SCHEDULE: SpringBig Holdings CEO Jeffrey Harris Sells Convertible Notes, Announces Departure

Jeffrey Harris, CEO of SpringBig Holdings, has sold convertible notes and will be stepping down from his role, while remaining on the board.

Summary

• Jeffrey Harris, CEO of SpringBig Holdings, has sold $160,000 in convertible notes and term notes to Shalcor Management Inc. and Green Room Investments Inc.
• The sale to Shalcor Management Inc. was in exchange for the forgiveness of a loan, while the sale to Green Room Investments Inc. is conditional on the company retaining key customers.
• Mr. Harris will be stepping down as CEO, with his last day of service being no later than March 31, 2025, or potentially later depending on the board's request.
• Upon his departure, Mr. Harris will receive 250,000 restricted stock units, vesting on the earlier of a change of control or March 31, 2026.
• Mr. Harris will remain on the board as a non-executive member after his departure as CEO.
• As of January 22, 2025, Mr. Harris beneficially owns 7,300,756 shares of common stock, representing approximately 15.3% of the company's outstanding shares.
• Medici Holdings V, Inc., an estate planning vehicle through which Mr. Harris shares ownership, beneficially owns 4,743,120 shares, representing approximately 10.2% of the outstanding shares.

Sentiment

Score: 4

Explanation: The document contains both positive and negative elements. The conditional funding is positive, but the CEO's departure and potential dilution are concerning. The overall sentiment is slightly negative due to the uncertainty surrounding the leadership transition and the company's ability to meet the conditions for the second tranche of funding.

Positives

• Mr. Harris will remain on the board as a non-executive member, providing continuity and experience.
• The sale of notes provides the company with $200,000 in cash if the second tranche is completed.
• The company has secured a commitment from Green Room Investments Inc. for a second tranche of funding, contingent on customer retention.

Negatives

• The departure of the CEO could create uncertainty and disruption within the company.
• The second tranche of the note sale is conditional on the company retaining key customers, which introduces risk.
• The sale of convertible notes could potentially dilute existing shareholders if converted to common stock.

Risks

• The company's ability to retain key customers is critical for the second tranche of the note sale to be completed.
• The departure of the CEO could negatively impact the company's performance and strategic direction.
• The conversion of the convertible notes could dilute existing shareholders.
• The company is reliant on a small number of key customers for a significant portion of its revenue.

Future Outlook

The company's future is dependent on retaining key customers to complete the second tranche of the note sale and on the transition of leadership following the CEO's departure. The company will need to manage the potential dilution from the convertible notes.

Management Comments

• Mr. Harris has reached an understanding with the Board regarding his decision to separate from the Issuer.
• Mr. Harris will continue to serve on the Board as a non-executive member after his departure as CEO.

Industry Context

The announcement comes at a time when many tech companies are facing challenges in customer retention and leadership transitions. The conditional nature of the second tranche of funding highlights the importance of customer relationships in the current market.

Comparison to Industry Standards

• The use of convertible notes for financing is common in the tech industry, particularly for companies seeking growth capital.
• The conditional nature of the second tranche of funding is similar to venture capital deals where milestones must be met.
• The CEO transition is not uncommon, but the company will need to ensure a smooth transition to maintain investor confidence.
• The 15.3% ownership by Mr. Harris is significant and indicates a strong alignment of interests with the company's success.

Management Changes

Related Party Transactions

• The sale of notes to Shalcor Management Inc., where Mark Silver, a board member, is the President, is a related party transaction.

Stakeholder Impact

• Shareholders may experience dilution if the convertible notes are converted to common stock.
• Employees may experience uncertainty due to the CEO's departure.
• Customers may be impacted if the company fails to retain key accounts.
• Creditors may be impacted by the company's financial performance and ability to meet its obligations.

Next Steps

• The company needs to ensure the retention of key customers to secure the second tranche of funding.
• The company needs to manage the transition of leadership following the CEO's departure.
• The company needs to prepare for the potential conversion of the convertible notes into common stock.

Key Dates

Keywords

convertible notes, CEO departure, share ownership, restricted stock units, note purchase agreement, customer retention, SpringBig Holdings, Jeffrey Harris, Medici Holdings