Filing summary: Tiga Acquisition Corp. (proposed Grindr transaction)
Important issuer distinction: Although the request identifies Grindr Inc., this is Tiga Acquisition Corp.’s unaudited Form 10-Q for the quarter ended September 30, 2022. Tiga was a blank-check company pursuing a merger with Grindr; these financial statements are not Grindr’s operating results.
Business context and reporting period
Tiga had not commenced operations or generated operating revenue. Its activities were seeking and preparing for a business combination. Under the merger agreement, Grindr’s equity was to be exchanged for New Grindr common stock, with the transaction subject to shareholder approval and other closing conditions. The filing said closing was expected on or about November 18, 2022. The proxy statement/prospectus became effective November 1, 2022, and a shareholder meeting was scheduled for November 15.
Financial metrics
| Metric | Three months ended September 30, 2022 | Nine months ended September 30, 2022 |
|---|---|---|
| Operating revenue | None | None |
| Operating costs | $4.7 million | $9.0 million |
| Net income (loss) | $(9.2) million | $(8.7) million |
| Net income (loss) per share, basic and diluted | $(0.27) | $(0.25) |
| Net cash used in operating activities | $(1.7) million for the nine-month period | |
| Cash at September 30, 2022 | $100,240 outside the Trust Account | |
| Trust Account | $288.8 million | |
| Current liabilities | $9.5 million, including $7.8 million accrued expenses and $1.78 million related-party note | |
| Total liabilities | $49.6 million |
Profit margins are not meaningful because Tiga had no operating revenue. The reported quarterly and year-to-date losses were materially affected by non-cash fair-value movements: the quarter included losses of $3.2 million on warrant liabilities and $2.6 million on forward purchase agreement liabilities; the nine-month period included a $1.7 million gain on warrant liabilities but a $3.1 million loss on forward purchase agreement liabilities. Interest income on Trust Account investments was $1.3 million for the quarter and $1.7 million year to date.
No conventional operating debt or long-term debt was reported. The $1.78 million related-party convertible note was due upon completion of a business combination, subject to its terms. The filing reported no off-balance-sheet financing arrangements.
Material changes versus the prior comparable period
- Net results shifted from income to loss: the three-month period reported a $9.2 million loss versus $11.8 million income in 2021; the nine-month period reported an $8.7 million loss versus $22.8 million income.
- Operating costs rose to $4.7 million from $0.7 million for the quarter, and to $9.0 million from $1.5 million year to date.
- The change in warrant and forward purchase agreement valuations reversed direction across periods and drove much of the year-over-year earnings change. These are fair-value changes, not operating revenue.
- Cash outside the Trust Account was $100,240 at quarter-end, compared with $17,499 at December 31, 2021. The Trust Account balance rose to $288.8 million from $284.4 million.
Outlook, risks, contingencies and unusual items
- Going concern: Management said limited cash and the November 27, 2022 business-combination deadline raised substantial doubt about Tiga’s ability to continue as a going concern. If no transaction closed and no extension was requested, Tiga faced mandatory liquidation and dissolution. Management intended to complete the Grindr transaction; no liquidation adjustments were recorded.
- Transaction funding: The amended forward purchase agreement provided for a $50 million committed purchase of shares and warrants, with a backstop mechanism if specified funds were below $50 million and an additional optional investment. The filing described an anticipated transfer of the Sponsor’s agreement rights and obligations to San Vicente Parent LLC.
- Transaction fees: The $9.66 million deferred underwriting fee was entirely waived after Credit Suisse and Goldman Sachs waived their rights, as disclosed in subsequent events.
- Other fees: A successful transaction could trigger a $5 million advisor success fee and potentially a $2 million incentive fee, depending on redemptions and the agreement’s terms.
- Risks: Completion, financing and shareholder approval were uncertain. Tiga cited potential effects from COVID-19 and the war in Ukraine as not readily determinable. Warrants and forward purchase agreement liabilities were remeasured at fair value, creating earnings volatility.
- Controls and legal matters: Management concluded disclosure controls were effective as of September 30, 2022. The filing reported no legal proceedings.
Important facts for investors to verify
- Whether the business combination closed, and its final terms, timing and post-closing capitalization.
- Actual public-share redemptions and the resulting cash available at closing, including the committed forward purchase and any backstop funding.
- The final treatment and payment of transaction fees, including the waived underwriting fee and any advisor fees.
- Grindr’s standalone financial results and operating metrics, which are not presented in this Tiga 10-Q.
- Whether Tiga’s liquidity and going-concern concerns were resolved by closing or an extension, and the final status of the related-party note.