Cover Page This section presents the filing details for the Quarterly Report on Form 10-Q, including shares outstanding and company classification - This is a Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, filed by SpringBig Holdings, Inc1 - As of August 12, 2024, the company had 46,315,018 shares of common stock issued and outstanding1 - The company is classified as a Non-accelerated filer, a Smaller reporting company, and an Emerging growth company1 Part I – Financial Information This part presents the company's unaudited financial statements, management's analysis of financial condition and operations, market risk disclosures, and controls and procedures Financial Statements (Unaudited) The unaudited condensed consolidated financial statements show continued net losses, a significant working capital deficit, and substantial doubt about the company's going concern ability due to debt covenant default Condensed Consolidated Balance Sheets As of June 30, 2024, the company reported total assets of $7.9 million and total liabilities of $16.4 million, resulting in an $8.5 million stockholders' deficit Condensed Consolidated Balance Sheet Data (in thousands) | Balance Sheet Item | June 30, 2024 (unaudited) | December 31, 2023 (audited) | | :--- | :--- | :--- | | Cash and cash equivalents | $724 | $331 | | Total current assets | $4,724 | $4,445 | | Total assets | $7,947 | $5,105 | | Total current liabilities | $13,636 | $13,551 | | Total liabilities | $16,419 | $13,779 | | Total stockholders' deficit | $(8,472) | $(8,674) | Condensed Consolidated Statements of Operations For Q2 2024, revenues decreased to $6.6 million, but net loss significantly narrowed to $0.6 million, largely due to a gain on note repurchase for the six-month period Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $6,612 | $7,214 | $13,086 | $14,371 | | Gross Profit | $4,697 | $5,703 | $9,377 | $11,510 | | Loss from operations | $(57) | $(1,773) | $(339) | $(3,501) | | Net loss | $(647) | $(2,028) | $(230) | $(4,290) | | Net loss per share (basic and diluted) | $(0.01) | $(0.06) | $(0.01) | $(0.15) | Condensed Consolidated Statements of Changes in Stockholder's Deficit For the six months ended June 30, 2024, the total stockholders' deficit slightly improved due to stock-based compensation and common stock issuance, partially offsetting the net loss - The total stockholders' deficit improved from $(8,674) thousand at the end of 2023 to $(8,472) thousand at June 30, 20241416 Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2024, net cash used in operating activities was $1.9 million, offset by $2.4 million from financing activities, resulting in a net cash increase of $0.4 million Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(1,919) | $(2,563) | | Net cash used in investing activities | $(63) | $(90) | | Net cash provided by (used in) financing activities | $2,375 | $(167) | | Net increase/(decrease) in cash | $393 | $(2,820) | | Cash and cash equivalents, end of period | $724 | $726 | Notes to the Condensed Consolidated Financial Statements The notes detail the company's business, accounting policies, and financial items, including a going concern warning due to a working capital deficit and debt covenant default - The company has incurred historical losses, resulting in an accumulated deficit of approximately $36.8 million and a working capital deficit of $8.9 million as of June 30, 202434 - There is substantial doubt about the company's ability to continue as a going concern, as its cash balance fell below the $1 million minimum required by its debt agreements, placing it in default, which gives note holders the right to demand immediate repayment3637 - In January 2024, the company issued $6.4 million of 8% Secured Convertible Notes and $1.6 million of 12% Secured Term Notes, using part of the proceeds to repurchase a previous note for $2.9 million, resulting in a $1.6 million gain6475 - For the six months ended June 30, 2024, 97% of total revenue was generated in the United States, with retail revenue accounting for $12.9 million of the $13.1 million total8182 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a revenue decline and significant expense reductions, while highlighting a critical liquidity crisis with a working capital deficiency and debt covenant default, raising substantial doubt about the company's going concern ability Business Overview SpringBig provides a software platform for customer loyalty and marketing automation, primarily serving cannabis retailers and brands in North America - The company is a software platform providing customer loyalty and marketing automation solutions, with a focus on the cannabis industry116 - SpringBig serves approximately 1,100 retail and brand clients across more than 2,500 retail locations in North America117 Key Operating and Financial Metrics Key metrics show declining revenue and retail clients, but improved net loss and Adjusted EBITDA due to cost-cutting, with net revenue retention falling to 86% Key Metrics Comparison (Q2 2024 vs Q2 2023) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Revenue (in thousands) | $6,612 | $7,214 | | Net loss (in thousands) | $(647) | $(2,028) | | Adjusted EBITDA (in thousands) | $330 | $(1,138) | | Number of retail clients | 1,113 | 1,439 | | Net revenue retention | 86% | 100% | | Number of messages (million) | 158 | 145 | - Net revenue retention is calculated based on recurring monthly subscription revenue from retail clients over a trailing twelve-month period and excludes excess use revenue125 Results of Operations For Q2 2024, revenues decreased 8% year-over-year, but total operating expenses were significantly cut by 36%, leading to a substantially smaller loss from operations Comparison of Operations (Three Months Ended June 30, in thousands) | (in thousands) | 2024 | 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $6,612 | $7,214 | $(602) | (8)% | | Gross Profit | $4,697 | $5,703 | $(1,006) | (18)% | | Total operating expenses | $4,754 | $7,476 | $(2,722) | (36)% | | Loss from operations | $(57) | $(1,773) | $1,716 | 97% | - The revenue decrease was impacted by the company ceasing to provide platform access to delinquent clients and a 37% year-over-year decline in excess use revenue due to budget-conscious clients145 - Operating expense reductions were achieved through lower employee headcount, reduced use of offshore developers, and lower G&A costs after delisting from Nasdaq to the OTCQX market149150151 Liquidity & Capital Resources The company faces significant liquidity challenges with an $8.9 million working capital deficiency and a debt covenant default, raising substantial doubt about its ability to continue as a going concern - The company has a working capital deficiency of $8.9 million as of June 30, 2024173208 - In January 2024, the company raised $6.4 million from 8% Convertible Notes and $1.6 million from 12% Term Notes169 - The company is in default on its 12% Secured Term Notes and 8% Secured Convertible Notes because its cash balance is below the required $1 million minimum, giving note holders the right to demand immediate repayment174 - Management concluded there is substantial doubt about the company's ability to continue as a going concern for the next 12 months176 Quantitative and Qualitative Disclosure About Market Risk The company states that its exposure to market risks, including interest rate fluctuations, inflation, and foreign exchange rate changes, is not material - The company does not believe that inflation has had a material effect on its business200 - Exchange rate risk from Canadian operations is considered immaterial as Canadian income and expenses are matched in the local currency201 Controls and Procedures As of June 30, 2024, the company's disclosure controls and procedures were deemed ineffective due to previously identified material weaknesses in internal control over financial reporting - Management concluded that disclosure controls and procedures were not effective as of June 30, 2024203 - The ineffectiveness is due to material weaknesses in internal control over financial reporting previously identified in the 2023 Form 10-K203 Part II – Other Information This part covers legal proceedings, risk factors, unregistered sales of equity securities, defaults on senior securities, other information, and exhibits Legal Proceedings The company is involved in incidental litigation, but management believes current legal proceedings will not materially affect its financial position or operations - The company states that it is not involved in any legal proceedings that are expected to have a significant adverse effect on its financials93206 Risk Factors The primary risk factor is the company's significant working capital deficiency and history of losses, leading to substantial doubt about its ability to continue as a going concern - The company has a significant working capital deficiency ($8.9 million as of June 30, 2024) and a history of losses208 - There is substantial doubt as to the company's ability to continue as a going concern208 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None210 Defaults Upon Senior Securities The company is in default of its 12% Secured Term Notes and 8% Secured Convertible Notes due to its cash balance falling below the required $1 million minimum - The company is in default upon its senior securities, specifically the 12% Secured Term Notes and 8% Secured Convertible Notes211 Other Information During the six months ended June 30, 2024, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the period212 Exhibits This section lists the exhibits filed with the Form 10-Q, including the CEO and CFO certifications and XBRL interactive data files - Exhibits filed include Sarbanes-Oxley Act certifications from the CEO and CFO, and XBRL data files214 Signatures This section contains the official signatures for the Quarterly Report on Form 10-Q - The report was signed on August 13, 2024, by Jeffrey Harris, Chief Executive Officer, and Paul Sykes, Chief Financial Officer219
SPRINGBIG HOLDIN(SBIG) - 2024 Q2 - Quarterly Report