MCOM 10-Q
micromobility.com Inc. (MCOM)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
For the quarter ended
For the transition period from to
Commission file number:
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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As of May 16, 2022, shares of common stock, par value $0.00001 per share, were issued and outstanding.
HELBIZ, INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2022
TABLE OF CONTENTS
| 2 |
PART 1 – FINANCIAL INFORMATION
Item 1. Interim Financial Statements.
Helbiz, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivables | ||||||||
| Contract assets – Media rights | ||||||||
| VAT receivables | ||||||||
| Prepaid and other current assets | ||||||||
| Total current assets | ||||||||
| Property, equipment and deposits, net | ||||||||
| Goodwill | ||||||||
| Intangible assets, net | ||||||||
| Other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Account payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Deferred revenues | ||||||||
| Warrant liabilities | ||||||||
| Short term financial liabilities and capital leases, net | ||||||||
| Total current Liabilities | ||||||||
| Other non-current liabilities | ||||||||
| Non-current financial liabilities, net | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies | ||||||||
| 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 March 31, 2022 and December 31, 2021, respectively. | ||||||||
| Class B Common stock, $ par value; shares authorized and; shares issued and outstanding at March 31, 2022 and December 31, 2021. | ||||||||
| Accumulated other comprehensive (loss) income | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ deficit | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | |||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
Helbiz, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)
(unaudited)
| Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenue | $ | $ | ||||||
| Operating expenses: | ||||||||
| Cost of revenues | ||||||||
| Research and development | ||||||||
| Sales and marketing | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Non-operating income (expenses), net | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Other income (expenses), net | ( | ) | ( | ) | ||||
| Total non-operating income (expenses), net | ( | ) | ( | ) | ||||
| Income Taxes | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Deemed Dividends and Deemed Dividends equivalents | $ | $ | ( | ) | ||||
| Net loss attributable to common stockholders | $ | ( | ) | $ | ( | ) | ||
| Net loss per share attributable to common stockholders, basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted-average number of shares outstanding used to compute net loss per share, basic and diluted | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive (loss) income, net of tax: | ||||||||
| Changes in foreign currency translation adjustments | $ | ( | ) | $ | ( | ) | ||
| Net loss and comprehensive income, excluded Series B Dividends | $ | ( | ) | $ | ( | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
HELBIZ, Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit
(in thousands, except share and per share data)
(unaudited)
| Class A Common Stock | Class B Common Stock | Accumulated | Accumulated Other Comprehensive (Loss) | TOTAL STOCKHOLDERS’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Deficit | Income | DEFICIT | ||||||||||||||||||||||
| Balance at January 1, 2022 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| ASU No. 2020-06 - modified retrospective method | — | ( | ) | — | ( | ) | ||||||||||||||||||||||
| Issuance of common shares – for Conversion of 2021 Convertible Notes | — | |||||||||||||||||||||||||||
| Issuance of common shares - for Settlement of Account Payable | — | |||||||||||||||||||||||||||
| Share based compensation | — | |||||||||||||||||||||||||||
| Changes in currency translation adjustment | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance at March 31, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 5 |
HELBIZ, Inc.
Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit
(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 (Loss) | TOTAL STOCKHOLDERS’ | ||||||||||||||||||||||||||||||
| STOCK | Shares | Amount | Shares | Amount | Receivables | Deficit | Income | DEFICIT | ||||||||||||||||||||||||||||
| Balance at January 1, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||||
| Retroactive application of the conversion ratio 4.63 applied on the reverse merger | — | |||||||||||||||||||||||||||||||||||
| Issuance of common shares – for Sale | — | |||||||||||||||||||||||||||||||||||
| Share based compensation - for Issuance of Common Shares | — | |||||||||||||||||||||||||||||||||||
| Issuance of common stock – for Warrant conversion | — | |||||||||||||||||||||||||||||||||||
| Issuance of common shares – for settlement of Lease | — | |||||||||||||||||||||||||||||||||||
| Settlement of Subscription Receivables | — | — | ||||||||||||||||||||||||||||||||||
| Share based compensation | — | |||||||||||||||||||||||||||||||||||
| Dividends and dividend equivalents for Preferred Stockholders | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Changes in currency translation adjustment | — | — | ||||||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance at March 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 6 |
HELBIZ, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands, except share and per share data)
(unaudited)
| Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Loss on disposal of assets | ||||||||
| Non-cash interest expenses and amortization of debt discount | ||||||||
| Change in fair value of warrant liabilities | ( | ) | ||||||
| Share-based compensation | ||||||||
| Other non-cash items related to licensing | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid and other current assets | ( | ) | ( | ) | ||||
| Security deposits | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Other non-current liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing activities | ||||||||
| Purchase of property, equipment, and deposits | ( | ) | ( | ) | ||||
| Purchase of intangible assets | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing activities | ||||||||
| Proceeds from issuance of financial liabilities, net | ||||||||
| Repayment of financial liabilities | ( | ) | ( | ) | ||||
| Proceeds from issuance of financial liabilities, due to related party - Officer | ||||||||
| Proceeds from settlement of Subscription receivables | ||||||||
| Proceeds from sale of Class A common shares, net | ||||||||
| Payments of offering costs and underwriting discounts and commissions | ( | ) | ||||||
| Net cash provided by financing activities | ( | ) | ||||||
| Increase (decrease) in cash and cash equivalents, and restricted cash | ( | ) | ||||||
| Effect of exchange rate changes | ( | ) | ( | ) | ||||
| Net increase (decrease) in cash and cash equivalents, and restricted cash | ( | ) | ||||||
| Cash and cash equivalents, and restricted cash, beginning of year | ||||||||
| Cash and cash equivalents, and restricted cash, end of year | $ | $ | ||||||
| RECONCILIATION OF CASH, CASH EQUIVALENT AND RESTRICTED CASH TO THE CONSOLIDATED BALANCE SHEET | ||||||||
| Cash and cash equivalents | ||||||||
| Restricted cash, included in Current assets | ||||||||
| Restricted cash, included in Other assets, non-current | ||||||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes, net of refunds | $ | $ | ||||||
| Non-cash investing & financing activities | ||||||||
| Issuance of Class A common shares – for warrant exercise | $ | $ | ||||||
| Issuance of Class A common shares – for settlement of lease | ||||||||
| Convertible debts converted into common shares | ||||||||
| Increasing of Financial liabilities for derecognition of Beneficial conversion features (BCF) - Adoption of ASU 2020-06 | ||||||||
| Purchase of vehicles with financing agreement | ||||||||
| Prepaid expenses related to D&O insurance, included in Account payable | ||||||||
| Issuance of common shares - for settlement of Account payable | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 7 |
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
Helbiz, Inc. and Subsidiaries, (“Helbiz” or the “Company”) was incorporated in the state of Delaware in October 2015 with 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 mopeds in the sharing environment. Through its Mobility App, Helbiz offers an intra-urban transportation solution that allows users to instantly rent electric vehicles. Additionally, the Company is operating two other business lines: (i) acquisition, commercialization and distribution of contents 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, Milan, and Belgrade, with additional operational teams around the world. The Company currently has electric vehicles operating in the United States and Europe.
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 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, 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 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, 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, and cash flows for the three months ended March 31, 2022, but are not necessarily indicative of the results of operations to be anticipated for any future annual or interim period.
| 8 |
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 is dependent 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 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 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.
Recent Accounting Pronouncements Adopted
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. ASU 2020-06 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:
| - | an increase of $3,371 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 $4,187 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 $816 to the beginning balance of accumulated deficit as of January 1, 2022. |
| 9 |
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. Effective January 1, 2022, we adopted ASU 2021-04 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 months ended on March 31, 2022, and on March 31, 2021.
| Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Mobility Revenues | $ | $ | ||||||
| Pay per ride | ||||||||
| Mobility Subscriptions | ||||||||
| Partnerships fees | ||||||||
| Media Revenues | $ | |||||||
| Commercialization of Media rights (B2B) | ||||||||
| Advertising fees | ||||||||
| Live subscriptions (B2C) | ||||||||
| Other Revenues | $ | $ | ||||||
| Total Revenues | $ | $ | ||||||
The Company mainly generates revenues related to: (i) single-use ride fees paid by riders of owned 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.
| 10 |
The table below shows the Deferred revenues roll-forward from January 1, 2021, to March 31, 2021, and from January 1, 2022, to March 31, 2022.
| Deferred revenues | January 1, 2021 | Additions | Q1 2021 Revenues | FX rate Adj | March 31, 2021 | |||||||||||||||
| Mobility | ( | ) | ||||||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | $ | |||||||||||||
| Deferred revenues | January 1, 2022 | Additions | Q1 2022 Revenues | FX rate Adj | March 31, 2022 | |||||||||||||||
| Mobility | ( | ) | ( | ) | ||||||||||||||||
| Media | ( | ) | ( | ) | ||||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
Deferred revenues related to prepaid customer wallet will be recorded as Mobility Revenues when riders will take a ride or make a subscription, while deferred revenues related to Media will be mainly recorded as Revenues in the first six months of 2022.
5. Contract assets – Media rights
The table below shows the Contract assets roll-forward from January 1, 2022, to March 31, 2022. During the period January 1, 2021 – March 31, 2021, the Company did not perform any media activities.
| Contract assets | 31-Dec-21 | Additions | Q1 2022 COGS | FX rate adj. | 31-Mar-22 | |||||||||||||||
| Media | ( | ) | ( | ) | ||||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
6. Prepaid and other current assets
Prepaid and other current assets consist of the following:
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| D&O Insurance Coverage | $ | $ | ||||||
| Prepaid | ||||||||
| Restricted cash | ||||||||
| Other current assets | ||||||||
| Total prepaid and other current assets | $ | $ | ||||||
Restricted
cash amounts for the periods presented are related to a bank guarantee amounted to $
| 11 |
7. Property, equipment and deposits, net
Property and equipment consist of the following:
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Sharing electric vehicles | $ | $ | ||||||
| Furniture, fixtures, equipment, computers, and software | ||||||||
| Leasehold improvements | ||||||||
| Total property and equipment, gross | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
| Electric vehicle deposits | ||||||||
| Total property, equipment and deposits, net | $ | $ | ||||||
As
of March 31, 2022, Sharing electric vehicles includes a leased assets (approximately 3,000 e-scooters) amounted to $
8. Liability warrants
The Company’s Warrants, classified as a liability, consisted of the following:
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| GRNV Sponsor Private Warrants | ||||||||
| Total liability warrants | $ | $ | ||||||
The tables below show the warrant liabilities roll-forward from January 1, 2021, to March 31, 2021, and from December 31, 2021, to March 31, 2022.
| Warrant liabilities | January 1, 2021 | Change in fair value | Exercise (fair value) | March 31, 2021 | ||||||||||||
| 2020 Warrant Purchase Agreement * | ( | ) | ||||||||||||||
| Total | $ | $ | $ | ( | ) | $ | ||||||||||
* On March 26, 2021, the investors exercised the 2020 Warrant Purchase Agreement and the Company issued 1,075,867 Class A Common Shares (considering the GRNV conversion ratio).
| Warrant liabilities | December 31, 2021 | Change in fair value | Exercise (fair value) | March 31, 2022 | ||||||||||||
| GRNV Sponsor Private Warrants | ( | ) | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
The following tables summarize the fair value hierarchy of the Company’s financial liabilities measured at fair value on a recurring basis as of March 31, 2022, and December 31, 2021.
| March 31, 2022 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| GRNV Sponsor Private Warrants | $ | $ | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| 12 |
| December 31, 2021 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| GRNV Sponsor Private Warrants | $ | $ | ||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
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 March 31, 2022, and December 31, 2021, the fair values of each GRNV Sponsor Private Warrant amounted to $0.31 and $0.76, respectively. The fair values were determined using the Black-Scholes option-pricing model with the following assumptions.
| March 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Remaining term (in years) | ||||||||
| Expected volatility | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
| Expected dividend yield | % | % | ||||||
9. Current and Non-current financial liabilities and capital leases, net
The Company’s Financial liabilities consisted of the following:
| Interest Rate | Maturity Date | March 31, 2022 (1) | December 31, 2021(1) | |||||||||||||
| 2021 Convertible Debts, net | % | 2022 | (2) | |||||||||||||
| Of which principal and accumulated interest expenses | ||||||||||||||||
| Of which unamortized debt discounts and debt issuance costs | ( | ) | ( | ) | ||||||||||||
| Secured Long Term Loan, net | % | 2023 | ||||||||||||||
| Long Term Loan, net | % | 2026 | ||||||||||||||
| Long Term Loan, net | % | 2024 | ||||||||||||||
| Capital lease liability(3) | N/A | 2023 | ||||||||||||||
| CEO Promissory Note (Related Party) | % | 2022 | ||||||||||||||
| Other financial liabilities | Varies | Varies | ||||||||||||||
| Total financial liabilities and capital leases, net | ||||||||||||||||
| Of which classified as Current financial liabilities and capital liabilities, net | ||||||||||||||||
| Of which classified as Non-current financial Liabilities, net | ||||||||||||||||
| (1) | ||
| (2) | ||
| (3) | Please refer to Note 10 – Commitments and Contingencies |
| 13 |
The table below shows the financial liabilities’ impact on the statements of operations, Interest expense, net account, related to the for the year ended on December 31, 2021, and December 31, 2020.
| Schedule of Interest expenses, net | Three months ended March 31, | |||||||
| 2022 | 2021 | |||||||
| 2021 Convertible debts | $ | $ | ||||||
| Of which Amortization of debt discount and issuance costs related to 2021 Convertible Debts | ||||||||
| Of which Interest expenses related to 2021 Convertible Debts | ||||||||
| Secured Long Term Loan | ||||||||
| Other financial liabilities | ||||||||
| Total Interest expenses, net | $ | $ | ||||||
2021 Convertible Debts
The three convertible notes, categorized as
2021 Convertible Debts are convertible by the Note holder upon issuance. In accordance with the agreement the conversion price will be
lower of $
During the three months ended
March 31, 2022, the Note holder converted $
At the closing date, the Company recorded a
debt discount related to the Convertible note, composed by: (i) fair value of the commitment shares, amounted to $
Effective January 1, 2022 (“transition
date”), 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 $
Refer to Note 14. Subsequent Events for further details over the convertible notes’ activities after March 31, 2022.
| 14 |
10. Commitments and Contingencies
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 $525 for the three months ended on March 31, 2022, and $464 for the three months ended on March 31, 2021.
Additionally, in June 2021, the Company entered
into a lease agreement for 2,950 eScooters with a European financial institution. This agreement, which has a duration of 12 months, became
effective on March 1, 2022, following the delivery of the vehicles to the Company’s warehouse. The Company shall pay a leasing fee
of $
| Operating leases | Capital leases | ||||||||
| Year ending December 31: | |||||||||
| 2022 | |||||||||
| 2023 | |||||||||
| 2024 | |||||||||
| Thereafter | |||||||||
| Total minimum lease payments | |||||||||
| Less: Amounts representing interest not yet incurred | |||||||||
| Present value of capital lease obligations | |||||||||
| Less: Current portion | |||||||||
| Long-term portion of capital lease obligations | |||||||||
Litigation
From time to time, the Company may become involved in legal proceedings arising in the ordinary course of business. There are currently no material legal proceedings against the Company, 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.
11. 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 months ended March 31, 2022, and 2021.
| Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Cost of revenue | $ | |||||||
| Research and development | ||||||||
| Sales and marketing | ||||||||
| General and administrative | ||||||||
| Total stock-based compensation expenses | $ | |||||||
| Of which related to shares to consultants not issued, accrued as Account payables | $ | |||||||
| 15 |
The following potentially dilutive outstanding shares (considering a retroactive application of the conversion ratio) 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.
| Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| 2020 Equity Incentive Plan | ||||||||
| Public Warrants | ||||||||
| 2021 Convertible Notes | ||||||||
| 2021 Convertible Notes Warrants | ||||||||
| GRNV Sponsor Private Warrants | ||||||||
| Class B Common Shares - Held in escrow for indemnification purpose | ||||||||
| 2020 CEO Performance Award | ||||||||
| 2021 Omnibus Plan | ||||||||
| Common Stocks to be issued outside equity incentive Plans | ||||||||
| Other Equity Awards with Performance condition | ||||||||
| Convertible Preferred Stock Series B | ||||||||
| Total number of Common Shares not included in the EPS Basic and diluted | ||||||||
13. 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.
Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenue | ||||||||
| Mobility | ||||||||
| Media | ||||||||
| All Other | ||||||||
| Total Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Mobility | ( | ) | ( | ) | ||||
| Media | ( | ) | ||||||
| All Other | ( | ) | ||||||
| Total Cost of revenues | $ | ( | ) | $ | ( | ) | ||
| Reconciling Items: | ||||||||
| Research and development | ( | ) | ( | ) | ||||
| Sales and marketing | ( | ) | ( | ) | ||||
| General and administrative | ( | ) | ( | ) | ||||
| Loss from operations | $ | ( | ) | $ | ( | ) | ||
| 16 |
Revenue by geography is based on where the trip was completed, or media content occurred. The following table set forth revenue by geographic area for the three months ended March 31, 2022, and 2021.
Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenue | ||||||||
| Italy | ||||||||
| United States | ||||||||
| All other countries | ||||||||
| Total Revenue | $ | $ | ||||||
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 March 31, 2022, and December 31, 2021.
| March 31, | December 31, | |||||||
| Non-Current Assets | 2022 | 2021 | ||||||
| Italy | $ | $ | ||||||
| United States | ||||||||
| All other countries | ||||||||
| Total Non-Current Assets | $ | $ | ||||||
14. Related Party Transactions
During the period ended March 31, 2022, our majority
shareholder and CEO has lent Helbiz, funds on an interest-free basis for cumulative gross proceeds of $
15. Subsequent Events
2022 Convertible Notes
On April 15, 2022, 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 issued to the Note holder the followings: (i) shares of Class A common stock as a commitment fee, (ii) a convertible
note in the principal amount of $
In exchange for the issuances of the commitment
Shares, the first convertible note, and the warrants, the Company received from the Note holder proceeds of $
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.
Based on the SPA, the Company is required to pay a redemption premium in two circumstances: if the Company redeems the convertible notes prior to maturity, the Company must pay a redemption fee equal to 10% of the principal amount being redeemed thereafter. Alternatively, the Company is required to start making monthly payments if 90 days after the issuance, the daily volume-weighted average is less than the Floor Price for ten trading days during a period of 15 consecutive trading days. Each monthly payment 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 reset the Floor Price
| 17 |
2021 Convertible Debts, conversion into Common Shares
From April 1, 2022, to the
date of this prospectus, the Note holder converted $
2021 Convertible Notes – Securities Purchase Agreement, as amended
On April 15, 2022, the Company amended the conversion price and the maturity dates for the 2021 Convertible Notes. In detail, the conversion price is the lesser of (i) $3.00 and (ii) 92.5% of the lowest VWAPs during the last five trading days immediately preceding the date of such conversion, but in no event will the conversion price be less than the applicable floor price, $0.50. As amended, each of the 2021 Convertible Notes matures on December 31, 2022.
On April 15, 2022, the Company amended the exercise
price of the
Deposit related to a Letter of Intent
On
May 12, 2022, we entered into a Letter of Intent with an entity that operates within the micro-mobility industry. In connection with
that Letter of Intent, we agreed to provide that entity a deposit of $
| 18 |
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 its 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 its plans and strategy for its 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, Inc., for the three months ended March 31, 2022, and 2021, and the year ended December 31, 2021. For purposes of this following discussion the terms “we”, ‘our” or “us” or “the Company” and similar references refers to Helbiz and its affiliates. Except for per share data and as otherwise indicated, all dollar amounts set out herein are in thousands.
Overview
Helbiz, Inc. (and with its subsidiaries, where applicable, “Helbiz” or the “Company”) was incorporated in the state of Delaware in October 2015 with headquarter in New York, New York. We are 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 mopeds in the sharing environment. Through its Mobility App, we offer an intra-urban transportation solution that allows users to instantly rent electric vehicles. We currently have electric vehicles 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 contents including live sport events such as the Italian Serie B Soccer League. This revenue stream is supported by Helbiz Live App, separated from the Mobility App, and (ii) food delivery services through a delivery-only “ghost kitchen” restaurant concept that specializes in preparing healthy-inspired, high-quality, fresh, made-to-order meals, in Milan. The service is fully integrated in the Mobility App.
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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.
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.
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Italian licenses
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 three months ended March 31, 2022, 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.
United States licenses
During the three months ended March 31, 2022, we provided the following services in the following U.S. cities:
• e-scooter services: Washington (D.C.), Sacramento, (California), Santa Barbara (California), Miami (Florida), Jacksonville (Florida), Miami Lakes (Florida), Miami Dade (Florida), Oklahoma City (Oklahoma), 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 Months Ended March 31, 2022 and 2021
The following table summarizes our consolidated results of operations for the three months ended March 31, 2022, and for the three months ended March 31, 2021, respectively:
Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net revenue | $ | 3,312 | $ | 1,015 | ||||
| Operating expenses: | ||||||||
| Cost of revenues(1) | 11,339 | 4,502 | ||||||
| R&D expenses(1) | 744 | 576 | ||||||
| Sales and marketing(1) | 2,598 | 1,133 | ||||||
| General and administrative(1) | 6,681 | 3,956 | ||||||
| Total operating expenses | 21,362 | 10,167 | ||||||
| Loss from operations | (18,050 | ) | (9,152 | ) | ||||
| Total non-operating (income) expenses, net | (1,343 | ) | (4,911 | ) | ||||
| Income Taxes | (4 | ) | (2 | ) | ||||
| Net Loss | (19,397 | ) | (14,065 | ) | ||||
| 21 |
Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Net revenue | 100 | % | 100 | % | ||||
| Operating expenses: | ||||||||
| Cost of revenues(1) | 342 | % | 444 | % | ||||
| Research and Development(1) | 22 | % | 57 | % | ||||
| Sales and marketing(1) | 78 | % | 112 | % | ||||
| General and administrative(1) | 202 | % | 390 | % | ||||
| Total operating expenses | 645 | % | 1,002 | % | ||||
| Loss from operations | (545 | )% | (902 | )% | ||||
| Total non-operating (income) expenses, net | (41 | )% | (484 | )% | ||||
| Income Taxes | — | — | ||||||
| Net Loss | (586 | )% | (1,386 | )% | ||||
| (1) | Includes stock-based compensation for employees and services received, as follows |
Three months ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| Stock-based Compensation: | ||||||||
| Cost of revenues | 10 | 12 | ||||||
| Research and Development | 64 | 236 | ||||||
| Sales and marketing | 182 | 166 | ||||||
| General and administrative | 995 | 1,269 | ||||||
| Total Stock-based Compensation | $ | 1,252 | $ | 1,683 | ||||
Net Revenue
Three months ended March 31, | ||||||||||||
| 2022 | 2021 | % Change | ||||||||||
| Mobility Revenues | $ | 1,577 | $ | 1,015 | 55 | % | ||||||
| Pay per ride | 1,205 | 795 | 52 | % | ||||||||
| Mobility Subscriptions | 288 | 164 | 76 | % | ||||||||
| Partnerships fees | 84 | 56 | 50 | % | ||||||||
| Media Revenues | $ | 1,656 | $ | — | 100 | % | ||||||
| Commercialization of Media rights (B2B) | 1,296 | — | 100 | % | ||||||||
| Advertising fees | 50 | — | 100 | % | ||||||||
| Live subscriptions (B2C) | 310 | — | 100 | % | ||||||||
| Other Revenues | $ | 79 | $ | — | 100 | % | ||||||
| Total Revenues | $ | 3,312 | $ | 1,015 | 226 | % | ||||||
Total revenue increased by $2,297, or 226%, from $1,015 for the three months ended March 31, 2021, to $3,312 for the three months ended March 31, 2022. This increase was primarily due to the media revenues related to the commercialization of media rights and the core business growth, mobility.
Mobility revenues
Mobility revenues increased by $562, or 55%, from $1,015 for the three months ended March 31, 2021, to $1,577 for the three months ended March 31, 2022.
The Mobility subscription, called Helbiz Unlimited, which allows users to rent our e-scooters and e-bikes in exchange for a monthly fee, increased by $124, or 76%, from $164 for the three months ended March 31, 2021, to $288 for the three months ended March 31, 2022.
| 22 |
Media revenues
Helbiz Media revenues are related to the launch of the new business line, which occurred in August 2021. During the three months ended March 31, 2022, Media generated revenues amounted to $1,656. In detail, we recorded Revenues for $1,296 from the international commercialization and distribution of media contents to media partners, in the Business to Business (“B2B") environment, and $310 from Helbiz Live monthly and yearly subscriptions.
Cost of Revenue
| Three months ended March 31, | ||||||||||||
| 2022 | 2021 | % Change | ||||||||||
| Mobility - Cost of revenues | $ | 4,637 | $ | 4,502 | 3 | % | ||||||
| Of which Amortization, Depreciation and write-off | 1,171 | 1,363 | (14 | )% | ||||||||
| Of which Stock-based Compensation | 10 | 12 | (17 | )% | ||||||||
| Media - Cost of revenues | $ | 6,276 | — | 100 | % | |||||||
| Of which content licensing | 4,510 | — | 100 | % | ||||||||
| Other - Cost of revenues | $ | 426 | — | 100 | % | |||||||
| Total - Cost of revenues | $ | 11,339 | $ | 4,502 | 152 | % | ||||||
Cost of Revenue increased by $6,837 or 152% of which $6,276 is explained by the Media business and its content licensing expenses, which contributed to Cost of revenue for $4,510.
Cost of Revenues related to Mobility increased by $135 or 3%, compared to 55% of mobility revenues increase. Depreciation, Amortization and write-off expenses, one of the main drivers of Cost of Revenue related to Mobility, decreased by $192, or 14%, from $1,363 for the three months ended March 31, 2021, to $1,171 for the three months ended March 31, 2022.
Research and Development
Three months ended March 31, | ||||||||||||
| 2022 | 2021 | % Change | ||||||||||
| Research and development | $ | 744 | $ | 576 | 29 | % | ||||||
| Of which Stock-based Compensation | 64 | 236 | (73 | )% | ||||||||
Research and Development expenses increased by $168 or 29%, from $576 for the three months ended March 31, 2021, to $744 for the three months ended March 31, 2022. 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.
Sales and Marketing
Three months ended March 31, | ||||||||||||
| 2022 | 2021 | % Change | ||||||||||
| Sales and marketing | $ | 2,598 | $ | 1,133 | 129 | % | ||||||
| Of which Stock-based Compensation | 182 | 166 | 10 | % | ||||||||
Sales and marketing expenses increased by $1,465 or 129%, from $1,133 for the three months ended March 31, 2021, to $2,598 for the three months ended March 31, 2022. The increase is in line with our strategy focused on significant investment in advertising, promotional and business development initiatives.
| 23 |
General and Administrative
Three months ended March 31, | ||||||||||||
| 2022 | 2021 | % Change | ||||||||||
| General and administrative | $ | 6,681 | $ | 3,956 | 69 | % | ||||||
| Of which Stock-based Compensation | 995 | 1,269 | (22 | )% | ||||||||
General and Administrative expenses increased by $2,725 or 69%, from $3,956 for the three months ended March 31, 2021, to $6,681 for the three months ended March 31, 2022. The increase is mainly driven by the costs for being a public company, such as D&O insurance which contributed for approximately $1.3 million to the increase.
Total non-operating income (expense), net
Three months ended March 31, | ||||||||||||
| 2022 | 2021 | % Change | ||||||||||
| Interest expense | $ | (1,981 | ) | $ | (498 | ) | 298 | % | ||||
| Change in fair value of warrant liabilities | $ | 945 | $ | (4,127 | ) | (123 | )% | |||||
| Other income (expense), net | $ | (307 | ) | $ | (286 | ) | 7 | % | ||||
| Total non-operating income (expense), net | $ | (1,343 | ) | $ | (4,911 | ) | (73 | )% | ||||
Interest expenses
Interest expenses increased by $1,483, or 298%, from $498 for the three months ended March 31, 2021, to $1,981 for the three months ended March 31, 2022. Such increase is mainly driven by the 5% interests’ expenses and amortization of debt discounts related to the 2021 Convertible debts, amounted to $1,384 during the three months ended March 31, 2022.
Change in fair value of warrant liabilities
Fair value adjustment shows a positive increase of $5,072, or 298% from $(4,127) for the three months ended March 31, 2021, to $945 for the three months ended March 31, 2022. The positive adjustment recorded for the three months ended March 31, 2022, is related to the fair value adjustment for 2,100,000 GVAC Sponsor Private Warrants. The mentioned fair value adjustment is mainly driven by the decrease of the market price.
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 its operations and expand its 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 March 31, 2022, our principal sources of liquidity were cash and cash equivalents of $1,115, excluding restricted cash of $110 (included in Other Assets) and $170 (included in prepaid and other current assets). Cash and cash equivalents consisted of bank deposits in U.S. Dollar and Euro.
We collect the fees from riders using a third-party processing payment provider. In detail, we 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 Media within 60 days for the international audiovisual rights.
| 24 |
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 April 2022:
| - | In April 2022, we entered into a Securities Purchase Agreement (the “SPA”) with YA II, Ltd. (the “Note holder”). Pursuant to the terms of the SPA, we issued: (i) 150,000 shares of Class A common stock as a commitment fee, (ii) a convertible note in the principal amount of $6 million, (iii) 500,000 Warrants to buy 500,000 Class A common shares, it is exercisable for five years at an exercise price of $3.00 per share. We also agreed to issue a second convertible note in the principal amount of $4 million within a day of a registration statement registering for resale shares underlying the 2022 Convertible Notes is declared effective by the U.S. Securities and Exchange Commission. In exchange for the issuances of the commitment Shares, the first convertible note, and the warrants, we received proceeds of $6 million and we shall receive additional $4 million in conjunction with the issuance of the second convertible note. |
| - | In April 2022, we amended the exercise price of the 1,000,000 warrants issued in conjunction with the 2021 Convertible Notes. As amended, the 1,000,000 Warrants has an exercise price of $3.00. |
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:
| March 31, 2022 | March 31, 2021 | |||||||
| Net cash used in operating activities | $ | (16,539 | ) | $ | (6,106 | ) | ||
| Net cash used in investing activities | (3,037 | ) | (4,742 | ) | ||||
| Net cash provided by financing activities | (168 | ) | 15,818 | |||||
| Effect of exchange rate changes | (115 | ) | (26 | ) | ||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (19,858 | ) | $ | 4,944 | |||
Operating Activities
During the three months ended March 31, 2022, operating activities used $16,539 of cash, resulting from our net loss of $19,397, increased for the net changes in operating assets and liabilities for $711 and partially offset by non-cash expenses for $3,569.
Net changes in operating assets and liabilities consisted primarily in the decrease in accounts payable for $1,801, the net increase in accounts receivables, security deposits and current assets for $894, partially offset by the increase in accrued expenses and other current liabilities of $1,984.
Non-cash expenses are mainly related to: (i) equity-based compensation for $1,252, (ii) depreciation, amortization, and loss on disposal of assets for $1,351, and (iii) non-cash interest expenses for $1,911 (mainly related to amortization of debt discounts associated with 2021 Convertible debts), partially offset by (iv) changes in fair value of financial instruments for $945.
Investing Activities
During the three months ended March 31, 2022, investing activities used $3,037 of cash. In detail, we paid approximately $2.8 million to vehicle manufacturers as deposits for e-bikes, e-scooters and e-mopeds. Those vehicles are expected to be delivered through all the year.
Additionally, we invested $0.1 million in operating licenses mainly related to Washington D.C., categorized as intangible assets.
| 25 |
Indebtedness
The following table summarizes our indebtedness as of March 31, 2022:
| As
of March 31, 2022 | ||||
| Current Financial Liabilities and Capital leases | $ | 26,722 | ||
| Current portion of financial Debts | 25,945 | |||
| Of which related to 2021 Convertible debts | 21,513 | |||
| Other current financial liabilities | 126 | |||
| GVAC Sponsor Private Warrants | 651 | |||
| Non-Current Financial Liabilities | 17,960 | |||
| Secured Long Term Loan | 13,747 | |||
| Long-term Loans, net | 4,213 | |||
| Total Financial Liabilities, and Capital leases and liability Warrant | $ | 44,682 | ||
As of March 31, 2022, we expected to make future annual principal repayments of the indebtedness set out above as follows:
| Year ending December 31: | ||||||
| 2022 – of which $23.5 million related to 2021 Convertible Notes | $ | 25,204 | ||||
| 2023 | 16,855 | |||||
| 2024 | 1,219 | |||||
| 2025 | 932 | |||||
| Thereafter | 829 | |||||
| Total future repayments of principal | $ | 45,040 | ||||
Equity warrants
As of March 31, 2022, the Company has the following outstanding warrants classified as equity component: 7,736,416 Public Warrants and 1,000,000 Convertible Note Warrants. No change compared to the warrants outstanding as of December 31, 2021.
Common Stock
As of March 31, 2022, the Company’s charter authorized the issuance of up to 285,774,102 of Class A common shares of common stock at $0.0001 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. At the Closing Date, 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.
Related Party Transactions
During the period ended March 31, 2022, our majority shareholder and CEO has lent Helbiz, funds on an interest-free basis for cumulative gross proceeds of $275 through a Promissory Note.
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 $525 for the three months ended on March 31, 2022, and $464 for the three months ended on March 31, 2021.
Additionally, in June 2021, the Company entered into a lease agreement for 2,950 eScooters with a European financial institution. This agreement, which has a duration of 12 months, became effective on March 1, 2022, following the delivery of the vehicles to the Company’s warehouse. The Company shall pay a leasing fee of $224 (Euro 202), on a monthly basis, for a cumulative amount of $2,691 (Euro 2,424). At the end of the leasing agreement, the Company has the option to purchase the leased assets for a cumulative amount of $42 (Euro 38). Based on the terms of the purchase option the Company categorized the agreement as capital lease. The eScooters 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 March 31, 2022 (Refer to Note. 7 Property, equipment and deposits, net for further information). Lease expenses under capital leases were accounted as interest expenses for $29 for the three months ended on March 31, 2022.
| Year ending December 31: | Operating leases | Capital leases | ||||||
| 2022 | 1,158 | 2,238 | ||||||
| 2023 | 489 | 490 | ||||||
| 2024 | 16 | — | ||||||
| Thereafter | — | — | ||||||
| Total minimum lease payments | 1,663 | 2,728 | ||||||
| Less: Amounts representing interest not yet incurred | 311 | |||||||
| Present value of capital lease obligations | 2,417 | |||||||
| Less: Current portion | 1,759 | |||||||
| Long-term portion of capital lease obligations | 433 | |||||||
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Media rights – Purchase Commitments
During 2021, the Company decided to enter 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 the 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.
Future annual minimum payments related to Media rights’ agreements as of March 31, 2022, 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 March 2022 average exchange rate.
| Amount | ||||||
| Year ending December 31: | ||||||
| 2022 | $ | 13,321 | ||||
| 2023 | 19,733 | |||||
| 2024 | 10,274 | |||||
| Thereafter | — | |||||
| Total | $ | 43,328 | ||||
Content licensing expenses, recorded as Cost of Revenues, were $6,136 for the three months ended on March 31, 2022.
Miami FC – Sponsorship Commitments
The Company entered 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’s 2023 USL Championship season. The Company may terminate the agreement, with at least 180 days’ notice, if the Company ceases operations in the South Florida Market or if the United Soccer League Championship is terminated or reduces its schedule of games per season to 30 or less.
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Future annual minimum sponsorship payments as of March 31, 2022, are as follows:
| 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 US 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 our significant accounting policies are described in greater detail in Note 2, “Summary of Significant Accounting Policies and Use of Estimates” to our consolidated financial statements as of December 31, 2021 and in Note 3, “Summary of Significant Accounting Policies and Use of Estimates” to our condensed consolidated financial statements as of March 31, 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.
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.
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Recent Accounting Pronouncements Adopted
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. ASU 2020-06 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:
| - | an increase of $3,371 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 $4,187 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 $816 to the beginning balance of accumulated deficit as of January 1, 2022. |
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.
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 March 31, 2022. 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.
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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 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 become involved in legal proceedings arising in the ordinary course of business. There are currently no material legal proceedings against us or that have been against us, and we are not aware of investigations being conducted by a governmental entity into our company.
Item 1A. Risk Factors
None.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On April 27, 2022, we issued 300,601 shares of Class A common stock in exchange for services, primarily legal 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.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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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. |
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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.
| Helbiz, Inc. | ||
| Date: May 16, 2022 | By: | /s/ Salvatore Palella |
| Name: | Salvatore Palella | |
| Title: | Chief Executive Officer | |
| Date: May 16, 2022 | By: | /s/ Giulio Profumo |
| Name: | Giulio Profumo | |
| Title: | Chief Financial Officer | |
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