| Significant Accounting Policies and Use of Estimates | 2 .
Significant Accounting Policies and Use of Estimates Use of Estimates The preparation of financial
statements in conformity with US 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 determination of common stock, warrant and financial instruments at fair value, useful lives
of 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. Reclassifications Certain reclassifications have been
made to the prior year’s consolidated financial statements to conform to the current consolidated financial statement presentation.
These reclassifications had no impact on net loss including stockholders’ deficit or cash flows as previously reported. In detail,
the Company reclassified the Security deposit balance of $ 416 Other assets 167 Other assets Intangible assets, net Segment Information Operating segments are defined
as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating
Decision Maker (CODM) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s
Chief Executive Officer, Salvatore Palella, is the Company’s CODM. The CODM reviews financial information presented on a consolidated
basis for purposes of making operating decisions, allocating resources, and evaluating financial performance For the year-ended December
31, 2020, the Company has determined to have operated in only one segment, the Mobility. While for the year ended December 31, 2021, the
Company has determined that it operates in two operating segments, Mobility and Media. During the years ended December 31, 2021, and 2020,
the Company generated revenues in US and Europe and as of December 31, 2021, and 2020, the Company had material assets located outside
of the United States, mainly in Italy. Revenue Recognition All of the Company’s
revenues are recognized in accordance with Accounting Standards Codification Topic 606 (“ASC 606”). We periodically reassess
our revenue recognition policies as new offerings become material. Mobility Revenues During the year-ended December
31, 2020, and 2021, the Company generates revenues from its network of sharing electric vehicles that offer access to a variety of transportation
options mainly through Helbiz Mobility Platform (“Mobility Revenues”). The company identified three revenue streams:
- Pay per ride
- Mobility Subscriptions
- Partnerships fees
a) Pay per ride Mobility subscriptions 1. Identification of the Contract, or Contracts, with a Customer. The Company considered the Terms
of Conditions (“ToC”) accepted by riders in identifying the contracts. The ToC defines the fees charged, each party’s
rights and obligations and payment terms. Pay per ride Mobility subscriptions 2. Identification
of the Performance Obligations in the Contract. Pay per ride Mobility subscriptions 3. Determination of the Transaction Price. The Company
earns fees from the riders based on the sum of unlocking fee, and per minute fees or subscription fees. Based on the nature of each contract
the entire amount of consideration received from the riders is included in the transaction price. Sales Taxes Helbiz Wallet 4. Allocation of the Transaction Price to the
Performance Obligations in the Contract. No allocation of the transaction price is required. 5. Recognition of Revenue when, or as, the Company
Satisfies a Performance Obligation. Pay per ride Mobility subscriptions i) Customer Credit: The Company does not have contractual
provisions related to customer’s rights for services provided. However, the Company may issue, at its sole discretion, credits to
customers for future rides when a customer is not satisfied by the services received. Credits are issued as Promotional Codes and they
have a short expiration, usually within a week. The value of those credits is recorded as reduction of revenues when the credits are used
by customers. Customer credits are not material to the Company’s operations. ii) Chargebacks: The Company’s third-party
payment processing provider processes chargebacks that are initiated by customers. The value of those credits is recorded as reduction
of revenues when the chargeback is completed. Chargebacks are not material for years ended December 31, 2021, and 2020. Revenue from Prepaid rides sold to customers are
deferred and recognized when the ride takes place.
b) Partnership fees Media Revenues During 2021, the Company decided to enter
into a new business line: the international distribution and broadcasting of media contents, including live sports events. As a result,
the Company recorded revenues in the following streams:
- Commercialization of Media rights (B2B)
- Live Subscriptions (B2C)
- Advertising fees
a) Commercialization of Media rights (B2B): Media Revenues are mainly composed by international
commercialization and distribution of media contents to media partners, in the Business to Business (“B2B") environment. In
detail, the Company recorded revenues in connection with the commercialization of the rights to broadcast, outside of Italy, the Italian
Lega Serie BKT football (“LNPB”). The Company applied the following steps to achieve
the core principle of ASC 606. 1. Identification of the Contract, or Contracts, with
a Customer. The Company has signed an agreement with each media partner, who operates in the broadcast and media market. 2. Identification of the Performance
Obligations in the Contract. The Company is responsible for delivering the media contents to the media partner. As a result, the Company
identified only one performance obligation: the delivery of media contents to the media partner. 3. Determination of the Transaction
Price. The Company analyzed the following criteria, using management judgement, to determine if the Company is acting as Principal or
Agent in those transactions. i) Controlling the goods or
services before it is transferred to customers ii) Inventory Risk. Controlling the goods or services
before it is transferred to customers” iii) Discretion in establishing
prices. The Company concluded that it acts as Principal in those
service agreements as it obtained control over the media content rights, it has inventory risk, and it has discretion in establishing
the prices. As result, the Company is entitled to recognize the gross selling price as transaction price. In addition, the Company excludes all sales taxes
and withholding taxes required by governmental authorities from the measurement of the transaction price. 4. Allocation of the Transaction
Price to the Performance Obligations in the Contract. As explained above, 2. Identification of the Performance Obligations in the Contract,
the Company determined that the contract contains only one performance obligation, as a result, there is no allocation of the transaction
price. 5. Recognition of Revenue
when, or as, the Company Satisfies a Performance Obligation. The Company identified one performance obligation: the delivery of media
contents. Revenues are recognized ratably over the licensing period in conjunction with the distribution of the media contents to the
media partners.
b) Live subscriptions (B2C)
c) Advertising Fees Other revenues The Company also generated
revenues from food delivery offerings and from a licensing agreement. Those fees are recognized as revenues on a straight-line basis over
the contractual period, in line with the satisfaction of the related performance obligations, as defined in ASC 606. Cost of revenues Cost of revenues primarily consists of
operative costs related to the Mobility and Live offerings.
- Costs incurred in connection to Mobility offerings include but is not
limited to: personnel-related costs, credit card processing fees, battery charging costs, electric vehicles repair and maintenance costs,
van and warehouses under operating leases, data center and networking expenses, mobile device and service costs, ride insurance costs,
depreciation of rental vehicles, amortization of platform development costs, amortization of Government relationships acquired through
the acquisition of MiMoto, and certain direct costs and amortization related to the obtainment of operating licenses.
- Costs incurred in connection to Live offerings includes contents licensing,
access cost, licensing and credit cards processing fees. Research and development Research and development expenses
primarily consist of personnel-related compensation costs for employees in engineering and product development, both internal and external.
Such expenses include costs related to the Company’s technology initiatives, as well as expenses associated with ongoing improvements
to existing products and platforms. Research and development expenses are expensed as incurred. Sales and marketing Sales and marketing expenses
primarily consist of advertising expenses, business development expenses, customer support costs, product marketing costs, personnel-related
compensation costs and depreciation expense of customer relationship acquired with the MiMoto’s acquisition. Sales and marketing
costs are expensed as incurred. General and administrative General and administrative
expenses primarily consist of personnel-related compensation costs, professional service fees, bank fees, depreciation expense of property
and equipment other than rental vehicles or related to them, offices rent, administrative fees, D&O insurance, and other corporate
costs. Income Taxes Deferred income taxes are
recorded for the expected tax consequences of temporary differences between the tax basis of assets and liabilities for financial reporting
purposes and amounts recognized for income tax purposes. The Company periodically reviews the recoverability of deferred tax assets recorded
on the consolidated balance sheet and provides valuation allowances as deemed necessary to reduce such deferred tax assets to the amount
that will, more likely than not, be realized. A full valuation allowance was recorded against the deferred tax assets as of December 31,
2021, and 2020. Income tax expense consists
of taxes currently payable and changes in deferred tax assets and liabilities calculated according to local tax rules. Significant judgment is required
in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, the Company
considers all available evidence for each jurisdiction including past operating results, estimates of future taxable income and the feasibility
of ongoing tax planning strategies. In the event that the Company changes its determination of the amount of deferred tax assets that
can be realized, the Company will adjust its valuation allowance with a corresponding impact to income tax expense in the period in which
such determination is made. The amount of deferred tax
provided is calculated using tax rates enacted at the balance sheet date. The impact of tax law changes is recognized in periods when
the change is enacted. A two-step approach is applied
in the recognition and measurement of uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine
if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including
resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is
more than 50% likely to be realized upon ultimate settlement. The Company’s policy
is to recognize interest and penalty expenses associated with uncertain tax positions as a component of income tax expense in the Consolidated
statements of operations and comprehensive loss. As of December 31, 2021, and 2020, the Company had no no Stock-Based Compensation The Company accounts for stock-based
compensation expense in accordance with the fair value recognition and measurement provisions of GAAP, which requires compensation cost
for the grant-date fair value of stock-based awards to be recognized over the requisite service period. The Company accounts for forfeitures when
they occur. The fair value of stock-based awards, granted or modified, is determined on the grant date at fair value, using appropriate
valuation techniques. Service-Based Awards The Company records stock-based
compensation expense for service-based stock options and restricted stock on a straight-line basis over the requisite service period.
For stock options with only service-based vesting conditions, the Company utilizes Black-Scholes option-pricing model as valuation model,
which incorporates the following assumptions:
- Expected stock price volatility
- Expected term
- Risk-free interest rate
- Expected dividend yield: For restricted stock, granted
under the employee stock purchase plan, subject only to a service condition for vesting, the Company measures the awards based on the
market price of its common stock at the grant date. Performance-Based Awards The Company has granted common
stock that vest upon the satisfaction of a performance condition. The performance-based conditions generally are satisfied upon achieving
specified performance targets, such as our financial or operating metrics, and/or the occurrence of a qualifying event, defined as the
earlier of (i) the closing of certain specific liquidation or change in control transactions, or (ii) an initial public offering (“IPO”).
The Company records stock-based compensation expense for performance-based equity awards only if performance-based conditions are considered
probable to be satisfied. Market-Based Awards We have granted stock options
that vest only upon the satisfaction of all the following conditions: service-based conditions, performance-based conditions, and market-based
conditions. The performance-based condition is satisfied upon achieving specified performance targets, such as the occurrence of a qualifying
event, as described above for performance-based awards. The market-based conditions are satisfied upon the achievement of specified Company’s
market valuations. For market-based awards, the
Company determined the Business Combination date as the grant-date of the award. At the grant-date, the Company measured the fair value
of the awards utilizing a Monte Carlo valuation model, which incorporates various assumptions including expected stock price volatility,
expected term, risk-free interest rates, expected date of a qualifying event, and expected capital raise percentage. The Company estimated
the volatility of common stock on the date of grant based on the weighted-average historical stock price volatility of comparable publicly
traded companies in its industry group. The Company estimated the expected term based on various exercise scenarios. The risk-free interest
rate is based on the U.S. Treasury yield curve in effect at the time of grant. The Company recorded stock-based
compensation expense for market-based equity awards such as stock options on an accelerated attribution method over the requisite service
period, and only if performance-based conditions are considered probable to be satisfied. We determine the requisite service period by
comparing the derived service period to achieve the market-based condition and the explicit service-based period, using the longer of
the two service periods as the requisite service period. Concentration of Credit Risk Cash and cash equivalents,
restricted cash are potentially subject to credit risk concentration. Cash and cash equivalents and restricted cash consist of cash deposits
which typically exceed insured limits and are placed with international financial institutions. The Company has not experienced any material
losses related to these concentrations during the periods presented. Cash and Cash Equivalents The Company maintains cash
in bank deposits in different currencies, mainly the U.S. Dollar and Euro. Foreign Currency The Company has operations
in foreign countries whose functional currency is the local currency. All assets and liabilities denominated in a foreign currency are
translated into U.S. dollars at the exchange rate on the balance sheet date. Revenue and expenses are translated at the average exchange
rate applicable during the period. Translation gains and losses are included as a component of accumulated other comprehensive loss in
stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency
other than the functional currency are included in other income and expenses in the accompanying consolidated statements of operations
and comprehensive loss when incurred. Property and Equipment Property and equipment
consist of equipment, computers and software, furniture and fixtures, and rental escooters, ebikes and emopeds. Property and equipment
are stated at cost less accumulated depreciation. Depreciation is computed using a straight-line method over the estimated useful life
of the related asset. Depreciation for property and equipment commences once they are ready for our intended use. Maintenance and repairs
are charged to expense as incurred, and improvements and betterments are capitalized. When assets are retired or otherwise disposed of,
the cost and accumulated depreciation are removed from the consolidated balance sheet and any resulting gain or loss is reflected in the
consolidated statement of operations in the period realized. The table below, shows the useful lives for the depreciation calculation
using the straight-line method:
Useful Lives
Equipment 5 years
Computers and Software 3 years
Furniture and fixtures 7 years
Rental ebikes 2 years
Rental escooters 1 – 1.5 years
Rental emopeds 4 years Leasehold improvements are amortized
on a straight-line basis over the shorter of the remaining term of the lease, or the useful life of the assets. Vehicle Deposits Vehicle Deposits
consist of capital advances made in connection to purchase orders submitted to vehicle’s manufacturers. The Company analyzed the
nature of the deposits and classified as non-current assets the deposits expected to be converted into fixed assets, such as new Mobility
vehicles. Acquisitions The Company
accounts for acquisitions of entities or asset groups that qualify as businesses using the acquisition method of accounting. In detail,
the acquisition method required that the purchase price of the acquisition is allocated to the tangible and intangible assets acquired
and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the purchase price over those fair
values is recorded as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may
record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the
measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent
adjustments are recorded in the consolidated statements of operations. Goodwill Goodwill represents the excess
of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Goodwill
is not subject to amortization but is tested for impairment on an annual basis during the fourth quarter or whenever events or changes
in circumstances indicate the carrying value of the reporting unit may be in excess of its fair value. As part of the annual goodwill
impairment test, the Company first performs a qualitative assessment to determine whether further impairment testing is necessary. If,
as a result of its qualitative assessment, it is more-likely-than-not that the fair value of the Company’s reporting unit is less
than its carrying amount, the quantitative impairment test will be required. Alternatively, the Company may bypass the qualitative assessment
and perform a quantitative impairment test. During the annual qualitative assessment, no impairment loss has been identified for the periods
presented. Intangible assets, net Intangible assets are carried at
cost and amortized on a straight-line basis over their estimated useful lives, which range from one to three years. Intangible assets
resulting from the acquisition of entities are accounted for using the purchase method of accounting based on management’s estimate
of the fair value of assets received. Intangible assets, net is mainly
composed by operating permits and licenses awarded by the Company, which allow the Company to operate operating the sharing business.
The Company tests intangible assets for impairment whenever events or changes in circumstances (qualitative indicators) indicate that
intangible assets might be impaired. Impairment of Long-Lived Assets The Company reviews long-lived
assets, including property and equipment and intangible assets, for impairment whenever events or changes in business circumstances indicate
that the carrying amount of the assets may not be fully recoverable. Such events and changes may include: significant changes in performance
relative to expected operating results, changes in asset use, negative industry or economic trends, and changes in the Company’s
business strategy. The Company measures recoverability of these assets first by comparing the carrying amounts to the future undiscounted
cash flows that the assets or the asset group are expected to generate. If such assets or asset groups are considered to be impaired,
an impairment loss would be recognized if the carrying amount of the asset exceeds the fair value of the asset. Fair Value of Financial Instruments and Fair Value
Measurements The Company determines
the fair value of financial assets and liabilities using the fair value hierarchy established in the accounting standards. The hierarchy
describes three levels of inputs that may be used to measure fair value, as follows: Level 1 — Quoted prices in active marke t Level 2— Inputs other than Level 1 t t Level 3— Unobservable inputs that are s t Assets and liabilities
measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurements.
The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management
to make judgments and consider factors specific to the asset or liability. The Company’s financial
instruments include cash and cash equivalents, accounts receivable, warrants, convertible debts, equity compensation, common stocks, promissory
notes, and accounts payable. Management believes that the carrying amounts of cash and cash equivalents, accounts receivable, accounts
payable and short-term debts approximate the fair value due to the short-term nature of those instruments. Warrants are classified as
Level 3 in the fair value hierarchy as they are valued using significant unobservable inputs or data in inactive markets. The Company
uses a third-party valuation specialist to assist management in its determination of the fair value of its Level 3. These fair value measurements
are highly sensitive to changes in these significant unobservable inputs and significant changes in these inputs would result in a significantly
higher or lower fair value. The fair value of the shares
of common stock underlying the stock option has historically been determined by using a third-party valuation specialist to assist management
in its determination. Management determines the fair value of the Company’s common stock by considering a number of objective and
subjective factors including: the valuation of comparable companies, sales of redeemable convertible preferred stock to unrelated third
parties, the Company’s operating and financial performance, the lack of liquidity of common stock, and general and industry specific
economic outlook, amongst other factors. Warrants The Company accounts for
warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms
and applicable authoritative guidance. The assessment considers whether the warrants are freestanding financial instruments, meet the
definition of a liability, and whether the warrants meet all of the requirements for equity classification, including whether the warrants
are indexed to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement”
in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires
the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while
the warrants are outstanding. For issued or modified
warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional
paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification,
the warrants are required to be recorded at their initial fair value on the date of issuance, and subsequently remeasured at each balance
sheet date thereafter. Financial Liabilities The Company accounts Financial
Liabilities between Current and Non-current liabilities based on the re-payment terms and conditions. At the issuance of each
financial instrument the Company evaluates the presence of: embedded derivatives, beneficial conversion features, other instruments issued
in conjunction of the financial transactions such as warrants. In case the Company identified more than one financial instrument or embedded
derivatives, the Company allocates the gross proceeds, at issuance date. For subsequent measurement of embedded derivatives and warrants
classified as liability the Company followed the applicable authoritative guidance which required subsequent adjustments of the instruments
at fair value with impact on the Consolidated Statement of Operations. Net Loss Per Share Attributable to Common Stockholders The Company follows the
two-class method when computing net loss per common share when shares are issued that meet the definition of participating securities.
The two-class method determines net income (loss) per common share for each class of common stock and participating securities according
to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available
to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights
to receive dividends as if all income for the period had been distributed. The Company’s redeemable convertible preferred stock
contractually entitles the holders of such shares to participate in dividends but does not contractually require the holders of such shares
to participate in the Company’s losses. Basic net loss per share is
computed by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, net of shares
of common stock held in escrow account. The diluted net loss per share is computed by giving effect to all potentially dilutive securities
outstanding for the period. For periods in which the Company reports net losses, diluted net loss per common share attributable to common
stockholders is the same as basic net loss per common share attributable to common stockholders, because potentially dilutive common shares
are not assumed to have been issued if their effect is anti-dilutive. Accounting Pronouncement Adopted in the Current
Year In January 2020, the FASB issued
ASU No. 2020-01, "Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives
and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815", which clarifies the interaction
of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting under Topic
323, and the accounting for certain forward contracts and purchased options accounted for under Topic 815. Effective on January 1, 2021,
the Company adopted this standard, which did not have a material impact on the consolidated financial statements. Accounting Pronouncements Issued but Not Yet Adopted In February 2016, the FASB
issued ASU No. 2016-02, Leases (Topic 842) In August 2020, the FASB issued
ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”,
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. 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 that an entity use the if-converted method and that the effect of potential share settlement
be included in diluted earnings per share calculations. This new standard will be effective for the Company for fiscal years beginning
after December 15, 2023, including interim periods within those fiscal years with early adoption permitted. The Company will adopt this
standard effective January 1, 2022, using the modified retrospective method. In the consolidated balance sheets, the adoption of this
new guidance is estimated to result in:
- an increase of approximately $3.4 million to
the total carrying value of the convertible notes to reflect the full principal amount of the convertible notes outstanding net of issuance
costs,
- a reduction of approximately $4.2 million to
additional paid-in capital to remove the equity component separately recorded for the beneficial conversion features associated with the
convertible notes, and
- a cumulative-effect adjustment of approximately $0.8 million
to the beginning balance of accumulated deficit as of January 1, 2022. 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 effective for fiscal years beginning after December 15, 2021, and interim
periods within those fiscal years, with early adoption permitted. ASU 2021-04 should be applied prospectively to modifications
or exchanges occurring after the effective date. Either the full or modified retrospective adoption method is allowed. The Company is
currently assessing the impact of adopting this standard on the consolidated financial statements. In October 2021, the FASB issued
ASU No. 2021-8, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, creating an exception
to the recognition and measurement principles in ASC 805, Business Combinations. The amendments require an acquirer to use the guidance
in ASC 606, R |
