All statements other than statements of historical facts contained in this report, including statements regarding future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "could," "would," "expect," "objective," "plan," "potential," "seek," "grow," "target," "if," and similar expressions intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations, objectives, and financial needs. Our actual results could differ materially from those anticipated due to various factors discussed under "Risk Factors" in this Quarterly Report on Form 10-Q.
SpringBig Holdings, Inc.(the "Company" or "SpringBig") is a market-leading software platform providing customer loyalty and marketing automation solutions to retailers and brands. We have leveraged our deep expertise in loyalty marketing to develop solutions that address the key challenges faced by retailers and brands, including those in the cannabis industry. Stringent, complex, and rapidly evolving regulations have resulted in restricted access to traditional marketing and advertising channels for cannabis retailers and brands, preventing them from utilizing many traditional methods for effectively accessing and engaging with consumers. In addition, the lack of industry-specific data and market intelligence solutions limit cannabis retailers' and brands' ability to efficiently market their products, thereby hindering their growth. Our platform enables our clients to increase brand awareness, engage customers, improve retention, and access actionable consumer feedback data to improve marketing. Our clients can use our loyalty marketing, digital communications, and text/email marketing solutions to drive new customer acquisition, customer spend and retail foot traffic. Our proven business-to-business-to-customer ("B2B2C") software platform creates powerful network effects between retailers and brands and provides an ability for both to connect directly with consumers. As retailers and brand scale, a virtuous cycle amplifies growth, ultimately expanding SpringBig'sreach and strengthening our value proposition. SpringBigserves approximately 1,390 brand and retailer clients across more than 2,800 distinct retail locations in North America. Our clients distribute more than 2.0 billion messages annually, and in the last year more than $7.3 billionof gross merchandise value was accounted for by clients utilizing our platform.
Business combinations and public company costs
June 14, 2022, SpringBig Holdings, Inc., a Delawarecorporation (formerly known as Tuatara Capital Acquisition Corporation("Tuatara" or "TCAC")), consummated the previously announced business combination of Tuataraand SpringBig, Inc. ("Legacy SpringBig"), a Delawarecorporation. Pursuant to the merger agreement, prior to the closing of the business combination, Tuatara changed its jurisdiction of incorporation by deregistering as a Cayman Islandsexempted company and continuing and domesticating as a corporation incorporated under the laws of the State of Delaware. Prior to the closing date, and in connection with the Closing, Tuatara changed its name to SpringBig Holdings, Inc.Legacy SpringBigwas deemed to be the accounting acquirer in the business combination based on an analysis of the criteria outlined in Accounting Standards Codification 805. While Tuatara was the legal acquirer in the business combination, because Legacy SpringBig was deemed the accounting acquirer, the historical financial statements of Legacy SpringBig became the historical financial statements of the combined company, upon the Closing. The business combination was accounted for as a "reverse recapitalization". A reverse recapitalization does not result in a new basis of accounting, and the financial statements of the combined entity represent the continuation of the financial statements of Legacy SpringBig in many respects. Under this method of accounting, Tuatara was treated as the "acquired" company for financial reporting purposes. For accounting purposes, Legacy SpringBig was deemed to be the accounting acquirer in the transaction and, consequently, the transaction was treated as a recapitalization of Legacy SpringBig (i.e., a capital transaction involving the issuance of stock by Tuatara for stock of Legacy SpringBig). Accordingly, the consolidated assets, liabilities and results of operations of Legacy SpringBig became the historical financial statements of the combined company, and Tuatara's assets, liabilities and results of operations were consolidated with Legacy SpringBig beginning on the acquisition date. Operations prior to the business combination are presented as those of Legacy SpringBig. The net assets of Tuatara were recognized at historical cost (which are consistent with carrying value), with no goodwill or other intangible assets recorded. 25 -------------------------------------------------------------------------------- As a consequence of the business combination, Legacy SpringBig became the successor to an SEC-registered and Nasdaq-listed company, which requires us to incur additional expenses and implement procedures and processes to address public company regulatory requirements and customary practices. We have and expect to continue to incur additional annual expenses as a public company for, amongst other things, directors' and officers' liability insurance, director fees and additional internal and external accounting, legal and administrative resources, including increased audit and legal fees.
Main operational and financial indicators
We monitor the following key financial and operational metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. The following is our analysis for the three and nine months ended
September 30, 2022and 2021, in thousands: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue $ 7,456 $ 6,121 $ 20,404 $ 17,028Net loss (3,059) (658) (8,535) (3,230) Adjusted EBITDA (3,490) (1,207) (9,634) (3,531) Number of retail clients 1,390 850 1,390 850 Net revenue retention 119 % 85 % 119 % 85 % Number of messages (million) 586 485 1,501 1,336
For a reconciliation of net loss to adjusted EBITDA, see “EBITDA and Adjusted EBITDA”, below.
Revenue We generate revenue from the sale of monthly subscriptions that provide retail clients with access to an integrated platform through which they can manage loyalty programs and communications with their consumers. We also generate additional revenue from these retail clients when the quantum of messages sent to consumers exceeds the amounts in the subscription package. The subscriptions generally have twelve-month terms (which typically are not subject to early termination without a cancellation fee payable by the client), are payable monthly, and automatically renew for subsequent and recurring 12-month periods unless notice of cancellation is provided in advance. The Company's revenue growth is generally achieved through a mix of new clients, clients upgrading their subscriptions (as new clients will frequently enter into a relatively low level of subscription (with respect to the size of such client's database and the number of their customers on such database) and/or the number of pre-determined communication credits), which frequently occurs shortly after such a client initially becomes a client, and the excess use element of revenues. "Excess use" revenues are revenues derived from amounts charged to clients for exceeding the pre-determined credit volume set forth in the applicable client's subscription agreement. Given this combination, and particularly the tendency for clients to upgrade soon after becoming a client, the Company does not actively monitor revenue split between new and existing clients, preferring to use the split between subscription and excess use in combination with net dollar retention and the number of clients as key metrics, as described below.
Other Key Operating Parameters
The growth in our revenues is a key metric at this stage in our development as a Company and therefore to provide investors with additional information, we have disclosed in the table above the number of our retail clients, our net revenue retention rate and the number of standardized messages distributed through the
SpringBigplatform by our clients. We regularly review the key operating and financial metrics set forth above to evaluate our business, our growth, assess our performance and make decisions regarding our business. We believe these key metrics are useful to investors both because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making, and they may be helpful in evaluating the state and growth of our business. Number of Retail Clients. We disclose in the table above the number of clients of the business at the end of the relevant period. We view the number of clients as an important metric to assess the performance of our business because an increased number of clients drives growth, increases brand awareness and helps contribute to our reach and strengthening our value proposition. 26 -------------------------------------------------------------------------------- Net Revenue Retention. We believe that the growth in the use of our platform by our clients is an important metric in evaluating our business and growth. We monitor our dollar-based net revenue retention rate on a rolling basis to track the maintenance of revenue and revenue-increasing activity growth. "Net revenue retention rate" (also referred to as "net dollar retention rate") does not have a standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies, and further, investors should not consider it in isolation. When evaluating our retention rates and calculating our net revenue retention rate, SpringBigcalculates the average recurring monthly revenue from retail clients, adjusted for losses, increases and decreases in monthly subscriptions during the prior twelve months divided by the average recurring monthly subscription revenue over the same trailing twelve-month period. We view a net revenue retention rate exceeding 100% as positive because this is indicative of increasing subscription revenue without including the impact of the initial recurring revenue from new clients during the month in which they are on-boarded. We believe that we can drive this metric by continuing to focus on existing clients and by revenue-increasing activities, such as client upgrades. Net revenue retention is measured over the twelve-month period ending at the reporting date and if the ratio exceeds 100% this is an indication of upgrades from clients exceeding the value of any lost clients and downgrades in subscriptions. The net revenue retention is calculated based on subscription revenues only and does not include the impact of excess use revenue. Number of Messages Sent. We believe that the volume of messages sent, measured in standardized message size, is important as it indicates the frequency of use and level of engagement of our platform by our clients.
EBITDA and Adjusted EBITDA
To provide investors with additional information regarding our financial results, we have disclosed EBITDA, which is a non-GAAP financial measure that we calculate as net income before interest, taxes, depreciation and amortization and Adjusted EBITDA, which represents EBITDA adjusted for certain unusual or infrequent items (such as changes in the fair value of warrants). We present EBITDA and Adjusted EBITDA because they are key measures used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of investment capacity. Accordingly, we believe that EBITDA and Adjusted EBITDA provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors, and is widely used by analysts, investors and competitors to measure a company's operating performance. EBITDA and Adjusted EBITDA have limitations, and you should not consider these in isolation or as a substitute for analysis of our results as reported under GAAP, including net loss, which we consider to be the most directly comparable GAAP financial measure. Some of these limitations are: •although depreciation is a non-cash charge, the assets being depreciated may have to be replaced in the future, and neither EBITDA nor Adjusted EBITDA reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; •EBITDA and Adjusted EBITDA do not reflect interest payments that may represent a reduction in cash available; •EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; and •EBITDA and Adjusted EBITDA do not reflect tax payments that may represent a reduction in cash available. Because of these limitations, you should consider EBITDA and Adjusted EBITDA alongside other financial performance measures, including net loss and our other GAAP results. 27
A reconciliation of net loss before tax to non-GAAP EBITDA and adjusted EBITDA is as follows (in thousands):
Nine Months Ended September Three Months Ended September 30, 30, 2022 2021 2022 2021 Net loss
$ (3,059) $ (658) $ (8,535) $ (3,230)Interest income (7) (1) (7) (3) Interest expense 320 5 632 6 Depreciation expense 67 50 191 62 EBITDA (2,679) (604) (7,719) (3,165) Stock based compensation* - 178 1,226 415 PPP Loan Forgiveness - (781) - (781) Business combination related bonus - - 550 - Change in fair value of warrants (811) - (3,691) - Adjusted EBITDA $ (3,490) $ (1,207) $ (9,634) $ (3,531)
*Stock-based compensation is recorded in general and administrative expenses
Factors affecting our performance
Global Economic Trends
The overall economic environment and related changes to consumer behavior have a significant impact on our business. Overall, positive conditions in the broader economy promote consumer spending on marketplaces and our customers' products, while economic weakness, which generally results in reduced consumer spending, may have a negative impact on our customers' sales, which in turn may impact our revenue.
Customer growth and retention
Our revenue grows primarily through acquiring and retaining customers and expanding relationships with customers over time, increasing the revenue per customer. We have historically been able to attract, retain and grow relationships with customers as a result of the Company's comprehensive product suite, differentiated loyalty programs, consistent communications with customers, and reliable customer service.
Regulation and maturation of cannabis markets
We believe that we will have significant opportunities for growth as more jurisdictions legalize cannabis for medical and/or adult use and the regulatory environment continues to develop. We intend to explore new expansion opportunities as additional jurisdictions legalize cannabis for medical or adult use and leverage our existing business model to enter new markets. We believe our understanding of the space coupled with our experienced sales force will enable us to quickly enter and execute in new markets and capture new business, which we sustain via our best-in-class product offerings. Further, a change in
U.S.federal regulations could result in our ability to engage in additional outlets, including the fintech, payments and e-commerce space. We expect competition to intensify in the future as the regulatory regime for cannabis becomes more settled and the legal market for cannabis becomes more accepted, which may encourage new participants to enter the market, including established companies with substantially greater financial, technical and other resources than existing market participants. We believe that maintaining and enhancing our brand identity and our reputation is critical to maintaining and growing our relationships with customers and to our ability to attract new customers. 28 -------------------------------------------------------------------------------- We believe our platform's scale and strong customer loyalty market themselves; however, we implement a variety of marketing efforts to attract retailers and brands not yet on our platform. Marketing efforts include multiple strategies designed to attract and retain both retail and brands subscribers. Negative publicity, whether or not justified, relating to events or activities attributed to us, our employees, customers or others associated with any of these parties, may tarnish our reputation and reduce the value of our brand. Given our high visibility, we may be more susceptible to the risk of negative publicity. Damage to our reputation and loss of brand equity may reduce demand for our platform and have an adverse effect on our business, operating results and financial condition. Moreover, any attempts to rebuild our reputation and restore value of our brand may be costly and time consuming, and such efforts may not ultimately be successful. We also believe that the importance of our brand recognition and reputation will continue to increase as competition in our market continues to develop. If our brand promotion activities are not successful, our operating results and growth may be adversely impacted.
Components of our operating results
SpringBigprovides its retail customers with access to an integrated platform that provides all the functions of the Company's proprietary software, which uses proprietary technology to send text or email messages to the customer's contacts. This access is provided to customers under a contract, with revenue generated from monthly fixed fees for credits (up to pre-contracted amount) and optional purchases of additional credits.
Cost of revenue primarily includes amounts payable to message distributors on behalf of the Company’s customers over cellular networks and integrations.
Sales, maintenance and marketing expenses
Sales, service and marketing expenses include salaries, benefits, travel expenses and incentive compensation for our sales, service and marketing employees. In addition, sales, service, and marketing expenses include business acquisition marketing, event cost, and branding and advertising costs.
Technology and software development expenses
Technology and software development costs consist of salaries and benefits for employees, including engineering and technical teams who are responsible for building new products, as well as maintaining and improving existing products. We capitalize certain costs associated with technology and software development in accordance with ACS 350-40, Intangibles -
Goodwilland Other - Internal Use Software, but these are limited in quantum as we are constantly and regularly making enhancements to our technology platform and do not consider appropriate to be capitalized. Capitalized costs are generally amortized over a three-year period commencing on the date that the specific software product is placed in service. We believe that continued investment in our platform is important for our growth.
General and administrative expenses
General and administrative expenses consist primarily of payroll and related benefits costs for our employees involved in general corporate functions including finance, human resources and investor relations, as well as costs associated with the use by these functions of software and equipment. All rent, insurance and other occupancy costs are also included in general and administrative expenses as are professional and outside services related to legal, audit and other services. 29
Comparison of the three months ended
The following tables present our results of operations for the periods indicated:
Three months completed
Increase 2022 2021 (decrease) % (in thousands) Revenue
$ 7,456 $ 6,121 $ 1,33522 % Cost of revenue 1,912 1,560 352 23 % Gross profit 5,544 4,561 983 22 % Operating expenses: Selling, servicing and marketing 3,075 2,570 505 20 % Technology and software development 2,811 1,916 895 47 % General and administrative 3,215 1,510 1,705 113 % Total operating expenses 9,101 5,996 3,105 52 % Loss from operations (3,557) (1,435) (2,122) 148 % Interest income 7 1 6 nm Interest expense (320) (5) (315) nm Forgiveness of PPP Loan - 781 (781) nm Change in fair value of warrants 811 - 811 nm Loss before taxes (3,059) (658) (2,401) 365 % Provision for income taxes - - - - Loss after taxes $ (3,059) $ (658) $ (2,401)365 % nm-not meaningful Revenues. Revenues increased $1.3 millionfor the three months ended September 30, 2022, representing a 22% increase compared with the same period in 2021. Our subscription revenue was $5.4 millionfor the three months ended September 30, 2022compared with $3.6 millionin the same quarter in 2021, representing 48% year over year growth. The excess use revenue declined by 24% year over year due to the weaker economy and the fact that some excess use revenue in the comparable prior period had converted into recurring subscription revenues due to clients upgrading their subscriptions. Our revenue from Brands clients increased by 61% year over year and was $267,000in the three months ended September 30, 2022, as compared to $166,000for the three months ended September 30, 2021. The Company's net revenue retention rate was 119% for the three months ended September 30, 2022, an increase from our net revenue retention rate of 85% for the same period in 2021, with the ratio continuing to exceed our target of 100% as a result of subscription upgrades and growth exceeding the value of lost and downgraded subscriptions. Gross Profit. Gross profit increased to $5.5 millionfor the three months ended September 30, 2022from $4.6 millionfor the three months ended September 30, 2021, representing a 22% increase. The cost of revenue increased by $0.4 million, representing a 23% increase over the three months ended September 30, 2021. The increase was primarily due to the increasing volume of communication messages distributed by clients, with a total of approximately 586 million messages in the quarter ending September 30, 2022, which constitutes an increase of 101 million messages, or 17% higher than in the same period last year. Our gross margin percentage remains reasonably consistent at 74.5% for the quarter ended September 30, 2022as compared to 74.4% for the same period in 2021. Operating Expenses. Our operating expenses increased by $3.1 million, or 52%, for the three months ended September 30, 2022compared with the same period in 2021. Selling, servicing and marketing expenses increased by $0.5 million, or 20%, for the quarter ended September 30, 2022, compared to the same period in 2021. As we continue to scale the business, we have continued to increase the scale of our 30 -------------------------------------------------------------------------------- sales, service and marketing operations, and in particular grew the number of employees in our Torontooffice and in our client support organization when comparing the quarter ending September 30, 2022with the same three months in the prior year. Technology and software development expenses increased by $0.9 million, or 47%, for the quarter ended September 30, 2022, compared to the same period in 2021, with the increase being attributable to higher headcount primarily through using offshore contract engineering resources to enable an acceleration in the pace of developing and enhancing our software platform. General and administrative expenses increased by $1.7 million, or 115%, for the quarter ended September 30, 2022, compared to the same period in 2021 due to additional rent expense, including the expansion of our office in Toronto, higher personnel-related costs as we increased headcount, and additional expenses related to preparing for and becoming a publicly listed company, specifically relating to legal, accounting and auditing fees, and directors' and officers' liability insurance premiums. We incurred expenses related to being a publicly listed company of approximately $1.2 millionfor the three months ended September 30, 2022.
Interest charges. Interest charges were
Change in fair value of warrants. The liability relating to warrants issued by
SpringBigis included on the balance sheet at the fair value prevailing at the end of the accounting period and any change in value is reported in the income statement. As at September 30, 2022, the market value of the public warrants, which are listed on the Nasdaq stock exchangewas $0.0503per warrant compared with $0.1012at June 30, 2022. The reduction in and the resulting change in value since the the quarter ending June 30, 2022was $0.8 million.
Comparison of the nine months ended
The following tables present our results of operations for the periods indicated:
Nine month period ended
Increase 2022 2021 (decrease) % (in thousands) Revenue
$ 20,404 $ 17,028 $ 3,37620 % Cost of revenue 5,754 4,913 841 17 % Gross profit 14,650 12,115 2,535 21 % Operating expenses: Selling, servicing and marketing 9,103 6,993 2,110 30 % Technology and software development 8,358 4,747 3,611 76 % General and administrative 8,790 4,383 4,407 101 % Total operating expenses 26,251 16,123 10,128 63 % Loss from operations (11,601) (4,008) (7,593) 189 % Interest income 7 3 4 nm Interest expense (632) (6) (626) nm Forgiveness of PPP loan - 781 (781) nm Change in fair value of warrants 3,691 - 3,691 nm Loss before taxes (8,535) (3,230) (5,305) 164 % Provision for income taxes - - - - Loss after taxes $ (8,535) $ (3,230) $ (5,305)164 % nm - not meaningful Revenues. Revenues increased by $3.4 millionfor the nine months ended September 30, 2022, representing a 20% increase compared with the same period in 2021. Our subscription revenue was $15.2 millionfor the nine months ended September 30, 2022compared with $10.6 millionin the same period in 2021, representing 40% year over year growth. The excess use revenue declined by 22% year over year due to the weaker economy and the fact that some prior year excess use revenue has now converted into recurring subscription revenues due to clients upgrading their subscriptions. Our revenue from brands clients 31 --------------------------------------------------------------------------------
grew 56% year over year and was
Gross Profit. Gross profit increased to
$14.7 millionfor the nine months ended September 30, 2022from $12.1 millionfor nine months ended September 30, 2021, representing a 21% increase. The cost of revenue increased by $841,000, representing an 17% increase, for the nine months ended September 30, 2022. The increase was primarily due to the increasing volume of communication messages distributed by clients, with a total of approximately 1.50 billion messages during the nine months ended September 30, 2022, representing an increase of 165 million, or 12% higher, than in the same period last year. The percentage increase in cost of revenue is lower than our revenue growth over the same period and therefore our gross margin percentage increased by 0.7% compared with the same period in 2021 to 71.8% for the nine months ended September 30, 2022. Operating Expenses. SpringBigcontinues to prioritize revenue growth while ensuring expenses are managed in an appropriate manner to ensure we are able to handle the growth with appropriate personnel, infrastructure, and processes and also ensuring net loss is maintained within an acceptable range.
Our operating expenses increased by
Selling, servicing, and marketing expenses increased by
$2.1 million, or 30%, for the nine months ended September 30, 2022, compared to the same period in 2021. As we continue to scale the business, we continue to increase the scale of our sales, service, and marketing operations, in particular we grew the number of employees in our Torontooffice and in our client support organization when comparing the nine months ended September 30, 2022with the same period in 2021. Technology and software development expenses increased by $3.6 million, or 76%, for nine months ended September 30, 2022, compared to the same period in 2021, with the increase being attributable to higher headcount primarily through using offshore contract engineering resources to enable an acceleration in the pace of developing and enhancing our software platform. General and administrative expenses increased by $4.4 million, or 101%, for the nine months ended September 30, 2022, compared to the same period in 2021 due to additional rent expense, including the expansion of our office in Toronto, higher personnel-related costs as we increased headcount and additional expenses related to preparing for and becoming a publicly listed company, specifically relating to legal, accounting and auditing fees, and directors' and officers' liability insurance premiums.. Stock based compenstation. Compensation expense recorded in connection with the Legacy Incentive Plan was $1.2 millionand $415,000for the nine months ended September 30, 2022, which are included in administrative expense on the statements of operations. Interest Income (Expense). Interest expense was $632,000for the nine months ended September 30, 2022due to interest on the 15% Convertible Notes and the 6.0% Convertible Notes issued in connection with the the merger consummated on June 14, 2022. Interest expense was immaterial for the nine months ended September 30, 2021. Change in fair value of warrants. The liability relating to warrants issued by SpringBigis included on the balance sheet at the fair value prevailing at the end of the accounting period and any change in value is reported in the income statement. As at September 30, 2022, the market value of the public warrants, which are listed on the Nasdaq stock exchangewas $0.0503per warrant. These warrants were not issued as of December 31, 2021, but were recorded in connection with the accounting related to the June 14, 2022merger. As of the merger date, the fair value per warrant was $0.2810. The liability relating to warrants issued by SpringBigis included on the balance sheet at the fair value prevailing at the end of the accounting period. During the nine months ended September 30, 2022, $3.7 millionof gain related to the change in value of the warrants is reported in the income statement.
Cash and capital resources
We have incurred net losses since inception, and experienced negative cash flows from operations. Prior to the business combination, we financed our operations and capital expenditures primarily through the private sales of equity securities and revenue. Our primary uses of cash in the short-term are to fund our operations as we continue to grow our business. In connection with the execution of the merger agreement in
November 2021, Legacy SpringBig and TCAC entered into subscription agreements, pursuant to which certain investors (the " PIPE Investors") agreed to purchase an aggregate of 1,310,000 shares of common stock of the combined company, for $10.00per share, for an aggregate purchase price of $13,100,000. On February 25, 2022, SpringBigentered into convertible notes (the "Convertible Notes") with certain of the 32 -------------------------------------------------------------------------------- PIPE Investorsfor a principal sum of $7.0 millionin aggregate. On the closing of the merger, the outstanding principal balance of the Convertible Notes became due and payable and was satisfied, along with the interest due on such notes, by the issuance to holders of such notes shares of the Company's common stock and the remainder of the investment from the PIPE Investorswas funded and paid to the Company. Additionally, following the execution of the merger agreement, we entered into two incremental financing agreements. An institutional investor through a securities purchase agreement agreed to purchase $11.0 millionof 6.0% Senior Secured Original Issue Discount Convertible Notes due in 2024 and a number of warrants equal to one-half of the principal amount of notes divided by the volume weighted average price on the trading day prior to closing. This financing closed immediately after the business combination. The Company also entered into a committed equity line facility (the "Facility") with CF Principal Investments, LLC("Cantor") for up to $50.0 millionin aggregate gross purchase price of newly issued shares of our common stock after the closing of the business combination. In connection with the Facility, the Company incurred a $1.5 millioncommitment fee which it settled in exchange for 877,193 shares of common stock. The Company may, from time to time at its option, sell to Cantor newly issued shares of common stock pursuant to the terms of the Facility. The use of the Facility under the agreement with Cantor is subject to certain conditions, including the effectiveness of a registration statement relating to the resale of the common stock issuable under the Facility. Therefore, funds from the $50.0 milliongross purchase price will not be immediately available, if at all, to SpringBig, and there can be no assurances that the Facility will be available to the Company at all times during its terms or that such purchase price will ever become available.
The following table summarizes our cash, accounts receivable and working capital as of
September 30, 2022 December 31, 2021 Cash and cash equivalents $ 6,806 $ 2,227 Accounts receivable, net 4,727 3,045 Working capital 10,212 3,979 We believe that the balance of cash, which was
$6.8 millionas of September 30, 2022, will be sufficient to satisfy our operating cash requirements over the next twelve months and beyond. This estimate is based on our current business plan and expectations and assumptions in light of current macroeconomic conditions. We have based these estimates on assumptions that may prove to be wrong and could use our available capital resources sooner than we currently expect, and future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section entitled "Risk Factors" in the Quarterly Report on Form 10-Q for Q2 2022. Although we are not currently a party to any agreement or letter of intent with respect to potential investments in, or acquisitions of, complementary businesses, services or technologies, we may enter into these types of arrangements in the future, which could also require us to seek additional equity financing, incur indebtedness, or use cash resources. We have no present understandings, commitments or agreements to enter into any such acquisitions. To the extent existing cash and investments and cash from operations are not sufficient to fund future activities, we may need to raise additional funds. We may seek to raise additional funds through equity, equity-linked, or debt financings. If we raise additional funds by incurring indebtedness, such indebtedness may have rights that are senior to holders of our equity securities and could contain covenants that restrict operations. Any additional equity financing may be dilutive to stockholders. Further, the Secured Convertible Notes also contain a number of restrictive covenants that may impose significant restrictions on obtaining future financings, including restrictions on SpringBig'sability to do any of each following while the Secured Convertible Notes remain outstanding: (i) incurring additional indebtedness and guaranteeing indebtedness; (ii) incurring liens or allowing mortgages or other encumbrances; (iii) prepaying, redeeming, or repurchasing certain other debt; (iv) paying dividends or making other distributions or repurchasing or redeeming its capital stock; (v) selling assets or entering into or effecting 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); (vi) issuing additional equity (outside of the equity facility, issuances under our equity compensation plan and other limited exceptions until a resale registration statement registering all of the common stock underlying the notes and warrants with the Investor is declared effective by the SEC); (vii) entering into variable rate transactions (exclusive of the equity facility); and (viii) adopting certain amendments to our governing documents, among other restrictions. In addition, the noteholders have the right, for 18 months following the first closing of the notes and warrants with the Investor, to purchase up to 30% of the securities we may offer in subsequent financings. Accordingly, we may be limited in our ability to raise additional capital on acceptable terms or at all within such limitations. Such restrictions may be waived by consent of the noteholder. 33
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