References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Tuatara Capital Acquisition Corporation References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to TCAC Sponsor, LLC. The following discussion
and analysis of the Company's financial condition and results of operations
should be read in conjunction with the financial statements and the notes
thereto contained elsewhere in this Quarterly Report. Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act
that are not historical facts and involve risks and uncertainties that could
cause actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Form 10-Q
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
completion of the Proposed Business Combination (as defined below), the
Company's financial position, business strategy and the plans and objectives of
management for future operations, are forward-looking statements. Words such as
"expect," "believe," "anticipate," "intend," "estimate," "seek" and variations
and similar words and expressions are intended to identify such forward-looking
statements. Such forward-looking statements relate to future events or future
performance, but reflect management's current beliefs, based on information
currently available. A number of factors could cause actual events, performance
or results to differ materially from the events, performance and results
discussed in the forward-looking statements, including that the conditions of
the Proposed Business Combination are not satisfied. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Risk
Factors section of the Company's Annual Report on Form 10-K filed with the U.S.
Securities and Exchange Commission (the "SEC"). The Company's securities filings
can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except
as expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated in the Cayman Islands on January 24,
2020 formed for the purpose of effecting a merger, amalgamation, share exchange,
asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses. We intend to effectuate our Business
Combination using cash derived from the proceeds of the Initial Public Offering
and the sale of the Private Placement Warrants, our shares, debt or a
combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
On November 8, 2021, Tuatara Capital Acquisition Corporation, a Cayman Islands
exempted company ("TCAC"), entered into an Agreement and Plan of Merger (as it
may be amended, supplemented or otherwise modified from time to time, the
"Merger Agreement"), by and among TCAC, HighJump Merger Sub, Inc., a Delaware
corporation ("Merger Sub"), and SpringBig, Inc., a Delaware corporation
("SpringBig").
The Merger Agreement and the transactions contemplated thereby were approved by
the boards of directors of each of TCAC and SpringBig.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities through March 31, 2022 were organizational activities, those
necessary to prepare for the Initial Public Offering, described below, and
identifying a target company for a Business Combination. We do not expect to
generate any operating revenues until after the completion of our Business
Combination. We generate non-operating income in the form of interest income on
investments held in the Trust Account. We incur expenses as a result of being a
public company (for legal, financial reporting, accounting and auditing
compliance), as well as for due diligence expenses.
For the three months ended March 31, 2022, we had a net income of $3,252,560,
which consists of a change in the fair value of warrant liability of $4,161,600
and interest earned on investments held in the Trust Account of $2,794, offset
by formation and operating cost of $911,834.
For the three months ended March 31, 2021, we had a net loss of $2,063,176,
which consists of a formation and operating cost of $95,578, transaction costs
allocated to warrant of $853,386 and compensation expense of $2,400,000, offset
by change in the fair value of warrant liability of 1,280,000 and interest
earned on investments held in Trust Account of $5,788.
Liquidity and Capital Resources
On February 17, 2021, we consummated the Initial Public Offering of 20,000,000
units, which includes a partial exercise by the underwriters of their
overallotment option in the amount of 2,500,000 Units, at $10.00 per Unit,
generating gross proceeds of $200,000,000. Simultaneously with the closing of
the Initial Public Offering, we consummated the sale of 6,000,000 Private
Placement Warrant at a price of $1.00 per Private Placement Warrant in a private
placement to the Sponsor, generating gross proceeds of $6,000,000.
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Following the Initial Public Offering, the partial exercise of the
over-allotment option, and the sale of the Private Placement Warrants, a total
of $200,000,000 was placed in the Trust Account. We incurred $11,766,856 in
Initial Public Offering related costs, including $4,000,000 of underwriting
fees, $7,000,000 of deferred underwriting fees and $766,856 of other costs.
For the three months ended March 31, 2022, cash used in operating activities was
$204,884. Net income of $3,252,560 was affected by interest earned on
investments held in the Trust Account of $2,794 and a change in the fair value
of warrant liability of $4,161,600,. Changes in operating assets and liabilities
used $706,950 of cash for operating activities.
For the three months ended March 31, 2021, cash used in operating activities was
$547,037. Net loss of $2,063,176 was affected by interest earned on investments
held in the Trust Account of $5,788, a change in the fair value of warrant
liability of $1,280,000, compensation expense of $2,400,000 and transaction
costs allocable to warrants $853,386. Changes in operating assets and
liabilities used $451,459 of cash for operating activities.
As of March 31, 2022, we had investments held in the Trust Account of
$200,038,604 (including $38,604 of interest income) consisting of securities
held in a money market fund that invests in U.S. Treasury securities. We may
withdraw interest from the Trust Account to pay taxes, if any. We intend to use
substantially all of the funds held in the Trust Account, including any amounts
representing interest earned on the Trust Account (less income taxes payable),
to complete our Business Combination. To the extent that our share capital or
debt is used, in whole or in part, as consideration to complete our Business
Combination, the remaining proceeds held in the Trust Account will be used as
working capital to finance the operations of the target business or businesses,
make other acquisitions and pursue our growth strategies.
As of March 31, 2022, we had cash of $416,588. We intend to use the funds held
outside the Trust Account primarily to identify and evaluate target businesses,
perform business due diligence on prospective target businesses, travel to and
from the offices, plants or similar locations of prospective target businesses
or their representatives or owners, review corporate documents and material
agreements of prospective target businesses, and structure, negotiate and
complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, or certain of our officers
and directors or their affiliates may, but are not obligated to, loan us funds
as may be required. If we complete a Business Combination, we would repay such
loaned amounts. In the event that a Business Combination does not close, we may
use a portion of the working capital held outside the Trust Account to repay
such loaned amounts but no proceeds from our Trust Account would be used for
such repayment. Up to $1,500,000 of such loans may be convertible into warrants
at a price of $1.00 per warrant, at the option of the lender. The warrants would
be identical to the Private Placement Warrants.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a Business Combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our Business Combination. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become
obligated to redeem a significant number of our Public Shares upon consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination.
Going Concern
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standard Board's Accounting Standards
Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability
to Continue as a Going Concern," the Company has until February 17, 2023, to
consummate a Business Combination. It is uncertain that the Company will be able
to consummate a Business Combination by this time. If a Business Combination is
not consummated by this date, there will be a mandatory liquidation and
subsequent dissolution of the Company. Management has determined that the
liquidity condition and mandatory liquidation, should a Business Combination not
occur, and potential subsequent dissolution raises substantial doubt about the
Company's ability to continue as a going concern. Management intends to complete
the Business Combination prior to the termination date. No adjustments have been
made to the carrying amounts of assets or liabilities should the Company be
required to liquidate after February 17, 2023.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 31, 2022. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay the Sponsor
up to $10,000 per month for office space, administrative and support services.
Upon completion of a Business Combination or its liquidation, the Company will
cease paying these monthly fees.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $7,000,000
in the aggregate. The deferred fee will become payable to the underwriters from
the amounts held in the Trust Account solely in the event that the Company
completes a Business Combination, subject to the terms of the underwriting
agreement.
On May 13, 2021, the Company received notification from J.P. Morgan Securities
("J.P. Morgan"), one the underwriters who participated in the Company's Initial
Public Offering, pursuant to which J.P. Morgan waived its right to the portion
of the deferred underwriting fee owed to them in the amount of $4,200,000. Aside
from general dialogue between representatives of Tuatara and J.P. Morgan (and
other investment banking professionals) about sourcing targets and broader SPAC
market conditions in the ordinary course, J.P. Morgan did not participate in any
respect in the Company's Business Combination process, and the Company has no
contractual arrangement with J.P. Morgan in that regard.
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Merger Agreement
On November 8, 2021, Tuatara Capital Acquisition Corporation ("TCAC") entered
into an Agreement and Plan of Merger (as it may be amended, supplemented or
otherwise modified from time to time, the "Merger Agreement"), by and among
TCAC, HighJump Merger Sub, Inc., a Delaware corporation ("Merger Sub"), and
SpringBig, Inc., a Delaware corporation ("SpringBig"). The Merger Agreement was
subsequently amended and restated on April 14, 2022 and further amended on May
4, 2022. See Note 10 "Subsequent Events" for further details.
The Merger Agreement provides for, among other things, the following
transactions on or prior to the closing date: (i) TCAC will become a Delaware
corporation (the "Domestication") and, in connection with the Domestication, (A)
TCAC's name will be changed as mutually agreed to between the parties, (B) each
then-issued and outstanding TCAC Class A Ordinary Share will convert
automatically, on a one-for-one basis, into one share of common stock of TCAC
(the "New SpringBig Common Stock"), (C) each then-issued and outstanding TCAC
Class B Ordinary Share will convert automatically, on a one-for-one basis, into
one share of New SpringBig Common Stock, and (D) each then-issued and
outstanding common warrant of TCAC will convert automatically, on a one-for-one
basis, into a warrant to purchase one share of New SpringBig Common Stock; and
(ii) following the Domestication, Merger Sub will merge with and into SpringBig,
with SpringBig as the surviving company in the merger and, after giving effect
to such merger, continuing as a wholly-owned subsidiary of TCAC (the "Merger").
The Business Combination is expected to close in mid-2022, following the receipt
of the required approval by TCAC's shareholders, required regulatory approvals
and the fulfillment of other customary closing conditions.
In accordance with the terms and subject to the conditions of the Merger
Agreement, based on an implied equity value of $215 million, (i) each share of
SpringBig common stock (other than dissenting shares) will be canceled and
converted into the right to receive the applicable portion of the merger
consideration comprised of New SpringBig Common Stock, as determined in the
Merger Agreement (the "Share Conversion Ratio"), and (ii) vested and unvested
options of SpringBig outstanding and unexercised immediately prior to the
effective time of the Merger will convert into comparable options that are
exercisable for shares of New SpringBig Common Stock, with a value determined in
accordance with the Share Conversion Ratio.
As part of the aggregate consideration payable to the SpringBig's
securityholders pursuant to the Merger Agreement, holders of SpringBig's common
stock (including those holders of converted preferred stock of SpringBig) and
holders of options of SpringBig's common stock will also have the right to
receive their pro rata portion of up to an aggregate of 10,500,000 shares of New
SpringBig Common Stock ("Contingent Shares") if any of the following stock price
conditions are met: (i) 7,000,000 Contingent Shares if the closing price of New
SpringBig Common Stock equals or exceeds $12.00 per share (as adjusted for share
splits, share dividends, reorganizations, and recapitalizations) on any twenty
(20) trading days in a thirty (30)-trading-day period at any time after the
closing date and by the third anniversary of the closing date; (ii) 2,250,000
Contingent Shares if the closing price of New SpringBig Common Stock equals or
exceeds $15.00 per share (as adjusted for share splits, share dividends,
reorganizations, and recapitalizations) on any twenty (20) trading days in a
thirty (30)-trading-day period at any time after the closing date and by the
third anniversary of the closing date; and (iii) 1,250,000 Contingent Shares if
the closing price of the New SpringBig Common Stock equals or exceeds $18.00 per
share (as adjusted for share splits, share dividends, reorganizations, and
recapitalizations) on any twenty (20) trading days in a thirty (30)-trading-day
period at any time after the closing date and by the third anniversary of the
closing date.
PIPE Financing (Private Placement)
In connection with the signing of the Merger Agreement, TCAC entered into
subscription agreements (the "Subscription Agreements") with certain investors
(the "PIPE Investors"). Pursuant to the Subscription Agreements, the PIPE
Investors agreed to subscribe for and purchase, and TCAC agreed to issue and
sell to such investors, on the closing date, an aggregate of 1,310,000 shares of
New SpringBig Common Stock for a purchase price of $10.00 per share, for
aggregate gross proceeds of $13,100,000 (the "PIPE Financing").
Advisory Service Agreement
On August 12, 2021 TCAC entered into an agreement (the "Agreement") with Cantor
Fitzgerald & Co. ("CF&CO") to act as a capital markets advisor in connection
with the proposed business combination (the "Business Combination") with
SpringBig, Inc. CF&CO acknowledges that the Company may engage additional
advisors in the same capacity (together with CF&CO, the "Capital Markets
Advisors"), provided that CF&CO will be the "lead" capital markets advisor and
CF&CO shall not be responsible for the actions or inactions of any other capital
markets advisor. In consideration of our services pursuant to this Agreement,
the Company agrees to pay CF&CO a fee of $5,000,000 (the "Advisory Fee") upon
the consummation of the Business Combination (the "Closing"). $2,000,000 of the
Advisory Fee shall be payable in cash, and the remainder of the Advisory Fee
(the "Redemption Dependent Portion") payable in cash and common stock of the
Company (the "Common Stock"), with the portions of each to depend on the final
amount of redemptions from the Company's trust account established for the
benefit of the Company's public stockholders (the "Trust Account") in connection
with the Business Combination.
Subsequent to the Agreement, TCAC entered into a second agreement ("Second
Agreement") with CF&CO to receive one or more financing(s) through the private
placement, offering or other sale of equity instruments in any form, including,
without limitation, (i) equity instruments in any form, including, without
limitation, preferred or common equity, or instruments convertible into
preferred or common equity or other related forms of interests or capital of the
Company in one or a series of transactions (an "Equity Financing") and (ii) debt
in any form, including, but not limited to, bank debt, high yield debt or
mezzanine debt, notes, bonds, debentures or other debt securities, of the
Company in one transaction or a series of transactions (a "Debt Financing" and
any Equity Financing or Debt Financing, (a "Financing")), in the cases of (i)
and (ii), in connection with the business combination contemplated by the
Agreement and Plan of Merger between the Company and SpringBig, Inc., dated as
of November 8, 2021 (the "Business Combination," and such agreement, the "Merger
Agreement"). The Company hereby engages CF&CO to act as the Company's financial
advisor, placement agent and arranger in connection with any Financing for the
Business Combination. In consideration of our services pursuant to this Second
Agreement, the Company agrees to pay CF&CO the following compensation:
(a) Upon the closing of any Financing (which is contemplated to fund and close
concurrently with the closing of the Business Combination), the Company shall
pay to CF&CO a non-refundable cash fee equal to 4% of the aggregate maximum
gross proceeds received or receivable in connection with such Financing,
including, without limitation, aggregate amounts committed by investors to
purchase securities, whether or not all securities are issued on the closing
date of the Equity Financing.
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(b) In no event shall the aggregate amount of the fees payable to CF&CO pursuant
to this section 3 be less than $1,500,000.
(c) The fees payable pursuant to this section 3 shall be in addition to any other
fees that the Company may be required to pay directly to any prospective
investor to secure its financing commitment.
(d) For the avoidance of doubt, if the structure of a Financing contemplates
multiple issuances, financing availability that is contingent upon the
occurrence of some future event or any other delayed consideration structure,
such Financing shall be considered a single Financing, and not multiple
Financings, and all fees payable pursuant to this section 3 for such
Financing shall be payable in full on the closing date of such Financing.
(e) All fees payable hereunder will be payable in U.S. dollars in immediately
available funds to CF&CO for its own account, or as directed by it, free and
clear of and without deduction for any and all present or future applicable
taxes, levies, imposts, deductions, charges or withholdings and all
liabilities with respect thereto (with appropriate gross-up for withholding
taxes) and will not be subject to reduction by way of setoff or counterclaim.
Once paid, no fee will be refundable under any circumstances.
Critical Accounting Policies
The preparation of unaudited condensed consolidated financial statements and
related disclosures in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and income and expenses during the periods reported. Actual results
could materially differ from those estimates. We have identified the following
critical accounting policies:
Warrant Liability
We account for the warrants issued in connection with our Initial Public
Offering in accordance with the guidance contained in ASC 815 under which the
warrants do not meet the criteria for equity treatment and must be 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.
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Ordinary shares subject to mandatory
redemption are classified as a liability instrument and measured at fair value.
Conditionally redeemable ordinary shares (including ordinary shares that feature
redemption rights that are either within the control of the holder or subject to
redemption upon the occurrence of uncertain events not solely within our
control) are classified as temporary equity. At all other times, ordinary shares
are classified as shareholders' equity. Our ordinary shares feature certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, ordinary shares subject
to possible redemption are presented at redemption value as temporary equity,
outside of the shareholders' equity section of our condensed consolidated
balance sheets.
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Net Income (Loss) Per Ordinary Share
Net income (loss) per ordinary share is computed by dividing net loss by the
weighted average number of ordinary shares outstanding during the period. We
have two classes of shares, which are referred to as Class A ordinary shares and
Class B ordinary shares. Income and losses are shared pro rata between the two
classes of shares. Accretion associated with the redeemable shares of Class A
ordinary shares is excluded from earnings per share as the redemption value
approximates fair value.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, "Debt-Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current U.S. GAAP. ASU 2020-06 removes certain settlement
conditions that are required for equity contracts to qualify for the derivative
scope exception and it also simplifies the diluted earnings per share
calculation in certain areas. ASU 2020-06 is effective for fiscal years
beginning after December 15, 2023, including interim periods within those fiscal
years, with early adoption permitted. We are currently assessing the impact, if
any, that ASU 2020-06 would have on our financial position, results of
operations or cash flows.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on the Company's unaudited condensed consolidated financial statements.
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