Part I Part I – Financial Information This section presents the unaudited financial statements and related notes for SpringBig Holdings, Inc. for the first quarter of 2024 Item 1. Financial Statements (Unaudited) SpringBig Holdings, Inc. reported a $0.417 million net income in Q1 2024, reversing a prior-year loss, largely due to a $1.573 million gain on note repurchase Condensed Consolidated Balance Sheets Total assets increased to $9.1 million as of March 31, 2024, driven by cash and lease assets, while the stockholders' deficit improved to $(8.0) million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 (unaudited) | December 31, 2023 (audited) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,668 | $331 | | Total current assets | $5,722 | $4,445 | | Total assets | $9,078 | $5,105 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $7,084 | $13,551 | | Long-term debt, non-current | $7,198 | $— | | Total liabilities | $17,103 | $13,779 | | Total stockholders' deficit | $(8,025) | $(8,674) | Condensed Consolidated Statements of Operations Net income reached $417,000 in Q1 2024, a significant improvement from a $2.262 million loss, primarily due to a $1.573 million gain on note repurchase and reduced operating expenses Statement of Operations Summary (in thousands) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenues | $6,474 | $7,157 | | Gross Profit | $4,680 | $5,807 | | Loss from operations | $(282) | $(1,728) | | Gain on note repurchase | $1,573 | $— | | Net income (loss) | $417 | $(2,262) | | Basic EPS | $0.01 | $(0.08) | | Diluted EPS | $0.01 | $(0.08) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $1.878 million in Q1 2024, offset by $3.274 million from financing, leading to a $1.337 million increase in cash and cash equivalents Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(1,878) | $379 | | Net cash used in investing activities | $(59) | $(12) | | Net cash provided by (used in) financing activities | $3,274 | $(1,344) | | Net increase (decrease) in cash | $1,337 | $(977) | | Cash and cash equivalents at end of period | $1,668 | $2,569 | Notes to the Condensed Consolidated Financial Statements Key notes include the company's delisting to OTCQX, management's going concern assessment, $8.0 million in new debt issuance, and a $1.6 million gain from note repurchase - The company's common stock was delisted from the Nasdaq Capital Market and began trading on the OTCQX® Best Market on September 6, 20232728 - Management concluded that liquidity and cash resources are sufficient for the next twelve months, despite a $1.4 million working capital deficit as of March 31, 20243234 - In January 2024, the company issued $6.4 million of 8% Secured Convertible Notes and $1.6 million of 12% Secured Term Notes, convertible at $0.15 per share6364 - On January 23, 2024, the company repurchased $4.4 million of 6% Senior Secured Convertible Notes for $2.9 million, recognizing a $1.6 million gain71 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 10% revenue decline to $6.5 million in Q1 2024, offset by a 34% reduction in operating expenses and a $1.6 million gain, resulting in a $0.4 million net income and positive Adjusted EBITDA Key Operating and Financial Metrics Key metrics for Q1 2024 show revenue at $6.474 million, a decline in retail clients and net revenue retention, but an increase in messages sent and positive Adjusted EBITDA of $150,000 Key Metrics Comparison (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue (in thousands) | $6,474 | $7,157 | | Net income (loss) (in thousands) | $417 | $(2,262) | | Adjusted EBITDA (in thousands) | $150 | $(1,331) | | Number of retail clients | 1,207 | 1,366 | | Net revenue retention | 89% | 100% | | Number of messages (million) | 637 | 488 | - Adjusted EBITDA is a non-GAAP measure, adjusting net income for interest, taxes, depreciation, amortization, stock-based compensation, bad debt, and other non-recurring items126130 Results of Operations Q1 2024 revenues decreased by 10% to $6.474 million, but a 34% reduction in operating expenses and a $1.6 million gain on note repurchase led to a net income of $0.4 million Year-over-Year Change in Operating Results (in thousands) | Item | Q1 2024 | Q1 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $6,474 | $7,157 | $(683) | (10)% | | Gross Profit | $4,680 | $5,807 | $(1,127) | (19)% | | Total operating expenses | $4,962 | $7,535 | $(2,573) | (34)% | | Loss from operations | $(282) | $(1,728) | $1,446 | (84)% | | Income (loss) after taxes | $417 | $(2,262) | $2,679 | nm | - The revenue decrease was driven by a 4% decline in subscription revenue and a 28% decline in excess use revenue due to client budget consciousness144 - Operating expenses were reduced across all categories: Selling, servicing and marketing by 38%, Technology and software development by 28%, and General and administrative by 36%148149150 Liquidity & Capital Resources The company improved liquidity in January 2024 by raising $8.0 million in new debt and repurchasing prior notes, reducing its working capital deficit to $1.4 million as of March 31, 2024 - In January 2024, the company raised $6.4 million from 8% Convertible Notes and $1.6 million from 12% Term Notes, yielding $7.5 million in net cash proceeds158 - A portion of new debt proceeds was used to repurchase $5.2 million of 6% Senior Secured Notes for $2.9 million160 Working Capital Summary (in thousands) | Item | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,668 | $331 | | Working capital | $(1,362) | $(9,106) | Quantitative and Qualitative Disclosure About Market Risk The company identifies market risks from interest rates, inflation, and foreign exchange, but deems their current financial impact immaterial - The company's primary market risks include interest rate fluctuations, inflation, and foreign exchange risk184 - Management believes these market risks are currently immaterial to the company's financial condition and results186187188 Controls and Procedures As of March 31, 2024, disclosure controls and procedures were deemed ineffective due to previously identified material weaknesses, with no material changes during the quarter - Management concluded that disclosure controls and procedures were not effective as of March 31, 2024190 - No material changes to internal controls over financial reporting occurred during Q1 2024192 Part II Part II – Other Information This section provides additional information on legal proceedings, risk factors, equity sales, and other corporate matters Legal Proceedings The company is involved in incidental litigation, but management anticipates no significant adverse financial impact from current proceedings - The company is involved in incidental litigation but does not expect a significant adverse effect from current proceedings91194 Risk Factors For a comprehensive discussion of business risks, the company refers investors to its 2023 Annual Report on Form 10-K - For a comprehensive understanding of business risks, the company refers to its 2023 Form 10-K195 Unregistered Sales of Equity Securities and Use of Proceeds On February 27, 2024, the company issued 255,102 shares of common stock for advisory services in an unregistered transaction - Issued 255,102 shares of common stock for advisory services on February 27, 2024, in an unregistered transaction196 Other Information No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2024 - No directors or officers adopted or terminated Rule 10b5-1 trading plans in Q1 2024198
SPRINGBIG HOLDIN(SBIG) - 2024 Q1 - Quarterly Report