wdq-20240331

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 quarter ended March 31, 2024


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

For the transition period from to

Commission file number 001-40049

SPRINGBIG HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Delaware						88-2789488
(State or other jurisdiction of incorporation)						(I.R.S Employer Identification No.)


621 NW 53rd Street
Ste. 500
Boca Raton,	Florida	33487
(Address of principal executive offices)		(zip code)

Registrant’s telephone number, including area code (800) 772-9172

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

None

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 and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes No

Table of Contents

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


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 Act). Yes No

As of May 14, 2024, there were 45,594,864 shares of common stock, $0.0001 par value issued and outstanding.

SPRINGBIG, INC

TABLE OF CONTENTS


		Page
	Part I – Financial Information
Item 1.	Financial Statements (Unaudited)	1
	C ondensed C onsolidated Balance Sheets as of March 31, 202 4 and December 31, 202 3	1
	C ondensed C onsolidated Statements of Operations for the three months ended March 31, 202 4 and 202 3	2
	Con densed Con solidated Statements of Changes in Stockholder’s Deficit for three months ended March 31, 202 4 and 202 3	3

	Con densed Con solidated Statements of Cash Flows for the three months ended March 31, 202 4 and 202 3	5
	Notes to the Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	30
Item 4.	Controls and Procedures	30
	Part II – Other Information
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Mine Safety Disclosures	30
Item 5.	Other Information	30
Item 6.	Exhibits	32
	Signatures	33

Part I – Financial Information

Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q are forward looking statements. Forward looking statements include our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as "anticipate," "estimate," "expect," "project," "plan," "intend," "believe," "may," "will," "should," "can have," "likely" and other words and terms of similar meaning in connection with any discussion of the timing or nature of future cash flows, operating or financial performance or other events. These forward looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry and Company, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, readers are cautioned that any such forward looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Although we believe that the expectations reflected in such forward looking statements are reasonable as of the date made, results may prove to be materially different. Unless otherwise required by law, we disclaim any obligation to update our view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this report.

Factors that could cause our actual results and our financial condition to differ materially from those indicated in our forward looking statements include, but are not limited to, the following:

•trends in the cannabis industry and SpringBig’s market size, including with respect to the potential total addressable market in the industry;

•SpringBig’s growth prospects;

•new product and service offerings SpringBig may introduce in the future;

•the price of SpringBig’s securities, including volatility resulting from changes in the competitive and highly regulated industry in which SpringBig operates and plans to operate, variations in performance across competitors, changes in laws and regulations affecting SpringBig’s business and changes in the combined capital structure;

•the ability to implement business plans, forecasts, and other expectations, and identify and realize additional opportunities; and

•other risks and uncertainties indicated from time to time in filings made with the Securities and Exchange Commission (the “SEC”).

These risks are not exhaustive. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Should one or more of these risks or uncertainties materialize or should any of the assumptions made by the management of SpringBig prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Additional information concerning these and other factors that may impact the operations and projections discussed herein can be found in the section entitled “Risk Factors” and in our periodic filings with the SEC. Our SEC filings are available publicly on the SEC’s website at www.sec.gov.

You should read this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results, levels of activity and performance as well as other events and circumstances may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Item 1. Financial Statements

SPRINGBIG HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	March 31, 2024		December 31, 2023
	(unaudited)		(audited)
	(In thousands except share data)
ASSETS
Assets
Current assets:
Cash and cash equivalents	$	1,668	$	331
Accounts receivable, net	3,211		2,948
Contract assets	255		273
Prepaid expenses and other current assets	588		893
Total current assets	5,722		4,445
Operating lease assets	3,031		340
Property and equipment, net	325		320
Total assets	$	9,078	$	5,105

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Liabilities
Current liabilities:
Accounts payable	$	2,040	$	2,925
Accrued expense and other current liabilities	1,767		1,951
Short-term cash advances	1,195		1,925
Current maturities of long-term debt	—		4,360
Deferred payroll tax credits	1,751		1,751
Deferred revenue	2		—
Related party payable	—		540
Operating lease liability, current	329		99
Total current liabilities	7,084		13,551
Long-term debt, non-current	7,198		—
Operating lease liability, non-current	2,815		225
Warrant liabilities	6		3
Total liabilities	$	17,103	$	13,779

Commitments and Contingencies

Stockholders’ Deficit
Common stock par value $0.0001 per share, 300,000,000 authorized at March 31, 2024; 45,594,864 issued and outstanding as of March 31, 2024; (300,000,000 authorized at December 31, 2023; 45,339,762 issued and outstanding as of December 31, 2023)	4		4
Additional paid-in-capital	28,119		27,887
Accumulated deficit	(36,148)		(36,565)
Total stockholders’ deficit	$	(8,025)	$	(8,674)
Total liabilities and stockholders’ deficit	$	9,078	$	5,105

The accompanying notes are an integral part of these condensed consolidated financial statements

SPRINGBIG HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)


	Three Months Ended March 31,
	2024		2023

	(In thousands, except share and per share data)

Revenues	$	6,474	$	7,157
Cost of revenues	1,794		1,350
Gross profit	4,680		5,807
Operating expenses
Selling, servicing and marketing	1,527		2,478
Technology and software development	1,666		2,300
General and administrative	1,769		2,757
Total operating expenses	4,962		7,535

Loss from operations	(282)		(1,728)

Interest income	4		10
Interest expense	(875)		(391)
Gain on note repurchase	1,573		—
Change in fair value of warrants	(3)		(153)
Income (loss) before income tax	417		(2,262)
Income tax expense	—		—
Net income (loss)	$	417	$	(2,262)
Net income (loss) per common share:
Basic	$	0.01	$	(0.08)
Diluted	$	0.01	$	(0.08)


Weighted-average common shares outstanding
Basic	45,432,272		26,803,839
Diluted	77,315,056		26,803,839

The accompanying notes are an integral part of these condensed consolidated financial statements

SPRINGBIG HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S DEFICIT (UNAUDITED)

Three Months Ended March 31, 2024


	Common Stock			Additional Paid-in-		Accumulated
	Shares	Amount		Capital		Deficit		Total

Balance at December 31, 2023	45,339,762	$	4	$	27,887	$	(36,565)	$	(8,674)
Stock-based compensation	—	—		195		—		195
Issuance of common stock*	255,102	—		37		—		37
Net income	—	—		—		417		417
Balance at March 31, 2024	45,594,864	$	4	$	28,119	$	(36,148)	$	(8,025)

* Common shares issued in exchange for services rendered.

Three Months Ended March 31, 2023


	Common Stock			Additional Paid-in-		Accumulated
	Shares	Amount		Capital		Deficit		Total

Balance at December 31, 2022	26,659,711	$	3	$	22,701	$	(26,332)	$	(3,628)
Stock-based compensation	—	—		162		—		162
Exercise of stock options	281,130	—		113		—		113


Net loss	—	—		—		(2,262)		(2,262)
Balance at March 31, 2023	26,940,841	$	3	$	22,976	$	(28,594)	$	(5,615)

The accompanying notes are an integral part of these condensed consolidated financial statements

SPRINGBIG HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Three Months Ended March 31,
	2024		2023
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	417	$	(2,262)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Gain on note repurchase	(1,573)		—
Non-cash interest expense	108		—
Depreciation and amortization	54		66
Discount amortization on convertible note	—		259
Amortization of debt financing costs	116		—
Stock-based compensation	195		162
Bad debt expense	87		169
Accrued interest on convertible notes	117		22
Amortization of operating lease right of use assets	90		123
Change in fair value of warrants	3		153
Changes in operating assets and liabilities:
Accounts receivable	(351)		(448)
Prepaid expenses and other current assets	305		474
Contract assets	18		10
Accounts payable and other liabilities	(1,505)		363
Deferred payroll tax credits	—		1,442
Operating lease liabilities	39		(126)
Deferred revenue	2		(28)
Net cash provided by (used in) operating activities	(1,878)		379

Cash flows from investing activities:
Purchase of convertible note	—		(3)
Purchases of property and equipment	(59)		(9)
Net cash used in investing activities	(59)		(12)

Cash flows from financing activities:
Proceeds from issuance of convertible notes	6,400		—
Repayment of convertible notes	(2,895)		(1,457)
Proceeds from issuance of term notes	1,600		—
Repayment of short-term cash advance	(730)		—
Repayment of related party payable	(540)		—
Cost of convertible and term note issuance	(561)		—
Proceeds from exercise of stock options	—		113
Net cash provided by (used in) financing activities	3,274		(1,344)

Net increase (decrease) in cash and cash equivalents	1,337		$	(977)
Cash and cash equivalents at beginning of period	331		3,546
Cash and cash equivalents at end of period	$	1,668	$	2,569

Supplemental cash flows disclosures
Interest paid	$	589	$	132
Common stock issued for services rendered relating to debt financing	$	37	$	—
Accrued cost of debt issuance	$	319	$	—
Obtaining a right-of-use asset in exchange for a lease liability	$	2,781	$	—

The accompanying notes are an integral part of these condensed consolidated financial statements

SPRINGBIG HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 – DESCRIPTION OF BUSINESS

SpringBig Holdings, Inc. and its wholly-owned subsidiaries (the “Company,” “we,” “us,”, “our”, or “SpringBig”) developed a software platform that provides marketing and customer engagement services to cannabis dispensaries and brands throughout the United States and Canada. The Company allows merchants to provide loyalty plans and rewards directly to consumers through an internet portal and mobile applications. Our operational headquarters are in Boca Raton, Florida, with additional offices located in the United States and Canada.

The Company has one direct wholly-owned subsidiary, SpringBig, Inc.

On June 14, 2022 (the “Closing Date”), SpringBig Holdings, Inc. (formerly known as Tuatara Capital Acquisition Corporation (“Tuatara” or “TCAC”)), consummated the business combination of SpringBig, Inc. (“Legacy SpringBig”) and HighJump Merger Sub, Inc., the wholly-owned subsidiary of Tuatara, pursuant to the Amended and Restated Agreement of Plan Merger, dated as of April 14, 2022, as amended, by and among Tuatara, HighJump Merger Sub, Inc. and Legacy SpringBig. Prior to the closing of the business combination (the “Closing”), Tuatara changed its jurisdiction of incorporation by deregistering as a Cayman Islands exempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware. In connection with the Closing, the registrant changed its name from Tuatara Capital Acquisition Corporation to “SpringBig Holdings, Inc.” SpringBig will continue the existing business operations of Legacy SpringBig as a publicly traded company.

Beginning June 15, 2022, the ticker symbols for the Company’s common stock and publicly traded warrants were changed to “SBIG” and “SBIGW,” respectively, and commenced trading on The Nasdaq Capital Market.

On September 1, 2023, the Board of Directors of SpringBig Holdings, Inc. determined that it would not be in the best interest of the Company or its shareholders to meet the continued listing requirements of the Nasdaq Capital Market, and the Company notified the Nasdaq Stock Market LLC (“Nasdaq”) that it was withdrawing its appeal of the Nasdaq Listings Qualification staff’s delist determination dated March 7, 2023, for the Company’s failure to meet the market value of listed securities requirement in the Nasdaq Listing Rules.

The Company’s common stock is now quoted for trading on the OTCQX® Best Market and its public warrants are now quoted for trading on the OTC Pink Market under their current trading symbols “SBIG” and “SBIGW,” respectively. The Company’s common stock started trading on the OTCQX® Best Market on September 6, 2023. The Company remains a reporting company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The unaudited condensed consolidated financial statements have been prepared in conformity with the rules and regulations of the SEC for Quarterly Reports on Form 10-Q and therefore do not include certain information, accounting policies, and footnote disclosure information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. However, all adjustments (consisting of normal recurring accruals), which, in the opinion of management, are necessary for a fair presentation of the financial statements, have been included. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for future periods or for the year ending December 31, 2024.

The financial data presented herein should be read in conjunction with the audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2023, as reported in the 2023 Annual Report on Form 10-K.

Going Concern and Liquidity

Historically, the Company has incurred losses, which has resulted in an accumulated deficit of approximately $36.1 million as of March 31, 2024. Cash flows used in operating activities were $1.9 million for the three months ended March 31, 2024. As of March 31, 2024, the Company had a working capital deficit of approximately $1.4 million, inclusive of $1.7 million in cash and cash equivalents to cover overhead expenses.

The Company’s ability to continue as a going concern is dependent on its ability to meet its liquidity needs through a combination of factors but not limited to, cash and cash equivalents, increase in revenue through increased usage by customers and new customers and strategic capital raises. The ultimate success of these plans is not guaranteed.

Based on management projections and cash on hand, we estimate that our liquidity and cash resources are sufficient for our current and projected financial needs for the next twelve months, at a minimum.

The accompanying condensed consolidated financial statements are prepared on a going concern basis and do not include any adjustments that might result from uncertainty about the Company’s ability to continue as a going concern.

Foreign Currency

We translate the condensed consolidated financial statements of our foreign subsidiaries, which have a functional currency in the respective country’s local currency, to U.S. dollars using month-end exchange rates for assets and liabilities and actual exchange rates for revenue, costs and expenses on the date of the transaction.

Use of Estimates

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. Certain accounting policies involve a “critical accounting estimate” because they are particularly dependent on estimates and assumptions made by management about matters that are highly uncertain at the time the accounting estimates are made. In addition, while we have used our best estimates based on facts and circumstances available to us at the time, different acceptable assumptions would yield different results. Changes in the accounting estimates are reasonably likely to occur from period to period, which may have a material impact on the presentation of our financial condition and results of operations. We review these estimates and assumptions periodically and reflect the effects of revisions in the period that they are determined to be necessary. We believe that the assumptions and estimates associated with income taxes, equity-based compensation (including issuance of common stock for services rendered), and allowance for credit losses have the greatest potential impact on our consolidated financial statements. Therefore, we consider the policies related to these financial areas to be our critical accounting policies.

Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. Accounting estimates used in the preparation of these financial statements change as new events occur, as more experience is acquired, as additional information is obtained, and as the operating environment changes. Actual results may differ materially from these estimates.

Segments

The Company manages its business as a single operating segment. Our chief operating decision maker reviews financial information presented for the purposes of allocating resources and evaluating financial performance at an entity level and we have no segment managers who are held accountable by the chief operating decision maker for operations and operating results. The products and services across the Company are similar in nature, distributed in a

comparable manner and have customers with common characteristics. We determined that we have one operating and reportable segment in accordance with Accounting Standards Codification (“ASC”) 280, Segment Reporting.

Fair Value of Financial Instruments

Our financial assets, which include cash equivalents, current financial assets and our current financial liabilities have fair values that approximate their carrying value due to their short-term maturities.

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentration of credit risk consist principally of cash and cash equivalents and accounts receivable. We place our cash and cash equivalents with high credit-quality financial institutions. Such deposits may be in excess of federally insured limits. To date, we have not experienced any losses on our cash and cash equivalents. We perform periodic evaluations of the relative credit standing of the financial institutions.

We perform ongoing credit evaluations of our customers’ financial condition and require no collateral from our customers. We maintain a credit loss reserve for expected credit losses based upon the expected collectability of accounts receivable balances. See Effective Accounting Pronouncements within this Note below for further information.

We had one customer representing 14% of our total revenues for the three months ended March 31, 2024 and the same customer represented more than 12% of total revenues for the three months ended March 31, 2023.

At March 31, 2024, we had two customers representing 23% of accounts receivable and the same two customers represented 30% of accounts receivable at December 31, 2023.

We had one vendor representing 60% of cost of goods sold for the three months ended March 31, 2024 and the same vendor represented 75% of cost of goods sold for the three month period ended March 31, 2023.

We had one vendor representing 26% of accounts payable as of March 31, 2024. At December 31, 2023, two vendors represented 30% of accounts payable.

Deferred Financing Costs

On January 23, 2024, the Company issued $6.4 million aggregate principal amount of 8% Secured Convertible Notes and $1.6 million aggregate principal amount of 12% Secured Term Notes. See Note 9. The expenses directly related to issuance of this debt, including investment bank advisory fees, legal fees and other advisory fees, have been deferred and will be expensed over the two year term of the debt up to January 2026.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less, when acquired, to be cash equivalents. The Company maintains its cash with three commercial banks.

As of March 31, 2024, the Company exceeded the federally insured limits of $250,000 for interest and non-interest bearing deposits. The Company had cash balances with a single financial institution in excess of the FDIC insured limits by amounts of $1.3 million as of March 31, 2024. We monitor the financial condition of such institution and have not experienced any losses associated with these accounts.

Allowance for Credit Losses

The Corporation's reserve methodology used to determine the appropriate level of the allowance for credit losses ("ACL") is a critical accounting estimate. The ACL is maintained at a level believed to be appropriate to provide for the current credit losses expected to be incurred related to the Company’s accounts and unbilled receivables at the balance sheet date. The evaluation of expected losses is based on the probability of default using

historical loss rates, as well as adjustments for forward-looking information, including industry and macroeconomic forecasts, as required. Management's current methodology includes utilizing a historical loss rate equivalent to the average loss rate during the preceding forty-eight months and applying this rate to accounts and unbilled receivables at the date of recording. This rate as well as the various quantitative and qualitative factors used in the methodologies are reviewed quarterly.

NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable, net consisted of the following (in thousands):


	March 31,		December 31,
	2024		2023
	(unaudited)		(audited)
Accounts receivable	$	4,005	$	3,690
Unbilled receivables	854		853
Total receivables	4,859		4,543
Less allowance for doubtful accounts	(1,648)		(1,595)
Accounts receivable, net	$	3,211	$	2,948

Bad debt expense was $87,000 and $169,000 for the three months ended March 31, 2024 and 2023, respectively, and is included in general and administrative expenses.

The following table details the activity related to the Company’s allowance for credit losses for the quarter ending March 31, 2024 (in thousands).


	Allowance for credit losses
Outstanding Balance, December 31, 2023	$	1,595
Current-period provision (release) for expected credit losses	53
Write-offs charged against the allowance, net of recoveries and other	—
Outstanding Balance, March 31, 2024	$	1,648

NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following (in thousands):


	March 31,		December 31,
	2024		2023
	(unaudited)		(audited)
Prepaid insurance	$	109	$	379
Other prepaid expenses	390		425
Deposits	89		89

	$	588	$	893

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):


	March 31,		December 31,
	2024		2023
	(unaudited)		(audited)
Computer equipment	$	448	$	416
Furniture & fixtures	176		149
Data warehouse	286		286
Software	197		197
Total cost	1,107		1,048
Less accumulated depreciation and amortization	(782)		(728)
Property and equipment, net	$	325	$	320

The useful life of computer equipment, software, furniture and fixtures, and the data warehouse is three years.

Depreciation and amortization expense for the three months ended March 31, 2024 and 2023 was $54,000 and $66,000, respectively. The amounts are included in general and administrative expenses in the condensed consolidated statements of operations.

NOTE 6 – CONVERTIBLE NOTE RECEIVABLE

In April 2022, the Company purchased $250,000 in aggregate principal amount of convertible promissory note due April 1, 2026 (the “Convertible Note Receivable”). The Convertible Note Receivable accrued interest at the rate of 5% per annum on the principal amount of the Convertible Note Receivable. The Company determined that the fair value of the Convertible Note was $0 at December 31, 2023. The loss of $272,000, including $22,000 of accrued interest income, was recorded in interest expense on the Company’s condensed consolidated statements of operations for the year ended December 31, 2023.

NOTE 7 – ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other current liabilities consisted of the following (in thousands):


	March 31,		December 31,
	2024		2023
	(unaudited)		(audited)
Accrued wages, commission and bonus	$	270	$	393
Accrued professional fees	95		176
Deferred financial advisory fees	1,000		1,000
Other liabilities	402		382


	$	1,767	$	1,951

NOTE 8 – RELATED PARTY TRANSACTIONS

The Company incurred software development and information technology related costs to a vendor related through common ownership to a major stockholder of approximately $2,000 for the three months ended March 31, 2024, and $4,000 for the three months ended March 31, 2023, respectively, and the related expense is recorded to technology and software development costs on the condensed consolidated statement of operations. Amounts due to this related party were $2,000 and $2,000 at March 31, 2024 and December 31, 2023, respectively.

The $540,000 related party payable at December 31, 2023, was repaid in January 2024, following completion of the issuance of $6.4 million aggregate principal amount of 8% Secured Convertible Notes and $1.6 million aggregate principal amount of 12% Secured Term Notes.

Jeffrey Harris, CEO, and Paul Sykes, CFO, both participated in the debt financing transaction completed on January 23, 2024. Jeffrey Harris purchased $320,000 8% Secured Convertible Notes, due 2026, and $80,000 12% Secured Term Notes, due 2026. Paul Sykes purchased $25,000 8% Secured Convertible Notes, due 2026, and $6,250 12% Secured Term Notes, due 2026.

There are two members of the board of directors at March 31, 2024, who are related parties to investors in the debt financing transaction completed on January 23, 2024. In aggregate these investors purchased $5.2 million 12% Secured Convertible Notes and $1.3 million 8% Secured Term Notes.

NOTE 9 – LONG-TERM DEBT

The table below presents the components of outstanding debt (in thousands):


	March 31,		December 31,
	2024		2023
	(unaudited)		(audited)
12% Secured Term Notes, due January 23, 2026	$	1,600	$	—
8% Secured Convertible Notes, due January 23, 2026	6,400		—
	$	8,000	$	—
Less: Deferred financing fees, net	(802)		—
	$	7,198	$	—

On January 23, 2024, the Company issued $1.6 million aggregate principal amount of 12% Secured Term Notes and $6.4 million aggregate principal amount of 8% Secured Convertible Notes to a group of investors.

The 12% Secured Term Notes, due in January 2026, accrue interest payable in cash semi-annually. The 8% Secured Convertible Notes accrue interest which is added to the outstanding principal balance annually.

The 8% Secured Convertible Notes are convertible into common stock at a conversion price of $0.15 per share at the holder’s option any time up to the day prior to maturity in January 2026.

The 12% Secured Term Notes and 8% Secured Convertible Notes rank pari passu and are secured on substantially all the assets of the Company.

The 12% Secured Term Notes and 8% Secured Convertible Notes include restrictive covenants that, among other things, limit the ability of the Company to incur additional indebtedness and guarantee indebtedness; incur liens or allow mortgages or other encumbrances; prepay, redeem, or repurchase certain other debt; pay dividends or make other distributions or repurchase or redeem our capital stock; sell assets or enter into or effect certain other transactions (including a reorganization, consolidation, dissolution or similar transaction or selling, leasing, licensing, transferring or otherwise disposing of assets of the Company or its subsidiaries) and also contain customary events of default.

The Company recorded $233,000 of interest expense in connection with the 12% Secured Term Notes and 8% Secured Convertible Notes for the three months ended March 31, 2024.

NOTE 10 – 6% SENIOR SECURED CONVERTIBLE NOTES

In connection with the business combination, on June 14, 2022, the Company issued $11.0 million in aggregate principal amount of Senior Secured Original Issue Discount Convertible Note, due June 14, 2024 (the “Secured Convertible Notes”), issued at a discount of $1.0 million, with proceeds of $10.0 million received on the Closing Date.

A warrant representing 586,890 shares of common stock of the Company (the “Convertible Warrant”) with a fair value of $839,000 as at the date of the business combination was also issued in a private placement with the purchaser party thereto. To determine the fair value of the Convertible Warrant, the Company performed a Black-Scholes calculation as of June 14, 2022 using a stock price of $4.28, a strike price of $12.00, a risk free rate of 3.61%, annualized volatility of 65%, and a time to maturity of five years.

On January 16, 2024, the Company and the noteholder executed an agreement for the Company to repurchase the outstanding note and associated warrants, and on January 23, 2024, the note and associated warrants were repurchased for $2.9 million. As such, the outstanding principal on the Secured Convertible Notes at March 31, 2024 was $0. At December 31, 2023, the outstanding principal of the Secured Convertible Notes was $5.1 million with a carrying value of $4.4 million, net of discount of $0.7 million. The Company recorded a $1.6 million gain on repurchase of the note for the three months ended March 31, 2024.

The Company recorded $14,000 and $402,000 of interest expense in connection with the Senior Secured Convertible Notes for the three months ended March 31, 2024 and March 31, 2023, respectively.

NOTE 11 – WARRANT LIABILITIES

Prior to the business combination, at the time of their initial public offering, TCAC issued warrants to purchase 10,000,000 Class A ordinary shares at a price of $11.50 per share, for aggregate consideration of $10.0 million as part of the units offered by the prospectus and, simultaneously with the closing of their initial public offering, issued in a private placement an aggregate of 6,000,000 private placement warrants for aggregate consideration of $6.0 million, each exercisable to purchase one Class A ordinary share at a price of $11.50 per share.

The Company accounts for the warrants in accordance with the guidance contained in ASC 815 Derivatives and Hedging, under which the warrants do not meet the criteria for equity treatment and hence are recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations.

At March 31, 2024 and December 31, 2023, the estimated fair value of the warrants was $6,400 and $3,200, respectively.

The Company recorded a change in fair value loss of approximately $3,000 and $153,000 for the three months ended March 31, 2024 and 2023, respectively.

The fair value is determined in accordance with ASC 820, Fair Value Measurement. See Note 17, Fair Value Measurements, to the accompanying condensed consolidated financial statements for further information.

NOTE 12 – REVENUE RECOGNITION

The following table represents our revenues disaggregated by type (in thousands):


	Three Months Ended March 31,
	2024		2023
Revenue

Brand revenue	$	59	$	295
Retail revenue	6,415		6,862
Total revenue	$	6,474	$	7,157

Geographic Information

Revenue by geographical region consist of the following (in thousands):


	Three Months Ended March 31,
	2024		2023
Brand revenue
United States	$	59	$	294
Canada	—		1
Retail revenue
United States	6,273		6,663
Canada	142		199
	$	6,474	$	7,157

Revenues by geography are generally based on the country of the Company’s contracting entity. Total United States revenue was approximately 98% of total revenue for the three months ended March 31, 2024 and 97% for the three months ended March 31, 2023.

NOTE 13 – CONTRACT ASSETS AND LIABILITIES

Contract assets consisted of the following as of (in thousands):


	March 31,		December 31,
	2024		2023
	(unaudited)		(audited)

Deferred sales commissions	$	255	$	273

The movement in the contract assets during the three months ended March 31, 2024 and the year ended December 31, 2023, comprised the following (in thousands):


	March 31,		December 31,
	2024		2023
	(unaudited)		(audited)
Contract assets at start of the period	$	273	$	333
Expense deferred during the period	36		165
(Less) amounts expensed during the period	(54)		(225)

Contract assets at end of the period	$	255	$	273

NOTE 14 – STOCK BASED COMPENSATION

In connection with the business combination, the Tuatara shareholders approved the SpringBig Holdings, Inc. 2022 Long-Term Incentive Plan (the “2022 Incentive Plan”), which became effective upon the Closing.

The number of shares of our common stock initially reserved for issuance under the 2022 Incentive Plan was 1,525,175, which equaled the amount of shares of our common stock equal to 5% of the sum of (i) the number of shares of our common stock outstanding as of the Closing and (ii) the number of shares of our common stock underlying stock options issued under the SpringBig, Inc. 2017 Equity Incentive Plan (as amended and restated) (the “Legacy Incentive Plan”) that were outstanding as of the Closing. Shares subject to stock awards granted under the

2022 Incentive Plan that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares, will not reduce the number of shares available for issuance under the 2022 Incentive Plan.

At the annual shareholder meeting on June 13, 2022, the Company shareholders approved an amendment to the 2022 Incentive Plan to add an automatic annual increase in the number of shares authorized for issuance of up to 5% of the number of the Company’s common stock issued and outstanding on December 31 of the immediately preceding calendar year, beginning with the fiscal year ending December 31, 2023; provided that the annual increase with respect to the fiscal year ending December 31, 2023, which is 1,332,986 shares of common stock, took effect on the first business day following the annual shareholder meeting.

The number of shares automatically added to the number of shares authorized for issuance on January 1, 2024, was 2,266,988, being 5% of the number of the Company’s common stock issued and outstanding on December 31, 2023. The total number of shares of common stock authorized for issuance under the 2022 Incentive Plan is 5,125,149 as of March 31, 2024.

Prior to the closing of the merger, Legacy SpringBig maintained an equity incentive plan (the “Legacy Incentive Plan”), which was originally established effective December 1, 2017. SpringBig has not granted any additional awards under the Legacy Incentive Plan following the business combination.

The following table summarizes information on stock options outstanding as of March 31, 2024 under the Legacy Incentive Plan:


	Options Outstanding			Options Vested and Exercisable
	Number of Options	Weighted Average Exercise Price (Per Share)		Number of Options	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price (Per Share)
Outstanding Balance, January 1, 2024	2,271,894	$	0.57	2,244,102	4.81	$	0.56
Options granted	—
Options exercised	—	$	—
Options forfeited	(2,964)	$	1.26
Options cancelled	—	$	—
Outstanding Balance, March 31, 2024	2,268,930	$	0.57	2,255,034	4.57	$	0.57

During the three months ended March 31, 2024 and 2023, compensation expense recorded in connection with the Legacy Incentive Plan was $17,000 and $30,000, respectively. These charges are recorded in administrative expense on the condensed consolidated statements of operations.

No options were exercised during the three months ended March 31, 2024. As of March 31, 2024, the intrinsic value of the 2,255,034 options outstanding and exercisable was $0. As of March 31, 2024, the total compensation cost related to non-vested awards not yet recognized was $17,000 with a weighted-average period of.0.25 years over which it is expected to be recognized.

The following table summarizes information on Restricted Stock Units outstanding as of March 31, 2024 under the 2022 Incentive Plan:


	Restricted Stock Units Outstanding
	Number of RSUs	Weighted Average Fair Value (Per Share)		Weighted Average Vesting (Years)
Outstanding Balance, December 31, 2022	725,000	$	1.97	2.5
RSUs granted	1,989,000	0.56
RSUs forfeited	(276,836)	1.28
RSUs vested and common stock issued	(225,655)	$	1.97
Outstanding Balance, December 31, 2023	2,211,509	$	0.80
RSUs forfeited	(50,000)	0.80
Outstanding Balance, March 31, 2024	2,161,509	$	0.79	1.9

During the three months ended March 31, 2024 and 2023, compensation expense recorded in connection with the 2023 Incentive Plan was $178,000 and $132,000, respectively. The expense is reported within general and administrative expenses. The remaining expense of approximately $1.1 million will be recognized in future periods through September 2026. The Restricted Stock Units vest one-third on each of the first, second, and third anniversary after issuance.

NOTE 15 – LEASES

The Company leases office facilities in Boca Raton, Florida, Seattle, Washington and Ontario, Canada under non-cancelable operating lease agreements. The leases require monthly payments ranging from $4,000 to $48,000 and expire on various dates through February 2032. In addition to minimum rent, the Company is required to pay a proportionate share of operating expenses under these leases.

In June 2022, the Company entered into a new lease which became effective on January 1, 2024 after completion of leasehold improvements. The new lease term is for 98 months and monthly rental payments range from $38,000 to $48,000 over the life of the lease.

As of March 31, 2024, and December 31, 2023, the following amounts were presented on the Company’s condensed consolidated balance sheets in accordance with ASC 842 - Lease Accounting (in thousands):


	March 31,		December 31,
	2024		2023
	(unaudited)		(audited)
Balance Sheet
Assets:
Right of use asset - operating lease	$	3,031	$	340
Liabilities
Current	329		99
Non-current	2,815		225
Total operating lease liability	$	3,144	$	324

For the three months ended March 31, 2024 and March 31, 2023, the Company’s operating lease cost was $160,000 and $133,000, respectively. Other information pertaining to capitalized assets and liabilities under the leasing standard is as follows (in thousands):


	Three Months Ended March 31, 2024		Three Months Ended March 31, 2023
Other information
Operating lease cost	$	160	$	133
Operating cash flows paid to operating leases	$	31	$	126
Right-of-use assets in exchange for new operating lease liabilities	$	2,781	$	—
Weighted-average remaining lease term — operating leases (months)	89.9		17.9
Weighted-average discount rate — operating leases	9.05%		5.67%

As of March 31, 2024, the Company’s lease liabilities mature as follows:


Fiscal Year:	Operating Leases
2024	$	434
2025	595
2026	592
2027	504
Thereafter	2,278
Total lease payments	4,403
Less Imputed Interest	(1,259)
Present value of lease liabilities	$	3,144

NOTE 16 – COMMITMENTS AND CONTINGENCIES

Litigation

The Company is from time to time involved in litigation incidental to the conduct of its business. In accordance with applicable accounting guidance, the Company records a provision for a liability when it is both probable that a liability has been incurred and the amount can be reasonably estimated. Management believes that the outcome of such legal proceedings, legal actions and claims will not have a significant adverse effect on the Company’s financial position, results of operations or cash flows.

Employee Retention Payroll Tax Credits

In March 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to provide economic and other relief as a result of the COVID-19 pandemic. The CARES Act includes, among other items, provisions relating to refundable employee retention payroll tax credits. Due to the complex nature of the employee retention credit computations, any benefits we may receive are uncertain and may significantly differ from our current estimates. We plan to record any benefit related to these credits upon both the receipt of the benefit and the resolution of the uncertainties, including, but not limited to, the completion of any potential audit or examination, or the expiration of the related statute of limitations. During the three months ended March 31, 2023, we received $2.0 million related to these credits, recognized $0.6 million as an offset related to operating expenses thorough accounts payable, and we have deferred recognition of remaining $1.4 million, which is recorded in current liabilities on the accompanying condensed consolidated balance sheets.

NOTE 17 – FAIR VALUE MEASUREMENTS

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 in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to 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 and liabilities).

The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1: Valuation is based on unadjusted quoted prices in active markets for identical assets and liabilities that are accessible at the reporting date. Because valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2: Valuation is determined from pricing inputs that are other than quoted prices in active markets that are either directly or indirectly observable as of the reporting date. Observable inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and interest rates and yield curves that are observable at commonly quoted intervals.

Level 3: Valuation is based on inputs that are both significant to the fair value measurement and unobservable. Level 3 inputs include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value generally require significant management judgment or estimation.

Liabilities measured at fair value on a recurring basis

The balances of the Company’s liabilities measured at fair value on a recurring basis as of March 31, 2024, are as follows (in thousands):


	Level 1		Level 2		Level 3	Total Fair Value
Liabilities:
Public warrants	6		—		—	6
	$	6	$	—

SEC Form 10-Q filed by SpringBig Holdings Inc.