and other current liabilities, as well as other non-current liabilities on the condensed consolidated balance sheet, were $0.7 million and $1.2 million, respectively.

Acquisition of Dog Food Advisor

On January 5, 2023, the Company entered into an Asset Purchase Agreement with Clicks and Traffic LLC (“Dog Food Advisor”) to purchase its Dog Food Advisor (“DFA”) assets for $9.0 million in cash consideration. Of the cash consideration purchase price, $8.1 million was paid on the acquisition date and the remaining $0.9 million was deposited into an escrow account as an indemnification hold back for a period of 12 months. No working capital was acquired from Dog Food Advisor. The Company incurred less than $0.1 million in transaction-related costs during the first quarter of 2023 in connection with the ~~sale~~acquisition of DFA, which are included in general and administrative expenses within the Company’s condensed consolidated statement of operations.

The preliminary purchase consideration allocation was as follows:


	January 5, 2023
	(in thousands)
Intangible assets	$	5,950
Goodwill	3,050
Total purchase consideration	$	9,000

The table below summarizes the fair value and the estimated useful lives of the ~~assets or paid in connection with~~acquired intangible assets:

January 5,
2023

Estimated Useful Life

(in thousands)

Developed technology and website content

1,950

5 years

Strategic customer relationships and subscriber lists

3,600

8 years

Trademarks

400

10 years

Total intangible assets

5,950

As of September 30, 2023, the ~~transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring~~purchase price allocated to the fair value of ~~its~~ assets ~~and liabilities,~~acquired, including intangibles, recorded in conjunction with the DFA acquisition remains preliminary as the Company ~~seeks to maximize~~is in the ~~use~~process of ~~observable inputs (market data obtained from independent sources) and to minimize~~assessing the ~~use of unobservable inputs (internal assumptions about how market participants would price~~acquired intangible assets ~~and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used~~ in order to finalize the accounting for the business combination. The preliminary purchase price allocation has been developed based on estimates with assumptions made by management. Although the Company does not expect the final allocation to vary significantly, there may be adjustments made to the preliminary purchase price allocation that could result in changes to the preliminary fair values allocated, assigned useful lives, and associated amortization recorded. Goodwill recognized as a result of this acquisition is deductible for tax purposes.

Pro forma disclosures required under ASC 805-10-50 are not presented because the pro forma impacts on the current period and prior year comparable period are not material.

Table of Contents

Acquisition of Maxbone, Inc.

On April 6, 2023, the Company acquired Maxbone, Inc., a top-tier digital platform for modern pet essentials, for $0.5 million in cash consideration and 100,000 common shares with a fair value of $0.2 million as of the ~~assets~~closing date. Of the $0.2 million of common stock consideration, $0.1 million was issued on the acquisition date and ~~liabilities:~~

~~Level 1:~~

Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

~~Level 2:~~

~~Observable inputs other than Level 1 inputs. Examples~~the remaining $0.1 million will be issued in the future after the indemnification holdback period expires 12 months after the acquisition close. The acquisition expanded the Company’s reach into the Pet Supplies market, while remaining committed to the needs and standards of the premium Pet Parent.

15. Loss Per Share

The following participating securities have been excluded from the computation of diluted loss per share for the periods presented because including them would have been anti-dilutive:


	Nine Months Ended
	September 30, 2023	September 30, 2022
	(in thousands)
Earnout Shares	15,000	15,000
Options and RSUs issued and outstanding	10,896	7,420
Warrants issued and outstanding	18,292	18,292
Delayed share issuance related to acquisition	51	—
Total	44,239	40,712

All unvested Earnout Shares are excluded from basic and diluted loss per share as such shares are contingently issuable only when the share price of the Company’s common stock exceeds specified thresholds, which had not been achieved as of ~~Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.~~

~~Level 3:~~

~~Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.~~

At September 30, ~~2021, assets held in the Trust Account were comprised of $125,000,000 in U.S. Treasury Securities mutual funds.~~

2023.

Table of Contents

The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at September 30, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.

Quoted Prices in

Significant Other

Significant Other

Active Markets

Observable Inputs

Unobservable Inputs
Assets:

Level

(Level 1)

(Level 2)

(Level 3)

Investments held in Trust Account

1

$
125,000,000

—

—

~~Note 11 — Subsequent Events~~

The Company evaluated subsequent events and transactions that occurred after the condensed balance sheet date up to the date that the unaudited condensed financial statements were available to be issued and determined that there have been no events that have occurred that would require adjustments to the disclosures of the unaudited condensed financial statements.

~~Table of Contents~~

~~ITEM~~

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

References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to CHW Acquisition Corporation. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to CHW Acquisition Sponsor, LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

~~Special Note Regarding Forward-Looking Statements~~

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’sManagement’s Discussion and Analysis of Financial Condition and Results of ~~Operations” regarding~~Operations

Overview

We are one of the ~~Company’s financial position, business strategy~~largest online marketplaces for pet care and strive to be the #1 platform for busy Pet Parents, offering access to 5-star dog walking, pet sitting, expert pet advice, wellness plans, and ~~objectives~~one-on-one training from our community of ~~management for future operations, are forward-looking statements. Words~~more than 450,000 local pet caregivers nationwide, in addition to pet insurance options from the leading pet insurance companies.

Our proprietary marketplace technology, which is available as a mobile app and website (“platform” or “marketplace”), enables independent pet caregivers (“PCGs”) to connect with Pet Parents. Through our cutting-edge technologies and multi-faceted platforms, Wag! connects Pet Parents with PCGs who provide pet care services. Our marketplace enables Pet Parents to find a wide array of pet services provided by PCGs and third-party service partners, such as ~~“expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek”~~walking, pet sitting and ~~variations~~boarding, advice from licensed pet experts, home visits, training services, and ~~similar words~~pet insurance comparison tools.

Beyond providing unrivaled services to premium Pet Parents, Wag! has expanded its reach to become the button on the phone for the paw. Wag!, once purely synonymous with pet services, is now a key player in the wellness space via the management and ~~expressions are intended~~operation of Petted.com, a pet insurance comparison service, as well as the acquisition of Furmacy, which delivers software to ~~identify such forward-looking statements. Such forward-looking statements relate~~simplify pet prescriptions. Additionally, in 2023, Wag! has expanded into the Pet Food & Treats market by acquiring one of the most visited and trusted dog food marketplaces: Dog Food Advisor. Wag! is confident that the addition of Dog Food Advisor will unlock tremendous value and insights for recurring and new customers alike; those who we already provide an unparalleled marketplace experience to ~~future events or future performance, but reflect management’s current beliefs, based~~in the wellness space and longtime customers who rely on ~~information currently available. A number~~Dog Food Advisor as a subject matter expert. In April 2023, we acquired Maxbone, Inc., a top-tier digital platform for modern pet essentials, expanding our reach into the Pet Supplies market.

Components of ~~factors could cause actual events, performance or results~~Our Results of Operations

The following is a summary of the principal line items comprising our operating results.

Revenues

We provide an online marketplace that enables Pet Parents to ~~differ materially~~connect with PCGs for various pet services. We recognize revenues in accordance with ASC 606, Revenue from Contracts with Customers, from the ~~events, performance~~following distinct streams: (1) service fees charged to PCGs, (2) subscription and ~~results discussed in the forward-looking statements.~~other fees paid by Pet Parents for Wag! Premium, (3) joining fees paid by PCGs to join and be listed on our platform, (4) wellness revenue through affiliate fees, and (5) Pet Food & Treat revenue also through affiliate fees. For ~~information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section~~some of the Company’s ~~Registration Statement filed~~arrangements with third-party service providers, the transaction price is considered variable and an estimate of the transaction price is recorded when the action occurs. The estimated transaction price used in the variable consideration is based on historical data with the ~~“SEC”. The Company’s securities filings can be accessed on~~respective third-party service partner and the ~~EDGAR section~~consideration is measured and settled monthly.

Cost of ~~the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation~~Revenues, Excluding Depreciation and Amortization

Cost of revenues consists of costs directly related to ~~update or revise any forward-looking statements whether~~revenue-generating transactions, which primarily includes fees paid to payment processors, hosting and platform-related infrastructure costs, product costs, third-party costs for background checks for PCGs, and other costs arising as a result of ~~new information, future events or otherwise.~~

~~Overview~~

~~We are a blank check company incorporated~~revenue transactions that take place on ~~January 12, 2021 as a Cayman Islands corporation~~our platform, excluding depreciation and ~~formed for the purpose~~amortization.

Platform Operations and Support

Platform operations and support expenses include personnel-related compensation costs of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar Business Combination with one or more businesses or entities that have not yet selected. While we may pursue an acquisition opportunity in any business, industry, sector, or geographical location, we intend to focus on industries that complement our management’s backgroundtechnology and ~~to capitalize on the ability of our management team to identify~~operations teams, and acquire a business. We may pursue a transaction in which our shareholders immediately, prior to completion of our initial Business Combination, would collectively own a minority interest in the post-Business Combination company. We intend to effectuate our initial  Business Combination using cash from the proceeds of this offeringthird-party operations support costs.

Sales and ~~the sale~~Marketing

Sales and marketing expenses include personnel-related compensation costs of the ~~private placement warrants, our shares, debt or a combination~~marketing team and advertising expenses. Sales and marketing expenses are expensed as incurred.

Royalty

Royalty expenses represent fees paid by us to be the exclusive marketer of ~~cash, equity~~certain pet insurance products.

Table of Contents

General and ~~debt.~~

~~We expect to continue to incur significant~~Administrative

General and administrative expense includes personnel-related compensation costs ~~in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.~~

~~Results of Operations~~

~~Our entire activity through September 30, 2021 was in preparation~~ for an initial public offering, and since our initial public offering, our activity has been limited to the search for a prospective initial Business Combination. We will not generate any operating revenues until after completion of our initial Business Combination at the earliest. We expect to incur increased expensesemployees on corporate functions, such as ~~a result of being a public company (for legal, financial reporting,~~management, accounting, and ~~auditing compliance),~~legal as well as insurance and other expenses used to run the business, together with outside party service costs of related items such as auditors and lawyers.

Depreciation and Amortization

Depreciation and amortization expenses primarily consist of depreciation and amortization expenses associated with our property and equipment. Amortization includes expenses associated with our capitalized software and website development.

Interest Expense, Net

Interest expense, net consists primarily of interest incurred on debt and interest earned on our cash, cash equivalents, and short-term investments.

Key Financial Metrics and Non-GAAP Financial Measures

We regularly review several metrics, including the following key financial metrics and non-GAAP financial measures, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions. These key financial metrics and non-GAAP financial measures are set forth below for ~~due diligence expenses.~~

the periods presented:


	Three Months Ended						Nine Months Ended
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
	(in thousands, except percentages)
U.S. GAAP measures:
Revenues	$	21,800		$	15,379		$	62,243		$	37,829
Net loss	$	(2,196)		$	(40,931)		$	(9,852)		$	(44,371)
Net loss margin	(10.1)		%	(266.1)		%	(15.8)		%	(117.3)		%
Net cash provided by (used in) operating activities	$	(2,297)		$	568		$	(4,624)		$	(3,578)
Non-GAAP measures:
Adjusted EBITDA (loss)(1)	$	1,007		$	(461)		$	717		$	(3,448)
Adjusted EBITDA (loss) margin(1)	4.6		%	(3.0)		%	1.2		%	(9.1)		%

(1) Adjusted EBITDA (loss) and Adjusted EBITDA (loss) margin are non-GAAP measures which may not be comparable to similarly-titled measures used by other companies. See below for a reconciliation of Adjusted EBITDA (loss) to net loss.

Non-GAAP Financial Measures

Adjusted EBITDA (Loss) and Adjusted EBITDA (Loss) Margin

Adjusted EBITDA (loss) means net loss adjusted to exclude, where applicable in a given period, interest expense, net; income taxes; depreciation and amortization; stock-based compensation; integration and transaction costs associated with acquired businesses; severance costs; and legal settlements. Adjusted EBITDA (loss) margin represents Adjusted EBITDA (loss) divided by Total revenues. We use Adjusted EBITDA (loss) and Adjusted EBITDA (loss) margin, which are both non-GAAP metrics, to evaluate and assess our operating performance and the operating leverage in our business, and for internal planning and forecasting purposes. We believe that Adjusted EBITDA (loss) and Adjusted EBITDA (loss) margin, when taken collectively with our GAAP results, may be helpful to investors because they provide consistency and comparability with past financial performance and assist in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results.

Table of Contents

Non-GAAP financial measures are presented for supplemental informational purposes only. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for financial information presented in accordance with U.S. GAAP. There are a number of limitations related to the use of non-GAAP financial measures versus comparable financial measures determined under U.S. GAAP. For example, other companies in our industry may calculate these non-GAAP financial measures differently or may use other measures to evaluate their performance. All of these limitations could reduce the usefulness of these non-GAAP financial measures as analytical tools. Investors are encouraged to review the related non-GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures and to not rely on any single financial measure to evaluate our business.

The following table provides a reconciliation of net loss to Adjusted EBITDA (loss):


	Three Months Ended						Nine Months Ended
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
	(in thousands, except percentages)
Net loss	$	(2,196)		$	(40,931)		$	(9,852)		$	(44,371)
Interest expense, net	1,683			735			4,972			784
Income taxes	41			—			79			13
Depreciation and amortization	414			134			1,170			431
Stock-based compensation	1,065			23,922			3,528			24,016
Integration and transaction costs associated with acquired business	—			—			189			—
Severance costs	—			—			131			—
Legal settlement	—			—			500			—
Change in fair value of derivative liability	—			13,708			—			13,708
Issuance of Community Shares	—			1,971			—			1,971
Adjusted EBITDA (loss)	$	1,007		$	(461)		$	717		$	(3,448)
Revenues	$	21,800		$	15,379		$	62,243		$	37,829
Adjusted EBITDA (loss) margin	4.6		%	(3.0)		%	1.2		%	(9.1)		%

Table of Contents

Comparison of the Three and Nine Months Ended September 30, 2023 and 2022

The following table sets forth our results of operations for the three and nine months ended September 30, 2023 and 2022. These results of operations are not necessarily indicative of the future results of operations that may be expected for any future period.


	Three Months Ended				Change			Nine Months Ended				Change
	September 30, 2023		September 30, 2022		$	%		September 30, 2023		September 30, 2022		$	%
	(in thousands, except percentages)
Revenues	$	21,800	$	15,379	6,421	41.8	%	$	62,243	$	37,829	24,414	64.5	%
Costs and expenses:
Cost of revenues (exclusive of depreciation and amortization shown separately below)	1,441		1,021		420	41.1	%	3,710		3,027		683	22.6	%
Platform operations and support	2,968		5,641		(2,673)	(47.4)	%	9,630		11,035		(1,405)	(12.7)	%
Sales and marketing	12,755		11,290		1,465	13.0	%	36,788		24,656		12,132	49.2	%
Royalty	—		—		—	100.0	%	1,791		—		1,791	100.0	%
General and administrative	4,682		23,781		(19,099)	(80.3)	%	14,487		28,546		(14,059)	(49.3)	%
Depreciation and amortization	414		134		280	209.0	%	1,170		431		739	171.5	%
Total costs and expenses	22,260		41,867		(19,607)	(46.8)	%	67,576		67,695		(119)	(0.2)	%
Interest expense, net	1,683		735		948	129.0	%	4,972		784		4,188	534.2	%
Other expense, net	12		13,708		(13,696)	(99.9)	%	21		13,708		(13,687)	(99.8)	%
Loss before income taxes and equity in net earnings of affiliate	(2,155)		(40,931)		38,776	(94.7)	%	(10,326)		(44,358)		34,032	(76.7)	%
Income taxes	41		—		41	100.0	%	79		13		66	507.7	%
Equity in net earnings of equity method investments	—		—		—	100.0	%	553		—		553	100.0	%
Net loss	$	(2,196)	$	(40,931)	38,735	(94.6)	%	$	(9,852)	$	(44,371)	34,519	(77.8)	%

* Comparisons between positive and negative numbers and with a zero are not meaningful.

** Percentage figures included in the below section have been calculated on the basis of rounded figures as presented and not on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in the table above or the condensed consolidated financial statements.

Revenues

Revenues increased by $6.4 million, or approximately 41.8%, from $15.4 million for the three months ended September 30, ~~2021, we had a net loss of $104,249, which consisted of operating expenses of $104,249.~~

~~For~~2022 to $21.8 million for the ~~period January 12, 2021 (inception) through~~three months ended September 30, ~~2021, we had~~2023. The increase was primarily attributable to a ~~net loss~~$4.0 million increase in Wellness revenue as a result of ~~$120,121, which consisted~~increased activity and a $1.7 million increase in Pet Food & Treats revenue as a result of ~~operating expenses~~our acquisition of ~~$120,121.~~

Dog Food Advisor in the first quarter of 2023 and launch of Cat Food Advisor in the third quarter of 2023. The increase also includes a $0.7 million increase in Services revenue from increased Pet Parents’ engagement of PCGs to provide pet care services as a result of increased return-to-office and travel trends, and growth in ancillary services such as Wag! Premium subscriptions and Wag! Store.

Table of Contents

~~Liquidity~~Revenues increased by $24.4 million, or approximately 64.5%, from $37.8 million for the nine months ended September 30, 2022 to $62.2 million for the nine months ended September 30, 2023. The increase was primarily attributable to a $17.6 million increase in Wellness revenue as a result of increased activity and ~~Capital Resources~~

~~Until the consummation~~a $4.7 million increase in Pet Food & Treats revenue as a result of our ~~Initial Public Offering,~~acquisition of Dog Food Advisor in the first quarter of 2023 and launch of Cat Food Advisor in the third quarter of 2023. The increase also includes a $2.2 million increase in Services revenue from increased Pet Parents’ engagement of PCGs to provide pet care services as a result of increased return-to-office, and growth in ancillary services such as Wag! Premium subscriptions and Wag! Store.

Cost of Revenues, Exclusive of Depreciation and Amortization

Cost of revenues, exclusive of depreciation and amortization, increased by $0.4 million, or approximately 41.1%, from $1.0 million for the three months ended September 30, 2022 to $1.4 million for the three months ended September 30, 2023. The increase was primarily attributable to an increase in product costs in connection with the sale of merchandise.

Cost of revenues, exclusive of depreciation and amortization, increased by $0.7 million, or approximately 22.6%, from $3.0 million for the nine months ended September 30, 2022 to $3.7 million for the nine months ended September 30, 2023. The increase was primarily attributable to an increase in product costs in connection with the sale of merchandise.

Platform Operations and Support

Platform operations and support expenses decreased by $2.7 million, or approximately (47.4)%, from $5.6 million for the three months ended September 30, 2022 to $3.0 million for the three months ended September 30, 2023. The decrease was primarily attributable to a $2.7 million decrease in stock-based compensation due to the impact of the Earnout Shares in 2022 (See Note 3, Business Combination with CHW, to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q).

Platform operations and support expenses decreased by $1.4 million, or approximately (12.7)%, from $11.0 million for the nine months ended September 30, 2022 to $9.6 million for the nine months ended September 30, 2023. The decrease was primarily attributable to a $2.5 million decrease in stock-based compensation due to the impact of the Earnout Shares in 2022, partially offset by a $1.3 million increase in employee personnel costs related to our ~~only source~~expansion initiatives in the operations and technology areas.

Sales and Marketing

Sales and marketing expenses increased by $1.5 million, or approximately 13.0%, from $11.3 million for the three months ended September 30, 2022 to $12.8 million for the three months ended September 30, 2023. The increase was primarily attributable to a $2.8 million increase in investing in new and expanding existing partnerships related to our Wellness offerings and a $0.6 million increase in professional services and other advertising costs, partially offset by a $1.9 million decrease in stock-based compensation due to the impact of ~~liquidity~~the Earnout Shares in 2022.

Sales and marketing expenses increased by $12.1 million, or approximately 49.2%, from $24.7 million for the nine months ended September 30, 2022 to $36.8 million for the nine months ended September 30, 2023. The increase was primarily attributable to a $12.0 million increase in investing in new and expanding existing partnerships related to our Wellness offerings, a $0.9 million increase in employee personnel costs, and a $0.7 million increase in professional services, partially offset by a $1.0 million decrease in advertising costs.

Royalty

Royalty expenses were $1.8 million for the nine months ended September 30, 2023. These expenses represent fees paid by us to be the exclusive marketer of certain pet insurance products.

General and Administrative

General and administrative expenses decreased by $19.1 million, or approximately (80.3)%, from $23.8 million for the three months ended September 30, 2022 to $4.7 million for the three months ended September 30, 2023. The decrease was primarily attributable to an ~~initial purchase~~$18.8 million decrease in stock-based compensation expense due to the impact of ~~shares~~the Earnout Shares in 2022.

Table of ~~Founder~~Contents

General and administrative expenses decreased by $14.1 million, or approximately (49.3)%, from $28.5 million for the nine months ended September 30, 2022 to $14.5 million for the nine months ended September 30, 2023. The decrease was primarily attributable to a $16.9 million decrease in stock-based compensation expense due to the impact of the Earnout Shares in 2022, partially offset by a $1.4 million increase in business licenses, fees, and permits and a $1.1 million increase in legal and accounting fees to meet our ~~Sponsor~~growth needs and ~~loans~~requirements of being a public company.

Depreciation and Amortization

Depreciation and amortization expenses increased by $0.3 million, or approximately 209.0%, from ~~our Sponsor.~~

On$0.1 million for the three months ended September ~~1, 2021, we consummated our Initial Public Offering~~30, 2022 to $0.4 million for the three months ended September 30, 2023. The increase was primarily attributable to the acquisitions of ~~12,500,000 Units, which includes 1,500,000 Units~~Dog Food Advisor and Maxbone in 2023 and the related amortization of acquired intangible assets.

Depreciation and amortization expenses increased by $0.7 million, or approximately 171.5%, from $0.4 million for the ~~underwriters’ partial exercise~~nine months ended September 30, 2022 to $1.2 million for the nine months ended September 30, 2023. The increase was primarily attributable to the acquisitions of ~~their over-allotment option, at $10.00 per Unit, generating gross proceeds~~Dog Food Advisor and Maxbone in 2023 and the related amortization of ~~$125,000,000. Simultaneously~~acquired intangible assets.

Interest Expense, Net

Interest expense, net increased by $0.9 million, or approximately 129.0%, from $0.7 million for the three months ended September 30, 2022 to $1.7 million for the three months ended September 30, 2023. The increase was primarily attributable to interest related to the Blue Torch Financing and Warrant Agreement entered into in connection with the closing of the ~~Initial Public Offering~~CHW Business Combination.

Interest expense, net increased by $4.2 million, or approximately 534.2%, from $0.8 million for the nine months ended September 30, 2022 to $5.0 million for the nine months ended September 30, 2023. The increase was primarily attributable to interest related to the Blue Torch Financing and Warrant Agreement entered into in connection with the underwriters’ partial exercise of their over-allotment option, we consummated the private placement of an aggregate of 4,238,636 Private Placement Warrants to our Sponsor at a price of $1.00 per warrant, generating gross proceeds of $4,238,636. Following our Initial Public Offering and the saleclosing of the ~~Private Placement Warrants, a total~~CHW Business Combination.

For further information on the debt and warrant agreement, refer to Note 8, Long-Term Debt, to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of ~~$125,000,000~~this Quarterly Report on Form 10-Q.

Other Expense, Net

The $13.7 million of other expense, net for the three and nine months ended September 30, 2022 was ~~placed~~primarily due to changes in ~~the Trust Account. We incurred $13,130,743 of transaction costs consisting of $2,187,500 of underwriting fees, $4,375,000 of deferred underwriting fees payable, $5,975,625 for~~ the fair value of ~~shares issued~~our Forward Purchase Agreements. See Note 3, Business Combination with CHW, to the ~~anchor investors~~Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for further information regarding the Forward Purchase Agreements.

Liquidity and ~~representative shares,~~Capital Resources

We have historically generated negative cash flows from operations and ~~$592,618~~have primarily financed our operations through private and public sales of equity securities and debt. As of September 30, 2023, we had cash and cash equivalents of $22.3 million.

We expect operating losses and negative cash flows from operations to continue in the foreseeable future as we continue to invest in growing our business. Our primary use of cash includes operating costs such as product and technology expenses, marketing expenses, personnel expenses and other ~~costs. in connection with~~expenditures necessary to support our operations and our growth. Based upon our current operating plans, we believe that our existing cash and equivalents will be sufficient to meet our short- and long-term capital requirements. Our forecast of the ~~Initial Public Offering~~period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

Our future capital requirements and the ~~sale~~adequacy of available funds will depend on many factors, including, but not limited to, our ability to grow our revenue and the impact of the ~~Private Placement Warrants.~~

factors described in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2022 (“2022 10-K”). We may seek additional equity or debt financing. See the section titled “Risk Factors—Risks Related to Our Operations—We may require additional capital to support business growth and this capital might not be available on acceptable terms, or at all” within the 2022 10-K.

Table of Contents

For proceeds, payments and additional financing arrangements arising from the ~~period January 12, 2021 (inception) through~~CHW Business Combination, please see Note 3, Business Combination with CHW, to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q for additional detail.

Cash Flows

The following table summarizes our cash flows for the periods indicated:


	Nine Months Ended
	September 30, 2023		September 30, 2022
	(in thousands)
Net cash provided by (used in):
Operating activities	$	(4,624)	$	(3,578)
Investing activities	(10,662)		1,952
Financing activities	(1,376)		51,524
Net change in cash, cash equivalents, and restricted cash	$	(16,662)	$	49,898

Changes in Cash Flows From Operating Activities

Net cash used in operating activities for the nine months ended September 30, ~~2021,~~2023 was $4.6 million, an increase of $1.0 million from $3.6 million for the nine months ended September 30, 2022. The increase in net cash used in operating activities was ~~$628,700. Net~~primarily due to $1.4 million of unfavorable changes in operating assets and liabilities, partially offset by a $0.3 million decrease in net loss excluding non-cash and reconciling items disclosed within our condensed consolidated statement of ~~$120,121~~cash flows. The $1.4 million of unfavorable changes in operating assets and liabilities was ~~impacted~~primarily driven by ~~an increase~~unfavorable changes in ~~due from related party of $68,591, an increase in prepaid~~accrued expenses and other ~~assets~~current liabilities and deferred revenue, partially offset by favorable changes in accounts receivable, other non-current liabilities, and accounts payable.

Changes in Cash Flows from Investing Activities

Net cash provided by (used in) investing activities for the nine months ended September 30, 2023 was an outflow of ~~$551,042 and~~$10.7 million, a decrease of $12.6 million from an inflow of $2.0 million for the nine months ended September 30, 2022. The decrease was primarily due to a $9.2 million increase in ~~accounts~~cash paid for acquisitions, net of cash acquired, a $2.6 million decrease in proceeds from the sale and maturities of short-term investments, and a $1.5 million increase in cash paid for equity method investments.

Changes in Cash Flows from Financing Activities

Net cash provided by (used in) financing activities for the nine months ended September 30, 2023 was an outflow of $1.4 million, a decrease of $52.9 million from an inflow of $51.5 million provided by financing activities for the nine months ended September 30, 2022. The decrease is primarily due to a $29.4 million decrease in proceeds from debt, net of discount, an $11.5 million decrease in proceeds from the Business Combination with CHW, net of transaction costs, and a $10.9 million decrease in proceeds from the issuance of Series P preferred stock, net of issuance costs.

Paycheck Protection Program Loan

On August 5, 2020, the Company received loan proceeds of approximately $5.1 million from a financial institution pursuant to the Paycheck Protection Program established by the Coronavirus Aid, Relief, and Economic Security Act, of which $3.5 million was subsequently forgiven. The PPP Loan matures on August 5, 2025 and bears interest at a fixed rate of 1.00%. Principal and interest payments are payable monthly, and as of ~~$111,054.~~

~~We intend~~September 30, 2023, the amount outstanding under the PPP Loan was $0.9 million.

For additional information regarding the PPP Loan, refer to ~~use~~Note 8, Long-Term Debt, to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Table of Contents

Blue Torch Financing and Warrant Agreement

On August 9, 2022, Legacy Wag! entered into a financing agreement and warrant agreement with Blue Torch Finance, LLC (together with its affiliated funds and any other parties providing a commitment thereunder, including any additional lenders, agents, arrangers or other parties joined thereto after the date thereof, collectively, the “Debt Financing Sources”), pursuant to which, among other things, the Debt Financing Sources agreed to extend an approximately $32.2 million senior secured term loan credit facility (the “Credit Facility”). Legacy Wag! is the primary borrower under the Credit Facility, the Company is a parent guarantor and substantially all of the ~~funds held~~Company’s existing and future subsidiaries are subsidiary guarantors. The Credit Facility is secured by a first priority security interest in substantially all assets of the ~~trust account, including any amounts representing interest earned on~~Company and the ~~trust account (less taxes payable and deferred underwriting commissions)~~guarantors.

For additional information regarding the Blue Torch financing arrangements, refer to Note 8, Long-Term Debt, to ~~complete our initial Business Combination. We may withdraw interest income (if any) to pay taxes, if any. Our annual tax obligations will depend~~the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on the amount of interest and other income earned on the amounts held in the trust account. We expect the interest income earned on the amount in the trust account (if any) will be sufficient to pay our taxes. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial Business Combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

At September 30, 2021, we had cash of $897,818 held outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, properties or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.

We do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating our business prior to our initial Business Combination, other than funds available from loans from our Sponsor, its affiliates or members of our management team. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination. In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial Business Combination, we may repay such loaned amounts out of the proceeds of the trust account released to us. In the event that our initial Business Combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants of the post-Business Combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial Business Combination, we do not expect to seek loans from parties other than our Sponsor, its affiliates or our management team as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.

Moreover, we may need to obtain additional financing to complete our initial Business Combination, either because the transaction requires more cash than is available from the proceeds held in our trust account, or because we become obligated to redeem a significant number of our public shares upon completion of the Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. If we have not consummated our initial Business Combination within the required time period because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account.

Form 10-Q.

~~Table of Contents~~

~~Related Party Transactions~~

~~Founder Shares~~

On January 18, 2021, the Sponsor paid $25,000 for 2,875,000 shares of Ordinary shares (the “Founder Shares”). The Founder Shares included an aggregate of up to 412,500 shares that were subject to forfeiture depending on the extent to which the underwriters’ over-allotment option was exercised, so that the number of Founder Shares will equal, on an as-converted basis, 20% of the Company’s issued and outstanding shares of ordinary shares after the Initial Public Offering. On September 1, 2021, the underwriters partially exercised the over-allotment option and 37,500 Founder Shares were forfeited for no consideration by the Sponsor.

The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earliest of: (A) six months after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the closing price of the shares of Ordinary shares equals or exceeds $12.50/share (as adjusted) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of Ordinary shares for cash, securities or other property.

~~Private Placement~~

Simultaneously with the closing of the Initial Public Offering and underwriters’ partial exercise of their over-allotment option, the Sponsor purchased 4,238,686 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $4,238,686. Each Private Placement Warrant is exercisable to purchase one share Ordinary shares at a price of $11.50 per share, subject to adjustment. A portion of the proceeds from the Private Placement Warrants were 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 proceeds from the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Warrants and all underlying securities will expire worthless.

~~Related Party Loans~~

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 we complete a Business Combination, we would repay the Working Capital Loans out of the proceeds of the trust account released to us. 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. 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 at the option of the lender. The warrants would be identical to the Private Placement Warrants. Notwithstanding the foregoing, the Business Combination Agreement does not permit Working Capital Loans to convert into warrants. Except as set forth above, to date, the terms of the Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As of September 30, 2021, there were no Working Capital Loans outstanding.

~~Administrative Services Fee~~

We agreed, commencing on the effective date of the Initial Public Offering through the earlier of our consummation of a Business Combination or our liquidation, to pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, secretarial and administrative services. As of September 30, 2021, we incurred and paid $10,000 in fees for these services.

~~Table of Contents~~

~~Registration Rights~~

~~Deferred Underwriting Fees~~

The underwriter was paid a cash underwriting discount of 1.75% of the gross proceeds of the Initial Public Offering, or $2,187,500. The underwriter is entitled to a deferred fee of $0.35 per unit, or $4,375,000 in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the trust account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.

Off-Balance Sheet Arrangements

~~As of September 30, 2021, we did~~

We do not have any off-balance sheet arrangements, as defined ~~in Item 303(a)(4)(ii)~~by applicable rules and regulations of ~~Regulation S-K and did not~~the SEC, that are reasonably likely to have ~~any commitments~~a current or ~~contractual obligations.~~

future material effect on our financial condition, results of operations, liquidity, capital expenditures, or capital resources.

Critical Accounting ~~Policies~~

~~The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America~~Estimates

U.S. GAAP requires ~~management~~us to make estimates and assumptions that affect the reported amounts of assets and liabilities ~~disclosure~~and disclosures of contingent assets and liabilities at the date of the financial statements and ~~income~~the reported amounts of revenue and expenses during the ~~periods reported.~~year. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue, costs and expenses. Actual results could ~~materially~~ differ from those estimates. We

There have ~~identified the following~~been no material changes to our critical accounting ~~policies:~~

~~Warrant Instruments~~

~~The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment~~policies since the 2022 10-K. For a description of critical accounting policies that affect our significant judgments and estimates used in the instruments’ specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the instruments are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the instruments meet all of the requirements for equity classification under ASC 815, including whether the instruments are indexed to the Company’s own ordinary shares and whether the instrument holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the instruments are outstanding. The Company determined that upon further review of the warrant agreement, management concluded that the Public Warrants and Private Placement Warrants issued pursuant to the warrant agreement qualify for equity accounting treatment.

~~Ordinary shares Subject to Possible Redemption~~

We account for our ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption rights that is 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, ordinary shares are classified as shareholders’ equity. Our ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, ordinary shares subject to possible redemption is presented as temporary equity, outside of the shareholders’ equity sectionpreparation of our condensed ~~balance sheets.~~

consolidated financial statements, see Part II, Item 7, ~~Table~~Management’s Discussion and Analysis of ~~Contents~~

~~Net Income (Loss) Per Share~~Financial Condition and Results of ~~Ordinary shares~~

~~We apply the two-class method in calculating earnings per share. Net income per share~~Operations, of the redeemable shares, basic and diluted is calculated by dividing the interest income earned on the Trust Account by the weighted average number of shares of redeemable ordinary shares outstanding since original issuance. Net loss per share of ordinary shares, basic and diluted, for non-redeemable ordinary shares is calculated by dividing the net income (loss), less income attributable to shares of redeemable ordinary shares, by the weighted average number of shares of non-redeemable ordinary shares outstanding for the periods presented.

~~Recently Adopted~~2022 10-K.

New Accounting ~~Standards~~

~~Recent~~Pronouncements

See discussion under Note 2, Significant Accounting ~~Standards~~

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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) (“ASU 2020-06”) to simplify certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is for fiscal years beginning after December 15, 2021, and should be applied on a full or modified retrospective basis. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU 2020-06 did not have a material impact on the Company’s financial statement.

~~Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statement.~~

~~Contractual Obligations~~

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, utilities and secretarial, and administrative support services providedPolicies, to the ~~Company. We began incurring these fees~~Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on ~~June 15, 2021 and will continue to incur these fees monthly until the earlier of the completion of a Business Combination and the Company’s liquidation.~~

The underwriters are entitled to a deferred fee of $0.35 per Unit, or $4,375,000 in the aggregate. The deferred 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 the underwriting agreement.

~~Pursuant to a registration and shareholder rights agreement entered into~~Form 10-Q for information on September 1, 2021, the holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of Working Capital Loans (and any shares of Ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans) will be entitled to registration rights pursuant to a registration and shareholder rights agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. However, the registration and shareholder rights agreement provides that we will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lockup period. We will bear the expenses incurred in connection with the filing of any such registration statements.

new accounting pronouncements.

~~Table of Contents~~

~~JOBS Act~~

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As such, our financial statements may not be comparable to companies that comply with 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 of the Sarbanes-Oxley Act, (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 executive 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.

~~ITEM~~

Item 3. ~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, we are not required to provide the information required by this Item.

Table of September 30, 2021, we were not subject to any market or interest rate risk. Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in certain U.S. government obligations with a maturity of 185 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

Contents

~~ITEM~~

Item 4. ~~CONTROLS AND PROCEDURES~~

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

~~Disclosure~~

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, refers to controls and other procedures that are designed to ~~ensure~~provide reasonable assurance that information required to be disclosed by usa company in ~~our~~the reports that it files or submits under the Exchange Act ~~reports~~ is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and ~~forms,~~forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that ~~such~~ information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to ~~our~~the company’s management, including ~~our~~its principal executive ~~officer~~ and principal financial ~~officer~~officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

~~Under~~ Because there are inherent limitations in all control systems, a control system, no matter how well conceived and operated, can provide only reasonable, as opposed to absolute, assurance that the ~~supervision~~objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Our management, with the participation of our ~~management, including our principal executive officer~~Chief Executive Officer and ~~principal financial and accounting officer, we conducted an evaluation of~~Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of ~~the end of the fiscal quarter ended~~ September 30, ~~2021, as such term is~~2023. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, due to the material weaknesses in internal control over financial reporting described below, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange ~~Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that our disclosure controls and procedures~~Act) were not effective ~~due solely to~~at a reasonable assurance level.

Previously Reported Material Weaknesses in Internal Control over Financial Reporting

As previously disclosed in our 2022 10-K, in connection with the audit of our financial statements for the fiscal year ended December 31, 2022, we identified the following material weaknesses, which still exist as of September 30, 2023. 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 financial statements will not be prevented or detected on a timely basis. We identified a material weakness in our internal control over financial reporting related to insufficient resources needed to fully implement our internal control risk assessment process, evaluate the ~~Company’s~~technical accounting ~~for complex financial instruments. As~~aspects of certain material transactions and effectively design and implement certain process level controls. We also identified a ~~result, we performed additional analysis as deemed necessary~~material weakness regarding the risk assessment process related to ~~ensure~~information technology general controls and activities of service organizations, the design and implementation of logical access, segregation of duties and program change controls and certain process level controls related to information used in the execution of those controls that impact our financial ~~statements were prepared~~reporting processes.

These material weaknesses resulted in ~~accordance with U.S. generally accepted accounting principles. Accordingly, management believes that~~ the immaterial misstatement of our consolidated financial statements ~~included in this Form 10-Q present fairly, in all material respects, our financial position, result of operations and cash flows~~ for the ~~periods presented.~~

year ended December 31, 2022. Additionally, these material weaknesses could result in a misstatement of the account balances or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

Remediation Plans

To address our material weaknesses, we have added accounting and finance personnel and implemented new financial accounting processes, controls, and systems. We are continuing to take steps to remediate the material weaknesses described above through implementing enhancements and controls within our accounting and proprietary systems, utilizing additional qualified accounting and finance resources and further evolving our accounting close processes. We will not be able to fully remediate these control deficiencies until these steps have been completed and the controls have been operating effectively for a sufficient period of time.

Changes in Internal Control over Financial Reporting

~~During the fiscal quarter ended September 30, 2021,~~

As described above, there ~~has~~have been ~~no change~~changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial ~~reporting, other than as described herein. Management has identified a material weakness in internal controls related~~reporting.

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See discussion under Note 9, Commitments and Contingencies, to the ~~accounting for complex financial instruments as described above. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance our system~~Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of ~~evaluating and implementing the accounting standards that apply to our financial statements, including through enhanced analyses~~this Quarterly Report on Form 10-Q, which is incorporated herein by our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurances that these initiatives will ultimately have the intended effects.

reference.

~~Table of Contents~~

~~PART II - OTHER INFORMATION~~

~~ITEM 1. LEGAL PROCEEDINGS~~.

~~None.~~

~~ITEM~~

Item 1A. ~~RISK FACTORS.~~

Risk Factors that could cause our actual results to differ materially from those in this Quarterly Report include the risk factors described in our final prospectus for our Initial Public Offering filed with the SEC. Any of those factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair

Risks affecting our business ~~or results~~are discussed in Part I, Item 1A, Risk Factors, of ~~operations. As of~~our Annual Report on Form 10-K for the ~~date of this Quarterly Report, there~~year ended December 31, 2022 (“2022 10-K”). There have been no material changes to ~~the~~our risk factors as previously disclosed in our ~~final prospectus for our Initial Public Offering. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.~~

2022 10-K.

~~ITEM~~

Item 2. ~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.~~

~~The registration statement for the Company’s Initial Public Offering was declared effective on August 30, 2021. On September 1, 2021, the Company consummated the Initial Public Offering~~Unregistered Sales of 11,000,000 units (the “Units”) with respect to the Ordinary shares (the “Ordinary Shares”) included in the Units being offered (the “Public Shares”) at $10.00 per Unit generating gross proceedsEquity Securities and Use of ~~$110,000,000.~~

Offering costs for the Initial Public Offering and underwriters’ partial exercise of the over-allotment option amounted to $13,130,743, consisting of $2,187,500 of underwriting fees, $4,375,000 of deferred underwriting fees payable (which are held in the Trust Account (defined below)), $5,975,625 for the fair value of shares issued to the anchor investors and representative shares and $592,618 of other costs. The $4,375,000 of deferred underwriting fee payable is contingent upon the consummation of a Business Combination by October 20, 2022, subject to the terms of the underwriting agreement.

Following the closing of the Initial Public Offering on September 1, 2021, an amount of $125,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement Warrants was placed in a trust account (“Trust Account”) and will be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, 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.

We paid a total of $2,187,500 underwriting discounts and commissions and $8,755,743 for other offering costs and expenses related to the Initial Public Offering. In addition, the underwriters agreed to defer $4,375,000 in underwriting discounts and commissions.

~~For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Quarterly Report.~~

Proceeds

(a)

None.

(b)None.

(c)None.

~~ITEM~~

Item 3. ~~DEFAULTS UPON SENIOR SECURITIES.~~

~~None.~~

Defaults Upon Senior Securities

None.

~~Table of Contents~~

~~ITEM~~

Item 4. ~~MINE SAFETY DISCLOSURES.~~

Mine Safety Disclosures

Not applicable.

~~��~~

~~ITEM~~

Item 5. ~~OTHER INFORMATION.~~

~~None.~~

Other Information

(a)None.

(b)None.

(c)As a smaller reporting company, we are not required to provide the information required by this Item.

~~Table of Contents~~

~~ITEM~~

Item 6. ~~EXHIBITS~~

Exhibits

(a)Exhibit Index:

~~The following exhibits are filed as part~~Table of ~~or incorporated by reference into, this Quarterly Report on Form 10-Q.~~

Contents

~~Exhibit No.~~

~~Description~~

31.1*

Exhibit Number

Description

Reference

3.1

Certificate of Incorporation of Wag! Group Co.

(a)

3.2

Bylaws of Wag! Group Co.

(a)

31.1

Rule 13a–14(a)/15d–14(a) Certification of Principal Executive Officer

31.2

Rule 13a–14(a)/15d–14(a) Certification of Principal Financial Officer

32.1

Section 1350 Certification of Principal Executive Officer ~~Pursuant to Securities Exchange Act Rules 13a-14(a)~~ and ~~15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

31.2*

~~Certification of~~ Principal Financial Officer ~~Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

32.1**

101.INS

~~Certification of 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 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*

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.CAL*

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.SCH*

101.DEF

~~XBRL Taxonomy Extension Schema Document~~

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

101.LAB

Inline XBRL Taxonomy Extension ~~Labels~~Label Linkbase Document

101.PRE*

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted inas Inline XBRL and ~~included as~~contained in Exhibit 101)

*Filed herewith.

**	~~Furnished.~~

** Furnished herewith.

(a)Previously filed on August 15, 2022 as an Exhibit to the Company’s Current Report on Form 8-K and is incorporated herein by reference.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	~~CHW ACQUISITION CORPORATION~~ WAG! GROUP CO.

~~Date: November 23, 2021~~	By:	/s/ ~~Jonah Raskas~~ GARRETT SMALLWOOD
		~~Jonah Raskas~~ Garrett Smallwood
		~~Co-Chief~~Chief Executive Officer and Chairman
		(Principal Executive Officer)

Date: November 9, 2023


		~~CHW ACQUISITION CORPORATION~~ By:	/s/ ALEC DAVIDIAN
			Alec Davidian
~~Date: November 23, 2021~~		~~By:~~	~~/s/ Steve Katchur~~
	~~Steve Katchur~~
	Chief Financial Officer
			(Principal Financial and Accounting Officer)

Date: November 9, 2023


					Page Number
			PART I. FINANCIAL INFORMATION
Item 1.			Financial Statements		4
			Unaudited Condensed Consolidated Balance Sheets		~~Page~~ 4
~~PART 1 – FINANCIAL INFORMATION~~

~~Item 1.~~	Unaudited Condensed ~~Financial Statements~~

	~~Condensed Balance Sheet as of September 30, 2021 (Unaudited)~~	1

	~~Condensed~~Consolidated Statements of Operations ~~for the Three Months Ended September 30, 2021 and the period January 12, 2021 (inception) through September 30, 2021 (Unaudited)~~	25
			Unaudited Condensed Consolidated Statements of Redeemable Preferred Stock and Stockholders’ Equity (Deficit)		6
			Unaudited Condensed Consolidated Statements ~~of Changes in Shareholders’ Equity for the Three Months Ended September 30, 2021 and period January 12, 2021 (inception) through September 30, 2021 (Unaudited)~~		3

	~~Condensed Statement~~ of Cash Flows ~~for the period January 12, 2021 (inception) through September 30, 2021 (Unaudited)~~	47

	Notes to Unaudited Condensed Consolidated Financial Statements	58

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			1726

Item 3.	Quantitative and Qualitative Disclosures ~~about~~About Market Risk			2233

Item 4.	Controls and Procedures			2234

			PART ~~II –~~II. OTHER INFORMATION		23

Item 1.	Legal Proceedings			2335

Item 1A.	Risk Factors			2335

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			2335

Item 3.	Defaults Upon Senior Securities			2335

Item 4.	Mine Safety Disclosures			2435

Item 5.	Other Information			2435

Item 6.	Exhibits			2535
			Signatures		37
~~SIGNATURES~~		26


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒


	September 30, 2021

ASSETS
CURRENT ASSETS
Cash	$	897,818
Due from related party		68,591
Prepaid expenses and other current assets		287,500

Total current assets		1,253,909

OTHER ASSETS
Prepaid expense – non-current portion		263,542
Investments held in trust account		125,000,000

TOTAL ASSETS	$	126,517,451

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable	$	111,054
Promissory note – related party		43,000

Total current liabilities		154,054

LONG-TERM LIABILITIES
Deferred underwriting fee payable		4,375,000
Total long-term liabilities		4,375,000

Total liabilities		4,529,054

COMMITMENTS AND CONTINGENCIES
Ordinary shares subject to possible redemption, $0.0001 par value, 12,500,000 shares at redemption value of $10.00 per share.		125,000,000

SHAREHOLDERS’ EQUITY (DEFICIT)
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding		—
Ordinary Shares; $0.0001 par value; 110,000,000 shares authorized; 3,187,500 shares issued and outstanding (excluding 12,500,000 shares subject to possible redemption), as of September 30, 2021.		318
Additional paid-in capital		—
Accumulated deficit		(3,011,921)

Total shareholders’ equity (deficit)		(3,011,603)

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)	$	126,517,451


			For the period
			January 12, 2021
	For the three months ended		(inception) through
	September 30,		September 30,
	2021		2021
OPERATING EXPENSES
General and administrative	$	104,249	$	120,121
Total operating expenses		104,249		120,121
NET LOSS	$	(104,249)	$	(120,121)

Weighted average shares outstanding of redeemable ordinary shares		3,983,516		1,388,889
Basic and diluted net income per share, redeemable ordinary shares	$	(0.01)	$	(0.03)

Weighted average shares outstanding of non-redeemable ordinary shares		3,170,467		3,165,278
Basic and diluted net income per share, non-redeemable ordinary shares	$	(0.01)	$	(0.03)


For the period January 12, 2021 (inception) through September 30, 2021 (unaudited)				Additional				Total
	Ordinary Shares			paid-in		Accumulated		shareholders’
	Shares	Amount		capital		deficit		equity (deficit)
Balance, January 12, 2021 (inception)	0	$	0	$	0	$	0	$	0

Issuance of Ordinary shares to Sponsor	3,162,500		316		24,684		—		25,000

Sale of private placement warrants	—		—		4,238,636		—		4,238,636

Issuance of representative shares	62,500		6		460,119		—		460,125

Accretion to Redeemable Ordinary shares to redemption value	—		—		(4,723,443)		(2,891,800)		(7,615,243)

Net loss	—		—		—		(120,121)		(120,121)

Forfeiture of founder shares	(37,500)		(4)		4		—		—

Balance, September 30,2021	3,187,500	$	318	$	—	$	(3,011,921)	$	(3,011,603)


	As Reported		Adjustment		As Restated
Balance Sheet
Ordinary shares subject to redemption	$	117,092,620	$	7,907,380	$	125,000,000
Ordinary shares, $0.0001 par value		397		(85)		312
Additional paid-in-capital		5,015,501		(5,015,501)		—
Retained earnings		(15,897)		(2,891,794)		(2,907,691)
Total liabilities and shareholders’ equity	$	122,092,621	$	—	$	122,092,621


Gross proceeds	$	125,000,000
Less:
Fair value of Public Warrants at issuance		(16,548,464)
Redeemable shares issuance costs		(6,187,584)
Plus:
Accretion of carrying value to redemption value		22,736,048
Class A ordinary shares subject to possible redemption	$	125,000,000


						For the period January 12,
	For the three months ended					2021 (inception) through
	September 30,					September 30,
	2021					2021
Basic and diluted net income per share:
Numerator:
Allocation of net income, including accretion of temporary equity	$	(58,048)	$	(46,201)	$	(36,633)	$	(83,488)

Denominator:
Weighted average shares outstanding		3,983,516		3,170,467		1,388,889		3,165,278

Basic and dilution net income per share	$	(0.01)	$	(0.01)	$	(0.03)	$	(0.03)