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 June 30, 2023

OR

☐ 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 to purchase common stock	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 August 10, 2023, there were 11,092,559 shares of the registrant’s common stock outstanding, par value $0.0001 per share.

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 Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) on March 23, 2023 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;

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

•our ability to fulfill the obligations and comply with the covenants under the Indenture governing our Convertible Notes; and

•other risks and uncertainties included in this Report, including those under the section entitled "Risk Factors."

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 June 30, 2023 (unaudited) and December 31, 2022	1
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 (unaudited)	2
Condensed Consolidated Statements of Stockholders’ Deficit for the three and six months ended June 30, 2023 and 2022 (unaudited)	3
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (unaudited)	4
Notes to Condensed Consolidated Financial Statements (unaudited)	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3. Quantitative and Qualitative Disclosures About Market Risk	47
Item 4. Controls and Procedures	47
Part II – Other Information	48
Item 1. Legal Proceedings	48
Item 1A. Risk Factors	48
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3. Defaults Upon Senior Securities	48
Item 4. Mine Safety Disclosures	48
Item 5. Other Information	48
Item 6. Exhibits	49
Signatures	50

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

Nogin, Inc. and Subsidiaries

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

	June 30,			December 31,
	2023			2022
ASSETS
Current assets:
Cash	$	3,143		$	15,385
Accounts receivable, net		1,908			1,578
Inventory		13,146			15,726
Prepaid expenses and other current assets		1,977			2,539
Total current assets		20,174			35,228
Property and equipment, net		1,895			1,595
Right-of-use asset, net (Note 19)		16,272			17,391
Goodwill		6,748			6,748
Intangible assets, net		5,384			5,493
Investment in unconsolidated affiliates		6,466			7,404
Other non-current asset		972			1,074
Total assets	$	57,911		$	74,933
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	13,936		$	19,605
Due to clients		3,609			10,891
Related party payables		869			1,033
Loans (Note 7)		3,155			—
Accrued expenses and other liabilities (Note 6)		16,281			17,826
Lease liabilities, current portion (Note 19)		4,512			4,367
Total current liabilities		42,362			53,722
Long-term note payable, net		329			—
Convertible notes (Note 7)		59,134			60,852
Deferred tax liabilities		407			394
Lease liabilities, net of current portion (Note 19)		13,637			15,223
Other long-term liabilities (Note 6)		23,472			17,766
Total liabilities		139,341			147,957
STOCKHOLDERS’ DEFICIT
Common stock, $0.0001 par value, 500,000,000 shares authorized; 11,092,559 and 3,334,714 shares issued and outstanding as of June 30, 2023 and December 31, 2022		1			—
Additional paid-in capital		22,596			9,270
Accumulated deficit		(104,027	)		(82,294	)
Total stockholders’ deficit		(81,430	)		(73,024	)
Total liabilities and stockholders’ deficit	$	57,911		$	74,933

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

1

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Net service revenue	$	7,543		$	9,254		$	16,461		$	17,787
Net product revenue		4,739			7,834			11,284			20,756
Net revenue from related parties		460			3,262			1,674			7,005
Total net revenue		12,742			20,350			29,419			45,548
Operating costs and expenses:
Cost of services (1)		3,277			5,757			8,807			11,192
Cost of product revenue (1)		1,972			5,156			5,913			15,407
Sales and marketing		715			620			1,417			1,186
Research and development		1,163			1,250			2,126			2,827
General and administrative		15,814			13,140			33,139			30,362
Depreciation and amortization		235			219			437			420
Total operating costs and expenses		23,176			26,142			51,839			61,394
Operating loss		(10,434	)		(5,792	)		(22,420	)		(15,846	)
Interest expense		(2,777	)		(1,464	)		(4,791	)		(2,117	)
Change in fair value of promissory notes		(259	)		(2,566	)		(418	)		(2,566	)
Change in fair value of derivative instruments		3,462			—			4,309			—
Change in fair value of unconsolidated affiliates		(293	)		(949	)		(938	)		(1,982	)
Change in fair value of convertible notes		(1,296	)		—			3,295			—
Debt extinguishment gain		63			—			63			—
Other (loss) income, net		(259	)		(292	)		(818	)		1,661
Loss before income taxes		(11,793	)		(11,063	)		(21,718	)		(20,850	)
(Benefit) Provision for income taxes		39			(93	)		13			65
Net loss	$	(11,832	)	$	(10,970	)	$	(21,732	)	$	(20,915	)
Net loss per common share – basic and diluted	$	(1.13	)	$	(5.54	)	$	(3.13	)	$	(10.56	)
Weighted average shares outstanding – basic and diluted		10,506,521			1,981,097			6,940,429			1,981,097

(1) Exclusive of depreciation and amortization shown separately.

See the accompanying notes to the unaudited condensed consolidated financial statements

2

Nogin, Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of 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, 2021		443,224		4,687		316,707		6,502		1,981,097		—		4,362		(1,330	)		(16,262	)		(13,230	)
Stock-based Compensation		—		—		—		—		—		—		58		—			—			58
Net loss		—		—		—		—		—		—		—		—			(9,942	)		(9,942	)
Balance, March 31, 2022		443,224	$	4,687		316,707	$	6,502		1,981,097	$	—	$	4,420	$	(1,330	)	$	(26,204	)	$	(23,114	)
Stock-based Compensation		—		—		—		—		—		—		25		—			—			25
Warrant issuance		—		—		—		—		—		—		713		—			—			713
Net loss		—		—		—		—		—		—		—		—			(10,970	)		(10,970	)
Balance, June 30, 2022		443,224	$	4,687		316,707	$	6,502		1,981,097	$	—	$	5,158	$	(1,330	)	$	(37,174	)	$	(33,346	)
Balance, December 31, 2022		—		—		—		—		3,334,714		—		9,270		—			(82,294	)		(73,024	)
Stock-based compensation		—		—		—		—		—		—		253		—			—			253
Fair value of equity classified warrants in common stock		—		—		—		—		—		—		430		—			—			430
Net loss		—		—		—		—		—		—		—		—			(9,901	)		(9,901	)
Balance, March 31, 2023		—	$	—		—	$	—		3,334,714	$	—	$	9,953	$	—		$	(92,195	)	$	(82,242	)
Stock and warrant issuance		—		—		—		—		7,699,277		1		12,526		—			—			12,527
Stock-based compensation		—		—		—		—		—		—		117		—			—			117
Warrant exercise		—		—		—		—		58,568		—		—		—			—			—
Net loss		—		—		—		—		—		—		—		—			(11,832	)		(11,832	)
Balance, June 30, 2023		—	$	—		—	$	—		11,092,559	$	1	$	22,596	$	—		$	(104,027	)	$	(81,430	)

See the accompanying notes to the unaudited condensed consolidated financial statements

3

Nogin, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)

	Six Months Ended June 30,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(21,732	)	$	(20,915	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		437			420
Amortization of debt issuance costs and discounts		722			802
Debt issuance costs expensed under fair value option		554			—
Stock-based compensation		370			83