We completed the Business Combination and PIPE Investment on June 16, 2022, pursuant to which we received total gross proceeds of $97.1 million, including proceeds from the issuance of Backstop Tranche 2 Shares.

Key Factors Affecting Our Operating Performance

Ability To Grow our Brand Awareness

Ability to Continue to Innovate in Products and Packaging

Ability to Expand our Retail Distribution

Cost-Efficient Acquisition of New Customers and Retention of Existing Customers on our DTC Platform

Ability to Drive Operating Efficiency and Leverage as We Scale

The global COVID-19 pandemic has impacted and will continue to impact our operating results, financial condition and cash flows.

offices, we are following the guidance from public health officials and applicable government agencies, including implementation of enhanced cleaning measures, social distancing guidelines and the wearing of masks.

Even after the COVID-19 pandemic subsides, we may experience materially adverse impacts to our business as a result of its economic impact. For additional discussion of COVID-19-related risks, see section entitled "Risk Factors".

Key Operating and Financial Metrics

Over the coming years, we expect to grow our omnichannel presence both in core assortment, adjacent categories and channels.

DTC Net Revenue Per Order

Non-GAAP Financial Measures: Adjusted EBITDA and Adjusted EBITDA Margin

operating performance and resource allocation and forecasting. As such, we believe Adjusted EBITDA provides investors with additional useful information in evaluating our performance.

Components of Results of Operations

Gross Profit and Gross Margin

Our operating expenses consist of advertising, product development, and selling, general and administrative expenses.

Advertising expenses are expensed as incurred and consist primarily of our customer acquisition costs associated with online advertising, as well as advertising on television, direct mail campaigns and other media. Costs associated with the production of advertising are expensed when the first advertisement is shown. We expect advertising costs to decrease from the 2021 fiscal year as a result of cash flow and customer acquisition cost management.

Interest and Other Expense (Income), Net

Interest expense consists primarily of interest expense associated with our debt financing arrangements.

The following table sets forth our statements of operations data expressed as a percentage of revenue:

Cost of Goods Sold and Gross Profit

Selling, General and Administrative Expenses

Loss on extinguishment of debt

Silicon Valley Bank Loan Facilities

As of June 30, 2022, we were in compliance with all covenants and had $5.9 million outstanding under the Loan Revolver. The effective interest rate is 5.00% on the revolving line of credit.

Silicon Valley Bank and Hercules Loan Facility

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

Net increase (decrease) in cash and cash equivalents $ 54,017 $ (63,795)

• 6,999,787 shares will vest, including the shares subject to the $12.50 threshold if not previously vested, if the share price of New Grove Class A Common Stock is greater than or equal to $15.00 over any 20 trading days within any 30 consecutive trading day period during the Earn-Out Period; and

We recognize the cost of share-based awards granted to employees and non-employees based on the estimated grant-date fair value of the awards.

Fair value of Common Stock - As our common stock is not currently publicly traded, the fair value of our underlying common stock was determined by our board of directors based upon a number of objective and subjective factors, as described in the section titled "-Common Stock Valuation" below.

Risk-Free Interest Rate - The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

Expected Dividend - We have never paid dividends on our common stock and has no plans to pay dividends on our common stock. Therefore, we used an expected dividend yield of zero.

generally require significant judgment, including our stock price, contractual terms, maturity and risk-free interest rates, as well as volatility.

•independent third-party valuations of our common stock;

•the rights, preferences and privileges of our redeemable convertible preferred stock relative to our common stock;

•our operating results, financial position and capital resources;

•our stage of development and current business conditions and projections, including the introduction of new products;

•the lack of marketability of our common stock;

•the hiring of key personnel and the experience of our management;

•the likelihood of achieving a liquidity event, such as an initial public offering or a sale of our company given the prevailing market conditions;

•and the nature and history of our business;

•industry trends and competitive environment;

•trends in consumer spending, including consumer confidence; and

•the overall economic, regulatory and capital market conditions.

Table of Contents of $10.00 from certain investors, equal no less than $175,000,000 (after deducting any amounts paid to VGAC II shareholders that exercise their redemption rights in connection with the Business Combination).

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