Delaware
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001-39714 |
92-1079067 |
(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(I.R.S. Employer
Identification No.)
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750 N. San Vicente Blvd., Suite RE 1400,
West Hollywood, California
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90069
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(Address of principal executive offices)
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(Zip Code)
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☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class
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Trading
Symbol(s)
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Name of each exchange
on which registered
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Common stock, par value $0.0001 per share
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GRND
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The New York Stock Exchange
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Warrants, each whole warrant exercisable for one share of common stock
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GRND WS
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The New York Stock Exchange
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Item 1.01 |
Entry into a Material Definitive Agreement
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Item 2.01 |
Completion of Acquisition or Disposition of Assets
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•
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each person who is the beneficial owner of more than 5% of Grindr Common Stock;
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•
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each person who is an executive officer or director of the Company; and
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•
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all executive officers and directors of the Company, as a group.
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Name and Address of Beneficial Owner(1)
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Number of Shares of Common Stock |
Percentage of Shares of Common Stock(2) |
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5% Holders
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The 1997 Gearon Family Trust(3) |
15,468,109
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8.9%
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Ashish Gupta(4) |
14,084,055
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7.9%
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Jeremy Leonard Brest(5)
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10,548,557
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6.1%
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Directors and Executive Officers
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George Arison
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—
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—
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Vandana Mehta-Krantz
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—
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—
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Austin Balance
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—
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—
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Raymond Zage, III(6)
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93,941,409
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49.5%
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James Fu Bin Lu(7)
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40,316,686
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23.1%
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J. Michael Gearon, Jr.(3)
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15,468,109
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8.9%
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Daniel Brooks Baer
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—
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—
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Meghan Stabler
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—
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—
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Gary I. Horowitz
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—
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—
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Maggie Lower
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—
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—
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Nathan Richardson
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—
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—
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All Company directors and executive officers as a group (eleven individuals)
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130,510,590
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81.4%
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(1) |
Unless otherwise noted, the business address of each of those listed in the table above is c/o Grindr Inc., 750 N San Vicente Blvd Ste RE1400, West Hollywood, CA 90069.
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(2) |
In calculating the percentages, (a) the numerator is calculated by adding the number of shares of Grindr Common Stock held by such beneficial owners and the number of shares of Grindr Common Stock issuable upon
the exercise of a warrant to purchase Grindr Common Shares at an exercise price of $11.50 (each a “Grindr Warrant”) or options and (b) the denominator is calculated by adding the aggregate number of shares of Grindr Common Stock outstanding
and the number of shares Grindr Common Stock issuable upon the exercise of Grindr Warrants or options held by such beneficial owner, if any (but not the number of shares of Grindr Common Stock issuable upon the exercise of Grindr Warrants
or options held by any other beneficial owner).
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(3) |
Consists of (i) 14,948,334 shares of Grindr Common Stock and (ii) 519,775 Grindr Warrants, the record holder of all of which is 28th Street Ventures, LLC, a Georgia limited liability company (“28th Street”). Mr. Gearon and The 1997 Gearon
Family Trust, by virtue of each of their 50% beneficial ownership of 28th Street, may be deemed to beneficially own the securities owned by 28th Street. Mr. Gearon and The 1997 Gearon Family Trust disclaim any beneficial ownership of the
securities held by 28th Street, respectively, other than to the extent of any pecuniary interest he may have therein, directly or indirectly. The business address for 28th Street, Mr. Gearon and The 1997 Gearon Family Trust is 3350 Riverwood
Parkway, Suite 425, Atlanta, GA 30339.
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(4) |
Consists of (i) 9,184,168 shares of Grindr Common Stock and (ii) 4,899,887 Grindr Warrants. Mr. Gupta has pledged 7,474,168 shares of Grindr Common Stock and 259,887 Grindr Warrants to certain lenders in connection with a financing
arrangement. The business address for Mr. Gupta is Ocean Financial Centre, Level 40, 10 Collyer Quay, Singapore 049315.
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(5) |
Consists of (i) 10,194,093 shares of Grindr Common Stock and (ii) 354,464 Grindr Warrants, all of which have been pledged to certain lenders in connection with a financing arrangement. The business address for Mr. Brest is 20A Cluny Park
Singapore 259634.
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(6) |
Consists of (i) 77,136,333 shares of Grindr Common Stock, (ii) 16,423,762 Grindr Warrants, and (iii) an option to acquire 381,314 shares of Grindr Common Stock within 60 days of Closing. Mr. Zage is the record holder of 5,130,000 of the
shares of Grindr Common Stock and 13,920,000 of the Grindr Warrants reported herein and Tiga SVH Investments Limited, a Cayman Islands company (“Tiga SVH”), is the record holder of the remainder. Tiga SVH is 100% owned by Tiga Investments Pte.
Ltd, a Singapore company (“Tiga Investments”), which is in turn 100% owned by Mr. Zage. Tiga SVH has pledged 72,006,333 shares of Grindr Common Stock and 2,503,762 Grindr Warrants to certain lenders in connection with a financing arrangement.
The business address for Mr. Zage, Tiga SVH, and Tiga Investments is Ocean Financial Centre, Level 40, 10 Collyer Quay, Singapore 049315.
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(7) |
Consists of (i) 38,425,923 shares of Grindr Common Stock, (ii) 1,336,124 Grindr Warrants, and (iii) an the option to acquire 554,639 shares of Grindr Common Stock within 60 days of Closing, the record holder of all of which is Longview
Capital SVH LLC, a Washington limited liability company (“Longview SVH”). Longview SVH is 100% owned by Longview Grindr Holdings Limited, a British Virgin Islands company (“Longview Grindr”), which in turn is 100% owned by Longview Capital
Holdings LLC, a Washington limited liability company (“Longview”), which is 100% owned by Mr. Lu. Longview SVH has pledged 38,425,923 shares of Grindr Common Stock and 1,336,124 Grindr Warrants to certain lenders in connection with a financing
arrangement. The business address for Mr. Lu, Longview SVH, Longview Grindr, and Longview is 428 East Street Ste E, Grinnell, IA 50112.
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Item 3.02 |
Unregistered Sales of Equity Securities.
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Item 3.03 |
Material Modification to Rights of Security Holders.
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Item 4.01 |
Changes in Registrant’s Certifying Accountant.
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Item 5.01 |
Changes in Control of Registrant.
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Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
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Item 5.06 |
Change in Shell Company Status.
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Item 7.01 |
Regulation FD Disclosure.
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Item 9.01 |
Financial Statements and Exhibits.
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(a) |
Financial statements of businesses acquired.
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(b) |
Pro forma financial information.
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(c) |
Exhibits.
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Exhibit
Number
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Description
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Agreement and Plan of Merger by and among Tiga Acquisition Corp., Tiga Merger Sub LLC and Grindr Group LLC, dated May 9, 2022.
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First Amendment to the Agreement and Plan of Merger by and among Tiga Acquisition Corp., Tiga Merger Sub LLC and Grindr Group LLC, dated October 5, 2022.
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Amended and Restated Certificate of Incorporation of Grindr Inc., dated November 18, 2022.
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Amended and Restated Bylaws of Grindr Inc., dated November 18, 2022.
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Specimen Common Stock Certificate of Grindr Inc.
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Specimen Warrant Certificate of Grindr Inc.
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Warrant Agreement between Grindr Inc. and Continental Stock Transfer & Trust Company, as warrant agent, dated November 23, 2020.
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Certificate of Corporate Domestication of Tiga, dated November 17, 2022.
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Amended and Restated Registration Rights Agreement by and among Grindr Inc., Tiga Sponsor LLC, the independent directors of Tiga, and certain former stockholders of Grindr Group LLC, dated November 18, 2022.
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Form of Indemnification Agreement of Grindr Inc.
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Grindr Inc.’s 2022 Equity Incentive Plan and forms of award agreement thereunder.
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10.4* |
Convertible Promissory Note, between Tiga Acquisition Corp. and Tiga Sponsor LLC, dated as of March 16, 2022. |
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Payoff Letter between Tiga Acquisition Corp. and Tiga Sponsor LLC, dated November 17, 2022.
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10.6* |
Amended and Restated Forward Purchase Agreement, between Tiga Acquisition Corp. and Tiga Sponsor LLC, dated May 9, 2022.
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10.7* |
Joinder and Assignment Agreement to Amended and Restated Forward Purchase Agreement by and among San Vicente Parent LLC, Tiga Acquisition Corp., and Tiga Sponsor LLC, dated November 10, 2022.
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10.8* |
First Amendment to the Warrant Agreement between Grindr Inc. and Continental Stock Transfer & Trust Company, as warrant agent, dated November 17, 2022.
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Letter from Withum to the Securities and Exchange Commission.
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List of Subsidiaries.
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Press Release, dated November 18, 2022.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations of Legacy Grindr for the three and nine months ended September 30, 2022.
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Unaudited Pro Forma Condensed Combined Financial Information.
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99.4* |
Legacy Grindr and San Vicente Offshore Holdings (Cayman) Limited financial statements (unaudited) as of September 30, 2022 and for the three and nine
months ended September 30, 2022 and 2021.
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104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
# |
Certain schedules to this Exhibit have been omitted in accordance with Item 601(a)(5) of Regulation S-K of the Exchange Act. The Company hereby agrees to hereby furnish supplementally a copy of all omitted schedules to the SEC upon request.
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+ |
Indicates a management or compensatory plan.
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^ |
Certain portions of this Exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K. The Company hereby agrees to furnish supplementally an unredacted copy of the exhibit to the SEC upon its request.
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* |
Filed herewith.
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**
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Previously filed.
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GRINDR INC.
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By:
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/s/ Vandana Mehta-Krantz
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Date: November 23, 2022
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Name:
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Vandana Mehta-Krantz | |
Title:
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Chief Financial Officer |
By:
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William Shafton
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Incorporator
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GRINDR INC.
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By:
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Name:
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Title: Authorized Signatory
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CONTINENTAL STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent By:
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By:
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Name:
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Title:
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(Signature)
(Address)
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(Tax Identification Number)
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Signature
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Exhibit 4.3
Execution Version
WARRANT AGREEMENT
between
TIGA ACQUISITION CORP.
and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
Dated November 23, 2020
THIS WARRANT AGREEMENT (this “Agreement”), dated as of November 23, 2020, is entered into by and between Tiga Acquisition Corp., a Cayman Islands exempted company (the “Company”), and Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (in such capacity, the “Warrant Agent”).
WHEREAS, on November 23, 2020, the Company entered into that certain Private Placement Warrants purchase agreement with Tiga Sponsor LLC (the “Sponsor”), pursuant to which the Sponsor will purchase an aggregate of 9,200,000 warrants (or 10,280,000 warrants in the aggregate if the Over-allotment Option (as defined below) in connection with the Company’s Offering (as defined below) is exercised in full) simultaneously with the closing of the Offering (and the closing of the Over-allotment Option, if applicable), and the Sponsor has an option to purchase up to 7,200,000 (or 8,280,000 if the underwriters’ over-allotment option is exercised in full) additional Private Placement Warrants in order to extend the period of time for the Company to consummate a business combination, bearing the legend set forth in Exhibit B hereto (the “Private Placement Warrants”) at a purchase price of $1.00 per Private Placement Warrant. Each Private Placement Warrant entitles the holder thereof to purchase one Class A ordinary share (as defined below) at a price of $11.50 per share, subject to adjustment as described herein;
WHEREAS, on November 23, 2020, the Company entered into that certain Second Amended and Restated Forward Purchase Agreement (the “Forward Purchase Agreement”) with the Sponsor pursuant to which the forward purchaser (being the Sponsor or certain permitted transferees (as defined in the Forward Purchase Agreement)) (the “Forward Purchaser”) will be issued Forward Purchase Warrants, bearing the legend set forth in Exhibit C hereto (the “Forward Purchase Warrants”) in a private placement transaction to occur at or prior to the time of the Company’s initial Business Combination (as defined below);
WHEREAS, in order to finance the Company’s transaction costs in connection with an intended initial merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination, involving the Company and one or more businesses (a “Business Combination”), the Sponsor or an affiliate of our Sponsor or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as the Company may require, of which up to $2,000,000 of such loans may be convertible into up to an additional 2,000,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant;
WHEREAS, the Company is engaged in an initial public offering (the “Offering”) of units of the Company’s equity securities, each such unit comprised of one Class A ordinary share (as defined below) and one-half of one Public Warrant (as defined below) (the “Units”) and, in
connection therewith, has determined to issue and deliver up to 12,000,000 redeemable warrants (including up to 1,800,000 redeemable warrants subject to the Over-allotment Option) to public investors in the Offering (the “Public Warrants” and, together with the Private Placement Warrants and the Forward Purchase Warrants, the “Warrants”). Each whole Warrant entitles the holder thereof to purchase one Class A ordinary share of the Company, par value $0.0001 per share (“Class A ordinary shares”), for $11.50 per share, subject to adjustment as described herein. Only whole Warrants are exercisable. A holder of the Public Warrants will not be able to exercise any fraction of a Warrant;
WHEREAS, the Company has filed with the Securities and Exchange Commission (the “Commission”) a Registration Statement on Form S-1, No: 333-249853 (the “Registration Statement”) and prospectus (the “Prospectus”), for the registration, under the Securities Act of 1933, as amended (the “Act”) of the Units, the Public Warrants and the Class A ordinary shares included in the Units;
WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, registration, transfer, exchange, redemption and exercise of the Warrants;
WHEREAS, the Company desires to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent and the holders of the Warrants; and
WHEREAS, all acts and things have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company and countersigned by or on behalf of the Warrant Agent (if a physical certificate is issued), as provided herein, the valid, binding and legal obligations of the Company, and to authorize the execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:
1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants, and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this Agreement.
2. Warrants.
2.1 Form of Warrant. Each Warrant shall initially be (a) issued in registered form only, (b) in substantially the form of Exhibit A hereto, the provisions of which are incorporated herein and (c) signed by, or bear the facsimile signature of, the Chief Executive Officer or the President, Chief Financial Officer, or other authorized person of the Company. In the event the person whose facsimile signature has been placed upon any Warrant shall have ceased to serve in the capacity in which such person signed the Warrant before such Warrant is issued, it may be issued with the same effect as if he or she had not ceased to be such at the date of issuance.
2.2 Effect of Countersignature. If a physical certificate is issued, unless and until countersigned by the Warrant Agent pursuant to this Agreement, a certificated Warrant shall be invalid and of no effect and may not be exercised by the holder thereof.
2.3 Registration.
2.3.1 Warrant Register. The Warrant Agent shall maintain books (the “Warrant Register”) for the registration of the original issuance and the registration of transfers of the Warrants. Upon the initial issuance of the Warrants in book-entry form, the Warrant Agent shall issue and register the Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered to the Warrant Agent by the Company. Ownership of beneficial interests in the Public Warrants shall be shown on, and the transfer of such ownership shall be effected through, records maintained by institutions that have accounts with The Depository Trust Company (the “Depositary”) (such institution, with respect to a Warrant in its account, a “Participant”). If the Depositary subsequently ceases to make its book-entry settlement system available for the Public Warrants, the Company may instruct the Warrant Agent regarding making other arrangements for book-entry settlement. In the event that the Public Warrants are not eligible for, or it is no longer necessary to have the Public Warrants available in, book-entry form, the Warrant Agent shall provide written instructions to the Depositary to deliver to the Warrant Agent for cancellation each book-entry Public Warrant, and the Company shall instruct the Warrant Agent to deliver to the Depositary definitive certificates in physical form evidencing such Warrants (“Definitive Warrant Certificates”) which shall be in the form annexed hereto as Exhibit A.
2.3.2 Registered Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and treat the person in whose name such Warrant shall be registered upon the Warrant Register (the “Registered Holder”), as the absolute owner of such Warrant and of each Warrant represented thereby (notwithstanding any notation of ownership or other writing on any physical warrant certificate made by anyone other than the Company or the Warrant Agent), for the purpose of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.
2.4 Detachability of Warrants. The Class A ordinary shares and Public Warrants comprising the Units shall begin separate trading on the 52nd day following the date of the Prospectus or, if such 52nd day is not on a day, other than a Saturday, Sunday or federal holiday, on which banks in New York City are generally open for normal business (a “Business Day”), then on the immediately succeeding Business Day following such date, or earlier (the “Detachment Date”) with the consent of Credit Suisse Securities (USA) LLC and Goldman Sachs (Asia) L.L.C., as representatives of the several underwriters, but in no event shall the Class A ordinary shares and the Public Warrants comprising the Units be separately traded until (A) the Company has filed a Current Report on Form 8-K with the Commission containing an audited balance sheet reflecting the receipt by the Company of the gross proceeds of the Offering, including the proceeds then received by the Company from the exercise by the underwriters of their right to purchase additional Units in the Offering (the “Over-allotment Option”), if the Over-allotment Option is exercised prior to the filing of the Form 8-K, and (B)
the Company issues a press release and files with the Commission a current report on Form 8-K announcing when such separate trading shall begin.
2.5 Fractional Warrants. The Company shall not issue fractional Warrants other than as part of the Units, each of which is comprised of one Class A ordinary share and one-half of one whole Public Warrant. If, upon the detachment of Public Warrants from the Units or otherwise, a holder of Warrants would be entitled to receive a fractional Warrant, the Company shall round down to the nearest whole number the number of Warrants to be issued to such holder.
2.6 Private Placement Warrants; Forward Purchase Warrants.
2.6.1 Private Placement Warrants. The Private Placement Warrants shall be identical to the Public Warrants, except that so long as they are held by the Sponsor or any of its Permitted Transferees (as defined below) the Private Placement Warrants: (i) may be exercised for cash or on a “cashless basis,” pursuant to subsection 3.3.1(b) hereof, (ii) including the Class A ordinary shares issuable upon exercise of the Private Placement Warrants, may not be transferred, assigned or sold until thirty (30) days after the completion by the Company of an initial Business Combination, (iii) shall not be redeemable by the Company pursuant to Section 6.1.1 hereof and (iv) shall only be redeemable by the Company pursuant to Section 6.1.2 if the Reference Value (as defined below) is less than $18.00 per share (subject to adjustment in compliance with Section 4 hereof); provided, however, that in the case of clause (ii), the Private Placement Warrants and any Class A ordinary shares held by the Sponsor or any of its Permitted Transferees that are issued upon exercise of the Private Placement Warrants may be transferred by the holders thereof:
(a) | to the Company’s officers or directors, any affiliate or family member of any of the Company’s officers or directors, any affiliate of the Sponsor or to any member of the Sponsor or any of their affiliates or shareholders; |
(b) | in the case of an individual, as a gift to such person’s immediate family or to a trust, the beneficiary of which is a member of such person’s immediate family, an affiliate of such person or to a charitable organization; |
(c) | in the case of an individual, by virtue of laws of descent and distribution upon death of such person; |
(d) | in the case of an individual, pursuant to a qualified domestic relations order; |
(e) | in the case of a trust, by distribution to one or more of the permissible beneficiaries of such trust; |
(f) | by private sales or transfers made in connection with any forward purchase agreement or similar arrangement or in connection with the consummation of a Business Combination at prices no greater than the price at which the shares or warrants were originally purchased; |
(g) | by virtue of the laws of the Cayman Islands upon termination and winding up of the Sponsor; |
(h) | in the event of the Company’s liquidation prior to the Company’s consummation of its Business Combination; or |
(i) | in the event that, subsequent to the Company’s consummation of its initial Business Combination, the Company completes a liquidation, merger, share exchange or other similar transaction which results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property; provided, however, that in the case of clauses (a) through (g) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions and the other restrictions contained in the letter agreements (the “Permitted Transferees”). |
2.6.2 Forward Purchase Warrants. The Forward Purchase Warrants shall have the same terms and be in the same form as the Public Warrants.
3. Terms and Exercise of Warrants.
3.1 Warrant Price. Each whole Warrant shall, when countersigned by the Warrant Agent (if a physical certificate is issued), entitle the Registered Holder thereof, subject to the provisions of such Warrant and this Agreement, to purchase from the Company the number of Class A ordinary shares stated therein, at the price of $11.50 per whole share, subject to the adjustments provided in Section 4 hereof and in the last sentence of this Section 3.1. The term “Warrant Price” as used in this Agreement refers to the price per share (including in cash or by payment of Warrants pursuant to a “cashless exercise,” to the extent permitted hereunder) described in the prior sentence at which Class A ordinary shares may be purchased at the time a Warrant is exercised. The Company in its sole discretion may lower the Warrant Price at any time prior to the Expiration Date (as defined below); provided that the Company shall provide at least twenty (20) days prior written notice of such reduction to Registered Holders of the Warrants and, provided further that any such reduction shall be identical among all of the Warrants..
3.2 Duration of Warrants. A Warrant may be exercised only during the period (the “Exercise Period”) (A) commencing on the later of: (i) the date that is thirty (30) days after the first date on which the Company completes a Business Combination, and (ii) the date that is twelve (12) months from the date of the closing of the Offering, and (B) terminating at the earliest to occur of (x) 5:00 p.m., New York City time on the date that is five (5) years after the date on which the Company completes its initial Business Combination, (y) the liquidation of the Company in accordance with the Company’s amended and restated memorandum and articles of association, as amended from time to time, if the Company fails to complete a Business Combination, and (z) other than with respect to the Private Placement Warrants then held by the Sponsor or its Permitted Transferees with respect to a redemption pursuant to Section 6.1.1 hereof or, if the Reference Value equals or exceeds $18.00 per share (subject to adjustment in compliance with Section 4 hereof), Section 6.1.2 hereof, 5:00 p.m., New York City time on the Redemption Date (as defined below) as provided in Section 6.3 hereof (the “Expiration Date”);
provided, however, that the exercise of any Warrant shall be subject to the satisfaction of any applicable conditions, as set forth in subsection 3.3.2 below, with respect to an effective registration statement or a valid exemption therefrom being available. Except with respect to the right to receive the Redemption Price (as defined below) (other than with respect to a Private Placement Warrant then held by the Sponsor or its Permitted Transferees in connection with a redemption pursuant to Section 6.1.1 hereof or, if the Reference Value equals or exceeds $18.00 per share (subject to adjustment in compliance with Section 4 hereof), Section 6.1.2 hereof) in the event of a redemption (as set forth in Section 6 hereof), each Warrant (other than a Private Placement Warrant then held by the Sponsor or its Permitted Transferees in the event of a redemption pursuant to Section 6.1.1 hereof or, if the Reference Value equals or exceeds $18.00 per share (subject to adjustment in compliance with Section 4 hereof), Section 6.1.2 hereof) not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights in respect thereof under this Agreement shall cease at 5:00 p.m. New York City time on the Expiration Date. The Company in its sole discretion may extend the duration of the Warrants by delaying the Expiration Date; provided that the Company shall provide at least twenty (20) days prior written notice of any such extension to Registered Holders of the Warrants and, provided further that any such extension shall be identical in duration among all the Warrants.
3.3 Exercise of Warrants.
3.3.1 Payment. Subject to the provisions of the Warrant and this Agreement, a Warrant, when countersigned by the Warrant Agent (if a physical certificate is issued), may be exercised by the Registered Holder thereof by delivering to the Warrant Agent at its corporate trust department (i) the Definitive Warrant Certificate evidencing the Warrants to be exercised, or, in the case of a Warrant represented by a book-entry, the Warrants to be exercised (the “Book-Entry Warrants”) on the records of the Depositary to an account of the Warrant Agent at the Depositary designated for such purposes in writing by the Warrant Agent to the Depositary from time to time, (ii) an election to purchase (“Election to Purchase”) any Class A ordinary shares pursuant to the exercise of a Warrant, properly completed and executed by the Registered Holder on the reverse of the Definitive Warrant Certificate or, in the case of a Book-Entry Warrant, properly delivered by the Participant in accordance with the Depositary’s procedures, and (iii) the payment in full of the Warrant Price for each Class A ordinary share as to which the Warrant is exercised and any and all applicable taxes due in connection with the exercise of the Warrant, the exchange of the Warrant for the Class A ordinary shares and the issuance of such Class A ordinary shares, as follows:
(a) | in lawful money of the United States, in good certified check or good bank draft payable to the order of the Warrant Agent; |
(b) | with respect to any Private Placement Warrant, so long as such Private Placement Warrant is held by the Sponsor or a Permitted Transferee, by surrendering the Warrants for that number of Class A ordinary shares equal to (i) if in connection with a redemption of Private Placement Warrants pursuant to Section 6.2 hereof, as provided in Section 6.2 hereof with respect to a Make-Whole Exercise (as defined below) and (ii) in all other scenarios the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the Warrants, multiplied by |
the excess of the “Historical Fair Market Value” (as defined in this subsection 3.3.1(b)) over the Warrant Price by (y) the Historical Fair Market Value. Solely for purposes of this subsection 3.3.1(b), the “Historical Fair Market Value” shall mean the average last reported sale price of the Class A ordinary shares for the ten (10) trading days ending on the third (3rd) trading day prior to the date on which notice of exercise of the Private Placement Warrant is sent to the Warrant Agent;
(c) | on a cashless basis, as provided in Section 6.2 hereof with respect to a Make-Whole Exercise; or |
(d) | on a cashless basis, as provided in Section 7.4 hereof. |
3.3.2 Issuance of Class A ordinary shares on Exercise. As soon as practicable after the exercise of any Warrant and the clearance of the funds in payment of the Warrant Price (if payment is pursuant to subsection 3.3.1(a)), the Company shall issue to the Registered Holder of such Warrant a book-entry position or certificate, as applicable, for the number of Class A ordinary shares to which he, she or it is entitled, registered in such name or names as may be directed by him, her or it on the register of members of the Company, and if such Warrant shall not have been exercised in full, a new book-entry position or countersigned Warrant, as applicable, for the number of shares as to which such Warrant shall not have been exercised. Notwithstanding the foregoing, the Company shall not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a Warrant and shall have no obligation to settle such Warrant exercise unless a registration statement under the Act with respect to the Class A ordinary shares underlying the Public Warrants is then effective and a prospectus relating thereto is current, subject to the Company’s satisfying its obligations under Section 7.4 or a valid exemption from registration is available. No Warrant shall be exercisable and the Company shall not be obligated to issue Class A ordinary shares upon exercise of a Warrant unless the Class A ordinary shares issuable upon such Warrant exercise have been registered, qualified or deemed to be exempt from registration or qualification under the securities laws of the state of residence of the Registered Holder of the Warrants. Subject to Section 4.6 of this Agreement, a Registered Holder of Warrants may exercise its Warrants only for a whole number of Class A ordinary shares. The Company may require holders of Public Warrants to settle the Warrant on a “cashless basis” pursuant to Section 7.4. If, by reason of any exercise of Warrants on a “cashless basis”, the holder of any Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a Class A ordinary share, the Company shall round down to the nearest whole number, the number of Class A ordinary shares to be issued to such holder.
3.3.3 Valid Issuance. All Class A ordinary shares issued upon the proper exercise of a Warrant in conformity with this Agreement and the Amended and Restated Memorandum and Articles of Association of the Company shall be validly issued, fully paid and non-assessable.
3.3.4 Date of Issuance. Each person in whose name any book-entry position or certificate, as applicable for Class A ordinary shares is issued and who is registered in the register of members of the Company shall for all purposes be deemed to have become the holder of record of such Class A ordinary shares on the date on which the Warrant, or book-entry
position representing such Warrant, was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such certificate, in the case of a certificated Warrant, except that, if the date of such surrender and payment is a date when the register of members of the Company or book-entry system of the Warrant Agent are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the share transfer books or book-entry system are open.
3.3.5 Maximum Percentage. A holder of a Warrant may notify the Company in writing in the event it elects to be subject to the provisions contained in this subsection 3.3.5; however, no holder of a Warrant shall be subject to this subsection 3.3.5 unless he, she or it makes such election. If the election is made by a holder, the Warrant Agent shall not effect the exercise of the holder’s Warrant, and such holder shall not have the right to exercise such Warrant, to the extent that after giving effect to such exercise, such person (together with such person’s affiliates), to the Warrant Agent’s actual knowledge, would beneficially own in excess of 9.8% (the “Maximum Percentage”) of the Class A ordinary shares outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of Class A ordinary shares beneficially owned by such person and its affiliates shall include the number of Class A ordinary shares issuable upon exercise of the Warrant with respect to which the determination of such sentence is being made, but shall exclude Class A ordinary shares that would be issuable upon (x) exercise of the remaining, unexercised portion of the Warrant beneficially owned by such person and its affiliates and (y) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such person and its affiliates (including, without limitation, any convertible notes or convertible preferred shares or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For purposes of the Warrant, in determining the number of outstanding Class A ordinary shares, the holder may rely on the number of outstanding Class A ordinary shares as reflected in (1) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the Commission as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or Continental Stock Transfer & Trust Company, as transfer agent (in such capacity, the “Transfer Agent”), setting forth the number of Class A ordinary shares outstanding. For any reason at any time, upon the written request of the holder of the Warrant, the Company shall, within two (2) Business Days, confirm orally and in writing to such holder the number of Class A ordinary shares then outstanding. In any case, the number of issued and outstanding Class A ordinary shares shall be determined after giving effect to the conversion or exercise of equity securities of the Company by the holder and its affiliates since the date as of which such number of issued and outstanding Class A ordinary shares was reported. By written notice to the Company, the holder of a Warrant may from time to time increase or decrease the Maximum Percentage applicable to such holder to any other percentage specified in such notice; provided, however, that any such increase shall not be effective until the sixty-first (61st) day after such notice is delivered to the Company.
4. Adjustments.
4.1 Share Capitalizations
4.1.1 Sub-divisions. If, after the date hereof, and subject to the provisions of Section 4.7 below, the number of issued and outstanding Class A ordinary shares is increased by a capitalization or share dividend payable in Class A ordinary shares, or by a sub-division of Class A ordinary shares, or other similar event, then, on the effective date of such share capitalization, share dividend, sub-division or similar event, the number of Class A ordinary shares issuable on exercise of each Warrant shall be increased in proportion to such increase in the issued and outstanding Class A ordinary shares. A rights offering to holders of Class A ordinary shares entitling holders to purchase Class A ordinary shares at a price less than the “Historical Fair Market Value” (as defined below) shall be deemed a capitalization of a number of Class A ordinary shares equal to the product of (i) the number of Class A ordinary shares actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for the Class A ordinary shares) multiplied by (ii) one (1) minus the quotient of (x) the price per Class A ordinary share paid in such rights offering divided by (y) the Historical Fair Market Value. For purposes of this subsection 4.1.1, (i) if the rights offering is for securities convertible into or exercisable for Class A ordinary shares, in determining the price payable for Class A ordinary shares, there shall be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) “Historical Fair Market Value” means the volume weighted average price of the Class A ordinary shares as reported during the ten (10) trading day period ending on the trading day prior to the first date on which the Class A ordinary shares trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights. No Class A ordinary shares shall be issued at less than their par value.
4.1.2 Extraordinary Dividends. If the Company, at any time while the Warrants are outstanding and unexpired, shall pay a dividend or make a distribution in cash, securities or other assets to the holders of Class A ordinary shares on account of such Class A ordinary shares (or other shares into which the Warrants are convertible), other than (a) as described in subsection 4.1.1 above, (b) Ordinary Cash Dividends (as defined below), (c) to satisfy the redemption rights of the holders of the Class A ordinary shares in connection with a proposed initial Business Combination, (d) to satisfy the redemption rights of the holders of the Class A ordinary shares in connection with a shareholder vote to amend the Company’s amended and restated memorandum and articles of association (i) to modify the substance or timing of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem 100% of the Company’s public shares if the Company does not complete its initial Business Combination within the time period required by the Company’s amended and restated memorandum and articles of association, as amended from time to time, or (ii) with respect to any other provision relating to shareholders’ rights or pre-initial Business Combination activity or (e) in connection with the redemption of public shares upon the failure of the Company to complete its initial Business Combination and any subsequent distribution of its assets upon its liquidation (any such non-excluded event being referred to herein as an “Extraordinary Dividend”), then the Warrant Price shall be decreased, effective immediately after the effective date of such Extraordinary Dividend, by the amount of cash and/or the fair market value (as determined by the Company’s board of directors (the “Board”), in good faith)
of any securities or other assets paid on each Class A ordinary share in respect of such Extraordinary Dividend. For purposes of this subsection 4.1.2, “Ordinary Cash Dividends” means any cash dividend or cash distribution which, when combined on a per share basis with the per share amounts of all other cash dividends and cash distributions paid on the Class A ordinary shares during the 365-day period ending on the date of declaration of such dividend or distribution to the extent it does not exceed $0.50 (as adjusted to appropriately reflect any of the events referred to in other subsections of this Section 4 and excluding cash dividends or cash distributions that resulted in an adjustment to the Warrant Price or to the number of Class A ordinary shares issuable on exercise of each Warrant) but only with respect to the amount of the aggregate cash dividends or cash distributions equal to or less than $0.50 per share.
4.2 Aggregation of Shares. If, after the date hereof, and subject to the provisions of Section 4.7, the number of issued and outstanding Class A ordinary shares is decreased by a consolidation, combination, reverse share sub-division or reclassification of Class A ordinary shares or other similar event, then, on the effective date of such consolidation, combination, reverse share sub-division, reclassification or similar event, the number of Class A ordinary shares issuable on exercise of each Warrant shall be decreased in proportion to such decrease in issued and outstanding Class A ordinary shares.
4.3 Adjustments in Exercise Price. Whenever the number of Class A ordinary shares purchasable upon the exercise of the Warrants is adjusted, as provided in Sections 4.1 and 4.2 above, the Warrant Price shall be adjusted (to the nearest cent) by multiplying such Warrant Price immediately prior to such adjustment by a fraction (x) the numerator of which shall be the number of Class A ordinary shares purchasable upon the exercise of the Warrants immediately prior to such adjustment and (y) the denominator of which shall be the number of Class A ordinary shares so purchasable immediately thereafter.
4.4 Raising of Capital in Connection with the Initial Business Combination. If (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per Class A ordinary share (with such issue price or effective issue price to be determined in good faith by the Board and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Class B ordinary shares of the Company, par value $0.0001 per share (the “Class B ordinary shares”), held by the Sponsor or such affiliates, as applicable, prior to such issuance (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the Company’s initial Business Combination on the date of the completion of the Company’s initial Business Combination (net of redemptions), and (z) the volume-weighted average trading price of Class A ordinary shares during the twenty (20) trading day period starting on the trading day prior to the day on which the Company completes its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the Warrant Price will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $10.00 and $18.00 per share redemption trigger prices described in Section 6.1.2 and Section 6.1.1, respectively, will be adjusted (to the nearest cent) to be equal to 100% and 180%, respectively, of the higher of the Market Value and the Newly Issued Price.
4.5 Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the issued and outstanding Class A ordinary shares (other than a change covered by Section 4.1 or Section 4.2 hereof or one that solely affects the par value of such Class A ordinary shares), or in the case of any merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the issued and outstanding Class A ordinary shares), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the holders of the Warrants shall thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the Warrants and in lieu of the Class A ordinary shares immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of Class A ordinary shares or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the Warrant holder would have received if such Warrant holder had exercised his, her or its Warrant(s) immediately prior to such event (the “Alternative Issuance”); provided, however, that (i) if such Warrant holders were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such merger or consolidation, then the kind and amount of securities, cash or other assets for which each Warrant shall become exercisable shall be deemed to be the weighted average of the kind and amount received per share by such Warrant holders in such merger or consolidation that affirmatively make such election, and (ii) if a tender, exchange or redemption offer has been made to and accepted by such Warrant holders (other than a tender, exchange or redemption offer made by the Company in connection with redemption rights held by shareholders of the Company as provided for in the Company’s amended and restated memorandum and articles of association or as a result of the redemption of Class A ordinary shares by the Company if a proposed initial Business Combination is presented to the shareholders of the Company for approval) under circumstances in which, upon completion of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the Exchange Act) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act) more than 50% of the issued and outstanding Class A ordinary shares, the Warrant holder shall be entitled to receive as the Alternative Issuance, the highest amount of cash, securities or other property to which such Warrant holder would actually have been entitled as a shareholder if such Warrant holder had exercised the Warrant prior to the expiration of such tender or exchange offer, accepted such offer and all of the Class A ordinary shares held by such Warrant holder had been purchased pursuant to such tender or exchange offer, subject to adjustment (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in this Section 4; provided, further, that if less than 70% of the consideration receivable by the holders of Class A ordinary shares in the applicable event is payable in the form of Class A ordinary shares in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the counter market, or is to be so listed for trading or quoted immediately following such applicable event, and if the Registered Holder of the Warrant properly exercises the Warrant within thirty (30) days following public
disclosure of such transaction, the Warrant Price shall be reduced by an amount (in dollars) equal to the difference of (i) the Warrant Price in effect prior to such reduction minus (ii) (A) the Per Share Consideration (as defined below) but in no event less than zero, minus (B) the Black-Scholes Warrant Value (as defined below). The “Black-Scholes Warrant Value” means the value of a Warrant immediately prior to the consummation of the applicable event based on the Black-Scholes Warrant Model for a Capped American Call on Bloomberg Financial Markets (assuming zero dividends) (“Bloomberg”). For purposes of calculating such amount, (i) Section 6 of this Agreement shall be taken into account, (ii) the price of each Class A ordinary share shall be the volume weighted average price of the Class A ordinary shares as reported during the ten (10) trading day period ending on the trading day prior to the effective date of the applicable event, (iii) the assumed volatility shall be the 90 day volatility obtained from the HVT function on Bloomberg determined as of the trading day immediately prior to the day of the announcement of the applicable event and (iv) the assumed risk-free interest rate shall correspond to the U.S. Treasury rate for a period equal to the remaining term of the Warrant. “Per Share Consideration” means (i) if the consideration paid to holders of the Class A ordinary shares consists exclusively of cash, the amount of such cash per Class A ordinary share, and (ii) in all other cases, the volume weighted average price of the Class A ordinary shares as reported during the ten (10) trading day period ending on the trading day prior to the effective date of the applicable event. If any reclassification or reorganization also results in a change in Class A ordinary shares covered by subsection 4.1.1, then such adjustment shall be made pursuant to subsection 4.1.1 or Sections 4.2, 4.3, 4.4 and this Section 4.5. The provisions of this Section 4.5 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers. In no event will the Warrant Price be reduced to less than the par value per share issuable upon exercise of such Warrant.
4.6 Notices of Changes in Warrant. Upon every adjustment of the Warrant Price or the number of shares issuable upon exercise of a Warrant, the Company shall give written notice thereof to the Warrant Agent, which notice shall state the Warrant Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of a Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon the occurrence of any event specified in Sections 4.1, 4.2, 4.3, 4.4. or 4.5, then, in any such event, the Company shall give written notice to each Warrant holder, at the last address set forth for such holder in the Warrant Register, of the record date or the effective date of the event. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event.
4.7 No Fractional Shares. Notwithstanding any provision contained in this Agreement to the contrary, the Company shall not issue fractional shares upon the exercise of Warrants. If, by reason of any adjustment made pursuant to this Section 4, the holder of any Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a share, the Company shall, upon such exercise, round down to the nearest whole number the number of Class A ordinary shares to be issued to the Warrant holder.
4.8 Form of Warrant. The form of Warrant need not be changed because of any adjustment pursuant to this Section 4, and Warrants issued after such adjustment may state the same Warrant Price and the same number of shares as is stated in the Warrants initially issued pursuant to this Agreement. However, the Company may, at any time, in its sole discretion,
make any change in the form of Warrant that the Company may deem appropriate and that does not affect the substance thereof, and any Warrant thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant or otherwise, may be in the form as so changed.
4.9 Other Events. In case any event shall occur affecting the Company as to which none of the provisions of the preceding subsections of this Section 4 are strictly applicable, but which would require an adjustment to the terms of the Warrants in order to (i) avoid an adverse impact on the Warrants and (ii) effectuate the intent and purpose of this Section 4, then, in each such case, the Company shall appoint a firm of independent registered public accountants, investment banking or other appraisal firm of recognized national standing, which shall give its opinion as to whether or not any adjustment to the rights represented by the Warrants is necessary to effectuate the intent and purpose of this Section 4 and, if they determine that an adjustment is necessary, the terms of such adjustment; provided, however, that under no circumstances shall the Warrants be adjusted pursuant to this Section 4.9 as a result of any issuance of securities in connection with a Business Combination. The Company shall adjust the terms of the Warrants in a manner that is consistent with any adjustment recommended in such opinion.
5. Transfer and Exchange of Warrants.
5.1 Registration of Transfer. The Warrant Agent shall register the transfer, from time to time, of any outstanding Warrant in the Warrant Register, upon surrender of such Warrant for transfer, properly endorsed with signatures properly guaranteed and accompanied by appropriate instructions for transfer. Upon any such transfer, a new Warrant representing an equal aggregate number of Warrants shall be issued and the old Warrant shall be cancelled by the Warrant Agent. In the case of certificated Warrants, such Warrants so cancelled may be delivered by the Warrant Agent to the Company from time to time upon request.
5.2 Procedure for Surrender of Warrants. Warrants may be surrendered to the Warrant Agent, together with a written request for exchange or transfer, and thereupon the Warrant Agent shall issue in exchange therefor one or more new Warrants as requested by the Registered Holder of the Warrants so surrendered, representing an equal aggregate number of Warrants; provided, however, that except as otherwise provided herein or with respect to any Book-Entry Warrant, each Book-Entry Warrant may be transferred only in whole and only to the Depository, to another nominee of the Depository, to a successor depository or to a nominee of a successor depository; provided, further, however, that in the event that a Warrant surrendered for transfer bears a restrictive legend (as in the case of the Private Placement Warrants and the Forward Purchase Warrants), the Warrant Agent shall not cancel such Warrant and issue new Warrants in exchange therefor until the Warrant Agent has received an opinion of counsel for the Company stating that such transfer is exempt from registration under the Act, as amended and indicating whether the new Warrants must also bear a restrictive legend.
5.3 Fractional Warrants. The Warrant Agent shall not be required to effect any registration of transfer or exchange which shall result in the issuance of a warrant certificate or book-entry position for a fraction of a warrant, except as part of the Units.
5.4 Service Charges. No service charge shall be made for any exchange or registration of transfer of Warrants.
5.5 Warrant Execution and Countersignature. The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms of this Agreement, the Warrants required to be issued pursuant to the provisions of this Section 5, and the Company, whenever required by the Warrant Agent, shall supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose.
5.6 Transfer of Warrants. Prior to the Detachment Date, the Public Warrants may be transferred or exchanged only together with the Unit in which such Warrant is included, and only for the purpose of effecting, or in conjunction with, a transfer or exchange of such Unit. Furthermore, each transfer of a Unit on the register relating to such Units shall operate also to transfer the Warrants included in such Unit. Notwithstanding the foregoing, the provisions of this Section 5.6 shall have no effect on any transfer of Warrants on and after the Detachment Date.
6. Redemption.
6.1 Redemption.
6.1.1 Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $18.00. Subject to Section 6.4 hereof, not less than all of the outstanding Warrants may be redeemed, at the option of the Company, at any time during the Exercise Period, at the office of the Warrant Agent, upon the notice referred to in Section 6.2 below, at a Redemption Price of $0.01 per Warrant, provided that (a) the Reference Value (as defined below) equals or exceeds $18.00 per share (subject to adjustment in compliance with Section 4 hereof) and (b) there is an effective registration statement covering the issuance of the Class A ordinary shares issuable upon exercise of the Warrants, and a current prospectus relating thereto, available throughout the 30-day Redemption Period (as defined in Section 6.2 below).
6.1.2 Redemption of Warrants When the Price per Class A Ordinary Share Equals or Exceeds $10.00. Subject to Section 6.4 hereof, not less than all of the outstanding Warrants may be redeemed, at the option of the Company, at any time during the Exercise Period, at the office of the Warrant Agent, upon notice referred to in Section 6.2 below, at a Redemption Price of $0.10 per Warrant, provided that (i) the Reference Value equals or exceeds $10.00 per share (subject to adjustment in compliance with Section 4 hereof) and (ii) if the Reference Value is less than $18.00 per share (subject to adjustment in compliance with Section 4 hereof), the Private Placement Warrants are also concurrently called for redemption on the same terms as the outstanding Public Warrants. During the 30-day Redemption Period in connection with a redemption pursuant to this subsection 6.1.2, Registered Holders of the Warrants may elect to exercise their Warrants on a “cashless basis” pursuant to subsection 3.3.1 and receive a number of Class A ordinary shares determined by reference to the table below, based on the Redemption Date (calculated for purposes of the table as the period to expiration of the Warrants) and the “Redemption Fair Market Value” (as such term is defined in this subsection 6.1.2) (a “Make-Whole Exercise”). Solely for purposes of this subsection 6.1.2, the “Redemption Fair Market Value” shall mean the volume weighted average price of the Class A ordinary shares for the ten (10) trading days immediately following the date on which notice of
redemption pursuant to this subsection 6.1.2 is sent to the Registered Holders. In connection with any redemption pursuant to this subsection 6.1.2, the Company shall provide the Registered Holders with the Redemption Fair Market Value no later than one (1) Business Day after the ten (10) trading day period described above ends.
Redemption Date | Redemption Fair Market Value of Class A ordinary shares | ||||||||||||||||||
(period to expiration of warrants) |
<10.00 | 11.00 | 12.00 | 13.00 | 14.00 | 15.00 | 16.00 | 17.00 | >18.00 | ||||||||||
60 months | 0.261 | 0.281 | 0.297 | 0.311 | 0.324 | 0.337 | 0.348 | 0.358 | 0.361 | ||||||||||
57 months | 0.257 | 0.277 | 0.294 | 0.310 | 0.324 | 0.337 | 0.348 | 0.358 | 0.361 | ||||||||||
54 months | 0.252 | 0.272 | 0.291 | 0.307 | 0.322 | 0.335 | 0.347 | 0.357 | 0.361 | ||||||||||
51 months | 0.246 | 0.268 | 0.287 | 0.304 | 0.320 | 0.333 | 0.346 | 0.357 | 0.361 | ||||||||||
48 months | 0.241 | 0.263 | 0.283 | 0.301 | 0.317 | 0.332 | 0.344 | 0.356 | 0.361 | ||||||||||
45 months | 0.235 | 0.258 | 0.279 | 0.298 | 0.315 | 0.330 | 0.343 | 0.356 | 0.361 | ||||||||||
42 months | 0.228 | 0.252 | 0.274 | 0.294 | 0.312 | 0.328 | 0.342 | 0.355 | 0.361 | ||||||||||
39 months | 0.221 | 0.246 | 0.269 | 0.290 | 0.309 | 0.325 | 0.340 | 0.354 | 0.361 | ||||||||||
36 months | 0.213 | 0.239 | 0.263 | 0.285 | 0.305 | 0.323 | 0.339 | 0.353 | 0.361 | ||||||||||
33 months | 0.205 | 0.232 | 0.257 | 0.280 | 0.301 | 0.320 | 0.337 | 0.352 | 0.361 | ||||||||||
30 months | 0.196 | 0.224 | 0.250 | 0.274 | 0.297 | 0.316 | 0.335 | 0.351 | 0.361 | ||||||||||
27 months | 0.185 | 0.214 | 0.242 | 0.268 | 0.291 | 0.313 | 0.332 | 0.350 | 0.361 | ||||||||||
24 months | 0.173 | 0.204 | 0.233 | 0.260 | 0.285 | 0.308 | 0.329 | 0.348 | 0.361 | ||||||||||
21 months | 0.161 | 0.193 | 0.223 | 0.252 | 0.279 | 0.304 | 0.326 | 0.347 | 0.361 | ||||||||||
18 months | 0.146 | 0.179 | 0.211 | 0.242 | 0.271 | 0.298 | 0.322 | 0.345 | 0.361 | ||||||||||
15 months | 0.130 | 0.164 | 0.197 | 0.230 | 0.262 | 0.291 | 0.317 | 0.342 | 0.361 | ||||||||||
12 months | 0.111 | 0.146 | 0.181 | 0.216 | 0.250 | 0.282 | 0.312 | 0.339 | 0.361 | ||||||||||
9 months | 0.090 | 0.125 | 0.162 | 0.199 | 0.237 | 0.272 | 0.305 | 0.336 | 0.361 | ||||||||||
6 months | 0.065 | 0.099 | 0.137 | 0.178 | 0.219 | 0.259 | 0.296 | 0.331 | 0.361 | ||||||||||
3 months | 0.034 | 0.065 | 0.104 | 0.150 | 0.197 | 0.243 | 0.286 | 0.326 | 0.361 | ||||||||||
0 months | — | — | 0.042 | 0.115 | 0.179 | 0.233 | 0.281 | 0.323 | 0.361 |
The exact Redemption Fair Market Value and Redemption Date may not be set forth in the table above, in which case, if the Redemption Fair Market Value is between two values in the table or the Redemption Date is between two redemption dates in the table, the number of Class A ordinary shares to be issued for each Warrant exercised in a Make-Whole Exercise will be determined by a straight-line interpolation between the number of shares set forth for the higher and lower Redemption Fair Market Values and the earlier and later redemption dates, as applicable, based on a 365- or 366-day year, as applicable.
The share prices set forth in the column headings of the table above shall be adjusted as of any date on which the number of shares issuable upon exercise of a Warrant or the Warrant Price is adjusted pursuant to Section 4 hereof. In the event of a Warrant Price adjustment pursuant to Section 4, the adjusted share prices in the column headings shall equal the share prices immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the Warrant Price after such adjustment and the denominator of which is the Warrant Price immediately prior to such adjustment. In such an event, the number of shares in the table above shall be adjusted by multiplying such share amounts by a fraction, the numerator of which is the number of shares deliverable upon exercise of a Warrant immediately prior to such adjustment and the denominator of which is the number of shares deliverable upon exercise of a Warrant as so adjusted. The number of shares in the table above shall be adjusted in the same manner and at
the same time as the number of shares issuable upon exercise of a Warrant. If the Warrant Price is adjusted pursuant to Section 4.4, the adjusted share prices set forth in the column headings of the table above shall be multiplied by a fraction, the numerator of which is the higher of the Market Value and the Newly Issued Price and the denominator of which is $10.00.
6.2 Date Fixed for, and Notice of, Redemption; Redemption Price; Reference Value. In the event the Company shall elect to redeem all of the Warrants, the Company shall fix a date for the redemption (the “Redemption Date”). Notice of redemption shall be mailed by first class mail, postage prepaid, by the Company not less than thirty (30) days prior to the Redemption Date (the “30-day Redemption Period”) to the Registered Holders of the Warrants to be redeemed at their last addresses as they shall appear in the Warrant Register. Any notice mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the Registered Holder received such notice. As used in this Agreement, (a) “Redemption Price” shall mean the price per Warrant at which any Warrants are redeemed pursuant to Section 6.1 and (b) “Reference Value” shall mean the last reported sales price of the Class A ordinary shares for any twenty (20) trading days within the thirty (30) trading day period ending on the third trading day prior to the date on which notice of the redemption is given.
6.3 Exercise After Notice of Redemption. The Warrants may be exercised for cash in accordance with Section 3 of this Agreement (or on a “cashless basis” in accordance with subsection 6.1.2 of this Agreement) at any time after notice of redemption shall have been given by the Company pursuant to Section 6.2 hereof and prior to the Redemption Date. On and after the Redemption Date, the record holder of the Warrants shall have no further rights except to receive, upon surrender of the Warrants, the Redemption Price.
6.4 Exclusion of Private Placement Warrants. The Company agrees that (a) the redemption rights provided in Section 6.1 hereof shall not apply to the Private Placement Warrants if at the time of the redemption such Private Placement Warrants continue to be held by the Sponsor or its Permitted Transferees and (b) if the Reference Value equals or exceeds $18.00 per share (subject to adjustment in compliance with Section 4 hereof), the redemption rights provided in Section 6.1.2 hereof shall not apply to the Private Placement Warrants if at the time of the redemption such Private Placement Warrants continue to be held by the Sponsor or its Permitted Transferees. However, once such Private Placement Warrants are transferred (other than to Permitted Transferees in accordance with Section 2.6 hereof), the Company may redeem the Private Placement Warrants pursuant to Section 6.1.1 or 6.1.2 hereof, provided that the criteria for redemption are met, including the opportunity of the holder of such Private Placement Warrants to exercise the Private Placement Warrants prior to redemption pursuant to Section 6.4 hereof. Private Placement Warrants that are transferred to persons other than Permitted Transferees shall upon such transfer cease to be Private Placement Warrants and shall become Public Warrants under this Agreement, including for purposes of Section 9.8 hereof.
7. Other Provisions Relating to Rights of Holders of Warrants.
7.1 No Rights as Shareholder. A Warrant does not entitle the Registered Holder thereof to any of the rights of a shareholder of the Company, including, without limitation, the right to receive dividends, or other distributions, exercise any preemptive rights to vote or to
consent or to receive notice as shareholders in respect of the meetings of shareholders or the election of directors of the Company or any other matter.
7.2 Lost, Stolen, Mutilated, or Destroyed Warrants. If any Warrant is lost, stolen, mutilated or destroyed, the Company and the Warrant Agent may, on such terms as to indemnity or otherwise as they may in their discretion impose (which terms shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination, tenor and date as the Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone.
7.3 Reservation of Class A ordinary shares. The Company shall at all times reserve and keep available a number of its authorized but unissued Class A ordinary shares that will be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this Agreement.
7.4 Registration of Class A ordinary shares.
7.4.1 Registration of the Class A ordinary shares. The Company agrees that as soon as practicable, but in no event later than fifteen (15) Business Days after the closing of its initial Business Combination, it shall use its commercially reasonable efforts to file with the Commission a registration statement for the registration, under the Act, of the Class A ordinary shares issuable upon exercise of the Warrants. The Company shall use its commercially reasonable efforts to cause the same to become effective within sixty (60) Business Days following the closing of its initial Business Combination and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration or redemption of the Warrants in accordance with the provisions of this Agreement. If any such registration statement has not been declared effective by the sixtieth (60th) Business Day following the closing of the Business Combination, holders of the Warrants shall have the right, during the period beginning on the sixty-first (61st) Business Day after the closing of the Business Combination and ending upon such registration statement being declared effective by the Commission, and during any other period when the Company shall fail to have maintained an effective registration statement covering the issuance of the Class A ordinary shares issuable upon exercise of the Warrants, to exercise such Warrants on a “cashless basis,” pursuant to subsection 3.3.1, by exchanging the Warrants (in accordance with Section 3(a)(9) of the Act or another exemption) for that number of Class A ordinary shares equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number of Class A ordinary shares underlying the Warrants, multiplied by the excess of the “Fair Market Value” (as defined below) less the Warrant Price by (y) the Fair Market Value and (B) 0.361. Solely for purposes of this subsection 7.4.1, “Fair Market Value” shall mean the volume-weighted average price of the Class A ordinary shares as reported during the ten (10) trading day period ending on the trading day prior to the date that notice of exercise is received by the Warrant Agent from the holder of such Warrants or its securities broker or intermediary. The date that notice of “cashless exercise” is received by the Warrant Agent shall be conclusively determined by the Warrant Agent. In connection with the “cashless exercise” of a Public Warrant, the Company shall, upon request, provide the Warrant Agent with an opinion of counsel for the Company (which shall be an outside law firm with securities law experience) stating that (i) the exercise of the Warrants on a
“cashless basis” in accordance with this subsection 7.4.1 is not required to be registered under the Act and (ii) the Class A ordinary shares issued upon such exercise shall be freely tradable under United States federal securities laws by anyone who is not an affiliate (as such term is defined in Rule 144 under the Act) of the Company and, accordingly, shall not be required to bear a restrictive legend. Except as provided in subsection 7.4.2, for the avoidance of doubt, unless and until all of the Warrants have been exercised or have expired, the Company shall continue to be obligated to comply with its registration obligations under the first three sentences of this subsection 7.4.1.
7.4.2 Cashless Exercise at Company’s Option. If the Class A ordinary shares are at the time of any exercise of a Public Warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security” under Section 18(b)(1) of the Act, the Company may, at its option, (i) require holders of Public Warrants who exercise Public Warrants to exercise such Public Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Act as described in subsection 7.4.1 and (ii) in the event the Company so elects, the Company shall (x) not be required to file or maintain in effect a registration statement for the registration, under the Act, of the Class A ordinary shares issuable upon exercise of the Warrants, notwithstanding anything in this Agreement to the contrary, and (y) use its commercially reasonable efforts to register or qualify for sale the Class A ordinary shares issuable upon exercise of the Public Warrant under applicable blue sky laws of the state of the residence of the holder to the extent an exemption is not available.
8. Concerning the Warrant Agent and Other Matters.
8.1 Payment of Taxes. The Company shall from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant Agent in respect of the issuance or delivery of Class A ordinary shares upon the exercise of the Warrants, but the Company shall not be obligated to pay any transfer taxes in respect of the Warrants or such shares.
8.2 Resignation, Consolidation, or Merger of Warrant Agent.
8.2.1 Appointment of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the holder of a Warrant (who shall, with such notice, submit his, her or its Warrant for inspection by the Company), then the holder of any Warrant may apply to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Warrant Agent at the Company’s cost. Any successor Warrant Agent, whether appointed by the Company or by such court, shall be a corporation organized and existing under the laws of the State of New York, in good standing and having its principal office in the Borough of Manhattan, City and State of New York, and authorized under such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. After appointment, any successor
Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties, and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.
8.2.2 Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to the predecessor Warrant Agent and the transfer agent for the Class A ordinary shares not later than the effective date of any such appointment.
8.2.3 Merger or Consolidation of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be consolidated or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Agreement without any further act.
8.3 Fees and Expenses of Warrant Agent.
8.3.1 Remuneration. The Company agrees to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder and shall, pursuant to the obligations under this Agreement, reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably incur in the execution of its duties hereunder.
8.3.2 Further Assurances. The Company agrees to perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing of the provisions of this Agreement.
8.4 Liability of Warrant Agent.
8.4.1 Reliance on Company Statement. Whenever in the performance of its duties under this Agreement the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by the Chief Executive Officer, President or Chief Financial Officer of the Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions of this Agreement.
8.4.2 Indemnity. The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct, fraud or bad faith. The Company agrees to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted by the Warrant Agent in the execution of
this Agreement, except as a result of the Warrant Agent’s gross negligence, willful misconduct, fraud or bad faith.
8.4.3 Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or execution of any Warrant (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant; nor shall it be responsible to make any adjustments required under the provisions of Section 4 hereof or responsible for the manner, method or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Class A ordinary shares to be issued pursuant to this Agreement or any Warrant or as to whether any Class A ordinary shares will when issued be valid and fully paid and non-assessable.
8.5 Acceptance of Agency. The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth and, among other things, shall account promptly to the Company with respect to Warrants exercised and concurrently account for, and pay to the Company, all monies received by the Warrant Agent for the purchase of Class A ordinary shares through the exercise of Warrants.
8.6 Waiver. The Warrant Agent has no rights of set-off or any other right, title, interest or claim of any kind (“Claim”) in, or to any distribution of, the Trust Account (as defined in that certain Investment Management Trust Agreement, dated as of the date hereof, by and between the Company and Continental Stock Transfer & Trust Company as trustee thereunder) and hereby agrees not to seek recourse, reimbursement, payment or satisfaction for any Claim against the Trust Account for any reason whatsoever. The Warrant Agent hereby waives any and all Claims against the Trust Account and any and all rights to seek access to the Trust Account.
9. Miscellaneous Provisions.
9.1 Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns.
9.2 Notices. Any notice, statement or demand authorized by this Agreement to be given or made by the Warrant Agent or by the holder of any Warrant to or on the Company shall be delivered by hand or sent by registered or certified mail or overnight courier service, addressed (until another address is filed in writing by the Company with the Warrant Agent) as follows:
Tiga Acquisition Corp.
250 North Bridge Road, #24-00
Raffles City Tower, Singapore 179101
Attention: Diana Kun Luo, Chief Financial Officer
email: dluo@tigainvestments.com
Any notice, statement or demand authorized by this Agreement to be given or made by the holder of any Warrant or by the Company to or on the Warrant Agent shall be delivered by hand or sent by registered or certified mail or overnight courier service, addressed (until another address is filed in writing by the Company with the Warrant Agent) as follows:
Continental Stock Transfer & Trust Company
1 State Street, 30 FL
New York, New York 10004
Attn: Compliance Department
Any notice, sent pursuant to this Agreement shall be effective, if delivered by hand, upon receipt thereof by the party to whom it is addressed, if sent by overnight courier, on the next business day of the delivery to the courier, and if sent by registered or certified mail on the third day after registration or certification thereof.
with a copy in each case to:
Milbank LLP
55 Hudson Yards
New York, New York 10001
Attn: Rod Miller & David H. Zemans
9.3 Applicable Law. The validity, interpretation and performance of this Agreement and of the Warrants shall be governed in all respects by the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
9.4 Persons Having Rights under this Agreement. Nothing in this Agreement expressed and nothing that may be implied from any of the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties hereto and the Registered Holders of the Warrants, any right, remedy, or claim under or by reason of this Agreement or of any covenant, condition, stipulation, promise, or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors and assigns and of the Registered Holders of the Warrants.
9.5 Examination of the Warrant Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Warrant Agent in the Borough of Manhattan, City and State of New York, for inspection by the Registered Holder of any Warrant. The Warrant Agent may require any such holder to submit such holder’s Warrant for inspection by the Warrant Agent.
9.6 Counterparts. This Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
9.7 Effect of Headings. The section headings herein are for convenience only and are not part of this Agreement and shall not affect the interpretation thereof.
9.8 Amendments. This Agreement may be amended by the parties hereto without the consent of any Registered Holder for the purpose of curing any ambiguity, or curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with respect to matters or questions arising under this Agreement as the parties may deem necessary or desirable and that the parties deem shall not adversely affect the interest of the Registered Holders. All other modifications or amendments, including any amendment to increase the Warrant Price or shorten the Exercise Period and any amendment to the terms of only the Private Placement Warrants and/or the Forward Purchase Warrants, shall require the vote or written consent of the Registered Holders of 65% of the then outstanding Public Warrants and Forward Purchase Warrants. Notwithstanding the foregoing, the Company may lower the Warrant Price or extend the duration of the Exercise Period pursuant to Sections 3.1 and 3.2, respectively, without the consent of the Registered Holders. Notwithstanding anything to the contrary herein, any modification or amendment to the terms of the Forward Purchase Warrants shall require the vote or written consent of the Registered Holders of 65% of the then-outstanding Forward Purchase Warrants.
9.9 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.
Exhibit 4.1
Execution Version
Exhibit A Form of Warrant Certificate
Exhibit B Legend — Private Placement Warrants and Forward Purchase Warrants
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and year first above written.
TIGA ACQUISITION CORP. | ||||
By: | /s/ Diana Luo | |||
Name: | Diana Luo | |||
Title: | Chief Financial Officer |
[Signature Page to Warrant Agreement]
CONTINENTAL STOCK TRANSFER & TRUST COMPANY | ||||
By: | /s/ Erika Young | |||
Name: | Erika Young | |||
Title: | Vice President |
[Signature Page to Warrant Agreement]
EXHIBIT A
Form of Warrant Certificate
[FACE]
Number
Warrants
THIS WARRANT SHALL BE VOID IF NOT EXERCISED PRIOR TO
THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED
FOR IN THE WARRANT AGREEMENT DESCRIBED BELOW
TIGA ACQUISITION CORP.
Incorporated Under the Laws of the Cayman Islands
CUSIP G88672 111
Warrant Certificate
This Warrant Certificate certifies that, [●] or registered assigns, is the registered holder of warrant(s) evidenced hereby (the “Warrants” and each, a “Warrant”) to purchase Class A ordinary shares, $0.0001 par value (the “Class A ordinary shares”), of Tiga Acquisition Corp., a Cayman Islands exempted company (the “Company”). Each Warrant entitles the holder, upon exercise during the period set forth in the Warrant Agreement referred to below, to receive from the Company that number of fully paid and non-assessable Class A ordinary shares as set forth below, at the exercise price (the “Exercise Price”) as determined pursuant to the Warrant Agreement, payable in lawful money (or through “cashless exercise” as provided for in the Warrant Agreement) of the United States of America upon surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent referred to below, subject to the conditions set forth herein and in the Warrant Agreement. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.
Each whole Warrant is initially exercisable for one fully paid and non-assessable Class A ordinary share. No fractional shares will be issued upon exercise of any Warrant. If, upon the exercise of Warrants, a holder would be entitled to receive a fractional interest in a Class A ordinary share, the Company will, upon exercise, round down to the nearest whole number the number of Class A ordinary shares to be issued to the Warrant holder. The number of Class A ordinary shares issuable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement.
The initial Exercise Price per one Class A ordinary share for any Warrant is equal to $11.50 per share. The Exercise Price is subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement.
Subject to the conditions set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised by the end of such Exercise Period, such Warrants shall become void. The Warrants may be redeemed, subject to certain conditions, as set forth in the Warrant Agreement.
Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflicts of laws principles thereof.
TIGA ACQUISITION CORP. | ||
By:
|
||
Name: | ||
Title: Authorized Signatory | ||
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, | ||
as Warrant Agent By: | ||
By:
|
||
Name: | ||
Title: |
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to receive Class A ordinary shares and are issued or to be issued pursuant to a Warrant Agreement dated as of November 23, 2020 (the “Warrant Agreement”), duly executed and delivered by the Company to Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder” meaning the Registered Holders or Registered Holder, respectively) of the Warrants. A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company. Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.
Warrants may be exercised at any time during the Exercise Period set forth in the Warrant Agreement. The holder of Warrants evidenced by this Warrant Certificate may exercise them by surrendering this Warrant Certificate, with the form of Election to Purchase set forth hereon properly completed and executed, together with payment of the Exercise Price as specified in the Warrant Agreement (or through “cashless exercise” as provided for in the Warrant Agreement) at the principal corporate trust office of the Warrant Agent. In the event that upon any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing the number of Warrants not exercised.
Notwithstanding anything else in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration statement covering the issuance of the Class A ordinary shares to be issued upon exercise is effective under the Securities Act and (ii) a prospectus thereunder relating to the Class A ordinary shares is current, except through “cashless exercise” as provided for in the Warrant Agreement.
The Warrant Agreement provides that upon the occurrence of certain events the number of Class A ordinary shares issuable upon exercise of the Warrants set forth on the face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder thereof would be entitled to receive a fractional interest in a Class A ordinary share, the Company shall, upon exercise, round down to the nearest whole number of Class A ordinary shares to be issued to the holder of the Warrant.
Warrant Certificates, when surrendered at the principal corporate trust office of the Warrant Agent by the Registered Holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a shareholder of the Company.
Election to Purchase
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive Class A ordinary shares and herewith tenders payment for such Class A ordinary shares to the order of Tiga Acquisition Corp. (the “Company”) in the amount of $[●] in accordance with the terms hereof. The undersigned requests that a certificate for such Class A ordinary shares be registered in the name of [●], whose address is and that such Class A ordinary shares be delivered to whose address is [●]. If said number of Class A ordinary shares is less than all of the Class A ordinary shares purchasable hereunder, the undersigned requests that a new Warrant Certificate representing the remaining balance of such Class A ordinary shares be registered in the name of [●], whose address is and that such Warrant Certificate be delivered to [●], whose address is [●].
In the event that the Warrant has been called for redemption by the Company pursuant to Section 6.1.2 of the Warrant Agreement and a holder thereof elects to exercise its Warrant pursuant to a Make-Whole Exercise, the number of Class A ordinary shares that this Warrant is exercisable for shall be determined in accordance with subsection 3.3.1(b) or Section 6.1.2 of the Warrant Agreement, as applicable.
In the event that the Warrant is a Private Placement Warrant that is to be exercised on a “cashless” basis pursuant to subsection 3.3.1(b) of the Warrant Agreement, the number of Class A ordinary shares that this Warrant is exercisable for shall be determined in accordance with subsection 3.3.1(b) of the Warrant Agreement.
In the event that the Warrant is to be exercised on a “cashless” basis pursuant to Section 7.4 of the Warrant Agreement, the number of Class A ordinary shares that this Warrant is exercisable for shall be determined in accordance with Section 7.4 of the Warrant Agreement.
In the event that the Warrant may be exercised, to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number of Class A ordinary shares that this Warrant is exercisable for would be determined in accordance with the relevant section of the Warrant Agreement which allows for such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned hereby irrevocably elects to exercise the right, represented by this Warrant Certificate, through the cashless exercise provisions of the Warrant Agreement, to receive Class A ordinary shares. If said number of shares is less than all of the Class A ordinary shares purchasable hereunder (after giving effect to the cashless exercise), the undersigned requests that a new Warrant Certificate representing the remaining balance of such Class A ordinary shares be registered in the name of [●], whose address is and that such Warrant Certificate be delivered to [●], whose address is [●].
[Signature Page Follows]
Date: , 20 | |
(Signature) | |
(Address) | |
(Tax Identification Number) | |
Signature | Guaranteed: |
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED).
EXHIBIT B
LEGEND
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. IN ADDITION, SUBJECT TO ANY ADDITIONAL LIMITATIONS ON TRANSFER DESCRIBED IN THE LETTER AGREEMENT BY AND AMONG TIGA ACQUISITION CORP. (THE “COMPANY”), TIGA SPONSOR LLC AND THE OTHER PARTIES THERETO, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED PRIOR TO THE DATE THAT IS THIRTY (30) DAYS AFTER THE DATE UPON WHICH THE COMPANY COMPLETES ITS INITIAL BUSINESS COMBINATION (AS DEFINED IN THE RECITALS OF THE WARRANT AGREEMENT REFERRED TO HEREIN) EXCEPT TO A PERMITTED TRANSFEREE (AS DEFINED IN SECTION 2 OF THE WARRANT AGREEMENT) WHO AGREES IN WRITING WITH THE COMPANY TO BE SUBJECT TO SUCH TRANSFER PROVISIONS.
SECURITIES EVIDENCED BY THIS CERTIFICATE AND CLASS A ORDINARY SHARES OF THE COMPANY ISSUED UPON EXERCISE OF SUCH SECURITIES SHALL BE ENTITLED TO REGISTRATION RIGHTS UNDER A REGISTRATION RIGHTS AGREEMENT TO BE EXECUTED BY THE COMPANY.
NO. WARRANT
EXHIBIT C
Forward Purchase Agreement
TIGA ACQUISITION CORP.,
|
||
a Cayman Islands Exempted Company
|
||
By:
|
/s/ G. Raymond Zage, III |
|
Name:
|
G. Raymond Zage, III |
|
Title:
|
Chairman and CEO |
2.3. |
Piggyback Registration.
|
2.6. |
Block Trades.
|
4.1. |
Indemnification.
|
5.2. |
Assignment; No Third Party Beneficiaries.
|
|
COMPANY: | ||
|
GRINDR INC. | ||
|
|||
|
By: |
/s/ George Arison | |
|
|
Name: |
George Arison |
|
|
Title: |
Chief Executive Officer |
|
TIGA SVH INVESTMENTS LIMITED |
||
|
|||
|
By: |
/s/ G. Raymond Zage, III |
|
|
|
Name: |
G. Raymond Zage, III |
|
|
Title: |
Director |
|
SPONSOR: |
||
|
TIGA SPONSOR LLC |
||
|
|||
|
By: |
/s/ G. Raymond Zage, III | |
|
|
Name: |
G. Raymond Zage, III |
|
|
Title: |
Member |
|
EXISTING HOLDERS: |
||
|
G. RAYMOND ZAGE, III |
||
|
|||
|
By: |
/s/ G. Raymond Zage, III | |
|
|
Name: |
G. Raymond Zage, III |
|
|
Title: |
Chief Executive Officer |
|
TIGA INVESTMENTS PTE. LTD. |
||
|
|||
|
By: |
/s/ G. Raymond Zage, III | |
|
|
Name: |
G. Raymond Zage, III |
|
|
Title: |
Director |
|
DAVID RYAN |
||
|
|||
|
By: |
/s/ David Ryan |
|
|
|
Name: |
David Ryan |
|
ASHISH GUPTA |
||
|
|||
|
By: |
/s/ Ashish Gupta |
|
|
|
Name: |
Ashish Gupta |
|
CARMAN WONG |
||
|
|||
|
By: |
/s/ Carman Wong |
|
|
|
Name: |
Carman Wong |
|
NEW HOLDER: |
||
|
Longview Capital SVH LLC |
||
|
|||
|
By: |
/s/ James Lu |
|
|
|
Name: |
James Lu |
|
|
Title: |
Manager |
|
NEW HOLDER: |
||
|
Longview Capital Holdings LLC |
||
|
|||
|
By: |
/s/ James Lu |
|
|
|
Name: |
James Lu |
|
|
Title: |
Manager |
|
BEN FALLOON |
||
|
|||
|
By: |
/s/ Ben Falloon |
|
|
|
Name: |
Ben Falloon |
|
NEW HOLDERS: |
||
|
KAG INVESTMENTS PTE. LTD. |
||
|
|||
|
By: |
/s/ Ashish Gupta |
|
|
|
Name: |
Ashish Gupta |
|
|
Title: |
Director |
|
NEW HOLDER: |
||
|
28th Street Ventures, LLC |
||
|
|||
|
By: |
/s/ Michael Gearon |
|
|
|
Name: |
Michael Gearon |
|
|
Title: |
Manager |
|
NEW HOLDER: |
||
|
|||
|
By: |
/s/ Jeffrey Bonforte |
|
|
|
Name: |
Jeffrey Bonforte |
|
NEW HOLDER: |
||
|
Brown Dog Capital LLC |
||
|
|||
|
By: |
/s/ Jeffrey Bonforte |
|
|
|
Name: |
Jeffrey Bonforte |
|
|
Title: |
Managing Member |
|
NEW HOLDER: |
||
|
Longview Capital, LLC |
||
|
|||
|
By: |
/s/ James Lu |
|
|
|
Name: |
James Lu |
|
|
Title: |
Manager |
|
NEW HOLDER: |
||
|
|||
|
By: |
/s/ Gary Hsueh |
|
|
|
Name: |
Gary Hsueh |
|
NEW HOLDER: |
||
|
Sierra Goliath LLC |
||
|
|||
|
By: |
/s/ Gary Hsueh |
|
|
|
Name: |
Gary Hsueh |
|
|
Title: |
Managing Member |
|
NEW HOLDER: |
||
|
|||
|
By: |
/s/ Michael Gearon |
|
|
|
Name: |
Michael Gearon |
|
NEW HOLDER: |
||
|
Catapult GP II LLC |
||
|
|||
|
By: |
/s/ Gary Hsueh |
|
|
|
Name: |
Gary Hsueh |
|
|
Title: |
Manager |
|
NEW HOLDER: |
||
|
|||
|
By: |
/s/ James Fu Bin Lu |
|
|
|
Name: |
James Fu Bin Lu |
|
By: |
|
|
|
|
Name: |
|
|
|
Title: |
|
GRINDR INC. |
|||
By: |
|||
|
Name: |
||
Title: |
1. |
James Fu Bin Lu
|
2. |
Catapult GP II LLC
|
3. |
Gary C. Hsueh
|
4. |
Sierra Goliath LLC
|
5. |
Jeffrey C. Bonforte
|
6. |
Brown Dog Capital LLC
|
7. |
Tiga SVH Investments Limited
|
8. |
Tiga Investments Pte. Ltd.
|
9. |
G. Raymond Zage, III
|
10. |
J. Michael Gearon, Jr.
|
11. |
28th Street Ventures, LLC
|
12. |
Ashish Gupta
|
13. |
KAG Investments Pte Ltd
|
14. |
David Ryan
|
15. |
Carman Wong
|
16. |
Longview Capital, LLC
|
17. |
Longview Capital SVH LLC
|
18. |
Longview Capital Holdings LLC
|
A. |
Indemnitee’s service to the Company substantially benefits the
Company.
|
1. |
Definitions.
|
7. |
Additional Indemnification.
|
(e) |
if prohibited by the DGCL or other applicable law.
|
10. |
Procedures for Notification and Defense of Claim.
|
11. |
Procedures upon Application for Indemnification.
|
12. |
Presumptions and Effect of Certain Proceedings.
|
13. |
Remedies of Indemnitee.
|
Grindr Inc.
|
||
By:
|
||
Name:
|
||
Title:
|
[indemnitee name]
|
||
Address:
|
||
Optionholder:
|
||
Date of Grant:
|
||
Vesting Commencement Date:
|
||
Number of Shares of Common Stock Subject to Option:
|
||
Exercise Price (Per Share):
|
||
Total Exercise Price:
|
||
Expiration Date:
|
Type of Grant:
|
[Incentive Stock Option] OR [Nonstatutory Stock Option]
|
Exercise and
Vesting Schedule:
|
Subject to the Optionholder’s Continuous Service through each applicable vesting date, the Option will vest as follows:
|
[ ]
|
• |
The Option is governed by this Stock Option Grant Notice (this “Grant Notice”), and the provisions of the Plan and the Stock Option Agreement and the Notice of Exercise, all of
which are made a part of this document. Unless otherwise provided in the Plan, this Grant Notice and the Stock Option Agreement (together, the “Option Agreement”) may not be
modified, amended or revised except in a writing signed by you and a duly authorized officer of the Company.
|
• |
[If the Option is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options granted to you) cannot be first exercisable for more than $100,000 in value (measured by exercise
price) in any calendar year. Any excess over $100,000 is a Nonstatutory Stock Option.]1
|
• |
You consent to receive this Grant Notice, the Stock Option Agreement, the Plan, the Prospectus and any other Plan-related documents by electronic delivery and to participate in the Plan through an on-line or electronic system established
and maintained by the Company or another third party designated by the Company.
|
• |
You have read and are familiar with the provisions of the Plan, the Stock Option Agreement, the Notice of Exercise and the Prospectus. In the event of any conflict between the provisions in this Grant Notice, the Stock Option Agreement,
the Notice of Exercise, or the Prospectus and the terms of the Plan, the terms of the Plan shall control.
|
• |
The Option Agreement sets forth the entire understanding between you and the Company regarding the acquisition of Common Stock and supersedes all prior oral and written agreements, promises and/or representations on that subject with the
exception of other equity awards previously granted to you and any written employment agreement, offer letter, severance agreement, written severance plan or policy, or other written agreement between the Company and you in each case that
specifies the terms that should govern this Option.
|
• |
Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act or other applicable law) or other transmission
method and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.
|
Grindr Inc.
|
Optionholder:
|
|||
By:
|
||||
Signature
|
Signature
|
|||
Title:
|
Date:
|
|||
Date:
|
[ADDRESS]
|
Date of Exercise: _______________
|
Type of option (check one):
|
Incentive ☐
|
Nonstatutory ☐
|
|
Date of Grant:
|
_______________
|
||
Number of Shares as
to which Option is
exercised:
|
_______________
|
||
Certificates to be
issued in name of:
|
_______________
|
||
Total exercise price:
|
$______________
|
||
Cash, check, bank draft or money order delivered herewith:
|
$______________
|
||
Value of ________ Shares delivered herewith:
|
$______________
|
||
Regulation T Program (cashless exercise):
|
$______________
|
||
Value of _______ Shares pursuant to net exercise:
|
$______________
|
Very truly yours,
|
|
Participant:
|
||
Date of Grant:
|
||
Vesting Commencement Date:
|
||
Number of Restricted Stock Units:
|
Vesting Schedule:
|
[______________________________________________________].
|
Notwithstanding the foregoing, vesting shall terminate upon the Participant’s termination of Continuous Service.
|
|
Issuance Schedule:
|
One share of Common Stock will be issued at the time set forth in Section 6 of the Agreement for each restricted stock unit which vests.
|
• |
The RSU Award is governed by this RSU Award Grant Notice (the “Grant Notice”), and the provisions of the Plan and the Agreement, all of which are made a part of this document.
Unless otherwise provided in the Plan, this Grant Notice and the Agreement (together, the “RSU Award Agreement”) may not be modified, amended or revised except in a writing signed
by you and a duly authorized officer of the Company.
|
• |
You consent to receive this Grant Notice, the Agreement, the Plan, the Prospectus and any other Plan-related documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and
maintained by the Company or another third party designated by the Company.
|
• |
You have read and are familiar with the provisions of the Plan, the RSU Award Agreement and the Prospectus. In the event of any conflict between the provisions in the RSU Award Agreement, or the Prospectus and the terms of the Plan, the
terms of the Plan shall control.
|
• |
The RSU Award Agreement sets forth the entire understanding between you and the Company regarding the acquisition of Common Stock and supersedes all prior oral and written agreements, promises and/or representations on that subject with
the exception of: (i) other equity awards previously granted to you, and (ii) any written employment agreement, offer letter, severance agreement, written severance plan or policy, or other written agreement between the Company and you in
each case that specifies the terms that should govern this RSU Award.
|
Attachments: |
RSU Award Agreement, 2022 Equity Incentive Plan, Prospectus
|
Principal Amount: Not to Exceed $2,000,000
(See Schedule A)
|
Dated as of March 16, 2022
|
2. |
Interest. No interest shall accrue on the unpaid
balance of this Note.
|
5. |
Conversion
|
6. |
Remedies.
|
TIGA ACQUISITION CORP.
|
||
By:
|
/s/ George Raymond Zage III
|
|
Name:
|
George Raymond Zage IIII
|
|
Title:
|
Chairman, Director and CEO
|
By:
|
/s/ Ashish Gupta
|
|
Name: Ashish Gupta
|
||
Title: Manager
|
TIGA ACQUISITION CORP.
|
||
By:
|
/s/ George Raymond Zage III
|
|
Name:
|
George Raymond Zage IIII
|
|
Title:
|
Chairman, Director and CEO
|
By:
|
/s/ Ashish Gupta
|
|
Name: Ashish Gupta
|
||
Title: Manager
|
Date
|
Drawing
|
Description
|
Principal Balance
|
|||
January 25, 2022
|
$750,000
|
Working Capital
|
$750,000
|
|||
March 30, 2022
|
$300,000
|
Working Capital
|
$1,050,000
|
|||
May 12, 2022
|
$430,000
|
Working Capital
|
$1,480,000
|
|||
June 27, 2022
|
$200,000
|
Working Capital
|
$1,680,000
|
|||
September 28, 2022
|
$100,000
|
Working Capital
|
$1,780,000
|
TIGA ACQUISITION CORP.
|
||
By:
|
/s/ Diana Luo
|
|
Name:
|
Diana Luo
|
|
Title:
|
Chief Financial Officer
|
ACCEPTED AND AGREED:
|
||
/s/ G. Raymond Zage, III
|
||
For and on behalf of Tiga Sponsor LLC
|
||
Name:
|
G. Raymond Zage, III
|
|
Title:
|
Manager
|
NAME OF PERMITTED TRANSFEREE: | ||||||
SAN VICENTE PARENT LLC | ||||||
|
| |
|
| |
|
|
| |
By:
|
| |
|
|
| |
|
| |
Name:
|
|
| |
|
| |
Title:
|
|
| |
|
| |
|
Address for Notices: | ||||||
|
| |
|
| |
|
E-mail: | ||||||
|
| |
|
| |
|
Fax: | ||||||
|
| |
|
| |
|
|
| |
Total number of Forward Purchase Shares/Backstop Shares Transferred: 10,000,000
|
|||
|
| |
|
| |
|
|
| |
Number of Forward Purchase Warrants/Backstop Warrants Transferred: 5,000,000
|
|||
|
| |
|
| |
|
|
| |
Aggregate Purchase Price for Forward Purchase Securities/Backstop Securities Transferred:
$100,000,000
|
|||
|
| |
|
| |
|
COMPANY: | ||||||
|
| |
|
| ||
TIGA ACQUISITION CORP. | ||||||
|
| |
|
| |
|
|
| |
By:
|
| |
|
|
| |
|
| |
Name:
|
|
| |
|
| |
Title:
|
SPONSOR: | ||||||
TIGA SPONSOR LLC | ||||||
|
| |
|
| |
|
|
| |
By:
|
| |
|
|
| |
|
| |
Name:
|
|
| |
|
| |
Title:
|
1.
|
| |
James Fu Bin Lu
|
2.
|
| |
Longview Capital Holdings LLC
|
3.
|
| |
Catapult GP II LLC
|
4.
|
| |
Gary C. Hsueh
|
5.
|
| |
Sierra Goliath LLC
|
6.
|
| |
Jeffrey C. Bonforte
|
7.
|
| |
Brown Dog Capital LLC
|
8.
|
| |
Idoya Partners L.P.
|
9.
|
| |
San Vicente Holdings LLC
|
10.
|
| |
San Vicente Group Holdings LLC
|
11.
|
| |
G. Raymond Zage, III
|
12.
|
| |
J. Michael Gearon, Jr.
|
13.
|
| |
28th Street Ventures, LLC
|
14.
|
| |
Ashish Gupta
|
15.
|
| |
KAG Investments Pte Ltd
|
16.
|
| |
David Ryan
|
17.
|
| |
Carman Wong
|
18.
|
| |
Ben Falloon
|
NAME OF PERMITTED TRANSFEREE:
|
|||
SAN VICENTE PARENT LLC
|
|||
By:
|
/s/ James Lu
|
||
Name:
|
James Lu | ||
Title:
|
President | ||
Address for Notices:
|
|||
c/o Longview Capital, LLC
428 East Street, Suite E
Grinnell, IA 50112
|
|||
E-mail: james@longviewcapital.org
|
|||
Fax:
|
|||
Total number of Forward Purchase Shares/Backstop Shares Transferred: 10,000,000
|
|||
Number of Forward Purchase Warrants/Backstop Warrants Transferred: 5,000,000
|
|||
Aggregate Purchase Price for Forward Purchase Securities/Backstop Securities Transferred: $100,000,000
|
|
COMPANY: |
||
|
TIGA ACQUISITION CORP. |
||
|
|
|
|
|
By: |
/s/ Ashish Gupta |
|
|
|
Name: |
Ashish Gupta |
|
|
Title: |
Director |
|
|
|
|
|
SPONSOR: |
||
|
TIGA SPONSOR LLC |
||
|
|
|
|
|
By: |
/s/ Ashish Gupta | |
|
|
Name: |
Ashish Gupta |
|
|
Title |
Manager |
TIGA ACQUISITION CORP.
|
||
By:
|
/s/ Diana Luo
|
|
Name:
|
Diana Luo
|
|
Title:
|
Chief Financial Officer
|
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
|
||
By:
|
/s/ Erika Young
|
|
Name:
|
Erika Young
|
|
Title:
|
Vice President
|
Legal Name
|
Date of Formation
|
Jurisdiction of Incorporation
|
Grindr Gap LLC (f/k/a San Vicente Gap LLC)
|
2/24/2020
|
Delaware
|
Grindr Capital LLC (f/k/a San Vicente Capital LLC)
|
2/19/2020
|
Delaware
|
Grindr Holdings LLC (f/k/a Grindr Inc., f/k/a KL Grindr Holdings Inc.)
|
6/17/2020
|
Delaware
|
Grindr LLC
|
12/31/2015
|
California
|
Grindr Canada Inc.
|
11/23/2020
|
British Columbia, Canada
|
Blendr LLC
|
11/2/2010
|
California
|
• |
Grindr announces the closing of business combination with Tiga Acquisition Corp.
|
• |
Grindr is a profitable leader in the world of LGBTQ social networking platforms with a highly engaged user base in a large and untapped addressable market (“TAM”) of
estimated $4 billion for 2022 and serving a highly coveted audience
|
• |
On average, users on Grindr’s platform sent over 260 million daily messages in 2021, and spent an average of 61 minutes per day on the Grindr app in December 2021
|
• |
H1’22 non-GAAP revenue was approximately $90MM and H1’22 adjusted EBITDA was approximately $42MM for , representing a period-over-period growth of 44% in non-GAAP
revenue and 26% in adjusted EBITDA, respectively
|
•
|
Revenues of $50.4 million and $38.2 million, respectively. The increase was $12.2 million, or
31.9%.
|
•
|
Net Income (Loss) of $(4.7) million and $1.9 million, respectively. The decrease was $6.6
million, or (347.4)%.
|
•
|
Adjusted EBITDA of $24.0 million and $20.5 million, respectively. The increase was $3.5 million, or 17.1%.
|
•
|
Revenue of $140.5 million and $100.8 million, respectively. The increase was $39.7 million,
or 39.4%.
|
•
|
Net Income (Loss) of $(4.3) million and $(1.4) million, respectively. The decrease was $2.9
million, or (207.1)%.
|
•
|
Adjusted EBITDA of $65.8 million and $53.7 million, respectively. The increase was $12.1 million, or 22.5%.
|
•
|
Revenue of $145.8 million, $61.1 million, and $43.4 million, respectively. The increase for the year ended December 31, 2021 compared to the combined Successor 2020 Period and Predecessor 2020 Period was
$41.3 million, or 39.5%.
|
•
|
Net Income (Loss) of $5.1 million, $(11.0) million, and $(2.1) million, respectively. The increase for the year ended December 31, 2021 compared to the combined Successor 2020 Period and Predecessor 2020
Period was $18.2 million, or 138.9%.
|
•
|
Adjusted EBITDA of $77.1 million, $35.7 million, and $14.9 million, respectively. The increase for the year ended December 31, 2021 compared to the combined Successor 2020 Period and Predecessor 2020 Period
was $26.5 million, or 52.4%. See the section titled “Non-GAAP Financial Measures—Adjusted EBITDA” for more details on the calculations.
|
(in thousands, except Adjusted ARPPU, ARPPU and ARPU)
|
Three
Months
Ended
September 30,
2022
|
Three
Months
Ended
September 30,
2021
|
Nine
Months
Ended
September 30,
2022
|
Nine
Months
Ended
September 30,
2021
|
|||||||
Key Operating Metrics
|
|||||||||||
Paying Users
|
815
|
611
|
768
|
577
|
|||||||
Adjusted Average Direct Revenue per Paying User
|
$
|
17.67
|
$
|
16.66
|
$
|
17.12
|
$
|
15.72
|
|||
Average Direct Revenue per Paying User
|
$
|
17.67
|
$
|
16.66
|
$
|
17.12 |
$
|
15.55
|
|||
Average Total Revenue per User
|
$
|
1.35
|
$
|
1.15
|
$
|
1.29
|
$
|
1.06
|
Successor
|
Predecessor
|
|||||||||||
(in thousands, except Adjusted ARPPU, ARPPU and ARPU)
|
Year ended
December 31,
2021
|
Period from
June 11, 2020
to December 31,
2020
|
Period from
January 1,
2020 to June 10,
2020
|
Year ended
December 31,
2019
|
||||||||
Key Operating Metrics
|
||||||||||||
Paying Users
|
601
|
579
|
601
|
618
|
||||||||
Adjusted Average Direct Revenue per Paying User
|
$
|
16.21
|
$
|
14.88
|
$
|
12.44
|
$
|
11.33
|
||||
Average Direct Revenue per Paying User
|
$
|
16.08
|
$
|
12.76
|
$
|
12.44
|
$
|
11.32
|
||||
Monthly Active Users
|
10,799
|
N/A
|
N/A
|
N/A
|
||||||||
Average Total Revenue per User
|
$
|
1.13
|
N/A
|
N/A
|
N/A
|
($ in thousands)
|
Three Months
Ended
September 30,
2022
|
Three Months
Ended
September 30,
2021
|
Nine Months
Ended
September 30,
2022
|
Nine Months
Ended
September 30,
2021
|
||||||||||||
Key Financial and Non-GAAP Metrics(1)
|
||||||||||||||||
Revenue
|
$
|
50,402
|
$
|
38,249
|
$
|
140,487
|
$
|
100,812
|
||||||||
Adjusted Direct Revenue
|
$
|
43,209
|
$
|
30,537
|
$
|
118,364
|
$
|
81,625
|
||||||||
Indirect Revenue
|
7,193
|
7,712
|
22,123
|
20,079
|
||||||||||||
Net income (loss)
|
$
|
(4,663
|
)
|
$
|
1,894
|
$
|
(4,343
|
)
|
$
|
(1,433
|
)
|
|||||
Net income (loss) margin
|
-9.3
|
%
|
5.0
|
%
|
-3.1
|
%
|
-1.4
|
%
|
||||||||
Adjusted EBITDA
|
$
|
24,034
|
$
|
20,492
|
$
|
65,778
|
$
|
53,698
|
||||||||
Adjusted EBITDA Margin
|
47.7
|
%
|
53.6
|
%
|
46.8
|
%
|
53.3
|
%
|
||||||||
Net cash provided by operating activities
|
$
|
36,794
|
$
|
18,852
|
Successor
|
Predecessor
|
|||||||||||||||
($ in thousands)
|
Year ended
December 31,
2021
|
Period from
June 11, 2020
to December 31,
2020
|
Period from
January 1,
2020 to June 10,
2020
|
Year ended
December 31,
2019
|
||||||||||||
Key Financial and Non-GAAP Metrics(1)
|
||||||||||||||||
Revenue
|
$
|
145,833
|
$
|
61,078
|
$
|
43,385
|
$
|
108,698
|
||||||||
Adjusted Direct Revenue
|
$
|
116,931
|
$
|
57,462
|
$
|
39,844
|
$
|
84,046
|
||||||||
Indirect Revenue
|
$
|
29,802
|
$
|
11,810
|
$
|
3,545
|
$
|
24,698
|
||||||||
Net income (loss)
|
$
|
5,064
|
$
|
(10,959
|
) |
$
|
(2,114
|
) |
$
|
7,706
|
||||||
Net income (loss) margin
|
3.5
|
%
|
(17.9
|
)% |
(4.9
|
)% |
7.1
|
% |
||||||||
Adjusted EBITDA
|
$
|
77,054
|
$
|
35,733
|
$
|
14,924
|
$
|
50,453
|
||||||||
Adjusted EBITDA Margin
|
52.8
|
%
|
58.5
|
% |
34.4
|
% |
46.4
|
% |
||||||||
Net cash provided by operating activities
|
$
|
34,430
|
$
|
9,602
|
$
|
16,456
|
$
|
37,973
|
(1)
|
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Grindr—Non-GAAP Financial Measures” for
additional information and a reconciliation of net income (loss) to Adjusted EBITDA and Adjusted EBITDA Margin and reconciliation of Direct Revenue to Adjusted Direct Revenue.
|
•
|
Paying Users. A Paying User is a user that has purchased or renewed a Grindr subscription and/or purchased a premium add-on on the Grindr App. We calculate Paying Users as a monthly average, by counting
the number of Paying Users in each month and then dividing by the number of months in the relevant measurement period. Paying Users is a primary metric that we use to judge the health of our business and our ability to convert users to
purchasers of our premium features. We are focused on building new products and services and improving on existing products and services, as well as launching new pricing tiers and subscription plans, to drive payer conversion.
|
•
|
ARPPU. We calculate ARPPU based on Direct Revenue in any measurement period, divided by Paying Users in such a period divided by the number of months in the period.
|
•
|
Adjusted ARPPU. We calculate adjusted ARPPU based on Adjusted Direct Revenue (excluding purchase accounting adjustments) in any measurement period, divided by Paying Users in such a period divided by the
number of months in the period.
|
•
|
MAUs. A MAU, or Monthly Active User, is a unique device that demonstrated activity on the Grindr App over the course of the specified period. Activity on the app is defined as opening the app, chatting
with another user, or viewing the cascade of other users. Grindr also excludes devices where all linked profiles have been banned for spam. We calculate MAUs as a monthly average, by counting the number of MAUs in each month and then
dividing by the number of months in the relevant period. We use MAUs to measure the number of active users on our platform on a monthly basis and to understand the pool of users we can potentially convert to Paying Users. We revised our
MAU calculation method in November 2020. For periods prior to this, our ability to accurately validate the newly defined metric is restricted by privacy related data retention policies; therefore, MAU is not presented for any periods
prior to 2021.
|
•
|
ARPU. We calculate ARPU based on Total Revenue in any measurement period, divided by our MAUs in such a period divided by the number of months in the period. As we expand our monetization product
offerings, develop new verticals, and grow our community of users, we believe we can continue to increase our ARPU.
|
•
|
Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) excluding income tax provision, interest expense, depreciation and amortization, stock-based compensation expense, non-core expenses/losses
(gains). Non-core expenses/losses (gains) include purchase accounting adjustments related to deferred revenue, transaction-related costs, asset impairments, management fees, and interest income from the related party loan to Catapult GP
II. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of revenue.
|
•
|
Adjusted Direct Revenue. We define Adjusted Direct Revenue as Direct Revenue adjusted for the release of the fair value adjustment of deferred revenue into revenue of the acquired deferred revenue due to
the June 10, 2020, acquisition (See Note 3 to Grindr’s audited consolidated financial statements beginning on page F-82 of the final prospectus and definitive proxy statement for additional information).
|
Results of Operations
|
Successor
|
Predecessor
|
|||||||||||||||||||||||||
($ in thousands)
|
Year ended
December 31,
2021
|
% of
Total
Revenue
|
Period
from
June 11,
2020 to
December 31,
2020
|
% of
Total
Revenue
|
Period
from
January 1,
2020 to
June 10,
2020
|
% of
Total
Revenue
|
Year
ended
December 31,
2019
|
% of
Total
Revenue
|
|||||||||||||||||||
Consolidated Statements of Operations and Comprehensive Income (Loss)
|
|||||||||||||||||||||||||||
Revenues
|
$
|
145,833
|
100.0
|
%
|
$
|
61,078
|
100.0
|
%
|
$
|
43,385
|
100.0
|
%
|
$
|
108,698
|
100.0
|
%
|
|||||||||||
Operating costs and expenses
|
|||||||||||||||||||||||||||
Cost of revenue (exclusive of depreciation and amortization shown separately below)
|
37,358
|
25.6
|
%
|
18,467
|
30.2
|
%
|
12,954
|
29.9
|
%
|
27,545
|
25.3
|
%
|
|||||||||||||||
Selling, general and administrative expenses
|
30,618
|
21.0
|
%
|
15,671
|
25.7
|
%
|
15,583
|
36.0
|
%
|
32,573
|
30.0
|
%
|
|||||||||||||||
Product development expense
|
10,913
|
7.5
|
%
|
7,278
|
11.9
|
%
|
7,136
|
16.4
|
%
|
11,059
|
10.2
|
%
|
|||||||||||||||
Depreciation and amortization
|
43,234
|
29.6
|
%
|
17,639
|
28.9
|
%
|
10,642
|
24.5
|
%
|
27,412
|
25.2
|
%
|
|||||||||||||||
Total operating costs and expenses
|
122,123
|
83.7
|
%
|
59,055
|
96.7
|
%
|
46,315
|
106.8
|
%
|
98,589
|
90.7
|
%
|
|||||||||||||||
Income (loss) from operations
|
23,710
|
16.3
|
%
|
2,023
|
3.3
|
%
|
(2,930
|
)
|
-6.8
|
%
|
10,109
|
9.3
|
%
|
||||||||||||||
Other (expense) income
|
|||||||||||||||||||||||||||
Interest (expense) income, net
|
(18,698
|
)
|
-12.8
|
%
|
(15,082
|
)
|
-24.7
|
%
|
277
|
0.6
|
%
|
386
|
0.3
|
%
|
|||||||||||||
Other income (expense), net
|
1,288
|
0.9
|
%
|
142
|
0.2
|
%
|
(76
|
)
|
-0.2
|
%
|
(348
|
)
|
-0.3
|
%
|
|||||||||||||
Total other (expense) income
|
(17,410
|
)
|
-11.9
|
%
|
(14,940
|
)
|
-24.5
|
%
|
201
|
0.4
|
%
|
38
|
—
|
%
|
|||||||||||||
Net income (loss) before income tax
|
6,300
|
4.3
|
%
|
(12,917
|
)
|
-21.1
|
%
|
(2,729
|
)
|
-6.3
|
%
|
10,147
|
9.3
|
%
|
|||||||||||||
Income tax provision (benefit)
|
1,236
|
0.8
|
%
|
(1,958
|
)
|
-3.2
|
%
|
(615
|
)
|
-1.4
|
%
|
2,441
|
2.2
|
%
|
|||||||||||||
Net income (loss) and comprehensive income (loss)
|
$
|
5,064
|
3.5
|
%
|
$
|
(10,959
|
)
|
-17.9
|
%
|
$
|
(2,114
|
)
|
-4.9
|
%
|
$
|
7,706
|
7.1
|
%
|
|||||||||
Net income (loss) per share
|
$
|
0.05
|
$
|
(0.11
|
)
|
$
|
(0.02
|
)
|
$
|
0.08
|
Successor
|
Predecessor
|
|||||||||||||||
Year ended
December 31,
2021
|
From June 11,
2020 through
December 31,
2020
|
From January 1,
2020 through
June 10,
2020
|
Year ended
December 31,
2019
|
|||||||||||||
Current income tax provision (benefit):
|
||||||||||||||||
Federal
|
$
|
4,828
|
$
|
1,461
|
$
|
760
|
$
|
341
|
||||||||
State
|
711
|
521
|
193
|
(73
|
)
|
|||||||||||
International
|
9
|
—
|
—
|
—
|
||||||||||||
Total current tax provision (benefit):
|
5,548
|
1,982
|
953
|
268
|
||||||||||||
Deferred income tax provision (benefit):
|
||||||||||||||||
Federal
|
(4,436
|
)
|
(3,552
|
)
|
(1,304
|
)
|
2,170
|
|||||||||
State
|
124
|
(388
|
)
|
(264
|
)
|
3
|
||||||||||
International
|
—
|
—
|
—
|
—
|
||||||||||||
Total deferred tax provision (benefit)
|
(4,312
|
)
|
(3,940
|
)
|
(1,568
|
)
|
2,173
|
|||||||||
Total income tax provision (benefit)
|
$
|
1,236
|
$
|
(1,958
|
)
|
$
|
(615
|
)
|
$
|
2,441
|
Results of Operations
|
||||||||||||||||||||||||||||
($ in thousands)
|
Three
Months
Ended
September
30,
2022
|
% of
Total
Revenue
|
|
Three
Months
Ended
September
30,
2021
|
% of
Total
Revenue
|
|
Nine
Months
Ended
September
30,
2022
|
% of
Total
Revenue
|
|
Nine
Months
Ended
September
30,
2021
|
% of
Total
Revenue
|
|||||||||||||||||
Consolidated Statements of Operations and Comprehensive Income (Loss)
|
||||||||||||||||||||||||||||
Revenues
|
$
|
50,402
|
100.0
|
%
|
$
|
38,249
|
100.0
|
%
|
|
$
|
140,487
|
100.0
|
%
|
|
$
|
100,812
|
100.0
|
%
|
||||||||||
Operating costs and expenses
|
||||||||||||||||||||||||||||
Cost of revenue (exclusive of depreciation and amortization shown separately below)
|
12,955
|
25.7
|
%
|
9,621
|
25.2
|
%
|
36,758
|
26.2
|
%
|
25,723
|
25.5
|
%
|
||||||||||||||||
Selling, general and administrative expenses
|
20,331
|
40.3
|
%
|
8,335
|
21.8
|
%
|
53,822
|
38.3
|
%
|
21,798
|
21.6
|
%
|
||||||||||||||||
Product development expense
|
4,159
|
8.3
|
%
|
2,841
|
7.4
|
%
|
11,981
|
8.5
|
%
|
7,422
|
7.4
|
%
|
||||||||||||||||
Depreciation and amortization
|
9,097
|
18.0
|
%
|
10,708
|
28.0
|
%
|
27,215
|
19.4
|
%
|
32,534
|
32.3
|
%
|
||||||||||||||||
Total operating costs and expenses
|
46,542
|
92.3
|
%
|
31,505
|
82.4
|
%
|
129,776
|
92.4
|
%
|
87,477
|
86.8
|
%
|
||||||||||||||||
Income (loss) from operations
|
3,860
|
7.7
|
%
|
6,744
|
17.6
|
%
|
10,711
|
7.6
|
%
|
13,335
|
13.2
|
%
|
||||||||||||||||
Other (expense) income
|
||||||||||||||||||||||||||||
Interest (expense) income, net
|
(4,786
|
)
|
(9.5
|
)%
|
(4,300
|
)
|
(11.2
|
)%
|
(10,998
|
)
|
(7.8
|
)%
|
(14,863
|
)
|
(14.7
|
)%
|
||||||||||||
Other income (expense), net
|
(263
|
)
|
(0.5
|
)%
|
(89
|
)
|
(0.2
|
)%
|
(329
|
)
|
(0.2
|
)%
|
(119
|
)
|
(0.1
|
)%
|
||||||||||||
Total other (expense) income
|
(5,049
|
)
|
(10.0
|
)%
|
(4,389
|
)
|
(11.5
|
)%
|
(11,327
|
)
|
(8.1
|
)%
|
(14,982
|
)
|
(14.9
|
)%
|
||||||||||||
Net income (loss) before income tax
|
(1,189
|
)
|
(2.4
|
)%
|
2,355
|
6.2
|
%
|
(616
|
)
|
(0.4
|
)%
|
(1,647
|
)
|
(1.6
|
)%
|
|||||||||||||
Income tax provision (benefit)
|
3,474
|
6.9
|
%
|
461
|
1.2
|
%
|
3,727
|
2.7
|
%
|
(214
|
)
|
(0.2
|
)%
|
|||||||||||||||
Net income (loss) and comprehensive income (loss)
|
$
|
(4,663
|
)
|
(9.3
|
)%
|
$
|
1,894
|
5.0
|
%
|
$
|
(4,343
|
)
|
(3.1
|
)%
|
$
|
(1,433
|
)
|
(1.4
|
)%
|
|||||||||
Net income (loss) per share
|
$
|
(0.04
|
)
|
$
|
0.02
|
$
|
(0.04
|
)
|
$
|
(0.01
|
)
|
($ in thousands)
|
Three Months
Ended
September 30,
2022
|
Three Months
Ended
September 30,
2021
|
Nine Months
Ended
September 30,
2022
|
Nine Months
Ended
September 30,
2021
|
||||||||||||
Reconciliation of Direct Revenue to Adjusted Direct Revenue
|
||||||||||||||||
Direct Revenue
|
$
|
43,209
|
$
|
30,537
|
$
|
118,364
|
$
|
80,733
|
||||||||
Adjustments
|
—
|
—
|
—
|
892
|
||||||||||||
Adjusted Direct Revenue
|
$
|
43,209
|
$
|
30,537
|
$
|
118,364
|
$
|
81,625
|
Successor
|
Predecessor
|
|||||||||||||||
($ in thousands)
|
Year ended
December 31,
2021
|
Period from
June 11, 2020
to December 31,
2020
|
Period from
January 1, 2020
to June 10,
2020
|
Year ended
December 31,
2019
|
||||||||||||
Reconciliation of Direct Revenue to Adjusted Direct Revenue
|
||||||||||||||||
Direct Revenue
|
$
|
116,031
|
$
|
49,268
|
$
|
39,840
|
$
|
84,000
|
||||||||
Adjustments
|
900
|
8,194
|
4
|
46
|
||||||||||||
Adjusted Direct Revenue
|
$
|
116,931
|
$
|
57,462
|
$
|
39,844
|
$
|
84,046
|
($ in thousands)
|
Three Months
Ended
September 30,
2022
|
Three Months
Ended
September 30,
2021
|
Nine Months
Ended
September 30,
2022
|
Nine Months
Ended
September 30,
2021
|
||||||||||||
Reconciliation of net income (loss) to adjusted EBITDA
|
||||||||||||||||
Net income (loss)
|
$
|
(4,663
|
)
|
$
|
1,894
|
$
|
(4,343
|
)
|
$
|
(1,433
|
)
|
|||||
Interest expense (income), net
|
4,786
|
4,300
|
10,998
|
14,863
|
||||||||||||
Income tax provision (benefit)
|
3,474
|
461
|
3,727
|
(214
|
)
|
|||||||||||
Depreciation and amortization
|
9,097
|
10,708
|
27,215
|
32,534
|
||||||||||||
Transaction-related costs (1)
|
1,033
|
1,835
|
2,211
|
2,978
|
||||||||||||
Litigation related costs (2)
|
439
|
231
|
1,521
|
1,378
|
||||||||||||
Stock-based compensation expense
|
9,686
|
664
|
23,353
|
1,806
|
||||||||||||
Management fees (3)
|
181
|
181
|
544
|
543
|
||||||||||||
Purchase accounting adjustment (4)
|
—
|
—
|
—
|
892
|
||||||||||||
Other expenses (income) (5)
|
1
|
218
|
552
|
351
|
||||||||||||
Adjusted EBITDA
|
24,034
|
20,492
|
65,778
|
53,698
|
(1)
|
Transaction related costs represent legal, tax, accounting, consulting, and other professional fees related to the Merger with Grindr and other potential acquisitions,
that are non-recurring in nature.
|
(2)
|
Litigation related costs primarily represent external legal fees associated with the outstanding litigation or regulatory matters such as the potential Datatilsynet fine
or the CFIUS review of the Business Combination, which are unrelated to Legacy Grindr’s core ongoing business operations.
|
(3)
|
Management fees represent administrative costs associated with SVH’s administrative role in managing financial relationships and providing directive on strategic and
operational decisions, which ceased to continue after the closing of the Merger with Grindr.
|
(4)
|
Purchase accounting adjustment includes the effects of the purchase accounting adjustment related to deferred revenue resulting from the June 10, 2020 acquisition.
|
(5)
|
Other expenses (income) primarily represents costs incurred from reorganization events that are unrelated to Grindr’s core ongoing business operations, including severance and employment related
costs which, for the three months ended September 30, 2022 and 2021 are insignificant and for the nine months ended September 30, 2022 and 2021 are $0.5 million and $0.1 million, respectively.
|
Successor
|
Predecessor
|
|||||||||||||||
($ in thousands)
|
Year ended December 31, 2021
|
Period from June 11, 2020 to December 31, 2020
|
Period from January 1, 2020 to June 10, 2020
|
Year ended December 31, 2019
|
||||||||||||
Reconciliation of net income (loss) to adjusted EBITDA
|
||||||||||||||||
Net income (loss)
|
$
|
5,064
|
$
|
(10,959
|
)
|
$
|
(2,114
|
)
|
$
|
7,706
|
||||||
Interest expense (income), net
|
18,698
|
15,082
|
(277
|
)
|
(386
|
)
|
||||||||||
Income tax provision (benefit)
|
1,236
|
(1,958
|
)
|
(615
|
)
|
2,441
|
||||||||||
Depreciation and amortization
|
43,234
|
17,639
|
10,642
|
27,412
|
||||||||||||
Transaction-related costs (1)
|
3,854
|
6,453
|
691
|
—
|
||||||||||||
Litigation related costs (2)
|
1,913
|
70
|
902
|
3,342
|
||||||||||||
Stock-based compensation expense
|
2,485
|
916
|
343
|
6,780
|
||||||||||||
Management fees (3)
|
728
|
444
|
386
|
662
|
||||||||||||
Purchase accounting adjustment (4)
|
900
|
8,194
|
—
|
—
|
||||||||||||
Other expenses (income) (5)
|
(1,058
|
)
|
(148
|
)
|
4,966
|
2,496
|
||||||||||
Adjusted EBITDA
|
$
|
77,054
|
$
|
35,733
|
$
|
14,924
|
$
|
50,453
|
(1)
|
Transaction related costs incurred during the year ended December 31, 2021 consist of legal, tax, accounting, consulting, and other professional fees related to the
Merger with Tiga and other potential acquisitions, that are non-recurring in nature. Transaction related costs incurred during the combined 2020 Successor and Predecessor period consist of legal, tax, accounting, consulting, and
other professional fees related to SVH’s indirect acquisition of Legacy Grindr from Kunlun in June 2020.
|
(2)
|
For the year ended December 31, 2021, litigation related costs primarily represent external legal fees associated with the outstanding litigation or regulatory matters
such as the potential Datatilsynet fine or the CFIUS review of the Business Combination, which are unrelated to Legacy Grindr’s core ongoing business operations. For the combined 2020
Successor and Predecessor period and year ended December 31, 2020, litigation related costs primarily represent external legal fees associated with the outstanding litigation or regulatory matters the CFIUS review of SVH’s
indirect acquisition of Legacy Grindr, which are unrelated to Legacy Grindr’s core ongoing business operations.
|
(3)
|
Management fees represent administrative costs associated with SVH’s administrative role in managing financial relationships and providing directive on strategic and
operational decisions, which will not continue after the closing of the Merger with Grindr.
|
(4)
|
Purchase accounting adjustment includes the effects of the purchase accounting adjustment related to deferred revenue resulting from the June 10, 2020 acquisition.
|
(5)
|
For the year ended December 31, 2021, other expenses (income) primarily represents costs incurred from reorganization events that are unrelated to Legacy Grindr’s core ongoing business operations, including severance and employment related costs of $0.5 million offset by PPP loan forgiveness income of $1.5 million. For the combined 2020 Successor and
Predecessor period, other expenses (income) primarily represents a one-time settlement of $5.5 million related to the outstanding incentive units that were settled upon SVH’s indirect acquisition of Legacy
Grindr. For year ended December 31, 2019, other expenses (income) primarily represents public readiness preparation costs of $1.4 million, as well as restructuring costs of $0.6 million that are unrelated to Grindr’s core
ongoing business operations.
|
Successor
|
Predecessor
|
|||||||||||||||
($ in thousands)
|
Year ended
December 31, 2021
|
Period from
June 11, 2020 to
December 31, 2020
|
Period from
January 1, 2020 to
June 10, 2020
|
Year ended
December 31, 2019
|
||||||||||||
Cash and cash equivalents, including restricted cash (as of the end of period)
|
$
|
17,170
|
$
|
42,786
|
$
|
66,454
|
$
|
47,950
|
||||||||
Net cash provided by (used in):
|
||||||||||||||||
Operating activities
|
34,430
|
9,602
|
16,456
|
37,973
|
||||||||||||
Investing activities
|
(3,797
|
)
|
(264,991
|
)
|
534
|
(4,684
|
)
|
|||||||||
Financing activities
|
(56,249
|
)
|
298,175
|
1,514
|
—
|
|||||||||||
Net change in cash and cash equivalents
|
$
|
(25,616
|
)
|
$
|
42,786
|
$
|
18,504
|
$
|
33,289
|
($ in thousands)
|
Nine Months
Ended
September
30, 2022
|
Nine Months
Ended
September
30, 2021
|
||||||
Cash, and cash equivalents, including restricted cash (as of the end of period)
|
$
|
28,628
|
$
|
56,047
|
||||
Net cash provided by (used in):
|
||||||||
Operating activities
|
$
|
36,794
|
$
|
18,852
|
||||
Investing activities
|
$
|
(3,773
|
)
|
$
|
(2,340
|
)
|
||
Financing activities
|
$
|
(21,563
|
)
|
$
|
(3,251
|
)
|
||
Net change in cash and cash equivalents
|
$
|
11,458
|
$
|
13,261
|
•
|
the historical unaudited financial statements of Tiga as of and for the three and nine months ended September 30, 2022 and the historical audited financial statements
of Tiga as of and for the year ended December 31, 2021;
|
|
•
|
the historical unaudited condensed consolidated financial statements of Legacy Grindr as of and for the three and nine months ended September 30, 2022 and the
historical audited consolidated financial statements of Legacy Grindr as of and for the year ended December 31, 2021; and
|
|
•
|
other information relating to Tiga and Legacy Grindr included in the Proxy Statement/Prospectus and this Current Report on Form 8-K, including the Merger Agreement.
|
•
|
the cancellation and exchange of all 111,294,372 issued and outstanding Legacy Grindr ordinary units into 156,139,170 shares of Grindr Common Stock, as adjusted by the
Exchange Ratio. The shares include 6,497,591 shares of Grindr Common Stock associated with the Series P share based compensation units,
|
|
• |
the conversion on a one-to-one basis of 6,840,000 of founder shares held by Tiga’s Sponsor and 60,000 founder shares held by independent directors
into Domesticated Tiga Common Stock upon the Domestication, and Grindr Common Stock upon the Closing,
|
|
• |
the conversion on a one-to-one basis of 485,233 issued and outstanding Tiga Class A ordinary shares into Domesticated Tiga Common Stock upon the
Domestication, and Grindr Common Stock upon the Closing,
|
|
•
|
the capital distribution of $128.8 million to former Legacy Grindr unitholders, and
|
|
•
|
the cancellation and exchange of all 3,635,681 granted and outstanding vested and unvested Legacy Grindr Options into 5,100,637 Grindr Options exercisable for shares of Grindr Common
Stock with the same terms and vesting conditions, each of which adjusted by the Exchange Ratio. Unvested Legacy Grindr Options did not accelerate nor vest on the consummation of the Business Combination.
|
•
|
the filing and effectiveness of our amended and restated certificate of incorporation and the effectiveness of our amended and restated bylaws, each of which occurred
immediately prior to the Effective Time;
|
||
•
|
the sale and issuance of 10,000,000 shares of Grindr Common Stock to Tiga Sponsor’s assignee, San Vicente Parent LLC (“SV Parent”) (which shares were ultimately
issued to Legacy Grindr in connection with the SV Consolidation, as further described below), pursuant to the Forward Purchase Agreement at $10.00 per share.
|
||
•
|
For each share issued under the Forward Purchase Agreement, the forward purchaser received 0.50 redeemable warrants.
|
||
•
|
Upon the issuance of the 10,000,000 shares of Grindr Common Stock in connection with the A&R Forward Purchase Agreement, 5,000,000 redeemable warrants were issued
with the same terms and exercise prices as the existing public warrants.
|
||
•
|
the partial cash settlement of $12.0 million of the shareholder loan with Catapult GP II, an investor in Legacy Grindr, which occurred subsequent to the latest
balance sheet date and before the closing of the Business Combination;
|
||
•
|
The issuance of new term loan facilities through a modification of the existing Legacy Grindr Credit Agreement in connection with the Business Combination shown below
(“New Debt”).
|
||
•
|
A $137.0 million facility, net
of $3.8 million in fees, bearing interest at the Secured Overnight Financing Rate “SOFR” + 8.0% to mature in 5 years, and an additional $29.2 million facility, net of $0.8 million in fees, bearing interest at SOFR + 4.2%, to mature in 18 months, with 25% of the principal being due within one year.
|
•
|
In connection with the acquisition of Legacy Grindr in 2020, the San Vicente Entities as of September 30, 2022, had a cash obligation to pay $155.0 million on June
20, 2023 to Kunlun. This obligation is recorded by the San Vicente Entities at the present value of these payments due in the future (“Deferred Payment”).
The Deferred Payment is recorded as a liability by SV Acquisition and in connection with the SV Consolidation was contributed to Legacy Grindr as an adjustment to equity. For further information on the Deferred Payment refer to Note 3 of
Legacy Grindr’s historical audited financial statements for the year ended December 31, 2021, incorporated herein by reference.
|
|
•
|
To reflect the effects of the SV Consolidation, the balance sheet presented in the Unaudited Pro Forma Combined Financial Information reflects the Deferred Payment as
a liability balance, as well as other asset and liability adjustments to reflect Legacy Grindr’s assumption of the San Vicente Entities’ historical bases of net assets as though the SV Consolidation occurred on September 30, 2022. To reflect
the effects of the SV Consolidation, the historical income statement periods presented in the Unaudited Pro Forma Combined Financial Information reflect the interest expense and related tax effects associated with the Deferred Payment as
though the SV Consolidation occurred on January 1, 2021.
|
|
•
|
In connection with the Business Combination, the Company and Kunlun agreed to settle the Deferred Payment within ten business days of the Closing. The difference
between the assumed carrying value of the Deferred Payment at the time of settlement on November 14, 2022 and the $155,000 obligation will be recognized in the amount of $12,250, which has been recorded as a loss on extinguishment of debt in
the period it was extinguished.
|
|
• |
In connection with the Business Combination, the board of managers of Legacy Grindr approved a distribution of $2.55 per unit of Series X Ordinary Units of Grindr amounting to $283,801 to Series X Ordinary Unit holders as of the close of
business on November 14, 2022 (the “Distribution”). As part of the Distribution, SV Group Holdings elected to receive a partial payment of its distribution in cash and the remainder of its distribution, $155,000, in the form of a promissory
note (the “Promissory Note”) on November 15, 2022. The Promissory Note, which would bear interest at 4.03% per annum beginning thirty days after issuance, is to be repaid no later than January 15, 2023 with all accrued interest. SV Group
Holdings in turn issued promissory notes to its parent companies, SVEJV and SV Group TopCo, totaling $155,000. SVEJV in turn issued a promissory note for its pro rata portion to SV Group Topco, which then issued a promissory note in the
amount of $155,000 to SV Acquisition, a wholly owned subsidiary of SV Parent. In addition, Catapult GP II elected to apply a portion of its distribution totaling $13,737 as a partial payment of the Note described in Note 5 of Legacy Grindr’s
unaudited financial statements for each of the three and nine months ended September 30, 2022 and 2021 filed as Exhibit 99.4 to this Current Report on Form 8-K, in the amount of $12,020, which comprised $1,280 of the accrued interest and
$10,740 of the principal. The approved Distribution, excluding the Promissory Note described above, was paid on various dates in November 2022.
|
|
• |
Prior to Closing and in connection with SV
Consolidation, but after Parent satisfied in full its funding obligations under the Forward Purchase Agreement to Tiga, SV Parent merged with and into Legacy Grindr (the “SV Merger”). In consideration for Legacy Grindr’s assumption of SV
Parent’s rights to receive the securities issuable by Tiga under the Forward Purchase Agreement, Legacy Grindr issued 7,127,896 Legacy Grindr Series X Ordinary Units to SV Cayman and entered into that certain warrant agreement with SV
Cayman, pursuant to which, upon the terms and subject to the conditions set forth therein, SV Cayman was entitled to purchase 3,563,948 Series X Ordinary Units of Grindr Group at a purchase price per share of $16.13. Such warrant and the
Legacy Grindr Series X Ordinary Units were ultimately exchanged at the Closing into shares of Grindr Common Stock and a warrant to purchase shares of Grindr Common Stock in accordance with the terms of the Merger Agreement.
|
•
|
Legacy Grindr unitholders have a relative majority of the voting power of Grindr;
|
|
•
|
Legacy Grindr unitholders have the ability to nominate the majority of the members of the board of directors;
|
|
•
|
Legacy Grindr senior management comprises the senior management roles of Grindr and are responsible for the day-to-day operations
|
|
•
|
The relative size of Legacy Grindr is significantly larger compared to Tiga;
|
|
•
|
Grindr assumed the Legacy Grindr name; and
|
|
•
|
The intended strategy and operations of Grindr continue Legacy Grindr’s historical strategy and operations in the post-combination company.
|
|
Pro Forma Combined (7)
|
|||||||
|
Number of
Shares
|
%
Ownership
|
||||||
Sponsor and certain affiliates(1)(2)
|
6,900,000
|
4.0
|
%
|
|||||
Public Shareholders(3)
|
485,233
|
0.2
|
%
|
|||||
Forward Purchase Investors(4)
|
10,000,000
|
5.8
|
%
|
|||||
Former Legacy Grindr unitholders(5)(6)
|
156,139,170
|
90.0
|
%
|
|||||
Total
|
173,524,403
|
100.0
|
%
|
(1)
|
Reflects 6,840,000 of founder shares held by Tiga’s Sponsor and 60,000 founder shares held by independent directors that converted into Domesticated Tiga Common Stock
at the Domestication, then into Grindr Common Stock upon Closing.
|
(2)
|
Excludes 18,560,000 of private placement warrants as the warrants are not
in the money at Closing. Excludes 1,780,000 of private placement warrants available to be issued in the event the $1.8 million related party note disclosed in Tiga’s historical financial statements is converted to warrants upon Closing. The related party note was repaid in cash in connection with the Closing as
the conversion price was approximately 145% higher than the value of the warrants as of the Closing.
|
(3)
|
Excludes 13,800,000 public warrants as the warrants are not in the money at Closing.
|
(4)
|
Reflects the sale and issuance of 10,000,000 shares of Grindr Common Stock to certain investors (including the Sponsor and its Affiliates) through the A&R Forward
Purchase Agreement at $10.00 per share and excludes the additional 5,000,000 redeemable warrants that were issued in connection with the 10,000,000 shares of Grindr Common Stock. On November 15, 2022, the Sponsor assigned its obligations
under the Backstop Commitment and the Forward Purchase Commitment to San Vicente Parent LLC. San Vicente Parent LLC satisfied its obligations under the A&R Forward Purchase Agreement. As part of the SV Consolidation, San Vicente Parent
LLC merged into Legacy Grindr and Legacy Grindr
assumed the rights and all remaining obligations of San Vicente Parent LLC under the A&R Forward Purchase Agreement, and received the shares of Grindr Common Stock and redeemable warrants issuable thereunder.
|
(5)
|
Excludes 5,100,637 shares of Grindr Common Stock issued to the former Legacy Grindr unitholders for their historical option awards which were converted at the Exchange Ratio. The former Legacy Grindr unitholders figures include 6,497,591 shares of Grindr Common Stock associated with the Series P share based compensation units described in “Beneficial Ownership of Securities”.
|
(6)
|
Reflects distributions to former Legacy Grindr unitholders of $283.8 million. Grindr and Kunlun entered into an agreement to settle the Deferred Payment within ten
business days of the Closing. These distributions combined with the $83.3 million distributions paid as disclosed in the Statements of Members’ Equity in Legacy Grindr’s historical
unaudited financial statements make up the total distribution as referenced in the Merger Agreement of $367.1 million.
|
(7)
|
Reflects redemptions of 27,114,767 public Tiga Class A ordinary shares in connection with the transaction at
approximately $10.50 per share
based on trust account figures prior to the Closing on November 18, 2022.
|
Tiga
(Historical) |
Grindr
(Historical) |
SV Consolidation
|
Transaction Accounting Adjustments
|
Pro Forma Combined
|
||||||||||||||||||
Assets
|
||||||||||||||||||||||
Current assets:
|
||||||||||||||||||||||
Cash and cash equivalents
|
$
|
100
|
$
|
27,236
|
$
|
-
|
$
|
170,800
|
(2)
|
$
|
3,890
|
|||||||||||
-
|
(4,137
|
)
|
(3)
|
|||||||||||||||||||
-
|
(1,780
|
)
|
(4)
|
|||||||||||||||||||
-
|
289,755
|
(5)
|
||||||||||||||||||||
-
|
(21,654
|
)
|
(6)
|
|||||||||||||||||||
-
|
100,000
|
(8)
|
||||||||||||||||||||
-
|
(128,800
|
)
|
(9)
|
|||||||||||||||||||
-
|
12,031
|
(10)
|
||||||||||||||||||||
-
|
(155,000
|
)
|
(11)
|
|||||||||||||||||||
-
|
(284,661
|
)
|
(16)
|
|||||||||||||||||||
Accounts receivable, net of allowances
|
-
|
18,433
|
-
|
-
|
18,433
|
|||||||||||||||||
Prepaid expenses
|
47
|
4,336
|
-
|
-
|
4,383
|
|||||||||||||||||
Deferred charges
|
-
|
3,749
|
-
|
-
|
3,749
|
|||||||||||||||||
Other current assets
|
-
|
8,087
|
-
|
(8,086
|
)
|
(6)
|
1
|
|||||||||||||||
Total current assets
|
147
|
61,841
|
-
|
(31,532
|
)
|
30,456
|
||||||||||||||||
Restricted cash
|
-
|
1,392
|
-
|
-
|
1,392
|
|||||||||||||||||
Investments held in Trust Account
|
288,842
|
-
|
-
|
(288,842
|
)
|
(5)
|
-
|
|||||||||||||||
Property and equipment, net
|
-
|
2,134
|
-
|
-
|
2,134
|
|||||||||||||||||
Capitalized software development costs, net
|
-
|
6,916
|
-
|
-
|
6,916
|
|||||||||||||||||
Intangible assets, net
|
-
|
113,335
|
-
|
-
|
113,335
|
|||||||||||||||||
Goodwill
|
-
|
258,619
|
17,084
|
(1a)
|
-
|
275,703
|
||||||||||||||||
Deposits and other assets
|
-
|
761
|
-
|
-
|
761
|
|||||||||||||||||
Total assets
|
$
|
288,989
|
$
|
444,998
|
$
|
17,084
|
$
|
(320,374
|
)
|
$
|
430,697
|
|||||||||||
Liabilities and Shareholders’ Equity
|
||||||||||||||||||||||
Current liabilities:
|
||||||||||||||||||||||
Accounts payable
|
$
|
-
|
$
|
1,913
|
$
|
-
|
$
|
(792
|
)
|
(6)
|
$
|
1,121
|
||||||||||
Accrued expenses and other current liabilities
|
7,761
|
10,429
|
(35
|
) |
(1b)
|
(8,119
|
)
|
(6)
|
10,036
|
|||||||||||||
Related party payable
|
1,780
|
-
|
-
|
(1,780
|
)
|
(4)
|
-
|
|||||||||||||||
Current Deferred Payment
|
-
|
-
|
140,093
|
(1c)
|
(140,093
|
)
|
(11)
|
-
|
||||||||||||||
Debt, current
|
-
|
5,040
|
-
|
8,908 |
(2) |
13,948
|
||||||||||||||||
Deferred revenue
|
-
|
18,732
|
-
|
-
|
18,732
|
|||||||||||||||||
Total current liabilities
|
9,541
|
36,114
|
140,058
|
(141,876
|
)
|
43,837
|
||||||||||||||||
Debt, non-current
|
-
|
189,663
|
-
|
161,892
|
(2)
|
347,418
|
||||||||||||||||
-
|
(4,137
|
)
|
(3)
|
|||||||||||||||||||
Deferred Payment
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||
Deferred tax liabilities
|
-
|
17,317
|
3,127
|
(1b)
|
(3,127
|
)
|
(11)
|
17,317
|
||||||||||||||
Forward Purchase Agreement liability
|
8,079
|
-
|
-
|
(8,079
|
)
|
(8)
|
-
|
|||||||||||||||
Warrant liability
|
22,328
|
-
|
-
|
3,450
|
(8)
|
25,778
|
||||||||||||||||
Deferred underwriting fee liability
|
9,660
|
-
|
-
|
(9,660
|
)
|
(7)
|
-
|
|||||||||||||||
Other non-current liabilities
|
-
|
169
|
-
|
-
|
169
|
|||||||||||||||||
Total liabilities
|
49,608
|
243,263
|
143,185
|
(1,537
|
)
|
434,519
|
||||||||||||||||
Commitments and contingencies:
|
||||||||||||||||||||||
Class A ordinary shares subject to possible redemption
|
288,842
|
-
|
-
|
(4,181
|
)
|
(12)
|
-
|
|||||||||||||||
(284,661
|
)
|
(16)
|
||||||||||||||||||||
Equity:
|
||||||||||||||||||||||
Preference shares
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||
Common Stock (par value $0.0001 per share)
|
-
|
-
|
-
|
1
|
(8)
|
18
|
||||||||||||||||
-
|
16
|
(13)
|
||||||||||||||||||||
-
|
-
|
(12)
|
||||||||||||||||||||
-
|
1
|
(14)
|
||||||||||||||||||||
Ordinary units
|
-
|
1
|
(1
|
) |
(1d)
|
-
|
-
|
|||||||||||||||
Class A ordinary shares
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||
Class B ordinary shares
|
1
|
-
|
-
|
(1
|
)
|
(14)
|
-
|
|||||||||||||||
Additional paid-in-capital
|
-
|
211,972
|
(126,100
|
) |
(1d)
|
104,628
|
(8)
|
19,951
|
||||||||||||||
-
|
(128,800
|
)
|
(9)
|
|||||||||||||||||||
-
|
(19,056
|
)
|
(6)
|
|||||||||||||||||||
-
|
(16
|
)
|
(13)
|
|||||||||||||||||||
-
|
4,181
|
(12)
|
||||||||||||||||||||
-
|
(49,462
|
)
|
(15)
|
|||||||||||||||||||
-
|
12,031
|
(10)
|
||||||||||||||||||||
9,660
|
(7)
|
|||||||||||||||||||||
-
|
913
|
(5)
|
||||||||||||||||||||
Accumulated deficit
|
(49,462
|
)
|
(10,238
|
)
|
-
|
(1,773
|
)
|
(6)
|
(23,791
|
)
|
||||||||||||
-
|
(11,780
|
)
|
(11)
|
|||||||||||||||||||
-
|
49,462
|
(15)
|
||||||||||||||||||||
Total shareholders’ equity (deficit)
|
(49,461
|
)
|
201,735
|
(126,101
|
) |
(29,995
|
)
|
(3,822
|
)
|
|||||||||||||
Total liabilities and shareholders’ equity (deficit)
|
$
|
288,989
|
$
|
444,998
|
$
|
17,084
|
$ |
(320,374
|
)
|
$
|
430,697
|
Tiga
(Historical) |
Grindr
(Historical) |
SV Consolidation
|
Transaction Accounting Adjustments
|
Pro Forma Combined
|
||||||||||||||||||
Revenue
|
$
|
-
|
$
|
140,487
|
$
|
-
|
$
|
-
|
$
|
140,487
|
||||||||||||
Operating cost and expense:
|
||||||||||||||||||||||
Cost of revenue (exclusive of depreciation and amortization shown separately below)
|
-
|
36,758
|
-
|
-
|
36,758
|
|||||||||||||||||
Selling, general and administrative expense
|
-
|
53,822
|
-
|
8,976
|
(18) |
62,798
|
||||||||||||||||
Product development expense
|
-
|
11,981
|
-
|
-
|
11,981
|
|||||||||||||||||
Depreciation and amortization
|
-
|
27,215
|
-
|
-
|
27,215
|
|||||||||||||||||
Operating costs
|
8,976
|
-
|
-
|
(8,976
|
)
|
(18)
|
|
-
|
||||||||||||||
Total operating cost and expense
|
8,976
|
129,776
|
-
|
-
|
138,752
|
|||||||||||||||||
Income (loss) from operations
|
(8,976
|
)
|
10,711
|
-
|
-
|
1,735
|
||||||||||||||||
Other income (expense):
|
||||||||||||||||||||||
Interest income (expense), net
|
-
|
(10,998
|
)
|
(19,155
|
)
|
(17a)
|
|
(13,561
|
)
|
(19)
|
|
(24,559
|
)
|
|||||||||
-
|
19,155
|
(20)
|
|
|||||||||||||||||||
Other (expense) income, net
|
-
|
(329
|
)
|
-
|
-
|
(329
|
)
|
|||||||||||||||
Interest earned on investments held in Trust Account
|
1,702
|
-
|
-
|
(1,702
|
)
|
(21)
|
|
-
|
||||||||||||||
Fair value of private placement warrants in excess of purchase price
|
(81
|
)
|
-
|
-
|
-
|
(81
|
)
|
|||||||||||||||
Change in fair value of warrant liabilities
|
1,733
|
-
|
-
|
100
|
(22)
|
|
1,833
|
|||||||||||||||
Change in fair value of forward purchase agreement liabilities
|
(3,071
|
)
|
-
|
-
|
3,071
|
(22)
|
|
-
|
||||||||||||||
Total other income (expense)
|
283
|
(11,327
|
)
|
(19,155
|
)
|
7,063
|
(23,136
|
)
|
||||||||||||||
Net income (loss) before income tax
|
(8,693
|
)
|
(616
|
)
|
(19,155
|
)
|
7,063
|
(21,401
|
)
|
|||||||||||||
Income tax provision (benefit)
|
-
|
3,727
|
(4,919
|
)
|
(17b)
|
|
1,219
|
(23)
|
|
27 |
|
|||||||||||
Net income (loss)
|
$
|
(8,693
|
)
|
$
|
(4,343
|
)
|
$
|
(14,236
|
)
|
$
|
5,844
|
$
|
(21,428
|
)
|
||||||||
Pro Forma Earnings Per Share
|
||||||||||||||||||||||
Basic
|
$
|
(0.12
|
)
|
|||||||||||||||||||
Diluted
|
$
|
(0.12
|
)
|
|||||||||||||||||||
Pro Forma Number of Shares Used in Computing EPS
|
||||||||||||||||||||||
Basic (#)
|
173,524,403
|
|||||||||||||||||||||
Diluted (#)
|
173,524,403
|
Tiga
(Historical) |
Grindr
(Historical) |
SV Consolidation
|
Transaction Accounting Adjustments
|
Pro Forma Combined
|
||||||||||||||||||
Revenue
|
$
|
-
|
$
|
145,833
|
$
|
-
|
$
|
-
|
$
|
145,833
|
||||||||||||
Operating cost and expense:
|
||||||||||||||||||||||
Cost of revenue (exclusive of depreciation and amortization shown separately below)
|
-
|
37,358
|
-
|
-
|
37,358
|
|||||||||||||||||
Selling, general and administrative expense
|
-
|
30,618
|
-
|
1,761
|
(18) |
32,379
|
||||||||||||||||
Product development expense
|
-
|
10,913
|
-
|
-
|
10,913
|
|||||||||||||||||
Depreciation and amortization
|
-
|
43,234
|
-
|
-
|
43,234
|
|||||||||||||||||
Operating costs
|
1,761
|
-
|
-
|
(1,761
|
)
|
(18)
|
-
|
|||||||||||||||
Total operating cost and expense
|
1,761
|
122,123
|
-
|
-
|
123,884
|
|||||||||||||||||
Income (loss) from operations
|
(1,761
|
)
|
23,710
|
-
|
21,949
|
|||||||||||||||||
Other income (expense):
|
||||||||||||||||||||||
Interest income (expense), net
|
-
|
(18,698
|
)
|
(26,597
|
)
|
(17a)
|
(19,981
|
)
|
(19)
|
(38,679
|
)
|
|||||||||||
-
|
26,597
|
(20)
|
||||||||||||||||||||
Other (expense) income, net
|
-
|
1,288
|
-
|
(11,780
|
)
|
(24)
|
(12,265
|
)
|
||||||||||||||
-
|
(1,773
|
)
|
(25)
|
|||||||||||||||||||
Interest earned on investments held in Trust Account
|
85
|
-
|
-
|
(85
|
)
|
(21)
|
-
|
|||||||||||||||
Change in fair value of warrant liabilities
|
23,121
|
-
|
-
|
4,553
|
(22)
|
27,674
|
||||||||||||||||
Change in fair value of forward purchase agreement liabilities
|
1,750
|
-
|
-
|
(1,750
|
)
|
(22)
|
-
|
|||||||||||||||
Total other income (expense)
|
24,956
|
(17,410
|
)
|
(26,597
|
)
|
(4,219
|
)
|
(23,270
|
)
|
|||||||||||||
Net income (loss) before income tax
|
23,195
|
6,300
|
(26,597
|
)
|
(4,219
|
)
|
(1,321
|
)
|
||||||||||||||
Income tax provision (benefit)
|
-
|
1,236
|
(5,985
|
)
|
(17b)
|
(6,572
|
)
|
(23)
|
(11,321
|
)
|
||||||||||||
Net income (loss)
|
$
|
23,195
|
$
|
5,064
|
$
|
(20,612
|
)
|
$
|
2,353
|
$
|
10,000
|
|||||||||||
Pro Forma Earnings Per Share
|
||||||||||||||||||||||
Basic
|
$
|
0.06
|
||||||||||||||||||||
Diluted
|
$
|
0.06
|
||||||||||||||||||||
Pro Forma Number of Shares Used in Computing EPS
|
||||||||||||||||||||||
Basic (#)
|
173,524,403
|
|||||||||||||||||||||
Diluted (#)
|
173,580,739
|
• |
the historical unaudited financial statements of Tiga as of and for the three and nine months ended September 30, 2022 and the historical audited financial statements
of Tiga as of and for the year ended December 31, 2021;
|
|
• |
the historical unaudited condensed consolidated financial statements of Legacy Grindr as of and for the three and nine months ended September 30, 2022 and the
historical audited consolidated financial statements of Legacy Grindr as of and for the year ended December 31, 2021; and
|
|
• |
other information relating to Tiga and Legacy Grindr included in the Proxy Statement/Prospectus and this Current Report on Form 8-K, including the Merger Agreement.
|
1.
|
Reflects the contribution of the San Vicente Entities from the SV Consolidation as a contribution of assets and liabilities between entities under common control.
This transfer of assets between entities under common control does not result in a change in reporting entity requiring retrospective restatement of the historical financial statements. The Company considered the following factors in making
this determination: the San Vicente Entities are considered non-substantive holding companies, the Legacy Grindr management structure
will remain in place subsequent to the SV Consolidation, and the discussion of the business in this Registration Statement centers around Legacy Grindr,
not the San Vicente Entities. The contribution of these balances is at historical cost assuming the SV Consolidation occurred on September 30, 2022. The table below reflects major balance sheet line items of both the San Vicente Entities and
Legacy Grindr and excludes line items where there is no difference between the historical balances. The adjustments and their explanations
are as follows:
|
San Vicente
Offshore Holdings
(Cayman) Limited
and Subsidiaries
(Historical)
|
Grindr
(Historical)
|
SV Consolidation
Adjustments
|
Reorganized
Grindr
|
||||||||||||||
Assets
|
|||||||||||||||||
Current assets:
|
|||||||||||||||||
Total current assets
|
61,841
|
61,841
|
—
|
61,841
|
|||||||||||||
Goodwill
|
275,703
|
258,619
|
17,084
|
(1a)
|
275,703
|
||||||||||||
Total assets
|
$
|
462,082
|
$
|
444,998
|
$
|
17,084
|
$
|
462,082
|
|||||||||
Liabilities and Shareholders’ Equity
|
|||||||||||||||||
Current liabilities:
|
|||||||||||||||||
Accrued expenses and other current liabilities
|
10,394
|
10,429
|
(35
|
)
|
(1b)
|
10,394
|
|||||||||||
Current Deferred Payment
|
140,093
|
—
|
140,093
|
(1c)
|
140,093
|
||||||||||||
Total current liabilities
|
176,172
|
36,114
|
140,058
|
176,172
|
|||||||||||||
Deferred tax liabilities
|
20,444
|
17,317
|
3,127
|
(1b)
|
20,444
|
||||||||||||
Total liabilities
|
386,448
|
243,263
|
143,185
|
386,448
|
|||||||||||||
Equity:
|
|||||||||||||||||
Ordinary units
|
—
|
1
|
(1
|
)
|
(1d)
|
—
|
|||||||||||
Additional paid-in-capital
|
119,739
|
211,972
|
(92,233
|
)
|
(1d)
|
119,739
|
|||||||||||
Accumulated deficit
|
(54,373
|
)
|
(10,238
|
)
|
(44,135
|
)
|
(1d)
|
(54,373
|
)
|
||||||||
Equity attributable to noncontrolling interest
|
10,268
|
—
|
10,268
|
(1d)
|
—
|
||||||||||||
Total shareholders’ equity (deficit)
|
75,634
|
201,735
|
(126,101
|
)
|
65,366
|
||||||||||||
Total liabilities and shareholders’ equity (deficit)
|
$
|
462,082
|
$
|
444,998
|
$
|
17,084
|
$
|
462,082
|
1a.
|
Reflects the assumption of the historical goodwill balance from SV Acquisition’s acquisition of Legacy Grindr. The difference in goodwill is related to tax basis differences associated with the Deferred Payment at the San Vicente Entities.
|
|
1b.
|
Reflects the assumption of additional historical accrued expenses and other current liabilities and deferred tax liabilities of the San Vicente Entities related to
the interest expense deductibility of the Deferred Payment.
|
|
1c.
|
Reflects the assumption of a liability for the Deferred Payment of $140.1 million, which represents the present value of the Deferred Payment, calculated by
discounting the current $155.0 million balance due in June 2023 by 15.7%.
|
|
1d.
|
Reflects the assumption of the net assets of the San Vicente Entities as an adjustment to additional paid-in-capital. Also reflects the elimination of the
noncontrolling interest in Legacy Grindr at the San Vicente Entities level, as subsequent to the SV Consolidation, the San Vicente
Entities will merge into Legacy Grindr. Legacy
Grindr will continue to own 100% of its consolidated subsidiaries.
|
|
2.
|
Reflects gross proceeds of
$170.8 million from the issuance of the New Debt.
|
3.
|
Reflects the recognition of
$4.1 million of deferred financing costs associated with the issuance of the New Debt.
|
4.
|
Reflects the cash disbursement for the $1.8 million repayment on the related party note, which was used to pay for transaction costs incurred by Tiga.
|
5.
|
Reflects the liquidation and reclassification of $288.8 million of investments held in the trust account to cash and cash equivalents that becomes available for
funding redemptions and general corporate use by Grindr. Also reflects the recognition of $0.9 million of additional investments held in the trust account at Closing compared to the balance as of September 30, 2022 in cash and cash
equivalents, with an increase to additional paid in capital for the incremental investments held in the trust account at Closing.
|
6.
|
Reflects the cash disbursement for the direct and incremental transaction costs of $21.7 million, including $18.0 million and $3.7 million paid by Tiga and Legacy Grindr, respectively in connection with the Business Combination prior to, or concurrent with the Closing.
Tiga’s transaction costs includes a $5.0 million success fee payable to Raine on the successful close of the Business Combination.
A portion of Legacy Grindr’s transaction costs are reflected as an increase of $1.8 million to the accumulated deficit due to $1.4 million of transaction costs allocated to the liability classified warrants and $0.4 million of third party debt costs incurred as discussed in (25). This adjustment reflects the reclassification of deferred issuance costs of Legacy Grindr that were paid or accrued and recorded in ‘Other current assets’ in Legacy Grindr’s historical financial statements as of September 30, 2022. The cash disbursements above eliminate $7.8 million and $0.4 million of the transaction costs accrued in ‘Accrued expenses and other current liabilities’ for Tiga and Legacy Grindr, respectively as well as the elimination of $0.8 million of ‘Accounts payable’ in Legacy Grindr’s historical financial statements as of September 30, 2022. |
7.
|
Reflects the forfeiture of $9.7 million of deferred underwriting fees incurred during Tiga’s initial public offering and due upon the Closing as discussed in the
section “Summary of the Proxy Statement/Prospectus—Recent Development” within the Proxy Statement/Prospectus.
|
8.
|
Reflects the sale and issuance of 10,000,000 shares of Grindr Common Stock to certain investors (including the Sponsor and its Affiliates) through the Forward
Purchase Commitment and the Backstop Commitment at $10.00 per share. This adjustment also reflects the elimination of the Forward Purchase Liability and establishment of additional Warrant Liabilities. Upon exercise of the Forward Purchase
Commitment and the Backstop Commitment an additional 5,000,000 public warrants are outstanding.
|
9.
|
Reflects the cash distributed to former owners of Legacy Grindr through a capital distribution declared prior to the closing of the Transaction and paid at Closing of $128.8 million.
|
10.
|
Subsequent to the latest balance sheet date, in connection with the
Transaction, prior to Closing, the Company received $12.0 million in cash from Catapult GP II to partially settle the shareholder loan which is reflected as an increase to cash of $12.0 million and an increase to additional paid-in-capital.
|
11.
|
Reflects the $155.0 million cash payment to former unitholders of Legacy Grindr
to extinguish the remaining Deferred Payment discussed in (1c), in connection with Closing. The extinguishment of the remaining Deferred Payment results in an estimated loss on extinguishment of $14.9 million reflecting the difference between
the carrying value at September 30, 2022 and the settlement value of $155.0 million. Also reflects the reversal of $3.1 million of deferred tax liabilities related to the future interest expense that was to be recognized on the Deferred
Payment interest accretion in (1b).
|
12.
|
Reflects the reclassification of Tiga’s Class A ordinary shares
subject to possible redemption into permanent equity and immediate conversion of 27,600,000 shares of Tiga’s Class A ordinary shares into
shares of Domesticated Tiga Common Stock at Domestication, then Grindr Common Stock upon Closing, on a one-to-one basis in connection with the Business Combination.
|
13.
|
Represents the issuance of 156,139,170 shares of Grindr Common Stock to holders of Legacy Grindr ordinary units at the Closing pursuant to the Merger Agreement to effect the reverse recapitalization.
|
14.
|
Reflects the conversion of all 6,900,000 shares of Tiga’s Class B ordinary shares into shares of Domesticated Tiga Common Stock at Domestication, then Grindr Common
Stock upon Closing, on a one-to-one basis in connection with the Business Combination.
|
15.
|
Reflects the elimination of Tiga’s historical accumulated deficit with a corresponding adjustment to Additional paid-in-capital for Grindr in connection with the
reverse recapitalization at the Closing.
|
16.
|
Reflects the cash disbursed to redeem 27,114,767 public shares of Tiga’s Class A ordinary shares, which converted into
Domesticated Tiga Common Stock at Domestication, then Grindr Common Stock upon Closing, in connection with the Business Combination at a redemption price of approximately $10.50 per share based on funds held in the trust account.
|
17.
|
Reflects the contribution of the San Vicente Entities from the SV Consolidation as a contribution of assets and liabilities between entities under common control
assuming the SV Consolidation occurred on January 1, 2021. The table below reflects major income statement line items of both the San Vicente Entities and Legacy Grindr and excludes line items where there is no difference between the
historical balances. The adjustments and their explanations are as follows:
|
|
San Vicente
Offshore Holdings
(Cayman) Limited
and Subsidiaries
(Historical)
|
Grindr
(Historical)
|
SV
Consolidation
Adjustments
|
Reorganized
Grindr
|
|||||||||||||
Revenue
|
$
|
140,487
|
$
|
140,487
|
$
|
—
|
$
|
140,487
|
|||||||||
Operating cost and expense:
|
|||||||||||||||||
Total operating cost and expense
|
129,776
|
129,776
|
—
|
129,776
|
|||||||||||||
Income (loss) from operations
|
10,711
|
10,711
|
—
|
10,711
|
|||||||||||||
Other income (expense):
|
|||||||||||||||||
Interest income (expense), net
|
(30,153
|
)
|
(10,998
|
)
|
(19,155
|
)
|
(17a)
|
(30,153
|
)
|
||||||||
Total other income (expense)
|
(30,482
|
)
|
(11,327
|
)
|
(19,155
|
)
|
(30,482
|
)
|
|||||||||
Net income (loss) before income tax
|
(19,771
|
)
|
(616
|
)
|
(19,155
|
)
|
(19,771
|
)
|
|||||||||
Income tax provision (benefit)
|
(1,192
|
) |
3,727
|
(4,919
|
)
|
(17b)
|
(1,192
|
)
|
|||||||||
Net income (loss)
|
(18,579
|
)
|
(4,343
|
)
|
(14,236
|
)
|
(18,579
|
)
|
|||||||||
Less: Income/(loss) attributable to non-controlling interest
|
(434
|
)
|
—
|
(434
|
)
|
(17c)
|
$
|
—
|
|||||||||
Net income (loss) attributable to controlling interest
|
$
|
(18,145
|
)
|
$
|
(4,343
|
)
|
$
|
(13,802
|
)
|
$
|
(18,579
|
)
|
|
San Vicente
Offshore Holdings
(Cayman) Limited
and Subsidiaries
(Historical)
|
Grindr
(Historical)
|
SV
Consolidation
Adjustments
|
Reorganized
Grindr
|
|||||||||||||
Revenue
|
$
|
145,833
|
$
|
145,833
|
$
|
—
|
$
|
145,833
|
|||||||||
Operating cost and expense:
|
|||||||||||||||||
Total operating cost and expense
|
122,123
|
122,123
|
—
|
122,123
|
|||||||||||||
Income (loss) from operations
|
23,710
|
23,710
|
23,710
|
||||||||||||||
Other income (expense):
|
|||||||||||||||||
Interest income (expense), net
|
(45,295
|
)
|
(18,698
|
)
|
(26,597
|
)
|
(17a)
|
(45,295
|
)
|
||||||||
Total other income (expense)
|
(44,007
|
)
|
(17,410
|
)
|
(26,597
|
)
|
(44,007
|
)
|
|||||||||
Net income (loss) before income tax
|
(20,297
|
)
|
6,300
|
(26,597
|
)
|
(20,297
|
)
|
||||||||||
Income tax provision (benefit)
|
(4,749
|
)
|
1,236
|
(5,985
|
)
|
(17b)
|
(4,749
|
)
|
|||||||||
Net income (loss)
|
$
|
(15,548
|
)
|
$
|
5,064
|
$
|
(20,612
|
)
|
$
|
(15,548
|
)
|
||||||
Less: Income/(loss) attributable to non-controlling interest
|
496
|
—
|
496
|
(17c)
|
—
|
||||||||||||
Net income (loss) attributable to controlling interest
|
$
|
(16,044
|
)
|
$
|
5,064
|
$
|
(21,108
|
)
|
$
|
(15,548
|
)
|
17a.
|
Reflects the interest expense accretion related to the Deferred Payment discussed in adjustment (1d) as though it were outstanding since January 1, 2021 using an
interest rate of 15.7%. A 0.125% change in the estimated interest rate on the Deferred Payment would result in a change in the total interest expense over the life of the obligation of approximately $0.4 million.
|
|
17b.
|
Reflects the tax impact of the interest expense recognized in (17a) above, as though the SV Consolidation occurred on January 1, 2021.
|
|
17c.
|
This difference is not reflected in the pro forma financial information, it reflects the elimination of the income attributable to non-controlling interest in Legacy
Grindr at the San Vicente Entities level, as subsequent to the SV Consolidation, the San Vicente Entities merged into Legacy Grindr. Legacy Grindr continues to own 100% of its consolidated subsidiaries.
|
|
18.
|
Represents reclassifications to conform Tiga’s financial information to financial statement line items and presentation of Grindr based on Legacy Grindr’s financial
statement presentation.
|
|
19.
|
Reflects the recognition of an estimated $13.6 million of pro forma interest expense related to the New Debt for the nine months ended September 30, 2022, and an estimated $20.0 million of pro forma
interest expense related to the New Debt for the year ended December 31, 2021.
|
20.
|
In connection with the extinguishment of the Deferred Payment discussed in adjustment (11), the interest expense of $19.1 million and $26.6 million in the nine months
ended September 30, 2022 and year ended December 31, 2021, respectively, attributed to the Deferred Payment is eliminated.
|
21.
|
Reflects the elimination of investment income related to investments held in the trust account.
|
22.
|
Reflects the elimination of the change in fair value of the Forward Purchase Liability and the change in fair value of the additional 5.0 million public warrants
outstanding as a result of the exercise of the Forward Purchase Commitment and Backstop Commitment discussed in (8) as though the public warrants were outstanding for the entire period.
|
23.
|
To reflect the income tax effect of all pro forma income statement adjustments as follows:
|
For the Nine Months Ended September 30, 2022
|
|||||
Reversal of pro forma tax effect of 17(b) due to the repayment of the Deferred Payment
|
$
|
4,919
|
|||
Pro forma effect of all other pro forma adjustments based on 30.6% blended federal and state statutory rates
|
$
|
(3,700
|
)
|
||
Pro forma adjustment to income tax provision/(benefit):
|
$
|
1,219
|
For the Year Ended December 31, 2021
|
|||||
Reversal of pro forma tax effect of 17(b) due to the repayment of the Deferred Payment
|
$
|
5,985
|
|||
Income tax benefit from the reversal of the SV deferred tax liability
|
$
|
(3,127
|
)
|
||
Pro forma effect of all other pro forma adjustments based on 30.6% blended federal and state statutory rates
|
$
|
(9,430
|
)
|
||
Pro forma adjustment to income tax provision/(benefit):
|
$
|
(6,572
|
)
|
24.
|
Reflects the loss on extinguishment of the Deferred Payment discussed in (11) above reflecting the difference in the present value and the settlement value.
|
25.
|
Reflects the recognition of $1.4 million of direct and incremental transaction costs allocated to the liability classified warrants. Also reflects $0.4 million of
third party debt costs incurred.
|
(in thousands, except share and per share data)
|
Nine Months Ended September 30, 2022
|
|||
Numerator:
|
||||
Net income (loss) attributable to common shareholders - basic and diluted
|
$
|
(21,428
|
)
|
|
Denominator:
|
||||
Sponsor and certain affiliates
|
6,900,000
|
|||
Public Shareholders
|
485,233
|
|||
Forward Purchase Investors
|
10,000,000
|
|||
Former Grindr unitholders
|
156,139,170
|
|||
Weighted average shares outstanding - basic
|
173,524,403
|
|||
Dilutive effect of Grindr stock based compensation
|
—
|
|||
Weighted average shares outstanding - diluted
|
173,524,403
|
|||
|
||||
Net income (loss) per share attributable to common shareholders - basic
|
$
|
(0.12
|
)
|
|
Net income (loss) per share attributable to common shareholders - diluted
|
$
|
(0.12
|
)
|
|
Nine Months Ended September 30, 2022
|
|||
Private placement warrants
|
18,560,000
|
|||
Public warrants
|
13,800,000
|
|||
Forward purchase warrants
|
5,000,000
|
|||
Stock based compensation
|
2,287,107
|
(in thousands, except share and per share data)
|
Year Ended December 31, 2021
|
|||
Numerator:
|
||||
Net income (loss) attributable to common shareholders - basic and diluted
|
$
|
10,000
|
||
Denominator:
|
||||
Sponsor and certain affiliates
|
6,900,000
|
|||
Public Shareholders
|
485,233
|
|||
Forward Purchase Investors
|
10,000,000
|
|||
Former Grindr unitholders
|
156,139,170
|
|||
Weighted average shares outstanding - basic
|
173,524,403
|
|||
Dilutive effect of Grindr stock based compensation
|
56,336
|
|||
Weighted average shares outstanding - diluted
|
173,580,739
|
|||
|
||||
Net income (loss) per share attributable to common shareholders - basic
|
$0.06
|
|||
Net income (loss) per share attributable to common shareholders - diluted
|
$0.06
|
|
Year Ended December 31, 2021
|
|||
Private placement warrants
|
18,560,000
|
|||
Public warrants
|
13,800,000
|
|||
Forward purchase warrants
|
5,000,000
|
|||
Stock based compensation
|
1,761,810
|
PART I–FINANCIAL INFORMATION
Grindr Financial Statements (Unaudited)
Grindr Group LLC and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(in thousands, except unit data)
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 27,236 | $ | 15,778 | ||||
Accounts receivable, net of allowances of $80 and $53 at September 30, 2022 and December 31, 2021, respectively | 18,433 | 17,885 | ||||||
Prepaid expenses | 4,336 | 2,330 | ||||||
Deferred charges | 3,749 | 4,611 | ||||||
Other current assets | 8,087 | 3,308 | ||||||
Total current assets | 61,841 | 43,912 | ||||||
Restricted cash | 1,392 | 1,392 | ||||||
Property and equipment, net | 2,134 | 2,374 | ||||||
Capitalized software development costs, net | 6,916 | 3,637 | ||||||
Intangible assets, net | 113,335 | 139,708 | ||||||
Goodwill | 258,619 | 258,619 | ||||||
Other assets | 761 | 84 | ||||||
Total assets | $ | 444,998 | $ | 449,726 | ||||
Liabilities and Members’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 1,913 | $ | 2,437 | ||||
Accrued expenses and other current liabilities | 10,429 | 3,539 | ||||||
Current maturities of long-term debt, net | 5,040 | 3,840 | ||||||
Deferred revenue | 18,732 | 20,077 | ||||||
Total current liabilities | 36,114 | 29,893 | ||||||
Long-term debt, net | 189,663 | 133,279 | ||||||
Deferred income taxes | 17,317 | 20,912 | ||||||
Other non-current liabilities | 169 | 2,405 | ||||||
Total liabilities | 243,263 | 186,489 | ||||||
Commitments and Contingencies (Note 8) | ||||||||
Members’ Equity | ||||||||
Preferred units, par value $0.00001, unlimited units authorized, no units issued and outstanding at September 30, 2022 and December 31, 2021 | — | — | ||||||
Ordinary units, par value $0.00001; unlimited units authorized; 111,107,688 and 110,867,483 issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 1 | 1 | ||||||
Additional paid-in capital | 211,972 | 269,131 | ||||||
Accumulated deficit | (10,238 | ) | (5,895 | ) | ||||
Total members’ equity | 201,735 | 263,237 | ||||||
Total liabilities and members’ equity | $ | 444,998 | $ | 449,726 |
See accompanying notes to unaudited condensed consolidated financial statements.
Grindr Group LLC and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (unaudited)
(in thousands, except per unit data)
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenue | $ | 50,402 | $ | 38,249 | $ | 140,487 | $ | 100,812 | ||||||||
Operating costs and expenses | ||||||||||||||||
Cost of revenue (exclusive of depreciation and amortization shown separately below) | 12,955 | 9,621 | 36,758 | 25,723 | ||||||||||||
Selling, general and administrative expense | 20,331 | 8,335 | 53,822 | 21,798 | ||||||||||||
Product development expense | 4,159 | 2,841 | 11,981 | 7,422 | ||||||||||||
Depreciation and amortization | 9,097 | 10,708 | 27,215 | 32,534 | ||||||||||||
Total operating costs and expenses | 46,542 | 31,505 | 129,776 | 87,477 | ||||||||||||
Income from operations | 3,860 | 6,744 | 10,711 | 13,335 | ||||||||||||
Other expense | ||||||||||||||||
Interest expense, net | (4,786 | ) | (4,300 | ) | (10,998 | ) | (14,863 | ) | ||||||||
Other expense, net | (263 | ) | (89 | ) | (329 | ) | (119 | ) | ||||||||
Total other expense | (5,049 | ) | (4,389 | ) | (11,327 | ) | (14,982 | ) | ||||||||
Net (loss) income before income tax | (1,189 | ) | 2,355 | (616 | ) | (1,647 | ) | |||||||||
Income tax provision (benefit) | 3,474 | 461 | 3,727 | (214 | ) | |||||||||||
Net (loss) income and comprehensive (loss) income | $ | (4,663 | ) | $ | 1,894 | $ | (4,343 | ) | $ | (1,433 | ) | |||||
Net (loss) income per unit: | ||||||||||||||||
Basic | $ | (0.04 | ) | $ | 0.02 | $ | (0.04 | ) | $ | (0.01 | ) | |||||
Diluted | $ | (0.04 | ) | $ | 0.02 | $ | (0.04 | ) | $ | (0.01 | ) | |||||
Weighted-average units of ordinary units outstanding: | ||||||||||||||||
Basic | 111,098,038 | 110,611,462 | 110,984,923 | 108,293,197 | ||||||||||||
Diluted | 111,098,038 | 110,626,218 | 110,984,923 | 108,293,197 |
See accompanying notes to unaudited condensed consolidated financial statements.
Grindr Group LLC and Subsidiaries
Condensed Consolidated Statements of Members’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)
(in thousands, except per unit amounts and unit data)
Series Y Preferred Units | Series X Ordinary Units | Additional | ||||||||||||||||||||||||||
(Par value $0.00001) | (Par value $0.00001) | paid-in | Accumulated | Total members’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | capital | deficit | equity | ||||||||||||||||||||||
Balance at December 31, 2021 | — | $ | — | 110,867,483 | $ | 1 | $ | 269,131 | $ | (5,895 | ) | $ | 263,237 | |||||||||||||||
Net income | — | — | — | — | — | 4,629 | 4,629 | |||||||||||||||||||||
Interest on the promissory note to a member | — | — | — | — | (741 | ) | — | (741 | ) | |||||||||||||||||||
Contribution from member - related party unit-based compensation | — | — | — | — | 349 | — | 349 | |||||||||||||||||||||
Unit-based compensation expense | — | — | — | — | 414 | — | 414 | |||||||||||||||||||||
Exercise of stock options | — | — | 26,384 | — | 119 | — | 119 | |||||||||||||||||||||
Balance at March 31, 2022 | — | — | 110,893,867 | 1 | 269,272 | (1,266 | ) | 268,007 | ||||||||||||||||||||
Net loss | — | — | — | — | — | (4,309 | ) | (4,309 | ) | |||||||||||||||||||
Member distributions | — | — | — | — | (83,313 | ) | — | (83,313 | ) | |||||||||||||||||||
Interest on the promissory note to a member | — | — | — | — | (746 | ) | — | (746 | ) | |||||||||||||||||||
Repayment of promissory note to a member | — | — | — | — | 427 | — | 427 | |||||||||||||||||||||
Payment of interest on promissory note to member | — | — | — | — | 3,362 | — | 3,362 | |||||||||||||||||||||
Contribution from member - related party unit-based compensation | — | — | — | — | 12,598 | — | 12,598 | |||||||||||||||||||||
Unit-based compensation expense | — | — | — | — | 360 | — | 360 | |||||||||||||||||||||
Exercise of stock options | — | — | 193,678 | — | 906 | — | 906 | |||||||||||||||||||||
Balance at June 30, 2022 | — | — | 111,087,545 | 1 | 202,866 | (5,575 | ) | 197,292 | ||||||||||||||||||||
Net loss | — | — | — | — | — | (4,663 | ) | (4,663 | ) | |||||||||||||||||||
Interest on the promissory note to a member | — | — | — | — | (745 | ) | — | (745 | ) | |||||||||||||||||||
Contribution from member - related party unit-based compensation | — | — | — | — | 9,097 | — | 9,097 | |||||||||||||||||||||
Unit-based compensation expense | — | — | — | — | 643 | — | 643 | |||||||||||||||||||||
Exercise of stock options | — | — | 20,143 | — | 111 | — | 111 | |||||||||||||||||||||
Balance at September 30, 2022 | — | $ | — | 111,107,688 | $ | 1 | $ | 211,972 | $ | (10,238 | ) | $ | 201,735 |
Grindr Group LLC and Subsidiaries
Condensed Consolidated Statements of Members’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)
(in thousands, except per unit amounts and unit data)
Series Y Preferred Units | Series X Ordinary Units | Additional | ||||||||||||||||||||||||||
(Par value $0.00001) | (Par value $0.00001) | paid-in | Accumulated | Total members’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | capital | deficit | equity | ||||||||||||||||||||||
Balance at December 31, 2020 | — | $ | — | 105,180,224 | $ | 1 | $ | 267,216 | $ | (10,959 | ) | $ | 256,258 | |||||||||||||||
Net loss | — | — | — | — | — | (5,121 | ) | (5,121 | ) | |||||||||||||||||||
Contribution from member - related party unit-based compensation | — | — | — | — | 268 | — | 268 | |||||||||||||||||||||
Unit-based compensation expense | — | — | — | — | 266 | — | 266 | |||||||||||||||||||||
Balance at March 31, 2021 | — | — | 105,180,224 | 1 | 267,750 | (16,080 | ) | 251,671 | ||||||||||||||||||||
Net income | — | — | — | — | — | 1,794 | 1,794 | |||||||||||||||||||||
Issuance of units | — | — | 5,387,194 | — | 30,000 | — | 30,000 | |||||||||||||||||||||
Promissory note to a member | — | — | — | — | (30,000 | ) | — | (30,000 | ) | |||||||||||||||||||
Interest on promissory note to a member | — | — | — | — | (526 | ) | — | (526 | ) | |||||||||||||||||||
Contribution from member - related party unit-based compensation | — | — | — | — | 352 | — | 352 | |||||||||||||||||||||
Unit-based compensation expense | — | — | — | — | 302 | — | 302 | |||||||||||||||||||||
Balance at June 30, 2021 | — | — | 110,567,418 | 1 | 267,878 | (14,286 | ) | 253,593 | ||||||||||||||||||||
Net income | — | — | — | — | — | 1,894 | 1,894 | |||||||||||||||||||||
Interest on promissory note to a member | — | — | — | — | (756 | ) | — | (756 | ) | |||||||||||||||||||
Contribution from member - related party unit-based compensation | — | — | — | — | 356 | — | 356 | |||||||||||||||||||||
Unit-based compensation expense | — | — | — | — | 340 | — | 340 | |||||||||||||||||||||
Exercise of stock options | — | — | 130,918 | — | 589 | — | 589 | |||||||||||||||||||||
Balance at September 30, 2021 | — | $ | — | 110,698,336 | $ | 1 | 268,407 | $ | (12,392 | ) | $ | 256,016 |
See accompanying notes to unaudited condensed consolidated financial statements.
Grindr Group LLC and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
Nine Months Ended September 30, |
||||||||
2022 | 2021 | |||||||
Operating activities | ||||||||
Net loss | $ | (4,343 | ) | $ | (1,433 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Unit-based compensation | 23,353 | 1,806 | ||||||
Accretion of premium on debt | — | 1,118 | ||||||
Amortization of debt issuance costs | 759 | 897 | ||||||
Interest income on promissory note from member | (2,232 | ) | (1,282 | ) | ||||
Depreciation and amortization | 27,215 | 32,534 | ||||||
Provision for doubtful accounts | 27 | — | ||||||
Deferred income taxes | (3,595 | ) | (3,855 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (575 | ) | (3,622 | ) | ||||
Prepaid expenses and deferred charges | (1,144 | ) | (1,602 | ) | ||||
Other current assets | (4,779 | ) | (4,268 | ) | ||||
Other assets | (677 | ) | 53 | |||||
Accounts payable | (524 | ) | 1,122 | |||||
Accrued expenses and other current liabilities | 4,654 | (7,185 | ) | |||||
Deferred revenue | (1,345 | ) | 5,364 | |||||
Due to related party | — | 10 | ||||||
Other liabilities | — | (805 | ) | |||||
Net cash provided by operating activities | $ | 36,794 | $ | 18,852 | ||||
Investing activities | ||||||||
Purchase of property and equipment | $ | (339 | ) | $ | (156 | ) | ||
Additions to capitalized software | (3,434 | ) | (2,184 | ) | ||||
Net cash used in investing activities | $ | (3,773 | ) | $ | (2,340 | ) | ||
Financing activities | ||||||||
Proceeds from exercise of stock options | $ | 1,136 | $ | 589 | ||||
Distributions paid | (79,524 | ) | — | |||||
Proceeds from issuance of debt | 60,000 | — | ||||||
Payment of debt | (2,220 | ) | (2,880 | ) | ||||
Payment of debt issuance costs | (955 | ) | (960 | ) | ||||
Net cash used in financing activities | $ | (21,563 | ) | $ | (3,251 | ) | ||
Net increase in cash, cash equivalents and restricted cash | 11,458 | 13,261 | ||||||
Cash, cash equivalents and restricted cash, beginning of the period | 17,170 | 42,786 | ||||||
Cash, cash equivalents and restricted cash, end of the period | $ | 28,628 | $ | 56,047 | ||||
Reconciliation of cash, cash equivalents and restricted cash | ||||||||
Cash and cash equivalents | $ | 27,236 | $ | 54,655 | ||||
Restricted cash | 1,392 | 1,392 | ||||||
Cash, cash equivalents and restricted cash | $ | 28,628 | $ | 56,047 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash interest paid | $ | 12,159 | $ | 13,752 | ||||
Income taxes paid | $ | 2,207 | $ | 8,775 | ||||
Supplemental disclosure of non-cash financing activities: | ||||||||
Repayment of principal and interest on the promissory note to a member from distributions | $ | 3,789 | $ | — | ||||
Member distributions | $ | (3,789 | ) | $ | — | |||
Deferred transaction costs not yet paid | $ | 1,168 | $ | — |
See accompanying notes to unaudited condensed consolidated financial statements.
Grindr Group LLC and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except per unit amounts and unit data)
1. | Nature of Business |
Grindr Group LLC and Subsidiaries (the “Company”) is headquartered in Los Angeles, California and manages and operates the Grindr app, a global LGBTQ+ social network platform serving and addressing the needs of the entire LGBTQ+ queer community. The Grindr app is available through Apple’s App Store for iPhones and Google Play for Android. The Company offers both a free, ad-supported service and a premium subscription version. The Company also manages a dating service app called Blendr, for a broader market.
The Company is a wholly owned subsidiary of San Vicente Group Holdings LLC (“Group Holdings”), which is the joint subsidiary of San Vicente Group TopCo LLC (“SVG”), a wholly owned subsidiary of San Vicente Acquisition LLC (“SVA”), and San Vicente Equity Joint Venture LLC (“SVE”), a related party and subsidiary of SVA.
2. | Summary of Significant Accounting Policies |
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission, (“SEC”), regarding interim financial reporting. Certain information and disclosures normally included in the condensed consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes for the year ended December 31, 2021. The unaudited condensed consolidated financial statements are unaudited and have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair statement of the condensed consolidated financial statements. The condensed consolidated financial statements include the accounts of the Company, and its wholly owned subsidiaries after elimination of intercompany transactions and balances. The operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results expected for the full year ending December 31, 2022.
Accounting Estimates
Management of the Company is required to make certain estimates, judgments, and assumptions during the preparation of its condensed consolidated financial statements in accordance with U.S. GAAP. These estimates, judgments, and assumptions impact the reported amounts of assets, liabilities, revenue, and expenses, and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates. On an ongoing basis, the Company evaluates its estimates and judgments including those related to: the useful lives and recoverability of property and equipment and definite-lived intangible assets; the recoverability of goodwill and indefinite-lived intangible assets; the carrying value of accounts receivable, including the determination of the allowance for doubtful accounts; valuation allowance; uncertain tax positions; legal contingencies; and the valuation of stock-based compensation, among others.
Impact of COVID-19
In March 2020, the World Health Organization declared COVID-19 a global pandemic. The COVID-19 outbreak has reached across the globe, resulting in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans intended to control the spread of the virus.
While restrictions have been lessened and lifted, restrictions could be increased or reinstated in the future. Although an adverse impact on the Company’s ongoing operations is unlikely, the full magnitude the pandemic will have on the Company remains uncertain and will depend on the duration of the pandemic, as well as the effectiveness of mass vaccinations and the impact of future variants of the virus. Additionally, changes to estimates related to ongoing COVID-19 disruptions could result in other impacts, including, but not limited to, goodwill, indefinite-lived intangibles, and long-lived asset impairment charges.
Segment Information
The Company operates in one segment. The Company’s operating segments are identified according to how the performance of its business is managed and evaluated by its chief operating decision maker, the Company’s Chief Executive Officer (“CEO”). Substantially all of the Company’s long-lived assets are attributed to operations in the U.S.
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable:
Level 1 - | Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets. |
Level 2 - | Other inputs, which are observable directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets, quoted market prices for identical or similar assets or liabilities in markets that are not active, and inputs that are derived principally from or corroborated by observable market data. |
Level 3 - | Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available in the circumstances, about the assumptions market participants would use in pricing the assets or liabilities. |
Recurring Fair Value Measurements
Money market funds are measured and recorded at fair value on the Company’s balance sheets on a recurring basis. The following tables present money market funds and their level within the fair value hierarchy as of September 30, 2022 and December 31, 2021:
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
September 30, 2022: | ||||||||||||||||
Money market funds | $ | 25,062 | $ | 25,062 | $ | — | $ | — |
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
December 31, 2021: | ||||||||||||||||
Money market funds | $ | 9,648 | $ | 9,648 | $ | — | $ | — |
The Company’s remaining financial instruments that are measured at fair value on a recurring basis consist primarily of cash, accounts receivable, accounts payable, accrued expenses, and other current liabilities. The Company believes their carrying values are representative of their fair values due to their short-term maturities. The fair values of the Company’s Credit Agreement balances were measured by comparing their prepayment values and observable market data consisting of interest rates based on similar credit ratings, which the Company classifies as a Level 2 input within the fair value hierarchy. The Company does not have any recurring fair value measurements using significant unobservable inputs (Level 3) as of September 30, 2022 and December 31, 2021.
Nonrecurring Fair Value Measurements
Assets acquired and liabilities assumed in business combinations are initially measured at fair value on the acquisition date on a nonrecurring basis using Level 3 inputs.
The Company is required to measure certain assets at fair value on a nonrecurring basis after initial recognition. These include goodwill, intangible assets, and long-lived assets, which are measured at fair value on a nonrecurring basis as a result of impairment reviews and any resulting impairment charge. Impairment is assessed annually in the fourth quarter or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit or assets below the carrying value, as described below. The fair value of the reporting unit or asset groups is determined primarily using cost and market approaches (Level 3).
Deferred transaction costs
Deferred transaction costs consist of direct legal, accounting and other fees relating to the Company’s anticipated merger with a special purpose acquisition company (the “Merger”). These costs are capitalized as incurred in other current assets on the condensed consolidated balance sheets and will be expensed or charged to members’ equity upon the completion of the Merger. In the event the Merger is terminated, deferred transaction costs will be expensed in that period. Deferred transaction costs as of September 30, 2022 were $8,086. There were no deferred transaction costs as of December 31, 2021.
Modification of equity classified award
On the modification date, the Company determines the type of modification of the equity award by assessing whether the equity awards are probable or improbable to vest before and after the modification. The Company estimates the fair value of the awards immediately before and immediately after modification for those equity awards that are probable of vesting before and after the modification. Any incremental increase in fair value is recognized as an expense immediately to the extent the underlying equity awards are vested and on a straight-line basis over the requisite service period using the related expense attribution method to the extent that they are unvested. For equity awards that are improbable of vesting before the modification and probable of vesting after the modification, the Company recognizes expense measured as the fair value of the modified award on a straight-line basis over the requisite service period using the related expense attribution method based on the fair value of the awards at the modification date.
Revenue Recognition
Revenue is recognized when or as a customer obtains control of promised services. The amount of revenue recognized reflects the consideration which the Company expects to be entitled to in exchange for these services.
The Company derives substantially all of its revenue from subscription revenue and advertising revenue. As permitted under the practical expedient available under ASU 2014-09, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which the Company recognizes revenue for the amount at which the Company has the right to invoice for services performed.
Direct Revenue
Direct revenue consists of subscription revenue. Subscription revenue is generated through the sale of monthly subscriptions that are currently offered in one, three, six, and twelve-month lengths. Subscription revenue is presented net of taxes, credits, and chargebacks. Subscribers pay in advance, primarily through mobile app stores, and, subject to certain conditions identified in the Company’s terms and conditions, generally all purchases are final and nonrefundable. Revenue is initially deferred and is recognized using the straight-line method over the term of the applicable subscription period.
Indirect Revenue
Indirect revenue consists of advertising revenue and other non-direct revenue. The Company has contractual relationships with advertising service providers and also directly with advertisers to display advertisements in the Grindr app. For all advertising arrangements, the Company’s performance obligation is to provide the inventory for advertisements to be displayed in the Grindr app. For contracts made directly with advertisers, the Company is also obligated to serve the advertisements in the Grindr app. Providing the advertising inventory and serving the advertisement is considered a single performance obligation, as the advertiser cannot benefit from the advertising space without its advertisements being displayed.
The pricing and terms for all advertising arrangements are governed by either a master contract or insertion order. The transaction price in advertising arrangements is generally the product of the number of advertising units delivered (e.g., impressions, offers completed, videos viewed, etc.) and the contractually agreed upon price per advertising unit. Further, for advertising transactions with advertising service providers, the contractually agreed upon price per advertising unit is generally based on the Company’s revenue share or fixed revenue rate as stated in the contract. The number of advertising units delivered is determined at the end of each month, which resolves any uncertainty in the transaction price during the reporting period.
Account Receivables, net of allowance for doubtful accounts
The majority of app users access the Company’s services through mobile app stores. The Company evaluates the credit worthiness of these two mobile app stores on an ongoing basis and does not require collateral from these entities. Accounts receivable also include amounts billed and currently due from advertising customers. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of accounts receivable that will not be collected. The allowance for doubtful accounts is based upon a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, and the specific customer’s ability to pay its obligation.
The accounts receivable balances, net of allowances, were $18,433 and $17,885 as of September 30, 2022 and December 31, 2021, respectively. The opening balance of accounts receivable, net of allowances, was $11,833 as of January 1, 2021.
Contract Liabilities
Deferred revenue consists of advance payments that are received or are contractually due in advance of the Company’s performance. The Company classifies subscription deferred revenue as current and recognizes revenue ratably over the terms of the applicable subscription period or expected completion of the performance obligation which range from one to twelve months. The deferred revenue balances were $18,732 and $20,077 as of September 30, 2022 and December 31, 2021, respectively. The opening balance of deferred revenue balance was $13,530 as of January 1, 2021.
For the three and nine months ended September 30, 2022, the Company recognized $2,406 and $18,848 of revenue that was included in the deferred revenue balance as of December 31, 2021. For the three and nine months ended September 30, 2021, the Company recognized $1,823 and $13,978 of revenue that was included in the deferred revenue balance as of December 31, 2020.
Disaggregation of Revenue
The following tables summarizes revenue from contracts with customers for the three and nine months ended September 30, 2022 and 2021, respectively:
Three Months Ended September 30, |
Nine Months Ended September 30, |
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2022 | 2021 | 2022 | 2021 | |||||||||||||
Direct revenue | $ | 43,209 | $ | 30,537 | $ | 118,364 | $ | 80,733 | ||||||||
Indirect revenue | 7,193 | 7,712 | 22,123 | 20,079 | ||||||||||||
$ | 50,402 | $ | 38,249 | $ | 140,487 | $ | 100,812 |
Three Months Ended September 30, |
Nine Months Ended September 30, |
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2022 | 2021 | 2022 | 2021 | |||||||||||||
United States | $ | 31,127 | $ | 23,531 | $ | 87,876 | $ | 63,533 | ||||||||
United Kingdom | 3,752 | 3,127 | 10,457 | 7,753 | ||||||||||||
Rest of the world | 15,523 | 11,591 | 42,154 | 29,526 | ||||||||||||
$ | 50,402 | $ | 38,249 | $ | 140,487 | $ | 100,812 |
Recent Accounting Pronouncements
As an “emerging growth company”, the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), allows the Company to delay adoption of new or revised pronouncement applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use the adoption dates applicable to private companies. As a result, the Company’s financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective date for new or revised accounting standards that are applicable to public companies.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends the accounting for contract assets acquired and contract liabilities assumed from contracts with customers in business combinations. The amendment requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with ASC Topic 606, resulting in a shift from previous guidance which required similar assets and liabilities to be accounted for at fair value at the acquisition date. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The amendments in this Update should be applied prospectively to business combinations occurring on or after the effective date of the amendments. While the Company is continuing to assess the timing of adoption and potential impact of this guidance it does not expect the guidance to have a material effect, if any, on its condensed consolidated financial statements and related disclosures. The Company will continue to evaluate the impact of this guidance upon the occurrence of future acquisitions.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. This guidance is optional for a limited period of time through December 31, 2022. The Company is currently evaluating the impact this guidance may have as it relates to arrangements that reference LIBOR on its condensed consolidated financial statements and related disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheets for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. The new standard is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years beginning after December 15, 2022. The primary effect of the adoption of ASU No. 2016-02 will be the recognition of a right of use asset and related liability to reflect the Company’s rights and obligations under its operating leases. The Company will also be required to provide the additional disclosures stipulated in ASU No. 2016-02. The Company is currently evaluating the impact of the requirements of ASU 2016-02 and does not expect the adoption to have a significant impact on the consolidated statements of operations and comprehensive income (loss) and consolidated statements of cash flows. Upon adoption, there will be a material increase in total assets and total liabilities in the consolidated balance sheet due to the recognition of right-of-use assets and lease liabilities for the Company’s leases.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology. The standard requires entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash. Additional disclosures about significant estimates and credit quality are also required. The FASB has subsequently issued updates to the standard to provide additional clarification on specific topics. The ASU is effective for the Company for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company is currently evaluating the impact of this standard on its financial statements.
3. | Income Tax |
In determining the quarterly provisions for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date income (loss), adjusted for discrete items arising in that quarter. In addition, the effect of changes in enacted tax laws or rates and tax status is recognized in the interim period in which the change occurs.
The computation of the estimated annual effective income rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and tax in foreign jurisdictions and permanent and temporary differences. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, additional information is obtained or the Company’s tax environment changes. To the extent that the estimated annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in the income tax provision in the quarter in which the change occurs.
For the three months ended September 30, 2022 and 2021, the Company recorded an income tax provision of $3,474 and $461, respectively. For the nine months ended September 30, 2022 and 2021, the Company recorded an income tax provision (benefit) of $3,727 and $(214) respectively. The Company’s annual estimated effective tax rate differs from the U.S. federal statutory rate of 21% primarily as a result of state taxes, unit-based compensation, foreign derived intangible income deduction and other permanent differences.
4. | Other Current Assets |
Other current assets consist of the following:
September 30, 2022 |
December 31, 2021 |
|||||||
Deferred transaction costs | $ | 8,086 | $ | — | ||||
Income tax receivable | — | 3,274 | ||||||
Other current assets | 1 | 34 | ||||||
$ | 8,087 | $ | 3,308 |
5. | Promissory Note from a Member |
On April 27, 2021, Catapult GP II LLC (“Catapult GP II”), a related party wherein certain members of Catapult GP II are executives of the Company, purchased 5,387,194 common units of the Company. In conjunction with the common units purchased, the Company entered into a full recourse promissory note with Catapult GP II with a face value of $30,000 (the “Note”). The Note, including all unpaid interest, is to be repaid the earlier of 1) the tenth anniversary of the Note, 2) upon the completion of a liquidity event, or 3) upon completion of an initial public offering or a special-purpose acquisition company transaction. The Note bears interest at 10% per annum on a straight-line basis.
The total amount outstanding on the Note, including interest, was $30,481 and $32,038 as of September 30, 2022 and December 31, 2021, respectively. The Note and the related accrued interest are reflected as a reduction to equity in the condensed consolidated statements of members’ equity.
6. | Accrued Expenses and Other Current Liabilities |
Accrued expenses and other current liabilities consist of the following:
September 30, 2022 |
December 31, 2021 |
|||||||
Settlement payable of incentive units on 2016 Plan | $ | 2,108 | $ | 1,060 | ||||
Income, sales and other taxes payable | 2,710 | 664 | ||||||
Accrued professional service fees | 1,452 | 184 | ||||||
Accrued legal expenses | 1,185 | 196 | ||||||
Accrued infrastructure expenses | 567 | – | ||||||
Employee compensation and benefits | 477 | 320 | ||||||
Settlement payable to a former director | 406 | 204 | ||||||
Deferred rent | 362 | 196 | ||||||
Other accrued expenses | 1,162 | 715 | ||||||
$ | 10,429 | $ | 3,539 |
7. | Debt |
Total debt for the Company is comprised of the following:
September 30, 2022 |
December 31, 2021 |
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Credit Agreement | ||||||||
Current | $ | 5,040 | $ | 3,840 | ||||
Non-current | 192,900 | 136,320 | ||||||
197,940 | 140,160 | |||||||
Less: unamortized debt issuance costs | (3,237 | ) | (3,041 | ) | ||||
$ | 194,703 | $ | 137,119 |
On June 10, 2020, Grindr Gap LLC and Grindr Capital LLC, wholly owned subsidiaries of the Company, entered into a credit agreement (the “Credit Agreement”) which permitted the Company to borrow up to $192,000.
Borrowings under the agreement are collateralized by the capital stock and assets of certain wholly owned subsidiaries of the Company. The Company’s obligation under the Credit Agreement is guaranteed by certain of the Company’s wholly owned subsidiaries.
Borrowings under the Credit Agreement are payable in full on June 10, 2025 with mandatory principal repayments beginning in the first quarter of 2021. Mandatory repayments are equal to 0.50% of the original principal amount of the Credit Agreement. The Company is also required to make mandatory prepayments of the Credit Agreement, commencing with the fiscal year ending December 31, 2020, equal to a defined percentage rate (determined based on the Company’s leverage ratio) of excess cash flows. No such prepayment was required for the three and nine months ended September 30, 2022 and 2021.
Borrowings under the Credit Agreement are Index Rate Loans or LIBOR Rate Loans, at the Company’s discretion. Index Rate Loans bear interest at Index Rate plus applicable margin based on the consolidated total leverage ratio, or 7%. LIBOR Rate Loans bear interest at LIBOR Rate plus an applicable margin based on the consolidated total leverage ratio, or 8%. The interest rates in effect as of September 30, 2022 and December 31, 2021 were 10.3% and 9.5%, respectively, based on the LIBOR Rate.
The Credit Agreement also required the Company to make a lump-sum principal repayment in the amount equal to $48,000 plus related accrued interest on or before February 28, 2021. This repayment date was amended to November 30, 2021 based on the first amendment to the Credit Agreement entered into on February 25, 2021. In addition to the mandatory repayment, the Company was required to pay a premium of 10% of the principal repayment, or $4,800, together with the mandatory lump-sum principal repayment.
The premium was accrued over the term of the Credit Agreement through the initial repayment date in February 2021. For the nine months ended September 30, 2021, $1,118 of the premium was accrued and recognized as interest expense in “Interest expense, net” in the condensed consolidated statements of operations and comprehensive (loss) income. The Company paid the mandatory lump-sum principal and premium in November 2021.
On June 13, 2022, a second amendment to the Credit Agreement was entered into which allowed the Company to borrow an additional $60,000, which the Company drew in conjunction with the closing of the amendment. The second amendment to the Credit Agreement was accounted for as a debt modification. The Company capitalized and paid debt issuance costs totaling $955 in conjunction with the second amendment. The borrowing under the second amendment has the same terms as the Credit Agreement and is payable in full on June 10, 2025.
The obligations under the Credit Agreement are subject to automatic acceleration upon a voluntary or involuntary bankruptcy event of default and are subject to acceleration at the election of the lenders upon the continuance of any other event of default, including a material adverse change in the business, operations or conditions of the Company, or SVA’s default on the deferred payment resulting from the Company’s acquisition of Grindr, Inc. from Kunlun Holdings Limited (“Kunlun”) (the “Deferred Payment”). A default interest rate of an additional 2% per annum will apply on all outstanding obligations during the occurrence and continuance of an event of default. If an event of default occurs on or prior to June 10, 2022, an additional premium will be charged equal to all unpaid interest that would have accrued until the date that is 24 months after the inception of the Credit Agreement. The Credit Agreement includes restrictive non-financial and financial covenants, including the requirement to maintain a total leverage ratio no greater than 4.75:1.00 prior to and through March 31, 2022, and no greater than 3.25:1.00 thereafter. As of September 30, 2022 and December 31, 2021, the Company was in compliance with the financial debt covenants.
The fair values of the Company’s Credit Agreement balances were measured by the discounted cash flow method or comparing their prepayment values and observable market data consisting of interest rates based on similar credit ratings, which the Company classifies as a Level 2 input within the fair value hierarchy. The estimated fair value of the Credit Agreement balances as of September 30, 2022 and December 31, 2021, was $189,746 and $142,963, respectively.
8. | Commitments and Contingencies |
Litigation
From time to time, the Company is subject to various legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict, and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Currently, it is too early to determine the outcome and probability of any legal proceedings and whether they would have a material adverse effect on the Company’s business. As of September 30, 2022 and December 31, 2021, there were no amounts accrued that the Company believes would be material to its financial position.
In January 2020, the Norwegian Consumer Council (“NCC”) submitted three complaints to the Norwegian Data Protection Authority, (“NDPA”). Datatilsynet, under Article 77(1) of the General Data Protection Regulation (“GDPR”) against the following parties: (1) Grindr and AdColony; (2) Grindr, Twitter, AppNexus, and OpenX; and (3) Grindr, and Smaato. The complaints reference a report entitled “Out Of Control: How consumers are exploited by the online advertising industry”. The NCC argued that (1) the Company lacks valid consent for data sharing, (2) the Company shares personal data under Article 9 and does not have a legal basis for processing personal data under article 9, and (3) the Company does not provide clear information about data sharing, which infringes the principle of transparency in Article (5)(1)(a) GDPR. In April 2020, the Company received an Order to Provide Information from the Datatilsynet. The Company responded to this Order and provided information to Datatilsynet in May 2020. In January 2021, the Datatilsynet sent the Company an “Advance notification of an administrative fine” of 100,000 NOK (the equivalent of approximately $9,300 using the exchange rate as of September 30, 2022) for an alleged infringement of the GDPR. This was notice of a proposed fine to which Grindr was entitled to respond before Datatilsynet made a final decision. Datatilsynet alleged (i) that Grindr disclosed personal data to third party advertisers without a legal basis in violation of Article 6(1) GDPR and (ii) that Grindr disclosed special category personal data to third party advertisers without a valid exemption from the prohibition in Article 9(1) GDPR. Grindr responded to the Advance notification on March 8, 2021, to contest the draft findings and fine. A redacted copy of Grindr’s response was made public. On April 29, 2021, Datatilsynet issued its Order To Provide Information - Grindr - Data Processors, asking, among other things, whether Grindr considered certain ad tech partners to be processors or controllers. Datatilsynet later extended the deadline to respond to June 2, 2021, and Grindr sent a response to Datatilsynet on that date. On October 11, 2021, Datatilsynet sent the Company a letter concerning Grindr’s reply to the Advance notification. In the letter, Datatilsynet clarified that the Advance notification only “pertains to data subjects on Norwegian territory,” and advised the Company of two additional complaints that had been filed (one in March 2021 and the other in September 2021) with Datatilsynet by the Norwegian Consumer Council. Datatilsynet requested any further comments or remarks to the Advance notification by November 1, 2021, but later extended the deadline to November 19, 2021. On November 19, 2021, Grindr served a response to Datatilsynet’s October 11, 2021 letter. On November 26, 2021, Datatilsynet requested any redactions to the response based upon the expectation that third parties may request a copy of Grindr’s November 19, 2021 response, and Grindr proposed redactions on the same day.
In December 2021, Datatilsynet issued a reduced administrative fine against the Company in the amount of 65,000 NOK, or approximately $6,045 using the exchange rate as of September 30, 2022, with an extended deadline for the Company to appeal through February 14, 2022. On February 14, 2022, Grindr filed an appeal brief with the DPA. Grindr is not aware when Datatilsynet will take additional action in this matter. It is too early to determine the probability of there being any further proceedings, the outcome of any such proceedings, and whether such proceedings may have a material adverse effect on the Company’s business, including because of the uncertainty of (i) the ultimate amount of the fine imposed, and (ii) whether Grindr may determine to appeal or further contest the fine. As a result, an estimate of the ultimate loss cannot be made at this time. It is at least reasonably possible that a change in the administrative fine may occur in the near term.
In Summer of 2018, Grindr was informed by multiple State Attorneys General (the “Multistate”) that the Multistate was opening a formal investigation into the Company’s sharing of users’ HIV status and last tested date with third parties, and its security and processing of user geolocation information. Since August 2018 the Company has responded to multiple requests for information. In November 2020, the Multistate contacted the Company with its expected claims and findings and general proposed settlement terms that included a settlement of $11,000. The Company responded in February 2021 by providing the Multistate with a white paper detailing why the Multistate’s claims are factually and legally deficient. The Company also met with the Multistate and presented its arguments via a presentation. In May 2021, the Multistate contacted Grindr to request an extension of the tolling agreement from June 1, 2021 to October 1, 2021. On May 30, 2021, Grindr entered into a tolling agreement extension with the State Attorneys General of Arkansas, Indiana, New Jersey, North Carolina, Oregon, Vermont, and Washington, extending the tolling agreement from June 1, 2021 to August 1, 2021. In June 2021, the New Jersey Attorney General served supplemental requests on Grindr seeking, among other things, additional information related to matters discussed in Grindr’s February 2021 white paper, as well as documents regarding submissions made by Grindr to Datatilsynet. In July 2021, Grindr served initial responses and objections to the New Jersey Attorney General’s supplemental requests and subsequently agreed to an extension of the tolling agreement from August 1, 2021 to October 1, 2021. Since that time, the New Jersey Attorney General agreed to limit the scope of the supplemental requests, and Grindr agreed to provide certain information in response to the supplemental requests. In addition, Grindr agreed to enter into an additional tolling agreement extension with the State Attorneys General of Arkansas, Indiana, New Jersey, North Carolina, Oregon, Vermont, and Washington, extending the tolling agreement from October 1, 2021 to March 31, 2022. On March 16, 2022, May 27, 2022 and July 5, 2022, Grindr entered into an additional extensions of the tolling agreement with the Attorneys General until May 30, 2022, June 30, 2022 and September 1, 2022. In October 2021, Grindr served an initial response to the New Jersey Attorney General’s supplemental requests, with additional responses to supplemental requests served in November and December 2021. In January 2022, Grindr submitted responses to the New Jersey Attorney General’s follow-up questions regarding the Company’s inquiry in response to The Pillar blog. On October 6, 2022, the Company was advised by the Multistate that the investigation has been closed without action and with no further action anticipated. See Note 13 for additional information.
In December 2020, Grindr was named in a statement of claim and petition for certification of a class action in Israel (Israeli Central District Court). The statement of claims generally alleges that Grindr violated users’ privacy by sharing information with third parties without their explicit consent. The petitioner asserts several causes of action under Israeli law, including privacy breaches, unlawful enrichment, and negligence, as well as causes of action under California law, including privacy violations under the California Constitution and California common law, negligence, violation of the Unfair Competition Law, and unjust enrichment. The statement of claims seeks various forms of monetary, declaratory, and injunctive relief, in addition to certification as a class action. In June 2021, the petitioner attempted service of the statement of claims and the associated filings (all in translated form as required under applicable law) on Grindr. In November 2021, Grindr filed an initial response to the plaintiff’s Statement of Claim challenging the effectiveness of service. The plaintiff then filed opposition to Grindr’s service-related motion, raising a series of technical challenges. During the Israeli court hearing in January 2022, the Israeli court directed the plaintiff to start the service process from the beginning by seeking court permission to pursue international service on Grindr. On February 8, 2022, the Court formally permitted the Plaintiff, in ex parte, to serve the Company outside the jurisdiction. The Company should file its response to the Motion for certification (and/or preliminary jurisdictional motions) within 90 days from the date it is served. On March 30, 2022, Grindr received a package via U.S. Mail with the case documents. Grindr’s local Israeli counsel is preparing a motion seeking the court’s preliminary ruling on the question of applicable law. On July 5, 2022, the Company filed a motion to determine the governing law. Grindr believes that the claims lack merit, and it continues to consider and evaluate an appropriate response. At this time, this matter remains in its nascent stages, and it is too early to determine the likely outcome of this proceeding or whether the proceeding may ultimately have a material adverse effect on the Company’s business, including because of the uncertainty of (i) whether Grindr will incur a loss, (ii) if a loss is incurred, what the amount of that loss may be, and (iii) whether Grindr may determine to appeal or further contest the loss.
9. | Distributions |
On June 10, 2022, the Board of Managers approved a special distribution of $0.75 per unit of Series X Ordinary Units, amounting to $83,313 to Series X Ordinary Unit holders as of the close of business on June 10, 2022. The distribution was partially paid in June 2022, and the balance was fully paid in July 2022.
10. | Unit-based Compensation |
The unit-based compensation expense is related to the grant of unit options and restricted units granted under the 2020 Plan and the grant of SVE’s Series P Units to Catapult Goliath LLC (“Catapult Goliath”), a related party that liquidated prior to the Closing and distributed its holdings to its members, some of whom were former officers of the Company. The unit-based compensation expense for SVE’s Series P Units have been pushed down to the operating entity and thus recorded in the Company’s condensed consolidated financial statements with a corresponding credit to equity as a capital contribution.
2020 Plan
Unit options
The following table summarizes the key input assumptions used in the Black-Scholes option-pricing model to estimate the fair value of unit options granted for the nine months ended September 30, 2022 and 2021:
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Expected life of units (in years)(1) | 4.57 - 4.61 | 4.55 - 4.61 | ||||||
Expected unit price volatility(2) | 56.39% - 60.87 | % |
48.20% - 56.46 | % |
||||
Risk free interest rate(3) | 1.37% - 3.05 | % |
0.32% - 0.78 | % |
||||
Expected dividend yield(4) | — | % | — | % | ||||
Weighted average grant-date fair value per unit of unit options granted | $2.75 - $5.81 | $1.80 - $2.17 | ||||||
Fair value per common unit | $5.89 - $11.13 | $4.50 - $4.98 |
(1) | The expected term for award is determined using the simplified method, which estimates the expected term using the contractual life of the option and the vesting period. |
(2) | Expected volatility is based on historical volatilities of a publicly traded per group over a period equivalent to the expected term of the awards |
(3) | The risk-free interest rate is based on the U.S. Treasury yield of treasury bonds with a maturity that approximates the expected term of the awards |
(4) | Prior to June 10, 2022, the Company has not historically paid cash dividends on its common units. On June 10, 2022, the Company’s Board of Managers approved a special distribution as described in Note 9, and does not expect to pay any normal course cash dividends on its common units in the foreseeable future. |
The following table summarizes the unit option activity for the nine months ended September 30, 2022:
Number of Options |
Weighted Average Exercise Price |
||||||||
Outstanding at December 31, 2021 | 3,442,397 | $ | 4.96 | ||||||
Granted | 867,050 | $ | 10.37 | ||||||
Exercised | (240,205 | ) | $ | 4.73 | |||||
Forfeited | (886,519 | ) | $ | 4.63 | |||||
Outstanding at September 30, 2022 | 3,182,723 | $ | 6.56 |
San Vicente Equity Joint Venture LLC (“SVE”) Series P Profit Units (“Series P”)
A summary of Series P Units activity for the nine months ended September 30, 2022 is presented below:
Number of Units |
Weighted Average Fair Value(1) |
||||||||
Unvested at December 31, 2021 | 4,306,636 | $ | 2.07 | ||||||
Vested | (3,293,464 | ) | $ | 5.36 | |||||
Unvested at September 30, 2022 | 1,013,172 | $ | 7.32 |
(1) | The weighted average fair value for unvested Series P units at December 31, 2021 is based on the grant date fair value. The weighted average fair value of the vested Series P units in 2022 and the unvested Series P units at September 30, 2022 considered the remeasured fair value of Series P upon modification (discussed below). |
There were no Series P units granted during the nine months ended September 30, 2022 and 2021.
Modification of Series P Units
On May 9, 2022, SVE and Catapult Goliath entered into an agreement to amend the vesting requirement for the Series P Units (the “Modification”). Under the Modification, the Series P Units performance-based vesting target was amended to time-based vesting and the Series P Units will vest as follows: (1) 40% immediately as of the date of modification (the “First Tranches”), and (2) 20% each on June 30, 2022, September 30, 2022 and December 31, 2022 (the “Second Tranches”). Additionally, the requisite services under the consulting agreement have been removed as a condition to vesting.
The vesting requirements for the First Tranches originally consisted of requisite services under a consulting agreement and performance-based targets, and all performance-based targets were met. As such, the Company accounted for the modification in the First Tranches as a Type I modification (probable to probable). As the modification only results in the acceleration of service-based vesting and does not involve any other changes, there was no incremental fair value upon modification. The Company recognized $2,285 incremental unit-based compensation during the nine months ended September 30, 2022 for the First Tranches as it relates to the units vested immediately upon the date of modification.
The vesting requirements for the Second Tranches originally consisted of requisite services under a consulting agreement and performance-based targets, and all performance-based targets were not met. As such, the Company accounted for the modification in the Second Tranches as a Type III modification (improbable to probable). This Type III modification results in a remeasured fair value of $7.32 per share. The remeasured fair value was determined by a probability weighted expected return method by weighting between a going concern scenario valued using the Option Pricing Method and a reverse merger scenario value using the equity value in the merger agreement. The incremental aggregate unit-based compensation related to the modification was $22,249. The Company recognized $19,217 of incremental unit-based compensation expense during the nine months ended September 30, 2022 for the Second Tranches.
Prior to the Closing, Catapult Goliath was liquidated and distributed its holdings to its members, some
of whom were former officers of the Company.
Unit-based compensation information
The following table summarizes unit-based compensation expenses for the three and nine months ended September 30, 2022 and 2021, respectively:
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Selling, general and administrative expenses | $ | 9,435 | $ | 593 | $ | 22,870 | $ | 1,623 | ||||||||
Product development expenses | 251 | 71 | 483 | 183 | ||||||||||||
$ | 9,686 | $ | 664 | $ | 23,353 | $ | 1,806 |
Unit-based compensation expense that was capitalized as an asset was $54 and $32 for the three months ended September 30, 2022 and 2021, respectively. Unit-based compensation expense that was capitalized as an asset was $108 and $78 for the nine months ended September 30, 2022 and 2021, respectively.
11. | Net (Loss) Income Per Share |
The following table sets forth the computation of basic and diluted (loss) income per share:
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Numerator: | ||||||||||||||||
Net (loss) income and comprehensive (loss) income | $ | (4,663 | ) | $ | 1,894 | $ | (4,343 | ) | $ | (1,433 | ) | |||||
Denominator: | ||||||||||||||||
Basic weighted average units of ordinary units outstanding | 111,098,038 | 110,611,462 | 110,984,923 | 108,293,197 | ||||||||||||
Diluted effect of unit-based awards | — | 14,756 | — | — | ||||||||||||
Diluted weighted average units of ordinary units outstanding | 111,098,038 | 110,626,218 | 110,984,923 | 108,293,197 | ||||||||||||
Net (loss) income per unit: | ||||||||||||||||
Basic | ($ | 0.04 | ) | $ | 0.02 | ($ | 0.04 | ) | ($ | 0.01 | ) | |||||
Diluted | ($ | 0.04 | ) | $ | 0.02 | ($ | 0.04 | ) | ($ | 0.01 | ) |
The following table presents the weighted average potential shares that are excluded from the computation of diluted net (loss) income and comprehensive (loss) income for the periods presented because including them would have had an anti-dilutive effect:
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Unit options issued under 2020 Plan | 996,487 | 332,300 | 1,630,226 | 345,733 |
12. | Related Parties |
For the three months ended September 30, 2022 and 2021, the Company paid advisor fees and out-of-pocket expenses amounting to $175 and $262 to two individuals who hold ownership interest in the Company, respectively. For the nine months ended September 30, 2022 and 2021, the Company paid advisor fees and out-of-pocket expenses amounting to $606 and $644 to two individuals who hold ownership interest in the Company, respectively.
See Note 5 and Note 10 for additional related party transactions with Catapult GP II and Catapult Goliath.
13. | Subsequent Events |
San Vicente Financial Statements (Unaudited)
San Vicente Offshore Holdings (Cayman) Limited and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(in thousands, except per unit data)
September 30, 2022 |
December 31, 2021 |
|||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 27,236 | $ | 15,778 | ||||
Accounts receivable, net of allowances of $80 and $53 at September 30, 2022 and December 31, 2021, respectively | 18,433 | 17,885 | ||||||
Prepaid expenses | 4,336 | 2,330 | ||||||
Deferred charges | 3,749 | 4,611 | ||||||
Other current assets | 8,087 | 3,308 | ||||||
Total current assets | 61,841 | 43,912 | ||||||
Restricted cash | 1,392 | 1,392 | ||||||
Property and equipment, net | 2,134 | 2,374 | ||||||
Capitalized software development costs, net | 6,916 | 3,637 | ||||||
Intangible assets, net | 113,335 | 139,708 | ||||||
Goodwill | 275,703 | 275,703 | ||||||
Other assets | 761 | 84 | ||||||
Total assets | $ | 462,082 | $ | 466,810 | ||||
Liabilities and Members’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 1,913 | $ | 2,437 | ||||
Accrued expenses and other current liabilities | 10,396 | 3,506 | ||||||
Deferred payment | 140,093 | 70,326 | ||||||
Current maturities of long-term debt, net | 5,040 | 3,840 | ||||||
Deferred revenue | 18,732 | 20,077 | ||||||
Total current liabilities | 176,174 | 100,186 | ||||||
Deferred payment, non-current | — | 125,612 | ||||||
Long-term debt, net | 189,663 | 133,279 | ||||||
Deferred income taxes | 20,444 | 28,958 | ||||||
Other non-current liabilities | 169 | 2,405 | ||||||
Total liabilities | 386,450 | 390,440 | ||||||
Commitments and Contingencies (Note 8) | | |||||||
Contingently Redeemable Noncontrolling Interest | | |||||||
Series P preferred units | $ | — | $ | — | ||||
Members’ Equity | | |||||||
Ordinary units, par value $0.01 | — | — | ||||||
Additional paid-in capital | 119,739 | 95,157 | ||||||
Accumulated deficit | (54,373 | ) | (36,236 | ) | ||||
Equity attributable to noncontrolling interest | 10,266 | 17,449 | ||||||
Total members’ equity | 75,632 | 76,370 | ||||||
Total liabilities and members’ equity | $ | 462,082 | $ | 466,810 |
See accompanying notes to unaudited condensed consolidated financial statements.
San Vicente Offshore Holdings (Cayman) Limited and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)
(in thousands)
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenue | $ | 50,402 | $ | 38,249 | $ | 140,487 | $ | 100,812 | ||||||||
Operating costs and expenses | ||||||||||||||||
Cost of revenue (exclusive of depreciation and amortization shown separately below) | 12,955 | 9,621 | 36,758 | 25,723 | ||||||||||||
Selling, general and administrative expense | 20,331 | 8,335 | 53,822 | 21,798 | ||||||||||||
Product development expense | 4,159 | 2,841 | 11,981 | 7,422 | ||||||||||||
Depreciation and amortization | 9,097 | 10,708 | 27,215 | 32,534 | ||||||||||||
Total operating costs and expenses | 46,542 | 31,505 | 129,776 | 87,477 | ||||||||||||
Income from operations | 3,860 | 6,744 | 10,711 | 13,335 | ||||||||||||
Other expense | ||||||||||||||||
Interest expense, net | (9,843 | ) | (11,118 | ) | (30,153 | ) | (34,386 | ) | ||||||||
Other expense, net | (263 | ) | (89 | ) | (329 | ) | (119 | ) | ||||||||
Total other expense | (10,106 | ) | (11,207 | ) | (30,482 | ) | (34,505 | ) | ||||||||
Net loss before income tax | (6,246 | ) | (4,463 | ) | (19,771 | ) | (21,170 | ) | ||||||||
Income tax provision (benefit) | (2,485 | ) | (1,079 | ) | (1,192 | ) | (5,019 | ) | ||||||||
Net loss and comprehensive loss | $ | (3,761 | ) | $ | (3,384 | ) | $ | (18,579 | ) | $ | (16,151 | ) | ||||
Less: Income (loss) attributable to noncontrolling interest | (466 | ) | 181 | (434 | ) | (67 | ) | |||||||||
Net loss attributable to San Vicente Offshore Holdings Limited | $ | (3,295 | ) | $ | (3,565 | ) | $ | (18,145 | ) | $ | (16,084 | ) |
See accompanying notes to unaudited condensed consolidated financial statements.
San Vicente Offshore Holdings (Cayman) Limited and Subsidiaries
Condensed Consolidated Statements of Members’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)
(in thousands, except per unit amounts and unit data)
Equity Attributable to San Vicente Offshore Holdings (Cayman) Limited |
Contingently Redeemable Noncontrolling Interest |
|||||||||||||||||||||||||||||||||
Ordinary Units (Par value $0.01) |
Series P Preferred Units | |||||||||||||||||||||||||||||||||
Units | Amount |
Additional paid-in capital |
Accumulated deficit |
Total |
Equity Attributable to Noncontrolling Interest |
Total Members’ Equity |
Units | Amount | ||||||||||||||||||||||||||
Balance at December 31, 2021 | 3 | $ | — | $ | 95,157 | $ | (36,236 | ) | $ | 58,921 | $ | 17,449 | $ | 76,370 | 759,219 | $ | — | |||||||||||||||||
Net loss | — | — | — | (1,594 | ) | (1,594 | ) | 454 | (1,140 | ) | — | — | ||||||||||||||||||||||
Interest on the promissory note to a related party | — | — | (668 | ) | — | (668 | ) | (73 | ) | (741 | ) | — | — | |||||||||||||||||||||
Unit-based compensation expense | — | — | 349 | — | 349 | 414 | 763 | 156,221 | — | |||||||||||||||||||||||||
Exercise of unit options in subsidiary | — | — | 103 | — | 103 | 16 | 119 | — | — | |||||||||||||||||||||||||
Balance at March 31, 2022 | 3 | $ | — | $ | 94,941 | $ | (37,830 | ) | $ | 57,111 | $ | 18,260 | $ | 75,371 | 915,440 | $ | — | |||||||||||||||||
Net loss | — | — | — | (13,248 | ) | (13,248 | ) | (430 | ) | (13,678 | ) | — | — | |||||||||||||||||||||
Subsidiary distributions | — | — | — | — | — | (8,313 | ) | (8,313 | ) | — | — | |||||||||||||||||||||||
Interest on the promissory note to a related party | — | — | (672 | ) | — | (672 | ) | (74 | ) | (746 | ) | — | — | |||||||||||||||||||||
Repayment of promissory note to a related party | — | — | 385 | — | 385 | 42 | 427 | — | — | |||||||||||||||||||||||||
Payment of interest on promissory note to related party | — | — | 3,026 | — | 3,026 | 336 | 3,362 | — | — | |||||||||||||||||||||||||
Unit based compensation | — | — | 12,598 | — | 12,598 | 360 | 12,958 | 2,124,072 | — | |||||||||||||||||||||||||
Exercise of unit options in subsidiary | — | — | 913 | — | 913 | (7 | ) | 906 | — | — | ||||||||||||||||||||||||
Balance at June 30, 2022 | 3 | $ | — | $ | 111,191 | $ | (51,078 | ) | $ | 60,113 | $ | 10,174 | $ | 70,287 | 3,039,512 | $ | — | |||||||||||||||||
Net loss | — | — | — | (3,295 | ) | (3,295 | ) | (466 | ) | (3,761 | ) | — | — | |||||||||||||||||||||
Interest on the promissory note to a related party | — | — | (671 | ) | — | (671 | ) | (74 | ) | (745 | ) | — | — | |||||||||||||||||||||
Unit-based compensation | — | — | 9,097 | — | 9,097 | 643 | 9,740 | 1,013,171 | — | |||||||||||||||||||||||||
Exercise of unit options in subsidiary | — | — | 122 | — | 122 | (11 | ) | 111 | — | — | ||||||||||||||||||||||||
Balance at September 30, 2022 | 3 | $ | — | $ | 119,739 | $ | (54,373 | ) | $ | 65,366 | $ | 10,266 | $ | 75,632 | 4,052,683 | $ | — |
San Vicente Offshore Holdings (Cayman) Limited and Subsidiaries
Condensed Consolidated Statements of Members’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (unaudited)
(in thousands, except per unit amounts and unit data)
Equity Attributable to San Vicente Offshore Holdings (Cayman) Limited |
Contingently Redeemable Noncontrolling Interest |
|||||||||||||||||||||||||||||||||
Ordinary Units (Par value $0.01) |
Series P Preferred Units | |||||||||||||||||||||||||||||||||
Units | Amount |
Additional paid-in capital |
Accumulated deficit |
Total |
Equity Attributable to Noncontrolling Interest |
Total Members’ Equity |
Units | Amount | ||||||||||||||||||||||||||
Balance at December 31, 2020 | 3 | $ | — | $ | 94,484 | $ | (20,192 | ) | $ | 74,292 | $ | 15,711 | $ | 90,003 | 159,112 | $ | — | |||||||||||||||||
Net loss | — | — | — | (9,266 | ) | (9,266 | ) | (252 | ) | (9,518 | ) | — | — | |||||||||||||||||||||
Unit-based compensation | — | — | 268 | — | 268 | 266 | 534 | 122,767 | — | |||||||||||||||||||||||||
Balance at March 31, 2021 | 3 | $ | — | $ | 94,752 | $ | (29,458 | ) | $ | 65,294 | $ | 15,725 | $ | 81,019 | 281,879 | $ | — | |||||||||||||||||
Net loss | — | — | — | (3,420 | ) | (3,420 | ) | 171 | (3,249 | ) | — | — | ||||||||||||||||||||||
Issuance of subsidiary equity | — | — | 17,644 | — | 17,644 | 12,356 | 30,000 | — | — | |||||||||||||||||||||||||
Promissory note to a related party | — | — | (17,644 | ) | — | (17,644 | ) | (12,356 | ) | (30,000 | ) | — | — | |||||||||||||||||||||
Interest on the promissory note to a related party | — | — | (476 | ) | — | (476 | ) | (50 | ) | (526 | ) | — | — | |||||||||||||||||||||
Unit-based compensation | — | — | 352 | — | 352 | 302 | 654 | 157,956 | — | |||||||||||||||||||||||||
Balance at June 30, 2021 | 3 | $ | — | $ | 94,628 | $ | (32,878 | ) | $ | 61,750 | $ | 16,148 | $ | 77,898 | 439,835 | $ | — | |||||||||||||||||
Net loss | — | — | — | (3,565 | ) | (3,565 | ) | 181 | (3,384 | ) | — | — | ||||||||||||||||||||||
Interest on the promissory note to a related party | — | — | (684 | ) | — | (684 | ) | (72 | ) | (756 | ) | — | — | |||||||||||||||||||||
Unit-based compensation | — | — | 356 | — | 356 | 340 | 696 | 159,693 | — | |||||||||||||||||||||||||
Exercise of unit options in subsidiary | — | — | 522 | — | 522 | 67 | 589 | — | — | |||||||||||||||||||||||||
Balance at September 30, 2021 | 3 | $ | — | $ | 94,822 | $ | (36,443 | ) | $ | 58,379 | $ | 16,664 | $ | 75,043 | 599,528 | $ | — |
See accompanying notes to unaudited condensed consolidated financial statements.
San Vicente Offshore Holdings (Cayman) Limited and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
Nine Months Ended September 30, |
||||||||
2022 | 2021 | |||||||
Operating activities | ||||||||
Net loss | $ | (18,579 | ) | $ | (16,151 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Unit-based compensation | 23,353 | 1,806 | ||||||
Accretion of premium on debt | — | 1,118 | ||||||
Accretion of interest on deferred payment | 19,155 | 19,523 | ||||||
Amortization of debt issuance costs | 759 | 897 | ||||||
Interest income on promissory note from a related party | (2,232 | ) | (1,282 | ) | ||||
Depreciation and amortization | 27,215 | 32,534 | ||||||
Provision for doubtful accounts | 27 | — | ||||||
Deferred income taxes | (8,514 | ) | (8,660 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (575 | ) | 3,622 | |||||
Prepaid expenses and deferred charges | (1,144 | ) | (1,602 | ) | ||||
Other current assets | (4,779 | ) | (4,268 | ) | ||||
Other assets | (677 | ) | 53 | |||||
Accounts payable | (524 | ) | 1,122 | |||||
Accrued expenses and other current liabilities | 4,654 | (7,185 | ) | |||||
Deferred revenue | (1,345 | ) | 5,364 | |||||
Due to related party | — | 10 | ||||||
Other liabilities | — | (805 | ) | |||||
Net cash provided by operating activities | $ | 36,794 | $ | 18,852 | ||||
Investing activities | ||||||||
Purchase of property and equipment | $ | (339 | ) | $ | (156 | ) | ||
Additions to capitalized software | (3,434 | ) | (2,184 | ) | ||||
Net cash used in investing activities | $ | (3,773 | ) | $ | (2,340 | ) | ||
Financing activities | ||||||||
Proceeds from exercise of unit options in subsidiary | $ | 1,136 | $ | 589 | ||||
Repayment of deferred payment | (75,000 | ) | — | |||||
Subsidiary distributions paid | (4,524 | ) | — | |||||
Proceeds from issuance of debt | 60,000 | — | ||||||
Payment of debt | (2,220 | ) | (2,880 | ) | ||||
Payment of debt issuance costs | (955 | ) | (960 | ) | ||||
Net cash used in financing activities | $ | (21,563 | ) | $ | (3,251 | ) | ||
Net increase in cash, cash equivalents and restricted cash | 11,458 | 13,261 | ||||||
Cash, cash equivalents and restricted cash, beginning of the period | 17,170 | 42,786 | ||||||
Cash, cash equivalents and restricted cash, end of the period | $ | 28,628 | $ | 56,047 | ||||
Reconciliation of cash, cash equivalents and restricted cash | ||||||||
Cash and cash equivalents | $ | 27,236 | $ | 54,655 | ||||
Restricted cash | 1,392 | 1,392 | ||||||
Cash, cash equivalents and restricted cash | $ | 28,628 | $ | 56,047 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash interest paid | $ | 12,159 | $ | 13,752 | ||||
Income taxes paid | $ | 2,207 | $ | 8,775 | ||||
Supplemental disclosure of non-cash financing activities: | ||||||||
Repayment of principal and interest on the promissory note to a related party from distributions | $ | 3,789 | $ | — | ||||
Subsidiary distributions to a related party | $ | (3,789 | ) | $ | — | |||
Deferred transaction costs not yet paid | $ | 1,168 | $ | — |
See accompanying notes to unaudited condensed consolidated financial statements.
San Vicente Offshore Holdings (Cayman) Limited and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
(in thousands, except per unit amounts and unit data)
1. | Nature of Business and Going Concern |
Organization
San Vicente Offshore Holdings (Cayman) Limited was incorporated as a limited liability company in the Cayman Islands on February 18, 2020. San Vicente Offshore Holdings (Cayman) Limited directly and indirectly holds units of Grindr Group LLC (“Grindr Group” or “Grindr”) through various wholly owned or partially owned subsidiaries (San Vicente Offshore Holdings (Cayman) Limited and Subsidiaries, collectively referenced as the “Company”).
The Company’s subsidiary, Grindr Group, manages and operates the Grindr app, a global LGBTQ+ social network platform serving and addressing the needs of the entire LGBTQ+ queer community. The Grindr app is available through Apple’s App Store for iPhones and Google Play for Android. Grindr Group offers both a free, ad-supported service and a premium subscription version. Grindr Group also manages a dating service app called Blendr, for a broader market.
Grindr Group is a subsidiary of San Vicente Group Holdings LLC (“Group Holdings”), which is the joint subsidiary of San Vicente Group TopCo LLC (“SVG”), a wholly owned subsidiary of SVA, and San Vicente Equity Joint Venture LLC (“SVE”), a related party and subsidiary of SVA, which is a wholly owned subsidiary of the Company.
Going Concern
As of September 30, 2022, the Company had cash of $27,236 and had a liability of $155,000, for which the carrying value as of September 30, 2022 is $140,093, that is payable to Kunlun Holdings Limited (“Kunlun”) in June 2023 (“Deferred Payment”, see Note 7), which is within twelve months of the date the consolidated financial statements are issued. The Company’s net loss, negative working capital, and net cash provided by operating cash flows for the nine months ended September 30, 2022 was $18,145, $114,333 and $36,794, respectively. The Company’s primary source of operating funds since inception has been operating cash flows, cash proceeds from debt, and equity financing transactions. In light of the maturity date of the Deferred Payment, management evaluated whether there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. In June 2022, the Company made a payment of $75,000 in partial satisfaction of the Deferred Payment obligation. Given the timing of the remaining Deferred Payment due in 2023, management has determined that there is a material uncertainty that casts significant doubt about the Company’s ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on management’s continued execution of the Company’s on-going and strategic plans, which include continuing to raise funds through a combination of ongoing operations, equity, and debt issuances. Management is also in the process of effectuating a merger of Grindr Group, a subsidiary, with Tiga Acquisition Corp (“Tiga”), a special purpose acquisition company and a related party. In accordance with the terms of the Agreement and Plan of Merger with Tiga that was signed on May 9, 2022, Grindr Group is permitted to distribute up to $370,000 to its members and affiliates to repay the entire Deferred Payment that currently exists with cash from the merger.
There is no assurance that the Company’s plans to raise capital will be successful. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. As such, the condensed consolidated financial statements have been prepared on a going concern basis. In the event the Company does not complete this business combination, the Company expects to seek additional funding through debt financings or other capital sources to pay off the Deferred Payment. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all. The ability to successfully effectuate the planned merger and obtain funding, therefore, is outside of management’s control and is a material uncertainty that casts significant doubt upon the Company’s ability to continue as a going concern.
2. | Summary of Significant Accounting Policies |
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission, (“SEC”), regarding interim financial reporting. Certain information and disclosures normally included in the condensed consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and accompanying notes for the year ended December 31, 2021. The unaudited condensed consolidated financial statements are unaudited and have been prepared on a basis consistent with that used to prepare the audited annual consolidated financial statements and include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair statement of the condensed consolidated financial statements. The condensed consolidated financial statements include the accounts of the Company, and its wholly owned subsidiaries after elimination of intercompany transactions and balances. The operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results expected for the full year ending December 31, 2022.
Accounting Estimates
Management of the Company is required to make certain estimates, judgments, and assumptions during the preparation of its condensed consolidated financial statements in accordance with U.S. GAAP. These estimates, judgments, and assumptions impact the reported amounts of assets, liabilities, revenue, and expenses, and the related disclosure of contingent assets and liabilities. Actual results could differ from these estimates. On an ongoing basis, the Company evaluates its estimates and judgments including those related to: the useful lives and recoverability of property and equipment and definite-lived intangible assets; the recoverability of goodwill and indefinite-lived intangible assets; the carrying value of accounts receivable, including the determination of the allowance for doubtful accounts; valuation allowance; uncertain tax positions; legal contingencies; and the valuation of unit-based compensation, among others.
Impact of COVID-19
In March 2020, the World Health Organization declared COVID-19 a global pandemic. The COVID-19 outbreak has reached across the globe, resulting in the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans intended to control the spread of the virus.
While restrictions have been lessened and lifted, restrictions could be increased or reinstated in the future. Although an adverse impact on the Company’s ongoing operations is unlikely, the full magnitude the pandemic will have on the Company remains uncertain and will depend on the duration of the pandemic, as well as the effectiveness of mass vaccinations and the impact of future variants of the virus. Additionally, changes to estimates related to ongoing COVID-19 disruptions could result in other impacts, including, but not limited to, goodwill, indefinite-lived intangibles, and long-lived asset impairment charges.
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable:
Level 1 - | Observable inputs obtained from independent sources, such as quoted market prices for identical assets and liabilities in active markets. |
Level 2 - | Other inputs, which are observable directly or indirectly, such as quoted market prices for similar assets or liabilities in active markets, quoted market prices for identical or similar assets or liabilities in markets that are not active, and inputs that are derived principally from or corroborated by observable market data. |
Level 3 - | Unobservable inputs for which there is little or no market data and require the Company to develop its own assumptions, based on the best information available in the circumstances, about the assumptions market participants would use in pricing the assets or liabilities. |
Recurring Fair Value Measurements
Money market funds are measured and recorded at fair value on the Company’s balance sheets on a recurring basis. The following tables present money market funds and their level within the fair value hierarchy as of September 30, 2022 and December 31, 2021:
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
September 30, 2022: | ||||||||||||||||
Money market funds | $ | 25,062 | $ | 25,062 | $ | — | $ | — |
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
December 31, 2021: | ||||||||||||||||
Money market funds | $ | 9,648 | $ | 9,648 | $ | — | $ | — |
The Company’s remaining financial instruments that are measured at fair value on a recurring basis consist primarily of cash, accounts receivable, accounts payable, accrued expenses, and other current liabilities. The Company believes their carrying values are representative of their fair values due to their short-term maturities. The fair values of the Company’s Credit Agreement balances were measured by comparing their prepayment values and observable market data consisting of interest rates based on similar credit ratings, which the Company classifies as a Level 2 input within the fair value hierarchy. The Company does not have any recurring fair value measurements using significant unobservable inputs (Level 3) as of September 30, 2022 and December 31, 2021.
Nonrecurring Fair Value Measurements
Assets acquired and liabilities assumed in business combinations are initially measured at fair value on the acquisition date on a nonrecurring basis using Level 3 inputs.
The Company is required to measure certain assets at fair value on a nonrecurring basis after initial recognition. These include goodwill, intangible assets, and long-lived assets, which are measured at fair value on a nonrecurring basis as a result of impairment reviews and any resulting impairment charge. Impairment is assessed annually in the fourth quarter or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit or assets below the carrying value, as described below. The fair value of the reporting unit or asset groups is determined primarily using cost and market approaches (Level 3).
Deferred transaction costs
Deferred transaction costs consist of direct legal, accounting and other fees relating to the Grindr Group’s anticipated merger with a special purpose acquisition company (the “Merger”). These costs are capitalized as incurred in other current assets on the condensed consolidated balance sheets and will be expensed or charged to members’ equity upon the completion of the Merger. In the event the Merger is terminated, deferred transaction costs will be expensed in that period. Deferred transaction costs as of September 30, 2022 were $8,086. There were no deferred transaction costs as of December 31, 2021.
Modification of equity classified award
On the modification date, the Company determines the type of modification of the equity award by assessing whether the equity awards are probable or improbable to vest before and after the modification. The Company estimates the fair value of the awards immediately before and immediately after modification for those equity awards that are probable of vesting before and after the modification. Any incremental increase in fair value is recognized as an expense immediately to the extent the underlying equity awards are vested and on a straight-line basis over the requisite service period using the related expense attribution method to the extent that they are unvested. For equity awards that are improbable of vesting before the modification and probable of vesting after the modification, the Company recognizes expense measured as the fair value of the modified award on a straight-line basis over the requisite service period using the related expense attribution method based on the fair value of the awards at the modification date.
Revenue Recognition
Revenue is recognized when or as a customer obtains control of promised services. The amount of revenue recognized reflects the consideration which the Company expects to be entitled to in exchange for these services.
The Company derives substantially all of its revenue from subscription revenue and advertising revenue. As permitted under the practical expedient available under ASU 2014-09, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less, (ii) contracts with variable consideration that is allocated entirely to unsatisfied performance obligations or to a wholly unsatisfied promise accounted for under the series guidance, and (iii) contracts for which the Company recognizes revenue for the amount at which the Company has the right to invoice for services performed.
Direct Revenue
Direct revenue consists of subscription revenue. Subscription revenue is generated through the sale of monthly subscriptions that are currently offered in one, three, six, and twelve-month lengths. Subscription revenue is presented net of taxes, credits, and chargebacks. Subscribers pay in advance, primarily through mobile app stores, and, subject to certain conditions identified in the Company’s terms and conditions, generally all purchases are final and nonrefundable. Revenue is initially deferred and is recognized using the straight-line method over the term of the applicable subscription period.
Indirect Revenue
Indirect revenue consists of advertising revenue and other non-direct revenue. The Company has contractual relationships with advertising service providers and also directly with advertisers to display advertisements in the Grindr app. For all advertising arrangements, the Company’s performance obligation is to provide the inventory for advertisements to be displayed in the Grindr app. For contracts made directly with advertisers, the Company is also obligated to serve the advertisements in the Grindr app. Providing the advertising inventory and serving the advertisement is considered a single performance obligation, as the advertiser cannot benefit from the advertising space without its advertisements being displayed.
The pricing and terms for all advertising arrangements are governed by either a master contract or insertion order. The transaction price in advertising arrangements is generally the product of the number of advertising units delivered (e.g., impressions, offers completed, videos viewed, etc.) and the contractually agreed upon price per advertising unit. Further, for advertising transactions with advertising service providers, the contractually agreed upon price per advertising unit is generally based on the Company’s revenue share or fixed revenue rate as stated in the contract. The number of advertising units delivered is determined at the end of each month, which resolves any uncertainty in the transaction price during the reporting period.
Account Receivables, net of allowance for doubtful accounts
The majority of app users access the Company’s services through mobile app stores. The Company evaluates the credit worthiness of these two mobile app stores on an ongoing basis and does not require collateral from these entities. Accounts receivable also include amounts billed and currently due from advertising customers. The Company maintains an allowance for doubtful accounts to provide for the estimated amount of accounts receivable that will not be collected. The allowance for doubtful accounts is based upon a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, and the specific customer’s ability to pay its obligation.
The accounts receivable balances, net of allowances, were $18,433 and $17,885 as of September 30, 2022 and December 31, 2021, respectively. The opening balance of accounts receivable, net of allowances, was $11,833 as of January 1, 2021.
Contract Liabilities
Deferred revenue consists of advance payments that are received or are contractually due in advance of the Company’s performance. The Company classifies subscription deferred revenue as current and recognizes revenue ratably over the terms of the applicable subscription period or expected completion of the performance obligation which range from one to twelve months. The deferred revenue balances were $18,732 and $20,077 as of September 30, 2022 and December 31, 2021, respectively. The opening balance of deferred revenue balance was $13,530 as of January 1, 2021.
For the three and nine months ended September 30, 2022, the Company recognized $2,406 and $18,848 of revenue that was included in the deferred revenue balance as of December 31, 2021. For the three and nine months ended September 30, 2021, the Company recognized $1,823 and $13,978 of revenue that was included in the deferred revenue balance as of December 31, 2020.
Disaggregation of Revenue
The following tables summarizes revenue from contracts with customers for the three and nine months ended September 30, 2022 and 2021, respectively:
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Direct revenue | $ | 43,209 | $ | 30,537 | $ | 118,364 | $ | 80,733 | ||||||||
Indirect revenue | 7,193 | 7,712 | 22,123 | 20,079 | ||||||||||||
$ | 50,402 | $ | 38,249 | $ | 140,487 | $ | 100,812 |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
United States | $ | 31,127 | $ | 23,531 | $ | 87,876 | $ | 63,533 | ||||||||
United Kingdom | 3,752 | 3,127 | 10,457 | 7,753 | ||||||||||||
Rest of the world | 15,523 | 11,591 | 42,154 | 29,526 | ||||||||||||
$ | 50,402 | $ | 38,249 | $ | 140,487 | $ | 100,812 |
Recent Accounting Pronouncements
As an “emerging growth company”, the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), allows the Company to delay adoption of new or revised pronouncement applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use the adoption dates applicable to private companies. As a result, the Company’s financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective date for new or revised accounting standards that are applicable to public companies.
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends the accounting for contract assets acquired and contract liabilities assumed from contracts with customers in business combinations. The amendment requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with ASC Topic 606, resulting in a shift from previous guidance which required similar assets and liabilities to be accounted for at fair value at the acquisition date. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The amendments in this Update should be applied prospectively to business combinations occurring on or after the effective date of the amendments. While the Company is continuing to assess the timing of adoption and potential impact of this guidance it does not expect the guidance to have a material effect, if any, on its condensed consolidated financial statements and related disclosures. The Company will continue to evaluate the impact of this guidance upon the occurrence of future acquisitions.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. This guidance is optional for a limited period of time through December 31, 2022. The Company is currently evaluating the impact this guidance may have as it relates to arrangements that reference LIBOR on its condensed consolidated financial statements and related disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheets for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statement of operations. The new standard is effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years beginning after December 15, 2022. The primary effect of the adoption of ASU No. 2016-02 will be the recognition of a right of use asset and related liability to reflect the Company’s rights and obligations under its operating leases. The Company will also be required to provide the additional disclosures stipulated in ASU No. 2016-02. The Company is currently evaluating the impact of the requirements of ASU 2016-02 and does not expect the adoption to have a significant impact on the consolidated statements of operations and comprehensive income (loss) and consolidated statements of cash flows. Upon adoption, there will be a material increase in total assets and total liabilities in the consolidated balance sheet due to the recognition of right-of-use assets and lease liabilities for the Company’s leases.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology. The standard requires entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash. Additional disclosures about significant estimates and credit quality are also required. The FASB has subsequently issued updates to the standard to provide additional clarification on specific topics. The ASU is effective for the Company for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company is currently evaluating the impact of this standard on its financial statements.
3. | Income Tax |
In determining the quarterly provisions for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date income (loss), adjusted for discrete items arising in that quarter. In addition, the effect of changes in enacted tax laws or rates and tax status is recognized in the interim period in which the change occurs.
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||
2022 | 2021 | Change | 2022 | 2021 | Change | |||||||||||||||||||
Income tax provision | $ | (2,485 | ) | $ | (1,079 | ) | $ | (1,406 | ) | $ | (1,192 | ) | $ | (5,019 | ) | $ | 3,827 | |||||||
Effective tax rate | 39.79 | % | 24.18 | % | 15.61 | % | 6.03 | % | 23.71 | % | (17.68 | )% |
The Company is subject to taxation in the U.S. and various states jurisdictions. ASC Topic 740, Income Taxes (“ASC 740”) indicates that the statutory income tax rate of a foreign reporting entity be used when preparing the rate reconciliation disclosure. As such, the Company and its wholly owned subsidiaries use the statutory income tax rate in the Cayman Islands, which is 0%. The change in the effective tax rate for the three and nine months ended September 30, 2022 when compared to the three and nine months ended September 30, 2021, was primarily attributable to the change in pre-tax earnings, U.S. federal and state income taxes, unit-based compensation, foreign derived intangible income deduction and other permanent differences.
The computation of the estimated annual effective income rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and tax in foreign jurisdictions and permanent and temporary differences. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, additional information is obtained or the Company’s tax environment changes. To the extent that the estimated annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in the income tax provision in the quarter in which the change occurs.
The Company remains subject to examination for federal and state income tax purposes for the tax years ending 2016 and forward. The Company does not anticipate a significant change in its uncertain tax benefits over the next 12 months.
4. | Other Current Assets |
Other current assets consist of the following:
September 30, 2022 |
December 31, 2021 |
|||||||
Deferred transaction costs | $ | 8,086 | $ | — | ||||
Income tax receivable | — | 3,274 | ||||||
Other current assets | 1 | 34 | ||||||
$ | 8,087 | $ | 3,308 |
5. | Promissory Note from a Related Party |
On April 27, 2021, Catapult GP II LLC (“Catapult GP II”), a related party wherein certain members of Catapult GP II are executives of the Company’s subsidiary, Grindr Group, purchased 5,387,194 common units of Grindr Group. In conjunction with the common units purchased, Grindr Group entered into a full recourse promissory note with Catapult GP II with a face value of $30,000 (the “Note”). The Note, including all unpaid interest, is to be repaid the earlier of 1) the tenth anniversary of the Note, 2) upon the completion of a liquidity event, or 3) upon completion of an initial public offering or a special-purpose acquisition company transaction. The Note bears interest at 10% per annum on a straight-line basis.
The total amount outstanding on the Note, including interest, was $30,481 and $32,038 as of September 30, 2022 and December 31, 2021, respectively. The Note and the related accrued interest are reflected as a reduction to equity in the condensed consolidated statements of members’ equity.
6. | Accrued Expenses and Other Current Liabilities |
Accrued expenses and other current liabilities consist of the following:
September 30, 2022 |
December 31, 2021 |
|||||||
Settlement payable of incentive units on 2016 Plan | $ | 2,108 | $ | 1,060 | ||||
Income, sales and other taxes payable | 2,677 | 631 | ||||||
Accrued professional service fees | 1,452 | 184 | ||||||
Accrued legal expenses | 1,185 | 196 | ||||||
Accrued infrastructure expenses | 567 | — | ||||||
Employee compensation and benefits | 477 | 320 | ||||||
Settlement payable to a former director of Grindr Group | 406 | 204 | ||||||
Deferred rent | 362 | 196 | ||||||
Other accrued expenses | 1,162 | 715 | ||||||
$ | 10,396 | $ | 3,506 |
7. | Debt |
Total debt for the Company is comprised of the following:
September 30, 2022 |
December 31, 2021 |
|||||||
Credit Agreement | ||||||||
Current | $ | 5,040 | $ | 3,840 | ||||
Non-current | 192,900 | 136,320 | ||||||
197,940 | 140,160 | |||||||
Less: unamortized debt issuance costs | (3,237 | ) | (3,041 | ) | ||||
$ | 194,703 | $ | 137,119 |
On June 10, 2020, Grindr Gap LLC and Grindr Capital LLC, wholly owned subsidiaries of the Company, entered into a credit agreement (the “Credit Agreement”) which permitted the Company to borrow up to $192,000.
Borrowings under the agreement are collateralized by the capital stock and assets of certain wholly owned subsidiaries of the Company. The Company’s obligation under the Credit Agreement is guaranteed by certain of the Company’s wholly owned subsidiaries.
Borrowings under the Credit Agreement are payable in full on June 10, 2025 with mandatory principal repayments beginning in the first quarter of 2021. Mandatory repayments are equal to 0.50% of the original principal amount of the Credit Agreement. The Company is also required to make mandatory prepayments of the Credit Agreement, commencing with the fiscal year ending December 31, 2020, equal to a defined percentage rate (determined based on the Company’s leverage ratio) of excess cash flows. No such prepayment was required for the three and nine months ended September 30, 2022 and 2021.
Borrowings under the Credit Agreement are Index Rate Loans or LIBOR Rate Loans, at the Company’s discretion. Index Rate Loans bear interest at Index Rate plus applicable margin based on the consolidated total leverage ratio, or 7%. LIBOR Rate Loans bear interest at LIBOR Rate plus an applicable margin based on the consolidated total leverage ratio, or 8%. The interest rates in effect as of September 30, 2022 and December 31, 2021 were 10.3% and 9.5%, respectively, based on the LIBOR Rate.
The Credit Agreement also required the Company to make a lump-sum principal repayment in the amount equal to $48,000 plus related accrued interest on or before February 28, 2021. This repayment date was amended to November 30, 2021 based on the first amendment to the Credit Agreement entered into on February 25, 2021. In addition to the mandatory repayment, the Company was required to pay a premium of 10% of the principal repayment, or $4,800, together with the mandatory lump-sum principal repayment.
The premium was accrued over the term of the Credit Agreement through the initial repayment date in February 2021. For the nine months ended September 30, 2021, $1,118 of the premium was accrued and recognized as interest expense in “Interest expense, net” in the condensed consolidated statements of operations and comprehensive loss. The Company paid the mandatory lump-sum principal and premium in November 2021.
On June 13, 2022, a second amendment to the Credit Agreement was entered into which allowed the Company to borrow an additional $60,000, which the Company drew in conjunction with the closing of the amendment. The second amendment to the Credit Agreement was accounted for as a debt modification. The Company capitalized and paid debt issuance costs totaling $955 in conjunction with the second amendment. The borrowing under the second amendment has the same terms as the Credit Agreement and is payable in full on June 10, 2025.
The obligations under the Credit Agreement are subject to automatic acceleration upon a voluntary or involuntary bankruptcy event of default and are subject to acceleration at the election of the lenders upon the continuance of any other event of default, including a material adverse change in the business, operations or conditions of the Company, or SVA’s default on the Deferred Payment resulting from the Company’s acquisition of Grindr, Inc. from Kunlun. A default interest rate of an additional 2% per annum will apply on all outstanding obligations during the occurrence and continuance of an event of default. If an event of default occurs on or prior to June 10, 2022, an additional premium will be charged equal to all unpaid interest that would have accrued until the date that is 24 months after the inception of the Credit Agreement. The Credit Agreement includes restrictive non-financial and financial covenants, including the requirement to maintain a total leverage ratio no greater than 4.75:1.00 prior to and through March 31, 2022, and no greater than 3.25:1.00 thereafter. As of September 30, 2022 and December 31, 2021, the Company was in compliance with the financial debt covenants.
The fair value of the Deferred Payment balance was measured by the discounted cash flow method using observable market data consisting of interest rates based on institutions with similar credit ratings, which the Company classifies as a Level 2 input within the fair value hierarchy. The Deferred Payment does not bear any interest, with $75,000 payable on the second anniversary of the closing date and $155,000 payable on the third anniversary of the closing date. The estimated fair value of the Deferred Payment as of September 30, 2022 was $137,136 and as of December 31, 2021 the carrying value of the Deferred Payment approximated the fair value.
The fair values of the Company’s Credit Agreement balances were measured by the discounted cash flow method or comparing their prepayment values and observable market data consisting of interest rates based on similar credit ratings, which the Company classifies as a Level 2 input within the fair value hierarchy. The estimated fair value of the Credit Agreement balances as of September 30, 2022 and December 31, 2021 was $189,746 and $142,963, respectively.
8. | Commitments and Contingencies |
Litigation
From time to time, the Company is subject to various legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict, and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Currently, it is too early to determine the outcome and probability of any legal proceedings and whether they would have a material adverse effect on the Company’s business. As of September 30, 2022 and December 31, 2021, there were no amounts accrued that the Company believes would be material to its financial position.
In January 2020, the Norwegian Consumer Council (“NCC”) submitted three complaints to the Norwegian Data Protection Authority, (“NDPA”). Datatilsynet, under Article 77(1) of the General Data Protection Regulation (“GDPR”) against the following parties: (1) Grindr and AdColony; (2) Grindr, Twitter, AppNexus, and OpenX; and (3) Grindr, and Smaato. The complaints reference a report entitled “Out Of Control: How consumers are exploited by the online advertising industry”. The NCC argued that (1) the Company lacks valid consent for data sharing, (2) the Company shares personal data under Article 9 and does not have a legal basis for processing personal data under article 9, and (3) the Company does not provide clear information about data sharing, which infringes the principle of transparency in Article (5)(1)(a) GDPR. In April 2020, the Company received an Order to Provide Information from the Datatilsynet. The Company responded to this Order and provided information to Datatilsynet in May 2020. In January 2021, the Datatilsynet sent the Company an “Advance notification of an administrative fine” of 100,000 NOK (the equivalent of approximately $9,300 using the exchange rate as of September 30, 2022) for an alleged infringement of the GDPR. This was notice of a proposed fine to which Grindr was entitled to respond before Datatilsynet made a final decision. Datatilsynet alleged (i) that Grindr disclosed personal data to third party advertisers without a legal basis in violation of Article 6(1) GDPR and (ii) that Grindr disclosed special category personal data to third party advertisers without a valid exemption from the prohibition in Article 9(1) GDPR. Grindr responded to the Advance notification on March 8, 2021, to contest the draft findings and fine. A redacted copy of Grindr’s response was made public. On April 29, 2021, Datatilsynet issued its Order To Provide Information - Grindr - Data Processors, asking, among other things, whether Grindr considered certain ad tech partners to be processors or controllers. Datatilsynet later extended the deadline to respond to June 2, 2021, and Grindr sent a response to Datatilsynet on that date. On October 11, 2021, Datatilsynet sent the Company a letter concerning Grindr’s reply to the Advance notification. In the letter, Datatilsynet clarified that the Advance notification only “pertains to data subjects on Norwegian territory,” and advised the Company of two additional complaints that had been filed (one in March 2021 and the other in September 2021) with Datatilsynet by the Norwegian Consumer Council. Datatilsynet requested any further comments or remarks to the Advance notification by November 1, 2021, but later extended the deadline to November 19, 2021. On November 19, 2021, Grindr served a response to Datatilsynet’s October 11, 2021 letter. On November 26, 2021, Datatilsynet requested any redactions to the response based upon the expectation that third parties may request a copy of Grindr’s November 19, 2021 response, and Grindr proposed redactions on the same day.
In December 2021, Datatilsynet issued a reduced administrative fine against the Company in the amount of 65,000 NOK, or approximately $6,045 using the exchange rate as of September 30, 2022, with an extended deadline for the Company to appeal through February 14, 2022. On February 14, 2022, Grindr filed an appeal brief with the DPA. Grindr is not aware when Datatilsynet will take additional action in this matter. It is too early to determine the probability of there being any further proceedings, the outcome of any such proceedings, and whether such proceedings may have a material adverse effect on the Company’s business, including because of the uncertainty of (i) the ultimate amount of the fine imposed, and (ii) whether Grindr may determine to appeal or further contest the fine. As a result, an estimate of the ultimate loss cannot be made at this time. It is at least reasonably possible that a change in the administrative fine may occur in the near term.
In Summer of 2018, Grindr was informed by multiple State Attorneys General (the “Multistate”) that the Multistate was opening a formal investigation into the Company’s sharing of users’ HIV status and last tested date with third parties, and its security and processing of user geolocation information. Since August 2018 the Company has responded to multiple requests for information. In November 2020, the Multistate contacted the Company with its expected claims and findings and general proposed settlement terms that included a settlement of $11,000. The Company responded in February 2021 by providing the Multistate with a white paper detailing why the Multistate’s claims are factually and legally deficient. The Company also met with the Multistate and presented its arguments via a presentation. In May 2021, the Multistate contacted Grindr to request an extension of the tolling agreement from June 1, 2021 to October 1, 2021. On May 30, 2021, Grindr entered into a tolling agreement extension with the State Attorneys General of Arkansas, Indiana, New Jersey, North Carolina, Oregon, Vermont, and Washington, extending the tolling agreement from June 1, 2021 to August 1, 2021. In June 2021, the New Jersey Attorney General served supplemental requests on Grindr seeking, among other things, additional information related to matters discussed in Grindr’s February 2021 white paper, as well as documents regarding submissions made by Grindr to Datatilsynet. In July 2021, Grindr served initial responses and objections to the New Jersey Attorney General’s supplemental requests and subsequently agreed to an extension of the tolling agreement from August 1, 2021 to October 1, 2021. Since that time, the New Jersey Attorney General agreed to limit the scope of the supplemental requests, and Grindr agreed to provide certain information in response to the supplemental requests. In addition, Grindr agreed to enter into an additional tolling agreement extension with the State Attorneys General of Arkansas, Indiana, New Jersey, North Carolina, Oregon, Vermont, and Washington, extending the tolling agreement from October 1, 2021 to March 31, 2022. On March 16, 2022, May 27, 2022 and July 5, 2022, Grindr entered into an additional extensions of the tolling agreement with the Attorneys General until May 30, 2022, June 30, 2022 and September 1, 2022. In October 2021, Grindr served an initial response to the New Jersey Attorney General’s supplemental requests, with additional responses to supplemental requests served in November and December 2021. In January 2022, Grindr submitted responses to the New Jersey Attorney General’s follow-up questions regarding the Company’s inquiry in response to The Pillar blog. On October 6, 2022, the Company was advised by the Multistate that the investigation has been closed without action and with no further action anticipated. See Note 12 for additional information.
In December 2020, Grindr was named in a statement of claim and petition for certification of a class action in Israel (Israeli Central District Court). The statement of claims generally alleges that Grindr violated users’ privacy by sharing information with third parties without their explicit consent. The petitioner asserts several causes of action under Israeli law, including privacy breaches, unlawful enrichment, and negligence, as well as causes of action under California law, including privacy violations under the California Constitution and California common law, negligence, violation of the Unfair Competition Law, and unjust enrichment. The statement of claims seeks various forms of monetary, declaratory, and injunctive relief, in addition to certification as a class action. In June 2021, the petitioner attempted service of the statement of claims and the associated filings (all in translated form as required under applicable law) on Grindr. In November 2021, Grindr filed an initial response to the plaintiff’s Statement of Claim challenging the effectiveness of service. The plaintiff then filed opposition to Grindr’s service-related motion, raising a series of technical challenges. During the Israeli court hearing in January 2022, the Israeli court directed the plaintiff to start the service process from the beginning by seeking court permission to pursue international service on Grindr. On February 8, 2022, the Court formally permitted the Plaintiff, in ex parte, to serve the Company outside the jurisdiction. The Company should file its response to the Motion for certification (and/or preliminary jurisdictional motions) within 90 days from the date it is served. On March 30, 2022, Grindr received a package via U.S. Mail with the case documents. Grindr’s local Israeli counsel is preparing a motion seeking the court’s preliminary ruling on the question of applicable law. On July 5, 2022, the Company filed a motion to determine the governing law. Grindr believes that the claims lack merit, and it continues to consider and evaluate an appropriate response. At this time, this matter remains in its nascent stages, and it is too early to determine the likely outcome of this proceeding or whether the proceeding may ultimately have a material adverse effect on the Company’s business, including because of the uncertainty of (i) whether Grindr will incur a loss, (ii) if a loss is incurred, what the amount of that loss may be, and (iii) whether Grindr may determine to appeal or further contest the loss.
9. | Distributions |
On June 10, 2022, the Board of Managers of Grindr Group, a subsidiary of the Company, approved a special distribution of $0.75 per unit of Grindr Group Series X Ordinary Units, amounting to $83,313 to Series X Ordinary Unit holders as of the close of business on June 10, 2022. The distribution was partially paid in June 2022, and the balance was fully paid in July 2022.
10. | Unit-based Compensation |
The unit-based compensation expense is related to the grant of unit options and restricted units granted under the Grindr Group 2020 Plan and the grant of SVE’s Series P Units to Catapult Goliath LLC (“Catapult Goliath”), a related party that liquidated prior to the Closing and distributed its holdings to its members, some of whom were former officers of the Company. The unit-based compensation expense for SVE’s Series P Units has been recorded in the Company’s condensed consolidated financial statements with a corresponding credit to equity as noncontrolling interest.
Grindr Group 2020 Plan
Unit options
The following table summarizes the key input assumptions used in the Black-Scholes option-pricing model to estimate the fair value of unit options granted for the nine months ended September 30, 2022 and 2021:
Nine Months Ended September 30, | ||||||||
2022 | 2021 | |||||||
Expected life of units (in years)(1) | 4.57 - 4.61 | 4.55 - 4.61 | ||||||
Expected unit price volatility(2) | 56.39% - 60.87% | 48.20% - 56.46% | ||||||
Risk free interest rate(3) | 1.37% - 3.05% | 0.32% - 0.78% | ||||||
Expected dividend yield(4) | —% | —% | ||||||
Weighted average grant-date fair value per unit of unit options granted | $2.75 - $5.81 | $1.80 - $2.17 | ||||||
Fair value per common unit | $5.89 - $11.13 | $4.50 - $4.98 |
(1) | The expected term for award is determined using the simplified method, which estimates the expected term using the contractual life of the option and the vesting period. |
(2) | Expected volatility is based on historical volatilities of a publicly traded per group over a period equivalent to the expected term of the awards |
(3) | The risk-free interest rate is based on the U.S. Treasury yield of treasury bonds with a maturity that approximates the expected term of the awards |
(4) | Prior to June 10, 2022, Grindr Group has not historically paid cash dividends on its common units. On June 10, 2022, Grindr Group’s Board of Managers approved a special distribution as described in Note 9, and does not expect to pay any normal course cash dividends on its common units in the foreseeable future. |
The following table summarizes the unit option activity for the nine months ended September 30, 2022:
Number of Options |
Weighted Average Exercise Price |
|||||||
Outstanding at December 31, 2021 | 3,442,397 | $ | 4.96 | |||||
Granted | 867,050 | $ | 10.37 | |||||
Exercised | (240,205 | ) | $ | 4.73 | ||||
Forfeited | (886,519 | ) | $ | 4.63 | ||||
Outstanding at September 30, 2022 | 3,182,723 | $ | 6.56 |
San Vicente Equity Joint Venture LLC (“SVE”) Series P Profit Units (“Series P”)
A summary of Series P Units activity for the nine months ended September 30, 2022 is presented below:
Number of Units |
Weighted Average Fair Value(1) |
|||||||
Unvested at December 31, 2021 | 4,306,636 | $ | 2.07 | |||||
Vested | (3,293,464 | ) | $ | 5.36 | ||||
Unvested at September 30, 2022 | 1,013,172 | $ | 7.32 |
(1) | The weighted average fair value for unvested Series P units at December 31, 2021 is based on the grant date fair value. The weighted average fair value of the vested Series P units in 2022 and the unvested Series P units at September 30, 2022 considered the remeasured fair value of Series P upon modification (discussed below). |
There were no Series P units granted during the nine months ended September 30, 2022 and 2021.
Modification of Series P Units
On May 9, 2022, SVE and Catapult Goliath entered into an agreement to amend the vesting requirement for the Series P Units (the “Modification”). Under the Modification, the Series P Units performance-based vesting target was amended to time-based vesting and the Series P Units will vest as follows: (1) 40% immediately as of the date of modification (the “First Tranches”), and (2) 20% each on June 30, 2022, September 30, 2022 and December 31, 2022 (the “Second Tranches”). Additionally, the requisite services under the consulting agreement have been removed as a condition to vesting.
The vesting requirements for the First Tranches originally consisted of requisite services under a consulting agreement and performance-based targets, and all performance-based targets were met. As such, the Company accounted for the modification in the First Tranches as a Type I modification (probable to probable). As the modification only results in the acceleration of service-based vesting and does not involve any other changes, there was no incremental fair value upon modification. The Company recognized $2,285 incremental unit-based compensation during the nine months ended September 30, 2022 for the First Tranches as it relates to the units vested immediately upon the date of modification.
The vesting requirements for the Second Tranches originally consisted of requisite services under a consulting agreement and performance-based targets, and all performance-based targets were not met. As such, the Company accounted for the modification in the Second Tranches as a Type III modification (improbable to probable). This Type III modification results in a remeasured fair value of $7.32 per share. The remeasured fair value was determined by a probability weighted expected return method by weighting between a going concern scenario valued using the Option Pricing Method and a reverse merger scenario value using the equity value in the merger agreement. The incremental aggregate unit-based compensation related to the modification was $22,249. The Company recognized $19,217 of incremental unit-based compensation expense during the nine months ended September 30, 2022 for the Second Tranches.
Prior to the Closing, Catapult Goliath was liquidated and distributed its holdings to its members, some of whom were former officers of the
Company.
Unit-based compensation information
The following table summarizes unit-based compensation expenses for the three and nine months ended September 30, 2022 and 2021, respectively:
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Selling, general and administrative expenses | $ | 9,435 | $ | 593 | $ | 22,870 | $ | 1,623 | ||||||||
Product development expenses | 251 | 71 | 483 | 183 | ||||||||||||
$ | 9,686 | $ | 664 | $ | 23,353 | $ | 1,806 |
Unit-based compensation expense that was capitalized as an asset was $54 and $32 for the three months ended September 30, 2022 and 2021, respectively. Unit-based compensation expense that was capitalized as an asset was $108 and $78 for the nine months ended September 30, 2022 and 2021, respectively.
11. | Related Parties |
For the three months ended September 30, 2022 and 2021, the Company paid advisor fees and out-of-pocket expenses amounting to $175 and $262 to two individuals who hold ownership interest in the Company, respectively. For the nine months ended September 30, 2022 and 2021, the Company paid advisor fees and out-of-pocket expenses amounting to $606 and $644 to two individuals who hold ownership interest in the Company, respectively.
See Note 5 and Note 10 for additional related party transactions with Catapult GP II and Catapult Goliath.
12. | Subsequent Events |
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