UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 2022March 31, 2023
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-39136
(Exact Name of Registrant as Specified in Its Charter) |
Delaware | 84-3015108 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
32 Old Slip, New York, NY 10005
(Address of principal executive offices)
(91791)7) 675-7157
(Issuer’s telephone number)
Helbiz, Inc.
(Former name or former address, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Class A Common Stock, $0.00001 par value | The Nasdaq Stock Market LLC | |||
The Stock Market LLC |
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
Emerging growth company | ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of August 15, 2022,May 22, 2023, shares of Class A common stock, par value $0.00001 per share, were issued and outstanding and shares of Class B common stock, par value $0.00001 per share, were issued and outstanding.
HELBIZ,
MICROMOBILITY.COM, INC.
(Formerly Helbiz, Inc.)
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2022 MARCH 31, 2023
TABLE OF CONTENTS
PART 1 – FINANCIAL INFORMATION
Item 1. Interim Financial Statements.
Micromobility.com, Inc.
(Formerly Helbiz, Inc.)
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
June 30, | December 31, | March 31, | December 31, | |||||||||||||
2022 | 2021 | 2023 | 2022 | |||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 2,480 | $ | 21,143 | $ | 647 | $ | 429 | ||||||||
Accounts receivables | 1,788 | 451 | 552 | 1,345 | ||||||||||||
Contract assets – Media rights | 1,806 | 2,758 | ||||||||||||||
Prepaid media rights | 997 | 2,366 | ||||||||||||||
VAT receivables | 2,843 | 2,992 | 1,873 | 3,054 | ||||||||||||
Prepaid and other current assets | 4,458 | 4,681 | 3,828 | 4,051 | ||||||||||||
Total current assets | 13,375 | 32,025 | 7,897 | 11,245 | ||||||||||||
Goodwill | 13,826 | 13,826 | ||||||||||||||
Property, equipment and deposits, net | 11,234 | 7,616 | 8,012 | 9,237 | ||||||||||||
Goodwill | 9,791 | 10,696 | ||||||||||||||
Intangible assets, net | 1,493 | 2,075 | 3,214 | 3,267 | ||||||||||||
Right of use assets | 3,211 | 2,872 | ||||||||||||||
Other assets | 1,539 | 1,212 | 717 | 707 | ||||||||||||
TOTAL ASSETS | $ | 37,433 | $ | 53,623 | $ | 36,877 | $ | 41,154 | ||||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Account payables | $ | 14,182 | $ | 10,536 | ||||||||||||
Accounts payable | $ | 14,467 | $ | 14,359 | ||||||||||||
Accounts payable related to media rights | 7,913 | 7,732 | ||||||||||||||
Accrued expenses and other current liabilities | 4,000 | 3,806 | 8,665 | 8,885 | ||||||||||||
Deferred revenues | 3,651 | 1,585 | 2,798 | 3,047 | ||||||||||||
Warrant liabilities | 210 | 1,596 | ||||||||||||||
Short term financial liabilities and capital leases, net | 30,597 | 25,473 | ||||||||||||||
Operating lease liabilities | 1,379 | 1,463 | ||||||||||||||
Finance lease liabilities | 1,977 | 2,002 | ||||||||||||||
Short term financial liabilities, net | 28,956 | 33,244 | ||||||||||||||
Total current Liabilities | 52,640 | 42,996 | 66,155 | 70,732 | ||||||||||||
Other non-current liabilities | 502 | 419 | 406 | 362 | ||||||||||||
Operating lease liabilities | 2,135 | 1,719 | ||||||||||||||
Finance lease liabilities | 58 | 71 | ||||||||||||||
Non-current financial liabilities, net | 17,557 | 18,057 | 6,881 | 7,174 | ||||||||||||
TOTAL LIABILITIES | 70,699 | 61,472 | 75,635 | 80,058 | ||||||||||||
Commitments and contingencies | Note 11 | |||||||||||||||
CONVERTIBLE PREFERRED STOCK | ||||||||||||||||
Series A Convertible Preferred Stock, $ | par value; shares authorized at March 31, 2023; issued and outstanding at March 31, 2023 and issued and outstanding at December 31, 2022.$ | — | $ | 945 | ||||||||||||
STOCKHOLDERS’ DEFICIT | ||||||||||||||||
Preferred stock, $ | par value; shares authorized; issued and outstanding— | — | ||||||||||||||
Class A Common stock, $ | par value; shares authorized and; and shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively.114,888 | 101,454 | ||||||||||||||
Class B Common stock, $ | par value; shares authorized and; shares issued and outstanding at June 30, 2022 and December 31, 2021.— | — | ||||||||||||||
Preferred stock, $ | par value; shares authorized; issued and outstanding— | — | ||||||||||||||
Class A Common stock, $ | par value; shares authorized and; and shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively.173,889 | 152,996 | ||||||||||||||
Class B Common stock, $ | par value; shares authorized and; shares issued and outstanding at March 31, 2023 and December 31, 2022.— | — | ||||||||||||||
Accumulated other comprehensive (loss) income | (1,150 | ) | (621 | ) | (3,151 | ) | (2,904 | ) | ||||||||
Accumulated deficit | (147,004 | ) | (108,682 | ) | (209,496 | ) | (189,942 | ) | ||||||||
Total Stockholders’ deficit | (33,266 | ) | (7,849 | ) | (38,758 | ) | (39,850 | ) | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 37,433 | 53,623 | $ | 36,877 | 41,154 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
Micromobility.com, Inc.
(Formerly Helbiz, Inc.)
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
(unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | Three months ended March 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | |||||||||||||||||||
Revenue | $ | 4,358 | $ | 2,982 | $ | 7,670 | $ | 3,997 | $ | 3,919 | $ | 3,312 | ||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Cost of revenue | 10,267 | 6,073 | 21,606 | 10,577 | ||||||||||||||||||||
Cost of revenues | 11,067 | 11,339 | ||||||||||||||||||||||
Research and development | 843 | 744 | ||||||||||||||||||||||
Sales and marketing | 1,239 | 2,598 | ||||||||||||||||||||||
General and administrative | 6,436 | 2,638 | 13,115 | 6,592 | 6,232 | 6,681 | ||||||||||||||||||
Sales and marketing | 3,415 | 1,275 | 6,013 | 2,408 | ||||||||||||||||||||
Research and development | 638 | 588 | 1,382 | 1,164 | ||||||||||||||||||||
Total operating expenses | 20,756 | 10,574 | 42,116 | 20,741 | 19,381 | 21,362 | ||||||||||||||||||
Loss from operations | (16,398 | ) | (7,592 | ) | (34,447 | ) | (16,744 | ) | (15,463 | ) | (18,050 | ) | ||||||||||||
Non-operating income (expenses), net | ||||||||||||||||||||||||
Interest expense, net | (1,512 | ) | (566 | ) | (3,492 | ) | (1,064 | ) | (1,701 | ) | (1,981 | ) | ||||||||||||
Gain (loss) on extinguishment of debts | (2,065 | ) | — | (2,065 | ) | — | ||||||||||||||||||
SEPA financial income (expenses), net | (2,208 | ) | — | |||||||||||||||||||||
Change in fair value of warrant liabilities | 441 | — | 1,386 | (4,127 | ) | 33 | 945 | |||||||||||||||||
Other income (expenses), net | (199 | ) | 12 | (507 | ) | (260 | ) | |||||||||||||||||
Total non-operating income (expenses), net | (3,335 | ) | (554 | ) | (4,679 | ) | (5,452 | ) | ||||||||||||||||
Other financial income (expenses), net | (212 | ) | (307 | ) | ||||||||||||||||||||
Total non-operating expenses, net | (4,088 | ) | (1,343 | ) | ||||||||||||||||||||
Income Taxes | (7 | ) | (18 | ) | (12 | ) | (33 | ) | ||||||||||||||||
Income tax benefit (expense) | (3 | ) | (4 | ) | ||||||||||||||||||||
Net loss | $ | (19,740 | ) | $ | (8,164 | ) | $ | (39,137 | ) | $ | (22,229 | ) | $ | (19,554 | ) | $ | (19,397 | ) | ||||||
Deemed Dividends and Deemed Dividends equivalents | $ | — | $ | (37 | ) | $ | — | $ | (72 | ) | ||||||||||||||
Net loss per share attributable to common stockholders | $ | (19,740 | ) | $ | (8,201 | ) | $ | (39,137 | ) | $ | (22,301 | ) | ||||||||||||
Net loss attributable to common stockholders | $ | (19,554 | ) | $ | (19,397 | ) | ||||||||||||||||||
Net loss per share attributable to common stockholders, basic and diluted | $ | (0.57 | ) | $ | (0.36 | ) | $ | (1.21 | ) | $ | (1.01 | ) | $ | (3.53 | ) | $ | (32.18 | ) | ||||||
Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted | 34,737,852 | 22,666,617 | 32,438,971 | 22,134,945 | 5,542,721 | 602,802 | ||||||||||||||||||
Net loss | (19,740 | ) | (8,164 | ) | (39,137 | ) | (22,229 | ) | $ | (19,554 | ) | $ | (19,397 | ) | ||||||||||
Other comprehensive (loss) income, net of tax: | ||||||||||||||||||||||||
Changes in foreign currency translation adjustments | $ | (206 | ) | $ | (46 | ) | $ | (529 | ) | $ | (39 | ) | $ | (247 | ) | $ | (323 | ) | ||||||
Net loss and comprehensive income, excluded Deemed Dividends and Deemed Dividends equivalents | $ | (19,946 | ) | $ | (8,210 | ) | $ | (39,666 | ) | $ | (22,268 | ) | $ | (19,801 | ) | $ | (19,720 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4 |
MICROMOBILITY.COM, INC.
(Formerly Helbiz, Inc.)
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit for the three months ended March 31, 2023
(in thousands, except share and per share data)
(unaudited)
SERIES B – PREFERRED | SERIES A – CONVERTIBLE PREFERRED | Class A Common Stock | Class B Common Stock | Accumulated | Accumulated Other Comprehensive | TOTAL STOCKHOLDERS’ | |||||||||||||||||||||||||||||
STOCK | STOCK | Shares | Amount | Shares | Amount | Deficit | (Loss) Income | DEFICIT | |||||||||||||||||||||||||||
Balance as of January 1, 2023 (Retroactive application of the reverse split ratio 1:50) | $ | — | $ | 945 | 3,264,576 | $ | 152,996 | 284,518 | $ | — | $ | (189,942 | ) | $ | (2,904 | ) | (39,850 | ) | |||||||||||||||||
Issuance of common shares – for Advance Notices under SEPA | — | — | 2,100,518 | 18,105 | — | — | — | — | 18,105 | ||||||||||||||||||||||||||
Issuance of common shares – for Conversion of Convertible Notes | — | — | 103,689 | 1,296 | — | — | — | — | 1,296 | ||||||||||||||||||||||||||
Issuance of common stock – for Conversion of Series A Convertible Preferred Stocks | — | (945 | ) | 135,645 | 945 | — | — | — | — | 945 | |||||||||||||||||||||||||
Issuance of common shares – for purchasing Intangible Assets | — | — | 6,869 | 50 | — | — | — | — | 50 | ||||||||||||||||||||||||||
Issuance of common shares – for settlement of Payroll liabilities | — | — | 13,000 | 78 | — | — | — | — | 78 | ||||||||||||||||||||||||||
Share based compensation | — | — | — | 418 | — | — | — | — | 418 | ||||||||||||||||||||||||||
Issuance of Series B Preferred Stock | 0 | — | — | — | — | — | — | — | 0 | ||||||||||||||||||||||||||
Redemption of Series B Preferred Stock | (0 | ) | — | — | — | — | — | — | — | (0) | |||||||||||||||||||||||||
Changes in currency translation adjustment | — | — | — | — | — | — | — | (247 | ) | (247 | ) | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (19,554 | ) | — | (19,554 | ) | ||||||||||||||||||||||||
Balance as of March 31, 2023 | $ | — | $ | — | 5,624,297 | 173,889 | 284,518 | $ | 0 | $ | (209,496 | ) | $ | (3,151 | ) | $ | (38,758 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5 |
HELBIZ,MICROMOBILITY.COM , INC.
(Formerly Helbiz, Inc.)
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit for the three and six months ended June 30,March 31, 2022
(in thousands, except share and per share data)
(unaudited)
Class A Common Stock | Class B Common Stock | Accumulated | Accumulated Other Comprehensive (Loss) | TOTAL STOCKHOLDERS’ | Class A Common Stock | Class B Common Stock | Accumulated | Accumulated Other Comprehensive (Loss) | TOTAL STOCKHOLDERS’ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Deficit | Income | DEFICIT | Shares | Amount | Shares | Amount | Deficit | Income | DEFICIT | |||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2022 | — | 18,699,956 | $ | 105,180 | $ | 14,225,898 | $ | — | — | $ | (127,263 | ) | $ | (944 | ) | $ | (23,027 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Warrants - in conjunction with Convertible Notes issuance | — | 603 | — | — | — | — | 603 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common shares – Commitment shares for Convertible Notes issuance | 150,000 | 399 | — | — | — | — | 399 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common shares – to legal advisors for Convertible Note issuance | 200,000 | 296 | — | — | — | — | 296 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2022 (Retroactive application of the reverse split ratio 1:50) | 325,784 | $ | 101,454 | 284,518 | — | $ | (108,682 | ) | $ | (621 | ) | $ | (7,849 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||
ASU No. 2020-06 - modified retrospective method | — | (4,187 | ) | — | — | 816 | — | (3,371 | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common shares – for Conversion of 2021 Convertible Notes | 7,242,626 | 7,516 | — | — | — | — | 7,516 | 48,140 | 6,810 | — | — | — | — | 6,810 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common shares - for Settlement of Account Payable | 79,353 | 117 | — | — | — | — | 117 | 43 | 10 | — | — | — | — | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Share based compensation | 21,248 | 776 | — | — | — | — | 776 | 33 | 1,092 | — | — | — | — | 1,092 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in currency translation adjustment | — | — | — | — | — | (206 | ) | (206 | ) | — | — | — | — | — | (323 | ) | (323 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (19,740 | ) | (19,740 | ) | — | — | — | — | (19,397 | ) | — | (19,397 | ) | |||||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2022 | — | 26,393,183 | $ | 114,888 | $ | 14,225,898 | $ | — | — | $ | (147,004 | ) | $ | (1,150 | ) | $ | (33,266 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | 374,000 | $ | 105,180 | 284,518 | $ | — | $ | (127,263 | ) | $ | (944 | ) | $ | (23,027 | ) |
Class A Common Stock | Class B Common Stock | Accumulated | Accumulated Other Comprehensive (Loss) | TOTAL STOCKHOLDERS’ | ||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Deficit | Income | DEFICIT | ||||||||||||||||||||||||||||||
Balance as of January 1, 2022 | — | 16,289,209 | $ | 101,454 | $ | 14,225,898 | $ | — | — | $ | (108,682 | ) | $ | (621 | ) | $ | (7,849 | ) | ||||||||||||||||||
ASU No. 2020-06 - modified retrospective method | — | (4,187 | ) | — | — | 816 | — | (3,371 | ) | |||||||||||||||||||||||||||
Issuance of common shares – for Conversion of 2021 Convertible Notes | 9,649,626 | 14,326 | — | — | — | — | 14,326 | |||||||||||||||||||||||||||||
Issuance of Warrants - in conjunction with Convertible Notes issuance | — | 603 | — | — | — | — | 603 | |||||||||||||||||||||||||||||
Issuance of common shares – Commitment shares for Convertible Notes issuance | 150,000 | 399 | — | — | — | — | 399 | |||||||||||||||||||||||||||||
Issuance of common shares – to legal advisors for Convertible Note issuance | 200,000 | 296 | — | — | — | — | 296 | |||||||||||||||||||||||||||||
Issuance of common shares - for Settlement of Account Payable | 27,166 | 48 | — | — | — | — | 48 | |||||||||||||||||||||||||||||
Share based compensation | 77,182 | 1,948 | — | — | — | — | 1,948 | |||||||||||||||||||||||||||||
Changes in currency translation adjustment | — | — | — | — | — | (529 | ) | (529 | ) | |||||||||||||||||||||||||||
Net Loss | — | — | — | — | — | — | (39,137 | ) | — | (39,137 | ) | |||||||||||||||||||||||||
Balance as of June 30, 2022 | — | 26,393,183 | $ | 114,888 | $ | 14,225,898 | $ | — | — | $ | (147,004 | ) | $ | (1,150 | ) | $ | (33,266 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
HELBIZ, Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit for the three months ended June 30, 2021
(in thousands, except share and per share data)
(unaudited)
SERIES B – CONVERTIBLE PREFERRED | Class A Common Stock | Class B Common Stock | Subscription | Accumulated | Accumulated Other Comprehensive | TOTAL STOCKHOLDERS’ | ||||||||||||||||||||||||||||||
STOCK | Shares | Amount | Shares | Amount | Receivables | Deficit | (Loss) Income | DEFICIT | ||||||||||||||||||||||||||||
Balance as of March 31, 2021 | $ | 4,075 | 21,755,670 | $ | 39,825 | — | $ | — | — | $ | (50,321 | ) | $ | 43 | (10,453 | ) | ||||||||||||||||||||
Issuance of common stock – MiMoto Smart Mobility S.r.l. Acquisition | — | 1,057,740 | 10,389 | — | — | — | — | — | 10,389 | |||||||||||||||||||||||||||
Share based compensation | — | — | 447 | — | — | — | — | — | 447 | |||||||||||||||||||||||||||
Exchange of Class A Common Stock to Class B Common Stock | — | (14,225,898 | ) | — | 14,225,898 | — | — | — | — | — | ||||||||||||||||||||||||||
Dividends and dividend equivalents for Preferred Stockholders | 37 | — | — | — | — | — | (37 | ) | — | (37 | ) | |||||||||||||||||||||||||
Changes in currency translation adjustment | — | — | — | — | — | — | — | (46 | ) | (46 | ) | |||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (8,164 | ) | (8,164 | ) | ||||||||||||||||||||||||||
Balance as of June 30, 2021 | $ | 4,112 | 8,587,512 | 50,661 | 14,225,898 | $ | — | $ | — | $ | (58,522 | ) | $ | (3 | ) | $ | (7,863 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
HELBIZ, Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit for the six months ended June 30, 2021
(in thousands, except share and per share data)
(unaudited)
SERIES B – CONVERTIBLE PREFERRED | Class A Common Stock | Class B Common Stock | Subscription | Accumulated | Accumulated Other Comprehensive | TOTAL STOCKHOLDERS’ | ||||||||||||||||||||||||||||||
STOCK | Shares | Amount | Shares | Amount | Receivables | Deficit | (Loss) Income | DEFICIT | ||||||||||||||||||||||||||||
Balance as of January 1, 2021 | $ | 4,040 | 20,359,154 | 24,872 | — | $ | — | (4,033 | ) | $ | (36,221 | ) | $ | 36 | (15,346 | ) | ||||||||||||||||||||
Issuance of common shares – for Sale | — | 127,116 | 923 | — | — | — | — | — | 923 | |||||||||||||||||||||||||||
Issuance of common shares – to financial advisor for Issuance of Common Shares | — | 5,719 | 33 | — | — | — | — | — | 33 | |||||||||||||||||||||||||||
Issuance of common stock – Exercise of Warrants | — | 1,075,867 | 10,567 | — | — | — | — | — | 10,567 | |||||||||||||||||||||||||||
Issuance of common stock – for settlement of Lease | — | 177,827 | 1,747 | — | — | — | — | — | 1,747 | |||||||||||||||||||||||||||
Settlement of Subscription Receivables | — | — | — | — | — | 4,033 | — | — | 4,033 | |||||||||||||||||||||||||||
Share based compensation | — | 9,987 | 2,130 | — | — | — | — | — | 2,130 | |||||||||||||||||||||||||||
Issuance of common stock – MiMoto Smart Mobility S.r.l. Acquisition | — | 1,057,740 | 10,389 | — | — | — | — | — | 10,389 | |||||||||||||||||||||||||||
Exchange of Class A Common Stock to Class B Common Stock | — | (14,225,898 | ) | — | 14,225,898 | — | — | — | — | — | ||||||||||||||||||||||||||
Dividends and dividend equivalents for Preferred Stockholders | 72 | — | — | — | — | — | (72 | ) | — | (72 | ) | |||||||||||||||||||||||||
Changes in currency translation adjustment | — | — | — | — | — | — | — | (39 | ) | (39 | ) | |||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (22,229 | ) | — | (22,229 | ) | |||||||||||||||||||||||||
Balance as of June 30, 2021 | $ | 4,112 | 8,587,512 | 50,661 | 14,225,898 | $ | — | $ | — | $ | (58,522 | ) | $ | (3 | ) | (7,863 | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
HELBIZ,MICROMOBILITY.COM , INC.
(Formerly Helbiz, Inc.)
Condensed Consolidated Statements of Cash Flows
(in thousands, except share and per share data)
(unaudited)
Six months ended June 30, | ||||||||
2022 | 2021 | |||||||
Operating activities | ||||||||
Net loss | $ | (39,137 | ) | $ | (22,229 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 2,661 | 3,331 | ||||||
Loss on disposal of assets | 116 | 238 | ||||||
Non-cash interest expenses and amortization of debt discount | 2,971 | 509 | ||||||
Change in fair value of warrant liabilities | (1,386 | ) | 4,128 | |||||
Change in fair value of accounts payables | (304 | ) | — | |||||
(Gain) or Loss on extinguishment of debts | 2,065 | — | ||||||
Share-based compensation | 2,252 | 2,131 | ||||||
Other non-cash items related to licensing | — | 748 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid and other assets | 2,617 | (38 | ) | |||||
Security deposits | (5 | ) | 22 | |||||
Accounts receivables | (1,337 | ) | (360 | ) | ||||
Accounts payables | 3,935 | (196 | ) | |||||
Accrued expenses and other current liabilities | 2,263 | 1,240 | ||||||
Other non-current liabilities | 83 | (137 | ) | |||||
Net cash used in operating activities | (23,206 | ) | (10,613 | ) | ||||
Investing activities | ||||||||
Purchase of property, equipment, and vehicle deposits | (3,586 | ) | (4,913 | ) | ||||
Deposit for Letter of Intent | (1,000 | ) | — | |||||
Purchase of intangible assets | (117 | ) | (308 | ) | ||||
Acquisition of business, net of cash acquired | — | (1,987 | ) | |||||
Net cash used in investing activities | (4,703 | ) | (7,208 | ) | ||||
Financing activities | ||||||||
Proceeds from issuance of financial liabilities, net | 10,248 | 18,156 | ||||||
Repayment of financial liabilities | (1,495 | ) | (2,505 | ) | ||||
Proceeds from issuance of financial liabilities, due to related party - Officer | 380 | 2,010 | ||||||
Proceeds from settlement of Subscription receivables | — | 4,033 | ||||||
Proceeds from sale of Class A common shares, net | — | 955 | ||||||
Payments of offering costs and underwriting discounts and commissions | — | (1,193 | ) | |||||
Net cash provided by financing activities | 9,133 | 21,456 | ||||||
Increase (decrease) in cash and cash equivalents, and restricted cash | (18,776 | ) | 3,635 | |||||
Effect of exchange rate changes | 306 | (39 | ) | |||||
Net increase (decrease) in cash and cash equivalents, and restricted cash | (18,470 | ) | 3,596 | |||||
Cash and cash equivalents, and restricted cash, beginning of year | 21,253 | 790 | ||||||
Cash and cash equivalents, and restricted cash, end of year | $ | 2,783 | $ | 4,386 | ||||
RECONCILIATION OF CASH, CASH EQUIVALENT AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEET | ||||||||
Cash and cash equivalents | 2,480 | 4,277 | ||||||
Restricted cash, included in Current assets | 193 | — | ||||||
Restricted cash, included in Other assets, non-current | 110 | 109 | ||||||
Supplemental disclosure of cash flow information | ||||||||
Cash paid for: | ||||||||
Interest | $ | 517 | $ | 556 | ||||
Income taxes, net of refunds | $ | 12 | $ | 2 | ||||
Non-cash investing & financing activities | ||||||||
Issuance of Class A common shares – for warrant exercise | $ | — | $ | 10,567 | ||||
Issuance of Class A common shares – for settlement of lease | — | 1,747 | ||||||
Issuance of common stock – MiMoto Smart Mobility S.r.l. Acquisition | — | 10,389 | ||||||
Convertible notes converted into common shares | 14,326 | — | ||||||
Increasing of Financial liabilities for derecognition of Beneficial conversion features (BCF) - Adoption of ASU 2020-06 | 3,371 | — | ||||||
Purchase of vehicles with financing agreement | 3,328 | — | ||||||
Prepaid expenses related to D&O insurance, included in Account payable | 402 | — | ||||||
Issuance of Warrants - in conjunction with Convertible Notes issuance | 603 | — | ||||||
Issuance of common shares – Commitment shares and share based compensation for Convertible Notes issuance | 695 | — |
Three months ended March 31, | ||||||||
2023 | 2022 | |||||||
Operating activities | ||||||||
Net loss | $ | (19,554 | ) | $ | (19,397 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 1,784 | 1,296 | ||||||
Non-cash interest expenses and amortization of debt discount | 510 | 1,911 | ||||||
Amortization of right-of-use assets | 462 | — | ||||||
Share-based compensation | 762 | 1,252 | ||||||
Change in fair value of warrant liabilities | (33 | ) | (945 | ) | ||||
Loss on disposal of assets | 10 | 55 | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid and other current assets | 2,716 | (188 | ) | |||||
Other Assets | (10 | ) | 143 | |||||
Accounts receivables | 793 | (849 | ) | |||||
Accrued expenses and other current liabilities | (309 | ) | 1,908 | |||||
Accounts payables | (63 | ) | (1,801 | ) | ||||
Other non-current liabilities | 44 | 76 | ||||||
Net cash used in operating activities | (12,886 | ) | (16,539 | ) | ||||
Investing activities | ||||||||
Purchase of property, equipment, and vehicle deposits | (202 | ) | (2,926 | ) | ||||
Purchase of intangible assets | (154 | ) | (111 | ) | ||||
Net cash used in investing activities | (356 | ) | (3,037 | ) | ||||
Financing activities | ||||||||
Gross proceeds from sale of Class A common shares | 18,105 | — | ||||||
Gross proceeds from issuance of financial liabilities | 4,190 | 113 | ||||||
Repayment of financial liabilities | (8,671 | ) | (556 | ) | ||||
Payments of offering costs and underwriting discounts and commissions | (15 | ) | 275 | |||||
Proceeds from issuance of financial liabilities, due to related party - Officer | — | — | ||||||
Net cash provided by financing activities | 13,609 | (168 | ) | |||||
Increase (decrease) in cash and cash equivalents, and restricted cash | 367 | (19,744 | ) | |||||
Effect of exchange rate changes | (145 | ) | (115 | ) | ||||
Net increase (decrease) in cash and cash equivalents, and restricted cash | 222 | (19,858 | ) | |||||
Cash and cash equivalents, and restricted cash, beginning of year | 736 | 21,253 | ||||||
Cash and cash equivalents, and restricted cash, end of period | $ | 958 | $ | 1,395 | ||||
RECONCILIATION OF CASH, CASH EQUIVALENT AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEET | ||||||||
Cash and cash equivalents | 648 | 1,115 | ||||||
Restricted cash, included in Current assets | 310 | 170 | ||||||
Restricted cash, included in Other assets, non-current | — | 110 | ||||||
Supplemental disclosure of cash flow information | ||||||||
Cash paid for: | ||||||||
Interest | $ | 1,186 | $ | 69 | ||||
Income taxes, net of refunds | $ | 3 | $ | — | ||||
Non-cash investing & financing activities | ||||||||
Issuance of common shares – for Conversion of Convertible Notes | $ | 1,296 | $ | 6,810 | ||||
Issuance of common shares – for conversion of Series A Convertible Preferred Stocks | 945 | — | ||||||
Issuance of common shares – for purchasing Intangible Assets | 50 | — | ||||||
Issuance of common shares - for Settlement of Payroll Liabilities | 78 | — | ||||||
Recognition of new lease agreements | 761 | — | ||||||
Derecognition of Beneficial conversion features (BCF) - Adoption of ASU 2020-06 | — | 3,371 | ||||||
Purchase of vehicles with financing agreement | — | 2,388 | ||||||
Prepaid expenses related to D&O insurance, included in Account payable | — | 1,269 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
HELBIZ, Inc.
MICROMOBILITY.COM, INC.
(Formerly Helbiz, Inc.)
Notes to Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
(Unaudited)
1. Description of Business and Basis of Presentation
Description of Business
micromobility.com, Inc. (formerly known as Helbiz, Inc., and, Subsidiaries, (“Helbiz”together with its subsidiaries, “micromobility.com” or the “Company”) was incorporated in the state of Delaware in October 2015 with its headquarter in New York, New York. The Company is an intra-urban transportation company that seeks to help urban areas reduce their dependence on individually owned cars by offering affordable, accessible, and sustainable forms of personal transportation, specifically addressing first and last mile transport.
Founded on proprietary technology platforms, the Company’s core business is the offering of electric scooters, bikes and mopedsvehicles in the sharing environment. Through its Mobility App, Helbizthe Company offers an intra-urban transportation solution that allows users to instantly rent electric vehicles. Additionally, the Company is operating two other business lines: (i) the acquisition, commercialization and distribution of contentsmedia content including live sport events, and (ii) food delivery services through a “ghost kitchen” concept.
The Company currently has a strategic footprint in growing markets with offices in New York, Los Angeles, Milan, and Belgrade, with additional operational teams around the world. The Company currently has electric vehicles operating in the United States and Europe.
Recent events
On March 30, 2023, a reverse stock split of 1:50 was approved by Company’s shareholders and Board of Directors. The Company’s financial statements were adjusted to reflect the reverse stock split.
On March 30, 2023, the Company’s Board of Directors also approved a change in name from “Helbiz, Inc.” to “micromobility.com, Inc.” (the “Company Name Change”).
Basis of Presentation
These accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company and its wholly ownedwholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.
The Company uses the U.S. dollar as the functional currency. For foreign subsidiaries where the U.S. dollar is the functional currency, gains, and losses from remeasurement of foreign currency balances into U.S. dollars are included in the condensed consolidated statements of operations. For the foreign subsidiary where the local currency is the functional currency, translation adjustments of foreign currency financial statements into U.S. dollars are recorded to a separate component of accumulated other comprehensive loss.
The condensed consolidated balance sheet as of December 31, 2021,2022, included herein was derived from the audited financial statements as of that date. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of, and for the year ended, December 31, 2021,2022, included in our Annual Report on Form 10-K.
The accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the Company’s financial position, results of operations, comprehensive loss, stockholders’ equity, for the three and six months ended June 30, 2022, and cash flows, for the six months ended June 30, 2022, but are not necessarily indicative of the results of operations to be anticipated for any future annual or interim period.
2. Going Concern and Management’s Plans
The Company has experienced recurring operating losses and negative cash flows from operating activities since its inception. To date, these operating losses have been funded primarily from outside sources of invested capital. The Company had, and may potentially continue to have, an ongoing need to raise additional cash from outside sources to fund its expansion plan and related operations. Successful transition to attaining profitable operations depends upon achieving a level of revenues adequate to support the Company’s cost structure. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
The Company plans to continue to fund its operations and expansion plan through debt and equity financing. Debt or equity financing may not be available on a timely basis on terms acceptable to the Company, or at all.
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and, as such, the financial statements do not include any adjustments relating to the recoverability and classification of recorded amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.
3. Summary of Significant Accounting Policies and Use of Estimates
Use of Estimates
The preparation of financial statements in conformity with USU.S. GAAP generally requires management to make estimates and assumptions that affect the reported amount of certain assets, liabilities, revenues, and expenses, and the related disclosure of contingent assets and liabilities. Specific accounts that require management estimates include commondetermination of fair values of private company stock, warrant and financial instruments, at fair value,purchase price allocation for business combinations, useful lives of intangible assets, property and equipment including scooters and valuation allowance for deferred income taxes.
Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Recent Accounting PronouncementsPronouncement Adopted in the Current Year
In August 2020,June 2016, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40)2016-13—Financial Instruments—Credit Losses (Topic 326): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which simplifies the accounting for convertible instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. By removing the separation model, a convertible debt instrument will be reported as a single liability instrument with no separate accounting for embedded conversion features.Measurement of Credit Losses on Financial Instruments. This new standard also removes certain settlement conditions that are required for contracts to qualify for equity classification and simplifies the diluted earnings per share calculations by requiring thatASU requires an entity to use a current expected credit loss methodology to measure impairments of certain financial assets and to recognize an allowance for its estimate of lifetime expected credit losses. The main objective of this update is to provide financial statement users with more decision-useful information about the if-converted methodexpected credit losses on financial instruments and that the effect of potential share settlement be included in diluted earnings per share calculations. ASU 2020-06other commitments to extend credit held by a reporting entity at each reporting date. The standard is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Effective January 1, 2022, the Company adopted ASU 2020-06 using the modified retrospective approach. In the condensed consolidated balance sheet, the adoption of this new guidance resulted in:
In May 2021, the FASB issued ASU 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, (“ASU 2021-04”) which clarifies the accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. Specifically, ASU 2021-04 requires the issuer to treat a modification of an equity-classified warrant as an exchange of the original warrant. The difference between the fair value of the modified warrant and the fair value of the warrant immediately before modification is then recognized as an issuance cost or discount of the related transaction. ASU 2021-04 is effectivepublic companies for fiscal years, beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted.beginning after December 15, 2022. Effective January 1, 2022,2023, we adopted ASU 2021-042016-13 on a prospective basis. The impact of adoption of this standard on our condensed consolidated financial statements was not material.
Accounting Pronouncements Issued but Not Yet Adopted
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. The lease assets and liabilities to be recognized are both measured initially based on the present value of the lease payments. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. This update is effective for annual periods beginning January 1, 2022, and interim periods beginning January 1, 2023, with early adoption permitted. The Company plans to adopt this standard as of the effective date for private companies using the modified retrospective approach of all leases entered into before the effective date. While the Company is currently reviewing its lease portfolio and evaluating and interpreting the requirements under the new guidance, including available accounting policy elections, it expects that its non-cancellable operating lease commitments will be subject to the new guidance and recognized as right-of-use assets and operating lease liabilities on the Company’s consolidated balance sheets. The Company is currently assessing the impact of this accounting standard on its shared vehicles revenues and rental leases.
4. Revenue Recognition
The table below shows the revenues breakdown for the three and six months ended on June 30, 2022,March 31, 2023, and on June 30, 2021.March 31, 2022.
Revenue recognition | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Mobility Revenues | $ | 2,716 | $ | 2,982 | $ | 4,293 | $ | 3,997 | ||||||||
Pay per ride | 2,187 | 2,304 | 3,392 | 3,099 | ||||||||||||
Mobility Subscriptions | 360 | 451 | 648 | 615 | ||||||||||||
Partnerships fees | 169 | 227 | 253 | $ | 283 | |||||||||||
Media Revenues | $ | 1,489 | $ | — | $ | 3,145 | $ | — | ||||||||
Commercialization of Media rights (B2B) | 1,052 | — | 2,348 | — | ||||||||||||
Advertising fees | 156 | — | 206 | — | ||||||||||||
Live subscriptions (B2C) | 281 | — | 591 | — | ||||||||||||
Other Revenues | $ | 153 | $ | — | $ | 232 | $ | — | ||||||||
Total Revenues | $ | 4,358 | $ | 2,982 | $ | 7,670 | $ | 3,997 |
The Company mainly generates revenues related to: (i) single-use ride fees paid by riders of the Company’s e-bikes, e-mopeds and e-scooters, and (ii) international commercialization and distribution of media contents to media partners, in the Business to Business (“B2B") environment.
Schedule of revenue recognition | ||||||||
Three months ended March 31, | ||||||||
2023 | 2022 | |||||||
Mobility Revenues (ASC 842) | $ | 1,578 | $ | 1,577 | ||||
Pay per ride | 1,203 | 1,205 | ||||||
Mobility Subscriptions | 324 | 288 | ||||||
Partnerships fees | 51 | 84 | ||||||
Media Revenues (ASC 606) | $ | 2,086 | 1,656 | |||||
Commercialization of Media rights (B2B) | 1,307 | 1,296 | ||||||
Advertising fees | 94 | 50 | ||||||
Live subscriptions | 685 | 310 | ||||||
Other Revenues (ASC 606) | $ | 255 | $ | 79 | ||||
Total Revenues | $ | 3,919 | $ | 3,312 |
The table below shows the Deferred revenuesIncome roll-forward from January 1, 2021, to June 30, 2021, and from January 1, 2022, to June 30, 2022.March 31, 2022, and from January 1, 2023, to March 31, 2023.
Deferred revenues | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of deferred revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Income | January 1, 2021 | Additions | Q1 2021 Revenue | March 31, 2021 | FX Rate adj | Additions | Q2 2021 Revenue | June 30, 2021 | January 1, 2022 | FX Rate adj | Additions | Q1 2022 Revenue | March 31, 2022 | |||||||||||||||||||||||||||||||||||||||
Mobility | $ | 146 | 391 | (345 | ) | 192 | 165 | 1,260 | (842 | ) | 775 | $ | 1,183 | (19 | ) | 347 | (329 | ) | 1,182 | |||||||||||||||||||||||||||||||||
Media | — | — | — | — | — | — | — | — | 402 | (40 | ) | 2,473 | (316 | ) | 2,519 | |||||||||||||||||||||||||||||||||||||
Total | $ | 146 | $ | 391 | $ | (345 | ) | $ | 192 | $ | 165 | $ | 1,260 | $ | (842 | ) | $ | 775 | $ | 1,585 | $ | (59 | ) | $ | 2,820 | $ | (645 | ) | $ | 3,701 | ||||||||||||||||||||||
Deferred Income | January 1, 2022 | FX Rate adj | Additions | Q1 2022 Revenue | March 31, 2022 | FX Rate adj | Additions | Q2 2022 Revenue | June 30, 2022 | January 1, 2023 | FX Rate adj | Additions | Q1 2023 Revenue | March 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||
Mobility | $ | 1,183 | (19 | ) | 347 | (329 | ) | 1,182 | (33 | ) | 592 | (538 | ) | 1,203 | $ | 1,775 | 2 | 407 | (423 | ) | 1,761 | |||||||||||||||||||||||||||||||||||
Media | 402 | (40 | ) | 2,473 | (316 | ) | 2,519 | (136 | ) | 1,623 | (1,558 | ) | 2,448 | 1,272 | 19 | 1,832 | (2,086 | ) | 1,037 | |||||||||||||||||||||||||||||||||||||
Total | $ | 1,585 | $ | (59 | ) | $ | 2,820 | $ | (645 | ) | $ | 3,701 | $ | (169 | ) | $ | 2,215 | $ | (2,096 | ) | $ | 3,651 | $ | 3,047 | $ | 21 | $ | 2,239 | $ | (2,509 | ) | $ | 2,798 |
Deferred revenuesincome related to Mobility is for out prepaid customer walletwallet. It will be recorded as Mobility Revenues when riders take a ride, while deferred revenuesincome related to Media will be mainly recorded as Revenues inthrough the sixthree months ending December 31, 2022.ended June 30, 2023.
5. Contract assets –Prepaid Media rights
The table below shows the Contract assetsPrepaid Media rights roll-forward from January 1, 2022, to June 30, 2022. During the periodMarch 31, 2022, and from January 1, 2021 – June 30, 2021, the Company did not perform any media activities.
Contract assets roll forward | ||||||||||||||||||||||||||||||||||||
Contract assets | January 1, 2022 | Additions | Q1 2022 COGS | FX Rate adj. | March 31, 2022 | Additions | Q2 2022 COGS | FX Rate adj. | June 30, 2022 | |||||||||||||||||||||||||||
Media | 2,758 | 2,835 | (4,510 | ) | (50 | ) | 1,033 | 4,427 | (3,586 | ) | (69 | ) | 1,806 | |||||||||||||||||||||||
Total | $ | 2,758 | $ | 2,835 | $ | (4,510 | ) | $ | (50 | ) | $ | 1,033 | $ | 4,427 | $ | (3,586 | ) | $ | (69 | ) | $ | 1,806 |
6. Prepaid and other current assets2023, to March 31, 2023.
Prepaid and other current assets consist of the following:
Prepaid and other current assets | ||||||||
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Prepaid | $ | 2,089 | $ | 1,449 | ||||
Security Deposits for leasing vehicles | 1,039 | — | ||||||
D&O Insurance Coverage | 591 | 3,133 | ||||||
Other current assets | 739 | 99 | ||||||
Total prepaid and other current assets | $ | 4,458 | $ | 4,681 |
Schedule of prepaid media rights | ||||||||||||||||||||
Prepaid Media rights | January 1, 2022 | Additions | Q1 2022 COGS | FX Rate adj. | March 31, 2022 | |||||||||||||||
Media | 2,758 | 2,835 | (4,510 | ) | (50 | ) | 1,033 | |||||||||||||
Total | $ | 2,758 | 2,835 | (4,510 | ) | (50 | ) | 1,033 |
Prepaid Media rights | January 1, 2023 | Additions | Q1 2023 COGS | FX Rate adj. | March 31, 2023 | |||||||||||||||
Media | 2,366 | 2,686 | (4,070 | ) | 16 | 997 | ||||||||||||||
Total | $ | 2,366 | $ | 2,686 | $ | (4,070 | ) | $ | 16 | $ | 997 |
Security Deposits for leasing vehicles amounted to $1,039, which consisted of the following:
Refer to “Commitments and Contingencies” paragraph for further disclosures related to the capital lease agreements.
7.6. Property, equipment and vehicle deposits, net
Property and equipment consist of the following:
Property, Plant and Equipment | ||||||||
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Sharing electric vehicles | $ | 11,995 | $ | 9,348 | ||||
Furniture, fixtures, equipment, computers, and software | 2,384 | 2,195 | ||||||
Leasehold improvements | 698 | 655 | ||||||
Electric vehicle deposits | 3,352 | 2,928 | ||||||
Total property, equipment and vehicle deposits, gross | 18,429 | 15,126 | ||||||
Less: accumulated depreciation | (7,195 | ) | (7,510 | ) | ||||
Total property, equipment and vehicle deposits, net | $ | 11,234 | $ | 7,616 |
Schedule of property and equipment | ||||||||
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Sharing electric vehicles | $ | 15,046 | $ | 15,128 | ||||
Of which under finance lease agreements | 3,288 | 3,260 | ||||||
Furniture, fixtures, and equipment | 1,621 | 1,411 | ||||||
Of which under finance lease agreements | 177 | 177 | ||||||
Computers and software | 1,048 | 1,045 | ||||||
Leasehold improvements | 724 | 714 | ||||||
Total property and equipment, gross | 18,439 | 18,298 | ||||||
Less: accumulated depreciation | (13,524 | ) | (12,136 | ) | ||||
Total property and equipment, net | $ | 4,915 | $ | 6,162 | ||||
Vehicle deposits | 3,097 | 3,075 | ||||||
Total property, equipment and deposits, net | $ | 8,012 | $ | 9,237 |
The following table summarizes the loss on disposal and depreciation expenses recorded in the condensed consolidated statement of operations for the three months ended on March 31, 2023, and 2022.
Schedule of consolidated income statement | ||||||||
Three months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cost of revenues | $ | 1,351 | $ | 981 | ||||
Research & Development | 15 | — | ||||||
General & administrative | 108 | 104 | ||||||
Total depreciation and loss on disposal expenses | $ | 1,474 | $ | 1,085 |
DepreciationThe Cost of revenues for the three months ended March 31, 2023, amounted to $1,351 which includes $551 related to depreciation expenses for sharing vehicles leased by the Company under finance lease agreements.
7. Intangible assets, net
Intangible assets consist of the following:
Schedule of intangible assets | ||||||||
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Government Relationships | 2,400 | 2,400 | ||||||
Trade name and trademarks | 900 | 900 | ||||||
Customer Relationships | — | — | ||||||
Licenses | 135 | 126 | ||||||
Other Intangible assets | 291 | 87 | ||||||
Total Intangible assets, Gross | $ | 3,726 | $ | 3,513 | ||||
Less: accumulated amortization | (512 | ) | (246 | ) | ||||
Total Intangible assets, net | $ | 3,214 | $ | 3,267 |
8. Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following:
Schedule of accrued expenses and other current liabilities | ||||||||
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Legal contingencies – refer to Note 11 Commitments and Contingencies | $ | 2,481 | $ | 2,710 | ||||
Payroll liabilities | 2,814 | 2,693 | ||||||
Accrued expenses | 2,730 | 2,369 | ||||||
Sales tax payables | 640 | 1,113 | ||||||
Total accrued expenses and other current liabilities | $ | 8,665 | $ | 8,885 |
Payroll liabilities and Accrued expenses presented in the table above are related to the leased assetsnormal course of business, while Sales tax payables and Legal contingencies are mainly related to liabilities arising from prior periods by Wheels. Sales tax payables are related to settlement agreements made by Wheels with multiple US states under which the Company is required to make monthly payments within the next 6 months.
11 |
9. Current and Non-current financial liabilities, net
The Company’s Financial liabilities consisted of the following:
Schedule of financial liabilities | ||||||||||||||||
Weighted Average Interest Rate | Maturity Date | March 31, 2023 | December 31, 2022 | |||||||||||||
Convertible debts, net | 9 | % | 2023 | 10,131 | 14,372 | |||||||||||
Secured loan, net | 13 | % | 2023 | 14,306 | 14,224 | |||||||||||
Unsecured loans, net | 7 | % | Various | 10,611 | 10,935 | |||||||||||
Warrants liabilities | N/A | — | 51 | 84 | ||||||||||||
Other financial liabilities | N/A | Various | 738 | 802 | ||||||||||||
Total Financial Liabilities, net | 35,837 | 40,418 | ||||||||||||||
Of which classified as Current Financial Liabilities, net | 28,956 | 33,244 | ||||||||||||||
Of which classified as Non-Current Financial Liabilities, net | 6,881 | 7,174 |
The table below shows the amounts recorded as Interest expense, net on the statements of operations for the three months ended on March 31, 2023, and March 31, 2022:
Schedule of interest expense | ||||||||
Three months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Convertible debts | $ | (932 | ) | $ | (1,384 | ) | ||
Secured loan | (540 | ) | (457 | ) | ||||
Unsecured loans | (224 | ) | (140 | ) | ||||
Other interest (income) expenses | (5 | ) | — | |||||
Total Interest expenses, net | $ | (1,701 | ) | $ | (1,981 | ) |
In detail, during the three months ended March 31, 2023, the Company recorded as Interest Expenses, net $457 related to amortization of debt discounts, of which $424 related to Convertible debts. During the three months ended March 31, 2022, the Company recorded as Interest Expenses, net $1,074 related to amortization of debt discounts, of which $1,042 related to Convertible debts.
As of March 31, 2023, the Company categorized as convertible debts the following instruments issued to YA II, Ltd. (the “Note Holder”): a) two convertible notes issued in 2022 (“2022 Convertible notes”) under two Securities Purchase Agreements and b) a convertible promissory note issued on March 8, 2023 under a Standby Equity Purchase Agreement (“January 2023 SEPA”) dated January 24, 2023 (“2023 SEPA Convertible note”).
2022 Convertible debts
As a result of the below conversion and repayments, on March 31, 2023, the Company had $6,141 as outstanding principal and accumulated interest, partially offset by debt discounts that amounted to $434127.
Repayments
The Company partially repaid in cash the 2022 Convertible Notes for a cumulative payment of $3,701 (of which $3,215 was principal, $132 was accumulated interest, and $567354 forwas redemption premium interest).
Conversion into Class A Common Shares
During the three and six months ended on June 30, 2022, respectively. March 31, 2023, the Company issued Class A Common Shares in satisfaction of conversion requests of $ in principal and interest.
2023 SEPA Convertible Note
On March 8, 2023, the Company issued a Convertible Promissory Note (“2023 SEPA Convertible Note”) to the Note Holder pursuant to the SEPA dated January 24, 2023. The 2023 SEPA Convertible Note had a principal amount of $4,500 with 10% issuance discount, a maturity date of September 15, 2023, a 5% annual interest rate and a 15% annual default interest rate. The 2023 SEPA Convertible Note shall be convertible into shares of the Company’s Class A common shares at a Fixed Conversion Price of $25.
12 |
The table below showsCompany has the Electric vehicle deposits roll-forward fromoption to repay the 2023 SEPA Convertible Note through the following or a combination of the two:
- | repay in cash the 2023 SEPA Convertible Note on or before the Maturity date, |
- | repay the 2023 SEPA Convertible Note by submitting one or a series of Advance Notices under the SEPA entered in January 2023, on or before the Maturity date. If any time during while the 2023 SEPA Convertible Note is outstanding, the Company delivers an Advance Notice under the January 2023 SEPA, at least one half of the proceeds of any such Advance Notice shall be used as an Advance Repayment or for the repayment of other amounts due from the Company to the Holder. |
The Company has also the option to redeem the 2023 SEPA Convertible Note (“redemption option”), provided that the trading price of the Company’s Class A Common Shares is less than the fixed Conversion Price of $
.2022 SEPA Convertible Note
On December 1, 2022, the Company issued a Convertible Promissory Note (“2022 SEPA Convertible Note”) to June 30,the Note Holder pursuant to the SEPA dated October 31, 2022. The 2022 SEPA Convertible Note had a principal amount of $5,000 with 10% issuance discount, a maturity date of January 31, 2023, a 0% annual interest rate and a 15% annual default interest rate. The 2022 SEPA Convertible Note shall be convertible into shares of the Company’s Class A common shares at a Fixed Conversion Price of $25.
During the period January 1, 2021 – June 30, 2021, no activity occurred forthree months ended March 31, 2023, the deposit account.Company completed the repayment initiated in 2022 by cash payments amounted to $4,210. As a result of the mentioned re-payments on March 31, 2023, the Company has no outstanding principal or accumulated interest under the 2022 SEPA Convertible Note.
Schedule of Electric vehicle deposits | ||||||||||||||||||||
Advance to Suppliers | January 1, 2022 | Additions | Reclassification in Sharing electric vehicles | FX Rate adj. | June 30, 2022 | |||||||||||||||
Mobility | 2,928 | 3,090 | (2,553 | ) | (113 | ) | 3,352 | |||||||||||||
Total | $ | 2,928 | $ | 3,090 | $ | (2,553 | ) | $ | (113 | ) | $ | 3,352 |
10. Leases
8. GoodwillOperating leases
The table below shows the Goodwill roll-forward from January 1, 2022, to June 30, 2022.
Schedule of goodwill | ||||||||||||||||||||
Goodwill | January 1, 2022 | Additions | Impairment | FX rate Adj | June 30, 2022 | |||||||||||||||
MiMoto Smart Mobility S.r.l. | 10,696 | — | — | (905 | ) | 9,791 | ||||||||||||||
Total | $ | 10,696 | $ | — | $ | — | $ | (905 | ) | $ | 9,791 |
9. Other assets
Letter of Intent
The Company has operating leases for office spaces, warehouse facilities, corporate houses, and certain company vehicles. The leases have remaining lease terms of 1one month to 5 years.
On May 12, 2022,During the three months ended March 31, 2023, the Company entered into a Letter of Intent (“LOI”) with Wheels Labs, Inc. (“Wheels”)5-years lease agreement for a Group operating instore located at 500 Broome Street, New York, NY, the micro-mobility industry. In connection withcumulative lease commitment for the LOI,5-year term is $865. At inception, the Company agreed to provide Wheels a depositrecorded $674 as ROU assets and the operating lease liability, using an Internal Borrowing rate of $114 million. Wheels is only required to return that deposit if it fails to comply with certain covenants set out in%.
The table below presents the LOI, or if it fails to take all reasonable steps to effectuate the transaction that is the subject of the Letter of Intent pursuant to its terms.
On June 20, 2022, the Company amended the original LOI. Basedimpact on the amended LOI,condensed consolidated statement of operations related to the Company will negotiate with Wheels on an exclusive basis, the terms and conditionsoperating leases for the acquisitionthree months ended March 31, 2023, including expenses related to lease agreements with an initial term of all of12 months or less. Amounts presented for the outstanding capital stock of Wheels and agreed to provide additional $1 million in July 2022 and $1 million in August 2022 as additional deposit. The Company did not pay the additional deposits due in July and August.three months ended March 31, 2023, have been recorded under ASC 840.
Other assets consist of the following:
Schedule of Other assets | ||||||||
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Letter of Intent | $ | 1,000 | $ | — | ||||
Other | 539 | 1,212 | ||||||
Total other assets | $ | 1,539 | $ | 1,212 |
10. Liability warrants
The Company’s Warrants, classified as a liability, consisted of the following:
Schedule of Warrants, classified as a liability | ||||||||
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
GRNV Sponsor Private Warrants | 210 | 1,596 | ||||||
Total liability warrants | $ | 210 | $ | 1,596 |
Schedule of operating lease expense | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Cost of revenues | 386 | 403 | ||||||
General and administrative | 295 | 350 | ||||||
Total Operating lease expenses | $ | 681 | $ | 753 |
The tables below show the warrant liabilities roll-forward from January 1, 2021, to June 30, 2021, and from December 31, 2021, to June 30, 2022.
Schedule of liability warrants | ||||||||||||||||
Warrant liabilities | January 1, 2021 | Change in fair value | Exercise (fair value) | June 30, 2021 | ||||||||||||
2020 Warrant Purchase Agreement * | 6,439 | 4,128 | (10,567 | ) | — | |||||||||||
Total | $ | 6,439 | $ | 4,128 | $ | (10,567 | ) | $ | — |
13 |
The table below show a cumulative change in fair value amounted to $1,386Finance leases, of which $945 has been recorded for the period from December 31, 2021, to March 31, 2022, and $441 for the three months ended June 30, 2022.
Warrant liabilities | December 31, 2021 | Change in fair value | Exercise (fair value) | June 30, 2022 | ||||||||||||
GRNV Sponsor Private Warrants | 1,596 | (1,386 | ) | — | 210 | |||||||||||
Total | $ | 1,596 | $ | (1,386 | ) | $ | — | $ | 210 |
The following tables summarize the fair value hierarchy of the Company’s financial liabilities measured at fair value on a recurring basis as of June 30, 2022, and December 31, 2021.
Fair Value, Liabilities Measured on Recurring Basis | ||||||||||||||||
June 30, 2022 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
GRNV Sponsor Private Warrants | $ | 210 | — | — | $ | 210 | ||||||||||
Total | $ | 210 | $ | — | $ | — | $ | 210 |
December 31, 2021 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
GRNV Sponsor Private Warrants | $ | 1,596 | — | — | $ | 1,596 | ||||||||||
Total | $ | 1,596 | $ | — | $ | — | $ | 1,596 |
Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. GRNV Sponsor Private Warrants are accounted as liability and categorized as Level 3 financial liabilities for the absence of an active market.
As of June 30, 2022, and DecemberMarch 31, 2021, the fair values of each GRNV Sponsor Private Warrant amounted to $0.10 and $0.76, respectively. The fair values were determined using the Black-Scholes option-pricing model with the following assumptions.
Assumptions used | ||||||||
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Remaining term (in years) | ||||||||
Expected volatility | % | % | ||||||
Risk-free interest rate | % | % | ||||||
Expected dividend yield | % | % |
11. Current and Non-current financial liabilities and capital leases, net
The Company’s Financial liabilities consisted of the following:
Financial liabilities | ||||||||||||||||
Interest Rate | Maturity Date | June 30, 2022 | December 31, 2021 | |||||||||||||
2021 Convertible Debts amended | 5 | % | 2022 | 16,488 | 30,291 | |||||||||||
2022 Convertible Debts | 5 | % | 2023 | (2) | 10,081 | — | ||||||||||
Secured Long Term Loan | 12.7 | % | 2023 | 14,245 | 13,679 | |||||||||||
Long Term Loan | 4.5 | % | 2026 | 3,344 | 3,918 | |||||||||||
Long Term Loan | 5.4 | % | 2024 | 1,561 | 2,054 | |||||||||||
Capital lease liability(1) | N/A | 2023 | 2,792 | — | ||||||||||||
CEO Promissory Note (Related Party) | 0 | % | 2022 | 380 | — | |||||||||||
Other financial liabilities | Varies | Varies | 1,017 | 1,053 | ||||||||||||
Total principal and accumulated interests | 49,907 | 50,994 | ||||||||||||||
Total unamortized debt discounts and debt issuance costs | (1,753 | ) | (7,464 | ) | ||||||||||||
Total financial liabilities and capital leases, net | 48,154 | 43,530 | ||||||||||||||
Of which classified as Current financial liabilities and capital liabilities, net | 30,597 | 25,473 | ||||||||||||||
Of which classified as Non-current financial Liabilities, net | 17,557 | 18,057 |
The table below shows the impact on the statements of operations, Interest expense, net and Loss on extinguishment of debts accounts, related to the financial liabilities for the three and six months ended June 30, 2022 and June 30, 2021.
Interest expenses | ||||||||||||||||
Schedule of Financial liabilities impacts on Statement of Operations |
Three Months Ended June 30,
|
Six Months Ended June 30,
| ||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
2021 Convertible Debts pre and post amendment | 426 | — | 1,810 | — | ||||||||||||
2022 Convertible Debts | 384 | — | 384 | — | ||||||||||||
Secured Long Term Loan | 516 | 418 | 973 | 454 | ||||||||||||
Other financial liabilities | 185 | 148 | 325 | 610 | ||||||||||||
Total Interest expenses, net | 1,512 | 566 | 3,492 | 1,064 | ||||||||||||
2021 Convertible Debts | 2,065 | — | 2,065 | — | ||||||||||||
Total Loss on extinguishment of debts | 2,065 | — | 2,065 | — |
2021 Convertible Debts
Amendments
The three 2021 convertible notes are convertible by the Note Holder upon issuance. In accordance with the original agreement the conversion price will be the lower of a Fixed Conversion Price or 92.5% of the lowest daily volume-weighted average price (VWAP) of the Class A Common Stock during the five consecutive trading days immediately preceding the conversion date, provided that the conversion price may not be less than the Floor Price.
On April 15, 2022, and on May 17, 2022, Helbiz amended certain terms of the 2021 Convertible Notes and related 1,000,000 Warrants previously issued under the 2021 SPA, see below the terms amended:
Schedule of Convertible Debts | ||||||||||||||||
Original Terms impacted | Note-1 | Note-2 | Note-3 | Warrant | ||||||||||||
Maturity Date | October 12, 2022 | October 22, 2022 | November 11, 2022 | N/A | ||||||||||||
Fixed Conversion Price | $ | 20.00 | $ | 20.00 | $ | 20.00 | N/A | |||||||||
Floor Price | $ | 10.00 | $ | 8.25 | $ | 8.55 | N/A | |||||||||
Strike Price | N/A | N/A | N/A | $ | 20.00 | |||||||||||
Amended Terms | Note-1 | Note-2 | Note-3 | Warrant | ||||||||||||
Maturity Date | December 31, 2022 | December 31, 2022 | December 31, 2022 | N/A | ||||||||||||
Fixed Conversion Price | $ | 3.00 | $ | 3.00 | $ | 3.00 | N/A | |||||||||
Floor Price | $ | 0.25 | $ | 0.25 | $ | 0.25 | N/A | |||||||||
Strike Price | N/A | N/A | N/A | $ | 3.00 |
Additionally, the parties also entered into a Guaranty Agreement and a Pledge Agreement as a result of the April 15, 2022 amendment.
Based on the new terms described above,2023, the Company considered the April 15, 2022, amendment as an extinguishment of the original 2021 Convertible Notes. As a result, the net carrying value of the original 2021 Convertible Notes have been derecognized and the amended 2021 Convertible Notes have been recorded at their fair values on the date of the amendment (April 15, 2022). On April 15, 2022, the fair value of the amended 2021 Convertible Notes have been estimated as the principal amounts and accrued interests and unpaid interests.
The difference between the two amounts, amounted to $2,065 which represents the debt discounts on April 15, 2022, has been recorded in the statements of operations as Loss on extinguishment of debt.
The Company analyzed the April 15, 2022 amendment of the exercise price of the 1,000,000 warrants issued to the 2021 Convertible Note Holder that had been classified as equity, in accordance with ASU 2021-04 which resulted in no impact on the interim financial statement ended June 30, 2022.
On April 15, 2022, all the Helbiz Inc. subsidiaries (“Guarantors”) entered into a Guaranty Agreement in favor of the Note Holder with respect to all the obligations Helbiz Inc owes to the Note Holder pursuant to the 2021 and 2022 Convertible Notes SPAs (refer below for further information regarding the 2022 Convertible Notes). The Guarantors, jointly and severally, guarantee to the Note Holder the full and unconditional payment when due, contained in the two SPAs. The Guarantors agree that after the occurrence of any default in the payment or performance of the obligations, the Guarantors will not demand, sue for or otherwise attempt to collect any such indebtedness of the Note Holder to the Guarantors until the obligations shall have been paid in full.
On April 15, 2022, Salvatore Palella (Helbiz Inc CEO and majority shareholder) entered into a Pledge Agreement in favor of the Note Holder. The agreement grants the Note Holder a first priority security interest and pledge in at least $7,000,000 shares of Class B Common Stock that are owned by the CEO of the Company as security for the Company’s obligations under the 2021 and 2022 Convertible Notes SPAs.
ASU 2020-06
Effective January 1, 2022, the Company adopted ASU 2020-06 using the modified retrospective approach, under this new guidance the BCF does not require bifurcation from the host liability. As a result, on January 1, 2022, the Company derecognized the BCF from the condensed combined balance sheet. In detail, the interest expense that arose from the amortization of the debt discount related to the BCF during 2021, amounted to $816, has been recognized as a cumulative adjustment to accumulated deficit at the transition date. Additionally, the remaining BCF debt discount balance at the transition date, amounted to $3,371 and the equity amount originally recorded at the issuance date $4,187 for the BCF, have been derecognized on the transition date.
Conversions
During the three months ended June 30, 2022, the Note Holder converted $7,516 (of which $7,354 as principal and $162 as accumulated interests) of the 2021 Convertible Notes into Class A Common Shares.
During the six months ended June 30, 2022, the Note Holder converted $14,398 (of which $13,854 as principal and $544 as accumulated interests) of the 2021 Convertible Notes into Class A Common Shares.
2022 Convertible Debts
On April 15, 2022 (“closing date”), the Company entered into a Securities Purchase Agreement (the “SPA”) with YA II, Ltd. (the “Note Holder”), pursuant to the terms of the SPA, the Company received from the Note holder proceeds of $10 million and issued: (i) 150,000 shares of Class A common stock as a commitment fee, (ii) 500,000 Warrants to buy 500,000 Class A common shares with an exercise price of $3.00 per share and a five-year expiration date, and (iii) two convertible notes with the following terms.
Schedule of Convertible Debts | ||||||||
Convertible Note-1 | Convertible Note-2 | |||||||
Issuance date | April 15, 2022 | May 27, 2022 | ||||||
Maturity Date | April 15, 2023 | May 27, 2023 | ||||||
Principal | $ | 6,000,000 | $ | 4,000,000 | ||||
Fixed Conversion Price | $ | 3.00 | $ | 3.00 | ||||
Floor Price | $ | 0.25 | $ | 0.25 | ||||
Interest rate | 5.00% | 5.00% | ||||||
Default interest rate | 15.00% | 15.00% |
The two convertible notes are convertible by the Note Holder upon issuance. The conversion price will be lower of the Fixed Conversion Price or 92.5% of the lowest daily volume-weighted average price (“DVWAP”) of the Class A Common Stock during the five consecutive trading days immediately preceding the conversion date, provided that the conversion price may not be less than the Floor Price.
Based on the SPA and the amendment that occurred on May 17, 2022, the Company is required to pay a redemption premium in two circumstances: a) if the Company redeems the convertible notes prior to maturity; or b) if 90 days after the issuance, the DVWAP is less than the Floor Price for ten trading days during a period of 15 consecutive trading days. In case event b) occurred the Company is required to make monthly payments which shall be in an amount equal to the sum of (i) the principal amount outstanding divided by the number of such monthly payments until maturity, (ii) a redemption premium of 10% of such principal amount and (iii) accrued and unpaid interest hereunder as of each payment date. The Company obligation to make monthly payments cease if the Company reduces the Floor Price. The reduced Floor Price shall be equal to no more than 80% of the Closing Bid Price on the Trading Day immediately prior to such Reset Notice.
At the issuance dates of the Convertible Notes, the Company separated the Convertible Notes into a liability and equity components. In detail, at the issuance of the convertible notes, the Company determined the fair value of:
The Company allocated the gross proceeds between the Convertible Note - classified as Current liability - and the warrants - classified as equity component with no subsequent re-measurement - based upon their relative fair values. Additionally, the Company recorded the following debt discounts related to the Convertible notes:
The difference between the principal amounts of the Convertible Notes and the liability components ("debt discount") is amortized to interest expense over the contractual term of the notes.
12. Commitments and Contingencies
Leases
The Company entered intoplace various non-cancellable operating lease agreements for office facilities, e-mopeds leases, corporate vehicles’ licensing, and corporate housing entered into by the Company with lease periods expiring through 2024. These agreements require the payment of certain operating expenses, such as non-refundable taxes, repairs and insurance and contain renewal and escalation clauses. The terms of the leases provide for payments on a monthly basis and sometimes on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease period and has accrued for rent expense incurred but not paid. Lease expenses under operating leases were $746 and $1,484 for the three and six months ended on June 30, 2022, respectively; and $657 and $1,119 for the three and six months ended on June 30, 2021, respectively.
Additionally, the Company entered into various non-cancellable capitalfinance lease agreements for 3,750 eScooters and R&D equipment with financial institutions. As of March 31, 2023, the remaining lease terms vary between one month to two years.
The capital lease agreements included within Financial liabilitiestable below presents the impact on the condensed consolidated balance sheet asstatement of June 30, 2022 amounted to $2,792, of which $2,649 isoperations related to the 3,750 eScooters and $143 is related to the R&D equipment. The capital lease agreements for the 3,750 eScooters have a duration between 12 to 18 months while the R&D equipment agreement has a duration of 36 months. The eScooters/R&D equipment under the lease are collateral for the lease obligations and are included within property, plant and equipment on the condensed consolidated balance sheet as of June 30, 2022 (Refer to Note. 7 Property, equipment and deposits, net for further information).
Lease expenses under capitalfinance leases were accounted as interest expenses for $83 and $112 for the three and six months ended on June 30,March 31, 2023, and 2022.
Schedule of finance lease expense | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Cost of revenues | 547 | 129 | ||||||
Research & Development | 15 | — | ||||||
Total Operating expenses related to finance leases | $ | 562 | $ | 129 | ||||
Interest expenses | 5 | — | ||||||
Total Non - Operating expenses related to finance leases | $ | 5 | $ | — |
Future annual minimum lease payments as of December 31, 2022, respectively.are as follows:
Lease expenses under capital leases | |||||||||||||||||
Schedule of future minimum lease payments | |||||||||||||||||
Operating leases | Capital leases | Leases | |||||||||||||||
Year ending December 31: | |||||||||||||||||
2022 | 895 | 2,193 | |||||||||||||||
Year ending December 31, | Operating | Finance | |||||||||||||||
2023 | 588 | 777 | $ | 1,161 | $ | 1,971 | |||||||||||
2024 | 124 | 60 | 526 | 60 | |||||||||||||
2025 | 359 | 15 | |||||||||||||||
Thereafter | 41 | 15 | 403 | — | |||||||||||||
Total minimum lease payments | 1,648 | 3,045 | $ | 2,450 | $ | 2,046 | |||||||||||
Less: Amounts representing interest not yet incurred | 252 | (11 | ) | ||||||||||||||
Present value of capital lease obligations | 2,792 | ||||||||||||||||
Present value of finance lease obligations | 2,035 | ||||||||||||||||
Less: Current portion | 2,701 | 1,977 | |||||||||||||||
Long-term portion of capital lease obligations | 91 | ||||||||||||||||
Long-term portion of finance lease obligations | 58 |
11. Commitments and Contingencies
Litigation
FromThe Company is from time to time the Company may become involved in legal proceedings, arisingclaims, and regulatory matters, indirect tax examinations or government inquiries and investigations that may arise in the ordinary course of business. There are currently no materialCertain of these matters include speculative claims for substantial or indeterminate amounts of damages.
The Company records a liability when the Company believes that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, the Company discloses the possible loss in the consolidated financial statements. The Company reviews the developments in contingencies that could affect the amount of the provisions that have been previously recorded. The Company adjusts provisions and changes to disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability and the estimated amount of any potential losses and many of the legal proceedings againstare early in the Company,discovery stage and the Company is not aware of investigations being conducted by a governmental entity into the Company. The Company does not disclose litigation with a remote possibility of an unfavorable outcome.
unresolved.
As of March 31, 2023, and December 31, 2022, the Company concluded that certain losses on litigations were probable and reasonable estimable; as a result, the Company recorded $2,481 and $2,710, respectively, as Accruals for legal contingencies, included in Other Current liabilities.
Schedule of accruals for litigation contingencies | ||||||||||||||||||||
Accruals for litigation contingencies | January 1, 2023 | FX Rate adj | Additions | Payments | March 31, 2023 | |||||||||||||||
micromobility.com, Inc | $ | 2,060 | — | — | (164 | ) | 1,896 | |||||||||||||
Wheels Lab, Inc | 650 | — | — | (65 | ) | 585 | ||||||||||||||
Total | $ | 2,710 | $ | — | $ | — | $ | (229 | ) | $ | 2,481 |
Wheels has been named in various lawsuits related to the use of Wheels’s vehicles in US cities and in certain matters involving California Labor Code violations and the classification of individuals as independent contractors rather than employees. The range of loss for the Wheels legal contingencies accrued is between $685 to $3.1 million which represents the range between the amount already settled with the counterparts and the amount claimed deducting insurance coverage.
The Company is also involved in certain claims where the losses are not considered to be reasonably estimable or possible; for these claims the range of potential loss is between 0 to $200.
12. Common Stock
As of March 31, 2023, the Company’s charter authorized the issuance of up to
of Class A common shares of common stock at $ par value per share, of Class B common shares of common stock at $ par value per share, shares of preferred stock at $ par value per share.13.Standby Equity Purchase Agreements
During the three months ended March 31, 2023, the Company entered into two Standby Equity Purchase Agreements (“2023 SEPAs”) with an investor. The 2023 SEPAs terms and conditions represent: i) at inception - a purchased put option on the Company’s Class A common shares and, ii) upon delivery of an Advance Notice - a forward contract on the Company’s Class A common shares. Neither the purchased put option nor the forward contract qualify for equity classification.
As a result of the above classification of the 2023 SEPAs, at inception the Company expensed as SEPA’s transactions costs the legal and commitment fees that exceeded the fair value of the purchased put options. The settlement of forward contracts initiated by the Company were recorded as other SEPA financial income (expense), net.
The table below presents the impact on the condensed consolidated statement of operations related to the 2023 SEPAs for the three months ended March 31, 2023, and 2022.
Schedule of consolidated operations related | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
SEPAs transaction costs | (1,611 | ) | — | |||||
Other SEPA financial income (expenses), net | (597 | ) | — | |||||
Total SEPA financial income (expenses), net | $ | (2,208 | ) | $ | — |
January 2023 SEPA
On January 24, 2023, the Company entered into a Standby Equity Purchase Agreement (“SEPA”) with YA II PN, Ltd. Pursuant to the SEPA, the Company has the right, but not the obligation, to sell to Yorkville up to $20,000 of its shares of Class A Common Stock at any time during the 24 months. To request a purchase, the Company would submit an Advance Notice to YA II PN, Ltd. specifying the number of shares, it intends to sell. The Advance Notice would state that the shares would be purchased at either:
(i) | 95.0% of the Option 1 Market Price, which is the lowest VWAP (the daily volume weighted average price of Company’s Class A common stock for the applicable date) in each of the three consecutive trading days commencing on the trading day following the Company’s submission of an Advance Notice, or |
(ii) | 92.0% of the Option 2 Market Price, which is the VWAP of the pricing period set out in the Advance Notice and consented to by YA II PN, Ltd. |
At inception the Company did not identify any day one impact for the SEPA agreement except for $400 as Commitment fees to be paid to YA II PN, Ltd and legal fees amounted to $192. The mentioned legal and Commitment fees have been recorded as SEPA transaction costs.
During the three months ended March 31, 2023, the Company delivered multiple Advance Notices for the sale of 7,402.
Class A Common Shares, resulting in cumulative gross proceeds of $15 |
March 2023 SEPA
On March 8, 2023, the Company entered into a Standby Equity Purchase Agreement (“SEPA”) with YA II PN, Ltd. Pursuant to the SEPA, the Company has the right, but not the obligation, to sell to Yorkville up to $50,000 of its shares of Class A Common Stock at any time during the 24 months. To request a purchase, the Company would submit an Advance Notice to YA II PN, Ltd. specifying the number of shares, it intends to sell. The Advance Notice would state that the shares would be purchased at either:
(i) | 95.0% of the Option 1 Market Price, which is the lowest VWAP (the daily volume weighted average price of Company’s Class A common stock for the applicable date) in each of the three consecutive trading days commencing on the trading day following the Company’s submission of an Advance Notice, or |
(ii) | 92.0% of the Option 2 Market Price, which is the VWAP of the pricing period set out in the Advance Notice and consented to by YA II PN, Ltd. |
At inception the Company did not identify any day one impact for the SEPA agreement except for $750 as Commitment fees to be paid to YA II PN, Ltd and legal fees amounted to $269, recorded as SEPA Deferred Costs as of March 31, 2023. The mentioned legal and Commitment fees have been recorded as SEPA transaction costs.
14. Share based compensation expenses
Stock-based compensation expense is allocated based on (i) the cost center to which the award holder belongs, for employees, and (ii) the service rendered to the Company, for third-party consultants. The following table summarizes total stock-based compensation expense by account for the three and six months ended June 30, 2022,March 31, 2023, and 2021.2022.
Schedule of stock-based compensation expenses | ||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, |
Three Months Ended March 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | |||||||||||||||||||
Cost of revenue | 2 | 5 | 12 | 17 | 2 | 10 | ||||||||||||||||||
Research and development | 34 | 71 | 98 | 307 | 31 | 64 | ||||||||||||||||||
Sales and marketing | 161 | 47 | 343 | 214 | 26 | 182 | ||||||||||||||||||
General and administrative | 804 | 423 | 1,799 | 1,593 | 518 | 995 | ||||||||||||||||||
SEPA financial expenses | 186 | — | ||||||||||||||||||||||
Total Share based compensation expenses, net | 1,001 | 546 | 2,252 | 2,131 | 762 | 1,252 | ||||||||||||||||||
Of which related to shares to consultants not issued and adjustments for shares price at issuance | 224 | — | 304 | — | ||||||||||||||||||||
Of which related to shares not issued for services rendered during the period, accrued as Account payables | 345 | 160 |
2023 Omnibus Incentive Plan
During the three months ended March 31, 2023, the Company adopted the 2023 Omnibus Incentive Plan (2023 Plan) under which the Company may issue equity incentives to selected employees, officers, and director of the Company. The 2023 Plan permits the grant of Incentive Stock Options, Non-statutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares.
Under the 2023 Plan, stock options are to be granted at a price that is not less than 100% of the fair value of the underlying common stock at the date of grant. Awards for employee vest 25% on the first anniversary of the date of grant and ratably each month over the ensuing 36-month period. Awards for independent board member vest ratably each quarter over the ensuing 4-quarter period. The maximum term for stock options granted under the 2023 Plan might not exceed ten years from the date of grant.
Upon original approval, the Company reserved
shares of the Company’s Class A common stock for issuance under the 2023 Plan, no equity incentives have been issued as of March 31, 2023, under the 2023 Plan.16 |
The following potentially dilutive outstanding shares (considering(considering a retroactive application of the conversion ratio) Reverse Stock Split) were excluded from the computation of diluted net loss per share for the periods presented because including them would have had an anti-dilutive effect, or issuance of such shares is contingent upon the satisfaction of certain conditions which were not satisfied by the end of the period.
Schedule of dilutive outstanding shares | ||||||||||||||||||||||||
Three months ended June 30, | Six months ended June 30, | Three months ended March 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | |||||||||||||||||||
2020 Equity Incentive Plan | 7,354,869 | 7,409,701 | 7,354,869 | 7,409,701 | 146,652 | 147,097 | ||||||||||||||||||
Public Warrants | 7,736,416 | — | 7,736,416 | — | 196,728 | 196,728 | ||||||||||||||||||
Convertible Notes * | 43,219,831 | — | 43,219,831 | — | ||||||||||||||||||||
Convertible Notes | 671,259 | 104,286 | ||||||||||||||||||||||
Convertible Notes Warrants | 1,500,000 | — | 1,500,000 | — | 40,000 | 20,000 | ||||||||||||||||||
GRNV Sponsor Private Warrants | 2,100,000 | — | 2,100,000 | — | ||||||||||||||||||||
Class B Common Shares - Held in escrow for indemnification purpose | 1,600,000 | — | 1,600,000 | — | ||||||||||||||||||||
Common Stocks to be issued outside equity incentive Plans | 107,139 | 1,382 | ||||||||||||||||||||||
2020 CEO Performance Award | 600,000 | 600,000 | 600,000 | 600,000 | 12,000 | 12,000 | ||||||||||||||||||
2021 Omnibus Plan | 368,750 | — | 368,750 | — | 5,875 | 9,000 | ||||||||||||||||||
Common Stocks to be issued outside equity incentive Plans | 155,620 | — | 155,620 | — | ||||||||||||||||||||
Convertible Preferred Stock Series B | — | 1,313,753 | — | 1,313,753 | ||||||||||||||||||||
Equity Award for Non-employees with Performance condition not satisfied | 343,419 | — | 343,419 | |||||||||||||||||||||
Class B Common Shares - Held in escrow for indemnification purpose | — | 32,000 | ||||||||||||||||||||||
Total number of Common Shares not included in the EPS Basic and diluted | 64,635,486 | 9,666,873 | 64,635,486 | 9,666,873 | 1,179,653 | 522,493 |
* | The number of Common Shares presented is based on the principal plus accumulated |
15.16. Segment and geographic information
The following table provides information about our segments and a reconciliation of the total segment Revenue and Cost of revenue to loss from operations.
Schedule of segment Revenue and Cost of revenue | ||||||||||||||||||||||||
Schedule of segment revenue and cost of revenue | ||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | Three months ended March 31, | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | 2023 | 2022 | |||||||||||||||||||
Revenue | ||||||||||||||||||||||||
Mobility | 2,716 | 2,982 | 4,293 | 3,997 | 1,578 | 1,577 | ||||||||||||||||||
Live | 1,489 | — | 3,145 | — | ||||||||||||||||||||
Media | 2,086 | 1,656 | ||||||||||||||||||||||
All Other | 153 | — | 232 | — | 255 | 79 | ||||||||||||||||||
Total Revenue | $ | 4,358 | $ | 2,982 | $ | 7,670 | $ | 3,997 | $ | 3,919 | $ | 3,312 | ||||||||||||
Cost of revenue | ||||||||||||||||||||||||
Mobility | (5,019 | ) | (6,073 | ) | (9,657 | ) | (10,577 | ) | (4,608 | ) | (4,637 | ) | ||||||||||||
Live | (4,675 | ) | — | (10,950 | ) | — | ||||||||||||||||||
Media | (5,610 | ) | (6,276 | ) | ||||||||||||||||||||
All Other | (574 | ) | — | (999 | ) | — | (849 | ) | (426 | ) | ||||||||||||||
Total Cost of revenue | $ | (10,267 | ) | $ | (6,073 | ) | $ | (21,606 | ) | $ | (10,577 | ) | ||||||||||||
Total Cost of revenues | $ | (11,067 | ) | $ | (11,339 | ) | ||||||||||||||||||
Reconciling Items: | ||||||||||||||||||||||||
Research and development | (843 | ) | (744 | ) | ||||||||||||||||||||
Sales and marketing | (1,239 | ) | (2,598 | ) | ||||||||||||||||||||
General and administrative | (6,436 | ) | (2,638 | ) | (13,115 | ) | (6,592 | ) | (6,232 | ) | (6,681 | ) | ||||||||||||
Sales and marketing | (3,415 | ) | (1,275 | ) | (6,013 | ) | (2,408 | ) | ||||||||||||||||
Research and development | (638 | ) | (588 | ) | (1,382 | ) | (1,164 | ) | ||||||||||||||||
Loss from operations | $ | (16,398 | ) | $ | (7,592 | ) | $ | (34,447 | ) | $ | (16,744 | ) | $ | (15,463 | ) | $ | (18,050 | ) |
Revenue by geography is based on where athe trip was completed, or media content occurred. The following table set forth revenue by geographic area for the three and six months ended June 30, 2022,March 31, 2023, and 2021.2022.
Schedule of Revenue by geography | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenue | ||||||||||||||||
Italy | 3,709 | 2,031 | 6,661 | 2,681 | ||||||||||||
United States | 649 | 951 | 1,009 | 1,316 | ||||||||||||
All other countries | — | — | — | — | ||||||||||||
Total Revenue | $ | 4,358 | $ | 2,982 | $ | 7,670 | $ | 3,997 |
Schedule of revenue by geography | ||||||||
Three months ended March 31, | ||||||||
2023 | 2022 | |||||||
Revenue | ||||||||
Italy | 3,148 | 2,952 | ||||||
United States | 771 | 360 | ||||||
All other countries | — | — | ||||||
Total Revenue | $ | 3,919 | $ | 3,312 |
Long-lived assets, net includes property and equipment, intangible assets, goodwill and other assets. The following table set forth long-lived assets, net by geographic area as of June 30, 2022,March 31, 2023, and December 31, 2021.2022.
Schedule of intangible assets, goodwill and other assets | ||||||||||||||||
June 30, | December 31, | March 31, | December 31, | |||||||||||||
Non-Current Assets | 2022 | 2021 | 2023 | 2022 | ||||||||||||
Italy | $ | 16,480 | $ | 17,905 | $ | 5,006 | $ | 5,575 | ||||||||
United States | 7,402 | 3,337 | 23,387 | 23,669 | ||||||||||||
All other countries | 176 | 184 | 587 | 665 | ||||||||||||
Total Non-Current Assets | $ | 24,058 | $ | 21,426 | $ | 28,980 | $ | 29,909 |
16.17. Related Party Transactions
During the six monthsperiod ended June 30, 2022,March 31, 2023, our majority shareholder and CEO converted a portion of his deferred salaries, totaling $78, into Class A Common Shares.
On March 13, 2023, the Company issued Series B has lent Helbiz, fundsno voting rights, except that each share of Series B is entitled to 80,000 votes at a shareholder meeting on an interest-free basiswhether to enact a reverse stock split. Holder of Company’s Series B was required to vote any proposal for a reverse stock split on a “mirrored” basis. This means that the Series B holder was required to cast their votes “For” and “Against” each such proposal in the same proportions as the holders of Company’s Class A Common shares eligible and voting at the Special Meeting cast their votes, in the aggregate. On March 30, 2023, the Company’s Series B Preferred Stock have been redeemed following the stockholder meeting for $ per share. As of March 31, 2023, there were shares of Series B Preferred Stock issued and outstanding.
18. Subsequent Events
2023 SEPA and Convertible debts repayment
From April 1, 2023, to date, the Company delivered Advance Notices under the January 2023 SEPA, for the sale of 3804,228 through two Promissory Notes.of which $1,706 was used for repaying the Convertible debts.
17. Subsequent Events
2021 Convertible Debts, conversion into Common Shares
From July 1, 2022, to the date of this prospectus, the Note Holder converted $4.6 million (including $0.4 million of interests) of the 2021 Convertible Notes into of Class A Common Shares.Shares issued to a Board member
CEO Promissory notes, conversion into Common Shares
On July 20, 2022,May 1, 2023, the Company’s majority shareholder and CEO converted $0.2 million of its Promissory Notes into ofCompany agreed to issue 59,524 Class A Common Shares.
IssuanceShares to Mr. Ponzellini (Company’s board member) in reference to the conversion of Note
On July 11, 2022, the Company issued a note to an investor in exchange for million Euro (approximately $2 million). The note carries 6.75% interest and mature in July 2027. The Company can redeem the note after December 15, 2023.
Issuanceoutstanding amount of Convertible Notes
On August 9, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”) with YA II, Ltd. (the “Note holder”),$90 of earned but unpaid consulting services accrued pursuant to a consulting agreement entered in March 2019 among Ponzellini and the terms of the SPA, the Company issued to the Note holder a convertible note in the principal amount of $3 million. The convertible notes mature on the one-year anniversary date of their issuance and bears interest at a rate of 5% per annum. In case of an event of default under the convertible notes, the interest rate increases to 15% per annum. The conversion terms and conditions of the Convertible note are the same agreed for 2021 and 2022 Convertible Notes.Company.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with itsour consolidated financial statements and the related notes. Some of the information contained in this discussion and analysis or set forth elsewhere, including information with respect to itsour plans and strategy for itsour business and related financing, includes forward-looking statements that involve risks, uncertainties and assumptions. You should read the “Special Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
The following discussion refers to the financial results of Helbiz,micromobility.com, Inc., for the three and six months ended June 30, 2022,March 31, 2023, and 2021.2022. For purposes of this following discussion the terms “we”, ‘our” or “us” or “the Company” and similar references refers to Helbizmicromobility.com and itsour affiliates. Except for per share data and as otherwise indicated, all dollar amounts set out herein are in thousands.
Overview
micromobility.com, Inc. (formerly known as Helbiz, Inc. (andInc, and, together with its subsidiaries, where applicable, “Helbiz”“micromobility.com” or the “Company”) was incorporated in the state of Delaware in October 2015 with its headquarter in New York, New York. We areThe Company is an intra-urban transportation company that seeks to help urban areas reduce their dependence on individually owned cars by offering affordable, accessible, and sustainable forms of personal transportation, specifically addressing first and last mile transport.
Founded on proprietary technology platforms, the Company’s core business is the offering of electric scooters bikes and mopedsvehicles in the sharing environment. Through its Mobility App, we offerthe Company offers an intra-urban transportation solution that allows users to instantly rent electric vehicles. We currently have electric vehiclesAdditionally, the Company is operating in the United States and Europe.
Starting from the second half of 2021, we expanded our product offerings through two other business lines: (i) the acquisition, commercialization and distribution of media contentscontent including live sport events, such as the Italian Serie B Soccer League. This revenue stream is supported by Helbiz Live App, which is separated from the Mobility App, and (ii) food delivery services through a delivery-only “ghost kitchen” restaurant concept that specializesconcept.
The Company currently has a strategic footprint with offices in preparing healthy-inspired, high-quality, fresh, made-to-order meals, in Milan.New York, Los Angeles, Milan, and Belgrade, with additional operational teams around the world. The service is fully integratedCompany currently has electric vehicles operating in the United States and Europe.
Recent events
On March 30, 2023, the Company held a special meeting of stockholders at which the Company’s stockholders approved a proposal to amend the Company’s Restated Certificate of Incorporation to effect a reverse stock split of the Company’s common stock (the “Reverse Stock Split”).
On March 30, 2023, the Company’s Board of Directors approved a one-for-fifty (1:50) reverse split of the Company’s issued and outstanding shares of common stock and a change in name from “Helbiz, Inc.” to “micromobility.com, Inc.” (the “Company Name Change”). On March 30, 2023, the Company filed with the Secretary of State of the State of Delaware a certificate of amendment to its Restated Certificate of Incorporation to effect the Reverse Stock Split and the Company Name Change. The Reverse Stock Split became effective on March 30, 2023.
As a result of the effectiveness of the Reverse Stock Split, every fifty shares of the Company’s issued and outstanding common stock were automatically combined, converted and changed into one share of the Company’s common stock, without any change in the number of authorized shares or the par value per share. In addition, a proportionate adjustment was made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding stock options, restricted stock units and warrants to purchase shares of common stock and the number of shares reserved for issuance pursuant to the Company’s equity incentive compensation plans. No fractional shares have been issued in connection with the Reverse Stock Split, any fractional shares resultant from the Reverse Stock Split have been rounded up to the next whole share.
19 |
Consolidated Results of Operations
The following tables set forth our results of operations for the periods presented and as a percentage of our net revenue for those periods. Percentages presented in the following tables may not sum due to rounding.
Comparison of the Three ended March 31, 2023 and 2022
The following table summarizes our consolidated results of operations for the three ended March 31, 2023, and for the three months ended March 31, 2022, respectively:
Three months ended March 31, | ||||||||
2023 | 2022 | |||||||
Net revenue | $ | 3,919 | $ | 3,312 | ||||
Operating expenses: | ||||||||
Cost of revenues(1) | 11,067 | 11,339 | ||||||
R&D expenses(1) | 843 | 744 | ||||||
Sales and marketing(1) | 1,239 | 2,598 | ||||||
General and administrative(1) | 6,232 | 6,681 | ||||||
Total operating expenses | 19,381 | 21,362 | ||||||
Loss from operations | (15,463 | ) | (18,050 | ) | ||||
Total non-operating (income) expenses, net | (4,088 | ) | (1,343 | ) | ||||
Income Taxes | (3 | ) | (4 | ) | ||||
Net Loss | (19,554 | ) | (19,397 | ) |
Three months ended March 31, | ||||||||
2023 | 2022 | |||||||
Net revenue | 100 | % | 100 | % | ||||
Operating expenses: | ||||||||
Cost of revenues(1) | 282 | % | 342 | % | ||||
Research and Development(1) | 22 | % | 22 | % | ||||
Sales and marketing(1) | 32 | % | 78 | % | ||||
General and administrative(1) | 159 | % | 202 | % | ||||
Total operating expenses | 495 | % | 645 | % | ||||
Loss from operations | (395 | )% | (545 | )% | ||||
Total non-operating (income) expenses, net | (104 | )% | (41 | )% | ||||
Income Taxes | (0 | )% | (0 | )% | ||||
Net Loss | (499 | )% | (586 | )% |
(1) | Includes stock-based compensation for employees and services received, as follows |
Three months ended March 31, | ||||||||
2023 | 2022 | |||||||
Stock-based Compensation: | ||||||||
Cost of revenues | 2 | 10 | ||||||
Research and Development | 31 | 64 | ||||||
Sales and marketing | 26 | 182 | ||||||
General and administrative | 518 | 995 | ||||||
Non-operating (income) expenses, net | 186 | — | ||||||
Total Stock-based Compensation expenses, net | $ | 762 | $ | 1,252 |
20 |
Net Revenues
Three months ended March 31, | ||||||||||||
2023 | 2022 | % Change | ||||||||||
Mobility Revenues | $ | 1,578 | $ | 1,577 | 0 | % | ||||||
Pay per ride | 1,203 | 1,205 | 0 | % | ||||||||
Mobility Subscriptions | 324 | 288 | 13 | % | ||||||||
Partnerships fees | 51 | 84 | (39 | )% | ||||||||
Media Revenues | $ | 2,086 | $ | 1,656 | 26 | % | ||||||
Commercialization of Media rights (B2B) | 1,307 | 1,296 | 1 | % | ||||||||
Live subscriptions | 685 | 310 | 121 | % | ||||||||
Advertising fees | 94 | 50 | 88 | % | ||||||||
Other Revenues | $ | 255 | $ | 79 | 223 | % | ||||||
Total Net Revenues | $ | 3,919 | $ | 3,312 | 18 | % |
Total revenue Increased by $607, or 18%, for the three months ended March 31, 2023, compared with the three months ended March 31, 2022. The increase can be mainly explained by the increase in Media revenues of $430 or 26% and Other revenues, generated by Kitchen business line, for $176 or 223%.
Mobility App.revenues
Total Mobility revenues remained flat between the three months ended March 31, 2023, and the three months ended March 31, 2022. The Company was able to maintain the same level of Mobility revenues with a decrease in active markets, trips and QAPU following the Company’s strategy to decrease the operating cash used by the micro-mobility business in order to achieve the goal of becoming cash positive.
Media revenues
Media revenue increased by $430, or 26%, for the three months ended March 31, 2023, compared with the three months ended March 31, 2022. The increase can be mainly explained by the increase in Live subscribers which drove the increase in Live subscription revenues from $310 for the three months ended March 31, 2022, to $685 for the three months ended March 31, 2023.
Cost of Revenues
Three months ended March 31, | ||||||||||||
2023 | 2022 | % Change | ||||||||||
Mobility - Cost of revenues | $ | 4,608 | $ | 4,637 | (1 | )% | ||||||
Of which Amortization, Depreciation and write-off | 1,580 | 1,171 | 35 | % | ||||||||
Media - Cost of revenues | $ | 5,610 | 6,276 | (11 | )% | |||||||
Of which content licensing | 4,070 | 4,510 | (10 | )% | ||||||||
Other - Cost of revenues | $ | 849 | 426 | 99 | % | |||||||
Total - Cost of revenues | $ | 11,067 | $ | 11,339 | (2 | )% |
Cost of Revenue remains flat comparing the three months ended March 31, 2023, with the three months ended March 31, 2022.
Mobility Cost of revenues
Overall Cost of revenues for the Mobility business remains stable comparing the three months ended March 31, 2023, and March 31, 2022. However, following the Company’s strategy to decrease the operating cash used by the micro-mobility business, it was able to maintain the same level of Mobility cost of revenues even though it recorded an increase in Amortization, Depreciation and write-off for 409 or 35%. The increase in Amortization, Depreciation and write-off is mainly related to the assets acquired from the acquisition of Wheels on November 18, 2022.
Media Cost of revenues
Media cost of revenues decreased by $666, or 11%, for the three months ended March 31, 2023, compared with the three months ended March 31, 2022. The decrease was mainly driven by the decrease in media content acquired during the period, in line with the Company’s strategy to decrease the operating cash used by the media business.
Other - Cost of revenues
Cost of revenues related to other business lines increased by $423, or 99%, for the three months ended March 31, 2023, compared with the three months ended March 31, 2022. The increase was mainly driven by the opening of the kitchen business in the United States of America.
21 |
Sales and marketing
Three months ended March 31, | ||||||||||||
2023 | 2022 | % Change | ||||||||||
Sales and marketing | $ | 1,239 | $ | 2,598 | (52 | )% | ||||||
Of which Stock-based Compensation | 26 | 182 | (86 | )% |
Sales and marketing expenses decreased by $1,359 or 52% in the three months ended March 31, 2023, compared with the three months ended March 31, 2022. The decrease was driven by: a) the termination of consultancy agreements with communication and marketing providers, and b) the reduction of marketing employees.
Research and Development
Three months ended March 31, | ||||||||||||
2023 | 2022 | % Change | ||||||||||
Research and development | $ | 843 | $ | 744 | 13 | % | ||||||
Of which Stock-based Compensation | 31 | 64 | (52 | )% |
Research and Development expenses increased by $99 or 13% in the three months ended March 31, 2023, compared with the three months ended March 31, 2022. The increase was driven by the continuous investments in the in-house Global IT engineering team.
General and Administrative
Three months ended March 31, | ||||||||||||
2023 | 2022 | % Change | ||||||||||
General and administrative | $ | 6,232 | $ | 6,681 | (7 | )% | ||||||
Of which Stock-based Compensation | 518 | 995 | (48 | )% |
General and Administrative expenses decreased by $449, or 7% in the three months ended March 31, 2023, compared with the three months ended March 31, 2022. One of the main drivers of such decrease is the reduction of stock- based compensation by $477.
Total non-operating income (expense), net
Three months ended March 31, | ||||||||||||
2023 | 2022 | % Change | ||||||||||
Interest expense, net | $ | (1,701 | ) | $ | (1,981 | ) | (14 | )% | ||||
SEPA financial income (expenses), net | $ | (2,208 | ) | $ | — | — | % | |||||
Change in fair value of warrant liabilities | $ | 33 | $ | 945 | (96 | )% | ||||||
Other income (expense), net | $ | (212 | ) | $ | (307 | ) | (31 | )% | ||||
Total non-operating income (expense), net | $ | (4,088 | ) | $ | (1,343 | ) | 204 | % |
Non-operating income (expense) increased by 204% or $2,745 comparing the three months ended March 31, 2023 with the three months ended March 31, 2022. Such increase was mainly driven by the SEPA financial expenses and the decrease in the income account, Change in fair value of warrant liabilities which decreased by $912 or 96%.
Interest expenses, net
Interest expenses decreased by $280, or 14%, from $1,981 for the three months ended March 31, 2022, to $1,701 for the three months ended March 31, 2023. The decrease was mainly driven by the decrease in Convertible notes outstanding.
SEPA financial income (expenses), net
At inception of the two 2023 SEPAs the legal and Commitment fees amounted to $1,611 have been recorded as SEPA financial expenses. The Company also recorded as SEPA financial income (expenses), net, the difference between the purchase price of each Advance Notice delivered to YA II PN (92% or 95% of the Market Price), Ltd and the fair value of the Class A Common Shares issued to YA II PN, Ltd on the date of the Advance Notice.
Change in fair value of warrant liabilities
The positive adjustments recorded for the three months ended March 31, 2023, and March 31, 2022, are related to the fair value adjustments for the GVAC Sponsor Private Warrants. The mentioned fair value adjustment were driven by the decrease of the market price recorded during the three months ended March 31, 2023 and March 31, 2022.
22 |
Mobility - Key Financial Measures and Indicators
Quarterly Active Platform Users. We define QAPUs as the number of unique users who completed a ride on our platform at least once in three months. While a unique user can use multiple product offerings on our platform in a given quarter, that unique user is counted as only one QAPU. We use QAPUs to assess the adoption of our platform and frequency of transactions, which are key factors in our penetration of the markets in which we operate.
Trips. We define Trips as the number of completed rides in a given period. To further clarify, a single-use Helbiz ride is recognized as a unique “Trip” upon completion of each ride. We believe that Trips is a useful metric to measure the scale and usage of our platform.
23 |
Active Markets. We track the number of active markets (cities) that we operate in. We believe that increasing the markets for expansion is fundamental to the success of our core business for the foreseeable future.
Italian licensesItaly
We are a substantial operator in Italy in the micro-mobility environment, based on number of licenses awarded, and number of vehicles authorized. During the sixthree months ended June 30, 2022,March 31, 2023, we provided sharing electric mobility services in the following Italian cities:
• E-scooter: Rome, Milan, Turin, Naples, Parma, Palermo, Collegno, Pisa, Modena, Ravenna, Latina, Pescara, Bari, Ferrara, Fiumicino, Montesilvano, Cesena Reggio Emilia, Frosinone, Catania and San Giovanni Teatino; and
• E-moped: Milan, Turin, Florence, Genova, and Pescara.Catania;
United States licensesof America
During the sixthree months ended June 30, 2022,March 31, 2023, we provided the followingsharing electric mobility services in the following U.S. cities:
• E-scooter services: Washington (D.C.) Los Angeles, (California), Sacramento, (California), Charlotte (North Carolina), Santa BarbaraMonica (California), Miami (Florida)Austin (Texas), JacksonvilleHonolulu (Hawaii), Orlando (Florida), Miami Lakes (Florida), Miami Dade (Florida), Oklahoma City (Oklahoma)University of Massachusetts (Massachusetts), Bowling Green (Kentucky) and Durham (North Carolina);
• E-bike services: Miami Lakes (Florida)
Consolidated Results of Operations
The following tables set forth our results of operations for the periods presented and as a percentage of our net revenue for those periods. Percentages presented in the following tables may not sum due to rounding.
Comparison of the Three and Six Months June 30, 2022 and 2021
The following table summarizes our consolidated results of operations for the three and six months ended June 30, 2022, and for the three and six months ended June 30, 2021, respectively:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenue | $ | 4,358 | $ | 2,982 | $ | 7,670 | $ | 3,997 | ||||||||
Operating expenses: | ||||||||||||||||
Cost of revenue | 10,267 | 6,073 | 21,606 | 10,577 | ||||||||||||
General and administrative | 6,436 | 2,638 | 13,115 | 6,592 | ||||||||||||
Sales and marketing | 3,415 | 1,275 | 6,013 | 2,408 | ||||||||||||
Research and development | 638 | 588 | 1,382 | 1,164 | ||||||||||||
Total operating expenses | 20,756 | 10,574 | 42,116 | 20,741 | ||||||||||||
Loss from operations | (16,398 | ) | (7,592 | ) | (34,447 | ) | (16,744 | ) | ||||||||
Total non-operating income (expenses), net | (3,335 | ) | (554 | ) | (4,679 | ) | (5,452 | ) | ||||||||
Income Taxes | (7 | ) | (18 | ) | (12 | ) | (33 | ) | ||||||||
Net loss | $ | (19,740 | ) | $ | (8,164 | ) | $ | (39,137 | ) | $ | (22,229 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenue | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Operating expenses: | ||||||||||||||||
Cost of revenue (1) | 236 | % | 204 | % | 282 | % | 265 | % | ||||||||
General and administrative (1) | 148 | % | 88 | % | 171 | % | 165 | % | ||||||||
Sales and marketing (1) | 78 | % | 43 | % | 78 | % | 60 | % | ||||||||
Research and development (1) | 15 | % | 20 | % | 18 | % | 29 | % | ||||||||
Total operating expenses | 476 | % | 355 | % | 549 | % | 519 | % | ||||||||
Loss from operations | (376 | )% | (255 | )% | (449 | )% | (419 | )% | ||||||||
Total non-operating income (expenses), net | (77 | )% | (19 | )% | (61 | )% | (136 | )% | ||||||||
Income Taxes | (0 | )% | (1 | )% | (0 | )% | (1 | )% | ||||||||
Net loss | $ | (453 | )% | $ | (274 | )% | $ | (510 | )% | $ | (556 | )% |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Stock-based compensation | ||||||||||||||||
Cost of revenue | $ | 2 | $ | 5 | $ | 12 | $ | 17 | ||||||||
General and administrative | 804 | 423 | 1,799 | 1,593 | ||||||||||||
Sales and marketing | 161 | 47 | 343 | 214 | ||||||||||||
Research and development | 34 | 71 | 98 | 307 | ||||||||||||
Total Stock- based compensation expenses | $ | 1,001 | $ | 546 | $ | 2,252 | $ | 2,131 |
Net Revenue
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||||||
Mobility Revenues | $ | 2,716 | $ | 2,982 | (9 | )% | $ | 4,293 | $ | 3,997 | 7 | % | ||||||||||||
Pay per ride | 2,187 | 2,304 | (5 | )% | 3,392 | 3,099 | 9 | % | ||||||||||||||||
Mobility Subscriptions | 360 | 451 | (20 | )% | 648 | 615 | 5 | % | ||||||||||||||||
Partnerships fees | 169 | 227 | (26 | )% | 253 | $ | 283 | (11 | )% | |||||||||||||||
Media Revenues | $ | 1,489 | $ | — | 100 | % | $ | 3,145 | $ | — | 100 | % | ||||||||||||
Commercialization of Media rights (B2B) | 1,052 | — | 100 | % | 2,348 | — | 100 | % | ||||||||||||||||
Advertising fees | 156 | — | 100 | % | 206 | — | 100 | % | ||||||||||||||||
Live subscriptions (B2C) | 281 | — | 100 | % | 591 | — | 100 | % | ||||||||||||||||
Other Revenues | $ | 153 | $ | — | 69 | % | $ | 232 | $ | — | 100 | % | ||||||||||||
Total Revenues | $ | 4,358 | $ | 2,982 | 46 | % | $ | 7,670 | $ | 3,997 | 92 | % |
Total revenue increased by $1,367, or 46%, for the three months ended June 30, 2022, compared with the three months ended June 30, 2021, and increased by $3,673, or 92% for the six months ended June 30, 2022, compared with the three months ended June 30, 2021. This increase was primarily due to the media revenues related to the commercialization of media rights.
Mobility revenues
Mobility revenues increased by $296, or 7%, in the six months ended June 30, 2022 compared with six months ended June 30, 2021 and decreased by $266, or 9%, from 2,982 for the three months ended June 30, 2021, to $2,716 for the three months ended June 30, 2022. As shown in the paragraph Mobility - Key Financial Measures and Indicators, Trips and QAPUs increased in the mobility business in all the periods analyzed.
Foreign Exchange Impact on Mobility Revenue
The general strengthening of the U.S. dollar against the Euro in the three and six months ended on June 30, 2022 compared to the same period in 2021 had an unfavorable impact on revenue. If we had translated mobility revenue for the three and six months ended on June 30, 2022 using the prior year's monthly average exchange rates for our revenue in Euro, our total mobility revenue would have been $2,941 and $4,628, respectively. Using these constant rates, mobility revenue would have been $225 and $335 higher than actual mobility revenue, respectively, for the three and six months ended on June 30, 2022.
Media revenues
Helbiz Media revenues are related to the launch of the new business line, which occurred in August 2021. During the three and six months ended June 30, 2022, Media generated, respectively, revenues amounted to $1,489 and $3,145. We recorded respectively Revenues for $1,052 and $2,348 from the international commercialization and distribution of media contents to media partners, in the Business to Business (“B2B") environment, and $281 and $591 from Helbiz Live monthly and yearly subscriptions.
Cost of Revenues
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||||||
Mobility - Cost of revenues | $ | 5,019 | $ | 6,073 | (17 | )% | $ | 9,657 | $ | 10,577 | (9 | )% | ||||||||||||
Of which Amortization, Depreciation and write-off | 1,257 | 2,173 | (42 | )% | 2,428 | 3,569 | (32 | )% | ||||||||||||||||
Of which Stock-based Compensation | 2 | 5 | (60 | )% | 12 | 17 | (12 | )% | ||||||||||||||||
Media - Cost of revenues | 4,675 | — | 100 | % | 10,959 | — | 100 | % | ||||||||||||||||
Of which content licensing | 3,473 | — | 100 | % | 7,983 | — | 100 | % | ||||||||||||||||
Other - Cost of revenues | 574 | — | 100 | % | 999 | — | 100 | % | ||||||||||||||||
Total - Cost of revenues | 10,268 | 6,073 | 69 | % | 21,606 | 10,577 | 104 | % |
Cost of Revenue increased by $4,195 or 69% and by 11,029, or 104% in the three and six months ended June 30, 2022 compared with three and six months ended June 30, 2021. The increase is mainly explained by the Media business and its content licensing expenses, which contributed to Cost of revenue for $3,473 and $7,983 in the three and six months ended June 30, 2022, respectively.
Cost of Revenues related to Mobility decreased by $1,054, or 17%, and by $920, or 9%, in the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021, respectively. The decrease is mainly driven by the decrease in Depreciation, Amortization and write-off expenses, one of the main drivers of Cost of Revenue related to Mobility, which decreased by $916, or 42%, and by $1,141, or 32%, in the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021, respectively.
General and Administrative
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||||||
General and administrative | $ | 6,436 | $ | 2,638 | 144 | % | $ | 13,115 | $ | 6,592 | 99 | % | ||||||||||||
Of which Stock-based Compensation | 804 | 423 | 90 | % | 1,799 | 1,593 | 13 | % |
General and Administrative expenses increased by $3,798 or 144%, and by $6,523 or 99% in the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021, respectively.
The increase is mainly driven by the costs for being a public company, such as D&O insurance which contributed for approximately $2.6 million to the increase for the six months ended June 30, 2022.
Sales and Marketing
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||||||
Sales and marketing | $ | 3,415 | $ | 1,275 | 168 | % | $ | 6,013 | $ | 2,408 | 150 | % | ||||||||||||
Of which Stock-based Compensation | 161 | 47 | 243 | % | 343 | 214 | 60 | % |
Sales and marketing expenses increased by $2,140 or 168%, and by $3,605 or 150% in the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021, respectively.
The increase is in line with our strategy focused on significant investment in advertising, promotional and business development initiatives.
Research and Development
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||||||
Research and development | $ | 638 | $ | 588 | 9 | % | $ | 1,382 | $ | 1,164 | 19 | % | ||||||||||||
Of which Stock-based Compensation | 34 | 71 | (52 | )% | 98 | 307 | (68 | )% |
Research and Development expenses increased by $50 or 9%, and by $218 or 19% in the three and six months ended June 30, 2022, compared to the three and six months ended June 30, 2021, respectively. Such increase is mainly driven by the continuous investments in the in-house IT engineering team, who had successfully integrated Helbiz Kitchen into the Mobility App and developed Helbiz Live App/platform.
Total non-operating income (expense), net
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||||||
Interest expense | $ | (1,512 | ) | $ | (566 | ) | 167 | % | $ | (3,492 | ) | $ | (1,064 | ) | 228 | % | ||||||||
Fair value adjustments | $ | 441 | $ | — | 100 | % | $ | 1,386 | $ | (4,128 | ) | (134 | )% | |||||||||||
Loss on extinguishment of debts | (2,065 | ) | — | 100 | % | (2,065 | ) | — | 100 | % | ||||||||||||||
Other financial income (expense) | $ | (198 | ) | $ | 12 | (1,753 | )% | $ | (508 | ) | $ | (260 | ) | 95 | % | |||||||||
Total other income (expense), net | $ | (3,334 | ) | $ | (554 | ) | 502 | % | $ | (4,679 | ) | $ | (5,452 | ) | (14 | )% |
Interest expenses
Interest expenses increased by $946, or 167%, from $566 for the three months ended June 30, 2021, to $1,512 for the three months ended June 30, 2022, and by $2,428, or 228%, from $1,064 for the six months ended June 30, 2021, to $3,492 for the six months ended June 30, 2022. Such increase is mainly driven by the 5% interests’ expenses and amortization of debt discounts related to the 2021 and 2022 Convertible notes, amounted to $810 and $2,194 during the three and six months ended June 30, 2022, respectively.
Change in fair value of warrant liabilities
Fair value adjustments amounted to $441 and $1,386 for the three and six months ended June 30, 2022, is related to the fair value adjustment for 2,100,000 GVAC Sponsor Private Warrants. The mentioned positive fair value adjustment is mainly driven by the decrease of the market price.
Loss on extinguishment of debt
Loss on extinguishment of debt amounted to $2,065 for the three and six months ended June 30, 2022. The amount is related to the 2021 Convertible debt amendment which has been considered as an extinguishment of the original 2021 Convertible Notes. On April 15, 2022 (amendment date) the net carrying value of the original 2021 Convertible Notes have been derecognized and the amended 2021 Convertible Notes have been recorded at their fair values on the date of the amendment. The difference between the two amounts, amounted to $2,065, has been recorded in the statements of operations as Loss on extinguishment of debt.St. John University (New York).
Liquidity and Capital Resources
Since our inception, we have financed our operations primarily with proceeds from outside sources of invested capital. We have had, and expect that we will continue to have, an ongoing need to raise additional cash from outside sources to fund our operations and expand itsour business. If we are unable to raise additional capital when desired, our business, financial condition and results of operations would be harmed. Successful transition to attaining profitable operations depends upon achieving a level of revenues adequate to support our cost structure.
As of June 30, 2022,March 31, 2023, our principal sources of liquidity were cash and cash equivalents of $2,480,$647, excluding restricted cash of $110 (included in Other Assets) and $193$310 (included in prepaid and other current assets). Cash and cash equivalents consisted of bank deposits in U.S. Dollar and Euro.SEPA agreements entered during the three months ended March 31, 2023. During the three months ended March 31, 2023, we entered into two different SEPA agreements:
- | On January 24, 2023, the Company entered into a Standby Equity Purchase Agreement (“2023 January SEPA”) with YA II PN, Ltd. (“YA"). Pursuant to the 2023 January SEPA, the Company has the right, but not the obligation, to sell to YA up to $20,000 of its shares of Class A Common Stock at any time during the 24 months. To request a purchase, the Company submits an Advance Notice to YA specifying the number of shares, it intends to sell. |
- | On March 8, 2023, the Company entered into another Standby Equity Purchase Agreement (“2023 March SEPA”) with YA. Pursuant to the 2023 March SEPA, the Company has the right, but not the obligation, to sell to YA up to $50,000 of its shares of Class A Common Stock at any time during the 24 months. To request a purchase, the Company submits an Advance Notice to YA specifying the number of shares, it intends to sell. The terms, conditions and limitations are the same of the 2023 January SEPA. |
We collect the fees from riders using a third-party processing payment provider. In detail, weWe collect the fees between 2 to 5 days after the completion of the ride. We also collect charges and fees from partners for specific advertising or co-branding activities, within 30 days from the events. Additionally, Helbiz Live media operators pay Helbiz Mediaus within 60 days for the international audiovisual rights.
We plan to continue to fund our operations and expansion plan, including the new business lines through debt and equity financing, for the next twelve months. As a result, we decided to take the following actions during July and the first half of August 2022:
We may be required to seek additional equity or debt financing. Our future capital requirements will depend on many factors, including our growth and expanded operations, including the new business lines. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.
Cash Flows
The following table summarizes our cash flows activities:
June 30, 2022 | June 30, 2021 | March 31, 2023 | March 31, 2022 | |||||||||||||
Net cash used in operating activities | $ | (23,206 | ) | $ | (10,613 | ) | $ | (12,886 | ) | $ | (16,539 | ) | ||||
Net cash used in investing activities | (4,703 | ) | (7,208 | ) | (356 | ) | (3,037 | ) | ||||||||
Net cash provided by financing activities | 9,133 | 21,456 | ||||||||||||||
Net cash provided (used) by financing activities | 13,609 | (168 | ) | |||||||||||||
Effect of exchange rate changes | 306 | (39 | ) | (145 | ) | (115 | ) | |||||||||
Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (18,470 | ) | $ | 3,596 | $ | 222 | $ | (19,858 | ) |
24 |
Operating Activities
During the sixthree months ended June 30, 2022,March 31, 2023, operating activities used $23,206$12,886 of cash, resulting from our net loss of $39,137,$19,554, partially offset by net changes in operating assets and liabilities for $7,554$3,172 and non-cash expenses for $8,375.$3,495.
Net changes in operating assets and liabilities consisted primarily in the increasedecrease in accounts payablereceivable for $3,935, the increase in accrued expenses and other current liabilities of $2,263,$793 and the decrease in prepaid assets for $2,617,$2,716, partially offset by the increase in accounts receivablepayable and accrued expenses of $1,337.$371.
Non-cash expenses are mainly related to: (i) equity-based compensation for $2,252,$762, (ii) depreciation, amortization, and loss on disposal of assets for $2,777,$2,257, and (iii) non-cash interest expenses for $2,971, and (iv) loss on extinguishment of debts for $2,065, partially offset by (v) changes in fair value of financial instruments for $1,386 and (vi) changes in fair value of accounts payable for $304.$510.
Investing Activities
During the sixthree months ended June 30, 2022,March 31, 2023, investing activities used $4,703$356 of cash. We paid approximately $3 million to vehicle manufacturers asThe Company invested $202 in purchase of property, equipment and deposits, for e-bikes, e-scooters and e-mopeds. Those vehicles are expected to be delivered through all the year. Additionally, we paid a deposit$154 in purchase of $1,000 for entering into a Letter of Intent with Wheels Labs, Inc., and we invested $0.1 million in operating licenses, categorized as intangible assets.
Financing Activities
During the sixthree months ended June 30, 2022,March 31, 2023, financing activities provided $9,133$13,609 of cash, mostly proceeds from the issuance of common stock for $18,105 under SEPA agreements, and financial liabilities for $10,628 mainly related to the issuance of the 2022 Convertible Notes,$4,190, partially offset by the repayment of financial liabilities for $1,495.$8,671 and the payment of offering costs, discounts and commissions for $15.
Indebtedness
The following table summarizes our indebtedness as of June 30, 2022:March 31, 2023:
As of June 30, 2022 | ||||
Current Financial Liabilities and Capital leases | $ | 30,807 | ||
Current portion of financial Debts | 30,294 | |||
Of which related to Convertible debts | 25,419 | |||
Other current financial liabilities | 303 | |||
GVAC Sponsor Private Warrants | 210 | |||
Non-Current Financial Liabilities | 17,557 | |||
Secured Long Term Loan | 13,889 | |||
Long-term Loans, net | 3,668 | |||
Total Financial Liabilities, and Capital leases and liability Warrant | $ | 48,364 |
Weighted Average Interest Rate | Maturity Date | March 31, 2023 | ||||||||||
Convertible debts, net | 9 | % | 2023 | 10,131 | ||||||||
Secured loan, net | 13 | % | 2023 | 14,306 | ||||||||
Unsecured loans, net | 7 | % | Various | 10,611 | ||||||||
Warrants liabilities | N/A | — | 51 | |||||||||
Other financial liabilities | N/A | Various | 738 | |||||||||
Total Financial Liabilities, net | 35,837 | |||||||||||
Of which classified as Current Financial Liabilities, net | 28,956 | |||||||||||
Of which classified as Non-Current Financial Liabilities, net | 6,881 |
During the three months ended March 31, 2023 the Company entered into a convertible Note agreement with YA. On March 8, 2023, the Company issued a Convertible Promissory Note (“2023 SEPA Convertible Note”) to YA pursuant to the SEPA dated January 24, 2023. The 2023 SEPA Convertible Note had a principal amount of $4,500 with 10% issuance discount, a maturity date of September 15, 2023, a 5% annual interest rate and a 15% annual default interest rate. The 2023 SEPA Convertible Note shall be convertible into shares of the Company’s Class A common shares at a Fixed Conversion Price of $25.
The Company has the option to repay the 2023 SEPA Convertible Note through the following or a combination of the two:
- | repay in cash the 2023 SEPA Convertible Note on or before the Maturity date, |
- | repay the 2023 SEPA Convertible Note by submitting one or a series of Advance Notices under the SEPA entered in January 2023, on or before the Maturity date. If any time during while the 2023 SEPA Convertible Note is outstanding, the Company delivers an Advance Notice under the January 2023 SEPA, at least one half of the proceeds of any such Advance Notice shall be used as an Advance Repayment or for the repayment of other amounts due from the Company to the Holder. |
The Company has also the option to redeem the 2023 SEPA Convertible Note (“redemption option”), provided that the trading price of the Company’s Class A Common Shares is less than the fixed Conversion Price of $25.
YA also has the option to convert prior to the Maturity date, any portion of the outstanding and unpaid principal and interest amount into fully paid and nonassessable Class A shares of Common Stock in accordance with the Fixed Conversion Price.
No re-payments or conversion occurred during the three months ended March 31, 2023.
Convertible notes repayments
During the three months ended March 31, 2023, the Company partially repaid in cash the 2022 Convertible Notes for a cumulative payment of $3,701 (of which $3,215 was principal, $132 was accumulated interest, and $354 was redemption premium interest). Additionally, the 2022 convertible notes have been partially converted into Class A common shares during the three months ended March 31, 2023. YA converted $1,296 (of which $1,250 as principal and $46 as accumulated interest) of the 2022 Convertible Notes into 103,688 Class A Common Shares. As a result of the mentioned conversion and re-payments on March 31, 2023, the Company has $6,141 as outstanding principal and accumulated interest, partially offset by debt discounts that amounted to $127.
During the three months ended March 31, 2023, the Company fully repaid the 2022 SEPA Convertible Note by $4,210 of cash payments.
Leases liabilities
We entered into various non-cancellable operating and finance lease agreements for office facilities, permit and brand licensing, e-mopeds leases, e-scooter leases, corporate vehicles’ licensing, and corporate housing with lease periods expiring through 2028. These agreements require the payment of certain operating expenses, such as non-refundable taxes, repairs and insurance and contain renewal and escalation clauses. The terms of the leases provide for payments on a monthly basis and sometimes on a graduated scale.
Future annual minimum lease payments as of March 31, 2023, are as follows:
Leases | ||||||||
Year ending December 31, | Operating | Finance | ||||||
2023 | $ | 1,161 | $ | 1,971 | ||||
2024 | 526 | 60 | ||||||
2025 | 359 | 15 | ||||||
Thereafter | 403 | — | ||||||
Total minimum lease payments | $ | 2,450 | $ | 2,046 | ||||
Less: Amounts representing interest not yet incurred | (11 | ) | ||||||
Present value of finance lease obligations | 2,035 | |||||||
Less: Current portion | 1,977 | |||||||
Long-term portion of finance lease obligations | 58 |
Securities outstanding as of March 31, 2023
As of March 31, 2023, we had the following outstanding securities:
March 31, 2023 | ||||
Class A Common Shares | 5,624,297 | |||
Class B Common Shares | 284,518 | |||
Total Common Shares outstanding | 5,908,815 | |||
Public Warrants | 196,728 | |||
Convertible Note Warrants | 40,000 | |||
2020 Equity Incentive Plan (Stock Options) | 146,652 | |||
2020 CEO Performance (Stock Options) | 12,000 | |||
2021 Omnibus Plan (Stock Options) | 5,875 | |||
Total Warrants and Stock Options outstanding | 401,255 |
Equity warrantsCommon Shares
As of June 30, 2022, the Company has the following outstanding warrants classified as equity component: 7,736,416 Public Warrants and 1,500,000 Convertible Note Warrants. On April 15, 2022, the Company issued 500,000 Convertible Note Warrants to buy 500,000 Class A common shares with an exercise price of $3.00 per share, at closing date and five years as expiration date. Additionally, on April 15, 2022 the Company amended the previously issued 1,000,000 Convertible Note Warrants by reducing the exercise price from $20.00 to $3.00.
Common Stock
As of June 30, 2022,March 31, 2023, the Company’s charter authorized the issuance of up to 285,774,102 shares of Class A common shares of common stock, at $0.0001$0.00001 par value per share, 14,225,898 of Class B common shares of common stock at $0.00001 par value per share, and 100,000,000 shares of preferred stock at $0.00001 par value per share.
Holders of shares of Class A Common Stock will be entitled to cast one vote per share and holders of shares of Class B Common Stock will be entitled to cast the lesser of (a) ten votes per share of Class B common stock or (b) such number of votes per share as shall equal the ratio necessary so that the votes of all outstanding shares of Class B Common Stock shall equal sixty percent (60%) of all shares of Class A Common Stock and shares of Class B Common Stock entitled to vote as of the applicable record date on each matter properly submitted to stockholders entitled to vote. On August 12, 2021, an aggregate of 1,600,000 shares of Helbiz Class B common stock issuable to the Helbiz CEO and Founder, Salvatore Palella, were deposited into a third-party escrow account to serve as Helbiz’s exclusive security for the Founder’s obligation to indemnify Helbiz under the Merger Agreement. The survival period for such indemnification is 12 months.
On April 15, 2022, Helbiz CEO and Founder, Salvatore Palella entered into a Pledge Agreement in favor of the Convertible Note Holder (YA II, Ltd.). The agreement grants the Convertible Note Holder a first priority security interest and pledge in at least $7,000,000 shares of Class B Common Stock that are owned by the CEO of the Company as security for the Company’s obligations under the 2021 and 2022 Convertible Notes SPAs.
Related Party Transactions
During the six months ended June 30, 2022, our majority shareholder and CEO has lent Helbiz, funds on an interest-free basis for cumulative gross proceeds of $380 through two Promissory Notes.
Contractual Obligations and Commitments
Leases
The Company entered into various non-cancellable operating lease agreements for office facilities, e-mopeds leases, corporate vehicles’ licensing, and corporate housing entered by the Company with lease periods expiring through 2024. These agreements require the payment of certain operating expenses, such as non-refundable taxes, repairs and insurance and contain renewal and escalation clauses. The terms of the leases provide for payments on a monthly basis and sometimes on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease period and has accrued for rent expense incurred but not paid. Lease expenses under operating leases were $746 and $1,484 for the three and six months ended on June 30, 2022, respectively; and $657 and $1,119 for the three and six months ended on June 30, 2021, respectively.
Additionally, the Company entered into various non-cancellable capital lease agreements for 3,750 eScooters and R&D equipment with financial institution. The three agreements have a total present value of the obligations amounted to $2,792 of which $2,649 is related to the 3,750 eScooters and $143 is related to the R&D equipment. The capital lease agreements for the 3,750 eScooters have a duration between 12 to 18 months while the R&D equipment agreement has a duration of 36 months. The eScooters/R&D equipment under the lease are collateral for the lease obligations and are included within property, plant and equipment on the condensed consolidated balance sheet as of June 30, 2022 (Refer to Note. 7 Property, equipment and deposits, net for further information).
Lease expenses under capital leases were accounted as interest expenses for $83 and $112 for the three and six months ended on June 30, 2022, respectively.
Operating leases | Capital leases | ||||||||
Year ending December 31: | |||||||||
2022 | 895 | 2,193 | |||||||
2023 | 588 | 777 | |||||||
2024 | 124 | 60 | |||||||
Thereafter | 41 | 15 | |||||||
Total minimum lease payments | 1,648 | 3,045 | |||||||
Less: Amounts representing interest not yet incurred | 252 | ||||||||
Present value of capital lease obligations | 2,792 | ||||||||
Less: Current portion | 2,701 | ||||||||
Long-term portion of capital lease obligations | 91 |
Media rights – Purchase Commitments
During 2021, the Company decided to enterentered into a new business line: the acquisition, commercialization and distribution of contents including live sport events to media partners and final viewers. In order to commercialize and broadcast media contents, the Company entered into non-cancellable Content licensing and Service agreements with multiple partners such as LNPB. These agreements require the payment of certain fees and contain renewal and escalation clauses. The terms of thethose agreements provide for payments on a periodical basis and on a graduated scale. The Company recognizes expense on a straight-line basis over the agreement period and has accrued for expense incurred but not paid.
As of March 31, 2023, the Company has $7,913 recorded as Account payables related to media rights. The amount is related to invoices received by media providers for the aforementioned Content licensing agreements.
Future annual minimum payments related to Media rights’ agreements as of June 30, 2022,March 31, 2023, are as follows. All the agreements are in Euro, in order to calculate the future annual minimum payments, the Euro payments are exchanged in Dollar using the three months ended June 2022 average exchange rate.
Amount | ||||||
Year ending December 31: | ||||||
2022 | $ | 12,501 | ||||
2023 | 18,672 | |||||
2024 | 9,722 | |||||
Thereafter | — | |||||
Total | $ | 40,895 |
Amount | |||||
Year ending December 31: | |||||
2023 | $ | 19,284 | |||
2024 | 7,918 | ||||
Total | $ | 27,202 |
Content licensing expenses, recorded as Cost of Revenues, were $4,660 and $10,923$4,070 for the three and six months ended on June 30, 2022.March 31, 2023.
Miami FC – Sponsorship CommitmentsRelated Party Transactions
The Company enteredDuring the period ended March 31, 2023, our majority shareholder and CEO converted a portion of his deferred salaries, totaling $78, into an agreement with Miami FC for the sponsorship of four United Soccer League (“USL”) Championship Seasons. The agreement expires upon the conclusion of the Miami FC’s13,000 Class A Common Shares.
On March 13, 2023, USL Championship season. The Company may terminate the agreement, with at least 180 days’ notice, if the Company ceases operationsissued 3,000 Series B Preferred Stock to the Company’s CEO for an aggregate purchase price of five hundred dollars. Series B has no voting rights, except that each share of Series B is entitled to 80,000 votes at a shareholder meeting on whether to enact a reverse stock split. Holder of Company’s Series B was required to vote any proposal for a reverse stock split on a “mirrored” basis. This means that the Series B holder was required to cast their votes “For” and “Against” each such proposal in the South Florida Market or ifsame proportions as the United Soccer League Championship is terminated or reduces its scheduleholders of gamesCompany’s Class A Common shares eligible and voting at the Special Meeting cast their votes, in the aggregate. On March 30, 2023, the Company’s Series B Preferred Stock have been redeemed following the stockholder meeting for $0.01 per season to 30 or less.
Future annual minimum sponsorship payments asshare. As of June 30, 2022, are as follows: March 31, 2023, there were 0 shares of Series B Preferred Stock issued and outstanding.
Amount | ||||||
Year ending December 31: | ||||||
2022 | $ | 525 | ||||
2023 | 650 | |||||
2024 | — | |||||
Thereafter | — | |||||
Total | $ | 1,175 |
Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with USU.S. GAAP. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
While ourOur significant accounting policies are described in greater detail in Note 2,3, “Summary of Significant Accounting Policies and Use of Estimates” to our consolidated financial statements as of December 31, 20212022 and in Note 3, “Summary of Significant Accounting Policies and Use of Estimates” to our condensed consolidated financial statements as of June 30, 2022 included elsewhere in this prospectus, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our condensed consolidated financial statements.March 31, 2023.
Emerging Growth Company
We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected to use such extended transition period which means that when a standard is issued or revised and we have different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Off-Balance Sheet Arrangements
We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission.
Recent Accounting PronouncementsPronouncement Adopted in the Current Year
ReferIn June 2016, the FASB issued ASU 2016-13—Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU requires an entity to Note 3. Summaryuse a current expected credit loss methodology to measure impairments of Significant Accounting Policiescertain financial assets and Useto recognize an allowance for its estimate of Estimates included in Noteslifetime expected credit losses. The main objective of this update is to Condensed Consolidated Financial Statement.
Accounting Pronouncements Issued but Not Yet Adopted
Referprovide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to Note 3. Summaryextend credit held by a reporting entity at each reporting date. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Effective January 1, 2023, we adopted ASU 2016-13 on a prospective basis. The impact of Significant Accounting Policies and Useadoption of Estimates included in Notes to Condensed Consolidated Financial Statement.this standard on our condensed consolidated financial statements was not material.
Item 3. Quantitative and Qualitative Disclosures about Market Risks
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2022.March 31, 2023. Based on such evaluation, due to a material weakness in internal control over financial reporting described below, our principal executive officer and principal financial officer concluded our disclosure controls and procedures (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) were not effective as of such date to provide reasonable assurance that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
28 |
Material Weakness
Our management’s conclusion that our disclosure controls and procedures were ineffective was due to the identification of a material weakness in our internal control over financial reporting in connection with the preparation of our Financial Statements. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements would not be prevented or detected on a timely basis. Our management identified the following material weakness in our internal control over financial reporting:
· | We have insufficiently designed and operating controls surrounding the accounting policies and controls, including standardized reconciliation schedules to ensure the company's books and records are maintained in accordance with U.S. GAAP. |
Notwithstanding the identified material weakness, management believes that the condensed consolidated financial statements included in this Form 10-Q present fairly, in all material respects, our consolidated financial position, consolidated results of operations, and consolidated cash flows as of and for the periods presented in accordance with U.S. GAAP.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. However, we expect to make changes to our internal control over financial reporting in the future to remediate the material weakness identified above.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may becomeare involved in legal proceedings arising in the ordinary course of business. Therebusiness and we may continue to be involved in such legal proceedings. Currently, there are currently no material legal proceedingsseveral product liability claims against us none of which, other than as discussed below, is material by itself. If several of these claims were to be decided against our interest or that have beenif our product liability insurance were not to cover several of these claims, we might need to divert resources from our operations to pay for such claims, and our results of operations would correspondingly affected.
The claims against us that we deem as potentially material are:
Our subsidiary, Wheels, has been named in various lawsuits related to the use of Wheels’s vehicles in U.S. cities and in certain matters involving California Labor Code violations and the classification of individuals as independent contractors rather than employees. We have estimated the range of loss for the Wheels legal contingencies accrued as between $685,000 to $3.1 million which represents the range between the amount already settled with the counterparts and the amount claimed deducting insurance coverage.
As of March 31, 2023, we concluded that certain losses on litigations were probable and reasonable estimable. As a governmental entity intoresult, we recorded an aggregate of approximately $2,481,000 in our company.unaudited interim financial statement for the period ended March 31, 2023 as “Accruals” for legal contingencies.
Item 1A. Risk Factors
AsAlthough as a Smaller Reporting Company we are not required to provide this information.information, we refer you to the sections of our annual report on Form 10-K and our registration statement on Form S-3 entitled “Risk Factors”. In addition to the risk factors contained in those documents and in our other filings with the U.S. Securities and Exchange Commission available on its Edgar filing website, we would like to draw your attention to the following risks:
We have conducted extensive equity raises that have diluted our shareholders’ ownership position, and we may continue to do so.
We operate at a loss and have needed to raise capital to continue to fund operations. Many of these capital raises have been in the form of equity offerings, including hybrid offerings such as debt that is convertible into shares of our common stock. Equity raises were the primary reason that the total outstanding shares of our class A common stock increased from approximately 325,800 at December 31, 2021 to 10,829,025 at May 22, 2023. Since the end of our most recent fiscal quarter on March 31, 2023, the number of our outstanding shares of Class A common stock has increased 93% from 5,624,297 to 10,829,025.
We expect that we will need to obtain additional equity financing to fund our operations. Such financings may be on terms that result in significant dilution to shareholders, in per share value and/or voting power, or that result in shareholders losing all of their investment in the Company. Such financings may be at prices substantially below our per share price or our per share net tangible book value.
We have few shareholders with significant ownership positions, and it could become difficult to find a sufficient number of shareholders to obtain approval for actions requiring shareholder approval or to obtain a quorum to hold shareholder meetings.
Our CEO beneficially owns approximately4.8% of our common stock, which because of the nature of the Class B common stock that he owns represents approximately 22.6% of the voting power of our common stock. No other shareholder individually, or to our knowledge in a group, beneficially owns more than 1% of our common stock (excluding warrants and convertible securities for which the exercise price or conversion price exceeds our current market price). As a result, we will need to conduct an extensive proxy campaign to ensure that we receive more than 50% of the votes of the common stock for any matter requiring more than 50% of the vote of the common stock, and such a campaign may not be successful. For those matters that only require a majority of the votes attending a shareholder meeting, we may have difficulty obtaining a quorum. Our bylaws and Delaware law require a quorum of 33.33% to conduct a shareholder meeting. Because of our diverse and retail-centered shareholder base, we may only be able to obtain a quorum after an extensive and expensive proxy campaign, if we can obtain a quorum at all. Our ability to obtain a quorum (i) could be adversely affected by any additional issuances of common stock as a part of equity capital raises and (ii) will be adversely affected by the automatic conversion of the Class B common stock into Class A common stock pursuant to the terms of our charter documents in August 2023 which will reduce our CEO’s voting power.
If we are unable to obtain a quorum, we may be unable to take necessary corporate actions without creating additional classes of preferred stock with preferred voting power. Any such issuance would decrease the ability of our common stockholders to control management and, in most instances, would violate Nasdaq’s continued listing standards and would lead to the delisting of our Class A common shares from the Nasdaq Capital Market.
We have received an additional letter from Nasdaq stating that we are not in compliance with their continued listing requirements, and we might not be able to regain compliance or may cease to be in compliance with additional listing requirements. If as a result of the non-compliance Nasdaq delists our Class A Common Stock, the liquidity and market price of our Class A Common Stock could decline or cease to exist.
Our Class A Common Stock is currently listed on the Nasdaq Capital Market. In order to maintain that listing, we must satisfy certain continued listing requirements. If we are deficient in maintaining the necessary listing requirements, our common stock may be delisted.
In addition to the letters from the Listing Qualifications Department of the Nasdaq Stock Market (“Nasdaq”) that we have previously disclosed in the risk factors reference above, on May 2, 2023 we received a letter from Nasdaq indicating we were not in compliance with their continued listing requirement that we maintain a market value for our shares of Class A Common Stock together with our publicly traded warrants in excess of $35 million. We have 180 days from receipt of such notice (until October 30, 2023) to remedy such non-compliance, unless such period is extended at Nasdaq’s discretion. To regain compliance, our Class A Common Stock together with our publicly traded warrants must be valued at over $35 million or more for ten consecutive business days. In the event we do not regain compliance within the 180-day period, our Class A Common Stock and publicly traded warrants may be subject to delisting.
Nasdaq also requires that securities listed on the Nasdaq Capital Market maintain a minimum bid price of above $1.00, and we will cease to be in compliance with that standard if fail to maintain a minimum closing bid price for 30 consecutive trading days. Our Class A common stock has had a closing minimum bid price of below $1.00 for over ten consecutive days. If the closing bid price of our Class A common stock remains below $1.00 for 30 consecutive days, we will receive another letter from Nasdaq noting our deficiency and will have an additional obstacle to getting back into good-standing with the Nasdaq requirements.
If Nasdaq after the applicable compliance periods proceeds to delisting and we are not able to remedy the non-compliance, Nasdaq would delist our common stock from trading on its exchange. If we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on the OTCQB or the “pink sheets.” If this occurs, we could face material adverse consequences, including:
• | a limited availability of market quotations for our securities; | |
• | reduced liquidity for our securities; | |
• | a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; | |
• | a limited amount of news and analyst coverage; and | |
• | a decreased ability to issue additional securities or obtain additional financing in the future. |
If we are delisted and are unable to have our securities quoted on the OTCQB or “pink sheets” or similar bulletin board, our shareholders would not be able to resell their securities in a public market.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
From July 1, 2022, toThere have been no sales of unregistered equity securities that we have no previously disclosed in filings with the date of this prospectus, we issued 9,694,902 shares of Class A common stock as conversion of 2021 Convertible Notes.
On August 1, 2022, we issued 383,509 shares of Class A common stock in exchange for services, primarily legalU.S. Securities and marketing, provided by third-parties. These issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.Exchange Commission.
On July 20, 2022, the Company’s majority shareholder and CEO converted $0.2 million of its Promissory Notes into 327,425 of Class A Common Shares, issued on August 1, 2022.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
Exhibit | Incorporated by Reference | Filed/Furnished | |||||||||
No. | Description | Form | Exhibit | Filing Date | Herewith | ||||||
31.1* | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act | X | |||||||||
31.2* | Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act | X | |||||||||
32.1** | Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act | X | |||||||||
32.2** | Certification of Principal Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act | X | |||||||||
101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | X | |||||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | X | |||||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | |||||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | |||||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | X | |||||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | |||||||||
104* | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. | X |
* | Filed herewith. |
** | Furnished herewith. |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: | By: | /s/ Salvatore Palella |
Name: | Salvatore Palella | |
Title: | Chief Executive Officer | |
Date: | By: | /s/ Giulio Profumo |
Name: | Giulio Profumo | |
Title: | Chief Financial Officer | |