Notes Payable | 10. Notes Payable Convertible Notes Payable iHeart Media Note Payable In April 2018, the Company entered into an advertising agreement with a media company whereby the media company will provide advertising services to the Company and the Company will pay for these services through a combination of convertible notes and cash. Interest is accrued monthly on the notes at a rate of 1.5 % per annum and increases to 8.0 % in the event of default until the maturity date of five years from issuance date of the notes. The notes are convertible in the event of the Company receiving proceeds of $ 50.0 million or more in a sale of equity securities (a Qualified Financing) subsequent to April 1, 2019, upon the consummation of a qualified public offering of securities, or if the Company elects to convert the notes into shares issued in the next round of financing that did not constitute a Qualified Financing. In the event that there was a next round of financing that did not constitute a Qualified Financing, the notes will automatically convert into those shares at maturity. The number of shares to be issued in the event of conversion is determined based on the price per share of the respective event based on the fixed amount of the note. In the event there is no subsequent round of financing, the notes would become due and payable. In April 2018, the Company issued two convertible notes for a total amount of $ 1.5 million under the agreement noted above. These notes were considered to be the Initial Promotion Commitment Tranche of the Minimum Commitment Tranche of $ 3.5 million. At the same time, the Company made a cash payment of $ 0.6 million. The entire Minimum Commitment Tranche and cash payment was initially recorded as a prepaid balance for advertising services included within prepaid expenses and other current assets. As advertising services are provided by the media company, they are recorded against the prepaid balance. At the issuance of the convertible note, a debt discount of $ 49.0 thousand was recorded and will be amortized over the contractual life of the convertible note. During 2020 the debt discount was fully amortized and an expense of $ 33.0 thousand was recognized. Within 18 months from the effective date, the Company is obligated to issue another $ 2.0 million in convertible notes and $ 0.5 million cash payment covering advertising services, the Additional Promotion Commitment Tranche. The Additional Promotion Commitment Tranche combined with the Initial Promotion Commitment Tranche comprise the total Minimum Commitment Tranche of $ 3.5 million. These notes will be issued with the same terms as the previously issued convertible notes. As there was a legal obligation to issue the convertible notes and cash payment related to the Additional Promotion Commitment Tranche, a convertible note payable and a corresponding prepaid balance for advertising services were recorded on issuance of the Initial Promotion Commitment Tranche. Additionally, the Company is entitled to, but not obligated to, issue Notes totaling to $ 11.5 million in principal (Maximum Additional Promotion Commitment Amount) followed by an additional amount of at least 22.5 % of that value in cash. In June 2019, the Company issued another convertible note for a total amount of $ 1.5 million, in connection with the Minimum Commitment Tranche followed by an additional $ 0.5 million in cash. In July 2019, the Company issued an additional convertible note for a total amount of $ 0.4 million, in connection with the Minimum Commitment Tranche. As of June 30, 2023 and December 31, 2022 , the Company had a remaining contractual debt balance of $ 99.0 thousand, related to the Minimum Commitment Tranche. As of June 30, 2023 , the Company has used $ 3.3 million in advertising services. In December 2019, in accordance with the original terms, convertible notes amounting to $ 1.1 million and the applicable $ 16.0 thousand of interest were converted into 112,718 shares of Company’s Series D Preferred Stock. In October 2020, in accordance with the original terms, convertible notes amounting to $ 2.0 million and the applicable $ 54.0 thousand of interest were converted into 528,195 shares of Company’s Series E Preferred Stock. In connection with the 2022 Business Combination on December 8, 2022, in accordance with the original terms, convertible notes amounting to $ 0.4 million and the applicable $ 12.0 thousand of interest were first converted into 100,951 shares of Legacy Getaround’s Series E Preferred Stock, which in turn were exchanged for 32,329 shares of the Company’s common stock. For the three months ended June 30, 2023 and 2022 , $ 1.0 thousand of interest expense was recognized during both periods and $ 3.0 thousand of interest expense was recognized for both periods for the six months ended June 30, 2023 and 2022. Mudrick Convertible Notes In connection with the 2022 Business Combination in December 2022, pursuant to the convertible note subscription agreement, dated May 11, 2022, as amended December 8, 2022, by and among InterPrivate II and Mudrick Capital Management L.P. on behalf of certain funds, investors, entities or accounts that are managed, sponsored or advised by Mudrick Capital Management L.P. or its affiliates (“noteholders”), the Company issued $ 175 million of senior secured convertible notes (“Mudrick Convertible Notes”). The Convertible Notes accrue interest payable semi-annually in arrears on December 15 and June 15 of each year, beginning on June 15, 2023 , at a rate of 8.00 % per annum (if paid in cash) or 9.50 % per annum (if paid in-kind). Upon the occurrence, and during the continuation, of an event of default, an additional 2.00 % will be added to the stated interest rate. The Mudrick Convertible Notes will mature on December 8, 2027 , unless earlier converted, redeemed or repurchased. The Mudrick Convertible Notes are convertible at the option of the noteholders at any time until the close of business on the second scheduled trading day immediately before the maturity date. Conversions of the Mudrick Convertible Notes will be settled in shares of common stock. The indenture governing the Mudrick Convertible Notes includes restrictive covenants that, among other things, limit the ability of the Company to incur additional debt, make restricted payments and limit the ability of the Company to incur liens, in addition to a covenant to maintain a consolidated cash and cash equivalents balance in excess of $ 10.0 million. The indenture also contains customary events of default. The initial conversion rate of the Mudrick Convertible Notes is 86.96 shares of Getaround common stock per $ 1,000 principal amount of Mudrick Convertible Notes, which is equivalent to an initial conversion price of approximately $ 11.50 per share. The initial conversion price is subject to a downward adjustment to 115 % of the average daily volume-weighted average trading price (“VWAP”) of Getaround common stock for the 90 trading days after the closing date, subject to a minimum conversion price of $ 9.21 per share. The conversion price is subject to further adjustments including adjustments in connection with certain issuances or deemed issuances of common stock at a price less than the then-effective conversion price, at any time prior to the close of business on the second scheduled trading day immediately before the maturity date of the Mudrick Convertible Notes. The Mudrick Convertible Notes are redeemable at any time by the Company, in whole but not in part, for cash, at par plus accrued and unpaid interest to, but excluding, the redemption date, plus certain make-whole premiums. In connection with the execution of the convertible note subscription agreement, the Company agreed to issue to the noteholders, within 100 trading days following the closing date, warrants in substantially the same form as previously issued public warrants, to purchase 2,800,000 shares of the Company’s common stock at an exercise price of $ 11.50 (Convertible Notes Warrants). The warrants will be exercisable for shares of the Company’s common stock having an aggregate value equal to $ 3.5 million, based upon a value of $ 1.25 per Convertible Notes Warrant. The value of the Convertible Notes Warrants will be adjusted upward or downward to reflect the VWAP reported by Bloomberg LP (subject to customary proportionate adjustments affecting the outstanding shares of the Company’s common stock) of the equivalent public warrants during the 90 trading days following the closing date, subject to a maximum upward or downward adjustment of $ 0.75 per Convertible Notes Warrant. As a result of the adjustment, the minimum and maximum number of Convertible Notes Warrants that the Company is obligated to issue is 1,750,000 and 7,000,000 , respectively. On May 4, 2023, the Company issued 7,000,000 warrants to holders of Mudrick Convertible Notes, according to the terms of the convertible note subscription agreement. The Convertible Notes Warrants are in substantially the same form as the public warrants, and are aggregated with the public warrants. Additionally, 266,156 shares of common stock were issued to Mudrick entities as Equitable Adjustment Shares in pursuant to the convertible note subscription agreement. In exchange for the issuance of the Mudrick Convertible Notes and commitment to issue warrants, the Company agreed to pay a backstop fee of $ 5.2 million through a reduction of proceeds. The net proceeds from the issuance of the Mudrick Convertible Notes and warrant commitment liability were $ 169.8 million. Upon the occurrence of a fundamental change (such as a person or group obtaining a controlling interest in the Company, sale of substantially all of the Company’s asset, liquidation of the Company, or ceasing to be listed on The New York Stock Exchange, The NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ Global Select Market), subject to certain conditions and limited exceptions, holders may require the Company to repurchase for cash all or any portion of the Mudrick Convertible Notes in principal amounts of $ 1,000 or an integral multiple thereof, at a fundamental change repurchase price equal to the principal amount of the Mudrick Convertible Notes to be repurchased plus certain make-whole premiums, plus accrued and unpaid interest to, but excluding, the repurchase date. On June 23, 2023, and July 7, 2023 the Company received written notice from U.S. Bank Trust Company, National Association, in its capacity as trustee under the indenture governing the Mudrick Convertible Notes, for its failure to comply with the covenant of timely filing the Annual Report and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023. Refer to Note 18 – Subsequent Events for further discussion. The Mudrick Convertible Notes were accounted for at fair value with changes in fair value being recognized under Convertible Promissory Note Fair Value Adjustment within the income statement (See Note 4 — Fair Value Measurements for a discussion of fair value accounting in connection with the Mudrick Convertible Notes). The Company’s convertible notes payable balance was as follows (in thousands): June 30, 2023 December 31, 2022 iHeart Convertible Note $ 99 $ 99 Mudrick Convertible Notes measured at fair value 56,067 56,743 Total Convertible Notes Payable $ 56,166 $ 56,842 Notes Payable Prêt Guaranty par l'État (“PGE”) Loan In response to the COVID-19 Pandemic, the French Government enacted a State Guarantee Scheme for new loans granted by financial institutions to aid French businesses from the period of March 16, 2020 through December 31, 2020. Loans cannot have a duration exceeding a period of six years from the date of the first disbursement. In November 2020, the Company entered into Loan agreements with three French lenders for a total of 4.5 million euros of notes payable. Of which, 3.0 million euros of the notes were interest free with the remaining 1.5 million euros having a 2.25 % fixed interest rate and a recurring annual payment of 0.3 million euros beginning September 2021 through September 2025 . The notes payable of 3.0 million euros matured during November 2021 and were to be paid in full. During January 2021, the payment terms of the 1.5 million euros loan were amended to have a recurring quarterly payment of 75.0 thousand euros beginning September 2021 through June 2026 . On July 13, 2021, the Company entered into a discussion to amend the PGE loan terms to defer first payments on 3.0 million euros of the loan due November 2021 to November 2022 . Prior to the amendment, all 3.0 million euros of the loan principal was due in November 2021. The amendment to the payment terms of the PGE loan was made through two agreements. Effective August 3, 2021, the first agreement deferred a first payment, where the principal of 0.6 million euros was to be paid in full, from November 2021 to be paid in monthly installments of 12.0 thousand euros beginning December 2022 through November 2026 and added a 0.7 % fixed interest rate. Effective October 1, 2021, the second agreement deferred a first payment, where the principal of 2.4 million euros was to be paid in full, from November 2021 to be paid in monthly installments of 49.0 thousand euros beginning November 2022 through November 2026 and added a 1.44 % fixed interest rate. During December 2022, the Company recognized 51.0 thousand euros, an additional guarantee commission loan expense to the French Government paid by the French lenders on the Company’s behalf, increasing the amount owed by the Company to the French lenders. As of June 30, 2023 , 1.1 million euros, or $ 1.1 million was classified within short-term debt and the total remaining outstanding principal was 3.5 million euros, or $ 3.8 million. For the three and six months ended June 30, 2023 and 2022 , 11.0 thousand euros and 30.0 thousand euros, or $ 12.0 thousand and $ 32.0 thousand, and 13.0 thousand euros and 27.0 thousand euros, or $ 14.0 thousand and $ 29.0 thousand, of interest expense was recognized, respectively. The Company’s notes payable balances were as follows (in thousands): June 30, 2023 December 31, 2022 PGE Loan 3,808 4,409 Total Notes Payable 3,808 4,409 Less: short-term portion of PGE Loan ( 1,147 ) ( 1,211 ) Total Notes Payable, less current portion $ 2,661 $ 3,198 The notes payable future principal payments as of June 30, 2023 are as follows (in thousands): Year ended December 31, 2023 $ 573 2024 1,150 2025 1,156 2026 929 Thereafter — Total $ 3,808 |