10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2022


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

For transition period from to

Commission File Number 001-40682

Nogin, Inc.

(Exact name of registrant as specified in its charter)

Delaware

86-1370703

(State or other jurisdiction of
incorporation or organization)​

(I.R.S. Employer
Identification Number)

1775 Flight Way STE 400

Tustin, CA 92782

(949) 222-0209

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

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


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.0001 per share	NOGN	The Nasdaq Stock Market LLC
Warrants, each whole warrant exercisable for one share of common stock at an exercise price of $11.50 per share	NOGNW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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


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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of November 10, 2022, there were 66,694,295 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Report, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Report and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the risks, uncertainties and assumptions described under the section in our Registration Statement on Form S-1 filed with the Securities and Exchange Commission (the “SEC”) on September 16, 2022 titled “Risk Factors.” These forward-looking statements are subject to numerous risks, including, without limitation, the following:

•

the ability to maintain the listing of the shares of Common Stock and Warrants on Nasdaq;

•

litigation, complaints, product liability claims and/or adverse publicity;

•

privacy and data protection laws, privacy or data breaches, or the loss of data;

•

our ability to realize the benefits of the Business Combination (as defined below);

•

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

•

the impact of the COVID-19 pandemic on the financial condition and results of operations of the Company.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this Report will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

You should read this Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Nogin, Inc. and Subsidiaries

Form 10-Q

Table of Contents


	Page
Part I - Financial Information	1
Item 1. Financial Statements	1
Condensed Consolidated Balance Sheets as of September 30, 2022 (unaudited) and December 31, 2021	1
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 nine months ended September 30, 2022 and 2021	3
Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2022 and 2021	4
Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3. Quantitative and Qualitative Disclosures About Market Risk	43
Item 4. Controls and Procedures	43
Part II - Other Information	44
Item 1. Legal Proceedings	44
Item 1A. Risk Factors	44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3. Defaults Upon Senior Securities	44
Item 4. Mine Safety Disclosures	44
Item 5. Other Information	44
Item 6. Exhibits	45
Signatures	46

PART I—FINANCIAL INFORMATION

Item 1. 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 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		—