PART ~~I - FINANCIAL~~I—FINANCIAL INFORMATION

Item 1. ~~Interim Financial Statements.~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~CONDENSED BALANCE SHEET~~

~~SEPTEMBER 30, 2021~~

~~(UNAUDITED)~~

ASSETS

Current assets

Cash
   $ 660,354
Prepaid expenses and other current assets
   538,213
Other receivable – related party
   5,541


Total Current Assets
   1,204,108
Marketable securities held in Trust Account
   231,501,771


TOTAL ASSETS

$
232,705,879



LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities

Accrued expenses
   $ 384,624


Total Current Liabilities
   384,624
Deferred underwriting fee payable
   7,982,754


Total Liabilities


8,367,378



Commitments and Contingencies
(See Note 7)
   0
Class A common stock subject to possible redemption, 22,807,868 shares at redemption value
   231,499,860
Stockholders’ Deficit


Preferred stock, $0.0001 par value; 1,000,000 shares authorized; NaN issued or outstanding
   0
Class A common stock, $0.0001 par value; 100,000,000 shares authorized; NaN shares issued and outstanding, and 22,807,868 subject to possible redemption
0

Class B common stock, $0.0001 par value; 10,000,000 shares authorized; 5,701,967 shares issued and outstanding
   570
Additional
paid-in
capital
   0
Accumulated deficit
   (7,161,929 )


Total Stockholders’ Deficit


(7,161,359
)


TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

$
232,705,879

~~The~~Financial Statements

Nogin, Inc.

Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)


	September 30, 2022			December 31, 2021
ASSETS
Current assets:
Cash	$	15,827		$	1,071
Accounts receivable, net		1,631			1,977
Related party receivables		8,477			5,356
Inventory		12,520			22,777
Prepaid expenses and other current assets		4,625			2,915
Total current assets		43,080			34,096
Restricted cash		1,500			3,500
Property and equipment, net		3,080			1,789
Intangible assets, net		939			1,112
Investment in unconsolidated affiliates		11,675			13,570
Other non-current asset		666			664
Total assets	$	60,940		$	54,731
LIABILITIES, CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	17,200		$	16,098
Due to clients		3,534			5,151
Related party payables		229			—
Accrued expenses and other liabilities		16,335			14,018
Total current liabilities		37,298			35,267
Line of credit		—			348
Long-term note payable, net		—			19,249
Convertible notes		74,486			—
Deferred tax liabilities		1,308			1,174
Other long-term liabilities		17,988			734
Total liabilities		131,080			56,772
Commitments and contingencies (Note 17)
CONVERTIBLE REDEEMABLE PREFERRED STOCK
Series A convertible, redeemable preferred stock, $0.0001 par value, 8,864,495 shares authorized, issued and outstanding, as of December 31, 2021		—			4,687
Series B convertible, redeemable preferred stock, $0.0001 par value, 6,944,093 shares authorized, 6,334,150 shares issued and outstanding, as of December 31, 2021		—			6,502

STOCKHOLDERS' DEFICIT
Common stock, $0.0001 par value, 500,000,000 and 60,760,816 shares authorized; 66,694,295 and 39,621,946 shares issued and outstanding as of September 30, 2022 and December 31, 2021		7			4
Additional paid-in capital		9,233			4,358
Treasury stock		—			(1,330	)
Accumulated deficit		(79,380	)		(16,262	)
Total stockholders’ deficit		(70,140	)		(13,230	)
Total liabilities, convertible redeemable preferred stock and stockholders’ deficit	$	60,940		$	54,731

See the accompanying notes ~~are an integral~~to unaudited condensed consolidated financial statements.

Nogin, Inc.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net service revenue	$	10,013		$	9,071		$	27,800		$	31,242
Net product revenue		8,645			15,224			29,401			19,739
Net revenue from related parties		2,316			2,652			9,321			4,240
Total net revenue		20,974			26,947			66,522			55,221
Operating costs and expenses:
Cost of services (1)		6,304			5,250			17,496			16,721
Cost of product revenue (1)		7,956			6,049			23,363			7,957
Sales and marketing		925			528			2,111			1,205
Research and development		1,400			1,609			4,227			4,033
General and administrative		15,969			15,658			46,332			30,300
Depreciation and amortization		194			144			614			384
Total operating costs and expenses		32,748			29,238			94,143			60,600
Operating loss		(11,774	)		(2,291	)		(27,621	)		(5,379	)
Interest expense		(2,568	)		(254	)		(4,685	)		(374	)
Change in fair value of promissory notes		(1,995	)		—			(4,561	)		—
Change in fair value of derivative instruments		64			—			64			—
Change in fair value of unconsolidated affiliates		87			—			(1,895	)		4,937
Change in fair value of convertible notes		(9,182	)		—			(9,182	)		—
Debt extinguishment loss		(1,885	)		—			(1,885	)		—
Other (loss) income, net		(1,574	)		2,660			87			2,972
(Loss) Income before income taxes		(28,827	)		115			(49,678	)		2,156
Provision for income taxes		69			366			134			82
Net (loss) income	$	(28,896	)	$	(251	)	$	(49,812	)	$	2,074

Net (loss) income per common share – basic	$	(0.58	)	$	(0.01	)	$	(1.16	)	$	0.04
Net (loss) income per common share – diluted	$	(0.58	)	$	(0.01	)	$	(1.16	)	$	0.04
Weighted average shares outstanding – basic		49,921,209			39,621,946			43,092,760			39,621,946
Weighted average shares outstanding – diluted		49,921,209			39,621,946			43,092,760			40,896,279

(1)

Exclusive of depreciation and amortization shown separately.

See the accompanying notes to unaudited condensed consolidated financial statements

Nogin, Inc.

Unaudited Condensed Consolidated Statements of Convertible Redeemable Preferred Stock and Stockholders' Deficit

(In thousands, except share data)


	Convertible Redeemable Preferred Stock
	Series A						Series B						Common Stock
	Shares			Amount			Shares			Amount			Shares		Amount		Additional Paid-in Capital			Treasury Stock			Accumulated Deficit			Total Stockholders’ Deficit
Balance, December 31, 2020		2,042,483		$	4,687			1,459,462		$	6,502			9,129,358	$	1	$	4,308		$	(1,330	)	$	(16,197	)	$	(13,218	)
Retroactive application of reverse recapitalization (1)		6,822,012			—			4,874,688			—			30,492,588		3		(3	)		—			—			—
Balance, December 31, 2020, as adjusted		8,864,495			4,687			6,334,150			6,502			39,621,946		4		4,305			(1,330	)		(16,197	)		(13,218	)
Net loss		—			—			—			—			—		—		—			—			(1,494	)		(1,494	)
Balance, March 31, 2021		8,864,495			4,687			6,334,150			6,502			39,621,946		4		4,305			(1,330	)		(17,691	)		(14,712	)
Stock-based compensation		—			—			—			—			—		—		32			—			—			32
Net income		—			—			—			—			—		—		—			—			3,819			3,819
Balance, June 30, 2021		8,864,495			4,687			6,334,150			6,502			39,621,946		4		4,337			(1,330	)		(13,872	)		(10,861	)
Stock-based compensation		—			—			—			—			—		—		16			—			—			16
Net loss		—			—			—			—			—		—		—			—			(251	)		(251	)
Balance, September 30, 2021		8,864,495		$	4,687			6,334,150		$	6,502			39,621,946	$	4	$	4,353		$	(1,330	)	$	(14,123	)	$	(11,096	)

Balance, December 31, 2021		2,042,483		$	4,687			1,459,462		$	6,502			9,129,358	$	1	$	4,361		$	(1,330	)	$	(16,262	)	$	(13,230	)
Retroactive application of reverse recapitalization (1)		6,822,012			—			4,874,688			—			30,492,588		3		(3	)		—			—			—
Balance, December 31, 2021, as adjusted		8,864,495			4,687			6,334,150			6,502			39,621,946		4		4,358			(1,330	)		(16,262	)		(13,230	)
Stock-based compensation		—			—			—			—			—		—		58			—			—			58
Net loss		—			—			—			—			—		—		—			—			(9,942	)		(9,942	)
Balance, March 31, 2022		8,864,495			4,687			6,334,150			6,502			39,621,946		4		4,416			(1,330	)		(26,204	)		(23,114	)
Stock-based compensation		—			—			—			—			—		—		25			—			—			25
Warrant issuance		—			—			—			—			—		—		713			—			—			713
Net loss		—			—			—			—			—		—		—			—			(10,973	)		(10,973	)
Balance, June 30, 2022		8,864,495			4,687			6,334,150			6,502			39,621,946		4		5,154			(1,330	)		(37,177	)		(33,349	)
Stock-based compensation		—			—			—			—			—		—		17			—			—			17
Net settlement of liability classified warrants into common stock		—			—			—			—			202,680		—		1,706			—			—			1,706
Net settlement of equity classified warrants into common stock		—			—			—			—			559,051		—		—			—			—			—
Exercise of stock options		—			—			—			—			199,147		—		84			—			—			84
Conversion of redeemable convertible preferred stock to common shares and cancellation of treasury shares		(8,864,495	)		(4,687	)		(6,334,150	)		(6,502	)		15,198,645		2		9,857			1,330			—			11,189
Reverse capitalization, net of transaction costs		—			—			—			—			10,864,076		1		(8,439	)		—			(13,307	)		(21,745	)
Equity classified warrants issued with PIPE convertible notes		—			—			—			—			—		—		366			—			—			366
Common stock issued to settle PIPE convertible note issuance costs		—			—			—			—			48,750		—		488			—			—			488
Net loss		—			—			—			—			—		—		—			—			(28,896	)		(28,896	)
Balance, September 30, 2022		—		$	—			—		$	—			66,694,295	$	7	$	9,233		$	—		$	(79,380	)	$	(70,140	)

(1)

As part of the Business Combination (as disclosed in Note 1), all share information has been retrospectively adjusted using the exchange ratio stipulated by the Merger Agreement.

See the accompanying notes to unaudited condensed consolidated financial ~~statements.~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~CONDENSED STATEMENTS OF OPERATIONS~~

~~(UNAUDITED)~~

Cash Flows
(~~As Restated –~~ In thousands)


	Nine Months Ended September 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(49,812	)	$	2,074
Adjustments to reconcile net (loss) income to net cash used by operating activities:
Depreciation and amortization		614			384
Amortization of debt issuance costs and discounts		2,154			42
Debt issuance costs expensed under fair value option		2,034			—
Amortization of contract acquisition costs		—			362
Stock-based compensation		100			48
Deferred income taxes		134			—
Change in fair value of unconsolidated affiliates		1,895			(4,937	)
Change in fair value of warrant liability		717			—
Change in fair value of promissory notes		4,561			—
Change in fair value of convertible notes		9,182			—
Change in fair value of derivatives		(64	)		—
Loss on extinguishment of debt		1,885			—
Settlement of deferred revenue		(1,611	)		—
Gain on extinguishment of PPP loan		—			(2,266	)
Other		(321	)		74
Changes in operating assets and liabilities:
Accounts receivable		346			1,605
Related party receivables		(3,120	)		(4,587	)
Inventory		10,257			(17,935	)
Prepaid expenses and other current assets		(4,037	)		(1,130	)
Accounts payable		1,875			10,933
Due to clients		(1,617	)		(9,204	)
Related party payables		229			—
Accrued expenses and other liabilities		(688	)		1,932
Net cash used in operating activities		(25,287	)		(22,605	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(1,744	)		(558	)
Investment in unconsolidated affiliates		—			(1,500	)
Net cash used in investing activities		(1,744	)		(2,058	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options		84			—
Proceeds from business combination, net of issuance costs		1,375			—
Proceeds from long-term notes payable		—			10,000
Payment of long-term notes payable		(20,950	)		—
Proceeds from promissory notes		8,000			—
Proceeds from promissory notes – related parties		2,175			—
Payment of promissory notes		(12,033	)		—
Payment of promissory notes – related parties		(3,130	)		—
Payment of debt issuance costs		(397	)		(125	)
Proceeds from PIPE convertible note issuance		65,500			—
Prepayment and other fees paid upon early settlement of debt		(489	)		—
Proceeds from line of credit		114,981			121,251
Repayments of line of credit		(115,329	)		(116,251	)
Net cash provided by financing activities		39,787			14,875
NET (DECREASE) INCREASE IN CASH AND RESTRICTED CASH		12,756			(9,788	)
Beginning of period		4,571			16,168
End of period	$	17,327		$	6,380


	Nine Months Ended September 30,
	2022		2021
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest	$	2,231	$	49
Cash paid for taxes		210		—
Non Cash Investing and Financing Activities
Issuance of common stock to settle transaction and advisory costs		3,588		—
Deferred transaction and advisory fees		10,979		—
Cash election consideration payable at closing of Business Combination		9,198		—
Conversion of redeemable convertible preferred stock into common stock		11,189		—
Net settlement of liability classified warrants		1,706		—

SCHEDULE OF CASH AND RESTRICTED CASH
Cash	$	15,827	$	4,380
Restricted cash		1,500		2,000
Total cash and restricted cash	$	17,327	$	6,380

See ~~Note 2)~~

Three Months
Ended
September 30,

For the
Period from
January 5, 2021
(Inception)
Through
September 30,


2021

2021

Operating and formation costs
   $ 648,866 $ 649,865


Loss from operations


(648,866
)

(649,865
)
Other income
/loss
:

Interest earned on marketable securities held in Trust Account
   1,911 1,911
Interest income - bank
   9 9
Change in fair value of over-allotment option liability
(61,353

)

(61,353
)

Fair value of forfeited over-allotment option
17,445

17,445



Total other
loss, net
   (41,988 ) (41,988 )


Net loss

$
(690,854
)

$
(691,853
)


Basic and diluted weighted average shares outstanding, Class A common stock
   14,565,744 5,338,839


Basic and diluted net
loss
per share, Class A

$
(0.03
)

$
(0.07
)


Basic and diluted weighted average shares outstanding, Class B common stock
   5,434,914 5,159,411


Basic and diluted net loss per share, Class B

$
(0.03
)

$
(0.07
)

~~The~~the accompanying notes ~~are~~to unaudited condensed consolidated financial statements

DESCRIPTION OF BUSINESS

Nogin (the “Company”) is an ~~integral part~~e-commerce, technology platform provider that delivers Commerce-as-a-Service (“CaaS”) solutions as a headless, flexible full stack enterprise commerce platform with cloud services and optimizations along with experts for brands and retailers that provide a unique combination of customizability and sales efficiency. The Company manages clients’ front-to-back-end operationsso clients can focus on their business. The Company’s business model is based on providing a comprehensive e-commerce solution to its customers on a revenue sharing basis. Unless the context otherwise requires, references in this subsection to “we,” “our,” “Nogin” and the “Company” refer to the business and operations of Legacy Nogin (as defined below) and its consolidated subsidiaries prior to the Business Combination (as defined below) and to Nogin, Inc. (formerly known as Software Acquisition Group Inc. III) and its consolidated subsidiaries following the consummation of the ~~unaudited condensed financial statements.~~

~~Table~~Business Combination.

The Company’s headquarters and principal place of ~~Contents~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)~~

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

~~FOR THE PERIOD FROM JANUARY 5, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021~~

~~(UNAUDITED)~~

~~(As Restated – See Note 2)~~

Class A

Common Stock subject

to possible redemption

Class B

Common Stock

Additional

Paid-in

Accumulated

Total

Stockholders’


Shares

Amount

Shares

Amount

Capital

Deficit

Equity (Deficit)

Balance – January 5, 2021 (inception)


—


$

—



0

$
0

$
0

$
0

$
0

Issuance of Class B common stock to Sponsor
   —      —      5,750,000 575 24,425 0   25,000
Net loss
   —      —      —   0   0   (1,000 ) (1,000 )






Balance – March 31, 2021
   —      $ —

5,750,000

$
575

$
24,425

$
(1,000
)

$
24,000

Net loss
   —      —      —   0   0   1 1






Balance – June 30, 2021
   —      $ —

5,750,000

$
575

$
24,425

$
(999
)

$
24,001

Sale of 20,000,000 Units, net of underwriting discounts and offering expenses
   —      —      —   0   0   0   0
Proceed
s
allocated to Public Warrants
   —      —      —   0   12,492,109 0   12,492,109
Allocated value of transaction costs to warrants
   —      —      —   0   (737,120 ) 0   (737,120 )
Adjustment of carrying value to initial redemption value

   —      —      —   0   (21,762,173 ) (6,470,076 ) (28,232,249 )
Sale of 9,000,000 Private Placement Warrants
   —      —      —   0   9,982,754 0   9,982,754
Forfeiture of Founder Shares
   —      —      (48,033 ) (5 ) 5 0   0
Net loss
   —      —      —   0   0   (690,854 ) (690,854 )






Balance – September 30, 2021
   —      $ —

5,701,967

$
570

$ 0
$
(7,161,929
)

$
(7,161,359
)

~~The accompanying notes~~business are ~~an integral part~~in Tustin, California.

Business Combination

On August 26, 2022 (the “Closing Date”), the Company completed its previously announced Business Combination pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), dated as of February 14, 2022 (as amended on April 19, 2022 and August 26, 2022), by and among the ~~unaudited condensed financial statements.~~

~~Table of Contents~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~CONDENSED STATEMENT OF CASH FLOWS~~

~~FOR THE PERIOD FROM JANUARY 5, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021~~

~~(UNAUDITED)~~

~~(As Restated – See Note 2)~~

Cash Flows from Operating Activities:

Net loss
   $ (691,853 )
Adjustments to reconcile net loss to net cash used in operating activities:

Interest earned on marketable securities held in Trust Account
   (1,911 )
Change in fair value of over-allotment option liability

61,353

Fair value of forfeited over-allotment option

(17,445
)

Changes in operating assets and liabilities:

Prepaid expenses and other current assets
   (538,213 )
Other receivable – related party
   (5,541 )
Accrued expenses
   384,624


Net cash used in operating activities


(808,986
)


Cash Flows from Investing Activities:

Investment of cash in Trust Account
   (231,499,860 )


Net cash used in investing activities


(231,499,860
)
Cash Flows from Financing Activities:

Proceeds from issuance of Class B common stock to Sponsor
   25,000
Proceeds from sale of Units, net of underwriting discounts paid
   223,517,106
Proceeds from sale of Private Placements Warrants
   9,982,754
Proceeds from promissory note – related party
   174,060
Repayment of promissory note – related party
   (174,060 )
Payment of offering costs
   (555,660 )


Net cash provided by financing activities


232,969,200



Net Change in Cash


660,354

Cash – Beginning of period
   0
Cash – End of period

$
660,354



Non-Cash
investing and financing activities:

Initial value of over-allotment option liability
   $ 211,034


Elimination of over-allotment option liability
   $ (254,942 )


Accretion for Class A common stock to redemption amount

   $ 28,969,369


Deferred underwriting fee payable
   $ 7,982,754


Forfeiture of Founder Shares
   $ (5 )

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

~~Table of Contents~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2021~~

~~(Unaudited)~~

~~NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS~~

Company (formerly known as Software Acquisition Group Inc. III ~~(the “Company”~~(“SWAG”) is), Nuevo Merger Sub, Inc., a ~~blank check company incorporated in Delaware on January 5, 2021. The Company was formed for the purpose~~wholly owned subsidiary of ~~effecting a merger, capital stock exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (a “Business Combination”~~SWAG (“Merger Sub”), and Branded Online, Inc. dba Nogin (“Legacy Nogin”).

The Company is not limited to a particular industry or sector 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 5, 2021 (inception) through September 30, 2021 relates~~ Pursuant to the ~~Company’s formation~~Merger Agreement, Merger Sub was merged with and the initial public offering (the “Initial Public Offering”), which is described below, and subsequent to the Initial Public Offering, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.

The registration statement for the Company’s Initial Public Offering was declared effective on July 28, 2021. On August 2, 2021, the Company consummated the Initial Public Offering of 20,000,000 Units (the “Units” and,into Legacy Nogin, with ~~respect to the shares of Class A common stock included in the Units sold, the “Public Shares”) at $10.00 per Unit, generating gross proceeds of $200,000,000 which is described in Note 4.~~

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 9,000,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to Software Acquisition Holdings III, LLC (the “Sponsor”), generating gross proceeds of $9,000,000, which is described in Note 5.

Following the closing of the Initial Public Offering on August 2, 2021 and the close of the over-allotment on August 4, 2021, an amount of $231,499,860 ($10.15 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) which 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 meeting the conditions of Rule2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the funds in the Trust Account to the Company’s stockholders, as described below.

On August 2, 2021, the underwriters notified the Company of their intention to partially exercise their over-allotment option. As such, on August 4, 2021, the Company consummated the sale of an additional 2,807,868 Units, at $10.00 per Unit, and the sale of an additional 982,754 Private Placement Warrants, at $1.00 per Private Warrant, generating total gross proceeds of $29,061,434. A total of $28,499,860 was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $231,499,860.

~~Transaction costs amounted to $13,056,080, consisting of $4,561,574 of underwriting fees, $7,982,754 of deferred underwriting fees and $511,752 of other offering costs.~~

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. NASDAQ rules provide thatLegacy Nogin surviving the Business Combination ~~must be with one or more target businesses that together have~~as a ~~fair market value equal to at least 80%~~wholly owned subsidiary of the ~~balance in~~Company (the “Business Combination” and, together with the ~~Trust Account (net of amounts disbursed to management for working capital, if permitted, and excluding~~other transactions contemplated by the ~~amount of any deferred underwriting commissions) at~~Merger Agreement, the ~~time~~“Transactions”).

While Legacy Nogin became a wholly-owned subsidiary of the ~~signing a definitive agreement to enter a Business Combination. The~~ Company, will only complete a Business Combination if the post-Business Combination 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 notLegacy Nogin was deemed to be ~~required to register as an investment company under~~ the ~~Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.~~

The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i)acquirer in ~~connection with a stockholder meeting called to approve~~ the Business Combination for accounting purposes. Accordingly, the Business Combination was accounted for as a reverse recapitalization, in which case the condensed consolidated financial statements of the Company represent a continuation of Legacy Nogin and the issuance of common stock and cash consideration in exchange for the net assets of SWAG recognized at historical costs and no recognition of goodwill or ~~(ii) by means~~other intangible assets. Operations prior to the Business Combination are those of Legacy Nogin and all share and per-share data included in these condensed consolidated financial statements have been retroactively adjusted to give effect to the Business Combination.

As a ~~tender offer.~~ result of the Business Combination, equityholders of Legacy Nogin received approximately 54.3 million shares of the Company’s common stock (“Common Stock”) and cash consideration of $15.0 million, of which $10.9 million was deferred on the Closing Date (Note 9).

The treatment of the Business Combination as a reverse recapitalization was based on the stockholders of Legacy Nogin holding the majority of voting interests of the Company, Legacy Nogin’s existing management team serving primarily as the initial management team of the Company, Legacy Nogin’s appointment of the majority of the initial board of directors of the Company and Legacy Nogin’s operations comprising the ongoing operations of the Company.

In connection with ~~a proposed~~the Business Combination, the Company ~~may seek stockholder approval~~received proceeds of ~~a Business Combination at a meeting called~~approximately $58.8 million from SWAG’s trust account, net of redemptions by SWAG’s public shareholders, as well as approximately $65.5 million in proceeds from the contemporaneous issuance of convertible notes (the “Convertible Notes”). The aggregate cash raised has been and will be used for ~~such purpose at which stockholders may seek to redeem their shares, regardless~~general business purposes, the paydown of ~~whether they vote for or against a Business Combination. The Company will proceed with a Business Combination only if~~Legacy Nogin’s outstanding debt, the ~~Company has net tangible assets~~payment of ~~at least $5,000,001 either immediately prior to or upon such consummation of a Business Combination~~transaction costs and if the ~~Company seeks stockholder approval, a majority~~payment of the ~~outstanding shares voted are voted in favor~~cash consideration.

The following table reconciles the elements of the Business ~~Combination.~~

~~Table of Contents~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2021~~

~~(Unaudited)~~

~~If the Company seeks stockholder approval of a Business~~ Combination ~~and it does not conduct redemptions pursuant~~ to the ~~tender offer rules, the Company’s Amended and Restated Certificate~~condensed consolidated statements of Incorporation provides that, a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from seeking redemption rights with respect to 15% or more of the Public Shares without the Company’s prior written consent.

The public stockholders will be entitled to redeem their shares for a pro rata portion of the amount then in the Trust Account (initially $10.15 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The per-share amount to be distributed to stockholders who redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 7). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.

~~If a stockholder vote is not required~~cash flows and the ~~Company does not decide to hold a stockholder vote~~condensed consolidated statements of convertible redeemable preferred stock and stockholders’ deficit for ~~business or other legal reasons,~~ the ~~Company will, pursuant to its Amended and Restated Certificate~~nine months ended September 30, 2022:


	Recapitalization
Cash - SWAG trust and cash, net of redemptions		58,841
Cash - PIPE equity financing		1,052
Less: Transaction and advisory fees paid in cash		(54,409	)
Less: Cash election consideration paid in cash at the Closing Date		(4,109	)
Net proceeds from Business Combination		1,375
Plus: Issuance of common stock to settle certain transaction costs		3,588
Less: non-cash items charged against additional paid-in capital		(17,510	)
Less: Deferred cash election consideration (Note 9)		(9,198	)
Net contributions from Business Combination and PIPE equity financing		(21,745	)

The number of ~~Incorporation, offer such redemption pursuant to the tender offer rules~~shares of the Securities and Exchange Commission (the “SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination.

The Company’s Sponsor has agreed (a) to vote its Founder Shares (as defined in Note 6), the Private Shares and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination, (b) not to propose an amendment to the Company’s Amended and Restated Certificate of Incorporation with respect to the Company’s pre-Business Combination activities prior toCommon Stock outstanding immediately following the consummation of athe Business Combination unless the Company provides dissenting public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment; (c) not to redeem any shares (including the Founder Shares) and Private Placement Warrants (including underlying securities) into the right to receive cash from the Trust Account in connection with a stockholder vote to approve a Business Combination (or to sell any shares in a tender offer in connection with a Business Combination if the Company does not seek stockholder approval in connection therewith) or a vote to amend the provisions of the Amended and Restated Certificate of Incorporation relating to stockholders’ rights of pre-Business Combination activity and (d) that the Founder Shares and Private Placement Warrants (including underlying securities) shall not participate in any liquidating distributions upon winding up if a Business Combination is not consummated. However, the Sponsor will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares purchased during or after the Initial Public Offering if the Company fails to complete its Business Combination.was as follows:


	Number of Shares
SWAG Common Stock, outstanding prior to the Business Combination		28,509,835
Less: Redemption of SWAG shares		(17,021,595	)
SWAG Common Stock		11,488,240
Shares issued in PIPE equity financing		517,079
Shares issued to financial advisors to settle transaction and issuance costs		407,500
Business Combination and PIPE equity financing shares		12,412,819
Nogin shares		54,281,476
Total shares of common stock immediately after Business Combination		66,694,295

~~If the Company is unable to complete a Business Combination by February 2, 202~~2.

(the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations under Delaware law to provide for claims of creditors and the requirements of applicable law. The underwriter has agreed to waive its rights to the deferred underwriting commission 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 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 assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).

~~Table of Contents~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2021~~

~~(Unaudited)~~

The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.15 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the day of liquidation of the Trust Account, if less than $10.15 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriter of Proposed Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). However, the Company has not asked the Sponsor to reserve for such indemnification obligations, nor has the Company independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets are securities of the Company. Therefore, the Company cannot assure its stockholders that the Sponsor would be able to satisfy those obligations. None of the Company’s officers or directors will indemnify the Company for claims by third parties including, without limitation, claims by vendors and prospective target businesses. 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, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

~~Liquidity and Management’s Plan~~

Prior to the completion of the Initial Public Offering, the Company lacked the liquidity it needed to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. The Company has since completed its Initial Public Offering at which time capital in excess of the funds deposited in the Trust Account and/or used to fund offering expenses was released to the Company for general working capital purposes. Accordingly, management has since reevaluated the Company’s liquidity and financial condition and determined that sufficient capital exists to sustain operations for at least one year from the date that the financial statement was issued, and therefore substantial doubt has been alleviated.

~~Risks and Uncertainties~~

~~Management continues to evaluate the impact of the~~

~~COVID-19~~

pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of operations and/or search for a target business, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS~~

In connection with the preparation of the Company’s unaudited condensed financial statements as of and for the quarterly period ended September 30, 2021, Management determined that the over-allotment option granted to the underwriters is considered to be a freestanding financial instrument and meets the definition of a liability under ASC 480. The determination was based on the understanding that the over-allotment option may be exercised subsequent to the transfer of the securities from the underwriters to the investors and that the option should be detached from the initial securities before it is exercised. The over-allotment option liability is measured at fair value at inception and subsequently until it is exercised or expires, with changes in fair value presented in the statement of operations.

~~The impact of the revision on the Company’s financial statements is reflected in the following table.~~

Condensed
Balance Sheet as of
September 30
, 2021 (
unaudited
)

As Previously

Reported

Adjustment

As
Restated

OA Liability

   $ 211,034    $ (211,034 )    $ 0

Total Liabilities

   $ 8,578,412    $ (211,034 )    $ 8,367,378
Temporary Equity

$

231,499,860

$
0

$
231,499,860

Additional
Paid
in
Capital

   $ 0

   $ 0

   $ 0
(
Accumulated
Deficit) Retained Earnings

   $ (7,372,963 )    $ 211,034    $ (7,161,929 )
Total Stockholders’ Equity

   $ (7,372,393 )    $ 211,034    $ (7,161,359 )
Condensed Statements of Operations for the period from January 5, 2021 (inception) through September 30, 2021 (unaudited)

Net Loss
   $ (647,945 )    $ (43,908 )    $ (691,853 )

~~Table of Contents~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2021~~

~~(Unaudited)~~

~~NOTE 3.~~ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to ~~Form10-Qand~~Form 10-Q and Article 8 of Regulation

S-X

of the ~~SEC.~~Securities and Exchange Commission (“SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s ~~prospectus~~Consolidated Financial Statements for ~~its Initial Public Offering as~~the year ended December 31, 2021, which are included in the Company’s registration statement on Form S-1 filed with the SEC on ~~August 9, 2021, as well as the Company’s Current Report on~~

~~Form8-K,~~

~~as filed with the SEC on August~~September 16, ~~2021.~~2022. The interim results for the ~~three~~nine months ended September 30, ~~2021 and for the period from January 5, 2021 (inception) through September 30, 2021~~2022 are not necessarily indicative of the results to be expected for the period ending December 31, ~~2021~~2022, or for any future annual or interim periods.

~~Table of Contents~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2021~~

~~(Unaudited)~~

Emerging Growth Company

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

companies.

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

Liquidity

Our primary requirements for liquidity and capital are working capital, inventory management, capital expenditures, public company costs and general corporate needs. We expect these needs to continue as we develop and grow our business.

Prior to the Business Combination, the Company’s available liquidity and operations were financed through equity contributions, line of credit, promissory notes and cash flow from operations. Subsequent to the Business Combination, the Company expects to fund operations through equity contributions and cash flow from operations.

In the third quarter of 2022, the impacts from the Company's inventory purchases, which began in 2021, were adversely affected by supply chain challenges which have led to lower revenue and cash flow from operating activities. To address the resulting cash flow challenges, the Company has implemented a comprehensive cost reduction and performance improvement program, including reduced headcount and elimination of certain discretionary and general and administrative expenses.

As of September 30, 2022, we had cash and restricted cash of $15.8 million and $1.5 million, respectively, which consists of amounts held as bank deposits. The Company believes its existing cash and restricted cash, together with the cash we expect to generate from

future operations, will be sufficient to support working capital and capital expenditure requirements for at least the next twelve months. The Company believes it has the ability to continue as a going concern. However, because we are in the growth stage of our business and operate in an emerging field of technology, we expect to continue to invest in research and development and expand our sales and marketing teams worldwide. We are likely to require additional capital to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances and in either the short-term or long-term may ~~make comparison~~determine to engage in equity or debt financings or enter into credit facilities for other reasons. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. In particular, the widespread COVID-19 pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected.

COVID-19 Pandemic

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. At the onset of COVID-19, the Company anticipated an impact to the business, its financial conditions and results of operations. The Company applied for and was granted a Paycheck Protection Plan (“PPP”) loan. In addition, the Company has taken a number of actions to mitigate the impacts of the ~~Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using~~COVID-19 pandemic on its business. The Company witnessed a large shift in consumer spending from retail stores to online stores, and as a result, there were no significant declines in revenue for the ~~extended transition period difficult or impossible because~~periods presented. However, the impacts of the ~~potential differences in accounting standards used.~~

COVID-19 pandemic will depend on future developments, including the duration and spread of the pandemic. These developments and the impacts of the COVID-19 pandemic on the financial markets and overall economy are highly uncertain and cannot be predicted.

Use of Estimates

The preparation of ~~the condensed~~ financial statements in conformity with U.S. GAAP requires ~~the Company’s~~ management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and ~~disclosure of contingent assets and liabilities at the date of the financial statements and~~ the reported amounts of ~~revenues~~revenue and expenses during the reporting period.

~~Making~~ The Company prepared these estimates ~~requires management to exercise significant judgment. It is at least reasonably possible that~~based on the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in this financial statement is the determination of the fair value of the warrant liabilities. Such estimates may be subject to change as moremost current and best available information, ~~becomes available and, accordingly, the~~but actual results could differ ~~significantly~~materially from ~~those estimates.~~

these estimates and assumptions. Significant estimates and assumptions reflected in the financial statements include, but are not limited to, the allowance for credit losses and revenue recognition, including variable consideration for estimated reserves for returns and other allowances. Management bases its estimates on historical experience and on assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources.

Accounts Receivable

The allowance for doubtful accounts was $425 thousand as of September 30, 2022 and $406 thousand as of December 31, 2021.

~~Cash~~

Inventory

Inventory is comprised entirely of finished goods for resale. The reserve for returns was $326 thousand as of September 30, 2022 and ~~Cash Equivalents~~

$532 thousand as of December 31, 2021.

Concentration of Risks

Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, restricted cash and accounts receivables. The Company ~~considers all short-term investments with an original maturity~~maintains cash balances at financial institutions. Amounts on deposit at these institutions are secured by the Federal Deposit Insurance Corporation (“FDIC”). At various times, the Company has had bank deposits in excess of ~~three months or less when purchased to be cash equivalents.~~the FDIC's insurance limit. The Company ~~did 0t have~~has not experienced any losses in its cash ~~equivalents at~~accounts to date. Management believes that the Company is not exposed to any significant credit risk with respect to its cash.

The Company performs ongoing credit evaluations of its customers and generally does not require collateral. As of September 30, ~~2021.~~

~~Marketable Securities Held in Trust Account~~

At2022, receivables from two customers amounted to $0.7 million (or 8% of accounts receivable) and $7.7 million (or 80% of accounts receivable). As of December 31, 2021, receivables from two customers amounted to $1.1 million (or 15% of accounts receivable) and $5.4 million (or 73% of accounts receivable).

Major Customers

For the nine months ended September 30, 2022, revenue from three customers amounted to $21.3 million (or 32% of total revenue), $9.6 million (or 14% of total revenue), and $6.2 million (or 9% of total revenue). For the nine months ended September 30, 2021, ~~substantially all~~revenue from three customer amounted to $14.1 million (or 25% of total revenue), $10.8 million (or 19% of total revenue), and $7.1 million (or 13% of total revenue).

Major Suppliers

For the ~~assets held in~~nine months ended September 30, 2022, three vendors accounted for $8.0 million (or 12% of total operating expense

purchases), $6.8 million (or 10% of total operating expense purchases) and $6.3 million (or 9% of total operating expense purchases). For the ~~Trust Account were held in money market funds, which are invested primarily in U.S. Treasury securities. All~~nine months ended September 30, 2021, three vendors accounted for $5.5 million (or 17% of ~~the Company’s investments held in the Trust Account are classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end~~total operating expense purchases), $4.0 million (or 13% of ~~each reporting period. Gains~~total operating expense purchases) and ~~losses resulting from the change in fair value~~$2.8 million (or 9% of investments held in Trust Account are included in interest earned on marketable securities held in Trust Account in the accompanying condensed statements of operations. The estimated fair values of investments held in Trust Account are determined using available market information.total operating expense purchases).

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

Warrants

The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock 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 the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s Class A common stock 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, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets.

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

~~Table of Contents~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2021~~

~~(Unaudited)~~

~~At September 30, 2021, the Class A common stock reflected in the balance sheets are reconciled in the following table:~~



~~Gross proceeds~~	~~$ 228,078,680~~
~~Less:~~
~~Proceeds allocated to Public Warrants~~	~~(12,492,109~~	)
~~Class A common stock issuance costs~~	~~(12,318,960~~	)
~~Add:~~
~~Adjustment of carrying value to initial redemption value~~	~~28,232,249~~

~~Class A common stock subject to possible redemption~~	~~$ 231,499,860~~

~~Derivative Liabilities (As Restated, See Note 2)~~

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

For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional

paid-in

capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date ~~thereafter.~~thereafter until settlement. Changes in the estimated fair value of the warrants are recognized as a

non-cash

gain or loss on the condensed statements of operations. The Company’s has analyzed the Public Warrants and Private Placement Warrants and determined they are considered to be freestanding instruments and do not exhibit any of the characteristics in ASC 480 and therefore are not classified as liabilities under ASC 480. (see Note 9)

~~The Company granted the underwriters a~~

~~45-day~~

option at the Initial Public Offering date to purchase up to 3,300,000 additional Units to cover over-allotments. The over-allotment option was evaluated under ASC 480 “Distinguishing Liabilities from Equity.” The Company concluded that the underlying transaction (Units which include redeemable shares and warrants) of the over-allotment option embodies an obligation to repurchase the issuer’s equity shares. Accordingly, the option was fair valued and recorded as a liability at issuance date and applied to the offering cost of the Class A redeemable shares. On August 4, 2021, the underwriters partially exercised their over-allotment option to purchase an additional 2,807,868 Units at $10.00 per Unit and forfeited the remaining over-allotment option. (see Note 10)

~~Offering Costs~~

Deferred offering costs consist of underwriting, legal, accounting and other expenses incurred through the balance sheet date that are directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs allocated to the Public Shares were charged to stockholders’ deficit upon the completion of the Initial Public Offering. Offering costs amounted to $13,056,080, which were charged to stockholders’ deficit upon the completion of the Initial Public Offering. $12,318,960 were allocated to public shares and charged to temporary equity, and $737,120 was allocated to warrants and accounted for as equity.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes under ASC Topic 740, “Income ~~Taxes.”~~Taxes” (ASC 740). Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial ~~statement’s~~statements 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 were deemed to be de minimis as of September 30, 2021.~~

ASC ~~Topic~~ 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be

~~more-likely-than-not~~

more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were 0no unrecognized tax benefits and 0no amounts accrued for interest and penalties as of September 30, ~~2021.~~2022. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since its inception.

~~Table~~

Revenue Recognition

Revenue is accounted for using Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers.

In accordance with ASC Topic 606, the Company recognizes revenue when control of ~~Contents~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2021~~

~~(Unaudited)~~

~~Net Loss per Common Share~~

the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. The Company ~~complies~~determines revenue recognition through the following steps:

•

Identification of a contract with ~~accounting~~a customer,

•

Identification of the performance obligations in the contract,

•

Determination of the transaction price,

•

Allocation of the transaction price to the performance obligations in the contract, and ~~disclosure requirements~~

•

Recognition of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Accretion associated with the redeemable shares of Class A common shares is excluded from earnings per sharerevenue when or as the ~~redemption value approximates fair value.~~performance obligations are satisfied.

~~The following table reflects~~

A performance obligation is a promise in a contract to transfer a distinct product. Performance obligations promised in a contract are identified based on the ~~calculation~~goods that will be transferred that are both capable of ~~basic~~being distinct and ~~diluted net income (loss) per ordinary share (in dollars, except per share amounts):~~

Three Months Ended

September 30, 2021

For the Period from

January 5, 2021

(Inception) Through

September 30, 2020


Class A

Class B

Class A

Class B

Basic and diluted net loss per common share

Numerator:

Allocation of net loss, as adjusted
   $ (503,124 )    $ (187,730 )    $ (351,839 )    $ (340,014 )
Denominator:

Basic and diluted weighted average shares outstanding
   14,565,744    5,434,914    5,338,839    5,159,411








Basic and diluted net loss per ordinary share
   $ (0.03 )    $ (0.03 )    $ (0.07 )    $ (0.07 )

~~Concentration~~are distinct in the context of ~~Credit Risk~~

~~Financial instruments that potentially subject~~the contract, whereby the transfer of the goods is separately identifiable from other promises in the contract. Performance obligations include establishing and maintaining customer online stores, providing access to the Company’s e-commerce platform, customer service support, photography services, warehousing, and fulfillment. Most of the contracts of the Company with customers contain multiple promises, which may result in multiple performance obligations, while others are combined into one performance obligation. For contracts with customers, the Company accounts for individual promises separately if they are distinct. The transaction price is allocated to ~~concentrations of credit risk consist of cash accounts in~~the separate performance obligations on a ~~financial institution, which, at times may exceed~~relative standalone selling price basis. The Company determines the ~~Federal Depository Insurance Corporation coverage limit of $250,000.~~ standalone

selling prices based on its overall pricing objectives, taking into consideration market conditions and other factors.

The Company has concluded the sale of goods and related shipping and handling on behalf of our customers are accounted for as a single performance obligation, while the expenses incurred for actual shipping charges are included in cost of sales.

The Company’s revenue is mainly commission fees derived from contractually committed gross revenue processed by customers on the Company's e-commerce platform. The Company is acting as an agent in these arrangements and customers do not ~~experienced losses~~have the contractual right to take possession of the Company's software. Revenue is recognized in an amount that reflects the consideration that the Company expects to ultimately receive in exchange for those promised goods, net of expected discounts for sales promotions and customary allowances.

CaaS Revenue is recognized on ~~these accounts~~a net basis from maintaining e-commerce platforms and ~~management believes~~online orders, as the Company is engaged primarily in an agency relationship with its customers and earns defined amounts based on the individual contractual terms for the customer and the Company does not ~~exposed~~take possession of the customers' inventory or any credit risks relating to ~~significant risks~~the products sold.

~~Fair Value~~the terms of ~~Financial Instruments~~

~~The fair value~~the agreements, historical experience, and expected levels of returns. Any uncertainties in the ultimate resolution of variable consideration due to factors outside of the Company’s ~~assets~~influence are typically resolved within a short timeframe therefore not requiring any additional constraint on the variable consideration. The estimated reserve for returns is included on the balance sheet in accrued expenses with changes to the reserve in revenue on the accompanying statement of operations. The reserve for returns as of September 30, 2022 was $0.7 million and ~~liabilities,~~as of December 31, 2021 was $1.8 million.

In most cases the Company acts as the merchant of record, resulting in a due to client liability (discussed below). However, in some instances, the Company may perform services without being the merchant of record in which ~~qualify~~case there is a receivable from the customer.

Payment terms and conditions are generally consistent for customers, including credit terms to customers ranging from seven days to 60 days, and the Company’s contracts do not include any significant financing component. The Company performs credit evaluations of customers and evaluates the need for allowances for potential credit losses based on historical experience, as well as current and expected general economic conditions.

Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, are excluded from net revenue in the condensed consolidated statements of operations.

Commerce as a Service

As noted above, the Company’s main revenue stream is CaaS revenue in which it receives commission fees derived from contractually committed gross revenue processed by customers on the Company's e-commerce platform. Consideration for online sales is collected directly from the end customer by the Company and amounts not owed to the Company are remitted to the customer. Revenue is recognized on a net basis from maintaining e-commerce platforms and online orders, as the Company is engaged in an agency relationship with its customers and earns defined amounts based on the individual contractual terms for the customer and the Company does not take possession of the customers' inventory or any credit risks relating to the products sold.

Product sales

Under two licensee agreements, the Company is the owner of inventory and reseller of record. As a result, the Company is the principal in sales to end customers and records these revenues on a gross basis at a point in time.

Fulfillment services

Revenue for business-to-business (“B2B”) fulfillment services is recognized on a gross basis either at a point in time or over a point in time. For example, inbound and outbound services are recognized when the service is complete, while monthly storage services are recognized over the service period.

Marketing services

Revenue for marketing services is recognized on a gross basis as marketing services are complete. Performance obligations include providing marketing and program management such as procurement and implementation.

Shipping services

Revenue for shipping services is recognized on a gross basis as shipments are completed and products are shipped to end customers.

Set up and implementation services

The Company provides set up and implementation services for new clients. The revenue is recognized on a gross basis at the

completion of the service, with the unearned amounts received for incomplete services recorded as deferred revenue, if any.

Other services

Revenue for other services such as photography, business to customer (“B2C”) fulfillment, customer service, development and web design are reimbursable costs and recognized on the gross basis, and are services rendered as part of the performance obligations to clients for which an online platform and online orders are managed. All reimbursable costs are the responsibility of the Company as the Company uses such services to fulfill its performance obligations.

Cost of services

Cost of services reflects costs directly related to providing services under the master service agreements with customers, which primarily includes service provider costs directly related to processing revenue transactions, marketing expenses and shipping and handling expenses which correspond to marketing and shipping revenues, as well as credit card merchant fees. Cost of services is exclusive of depreciation and amortization and general salaries and related expenses.

Cost of product revenue

Cost of product revenue reflects costs directly related to selling inventory acquired from select clients, which primarily includes product cost, warehousing costs, fulfillment costs, credit card merchant fees and third-party royalty costs. Cost of product revenue is exclusive of depreciation and amortization and general salaries and related expenses.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases (ASC Topic 842), a comprehensive new lease recognition standard which will supersede previous existing lease recognition guidance. Under the standard, lessees will need to recognize a right-of use asset and a lease liability for leases with terms greater than twelve months. The liability will be equal to the present value of lease payments. The asset will be based on the liability, subject to adjustment, such as for initial direct costs. For income statement purposes, leases will be required to be classified as either operating or finance. Operating leases will result in straight-line expense (similar to current operating leases) while finance leases will result in a front-loaded expense pattern (similar to current capital leases). The standard is effective for fiscal periods beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022 and requires a modified retrospective adoption. The Company is currently evaluating the impact the adoption of this standard will have on the financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses” (Topic 326). The FASB issued this update to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments ~~under ASC~~and other commitments to extend credit held by a reporting entity at each reporting date. The amendments in this update replace the existing guidance of incurred loss impairment methodology with an approach that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic ~~820, “Fair Value Measurement,~~326, Financial Instruments—Credit Losses,” ~~approximates~~which clarifies the ~~carrying amounts represented~~scope of guidance in the ~~accompanying condensed balance sheet, primarily due~~ASU 2016-13. The updated guidance is effective for annual periods beginning after December 15, 2022 and interim periods within fiscal years beginning after December 15, 2023. The Company is currently evaluating the impact the adoption of this standard will have on the financial statements.

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, Simplifying the Accounting for Income Taxes, which eliminates certain exceptions related to ~~their short-term nature.~~

~~Recent Accounting Standards~~

the approach for intra-period tax allocation, the methodology for calculating taxes during the quarters and the recognition of deferred tax liabilities for outside basis differences. This guidance also simplifies aspects of the accounting for franchise taxes and changes in tax laws or rates, as well as clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for the Company beginning January 1, 2022. The Company has adopted this guidance and there was not a material impact on the financial statements.

In August 2020, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued Accounting Standards Update

~~(“ASU”~~ ("ASU")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~~

~~)(“ASU~~

~~2020-06”)~~ 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which improves Convertible Instruments and Contracts in an Entity’s Own Equity and is expected to

~~simplify~~ improve financial reporting associated with accounting for ~~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~~ASU simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument and ~~freestanding instruments~~more convertible preferred stock as a single equity instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are ~~indexed~~required for equity contracts to ~~and settled in an entity’s own equity.~~qualify for the derivative scope exception, which will permit more equity contracts to qualify for it.

The ASU

~~2020-06~~

~~amends~~ also simplifies the diluted earnings per share ~~guidance, including the requirement to use the~~

~~if-converted~~

~~method for all convertible instruments.~~(EPS) calculation in certain areas. ASU

2020-06

is effective for the Company beginning January 1, ~~2022 and should be applied on a full or modified retrospective basis,~~2024, with early adoption permitted ~~beginning on~~as of January 1, 2021. The Company ~~is currently assessing~~early adopted the provisions of ASU 2020-06 effective January 1, 2022. There was no impact ~~if any, that ASU~~

~~2020-06 would~~

~~have on its~~to the Company’s financial ~~position, results~~statements as a result of ~~operations or cash flows.~~

~~Management does not believe that any other~~adoption.

Other recently issued ~~but not yet effective,~~ accounting standards ~~if currently adopted, would~~are not expected to have a material effect on the ~~Company’s condensed~~Company's financial statements.

PROPERTY AND EQUIPMENT

~~Table~~

Property and equipment, net as of ~~Contents~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER~~September 30, ~~2021~~

~~(Unaudited)~~

~~NOTE 4. INITIAL PUBLIC OFFERING~~

~~Pursuant to the Initial Public Offering, the Company sold 20,000,000 Units at a purchase price of $10.00 per Unit. Each Unit consists of one share of Class A common stock~~2022 and

~~one-half~~

of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase 1 share of Class A common stock at an exercise price of $11.50, subject to adjustment (see Note 8).

~~On August 2,~~ December 31, 2021, the underwriters notified the Company of their intention to partially exercise their over-allotment option. As such, on August 4, 2021, the Company consummated the sale of an additional 2,807,868 Units, at $10.00 per Unit, and the sale of an additional 982,754 Private Placement Warrants, at $1.00 per Private Warrant.

~~NOTE 5. PRIVATE PLACEMENT~~

~~Simultaneously with the closing~~consisted of the ~~Initial Public Offering,~~following (in thousands):


	September 30, 2022			December 31, 2021
Furniture and equipment	$	3,880		$	2,160
Leasehold Improvements		536			536
Property, plant, and equipment, gross		4,416			2,696
Less accumulated depreciation		(1,336	)		(907	)
Property and equipment, net	$	3,080		$	1,789

Depreciation expense for property and equipment for the Sponsor purchased an aggregate of 9,000,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $9,000,000, in a private placement. Each Private Placement Warrant is exercisable to purchase one Class A common stock at a price of $11.50. 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 will expire worthless.

~~NOTE 6. RELATED PARTY TRANSACTIONS~~

~~Founder Shares~~

On January 22, 2021, the Sponsor purchased 5,750,000 shares (the “Founder Shares”) of the Company’s Class B common stock for an aggregate price of $25,000. The Founder Shares include an aggregate of up to 750,000 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the Sponsor will collectively own, on an

~~as-converted~~

basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the Sponsor does not purchase any Public Shares in the Initial Public Offering). On August 2, 2021, the underwriters notified the Company of their intention to partially exercise their over-allotment option. As such, on August 4, 2021, the Company consummated the sale of an additional 2,807,868 Units. As a result of the underwriters’ election to partially exercise their over-allotment option and the forfeiture of the remaining over-allotment option, 48,033 Founder Shares were forfeited, and 701,967 Founder Shares are no longer subject to forfeiture resulting in an aggregate of 5,701,967 Founder Shares outstanding at August 4, 2021.

~~The Sponsor has agreed not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A)~~

one year after the completion of a Business Combination or (B) the date on which the Company completes a liquidation, merger, capital stock exchange or similar transaction that results in the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, if the last sale price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days with

~~any~~

~~30-trading day period commencing at least 150 days after the Business Combination, the Founder Shares will be released from the~~

~~lock-up.~~

~~Table of Contents~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2021~~

~~(Unaudited)~~

~~Other Receivable – Related Party~~

~~On August 23, 2021, the Company paid a charge in the amount~~

~~5,541~~

behalf of an affiliated entity. This amount is included in other receivable – related party. The Company was subsequently reimbursed in full subsequent to September 30, 2021, prior to the issuance of these financial statements.

~~Administrative Support Agreement~~

The Company agreed, commencing on July 28, 2021, through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay an affiliate of the Sponsor or its designee a total of up to $15,000 per month for office space, adminis

~~rative and shared personnel support. For the three~~nine months ended September 30, 2022 and 2021 was $445 thousand and $348 thousand, respectively.

INTANGIBLE ASSETS

The Company entered into a three-year master service agreement with a new customer for a $2.0 million contract acquisition fee on July 16, 2018. The agreement resulted in the acquisition of nine new contracts with different companies and brands. The cost is amortized over a three-year period, which ended in 2021.

In connection with the Betabrand acquisition (Note 11), the Company’s amortization expense for capitalized software for the ~~period from January 5,~~nine months ended September 30, 2022 and 2021 ~~(inception) through~~was $169 thousand and $36 thousand, respectively.

As of September 30, 2022 and December 31, 2021, intangible assets consist of the following (in thousands):


	September 30, 2022			December 31, 2021
Contract acquisition cost	$	2,000		$	2,000
Software		1,175			1,174
		3,175			3,174
Less: Accumulated amortization		(2,236	)		(2,062	)
Intangible assets-net	$	939		$	1,112

INVESTMENT IN UNCONSOLIDATED AFFILIATES

On April 6, 2021, the Company ~~incurred $15,000~~and Tiger Capital Group, LLC (“Tiger Capital”) formed a joint venture, Modcloth Partners, LLC. (“Modcloth”). The Company and Tiger Capital each contributed $1.5 million into Modcloth and the Company will own 50% of the outstanding membership units. Tiger Capital will provide the financing for the inventory, while the Company entered into a Master Services Agreement (“MSA”) with Modcloth to provide the eCommerce services (see Note 12). The Company accounts for its investment in ~~fees for these services,~~ModCloth under the fair value option of ~~which such amount is~~accounting. As of September 30, 2022 and December 31, 2021, the investment balance related to ModCloth was $4.5 million and $6.4 million, respectively, and was included in ~~accrued expenses~~investment in unconsolidated affiliates on the condensed consolidated balance sheets. For the nine months ended September 30, 2022, the Company recorded a fair value adjustment related to its ModCloth investment of $1.9 million included in changes in fair value of unconsolidated affiliates on the condensed consolidated statements of operations.

On December 31, 2021, the Company and CFL Delaware, Inc. (“CFL”) formed a joint venture, IPCO, whereby Nogin contributed certain assets acquired from the BTB (ABC), LLC (“Betabrand”) acquisition (see Note 11) and entered into a MSA with IPCO to provide certain eCommerce services, marketing, photography, customer service and merchant credit card monitor fraud services (Note 12); and CFL entered into a Master Supply Agreement with IPCO and agreed to procure the supply of inventory to IPCO, provide manufacturing, fulfillment, logistics and warehousing services for the inventory. The Company accounts for its investment in IPCO under the fair value option of accounting. As of September 30, 2022 and December 31, 2021, the investment balance related to IPCO was $7.2 million and $7.1 million, respectively, and was included in investment in unconsolidated affiliates on the condensed consolidated balance sheets. For the nine months ended September 30, 2022, the Company recorded $1.6 million to other income, net related to the settlement of deferred revenue related to sale of finished inventory to IPCO. In addition, the Company recorded a fair value adjustment related to its IPCO investment of $45 thousand included in changes in fair value of unconsolidated affiliates on the condensed consolidated statement of operations for the nine months ended September 30, 2022.

The following table presents summarized financial information for the joint ventures for the three and nine months ended September 30, 2022 and as of September 30, 2022 and December 31, 2021 (in thousands):


	Modcloth						IPCO
	Nine months ended			Three months ended			Nine months ended			Three months ended
	September 30, 2022			September 30, 2022			September 30, 2022			September 30, 2022
Net revenue	$	12,172		$	2,822		$	18,558		$	4,991
Gross margin		5,242			1,245			14,190			3,943
Net loss		(3,642	)		(1,111	)		(1,767	)		(461	)


	Modcloth						IPCO
	As of September 30, 2022			As of December 31, 2021			As of September 30, 2022			As of December 31, 2021
Current assets	$	3,878		$	5,009		$	3,759		$	2,596
Long term assets		6,202			6,303			5,672			6,130
Current liabilities		13,379			8,539			7,300			1,699
Long term liabilities		3,292			5,698			—			—

The Company’s ModCloth and IPCO investments are Level 3 fair value measurement. The Company utilized the following valuation methods to conclude on the fair value as of September 30, 2022:

- Discounted Cash Flow – The key unobservable input utilized was a discount rate of 17.4% for Modcloth and 19.0% for IPCO.

- Guideline Public Company Method – The Company utilized a revenue multiple of 0.78x for Modcloth and 0.28x for IPCO on current period forecasted revenues. The revenue multiple was derived from public peers of the Company.

- Guideline Transaction Method – The Company utilized a revenue multiple of 0.80x for Modcloth and 0.29x for IPCO on current period forecasted revenues. The revenue multiple was derived from public transactions in which the target companies were similar to the Company.

The following table summarizes the changes in the ~~accompanying balance sheet.~~ModCloth and IPCO investment Level 3 fair value measurement (in thousands):


	Modcloth			IPCO
Balance as of December 31, 2021	$	6,437		$	7,133
Change in fair value		(1,940	)		45
Balance as of September 30, 2022	$	4,497		$	7,178

CERTAIN LIABILITY ACCOUNTS

Accrued expenses and other current liabilities as of September 30, 2022 and December 31, 2021 were as follows (in thousands):


	September 30, 2022		December 31, 2021
Cash election consideration payable		5,000		—
Deferred revenue		2,381		4,524
Deferred rent		2,040		1,573
Payroll and other employee costs		1,678		2,196
Accrued transaction costs		940		1,750
Sales tax payable		737		1,113
Accrued interest		456		—
Other accrued expenses and current liabilities		3,103		2,862
Total		16,335		14,018

Other long-term liabilities as of September 30, 2022 and December 31, 2021 were as follows (in thousands):


	September 30, 2022		December 31, 2021
Deferred transaction costs payable		10,979		—
Cash election consideration payable		3,865		—
Standby agreement derivative liability		1,900		—
Deferred PIPE issuance costs payable		1,160		—
Warrant liability		—		561
Other long-term liabilities		84		173
Total		17,988		734

~~Promissory Note — Related Party~~LONG-TERM DEBT

Convertible Notes and Indenture

On ~~January 22, 2021, the Sponsor issued an unsecured promissory note to~~April 19, 2022, the Company, certain guarantors named therein (the ~~“Promissory Note”~~“Notes Guarantors”) and certain investors named therein (each, a “Subscriber” and collectively, the “Subscribers”), entered into subscription agreements (each, a “PIPE Subscription Agreement” and collectively, the “PIPE Subscription Agreements”) pursuant to which the Company ~~could borrow~~agreed to issue and sell to the Subscribers immediately prior to the closing of the Business Combination (i) up to an aggregate principal amount of ~~$300,000. The Promissory Note was~~

~~non-interest~~

~~bearing~~$75.0 million of 7.00% Convertible Senior Notes due 2026 (the “Convertible Notes”) at par value of the notes and (ii) up to an aggregate of 1.5 million warrants (the “PIPE Warrants”) with each whole PIPE Warrant entitling the holder thereof to purchase one share of Common Stock

On August 26, 2022, immediately prior to the closing of the Business Combination (the “Closing”), the Company issued $65.5 million aggregate principal amount of Convertible Notes and, as ~~amended effective May 28, 2021,~~contemplated by the PIPE Subscription Agreements, the Company, the Note Guarantors and U.S. Bank Trust Company, National Association, as trustee, entered into an Indenture governing the Convertible Notes (the “Indenture”). The Convertible Notes were offered in a private placement under the Securities Act, pursuant to the PIPE Subscription Agreements. The Convertible Notes will mature on September 1, 2026 (the “Maturity Date”), unless earlier repurchased, redeemed or converted in accordance with their terms, and will accrue interest at a rate of 7.00% per annum, payable in cash. The Convertible Notes may be converted at any time (in whole or in part) into shares of Common Stock, at the option of the holder of such Convertible Note, based on the ~~earlier~~applicable conversion rate at such time. The initial conversion price is approximately $11.50 per share of Common Stock, based on an initial conversion rate of 86.9565 shares of Common Stock per $1,000 principal amount of Convertible Notes. For conversions with a conversion date on or after the first anniversary of the closing of the Transactions and prior to the regular record date immediately preceding the Maturity Date, the conversion consideration will also include an interest make-whole payment equal to the remaining scheduled payments of interest on the Convertible Note being converted through the Maturity Date. The Company will be able to elect to make such interest make-whole payment in cash or in Common Stock, subject to certain conditions. The conversion rate is subject to adjustments set forth in the Indenture, including conversion rate resets (x) on August 27, 2023, September 26, 2023 and September 26, 2024 and (y) following the consummation of certain equity and equity-linked offerings by the Company and sales of certain equity and equity-linked securities by certain shareholders of the Company. On August 27, 2023, the conversion rate will reset to the greater of (i) ~~September 30, 2021~~the then-current conversion rate and (ii) if the Standby Capital VWAP Sale Price (as defined below) is less than or equal to $7.50, the quotient of (x) $1,000 and (ii) the ~~consummation~~volume weighted average sale price of shares of Common Stock sold under the Standby Agreement (as defined below) (the “Standby Capital VWAP Sale Price”). As of September 30, 2022, the Standby Capital VWAP Sale Price was $2.40.

Each holder of a Convertible Note will have the right to cause the Post-Combination Company to repurchase for cash all or a portion of the ~~Initial Public Offering.~~ Convertible Notes held by such holder upon the occurrence of a “Fundamental Change” (as defined in the Indenture) at a price equal to (i) on or before September 26, 2023, 100% of the original principal amount of such Convertible Note, and (ii) from and after September 26, 2023, 100% of the accreted principal amount applicable at such time pursuant to the terms of the Indenture, in each case, plus accrued and unpaid interest.

The ~~outstanding balance~~Indenture includes restrictive covenants that, among other things, require the Company to maintain a minimum level of liquidity on a consolidated basis and limit the ability of the Company and its subsidiaries to incur indebtedness above certain thresholds or to issue preferred stock, to make certain restricted payments, to dispose of certain material assets and engage in other asset sales, subject to reinvestment rights, to pay certain advisory fees in connection to the Transactions and the transactions contemplated by the PIPE Subscription Agreements above a certain threshold, and other customary covenants with respect to the collateral securing the obligations created by the Convertible Notes and the Indenture, including the entry into security documents (in each case, subject to certain exceptions set forth in the Indenture); provided that the covenants with respect to (i) the making of restricted payments, (ii) the incurrence of indebtedness, (iii) the disposition of certain material assets and asset sales, (iv) liquidity, (v) the payment of advisory fees and (vi) the collateral securing the obligations created by the Convertible Notes and the Indenture shall terminate once less than 15% of the aggregate principal amount of the Convertible Notes are outstanding. The liquidity covenant would terminate if the Company achieves $175 million in consolidated revenue in the preceding four fiscal quarters. Certain of the Company’s subsidiaries

will serve as Notes Guarantors that jointly and severally, fully and unconditionally guarantee the obligations under the ~~Promissory Note~~Convertible Notes and the Indenture. The Indenture also requires certain future subsidiaries of ~~$174,060~~the Post-Combination Company, if any, to become Notes Guarantors. This covenant will terminate once less than 15% of the aggregate principal amount of the Convertible Notes are outstanding. The Indenture also includes customary events of default and related provisions for potential acceleration of the Convertible Notes.

If the Company does not have an effective registration statement on file with the SEC within 90 days of the Closing Date, registering the underlying shares issuable upon conversion of the Convertible Notes, or fails to maintain the effectiveness of such registration statement, then additional interest would accrue on the outstanding principal of the Convertible Notes at a rate of (a) 0.25% per annum for the first 90 days commencing on the first business day following a ten business day grace period and (b) 0.50% per annum thereafter, in each case, until the Company cures the lapse of effectiveness. The Company accounts for such additional interest in accordance with ASC subtopic 825-20, Registration Payment Arrangements (“ASC 825-20”). ASC 825-20 specifies that the contingent obligation to make future payments under a registration payment arrangement, whether issued as a separate agreement or included as a provision of a financial instrument, should be separately recognized and accounted for as a contingency in accordance with ASC 450-20, Loss Contingencies. The Company recorded no amount for this contingency at issuance of the Convertible Notes, nor as of September 30, 2022 as the likelihood of making such registration payments was remote at each date.

The Company elected to account for the Convertible Notes under the fair value option of accounting upon issuance of the Convertible Notes. At issuance the Company recognized the fair value of the Convertible Notes of $65.1 million with the remaining $0.4 million of proceeds received allocated to the PIPE Warrants. As of September 30, 2022, the fair value of the Convertible Notes was $74.9 million, of which $0.5 million, representing accrued interest, is included in accrued expenses and other current liabilities on the condensed consolidated balance sheets. The loss on the increase in fair value of the Convertible Notes during the three and nine months ended September 30, 2022 was $9.8 million of which $0.6 million is included in interest expense, which is recognized based on the effective interest method, and $9.2 million included in the change in fair value of convertible notes on the condensed consolidated statements of operations. The difference between the amount due at maturity of $73.8 million, which is due on September 1, 2026, and the fair value of the Convertible Notes as of September 30, 2022 is $1.1 million.

The primary reason for electing the fair value option is for simplification and cost-benefit considerations of accounting for the Convertible Notes (the hybrid financial instrument) at fair value in its entirety versus bifurcation of the embedded derivatives. The significant inputs to the valuation of the Convertible Notes at fair value are Level 3 inputs since they are not directly observable. The fair value was determined using a binomial lattice valuation model. The significant assumptions used in the model are the credit spread and volatility of the Common Stock.

As of September 30, 2022, there have been no interest or principal payments made on the Convertible Notes.

Line of credit

Effective January 14, 2015, the Company entered into a Revolving Credit Agreement with a financial institution that provided maximum borrowing under a revolving loan commitment of up to $2 million, bearing an interest rate of 2% plus prime rate as published by the Wall Street Journal. Effective July 3, 2020, the Company renewed the line of credit with the financial institution through May 31, 2021 that provided maximum borrowing under a revolving loan commitment of up to $5 million. In May 2021 the maturity date was extended to June 30, 2021 and then further extended to July 31, 2021. The line was then renewed on July 21, 2021 with an expanded credit limit of $8 million, a new maturity date of June 30, 2023 and an amended per annum interest rate of the greater of 2.25% plus prime rate as published by the Wall Street Journal or 5.50%. The line of credit was repaid at the closing of the ~~Initial Public Offering on~~Business Combination.

Notes Payable

On August ~~2, 2021.~~

~~Related Party Loans~~

~~In order to finance transaction costs in connection~~11, 2021, the Company entered into a loan and security agreement (the “Note Agreement”) with a ~~Business Combination,~~financial institution that provided for a borrowing commitment of $15 million in the ~~Sponsor or an affiliate~~form of promissory notes. In August 2021, the Company borrowed $10 million under the first tranche (“First Tranche Notes”). The Note Agreement had a commitment for additional second tranche borrowings of $5 million through June 30, 2022 (“Second Tranche Notes”). In October 2021, the Company borrowed the remaining $5 million committed under the Note Agreement. The borrowings under the Note Agreement were secured by substantially all assets of the ~~Sponsor~~Company.

The First Tranche Notes and Second Tranche Notes were due to mature on September 1, 2026 and November 1, 2026, respectively, and bore interest at a rate per annum of 6.25% plus the greater of 3.25% or ~~certain~~the prime rate as published by the Wall Street Journal. The Company was required to make interest-only payments on the first of ~~the Company’s directors~~each month beginning October 1, 2021 and ~~officers may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination,~~December 1, 2021, respectively. Beginning October 1, 2023 and December 1, 2023, respectively, the Company would ~~repay~~have been required to make principal payments of $278 thousand and $139 thousand, respectively, plus accrued interest on the ~~Working Capital Loans out~~first of each month through maturity. Upon payment in full of the First Tranche Notes and Second Tranche Notes, the Company was required to pay exit fees of $600 thousand and $300 thousand, respectively.

In December 2021, the Company borrowed an additional $1 million from the same financial institution, which was repaid in full on December 31, 2021. In addition, the Company borrowed an additional $5 million (“Third Tranche Notes”) that bore interest at a rate per annum of 6.25% plus the greater of 3.25% or the prime rate as published by the Wall Street Journal. The Company is required to make interest-only payments on the first of each month beginning February 1, 2022, with the full principal amount due on July 1, 2023. Upon payment in full, the Company is required to pay exit fees of $50 thousand.

In connection with the Note Agreement, the Company issued warrants to purchase up to 33,357 shares of common stock of the Company (the “Legacy Liability Warrants”) at an exercise price of $0.01 per share (Note 8). On the date of issuance, the Company recorded the fair value of the Legacy Liability Warrants as a discount to the First Tranche Notes which was being amortized into interest expense over the term of the First Tranche Notes using the effective interest method. The issuance costs were deferred over the repayment term of the debt. Deferred issuance costs relate to the Company’s debt instruments, the short-term and long-term portions are reflected as a deduction from the carrying amount of the related debt.

In addition, the Company issued additional notes payable in July 2022 for proceeds of $3.0 million. Such notes payable matured on the ~~Trust Account released~~earlier of (a) December 30, 2022 or (b) the close of the Business Combination. The amount due at maturity was $4.5 million. The Company elected to account for the additional notes payable under the fair value option of accounting.

The notes payable were repaid at the closing of the Business Combination.

Promissory Notes

During the second quarter of 2022, the Company entered into promissory notes with various individuals (the “Promissory Notes”), including current investors, members of management and other unrelated parties in exchange for cash in an amount equal to $7.0 million (the “Promissory Notes”). The Promissory Notes were due to mature on the earlier of (a) one year from issuance or (b) the closing of the Business Combination (Note 1) and bore per annum interest at the rate of 7.75% plus the greater of 3.50% or the prime rate as published by the Wall Street Journal. The Company was required to make nine interest-only payments, followed by three principal and interest payments. In connection with the Promissory Notes, the Company issued warrants (“Promissory Note Warrants”) to purchase up to 31,024 shares of common stock of the Company at an exercise price of $0.01 per share (Note 7). Upon payment in full of the Promissory Notes, the Company was required to make an additional final payment (“Final Payment”) of $3.5 million.

The Company elected to account for the Promissory Notes under the fair value option of accounting upon issuance of each of the Promissory Notes. At issuance the Company recognized the fair value of the Promissory Notes of $6.3 million with the remaining $0.7 million of proceeds received allocated to the ~~Company. Otherwise,~~Promissory Note Warrants.

The Promissory Notes were repaid at the ~~Working Capital Loans would be repaid only out~~closing of ~~funds held outside~~ the ~~Trust Account. In the event that a~~ Business ~~Combination does not close,~~Combination.

Paycheck Protection Program Loan

On April 14, 2020, the Company ~~may use~~received loan proceeds of $2.3 million pursuant to the Paycheck Protection Program (the “PPP Loan”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). The PPP Loan had a ~~portion~~maturity date of ~~proceeds held outside~~April 22, 2022 and bore interest at a rate of 1% per annum. The balance as of December 31, 2020 of $2.3 million is included in Paycheck Protection Program loan payable on the ~~Trust Account to repay~~condensed consolidated balance sheets. On September 17, 2021, the ~~Working Capital Loans, but no proceeds held~~PPP Loan was forgiven in full including accrued interest thereon. As such, the Company recorded a gain on loan forgiveness during the nine months ended September 30, 2021 of $2.3 million included in other income in the ~~Trust Account would be used~~consolidated statement of operations.

WARRANTS AND DERIVATIVES

In connection with the Note Agreement, on August 11, 2021 the Company granted Legacy Liability Warrants to ~~repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion,~~purchase up to ~~$1,500,000~~33,357 shares of ~~such Working Capital Loans may be convertible into warrants of the post-Business Combination entity~~common stock at a price of ~~$1.00~~$0.01 per ~~warrant.~~share. The ~~warrants would be identical to~~Legacy Liability Warrants were exercisable at any time through the ~~Private Placement Warrants. As of September 30, 2021, there were0 amounts outstanding under the Working Capital Loans.~~

~~NOTE 7. COMMITMENTS AND CONTINGENCIES~~

~~Registration Rights~~

Pursuant to a registration rights agreement entered into on July 28, 2021, the holders of the Founder Shares, Private Placement Units (including securities contained therein) and units (including securities contained therein) that may be issued upon conversion of Working Capital Loans, and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and any shares of Class A common stock and warrants (and underlying Class A common stock) are entitled to registration rights, requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to Class A common stock). The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that the Company 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 and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable

~~lock-up~~

period. The registration rights agreement does not contain liquidated damages or other cash settlement provisions resulting from delays in registering the Company’s securities. 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~~tenth anniversary from the date of the Initial Public Offering to purchase up to 3,000,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On August 2, 2021, the underwriters notified the Company of their intention to partially exercise their over-allotment option. As such, on August 4, 2021, the Company consummated the sale of an additional 2,807,868 Units.

~~Table of Contents~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2021~~

~~(Unaudited)~~

grant. The underwriters were paid a cash fee of $0.20 per Unit, or $4,561,574 in the aggregate. In addition, the underwriters are entitled to a deferred fee of $7,982,754 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 the Company completes a Business Combination, subject to the terms of the underwriting agreement.

~~NOTE 8. CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION~~

~~Class~~

~~Common Stock~~

— The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At September 30, 2021, there were 22,807,868 shares of Class A common

~~stock issued and outstanding, all of which are subject to possible redemption and presented as temporary equity in the accompanying balance sheet.~~

Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all other matters submitted to a vote of our stockholders except as otherwise required by law.

~~The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a~~

~~one-for-one~~

basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which the shares of Class B common stock will convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the issued and outstanding shares of our Class B common stock agree to waive suchLegacy Liability Warrants had customary anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an

~~as-converted~~

basis, 20% of the sum of all shares of common stock issued and outstanding upon the completion of the Initial Public Offering, plus all shares of our Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination, excluding any shares or equity-linked securities issued, or to be issued, to any seller in our a Business Combination.

~~NOTE 9. SHAREHOLDERS’ DEFICIT~~

~~Preferred Stock~~

— The Company is authorized to issue 1,000,000 shares of preferred stock 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 shares of preferred stock issued or outstanding.

~~Class~~

~~B Common Stock~~

— The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. At September 30, 2021, there were 5,750,000 shares of Class B common stock issued and outstanding, of which an aggregate of up to 750,000 shares of Class B common stock are subject to forfeiture to the extent that the underwriters’ over-allotment option is not exercised in full or in part, so that the number of shares of Class B common stock will equal 20% of the Company’s issued and outstanding common stock after the Initial Public Offering. As a result of the underwriters’ election to partially exercise their over-allotment option and the forfeiture of the remaining over-allotment option, 48,033 Founder Shares were forfeited, and 701,967 Founder Shares are no longer subject to forfeiture resulting in an aggregate of 5,701,967 Founder Shares outstanding at August 4, 2021.

~~Prior to the consummation of a Business Combination, only holders of Class B common stock will have the right to vote on the election of directors.~~

~~Warrants~~

— Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable 30 days after the consummation of a Business Combination. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any Class A common stock pursuant to the exercise of a Public Warrant and will have no obligation to settle such Public Warrant exercise unless a registration statement under the Securities Act covering the issuance of the Class A common stock issuable upon exercise of the Public Warrants is then effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration. No Public 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 Public Warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available.

~~Table of Contents~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2021~~

~~(Unaudited)~~

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 with the SEC a registration statement registering the issuance of the shares of Class A common stock issuable upon exercise of the warrants, to cause such registration statement to become effective and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60

business day after the closing of a Business Combination or 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 will 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.

~~Redemption of Warrants When the Price per share of Class~~

~~A common stock Equals or Exceeds $18.00~~

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

~~in whole and not in part;~~

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

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

~~if, and only if, the reported closing price of the Class A common stock equals or exceeds $18.00 per share (as adjusted~~provisions for stock splits, stock dividends ~~reorganizations,~~and recapitalizations ~~and~~of the ~~like) for any 20 trading days within~~

~~a30-tradingday~~

~~period ending three business days before~~Company’s common stock. In addition, in connection with issuance of the additional notes payable in July 2022, the Company ~~sends~~granted additional Legacy Liability Warrants to purchase up to 13,343 shares of Common Stock that had a fair value of $428 thousand at issuance. The Legacy Liability Warrants had been determined to be liability classified as the ~~notice of redemption to the warrant holders.~~

Ifexercise price may be reduced and ~~when the warrants become redeemable by the Company, the Company may not exercise its redemption right if~~result in the issuance of shares of common stock 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.

~~The exercise price and number~~

~~of s~~

~~hares~~

of Class A common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.

~~In addition if (x) the Company issues~~ additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the 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 a Business Combination on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the common stock during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.

The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Proposed Public Offering, except that the Private Placement Warrants and the common shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and will be

~~non-redeemable.~~

~~Table of Contents~~

~~SOFTWARE ACQUISITION GROUP INC. III~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2021~~

~~(Unaudited)~~

~~NOTE 10. FAIR VALUE MEASUREMENTS (as Restated, See Note 2)~~

~~The Company follows the guidance in ASC 820 for its financial assets and liabilities that arere-measured and reported at fair value at each reporting period, and~~

~~non-financial~~

~~assets and liabilities that arere-measured and reported at fair value at least annually.~~

~~The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received~~ in connection with the sale of the ~~assets or paid~~Company if such Legacy Liability Warrants are not assumed. The Legacy Liability Warrants were initially recorded at fair value with a corresponding debt discount (Note 7) at grant date and are subsequently remeasured to fair value each reporting period. The Company recorded a fair value loss on the Legacy Liability Warrants of $208 thousand and $717 thousand for the three and nine months ended September 30, 2022, respectively, which is included in other (loss) income, net on the condensed consolidated statements of operations. The Company did not recognize a change in fair value on the Legacy Liability Warrants during the three and nine months ended September 30, 2021. The fair value of the warrant liability as of December 31, 2021 was $561 thousand, and is included in other long-term liabilities in the condensed consolidated balance sheets. All Legacy Liability Warrants were settled in connection with the ~~transfer~~closing of the Business Combination.

The Company had determined the warrant liability to be a Level 3 fair value measurement. The Company utilizes the Black-Scholes-Merton (“Black-Scholes”) model to determine the fair value of the Legacy Liability Warrants at each reporting date. The significant inputs utilized in the Black-Scholes model as of December 31, 2021 were as follows.


	December 31, 2021
Common Stock Fair Value Per Share	$	16.81
Exercise Price Per Share	$	0.01
Volatility		75.7	%
Risk-free rate		0.53	%
Expected Dividend Rate		0.0	%

The expected dividend rate was 0.0% as the Company has not and does not intend to pay dividends. The Company utilized the probability weighted expected return method (“PWERM”) to value the Company’s common stock.

The following table summarizes the changes in the warrant liability included in other long-term liabilities that were issued in connection with the Note Agreement (in thousands):


	Warrant Liability
Balance as of December 31, 2021	$	561
Legacy Liability Warrants issued		428
Change in fair value		717
Settlement of warrant liability in common stock		(1,706	)
Balance as of September 30, 2022	$	—

Convertible Note Warrants

The Company issued the PIPE Warrants in connection with the Convertible Notes issuance. There were 1,396,419 PIPE Warrants issued to purchase common stock of the Company at $11.50 per share. The PIPE Warrants are redeemable for $0.01 once the Company’s stock prices reaches $18.00 per share. The PIPE Warrants are equity classified. Approximately $377 thousand of the proceeds upon issuance of the Convertible Notes was allocated to the PIPE Warrants along with an immaterial amount of issuance costs.

Other Warrants

The Company had also granted Legacy Equity Warrants in 2017 and 2018 to purchase 100,000 shares of common stock at a price of $0.96 per share. 75,000 of such warrants were set to expire on January 12, 2027 and the remaining 25,000 were set to expire on July 20, 2028. The Legacy Equity Warrants were fully vested and exercisable at the Holder’s option at any time. Any shares not exercised at time of an acquisition would have automatically been deemed to be cashless exercised. Under the applicable accounting literature, these warrants meet the criteria to be classified as permanent equity within the equity section of the condensed consolidated balance sheet. These warrants were settled in connection with the closing of the Business Combination.

In addition, in connection with the Promissory Notes, the Company issued the Promissory Note Warrants to purchase up to 31,024 shares of common stock of the Company at an exercise price of $0.01 per share. The Promissory Note Warrants are fully vested and exercisable at the Holder’s option at any time. Under the applicable accounting literature, these warrants meet the criteria to be classified as permanent equity within the equity section of the condensed consolidated balance sheet. These warrants were settled in connection with the closing of the Business Combination.

Standby Agreement Derivative Liability

In connection with the Business Combination, Legacy Nogin acquired from SWAG a derivative liability associated with agreements entered into by SWAG prior to the Closing Date. SWAG entered into an agreement with a financial institution (the “Financial Institution”), whereby the Financial Institution purchased SWAG Class A common stock from third parties prior to the Closing Date (the “Standby Agreement”). At the Closing Date, the Company paid the Financial Institution 80% of the Financial Institution’s aggregate purchase price of such shares of SWAG Class A common stock. After the Closing Date, the Financial Institution may sell the shares purchased pursuant to the Standby Agreement and keep all the proceeds of such sales until they have recouped the remaining 20% of the aggregate purchase price of the shares purchased prior to the Closing Date. After such time, proceeds from the sale of such shares would be paid to the Company less a liquidity fee equal to 3.5% of the proceeds from such sales. If the Financial Institution has not fully recouped the aggregate purchase price of the shares purchased prior to the Closing Date by August 26, 2026,

the Company would be obligated to pay the remaining amount due to the Financial Institution on such date. Any remaining unsold shares as of August 26, 2026 would be returned to the Company.

In addition, SWAG entered into a subscription agreement (the “Subscription Agreement”) with the same Financial Institution whereby the Financial Institution purchased 517,079 shares of Common Stock at a purchase price of $10.17 per share at the closing of the Business Combination and paid the Company an amount equal to 20% of the purchase price. The Subscription Agreement was structured similarly to the Standby Agreement between the Company and the Financial Institution regarding the timing and amount of future payments, as well as the return of any unsold shares at maturity.

The Company concluded the Standby Agreement would be accounted for as a derivative in its entirety in accordance with ASC 815-10, and the structured payments within the Subscription Agreement was considered an embedded feature in the Subscription Agreement that met the definition of a derivative and required bifurcation from the Subscription Agreement, as it is not clearly and closely related to the Subscription Agreement and would be accounted for in accordance with ASC 815-10 (together the “Standby Agreement Derivative). The Standby Agreement Derivative was not entered in to for hedging purposes. The Company accounted for the Standby Agreement Derivative acquired at fair value upon the closing of the Business Combination. The Company will continue to account for the Standby Agreement Derivative at fair value each reporting period in accordance with ASC 815-10.

The Company engaged a third-party valuation specialist to assist with the fair value assessment. The acquisition date fair value at the closing of the Business Combination was $2.0 million. The fair value as of September 30, 2022 of the Standby Agreement Derivative liability is $1.9 million and is recognized in other long-term liabilities on the condensed consolidated balance sheets. The change in fair value of the Standby Agreement Derivative liability for both the three and nine months ended September 30, 2022 of $0.1 million is recorded in change in fair value of derivatives on the condensed consolidated statements of operations.

FAIR VALUE MEASUREMENTS

The Company applies the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures (“ASC 820”), which provides a single authoritative definition of fair value, sets out a framework for measuring fair value, and expands on required disclosures about fair value measurement.

The Company applies the provisions of ASC 820 to all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis.

The Company defines fair value as an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ~~In connection with measuring~~As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value ~~of its~~measurement:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

In determining fair value, the Company ~~seeks to~~utilized valuation techniques that maximize the use of observable inputs ~~(market data obtained from independent sources)~~ and to minimize the use of unobservable inputs ~~(internal assumptions about how market participants would price assets~~to the extent possible as well as considers counter party credit risk and ~~liabilities).~~nonperformance risk in its assessment of fair value.

The carrying value of the Company’s short-term financial instruments, such as cash, restricted cash, accounts receivable, notes payable, and accounts payable, approximate the fair value due to the immediate or short-term maturity of these instruments. As of September 30, 2022, the Company no longer has recurring measurements for warrant liability. Further, the Company has elected to apply the fair value option of accounting for its Convertible Notes and equity investments in unconsolidated affiliates. The Company is required to present the fair value of the Standby Agreement derivative liability each reporting period. The following ~~fair value hierarchy is used to classify~~details the Company’s recurring measurements for assets and liabilities at fair value (in thousands):


	September 30, 2022		December 31, 2021
Warrant liability (Level 3) - Note 8	$	-	$	561
Investment in unconsolidated affiliates (Level 3) - Note 5		11,674		13,570
Convertible Note (Level 3) - Note 7		74,942		-
Standby Agreement derivative liability (Level 3)- Note 8		1,900		-
Non-current Cash Consideration (Level 3)		3,865		-

Deferred cash consideration

In connection the Business Combination, Legacy Nogin equityholders elected to receive $15.0 million of the merger consideration in cash. In order to meet conditions to close the Transactions, the Company paid $4.1 million of the $15.0 million cash consideration at the Closing Date. Of the $10.9 million in deferred cash consideration, $5.0 million is payable, subject to certain conditions, on February 21, 2023, and is included in accrued expenses and other current liabilities as of September 30, 2022 on the condensed consolidated balance sheets (the “Current Cash Consideration”). The remaining $5.9 million (the “Non-current Cash Consideration”) is payable, subject to certain conditions, on the earlier of (a) the date on which the Company completes a primary offering of equity securities that generates gross proceeds to the Company equal to or in excess of $15.0 million and (b) November 25, 2026. In the event the conditions to paying cash consideration are not met and cash consideration remains unpaid as of November 25, 2026, the unpaid cash consideration will be settled in shares of the Company’s common stock with the number of shares issued determined based on the ~~observable~~quotient of unpaid cash consideration divided by the 10-day volume weighted average trading price of the Company’s common stock on NASDAQ. The Company elected to account for the Non-current Cash Consideration of $5.9 million under the fair value option of accounting under ASC 825-10. At the Closing Date, the fair value of the Non-current Cash Consideration was $4.2 million. In connection with the reverse recapitalization, the cash consideration would be akin to a distribution of capital. As a result, the Company recorded the fair value of the distribution at the Closing Date of $13.3 million, which included the $4.1 million paid at the Closing Date, $5.0 million Current Cash Consideration and $4.2 million Non-current Cash Consideration, against accumulated deficit. As of September 30, 2022, the fair value of the Non-current Cash Consideration was $3.9 million which is included in other long-term liabilities on the condensed consolidated balance sheets. The change in fair value from the Closing Date for the three and nine months ended September 30, 2022 of $0.3 million is included in other (loss) income, net on the condensed consolidated statements of operations.

The significant inputs ~~and unobservable~~to the valuation of the deferred cash consideration at fair value are Level 3 inputs since they are not directly observable. The Company primarily used ~~in order~~a discounted cash flow method to value the deferred cash consideration, based on the expected future payment discounted to present value. The significant input is the discount rate which is based on the Company’s credit rating.

10.

INCOME TAXES

The income tax expense for the nine months ended September 30, 2022 and September 30, 2021 was $134 thousand and $82 thousand, respectively. Income tax expense differs from the income taxes expected at the U.S. federal statutory tax rate of 21%, primarily due to state taxes and additional valuation allowance for the nine months ended September 30, 2022.

11.

ACQUISITION

On December 2, 2021, the Company acquired the assets of Betabrand through a credit bid of $7.0 million on Betabrand’s outstanding indebtedness. The Company engaged a third-party valuation specialist to assist with the purchase price valuation, which resulted in goodwill of $3.1 million. The following table summarizes the finalized fair value of the assets and ~~liabilities:~~assumed liabilities (in thousands):


	As of December 2, 2021
Acquired assets
Inventory	$	2,408
Other current assets		741
Property and equipment		25
Internal-use software and website		348
Intangible assets
Customer relationships		2,538
Developed technology		748
Trade name		438
Security Deposits		19
Total identifiable assets	$	7,265
Liabilities assumed
Accounts payable	$	151
Deferred revenue		3,224
Total liabilities	$	3,375

On December 31, 2021, the Company and CFL entered into a Limited Liability Operating Agreement (the “LLC Agreement”), whereby Nogin contributed certain assets acquired from the Betabrand acquisition and entered into a MSA with IPCO to provide certain eCommerce services, marketing, photography, customer service and merchant credit card monitor fraud services; and CFL entered into a Master Supply Agreement with IPCO and agreed to procure the supply of inventory to IPCO, provide manufacturing, fulfillment, logistics and warehousing services for the inventory. The Company and CFL each received fifty percent ownership.

12.

RELATED PARTY TRANSACTIONS

The Company provides services to its joint ventures, ModCloth and IPCO under Master Services agreements (“MSA”), which were entered into on April 25, 2021 and December 31, 2021, respectively. Sales under the MSA to ModCloth and IPCO were equal to $4.4 million and $4.9 million, respectively, during the nine months ended September 30, 2022. In addition, the Company sold inventory to IPCO for $0.6 million during the nine months ended September 30, 2022, which such amount is included in net revenue to related parties in the condensed consolidated statement of operations. As of September 30, 2022 and December 31, 2021, the Company had receivables from ModCloth of $7.7 million and $5.3 million, respectively, which were included in related party receivables on the condensed consolidated balance sheets. As of September 30, 2022, the Company had payables to IPCO of $0.2 million, which was included in related party payables on the condensed consolidated balance sheets.

During the second quarter of 2022, the Company issued a portion of the Promissory Notes described in Note 7 to certain principal owners and members of management of the Company which have been identified as related parties. The Company received proceeds in connection with the Promissory Notes to related parties of $2.0 million at issuance of which $0.2 million was allocated to the Promissory Note Warrants. The Company paid $3.1 million to settle the Promissory Notes at the closing of the Business Combination.

One of the Company’s co-chief executive officers and his immediate family member (together, the “PIPE Related Parties”) were investors in the PIPE issuance of Convertible Notes (Note 7) for total proceeds of $1.5 million, which is included in proceeds from PIPE convertible note issuance in the condensed consolidated statements of cash flows for the nine months ended September 30, 2022. In addition to the $1.5 million in Convertible Notes, the PIPE Related Parties also received 32,142 equity classified Convertible Note Warrants (Note 8). As of September 30, 2022, the fair value of the Convertible Notes with the PIPE Related Parties was $1.7 million, which is included in Convertible Notes on the condensed consolidated balance sheets. The terms of the Convertible Notes with the PIPE Related Parties are consistent with the rest of the Convertible Note holders.

13.

REVENUE

Disaggregation of Revenue

The Company has five major streams of revenue. CaaS service revenue, product revenue and shipping revenue are considered transferred to customers at the point of sale. Marketing and other revenue (other than B2C fulfillment services for rental space) are considered transferred to customers when services are performed. Thus, these revenues streams are recognized at a point in time. B2C fulfillment services for rental space is recognized over time.


~~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 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.~~

The following table presents ~~information about~~a disaggregation of the Company’s ~~assets that are measured at fair value~~revenues by revenue source for the nine months ended September 30, 2022 and 2021 (in thousands):


	Three Months ended September 30,				Nine Months ended September 30,
	2022		2021		2022		2021
Commerce-as-a-Service Revenue	$	5,422	$	4,409	$	15,729	$	13,791
Product sales revenue		8,645		15,224		29,401		19,739
Marketing revenue		3,417		4,319		11,104		13,127
Shipping revenue		2,574		1,583		6,688		4,405
Other revenue		916		1,412		3,600		4,159
Total revenue	$	20,974	$	26,947	$	66,522	$	55,221

14.

SEGMENT REPORTING

The Company conducts business domestically and our revenue is managed on a ~~recurring~~consolidated basis. Our Co-Chief Executive Officer, Jonathan S. Huberman, who is our Chief Operating Decision Maker, reviews financial information presented on a consolidated basis ~~at September 30, 2021,~~for purposes of allocating resources and ~~indicates~~evaluating financial performance. There are no segment managers who are held accountable for operations, operating results, and plans for levels, components, or types of products or services below the ~~fair value hierarchy~~consolidated unit level. Accordingly, the Company is considered to be a single reportable segment.

All of the ~~valuation inputs~~Company’s long-lived assets and external customers are located within the ~~Company utilized to determine such fair value:~~United States.

15.

EARNINGS PER SHARE

Description

Level

September 30,

2021

Assets:

Marketable securities held in Trust Account
   1    $ 231,501,771

Basic and diluted net income (loss) per share are computed using the two-class method as required when there are participating securities. The ~~over-allotment option was accounted for a liability in accordance with~~

~~ASC-480~~

~~and is presented within liabilities on~~Company’s redeemable convertible preferred stock are participating securities as the accompanying balance sheet. The over-allotment option is measured at fair value at inception and on a recurring basis until it is exercised or expires, with changes in fair value presented in the statement of operations. On August 4, 2021, the underwriters partially exercised their over-allotment option to purchase an additional 2,807,868 Units at $10.00 per Unit and forfeited the remaining over-allotment option. The over-allotment liability was eliminated upon the forfeitureholders of the ~~unexercised option.~~

~~The over-allotment option liability was valued using~~redeemable convertible preferred stock are entitled to participate with in dividends with common stock. In periods of net income, net income is attributed to common stockholders and participating securities based on their participating rights. Net losses are not allocated to the participating securities as the participating securities do not have a ~~Modified Black Scholes Model.~~

contractual obligation to share in any losses. The following table presents the ~~quantitative information regarding Level 3 fair value measurement inputs:~~Company’s basic and diluted net income (loss) per share:


	Three Months ended September 30,						Nine Months ended September 30,
(In thousands, except share and per share amounts)	2022			2021			2022			2021
Numerator: Basic EPS
Net (loss) income	$	(28,896	)	$	(251	)	$	(49,812	)	$	2,074
Less: Undistributed earnings attributable to participating securities		—			—			—			(581	)
Net (loss) income attributable to common stockholders-basic	$	(28,896	)	$	(251	)	$	(49,812	)	$	1,493
Denominator: Basic EPS
Weighted average shares of common stock outstanding-basic		49,921,209			39,621,946			43,092,760			39,621,946
Net (loss) income per share attributable to common stock-basic	$	(0.58	)	$	(0.01	)	$	(1.16	)	$	0.04


	Three Months ended September 30,						Nine Months ended September 30,
(In thousands, except share and per share amounts)	2022			2021			2022			2021
Numerator: Diluted EPS
Net income (loss) attributable to common stockholders-diluted	$	(28,896	)	$	(251	)	$	(49,812	)	$	1,493
Denominator: Diluted EPS
Adjusted weighted average shares of common stock outstanding-basic		49,921,209			39,621,946			43,092,760			39,621,946
Dilutive potential shares of common stock:
Options to purchase shares of common stock		—			—			—			728,284
Warrants to purchase shares of common stock		—			—			—			546,049
Weighted average shares of common stock outstanding-diluted		49,921,209			39,621,946			43,092,760			40,896,279
Net income (loss) per share attributable to common stock-diluted	$	(0.58	)	$	(0.01	)	$	(1.16	)	$	0.04

The Company’s potentially dilutive securities below, have been excluded from the computation of diluted net loss per share as they would be anti-dilutive.

Weighted-average number of potentially anti-dilutive shares excluded from calculation of dilutive earnings per share


	Three Months ended September 30,				Nine Months ended September 30,
	2022		2021		2022		2021
Series A convertible, redeemable preferred shares		5,492,133		8,864,495		7,728,022		8,864,495
Series B convertible, redeemable preferred shares		3,924,419		6,334,150		5,522,080		6,334,150
Stock-based compensation awards		1,927,862		—		2,419,681		—
Legacy Nogin Warrants		472,624		—		572,779		—
PIPE Warrants		531,246		—		179,028		—
SWAG Warrants		8,136,240		—		2,741,883		—
Shares Underlying Convertible Notes		2,166,825		—		730,212		—

16.

MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT

August 4,
2021

August 2,

2021

Stock Price
   $ 10.04 $ 10.00
Exercise Price
   $ 10.00 $ 10.00
Volatility
   5.00 % 5.00 %
Term (days)
   43 45
Dividend Yield
   0.00 0.00
Risk Free Rate-Daily Treasury Yield Curve
   0.05 % 0.05 %

~~The following table presents the~~

Significant changes in the ~~fair~~Company’s mezzanine equity and shareholders’ deficit during the nine months ended September 30, 2022 were as follows:

Common Stock

Subsequent to the Business Combination, the Company authorized up to 500 million shares of common stock with a par value of $0.0001 per share. Each share of common stock entitles the ~~Level 3 over-allotment liability:~~

shareholder to one vote.

Preferred Stock

As part of the Business Combination, all of the convertible preferred stock of Legacy Nogin, (including both the Series A preferred stock and Series B preferred stock) were converted into approximately 15.2 million shares of the Company’s Common Stock. As a result of the conversion of the Series A preferred stock and Series B preferred stock, the Company reclassified the amounts previously recorded in mezzanine equity to additional paid-in capital.

Subsequent to the Business Combination, the Company is authorized to issue 50 million shares of preferred stock with a par value of $0.0001 per share. There were no shares of preferred stock issued and outstanding as of September 30, 2022.

17.

COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company has entered into lease agreements for offices and warehouses located in California.

As of September 30, 2022, the monthly lease payments for the leases range from approximately $36 thousand to approximately $124 thousand and the leases expire at various times through November 2028. Some of the leases contain renewal options.

Minimum rent payments under all operating leases are recognized on a straight-line basis over the term of the lease including any periods of free rent, and any difference between rental payments and straight-line is recognized as deferred rent in the accompanying condensed consolidated balance sheet.

Rent expense for the nine months ended September 30, 2022 and 2021 was approximately $4.1 million and $2.7 million, respectively, and is included in general and administrative expenses in the condensed consolidated statements of operations.

In July 2018, the Company assumed the operating lease for office space of the entity with which an asset purchase agreement (APA) was executed. The monthly lease payment is $75 thousand and expires in May 2023. The future minimum lease payments are included in the table below. The Company subleased the office space to a third-party in December 2018 for approximately $87 thousand per month. The sublease agreement will expire in May 2023. Future rental income is approximately $1.0 million for 2022 and approximately $435 thousand for 2023.

Future minimum lease payments under non-cancelable terms are as follows (in thousands):


	As of September 30, 2022
2022 (remaining payments)	$	570
2023		1,272
2024		873
2025		900
2026		927
Thereafter		1,853
Total minimum lease payments	$	6,395


	~~Over-allotment~~ ~~Option Liability~~
~~Fair value as of January 5, 2021~~	$	0
~~Initial measurement on August 2, 2021~~		~~211,034~~
~~Change in fair value at August 4, 2021~~		~~61,353~~
~~Fair value of forfeited over-allotment option at August 4, 2021~~		~~(17,445~~	)
~~Elimination of over-allotment liability at August 4, 2021~~		~~(254,942~~	)

~~Fair value as of September 30, 2021~~	$	0

Litigation

In the ordinary course of business, the Company may face various claims brought by third parties and the Company may, from time to time, make claims or take legal actions to assert its rights, including intellectual property disputes, contractual disputes, and other commercial disputes. Any of these claims could subject the Company to litigation. As of September 30, 2022 there are no claims that would cause a material impact on the condensed consolidated financial statements.

Indemnities

The Company’s directors and officers agreements require us, among other things, to indemnify the director or officer against specified expenses and liabilities, such as attorneys’ fees, judgments, fines and settlements, paid by the individual in connection

with any action, suit or proceeding arising out of the individual’s status or service as our director or officer, other than liabilities arising from willful misconduct or conduct that is knowingly fraudulent or deliberately dishonest, and to advance expenses incurred by the individual in connection with any proceeding against the individual with respect to which the individual may be entitled to indemnification by the Company. The Company also indemnifies its lessor in connection with its facility lease for certain claims arising from the use of the facilities.

These indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities in the accompanying condensed consolidated balance sheets.

18.

~~NOTE 11.~~ SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed consolidated financial statements were issued. ~~Based upon this review, other than described in these financial statements, the~~The Company did not identify any subsequent events or transactions that would ~~have required~~require adjustment or disclosure in the condensed consolidated financial statements.

~~Table of Contents~~

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

References in this report (this “Quarterly Report”) to “we,” “us” or the “Company” refer to Software Acquisition Group Inc. III References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Software Acquisition Holdings III, LLC.

The following discussion and analysis of ~~the Company’s~~our financial condition and results of operations should be read in conjunction with the unaudited consolidated financial statements and the related notes ~~thereto contained~~of Nogin, Inc. and its subsidiaries included elsewhere in this ~~Quarterly~~ Report. ~~Certain~~Some of the information contained in ~~the~~this discussion and analysis ~~set forth below includes~~contains forward-looking statements that involve risks and uncertainties.

~~Special Note Regarding Forward-Looking Statements~~

~~This Quarterly~~ As a result of many factors, such as those set forth in the section captioned “Risk Factors” in our Registration Statement on Form S-1 filed with the SEC on September 16, 2022 and elsewhere in this Report, includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 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 Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, including that the conditions of the Proposed Business Combination are not satisfied. For information identifying important factors that could cause actual results tomay differ materially from those anticipated in these forward-looking statements.

Unless the ~~forward-looking statements, please~~context otherwise requires, references in this subsection to “we,” “our,” “Nogin” and the “Company” refer to the ~~Risk Factors section~~business and operations of Branded Online, Inc. dba Nogin and its consolidated subsidiaries prior to the Business Combination and to Nogin, Inc. (formerly known as Software Acquisition Group Inc. III) and its consolidated subsidiaries following the consummation of the Business Combination (as defined below).

Company Overview

Nogin is an e-commerce, technology platform provider in the apparel and ancillary industry’s multichannel retailing, business-to-consumer and business-to-business domains. Nogin’s CaaS platform delivers full-stack enterprise-level capabilities to our clients enabling them to compete with large retailers. As clients grow their brand, they require additional capabilities beyond a simple online storefront. We provide the technology for these growing brands to manage complexities related to customer management, order optimization, returns, and fulfillment. The platform’s tools provide clients with capabilities around website development, photography, content management, customer service, marketing, warehousing, and fulfillment. The Company’s ~~final prospectus~~business model is based on providing a total e-commerce software solution to its partners on a revenue-sharing basis. The Company’s platform is used by online businesses whose needs are too complex for low cost SaaS ecommerce platforms, yet require more flexibility and economic viability than provided by enterprise solutions.

Our platform helps brands develop relationships directly with their customers leading to accelerated revenue growth, improved customer engagement, and reduced costs related to re-platforming and third-party integrations.

Recent Developments

Business Combination

On February 14, 2022, the Company entered into the Merger Agreement with Merger Sub and Legacy Nogin, pursuant to which Merger Sub would merge with and into Legacy Nogin, with Legacy Nogin surviving the merger as a wholly owned subsidiary of the Company.

On April 19, 2022, the Company, the Notes Guarantors and the Subscribers entered into the PIPE Subscription Agreements pursuant to which the Company agreed to issue and sell to the Subscribers immediately prior to the closing of the Business Combination (i) up to an aggregate principal amount of $75.0 million of Convertible Notes at the par value of the notes and (ii) up to an aggregate of 1.5 PIPE Warrants with each whole PIPE Warrant entitling the holder thereof to purchase one share of Common Stock.

On August 26, 2022, the Company and a subscriber (the “Equity Subscriber”) entered into a subscription agreement (the “Equity PIPE Subscription Agreement”) pursuant to which the Company agreed to issue and sell to the Equity Subscriber, immediately prior to the closing of the Business Combination, 517,079 shares of Common Stock (the “PIPE Shares”) at a price per PIPE Share equal to $10.17 (the “Equity PIPE” and, together with the transactions described in clauses (i) and (ii) above, the “PIPE Investment”).

On August 26, 2022, immediately prior to the Closing, the Company issued (i) 517,079 shares of Common Stock to the Equity Subscriber in accordance with the terms of the Equity PIPE Subscription Agreement, (ii) $65.5 million aggregate principal amount of Convertible Notes to the Subscribers in accordance with the terms of the PIPE Subscription Agreements and (iii) 1,396,419 PIPE Warrants to the Subscribers in accordance with the terms of the PIPE Subscription Agreements.

On the Closing Date, pursuant to the Merger Agreement, Merger Sub merged with and into Legacy Nogin, with Legacy Nogin surviving the merger as a wholly owned subsidiary of the Company. In connection with Closing, we changed our name to Nogin, Inc.

Joint Ventures

On April 6, 2021, the Company and Tiger Capital Group, LLC (“Tiger Capital”) formed a joint venture, Modcloth LLC (“ModCloth”). The Company and Tiger Capital each contributed $1.5 million into ModCloth and Nogin owns 50% of the outstanding membership units. Tiger Capital provides the financing for the inventory, while Nogin entered into a Master Services Agreement (“MSA”) with ModCloth to provide the Intelligent Commerce Platform and eCommerce services. The Company accounts for its ~~Initial Public Offering filed~~investment in ModCloth under the fair value option of accounting. As of December 31, 2021, the investment balance related to

ModCloth was$6.4 million and was included in investment in unconsolidated affiliates on the consolidated balance sheets. For the year ended December 31, 2021, the Company recorded a fair value adjustment related to its ModCloth investment of $4.9 million included in changes in fair value of unconsolidated affiliates on the consolidated statements of operations.

On December 31, 2021, the Company and CFL Delaware, Inc. (“CFL”) formed a joint venture, IPCO Holdings, LLC (“IPCO”), whereby the Company contributed certain assets acquired from the BTB (ABC), LLC (“Betabrand”) acquisition and entered into a MSA with IPCO to provide certain eCommerce services, marketing, photography, customer service and merchant credit card monitor fraud services; and CFL entered into a Master Supply Agreement with IPCO and agreed to procure the ~~U.S. Securities~~supply of inventory to IPCO, provide manufacturing, fulfillment, logistics and ~~Exchange Commission (the “SEC”).~~warehousing services for the inventory. The Company accounts for its investment in IPCO under the fair value option of accounting. As of December 31, 2021, the investment balance related to IPCO was $7.1 million and was included in investment in unconsolidated affiliates on the consolidated balance sheets.

The Company has determined that it does not have the ability to direct the most significant activities of the joint ventures. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligationmaximum exposure to ~~update or revise any forward-looking statements whether~~loss as a result of ~~new information,~~its investments in the joint ventures is equal to its carrying value of the investment. The Company has recorded its 50% equity interest in the joint ventures as investments in unconsolidated affiliates under the fair value option of accounting. Changes in the fair value of the joint ventures, which are inclusive of equity in income, are recorded as changes in fair value of unconsolidated affiliates in the consolidated statements of operations during the periods such changes occur.

Impact of COVID-19 pandemic

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The worldwide spread of COVID-19 has resulted, and is expected to continue to result, in a global slowdown of economic activity which is likely to decrease demand for a broad variety of goods and services, including those provided by our clients, while also disrupting sales channels and advertising and marketing activities for an unknown period until the virus is contained, or economic activity normalizes. Our revenue growth and results of operations have been resilient despite the headwinds created by the COVID-19 pandemic. The extent to which ongoing and future ~~events~~developments related to the global impact of the COVID-19 pandemic and relatedvaccination measures designed to curb its spread continue to impact our business, financial condition, and results of operations, all of which cannot be predicted with certainty. Many of these ongoing and future developments are beyond our control, including the speed of contagion, the development, distribution and implementation of effective preventative or ~~otherwise.~~

~~Overview~~

Wetreatment measures, including vaccines (and vaccination rates), the scope of governmental and other restrictions on travel, discretionary services and other activity, and the public reactions and receptiveness to these developments. See the section entitled “Risk Factors” for further discussion of the adverse impacts of the COVID-19 pandemic on our business.

At the onset of COVID-19, the Company anticipated an impact to the business, its financial conditions and results of operations. The Company applied for and was granted a Paycheck Protection Plan (“PPP”) loan. In addition, the Company has taken a number of actions to mitigate the impacts of the COVID-19 pandemic on its business. The Company witnessed a large shift in consumer spending from retail stores to online stores, and as a result, there were no significant declines in the periods presented. However, the impacts of the COVID-19 pandemic will depend on future developments, including the duration and spread of the pandemic. These developments and the impacts of the COVID-19 pandemic on the financial markets and overall economy are highly uncertain and cannot be predicted.

In 2020, due to COVID-19, the Company implemented a ~~blank check company incorporated in Delaware on January 5, 2021, formed~~pay reduction of 20% for the ~~purpose~~majority of ~~effecting~~our salaried employees. Once the PPP loan was received, the Company removed the pay reduction for the employees who were affected by the pay reduction.

Components of Our Results of Operations

Revenue

The Company’s sources of revenue are summarized as follows:

•

Product revenue

Beginning in fiscal 2021, under two licensee agreements, the Company is the owner of inventory and reseller of record. As a ~~merger,~~result, the Company is the principal in sales to end customers and records these revenues on a gross basis at a point in time.

•

Service revenue

Fulfillment service revenue—Revenue for business-to-business (“B2B”) fulfillment services is recognized on a gross basis either at a point in time or over a point in time. For example, inbound and outbound services are recognized when the service is complete, while monthly storage services are recognized over the service period.

Marketing service revenue—Revenue for marketing services is recognized on a gross basis as marketing services are complete. Performance obligations include providing marketing and program management such as procurement and implementation.

Shipping service revenue—Revenue for shipping services is recognized on a gross basis as shipments are completed and products are shipped to end customers. This historical source of revenue is separate from the Smart Ship offering. Smart Ship is an offering that provides order storage and fulfillment solutions, designed for small to mid-size companies to manage the fulfillment of their orders and would be included as Fulfillment service revenue.

Other service revenue—Revenue for other services such as photography, business to customer (“B2C”) fulfillment, customer service, development and web design are reimbursable costs and recognized on the gross basis, and are services rendered as part of the performance obligations to clients for which an online platform and online orders are managed. All reimbursable costs are the responsibility of the Company as the Company uses such services to fulfill its performance obligations.

Set up and implementation service revenue—The Company provides set up and implementation services for new clients. The revenue is recognized on a gross basis at the completion of the service, with the unearned amounts received for incomplete services recorded as deferred revenue, if any.

The Company recognizes revenue when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. The Company determines revenue recognition through the following steps:

•

Identification of a contract with a customer;

•

Identification of the performance obligations in the contract;

•

Determination of the transaction price;

•

Allocation of the transaction price to the performance obligations in the contract;

•

Recognition of revenue when or as the performance obligations are satisfied.

A performance obligation is a promise in a contract to transfer a distinct product. Performance obligations promised in a contract are identified based on the goods that will be transferred that are both capable of being distinct and are distinct in the context of the contract, whereby the transfer of the goods is separately identifiable from other promises in the contract. Performance obligations include establishing and maintaining customer online stores, providing access to the Company’s e-commerce platform, customer service support, photography services, warehousing, and fulfillment. Most of the contracts of the Company with customers contain multiple promises, which may result in multiple performance obligations, while others are combined into one performance obligation. For contracts with customers, the Company accounts for individual promises separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines the standalone selling prices based on its overall pricing objectives, taking into consideration market conditions and other factors.

The Company’s revenue is mainly commission fees derived from contractually committed gross revenue processed by customers on the Company's e-commerce platform. The Company is acting as an agent in these arrangements and customers do not have the contractual right to take possession of the Company's software. Revenue is recognized in an amount that reflects the consideration that the Company expects to ultimately receive in exchange for those promised goods, net of expected discounts for sales promotions and customary allowances.

CaaS Revenue is recognized on a net basis from maintaining e-commerce platforms and online orders, as the Company is engaged primarily in an agency relationship with its customers and earns defined amounts based on the individual contractual terms for the customer and the Company does not take possession of the customers' inventory or any credit risks related to the products sold.

Variable consideration is included in revenue for potential product returns. The Company uses an estimate to constrain revenue for the expected variable consideration at each period end. The Company reviews and updates its estimates and related accruals of variable consideration each period based on the terms of the agreements, historical experience, and expected levels of returns. Any uncertainties in the ultimate resolution of variable consideration due to factors outside of the Company’s influence are typically resolved within a short timeframe therefore not requiring any additional constraint on the variable consideration. The estimated reserve for returns is included on the balance sheet in accrued expenses with changes to the reserve in revenue on the accompanying statement of operations.

Operating Expenses

We classify our operating expenses into the following categories:

•

Cost of services. Cost of services reflects costs directly related to providing services under the master service agreements with customers, which primarily includes service provider costs directly related to processing revenue transactions, marketing expenses and shipping and handling expenses which correspond to marketing and shipping revenues, as well as credit card merchant fees. Cost of services is exclusive of depreciation and amortization and general salaries and related expenses.

•

Cost of product revenue. Cost of product revenue reflects costs directly related to selling inventory acquired from select clients, which primarily includes product cost, warehousing costs, fulfillment costs, credit card merchant fees and third-party royalty costs. Cost of product revenue is exclusive of depreciation and amortization and general salaries and related expenses.

•

Sales and marketing. Sales and marketing expense consists primarily of salaries associated with selling across all our revenue streams.

•

Research and development. Research and development expense consists primarily of salaries and contractors’ costs associated with research and development of the Company’s technology platform.

•

General, and administrative. General and administrative expense consists primarily of lease expense, materials and equipment, dues and subscriptions, professional services, and acquisition costs incurred.

•

Depreciation and amortization. Depreciation and amortization expenses are primarily attributable to our capital ~~stock exchange,~~investment and consist of fixed asset ~~acquisition, share purchase, reorganization or other similar Business Combination~~depreciation and amortization of intangibles considered to have finite lives.

Interest Expense

Interest expense primarily consists of interest incurred under our line of credit and promissory notes.

Change in Fair Value of Unconsolidated Affiliates

Change in fair value of unconsolidated affiliates represents the fair value adjustments associated with ~~one or more businesses. We intend~~the Company’s ModCloth and IPCO investments for which the Company elected to ~~effectuate our Business Combination using cash~~use the fair value option of accounting.

Other Income (Expense)

Other income (expense) is mainly related to sublease rental income derived from the ~~proceeds~~sublease of property by the Company as well as gain from settlement of deferred revenue and PPP loan forgiveness.

Provision (Benefit) for Income Taxes

The provision (benefit) for income taxes consist primarily of U.S. federal, state, and foreign income taxes. Deferred tax assets and liabilities are recognized with respect to the tax consequences attributable to differences between the financial statement carrying values and tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. A valuation allowance is established, when necessary, to reduce deferred tax assets if it is more likely than not that some portion or all the deferred tax assets will not be realized.

Realization of our deferred tax assets is dependent primarily on the generation of future taxable income. In considering the need for a valuation allowance, we consider our historical, as well as future, projected taxable income along with other objectively verifiable evidence. Objectively verifiable evidence includes our realization of tax attributes, assessment of tax credits and utilization of net operating loss carryforwards during the year.

Results of Operations

The following tables set forth our consolidated results of operations and out consolidated results of operations as a percentage of revenue for the periods presented (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net service revenue	$	10,013		$	9,071		$	27,800		$	31,242
Net product revenue		8,645			15,224			29,401			19,739
Net revenue from related parties		2,316			2,652			9,321			4,240
Total net revenue		20,974			26,947			66,522			55,221
Operating costs and expenses:
Cost of services (1)		6,304			5,250			17,496			16,721
Cost of product revenue (1)		7,956			6,049			23,363			7,957
Sales and marketing		925			528			2,111			1,205
Research and development		1,400			1,609			4,227			4,033
General and administrative		15,969			15,658			46,332			30,300
Depreciation and amortization		194			144			614			384
Total operating costs and expenses		32,748			29,238			94,143			60,600
Operating loss		(11,774	)		(2,291	)		(27,621	)		(5,379	)
Interest expense		(2,568	)		(254	)		(4,685	)		(374	)
Change in fair value of promissory notes		(1,995	)		—			(4,561	)		—
Change in fair value of derivative instruments		64			—			64			—
Change in fair value of unconsolidated affiliates		87			—			(1,895	)		4,937
Change in fair value of convertible notes		(9,182	)		—			(9,182	)		—
Debt extinguishment loss		(1,885	)		—			(1,885	)		—
Other (loss) income, net		(1,574	)		2,660			87			2,972
(Loss) Income before income taxes		(28,827	)		115			(49,678	)		2,156
Provision for income taxes		69			366			134			82
Net (loss) income	$	(28,896	)	$	(251	)	$	(49,812	)	$	2,074


	Three Months Ended September 30,						Nine Months Ended September 30,
(as a percentage of total revenue*)	2022			2021			2022			2021
Net service revenue		47.7	%		33.7	%		41.8	%		56.6	%
Net product revenue		41.2	%		56.5	%		44.2	%		35.7	%
Net revenue from related parties		11.0	%		9.8	%		14.0	%		7.7	%
Total net revenue		100.0	%		100.0	%		100.0	%		100.0	%
Operating costs and expenses:
Cost of services (1)		30.1	%		19.5	%		26.3	%		30.3	%
Cost of product revenue (1)		37.9	%		22.4	%		35.1	%		14.4	%
Sales and marketing		4.4	%		2.0	%		3.2	%		2.2	%
Research and development		6.7	%		6.0	%		6.4	%		7.3	%
General and administrative		76.1	%		58.1	%		69.6	%		54.9	%
Depreciation and amortization		0.9	%		0.5	%		0.9	%		0.7	%
Total operating costs and expenses		156.1	%		108.5	%		141.5	%		109.7	%
Operating loss		-56.1	%		-8.5	%		-41.5	%		-9.7	%
Interest expense		-12.2	%		-0.9	%		-7.0	%		-0.7	%
Change in fair value of promissory notes		-9.5	%		0.0	%		-6.9	%		0.0	%
Change in fair value of derivative instruments		0.3	%		0.0	%		0.1	%		0.0	%
Change in fair value of unconsolidated affiliates		0.4	%		0.0	%		-2.8	%		8.9	%
Change in fair value of convertible notes		-43.8	%		0.0	%		-13.8	%		0.0	%
Debt extinguishment loss		-9.0	%		0.0	%		-2.8	%		0.0	%
Other (loss) income, net		-7.5	%		9.9	%		0.1	%		5.4	%
(Loss) Income before income taxes		-137.4	%		0.4	%		-74.7	%		3.9	%
Provision for income taxes		0.3	%		1.4	%		0.2	%		0.1	%
Net (loss) income		-137.8	%		-0.9	%		-74.9	%		3.8	%

* Percentages may not sum due to rounding

Comparison of the ~~Initial Public Offering~~Nine Months Ended September 30, 2022 and 2021

Net service revenue


	For the Nine Months Ended September 30,
	2022			2021			$ Change			% Change
	(in thousands, except percentages)
Net service revenue	$	27,800		$	31,242		$	(3,442	)		(11.0	)%
Percent of total revenue		41.8	%		56.6	%

Net service revenue decreased by $3.4 million, or 11.0%, to $27.8 million for the nine months ended September 30, 2022 as compared to $31.2 million for the nine months ended September 30, 2021. The Company historically recognizes net revenue as a percentage of service sales. The decrease is primarily due to a client for whom the Company recognized service revenue in 2021 until the Company purchased inventory from the client, and as a result, the Company began recognizing product revenue instead of service revenue starting in the third quarter of 2021. See below for further discussion on product revenue. Net service revenue as a percentage of total revenue was 41.8% for the nine months ended September 30, 2022 compared to 56.6% for the nine months ended September 30, 2021.

Net product revenue


	For the Nine Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Net product revenue	$	29,401		$	19,739		$	9,662		48.9	%
Percent of total revenue		44.2	%		35.7	%

Net product revenue increased by $9.7 million, or 48.9%, to $29.4 million for the nine months ended September 30, 2022 as compared to $19.7 million for the nine months ended September 30, 2021. The Company historically recognizes net revenue as a percentage of service sales. Starting in the second quarter of 2021, the Company added product revenue, which was generated from purchased inventory from select clients, to assist those clients with managing inventory through the pandemic in order to continue marketing and selling their particular brand of products. The Company sourced the products from vendors approved by licensees, and the products were received into the Company’s leased distribution centers and orders by end-customers were then fulfilled. As a result, the Company recognized the gross revenue for the sale of the ~~Private Placement Warrants, our shares, debt or a combination~~inventory-owned products, and the corresponding cost of ~~cash, shares and debt.~~

~~We expect to continue to incur significant costs~~product revenue in the ~~pursuit~~period the order was fulfilled. The practice of ~~our acquisition plans. We cannot assure you~~purchasing inventory was unique to 2021 and 2022, and the Company does not anticipate continuing after finding a buyer to distribute the inventory. The increase in product revenue is primarily due to the addition of a second product revenue client that ~~our plans to complete~~was added in the third quarter of 2021. Net product revenue as a ~~Business Combination will be successful.~~

~~Results~~percentage of ~~Operations~~

~~We have neither engaged in any operations nor generated any revenues to date. Our only activities from January 5, 2021 (inception) through~~total revenue was 44.2% for the nine months ended September 30, ~~2021 were organizational activities, those necessary~~2022 compared to ~~prepare~~35.7% for the ~~Initial Public Offering, described below, and subsequent~~nine months ended September 30, 2021.

Net revenue from related parties


	For the Nine Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Net revenue from related parties	$	9,321		$	4,240		$	5,081		119.8	%
Percent of total revenue		14.0	%		7.7	%

Net revenue from related parties increased by $5.1 million, or 119.8%, to $9.3 million for the nine months ended September 30, 2022 as compared to $4.2 million for the nine months ended September 30, 2021. The Company provides services to its joint ventures under Master Services agreements that are classified as related party revenue. The increase is primarily due to the ~~Initial Public Offering, identifying~~addition of a ~~target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination, at the earliest. We will generate~~

~~non-operating~~

~~income~~second joint venture added in the ~~form~~fourth quarter of ~~interest income on marketable securities held~~2021, and revenue for the second joint venture was included for the nine months ending September 30, 2022. Net service revenue from related parties as a percentage of total revenue was 14.0% for the nine months ended September 30, 2022 compared to 7.7% for the nine months ended September 30, 2021.

Cost of services


	For the Nine Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Cost of services	$	17,496		$	16,721		$	775		4.6	%
Percent of total revenue		26.3	%		30.3	%

Cost of services increased by $0.8 million, or 4.6%, to $17.5 million for the nine months ended September 30, 2022 as compared to $16.7 million for the nine months ended September 30, 2021. The increase in cost of services in 2022 was related to higher shipping

costs. Cost of services as a percentage of total revenue was 26.3% for the nine months ended September 30, 2022 compared to 30.3% for the nine months ended September 30, 2021.

Cost of product revenue


	For the Nine Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Cost of product revenue	$	23,363		$	7,957		$	15,406		193.6	%
Percent of total revenue		35.1	%		14.4	%

Cost of product revenue increased by $15.4 million, or 193.6%, to $23.4 million for the nine months ended September 30, 2022 as compared to $8.0 million for the nine months ended September 30, 2021. The increase was primarily related to the acquisition of inventory starting in the ~~Trust Account. We will incur expenses~~second quarter of 2021 in order to support select clients during the pandemic. The practice of purchasing inventory was unique to 2021 and 2022, and the Company does not anticipate continuing after finding a buyer to distribute the inventory. Cost of product revenue as a percentage of total revenue was 35.1% for the nine months ended September 30, 2022 compared to 14.4% for the nine months ended September 30, 2021.

Sales and Marketing


	For the Nine Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Sales and marketing	$	2,111		$	1,205		$	906		75.2	%
Percent of total revenue		3.2	%		2.2	%

Sales and marketing expense increased by $0.9 million, or 75.2%, to $2.1 million for the nine months ended September 30, 2022 as compared to $1.2 million for the nine months ended September 30, 2021. The increase in sales and marketing expense in 2022 was primarily due to rebuilding of the sales team after a reduction as a result of ~~being~~the COVID-19 pandemic.

Research and development


	For the Nine Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Research and development	$	4,227		$	4,033		$	194		4.8	%
Percent of total revenue		6.4	%		7.3	%

Research and development expense increased by $0.2 million, or 4.8%, to $4.2 million for the nine months ended September 30, 2022 as compared to $4.0 million for the nine months ended September 30, 2021. The increase in research and development expense in 2022 was primarily due to general growth in the Company as a ~~public company (for legal, financial reporting,~~result of the economic recovery from the COVID-19 pandemic, along with additional cost investments related to new product launches.

General and administrative


	For the Nine Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
General and administrative	$	46,332		$	30,300		$	16,032		52.9	%
Percent of total revenue		69.6	%		54.9	%

General and administrative expense increased by $16.0 million, or 52.9%, to $46.3 million for the nine months ended September 30, 2022 as compared to $30.3 million for the nine months ended September 30, 2021. The increase in general and administrative expense in 2022 was primarily due to additional headcount and operating expense to support the growth in the Company’s total revenue.

Depreciation and amortization


	For the Nine Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Depreciation and amortization	$	614		$	384		$	230		59.9	%
Percent of total revenue		0.9	%		0.7	%

Depreciation and amortization expense increased by $0.2 million, or 59.9%, to $0.6 million for the nine months ended September 30, 2022 as compared to $0.4 million for the nine months ended September 30, 2021. The increase in depreciation and amortization in 2022 was primarily due to the purchase of new hardware and equipment and additional amortization related to the acquired capitalized software.

Interest expense


	For the Nine Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Interest expense	$	4,685		$	374		$	4,311		1152.7	%
Percent of total revenue		7.0	%		0.7	%

Interest expense increased by $4.3 million, or 1152.7%, to $4.7 million for the nine months ended September 30, 2022 as compared to $0.4 million for the nine months ended September 30, 2021. The increase in interest expense in 2022 was primarily due to interest on the Company’s notes payable issued in the third and fourth quarters of 2021 and the third quarter of 2022 and investor notes issued in the second quarter of 2022. The notes payable and investor notes were fully repaid at closing of the Business Combination.

Change in fair value of promissory notes


	For the Nine Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Change in fair value of promissory notes	$	4,561		$	—		$	4,561		100.0	%
Percent of total revenue		6.9	%		—	%

Change in fair value of promissory notes was $4.6 million for the nine months ended September 30, 2022. The Company recognized a loss of $4.6 million for the nine months ended September 30, 2022 that were related to the Promissory Notes issued in the second and third quarter of 2022, which were based on the estimated cash payment needed to repay the Promissory Notes at closing of the Business Combination.

Change in fair value of derivatives


	For the Nine Months Ended September 30,
	2022			2021			$ Change			% Change
	(in thousands, except percentages)
Change in fair value of derivatives	$	(64	)	$	—		$	(64	)	100.0%
Percent of total revenue		-0.1	%		—	%

Change in fair value of derivates notes was a gain of $64 thousand for the nine months ended September 30, 2022. The Company recognized a change in fair value of derivate notes in connection with the Standby Agreement.

Change in fair value of unconsolidated affiliate


	For the Nine Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Change in fair value of unconsolidated affiliates	$	1,895		$	(4,937	)	$	6,832		(138.4	)%
Percent of total revenue		2.8	%		(8.9	)%

Change in fair value of unconsolidated affiliates decreased by $6.8 million, or 138.4%, to a loss of $1.9 million for the nine months ended September 30, 2022 as compared to a gain of $4.9 million for the nine months ended September 30, 2021. The decrease is attributable to the Company’s investment in ModCloth, which was formed in April 2021, and IPCO, which was formed in December 2021. The Company elected to apply the fair value option of accounting to the joint ventures. The Company engaged a third-party valuation specialist to assist with the fair value assessment. As a result, the Company recorded a fair value adjustment for the investment in connection with its 50% interest during the nine months ended September 30, 2022 and ~~auditing compliance)~~September 30, 2021.

Change in fair value of convertible notes


	For the Nine Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Change in fair value of convertible notes	$	9,182		$	—		$	9,182		100.0	%
Percent of total revenue		13.8	%		—	%

Change in fair value of convertible notes was $9.2 million for the nine months ended September 30, 2022. The change is attributable to fair value of the convertible notes, which the Company engaged a third-party valuation specialist to assist with the fair value assessment.

Debt Extinguishment Loss


	For the Nine Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Debt extinguishment loss	$	1,885		$	—		$	1,885		100.0	%
Percent of total revenue		2.8	%		—	%

Debt Extinguishment loss was $1.9 million for the nine months ended September 30, 2022. The Company recognized a loss of $1.9 million for the extinguishment of debt as part of the closing of the Business Combination.

Other (loss) income


	For the Nine Months Ended September 30,
	2022			2021			$ Change			% Change
	(in thousands, except percentages)
Other (loss) income	$	87		$	2,972		$	(2,885	)		(97.1	)%
Percent of total revenue		0.1	%		5.4	%

Other (loss) income decreased by $2.9 million, or 97.1%, to $0.1 million for the nine months ended September 30, 2022 as ~~well~~compared to $3.0 million for the nine months ended September 30, 2021. The decrease was primarily related to the settlement of deferred revenue of $1.6 million related to sale of finished inventory to IPCO in the first quarter of 2022 and forgiveness of the PPP loan of $2.6 million in the third quarter of 2021.

Provision for income tax


	For the Nine Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Provision for income tax	$	134		$	82		$	52		63.4	%
Percent of total revenue		0.2	%		0.1	%

The provision for income tax expense increased $0.1 million, or 63.4%, during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021. The increase was primarily due to a full valuation allowance for differences related to GAAP and tax income related to the Company’s joint ventures due ~~diligence expenses.~~

~~For~~to election of accounting for the joint ventures using the equity method fair value option.

Comparison of the Three Months Ended September 30, 2022 and 2021

Net service revenue


	For the Three Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Net service revenue	$	10,013		$	9,071		$	942		10.4	%
Percent of total revenue		47.7	%		33.7	%

Net service revenue increased by $0.9 million, or 10.4%, to $10.0 million for the three months ended September 30, 2022 as compared to $9.1 million for the three months ended September 30, 2021. The increase was primarily due to revenue associated with our Smart Ship technology that was introduced in the second quarter of 2022.

Net product revenue


	For the Three Months Ended September 30,
	2022			2021			$ Change			% Change
	(in thousands, except percentages)
Net product revenue	$	8,645		$	15,224		$	(6,579	)		-43.2	%
Percent of total revenue		41.2	%		56.5	%

Net product revenue decreased by $6.6 million, or 43.2%, to $8.6 million for the three months ended September 30, 2022 as compared to $15.2 million for the three months ended September 30, 2021. The Company historically recognizes net revenue as a percentage of service sales. Starting in the second quarter of 2021, ~~we had~~the Company added product revenue, which was generated from purchased inventory from select clients, to assist those clients with managing inventory through the pandemic in order to continue marketing and selling their particular brand of products. The Company sourced the products from vendors approved by licensees, and the products were received into the Company’s leased distribution centers and orders by end-customers were then fulfilled. As a ~~net~~result, the Company recognized the gross revenue for the sale of the inventory-owned products, and the corresponding cost of product revenue in the period the order was fulfilled. The practice of purchasing inventory was unique to 2021 and 2022, and the Company does not anticipate continuing after finding a buyer to distribute the inventory. The decrease was primarily due to discounted pricing in the third quarter of 2022 to focus on generating cash through closing of the Business Combination.

Net revenue from related parties


	For the Three Months Ended September 30,
	2022			2021			$ Change			% Change
	(in thousands, except percentages)
Net revenue from related parties	$	2,316		$	2,652		$	(336	)		(12.7	)%
Percent of total revenue		11.0	%		9.8	%

Net revenue from related parties decreased by $0.3 million, or 12.7%, to $2.3 million for the three months ended September 30, 2022 as compared to $2.7 million for the three months ended September 30, 2021. The Company provides services to its joint ventures under Master Services agreements that are classified as related party revenue. The increase in the third quarter of 2022 is due to revenue from the IPCO joint venture, which was formed in the fourth quarter of 2021.

Cost of services


	For the Three Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Cost of services	$	6,304		$	5,250		$	1,054		20.1	%
Percent of total revenue		30.1	%		19.5	%

Cost of services increased by $1.1 million, or 20.1%, to $6.3 million for the three months ended September 30, 2022 as compared to $5.3 million for the three months ended September 30, 2021. The increase in cost of services in 2022 was primarily attributable to increased social media and search engine costs.

Cost of product revenue


	For the Three Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Cost of product revenue	$	7,956		$	6,049		$	1,907		31.5	%
Percent of total revenue		37.9	%		22.4	%

Cost of product revenue increased by $1.9 million, or 31.5%, to $8.0 million for the three months ended September 30, 2022 as compared to $6.0 million for the three months ended September 30, 2021. Cost of product revenue as a percentage of total revenue was 37.9% for the three months ended September 30, 2022 compared to 22.4% for the three months ended September 30, 2021. The increase in cost of product revenue is primarily attributed to discounted pricing in the third quarter of 2022 as the Company focused on generating cash through closing of the Business Combination.

Sales and Marketing


	For the Three Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Sales and marketing	$	925		$	528		$	397		75.2	%
Percent of total revenue		4.4	%		2.0	%

Sales and marketing expense increased by $0.4 million, or 75.2%, to $0.9 million for the three months ended September 30, 2022 as compared to $0.5 million for the three months ended September 30, 2021. The increase in sales and marketing expense in 2022 was primarily due to additional headcount and consulting to support initiatives following the Business Combination.

Research and development


	For the Three Months Ended September 30,
	2022			2021			$ Change			% Change
	(in thousands, except percentages)
Research and development	$	1,400		$	1,609		$	(209	)		(13.0	)%
Percent of total revenue		6.7	%		6.0	%

Research and development expense decreased by $0.2 million, or 13.0%, to $1.4 million for three months ended September 30, 2022 as compared to $1.6 million for the three months ended September 30, 2021. The decrease in research and development expense in 2022 was primarily due to decreased costs following the launch of Smart Ship in early 2022.

General and administrative


	For the Three Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
General and administrative	$	15,969		$	15,658		$	311		2.0	%
Percent of total revenue		76.1	%		58.1	%

General and administrative expense increased by $0.3 million, or 2.0%, to $16.0 million for the three months ended September 30, 2022 as compared to $15.7 million for the three months ended September 30, 2021. The increase in general and administrative expense in 2022 was primarily due to additional headcount to support initiatives following the Business Combination.

Depreciation and amortization


	For the Three Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Depreciation and amortization	$	194		$	144		$	50		34.7	%
Percent of total revenue		0.9	%		0.5	%

Depreciation and amortization expense increased by $0.1 million, or 34.7%, to $0.2 million for the three months ended September 30, 2022 as compared to $0.1 million for the three months ended September 30, 2021. The increase in depreciation and amortization in 2022 was primarily due to the purchase of new hardware and equipment and capitalized software in 2022.

Interest expense


	For the Three Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Interest expense	$	2,568		$	254		$	2,314		911.0	%
Percent of total revenue		12.2	%		0.9	%

Interest expense increased by $2.3 million, or 911.0%, to $2.6 million for the three months ended September 30, 2022 as compared to $0.3 million for the three months ended September 30, 2021. The increase in interest expense in 2022 was primarily due to interest on the Company’s notes payable issued in the third and fourth quarters of 2021 and the third quarter of 2022 and investor notes issued in the second quarter of 2022. The notes payable and investor notes were fully repaid at closing of the Business Combination.

Change in fair value of promissory notes


	For the Three Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Change in fair value of promissory notes	$	1,995		$	—		$	1,995		100.0	%
Percent of total revenue		9.5	%		—	%

Change in fair value of promissory notes was $2.0 million for the three months ended September 30, 2022. The Company recognized a loss of ~~$690,854,~~$2.0 million for the promissory notes issued in the second and third quarter of 2022, which ~~consisted~~were based on the estimated cash payment needed to repay the promissory notes at closing of ~~formation and operating costs~~the Business Combination.

Change in fair value of ~~$648,866, offset by interest income~~derivatives


	For the Three Months Ended September 30,
	2022			2021			$ Change			% Change
	(in thousands, except percentages)
Change in fair value of derivatives	$	(64	)	$	—		$	(64	)		100.0	%
Percent of total revenue		(0.3	)%		—	%

Change in ~~bank~~fair value of ~~$9,~~derivatives notes was a gain of $64 thousand for the three months ended September 30, 2022. The Company recognized a change in fair value ~~loss~~ of ~~over-allotment option liability of $61,353,~~derivate notes in connection with the Standby Agreement.

Change in fair value of ~~forfeited over-allotment option $17,445,and interest earned on marketable securities held in Trust Account of $1,911.~~

For the period from January 5, 2021 (inception) through September 30, 2021, we had a net loss $691,853, which consisted of formation and operating costs of $649,865, offset by interest income in bank of $9, changeunconsolidated affiliates


	For the Three Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Change in fair value of unconsolidated affiliates	$	87		$	—		$	87		100.0	%
Percent of total revenue		0.4	%		—	%

Change in fair value ~~loss~~ of ~~over-allotment~~unconsolidated affiliates was $0.1 million for the three months ended September 30, 2022. The increase is attributable to the Company’s investment in ModCloth, which was formed in April 2021, and IPCO, which was formed in December 2021. The Company elected to apply the fair value option ~~liability~~ of ~~$61,353,~~accounting to the joint ventures. The Company engaged a third-party valuation specialist to assist with the fair value assessment. As a result, the Company recorded a fair value adjustment for the investment in connection with its 50% interest during the three months ended September 30, 2022 and 2021.

Change in fair value of ~~forfeited over-allotment option $17,445, and interest earned on marketable securities held~~convertible notes


	For the Three Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Change in fair value of convertible notes	$	9,182		$	—		$	9,182		100.0	%
Percent of total revenue		43.8	%		—	%

Change in ~~Trust Account~~fair value of ~~$1,911.~~

~~Liquidity and Capital Resources~~

~~On August 2, 2021, we consummated~~convertible notes was $9.2 million for the ~~Initial Public Offering~~three months ended September 30, 2022. The change is attributable to fair value of ~~20,000,000 Units, generating gross proceeds~~the convertible notes. The Company engaged a third-party valuation specialist to assist with the fair value assessment.

Debt Extinguishment Loss


	For the Three Months Ended September 30,
	2022			2021			$ Change		% Change
	(in thousands, except percentages)
Debt extinguishment loss	$	1,885		$	—		$	1,885		100.0	%
Percent of total revenue		9.0	%		—	%

Debt Extinguishment loss was $1.9 million for the three months ended September 30, 2022. The Company recognized a loss of ~~$200,000,000. Simultaneously with~~$1.9 million for the extinguishment of debt as part of the closing of the ~~Initial Public Offering,~~Business Combination.

Other (loss) income


	For the Three Months Ended September 30,
	2022			2021			$ Change			% Change
	(in thousands, except percentages)
Other (loss) income	$	(1,574	)	$	2,660		$	(4,234	)		(159.2	)%
Percent of total revenue		(7.5	)%		9.9	%

Other (loss) income decreased by $4.2 million, or 159.2%, to a loss of $1.6 million for the three months ended September 30, 2022 as compared to a gain of $2.7 million for the three months ended September 30, 2021. The decrease in other income was primarily related to the forgiveness of PPP loan in the third quarter of 2021 and costs related to issuance of PIPE convertible notes that are expensed due to fair value option election of accounting.

Provision for income tax


	For the Three Months Ended September 30,
	2022			2021			$ Change			% Change
	(in thousands, except percentages)
Provision for income tax	$	69		$	366		$	(297	)		(81.1	)%
Percent of total revenue		0.3	%		1.4	%

The provision for income tax expense decreased $0.3 million, or 81.1%, to $0.1 million for the three months ended September 30, 2022 as compared to $0.4 million for the three months ended September 30, 2021. The decrease was primarily due to a full valuation allowance for differences related to GAAP and tax income related to the Company’s joint ventures due to election of accounting for the joint ventures using the equity method fair value option.

Non-GAAP Financial Measures

We prepare and present our consolidated financial statements in accordance with U.S. GAAP. However, management believes that Adjusted EBITDA, a non-GAAP financial measure, provides investors with additional useful information in evaluating our performance, as these measures are regularly used by security analysts, institutional investors and other interested parties in analyzing operating performance and prospects. This non-GAAP measure is not intended to be a substitute for any U.S. GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry.

We calculate and define Adjusted EBITDA as net loss, adjusted to exclude: (1) interest expense, (2) income tax expense and (3) depreciation and amortization.

Adjusted EBITDA is a financial measure that is not required by or presented in accordance with U.S. GAAP. We believe that Adjusted EBITDA, when taken together with our financial results presented in accordance with U.S. GAAP, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations, or outlook. In particular, we ~~consummated~~believe that the ~~sale~~use of ~~9,000,000 Private Placement~~Adjusted EBITDA is helpful to our investors as it is a measure used by management in assessing the health of our business and evaluating our operating performance, as well as for internal planning and forecasting purposes.

Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. Some of the limitations of Adjusted EBITDA include that (1) it does not reflect capital commitments to be paid in the future, (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and adjusted EBITDA does not reflect these capital expenditures, (3) it does not reflect tax payments that may represent a reduction in cash available to us and (4) does not include certain non-recurring cash expenses that we do not believe are representative of our business on a steady-state basis. In addition, our use of Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial measures, including our net loss and other results stated in accordance with U.S. GAAP.

The following table presents a reconciliation of net loss, the most directly comparable financial measure stated in accordance with U.S. GAAP, to Adjusted EBITDA, for each of the periods presented (in thousands):


	Three Months ended September 30,						Nine Months ended September 30,
	2022			2021			2022			2021
Net (loss) income	$	(28,896	)	$	(251	)	$	(49,812	)	$	2,074
Interest expense		2,568			254			4,685			374
Provision for income taxes		69			366			134			82
Depreciation and amortization		194			144			614			384
Adjusted EBITDA	$	(26,065	)	$	513		$	(44,379	)	$	2,914

Liquidity and Capital Resources

Prior to the Business Combination, the Company’s available liquidity and operations were financed through equity contributions, a line of credit, promissory notes and cash flow from operations. Subsequent to the Business Combination, the Company expects to fund operations through equity contributions and cash flow from operations.

As of September 30, 2022, we had cash of $15.8 million and restricted cash of $1.5 million, which consists of amounts held as bank deposits. The Company believes its existing cash and restricted cash, together with the cash we expect to generate from future operations, will be sufficient to support working capital and capital expenditure requirements for at least the next twelve months. The Company believes it has the ability to continue as a going concern. However, because we are in the growth stage of our business and operate in anemerging field of technology, we expect to continue to invest in research and development and expand our sales and marketing teams worldwide. We are likely to require additional capital to respond to technological advancements, competitive dynamics or technologies, customer demands, business opportunities, challenges, acquisitions or unforeseen circumstances and in either the short-term or long-term may determine to engage in equity or debt financings or enter into credit facilities for other reasons. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited. In particular, the widespread COVID-19 pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital. If we are unable to raise additional funds when or on the terms desired, our business, financial condition and results of operations could be adversely affected.

Indebtedness

Convertible Notes and Indenture

On April 19, 2022, the Company, the Notes Guarantors and the Subscribers entered into the PIPE Subscription Agreements pursuant to which the Company agreed to issue and sell to the Subscribers immediately prior to the closing of the Business Combination (i) up to an aggregate principal amount of $75.0 million of Convertible Notes at the par value of the notes and (ii) up to an aggregate of 1.5 million PIPE Warrants ~~at a price~~with each whole PIPE Warrant entitling the holder thereof to purchase one share of ~~$1.00 per Private Placement Unit~~Common Stock.

On August 26, 2022, immediately prior to the Closing, the Company issued $65.5 million aggregate principal amount of Convertible Notes and, as contemplated by the PIPE Subscription Agreements, the Company, the Note Guarantors and U.S. Bank Trust Company, National Association, as trustee, entered into the Indenture. The Convertible Notes were offered in a private placement under the Securities Act, pursuant to ~~our Sponsor, generating gross proceeds~~the PIPE Subscription Agreements. The Convertible Notes will mature on September 1, 2026, unless earlier repurchased, redeemed or converted in accordance with their terms, and will accrue interest at a rate of ~~$9,000,000.~~ 7.00% per annum, payable in cash. The Convertible Notes may be converted at any time (in whole or in part) into shares of Common Stock, at the option of the holder of such Convertible Note, based on the applicable conversion rate at such time. The initial conversion price is approximately $11.50 per share of Common Stock, based on an initial conversion rate of 86.9565 shares of Common Stock per $1,000 principal amount of Convertible Notes. For conversions with a conversion date on or after the first anniversary of the closing of the Transactions and prior to the regular record date immediately preceding the Maturity Date, the conversion consideration will also include an interest make-whole payment equal to the remaining scheduled payments of interest on the Convertible Note being converted through the Maturity Date. The Company will be able to elect to make such interest make-whole payment in cash or in Common Stock, subject to certain conditions. The conversion rate is subject to adjustments set forth in the Indenture, including conversion rate resets (x) on August 27, 2023, September 26, 2023 and September 26, 2024 and (y) following the consummation of certain equity and equity-linked offerings by the Company and sales of certain equity and equity-linked securities by certain shareholders of the Company. Each holder of a Convertible Note will have the right to cause the Post-Combination Company to repurchase for cash all or a portion of the Convertible Notes held by such holder upon the occurrence of a “Fundamental Change” (as defined in the Indenture) at a price equal to (i) on or before September 26, 2023, 100% of the original principal amount of such Convertible Note, and (ii) from and after September 26, 2023, 100% of the accreted principal amount applicable at such time pursuant to the terms of the Indenture, in each case, plus accrued and unpaid interest.

The Indenture includes restrictive covenants that, among other things, require the Company to maintain a minimum level of liquidity on a consolidated basis and limit the ability of the Company and its subsidiaries to incur indebtedness above certain thresholds or to issue preferred stock, to make certain restricted payments, to dispose of certain material assets and engage in other asset sales, subject to reinvestment rights, to pay certain advisory fees in connection to the Transactions and the transactions contemplated by the PIPE Subscription Agreements above a certain threshold, and other customary covenants with respect to the collateral securing the obligations created by the Convertible Notes and the Indenture, including the entry into security documents (in each case, subject to certain exceptions set forth in the Indenture); provided that the covenants with respect to (i) the making of restricted payments, (ii) the incurrence of indebtedness, (iii) the disposition of certain material assets and asset sales, (iv) liquidity, (v) the payment of advisory fees and (vi) the collateral securing the obligations created by the Convertible Notes and the Indenture shall terminate once less than

15% of the aggregate principal amount of the Convertible Notes are outstanding. The liquidity covenant would terminate if the Company achieves $175 million in consolidated revenue in the preceding four fiscal quarters. Certain of the Company’s subsidiaries will serve as Notes Guarantors that jointly and severally, fully and unconditionally guarantee the obligations under the Convertible Notes and the Indenture. The Indenture also requires certain future subsidiaries of the Post-Combination Company, if any, to become Notes Guarantors. This covenant will terminate once less than 15% of the aggregate principal amount of the Convertible Notes are outstanding. The Indenture also includes customary events of default and related provisions for potential acceleration of the Convertible Notes.

Line of credit

Notes Payable

On August ~~2, 2021, the underwriters notified the Company of their intention to partially exercise their over-allotment option. As such, on August 4,~~11, 2021, the Company ~~consummated~~entered into a loan and security agreement (the “Note Agreement”) with a financial institution that provided for a borrowing commitment of $15 million in the ~~sale~~form of promissory notes. In August 2021, the Company borrowed $10 million under the first tranche (“First Tranche Notes”). The Note Agreement had a commitment for additional second tranche borrowings of $5 million through June 30, 2022 (“Second Tranche Notes”). In October 2021 the Company borrowed the remaining $5 million committed under the Note Agreement. The borrowings under the Note Agreement were secured by substantially all assets of the Company.

The First Tranche Notes and Second Tranche Notes were due to mature on September 1, 2026 and November 1, 2026, respectively, and bore interest at a rate per annum of 6.25% plus the greater of 3.25% or the prime rate as published by the Wall Street Journal. The Company was required to make interest-only payments on the first of each month beginning October 1, 2021 and December 1, 2021, respectively. Beginning October 1, 2023 and December 1, 2023, respectively, the Company would have been required to make principal payments of $278 thousand and $139 thousand, respectively, plus accrued interest on the first of each month through maturity. Upon payment in full of the First Tranche Notes and Second Tranche Notes, the Company was required to pay exit fees of $600 thousand and $300 thousand, respectively.

In December 2021, the Company borrowed an additional ~~2,807,868 Units, at $10.00 per Unit, and~~$1 million from the ~~sale of~~same financial institution, which was repaid in full on December 31, 2021. In addition, the Company borrowed an additional ~~982,754 Private Placement~~$5 million (“Third Tranche Notes”) that bore interest at a rate per annum of 6.25% plus the greater of 3.25% or the prime rate as published by the Wall Street Journal. The Company was required to make interest-only payments on the first of each month beginning February 1, 2022, with the full principal amount due on July 1, 2023. Upon payment in full, the Company is required to pay exit fees of $50 thousand.

In connection with the Note Agreement, the Company issued warrants to purchase up to 33,357 shares of common stock of the Company (the “Legacy Liability Warrants”) at an exercise price of $0.01 per share (Note 8). On the date of issuance, the Company recorded the fair value of the Legacy Liability Warrants ~~at $1.00 per Private Warrant, generating total gross~~as a discount to the First Tranche Notes which was being amortized into interest expense over the term of the First Tranche Notes using the effective interest method. The issuance costs were deferred over the repayment term of the debt. Deferred issuance costs relate to the Company’s debt instruments, the short-term and long-term portions are reflected as a deduction from the carrying amount of the related debt.

In addition, the Company issued additional notes payable in July 2022 for proceeds of ~~$29,061,434.~~

~~Following~~$3.0 million. Such notes payable matured on the ~~Initial Public Offering,~~earlier of (a) December 30, 2022 or (b) the ~~sale~~close of the ~~Private Placement Units, and~~Business Combination. The amount due at maturity was $4.5 million. The Company elected to account for the ~~exercise~~additional notes payable under the fair value option of accounting.

The notes payable were repaid at the closing of the ~~over-allotment option~~Business Combination.

Promissory Notes

During the second quarter of 2022, the Company entered into promissory notes with various individuals (the “Promissory Notes”), including current investors, members of management and other unrelated parties in exchange for cash in an amount equal to $7.0 million (the “Promissory Notes”). The Promissory Notes were due to mature on the earlier of (a) one year from issuance or (b) the closing of the Business Combination (Note 1) and bore per annum interest at the rate of 7.75% plus the greater of 3.50% or the prime rate as published by the ~~underwriters,~~Wall Street Journal. The Company was required to make nine interest-only payments, followed by three principal and interest payments. In connection with the Promissory Notes, the Company issued warrants (“Promissory Note Warrants”) to purchase up to 31,024 shares of common stock of the Company at an exercise price of $0.01 per share (Note 7). Upon

payment in full of the Promissory Notes, the Company was required to make an additional final payment (“Final Payment”) of $3.5 million.

The Promissory Notes were repaid at the closing of the Business Combination.

Paycheck Protection Program Loan

On April 14, 2020, the Company received loan proceeds of $2.3 million pursuant to the Paycheck Protection Program (the “PPP Loan”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and administered by the U.S. Small Business Administration (“SBA”). The PPP Loan had a ~~total~~maturity date of ~~$231,499,860 ($10.15~~April 22, 2022 and bore interest at a rate of 1% per ~~Unit)~~annum. The balance as of December 31, 2020 of $2.3 million is included in Paycheck Protection Program loan payable on the condensed consolidated balance sheets. On September 17, 2021, the PPP Loan was ~~placed~~forgiven in full including accrued interest thereon. As such, the Company recorded a gain on loan forgiveness during the nine months ended September 30, 2021 of $2.3 million included in other income in the ~~Trust Account.~~consolidated statement of operations.

Cash Flows

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


	Nine Months Ended September 30,
	2022			2021
Cash flow used in operating activities	$	(25,287	)	$	(22,605	)
Cash flow used in investing activities		(1,744	)		(2,058	)
Cash flow provided by financing activities		39,787			14,875

Operating Activities

Our cash flows from operating activities are primarily driven by the activities associated with our CaaS revenue stream, offset by the cash cost of operations, and are significantly influenced by the timing of and fluctuations in receipts from buyers and related payments to our clients. We ~~incurred $13,056,080 in Initial Public Offering related costs, including $4,561,574~~typically receive cash from the end users of ~~underwriting fees, $7,982,754 of deferred underwriting fees~~products sold prior to remitting back to our clients. Our collection and ~~$511,752 of other costs.~~

~~Table of Contents~~

~~For~~payment cycles can vary from period to period. In addition, seasonality may impact cash flows from operating activities on a sequential quarterly basis during the ~~period from January 5, 2021 (inception) through~~year.

During the nine months ended September 30, ~~2021,~~2022, net cash used in operating activities increased by $2.7 million to $25.3 million, compared to net cash used in operating activities of $22.6 million during the nine months ended September 30, 2021. The primary driver of the change was ~~$808,986. Net~~the increase in net loss and the sale of ~~$691,853~~existing inventory.

Investing Activities

Our primary investing activities have consisted of purchases of property and equipment and software.

During the nine months ended September 30, 2022, net cash used in investing activities decreased by $0.4 million to $1.7 million compared to net cash used in investing activities of $2.1 million during the nine months ended September 30, 2021. The primary drivers of the decrease were cash used in the prior year for the Modcloth joint venture investment, offset by an increase in property and equipment purchases of $1.1 million.

Financing Activities

Our financing activities consisted primarily of borrowings and repayments of debt as well as activity related to the business combination.

During the nine months ended September 30, 2022, net cash provided by financing activities increased by $24.9 million to $39.8 million, compared to net cash provided by financing activities of $14.9 million for the nine months ended September 30, 2021. The change was ~~affected~~primarily driven by the change in fair value loss of the of the over-allotment of $61,353, fair value of forfeited over-allotment option $17,445, and the interest earned on marketable securities held in Trust Account of $1,911. Changes in operating assets and liabilities used $159,130 of cash for operating activities.

~~We intend~~activity related to use the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes payable), to complete our Business Combination. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete our 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.

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, plants 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.

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, or certain of our officers and directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that a 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 upon consummation of the Business ~~Combination at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.~~

Combination.

Off-Balance Sheet Arrangements

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking

~~in-depth~~

~~due diligence and negotiating a 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 Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.

~~Off-Balance~~

~~Sheet Arrangements~~

~~We have no obligations, assets or liabilities, which would be considered~~

~~off-balance~~

~~sheet arrangements as of September 30, 2021. We do not participate in transactions that create~~any relationships with ~~unconsolidated~~other entities or financial partnerships, such as entities often referred to as ~~variable interest~~structured finance or special purpose entities ~~which would~~that have been established for the purpose of facilitating

off-balance

sheet ~~arrangements.~~arrangements or other contractually narrow or limited purposes. We ~~have not entered into any~~

~~off-balance~~

~~sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any~~

~~non-financial~~

~~assets.~~

~~Contractual obligations~~

~~We do~~did not have any ~~long-term debt, capital lease obligations,~~other off-balance sheet arrangements during the periods presented other than the indemnification agreements.

Contractual Obligations and Known Future Cash Requirements

Our principal commitments consist of operating lease ~~obligations or long-term liabilities, other than an agreement~~for the office and warehouses located in California and Pennsylvania. Our five monthly lease commitment payments range from approximately $36 thousand to ~~pay an affiliate~~approximately $124 thousand. Each of our five lease commitments expire at various times through November 2028. Some of the ~~Sponsor~~leases contain renewal options. Minimum rent payments under all operating leases are recognized on a ~~monthly fee~~straight-line basis over the term of ~~$15,000~~the lease including any periods of free rent.

As of September 30, 2022, the expected future obligations of the Company are as follows:


	Total		2022		2023		2024		2025		2026		Thereafter
Operating lease obligations	$	6,395	$	570	$	1,272	$	873	$	900	$	927	$	1,853

Rent expense for ~~office space, utilities~~the nine months ended September 30, 2022 and ~~secretarial~~2021 was approximately $4.1 million and $2.7 million, respectively, and is included in general and administrative support . We began incurring these fees on the date the Public Shares were first listed on NASDAQ and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and our liquidation.

~~The underwriters are entitled to a deferred fee of $0.35 per share, or $7,982,754~~expenses in the ~~aggregate. The deferred fee will become payable~~consolidated statements of operations.

In addition, we anticipate to have future cash requirements related to investment in new products, technology, sales and marketing. Our budgeted expenditure is approximately $3.7 million for 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.~~

year ended December 31, 2022.

Critical Accounting Policies

~~The preparation~~ and Estimates

Management’s Discussion and Analysis of ~~condensed~~Our Financial Condition and Results of Operations are based upon our consolidated financial statements, ~~and related disclosures~~which have been prepared in ~~conformity~~accordance with accounting principles generally accepted in the ~~United States~~U.S. (“GAAP”). The preparation of ~~America~~these financial statements requires ~~management~~us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and ~~liabilities,~~expenses as well as the disclosure of contingent assets and liabilities. We regularly review our estimates and assumptions. These estimates and assumptions, which are based upon historical experience and on various other factors believed to be reasonable under the circumstances, form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Reported amounts and disclosures may have been different had management used different estimates and assumptions or if different conditions had occurred in the periods presented. Below is a discussion of the policies that we believe may involve a high degree of judgment and complexity.

We believe that the accounting policies disclosed below include estimates and assumptions critical to our business and their application could have a material impact on our consolidated financial statements. In addition to these critical policies, our significant accounting policies are included within Note 2 of our “Notes to Consolidated Financial Statements” included elsewhere in this filing.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at the invoiced amount, do not bear interest, and primarily represent receivables from consumers and credit card receivables from merchant processors, after performance obligations have been fulfilled. Amounts collected on accounts receivable are included in operating activities in the statements of cash flows.

The Company maintains an allowance for credit losses, as deemed necessary, for estimated losses inherent in its accounts receivable portfolio. In estimating this reserve, management considers historical losses adjusted to take into account current market conditions and customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any customers with off-balance-sheet credit exposure. The Company writes off accounts receivable balances once the receivables are no longer deemed collectible.

Joint Ventures

The Company accounts for joint ventures in accordance with ASC 810-10, “Consolidations,” ASC 323-10, “Investments-Equity Method and Joint Ventures” and ASC 825-10, “Finance Instruments,” under which the Company’s joint ventures meet the criteria to be accounted for as an equity method investment using the fair value method. As such, the difference between fair value and cash contribution is recorded as a gain to other income in the Company’s consolidated statement of operations. The joint ventures are subject to fair value assessment each reporting period and the changes in fair value is booked to the Company’s consolidated statement of operations. In valuing joint venture investments, we utilized the valuation from an independent third-party specialist, with input from management, which used a combination of net income and market approaches, with 50% weight to the discounted cash flow method and 25% weigh to each of the guideline public company and transaction methods. Changes in these estimates and assumptions or the relationship between those assumptions impact our valuation as of the valuation date and may have a material impact on the valuation.

Warrants

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480 and ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the

definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own shares of common stock, 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 warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter until settlement. Changes in the ~~financial~~estimated fair value of the warrants are recognized as a non-cash gain or loss on the condensed statements ~~and income and expenses during the periods reported. Actual results could materially differ from those estimates. At September 30, 2021, we have not identified any critical accounting policies.~~

of operations.

Class A Common Stock Subject to Possible Redemption

We ~~account~~accounted for ~~our~~shares of SWAG Class A common stock subject to possible ~~conversion~~redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” ~~Common~~Shares of SWAG Class A common stock subject to mandatory redemption iswere classified as a liability instrument and measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) iswas classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, the SWAG Class A common stock subject to possible redemption is presented ~~at redemption value~~ as temporary equity, outside of the stockholders’ equity section of our unaudited condensed balance ~~sheets.~~

~~Table of Contents~~

sheet.

Net ~~Income (Loss) Per~~Loss per Common Share

We applied the two-class method in calculating earnings per share. Net ~~loss~~income per common share, ~~is computed~~basic and diluted for Class A redeemable common stock was calculated by dividing the interest income earned on the Trust Account, net ~~loss~~of applicable taxes, by the weighted average number of ~~common shares outstanding during the period. Accretion associated with the redeemable~~ shares of Class A redeemable common stock outstanding for the periods. Net income (loss) per common share, basic and diluted, for Class B non-redeemable common stock is ~~excluded from earnings per share as~~calculated by dividing net income (loss) less income attributable to Class A redeemable common stock, by the ~~redemption value approximates fair value.~~

~~Recent Accounting Standards~~

~~In August 2020,~~weighted average number of shares of Class B non-redeemable common stock outstanding for the periods presented.

Revenue

Revenue is accounted for using Financial Accounting Standards Board (“FASB”) ~~issued~~ Accounting Standards ~~Update~~

Codification (“~~ASU”~~ASC”)~~2020-06,~~

~~Debt — Debt~~ Topic 606, Revenue from Contracts with ~~Conversion and Other Options~~

~~(Subtopic470-20)~~

~~and Derivatives and Hedging — Contracts in Entity’s Own Equity~~

~~(Subtopic815-40)~~

~~(“ASU~~

~~2020-06”)~~

Customers.

In accordance with ASC Topic 606, the Company recognizes revenue when control of the promised goods or services is transferred to ~~simplify accounting for certain financial instruments. ASU2020-06eliminates~~ 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 contractsCompany’s customers, in an ~~entity’s own equity.~~amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. The ~~new standard also introduces additional disclosures for convertible debt~~Company determines revenue recognition through the following steps:

•

Identification of a contract with a customer,

•

Identification of the performance obligations in the contract,

•

Determination of the transaction price,

•

Allocation of the transaction price to the performance obligations in the contract, and ~~freestanding instruments~~

•

Recognition of revenue when or as the performance obligations are satisfied.

A performance obligation is a promise in a contract to transfer a distinct product. Performance obligations promised in a contract are identified based on the goods that will be transferred that are ~~indexed~~both capable of being distinct and are distinct in the context of the contract, whereby the transfer of the goods is separately identifiable from other promises in the contract. Performance obligations include establishing and maintaining customer online stores, providing access to the Company’s e-commerce platform, customer service support, photography services, warehousing, and ~~settled~~fulfillment. The Company has concluded the sale of goods and related shipping and handling on behalf of our customers are accounted for as a single performance obligation, while the expenses incurred for actual shipping charges are included in cost of sales.

The Company’s revenue is mainly commission fees derived from contractually committed gross revenue processed by customers on the Company’s e-commerce platform. Customers do not have the contractual right to take possession of the Company’s software. Revenue is recognized in an ~~entity’s own equity. ASU2020-06amends~~amount that reflects the ~~diluted earnings per share guidance, including~~consideration that the ~~requirement~~Company expects to ~~use the~~

~~if-converted~~

~~method~~ultimately receive in exchange for ~~all convertible instruments. ASU2020-06is effective January 1, 2022~~those promised goods, net of expected discounts for sales promotions and ~~should be applied~~customary allowances.

Commerce-as-a-Service Revenue is recognized on a ~~full or modified retrospective~~net basis from maintaining e-commerce platforms and online orders, as the Company is engaged primarily in an agency relationship with ~~early adoption permitted beginning~~its customers and earns defined amounts based on ~~January 1, 2021. We are currently assessing~~ the ~~impact, if any, that ASU2020-06would have on our financial position, results of operations or cash flows.~~

~~Management~~individual contractual terms for the customer and the Company does not ~~believe that~~take possession of the customers’ inventory or any credit risks relating to the products sold.

Variable consideration is included in revenue for potential product returns. The Company uses a reserve to constrain revenue for the expected variable consideration at each period end. The Company reviews and updates its estimates and related accruals of variable consideration each period based on the terms of the agreements, historical experience, and expected levels of returns. Any uncertainties in the ultimate resolution of variable consideration due to factors outside of the Company’s influence are typically resolved within a short timeframe therefore not requiring any additional constraint on the variable consideration.

Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, are excluded from net sales in the statements of operations.

Commerce-as-a-Service

The Company’s main revenue stream is “Commerce-as-a-Service” revenue in which they receive commission fees derived from contractually committed gross revenue processed by customers on the Company’s e-commerce platform. Consideration for online sales is collected directly from the shopper by the Company and amounts not owed to the Company are remitted to the client. Revenue is recognized on a net basis from maintaining e-commerce platforms and online orders, as the Company is engaged in an agency relationship with its customers and earns defined amounts based on the individual contractual terms for the customer and the Company does not take possession of the customers’ inventory or any credit risks relating to the products sold.

Product revenue

Under one of the Company’s Master Services Agreements, the Company is the owner of inventory and reseller of record. As a result, the Company is the principal in sales to end customers and records these revenues on a gross basis a point in time.

Fulfillment

Marketing

Shipping

Revenue for shipping services is recognized on a gross basis as shipments are completed and products are shipped to end customers.

Other services

Revenue for other ~~recently issued, but not yet effective,~~services such as photography, business to customer (“B2C”) fulfillment, customer service, development and web design are reimbursable costs and recognized on the gross basis, and are services rendered as part of the performance obligations to clients for which an online platform and online orders are managed. All reimbursable costs are the responsibility of the Company as the Company uses such services to fulfill its performance obligations.

Set up and implementation

The Company provides set up and implementation services for new clients. The revenue is recognized on a gross basis at the completion of the service, with the unearned amounts received for incomplete services recorded as deferred revenue, if any.

Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, are excluded from net sales in the statements of operations

Recently Issued Accounting Pronouncements

We discuss the potential impact of recent accounting ~~standards, if currently adopted, would have a material effect on~~pronouncements in Note 2 to our ~~condensed financial statements.~~

“Notes to Consolidated Financial Statements” under the caption “Summary of Significant Accounting Policies”.

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

~~Not required for~~

The Company is a smaller reporting ~~companies.~~

company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information under this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

~~Disclosure~~

Our management has established and maintains a system of disclosure controls and procedures that are designed to ~~ensure~~provide reasonable assurance that information required to be disclosed by us in ~~our~~the reports that we file or submit under the Exchange Act, ~~reports~~such as this Report, is recorded, processed, summarized and reported within the time periods specified in the ~~SEC’s~~SEC rules and ~~forms,~~forms. The disclosure controls and procedures are also designed to provide reasonable assurance that such information is accumulated and communicated to our management, including our ~~principal executive officer~~Co-Chief Executive Officers and ~~principal financial officer or persons performing similar functions,~~Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

~~Under~~

As of the end of the period covered by this Report, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) of the Exchange Act, as such disclosure controls and procedures are defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act. This evaluation was carried out under the supervision and with the participation of our management, including our ~~principal executive officer~~co-Chief Executive Officers and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2021, as such term is defined

~~inRules13a-15(e)~~

~~and~~

~~15d-15(e)~~

~~under the Exchange Act.~~Chief Financial Officer. Based on this evaluation, ~~our principal executive officer and principal financial and accounting officer~~these officers have concluded that, ~~during the period covered by this report,~~as of September 30, 2022, our disclosure controls and procedures were ~~not~~ effective ~~due~~ to the material weakness in our internal controls over financial reporting related to the Company’s accounting for complex financial instruments. As a result, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this form

~~10-Q~~

~~present fairly, in all material respects, our financial position, results~~provide reasonable assurance of ~~operations and cash flows for the period presented.~~

achieving their objectives.

Changes in Internal Control over Financial Reporting

~~During the fiscal quarter ended September 30, 2021, other than noted below, there has~~

There have not been ~~no change~~any 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 the quarter to which this Report relates that ~~has~~have materially affected, or isare reasonably likely to materially affect our internal control over financial reporting. ~~Management has identified~~

Part II - Other Information

Item 1. Legal Proceedings

We are and may become, from time to time, involved in legal actions in the ordinary course of business, including governmental and administrative investigations, inquiries and proceedings concerning employment, labor, environmental and other claims. Although management is unable to predict with certainty the eventual outcome of any legal action, management believes the ultimate liability arising from such actions, individually and in the aggregate, which existed at September 30, 2022, will not materially affect the Company’s consolidated results of operations, financial position or cash flows. Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material weakness in internal controls related to the accounting for complex financial instruments. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance our system of evaluating and implementing the accounting standards that apply toeffect on our financial ~~statements, including through enhanced analyses by our personnel~~results.

Item 1A. Risk Factors

We are subject to various risks and ~~third-party professionals with whom we consult regarding complex accounting applications. The elements~~uncertainties in the course of our ~~remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have~~business. As a result of the ~~intended effects.~~

~~Table~~closing of ~~Contents~~

~~PART II—OTHER INFORMATION~~

~~Item 1. Legal Proceedings~~

~~None~~

~~Item 1A. Risk Factors~~

~~Factors that could cause our actual results to differ materially from those in this report include~~the Business Combination, the risk factors ~~described~~previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 no longer apply. For a discussion of risks and uncertainties relating to our business following the Business Combination, please see the section in our ~~final prospectus for our Initial Public Offering~~Registration Statement on Form S-1 filed with the ~~SEC. As of the date of this Report, there~~SEC on September 16, 2022 titled “Risk Factors.” There have been no material changes to the risk factors disclosed in our final prospectus for the Initial Public Offering filed with the SEC. Any of these 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 our business or results of operations.

We have identified a material weakness in our internal control over financial reporting as of September 30, 2021. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.

In connection with the Company’s initial public offering, we accounted for a portion of the proceeds received from the offering as stockholders’ deficit. Following the SEC’s guidance on this issue, management has identified errors made in its historical financial statements and performed a quantitative assessment under SAB 99, concluding a restatement is required of the Company’s financial statements to classify such amount as Class A common stock subject to possible redemption and a material weakness in our internal controls over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis.

Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.

If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.

therein.

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

Proceeds

Unregistered Sales of Equity Securities

Other than with respect to the PIPE Investment as described in the Company’s Current Report on Form 8-K filed with the SEC on September 1, 2022, we sold no securities during the three months ended September 30, 2022 that were not registered under the Securities Act.

Use of Proceeds

On August 2, 2021, weSWAG consummated ~~the Initial Public Offering~~its initial public offering of 20,000,000 ~~Units.~~units. The ~~Units~~units were sold at an offering price of $10.00 per unit, generating total gross proceeds of $200,000,000. Jefferies LLC served as the manager for the ~~Initial Public Offering.~~initial public offering. The securities in the offering were registered under the Securities Act on registration statement on Form

S-1

~~(No.333-253230)~~ (No. 333-253230).

The ~~Securities and Exchange Commission~~SEC declared the registration statements effective on July 30, 2021.

Simultaneous with the consummation of the ~~Initial Public Offering,~~initial public offering, the Sponsor purchased an aggregate of 9,000,000 ~~Private Placement Warrants~~private placement warrants at a price of $1.00 per ~~Private Placement Warrant,~~private placement warrant, generating total proceeds of $9,000,000. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

Of the gross proceeds received from the ~~Initial Public Offering,~~initial public offering, an aggregate of $203,000,000 ($10.15 per ~~Unit)~~unit) was placed in ~~the Trust Account.~~

SWAG’s trust account.

On August 4, 2021, the underwriters partially exercised their over-allotment option, resulting in an additional 2,807,868 ~~Units~~units issued for an aggregate amount of $28,078,680. In connection with the underwriters’ partial exercise of their over-allotment option, the Company also consummated the sale of an additional 982,754 ~~Private Placement Warrants~~private placement warrants at $1.00 per ~~Private Placement Warrant,~~private placement warrant, generating total proceeds of $982,754. A total of $28,499,860 was deposited into ~~the Trust Account,~~SWAG’s trust account, bringing the aggregate proceeds held in ~~the Trust Account~~SWAG’s trust account to $231,499,860.

~~For a description~~

After deducting payments to existing stockholders of approximately $173.0 million in connection with their exercise of redemption rights, the ~~use~~remainder of SWAG’s trust account was used to pay fees and expenses and to pay cash consideration to Legacy Nogin stockholders, in each case, in connection with the ~~proceeds generated in our Initial Public Offering, see Part I, Item 2 of~~

~~thisForm10-Q.~~

Business Combination.

Item 3. ~~Defaults~~Defaults Upon Senior Securities

~~None~~

~~Table of Contents~~

None.

Item 4. Mine Safety Disclosures

~~None~~

Not applicable.

Item 5. ~~Other~~Other Information

~~None~~

None.

Item 6. Exhibits


		Incorporated by Reference
Exhibit	Exhibit Description	Form	Exhibit	Filing Date
2.1*	Agreement and Plan of Business Combination, dated as of February 14, 2022, by and among Software Acquisition Group Inc. III, Nuevo Business Combination Sub, Inc. and Branded Online, Inc. dba Nogin.	S-4	2.1	2/14/2022
2.2	Amendment to Agreement and Plan of Business Combination, dated as of April 19, 2022, by and among Software Acquisition Group Inc. III, Nuevo Business Combination Sub, Inc. and Branded Online, Inc. dba Nogin.	S-4	2.2	5/16/2022
2.3	Amendment to Agreement and Plan of Business Combination, dated as of August 26, 2022, by and among Software Acquisition Group Inc. III, Nuevo Business Combination Sub, Inc., Branded Online, Inc. dba Nogin, Jan-Christopher Nugent and Geoffrey Van Haeren.	8-K	2.3	9/01/2022
3.1	Amended and Restated Certificate of Incorporation of Nogin, Inc.	8-K	3.1	9/01/2022
3.2	Amended and Restated Bylaws of Nogin, Inc.	8-K	3.2	9/01/2022
4.1	Convertible Notes Indenture, dated as of August 26, 2022, by and among the Company, the guarantors named therein and U.S. Bank, National Association, as trustee.	8-K	4.4	9/01/2022
4.2	Form of 7.00% Convertible Senior Notes due 2026 (included in Exhibit 4.4).	8-K	4.5	9/01/2022
4.3	PIPE Warrant Agreement, dated as of August 26, 2022, by and among the Company and Continental Stock Transfer & Trust Company, as warrant agent.	8-K	4.6	9/01/2022
10.1	Amended and Restated Registration Rights Agreement, dated as of August 26, 2022, by and among the Company, certain equityholders of the Company named therein and certain equityholders of Legacy Nogin named therein.	8-K	10.1	9/01/2022
10.2	Nogin, Inc. 2022 Incentive Award Plan.	8-K	10.7	9/01/2022
10.3	Form of Stock Option Grant Notice and Stock Option Agreement under the Nogin, Inc. 2022 Incentive Award Plan.	8-K	10.8	9/01/2022
10.4	Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement under the Nogin, Inc. 2022 Incentive Award Plan.	8-K	10.9	9/01/2022
10.5	Form of Equity PIPE Subscription Agreement.	8-K	10.10	9/01/2022
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.3	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	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 (furnished herewith).
32.2	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 (furnished herewith).
32.3	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 (furnished herewith).
101	The following financial information from Nogin, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets - Unaudited, (ii) the Condensed Consolidated Statement of Operations - Unaudited, (iii) the Condensed Consolidated Statements of Convertible Redeemable Preferred Stock and Stockholders’ Deficit - Unaudited, (iv) the Condensed Consolidated Statement of Cash Flows - Unaudited and (v) the Notes to Condensed Consolidated Financial Statements - Unaudited (submitted electronically herewith).
104	Cover Page Interactive Data File, formatted in Inline XBRL (included as Exhibit 101).

* Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The ~~following~~Company agrees to furnish a copy of all omitted exhibits ~~are filed as part of, or incorporated by reference into, this Quarterly Report on Form~~

~~10-Q.~~


~~No.~~		~~Description of Exhibit~~

31.1*		~~Certification of Principal Executive Officer and Principal Financial Officer~~ and schedules to the SEC upon its request. 45 SIGNATURES Pursuant to ~~Securities Exchange Act Rules~~ ~~13a-14(a),~~ ~~as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

32.1**		~~Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

101.INS*		~~Inline XBRL Instance Document.~~

101.SCH*		~~Inline XBRL Taxonomy Extension Schema Document.~~

101.CAL*		~~Inline XBRL Taxonomy Extension Calculation Linkbase Document.~~

101.DEF*		~~Inline XBRL Taxonomy Extension Definition Linkbase Document.~~

101.LAB*		~~Inline XBRL Taxonomy Extension Label Linkbase Document.~~

101.PRE*		~~Inline XBRL Taxonomy Extension Presentation Linkbase Document.~~

104*		~~Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).~~

*	~~Filed herewith.~~

**	~~Furnished.~~

~~Table of Contents~~

~~SIGNATURES~~

~~In accordance with~~ 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.~~

authorized:


			~~SOFTWARE ACQUISITION GROUP~~ NOGIN, INC. ~~III~~

~~Date: February~~ By:	/s/ Jan-Christopher Nugent
	Jan-Christopher Nugent
	Co-Chief Executive Officer and Chairman of the Board of Directors

	November 14, 2022

By:	~~By:~~		/s/ Jonathan S. Huberman
		~~Name:~~		Jonathan S. Huberman
		~~Title:~~		~~Chief~~ Co-Chief Executive Officer and President

	November 14, 2022


By:	/s/ Shahriyar Rahmati
	Shahriyar Rahmati
	Chief Financial Officer and Chief Operating Officer

			~~(Principal Executive and Financial Officer)~~ November 14, 2022


Delaware		86-1370703
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification ~~No.)~~ Number)


Title of each class	Trading ~~Symbol(s)~~ Symbol	Name of each exchange on which registered
~~Units, each consisting of one~~ Common stock, par value $0.0001 per share ~~of Class A Common Stock and~~ ~~one-half~~ ~~of one Redeemable Warrant~~	~~SWAGU~~ NOGN	The Nasdaq Stock Market LLC
~~Class A Common Stock,~~ ~~par value $0.0001~~ Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $11.50 per share	~~SWAG~~ NOGNW	The Nasdaq Stock Market LLC
~~Warrants, each exercisable for one share~~ ~~Class A Common Stock for $11.50 per share~~	~~SWAGW~~	~~The Nasdaq Stock Market LLC~~


~~Large accelerated filer~~		☐		~~Accelerated filer~~	☐

~~Non-accelerated~~ Large accelerated filer	☐	☒ Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company		☒

				Emerging growth company	☒

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

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


		Page
Part I.I - Financial Information				1
Item 1. ~~Interim~~ Financial Statements			1
~~Unaudited~~ Condensed Consolidated Balance ~~Sheet~~Sheets as of September 30, 2022 (unaudited) and December 31, 2021			1
~~Unaudited~~ Condensed Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2022 and 2021	2
Condensed Consolidated Statements of Convertible Redeemable Preferred Stock and Stockholders’ Deficit (unaudited) for the ~~period from January 5, 2021 (inception) through September 30, 2021 (As Restated)~~			2
~~Unaudited Condensed Statements of Changes in Stockholders’ Equity (Deficit) for the three~~nine months ended September 30, ~~2021~~2022 and ~~for the period from January 5,~~ 2021 ~~(inception) through September 30, 2021 (As Restated)~~			3
~~Unaudited~~ Condensed ~~Statement~~Consolidated Statements of Cash Flows (unaudited) for the ~~period from January 5, 2021 (inception) through~~nine months ended September 30, 2022 and 2021 ~~(As Restated)~~			4
~~Unaudited~~ Notes to Condensed Consolidated Financial Statements (unaudited)			5	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17	24
Item 3. Quantitative and Qualitative Disclosures ~~Regarding~~About Market Risk			19	43
Item 4. Controls and Procedures			19	43
Part ~~II.~~II - Other Information				44
Item 1. Legal Proceedings			20	44
Item 1A. Risk Factors			20	44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			20	44
Item 3. Defaults Upon Senior Securities			20	44
Item 4. Mine Safety Disclosures			21	44
Item 5. Other Information			21	44
Item 6. Exhibits			21	45
~~Part III.~~ Signatures			22	46


	Three Months Ended September 30,			For the Period from January 5, 2021 (Inception) Through September 30,
	2021			2021

Operating and formation costs	$	648,866		$	649,865

Loss from operations		(648,866	)		(649,865	)
Other income /loss :
Interest earned on marketable securities held in Trust Account		1,911			1,911
Interest income - bank		9			9
Change in fair value of over-allotment option liability		(61,353	)		(61,353	)
Fair value of forfeited over-allotment option		17,445			17,445

Total other loss, net		(41,988	)		(41,988	)

Net loss	$	(690,854	)	$	(691,853	)

Basic and diluted weighted average shares outstanding, Class A common stock		14,565,744			5,338,839

Basic and diluted net loss per share, Class A	$	(0.03	)	$	(0.07	)

Basic and diluted weighted average shares outstanding, Class B common stock		5,434,914			5,159,411

Basic and diluted net loss per share, Class B	$	(0.03	)	$	(0.07	)


	Class A Common Stock subject to possible redemption				Class B Common Stock						Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount			Capital			Deficit			Equity (Deficit)

Balance – January 5, 2021 (inception)		—	$	—		0		$	0		$	0		$	0		$	0
Issuance of Class B common stock to Sponsor		—		—		5,750,000			575			24,425			0			25,000
Net loss		—		—		—			0			0			(1,000	)		(1,000	)

Balance – March 31, 2021		—	$	—		5,750,000		$	575		$	24,425		$	(1,000	)	$	24,000
Net loss		—		—		—			0			0			1			1

Balance – June 30, 2021		—	$	—		5,750,000		$	575		$	24,425		$	(999	)	$	24,001
Sale of 20,000,000 Units, net of underwriting discounts and offering expenses		—		—		—			0			0			0			0
Proceed s allocated to Public Warrants		—		—		—			0			12,492,109			0			12,492,109
Allocated value of transaction costs to warrants		—		—		—			0			(737,120	)		0			(737,120	)
Adjustment of carrying value to initial redemption value		—		—		—			0			(21,762,173	)		(6,470,076	)		(28,232,249	)
Sale of 9,000,000 Private Placement Warrants		—		—		—			0			9,982,754			0			9,982,754
Forfeiture of Founder Shares		—		—		(48,033	)		(5	)		5			0			0
Net loss		—		—		—			0			0			(690,854	)		(690,854	)

Balance – September 30, 2021		—	$	—		5,701,967		$	570		$	0		$	(7,161,929	)	$	(7,161,359	)


Condensed Balance Sheet as of September 30 , 2021 ( unaudited )	As Previously Reported			Adjustment			As Restated
OA Liability	$	211,034		$	(211,034	)	$	0
Total Liabilities	$	8,578,412		$	(211,034	)	$	8,367,378
Temporary Equity	$	231,499,860		$	0		$	231,499,860
Additional Paid in Capital	$	0		$	0		$	0
( Accumulated Deficit) Retained Earnings	$	(7,372,963	)	$	211,034		$	(7,161,929	)
Total Stockholders’ Equity	$	(7,372,393	)	$	211,034		$	(7,161,359	)
Condensed Statements of Operations for the period from January 5, 2021 (inception) through September 30, 2021 (unaudited)
Net Loss	$	(647,945	)	$	(43,908	)	$	(691,853	)


	Three Months Ended September 30, 2021						For the Period from January 5, 2021 (Inception) Through September 30, 2020
	Class A			Class B			Class A			Class B
Basic and diluted net loss per common share
Numerator:
Allocation of net loss, as adjusted	$	(503,124	)	$	(187,730	)	$	(351,839	)	$	(340,014	)
Denominator:
Basic and diluted weighted average shares outstanding		14,565,744			5,434,914			5,338,839			5,159,411

Basic and diluted net loss per ordinary share	$	(0.03	)	$	(0.03	)	$	(0.07	)	$	(0.07	)


	August 4, 2021			August 2, 2021
Stock Price	$	10.04		$	10.00
Exercise Price	$	10.00		$	10.00
Volatility		5.00	%		5.00	%
Term (days)		43			45
Dividend Yield		0.00			0.00
Risk Free Rate-Daily Treasury Yield Curve		0.05	%		0.05	%