micromobility.com Inc. - Quarter Report: 2022 March (Form 10-Q)

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 001-39136

32 Old Slip, New York, NY 10005

(Address of principal executive offices)

(917) 675-7157

(Issuer’s telephone number)

(Former name or former address, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐   No  ☒

As of May 16, 2022, 34,119,112 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

PART 1 – FINANCIAL INFORMATION

Item 1. Interim Financial Statements.

Helbiz, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Helbiz, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements. 

HELBIZ, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit

(in thousands, except share and per share data)

(unaudited)

 The accompanying notes are an integral part of these condensed consolidated financial statements.

HELBIZ, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit

(in thousands, except share and per share data)

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

HELBIZ, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands, except share and per share data)

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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.

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:

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.

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.

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 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.

6. Prepaid and other current assets

Prepaid and other current assets consist of the following:

Restricted cash amounts for the periods presented are related to a bank guarantee amounted to $170 (RSD 17,627), issued by a Serbian bank with September 6, 2022, as expiration date. The bank guarantee is in favor of the Municipality of Belgrade and it was required for applying to an e-bike tender in order to support the seriousness of the bid. The bank guarantee has the following clauses unconditional, irrevocable, no objections and payable on the first call.  

7. Property, equipment and deposits, net

Property and equipment consist of the following:

As of March 31, 2022, Sharing electric vehicles includes a leased assets (approximately 3,000 e-scooters) amounted to $2,388 related to a lease agreement effective starting from March 1, 2022. Depreciation expenses related to the leased assets amounted to $133 for the three months ended on March 31, 2022. 

8. Liability warrants

The Company’s Warrants, classified as a liability, consisted of the following:

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.

 * 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).

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.

 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.

9. Current and Non-current financial liabilities and capital leases, net

The Company’s Financial liabilities consisted of the following:

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.

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 $20.00 or 92.5% of the lowest daily volume-weighted average price of the Class A Common Stock during the five consecutive trading days immediately preceding the conversion date, provided that the conversion price may not be less than the Floor Price. The Company re-settled the Floor Prices during the three months ended March 31, 2022. In detail, as of March 31, 2022, the Floor Prices were: $4.78 for the first note, $2.50 for the second note and $8.55 for the third note. On March 31, 2022, the Note holder waived monthly payments due under the Debentures from issuance to April 30, 2022. 

During the three months ended March 31, 2022, the Note holder converted $6,882 (of which $6,500 as principal and $382 as accumulated interests) of the Convertible Notes into 2,407,000 Class A Common Shares.

At the closing date, the Company recorded a debt discount related to the Convertible note, composed by: (i) fair value of the 150,000 commitment shares, amounted to $1,598, (ii) issuance costs, amounted to $466, and (iii) a beneficial conversion feature embedded (“BCF”) in the Convertible Notes, amounted to $4,186. The BCF has been initially bifurcated from the host liability and accounted as equity.

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 $816, has been recognized as a cumulative adjustment to accumulated deficit as at the transition date. Additionally, the remaining BCF debt discount balance as at the transition date, amounted to $3,371 and the equity amount originally recorded at the issuance date $4,187 for the BCF, have been derecognized on the transition date.

Refer to Note 14. Subsequent Events for further details over the convertible notes’ activities after March 31, 2022.

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 $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.

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.

12. Net Loss Per Share - Dilutive outstanding shares 

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.

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.

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.

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.

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 $275 through a Promissory Note.

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) 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, (iv) 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, the Company received from the Note holder proceeds of $6 million and it shall receive additional $4 million in conjunction with the issuance of the second convertible note.

The convertible notes mature on the one-year anniversary date of their issuance and bears interest at a rate of 5% per annum. In case of an event of default under the convertible notes, the interest rate increases to 15% per annum. 

The 2022 Convertible Notes are convertible by the investor at the lower of $3.00 or 92.5% of the lowest daily VWAP of the Class A Common Stock during the five consecutive trading days immediately preceding the conversion date or other date of determination, provided that the conversion price may not be less than the Floor Price: $0.50. Any time after the issuance of a Debenture that the daily VWAP is less than the Floor Price for five trading days, the Company is required to provides the Debenture Holder a reset notice (each, a “Floor Reset Notice”) setting forth a reduced Floor Price which shall be equal to no more than 80% of the closing price on the trading day immediately prior to such Floor Reset Notice (and in no event greater than floor price then in effect) and takes all steps necessary to implement such Floor Price reset, including, without limitation, applying for the additional listing of conversion shares on the primary market. Whenever any payment or other obligation hereunder shall be due on a day other than a business day, such payment shall be made on the next succeeding business day.

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

2021 Convertible Debts, conversion into Common Shares

From April 1, 2022, to the date of this prospectus, the Note holder converted $2.0 million of the 2021 Convertible Notes into 0.7 million of Class A Common Shares.

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 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.

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 $1,000,000. That entity is only required to return that deposit if it fails to comply with certain covenants set out in the Letter of Intent or if it fails to take all reasonable steps to effectuate the transaction that is the subject of the Letter of Intent pursuant to its terms. 

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.

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.

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:

Net Revenue

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.

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

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

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

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.

General and Administrative

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

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.

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:

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:

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.

Indebtedness

The following table summarizes our indebtedness as of March 31, 2022:

As of March 31, 2022, we expected to make future annual principal repayments of the indebtedness set out above as follows:

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.