Notes to Condensed Consolidated Financial
Statements
(in thousands, except share and per share
data)
(Unaudited)
1. 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. Beginning
in 2020, the Company increased its services offered to customers by including monthly subscriptions for accessing its network of electric
vehicles. On April 1, 2021, the Company, through the acquisition of MiMoto Smart Mobility S.r.l, added electric mopeds on its sharing
services offer (See Note 3. MiMoto Smart Mobility S.r.l. – Acquisition).
Founded on a proprietary technology platform, the
Company offers a sharing economy for electric scooters bikes and mopeds. Through its App, Helbiz offers an intra-urban transportation
solution that allows users to instantly rent electric vehicles directly from the Helbiz mobile application. The Company currently has
a strategic footprint in growing markets with offices in New York, Milan, Belgrade and Singapore, with additional operational
teams around the world. The Company currently has electric vehicles operating in the United States and Europe.
During
2021, the Company decided to enter into a new business line: the acquisition, commercialization and distribution of contents including
live sport events. The Company developed a new app, Helbiz Live, separated from the micro-mobility platform. Starting from August 2021,
the Company will broadcast the Italian Serie B Soccer League in the United States, Italy and Serbia.
During
2021, the Company decided to expand its offering to final customers, through its wholly-owned Italian subsidiary, Helbiz Kitchen
Italia S.r.l. In July 2021, the Company launched 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 in an early-stage phase, and it is available through
the micro-mobility platform.
Business Combination and Organization
On August 12, 2021, Helbiz consummated a business
combination, by and among GreenVision Acquisition Corp. (“GRNV”) and its subsidiary, Helbiz Holdings Inc (name of Helbiz,
Inc. as private Company, before August 12, 2021) and Salvatore Palella (as representative of the shareholders of Helbiz Holdings Inc.).
On the Closing Date, GRNV changed its name to Helbiz, Inc. as the name of the entity surviving the business combination.
In connection with the execution of the business
combination, GRNV entered into subscription agreements with multiple investors for an aggregate of 2,650,000 GRNV units at $10.00 per
unit, with each unit consisting of one Class A Common Stock and a warrant to purchase one Class A Common Stock exercisable at $11.50,
for aggregate gross proceeds of $26.5 million (the “PIPE Investment”), of which proceeds $5 million was in the form of cancelation
of Helbiz Holdings Inc. promissory notes. Refer to Note 4. GreenVision Acquisition Corp. – Business Combination, for further
information regarding the Net Asset acquired.
As a result of the aforementioned business combination,
each Helbiz Holdings share issued and outstanding immediately prior to the business combination date was canceled and automatically converted
into the right to receive 4.63 (the “conversion ratio”) GRNV shares of the respective class.
Going Concern
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. Refer to Note 20. Subsequent Events for further details
over the funding activities after September 30, 2021.
The accompanying 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.
Impact of COVID-19
Various governments continue to implement, lift,
and in some regions reinstate restrictions, including business activities and travel restrictions. These restrictions have caused decreased
demand for transportation services as well as decreased earning opportunities for our platform, and disruptions in global supply chains
and significant volatility and disruption of financial markets.
COVID-19 has produced uncertainty around the world,
and it is not possible to predict the COVID-19 pandemic’s cumulative and ultimate impact on our future business operations, results
of operations, financial position, liquidity, and cash flows. The extent of the impact of the pandemic on our business and financial results
will depend largely on future developments, including the duration of the spread of the outbreak and any resurgences of the outbreak or
variants of the virus, both globally and within the United States, the administration, adoption and efficacy of vaccines in the United
States and internationally, the impact on capital, foreign currencies exchange and financial markets, governmental or regulatory orders
that impact our business and whether the impacts may result in permanent changes to our end-users’ behavior, all of which are highly
uncertain and cannot be predicted.
The Company continues to closely monitor the impact
of the COVID-19 pandemic. The Company has concluded that the specific impact is not readily determinable as of the date of these condensed
consolidated financial statements. The condensed consolidated financial statements presented do not include any adjustments that might
result from the outcome of this uncertainty.
2. Significant Accounting Policies and Use of Estimates
Basis of Presentation
These accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article
8 of Regulation S-X pf the SEC. Certain information or footnote disclosures normally included in financial statements prepared in
accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial
reporting. The condensed consolidated balance sheet as of December 31, 2020, included herein was derived from the audited financial
statements as of that date. 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, 2020
included in the S-1 IPO Investment Prospectus, filed on October 27, 2021. The results for the interim periods are not
necessarily indicative of results for the full year.
These accompanying unaudited condensed consolidated
financial statements 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.
In the
opinion of management, these financial statements include all adjustments, which are of a normal recurring nature,
necessary for a fair statement of the financial position, results of operations, comprehensive loss, cash flows and the change in equity
for the periods presented.
Reclassifications
Certain reclassifications have been made to the
prior year’s consolidated financial statements to conform to the current interim financials’ presentation. These reclassifications
had no impact on net loss including stockholders’ deficit or cash flows as previously reported. In detail, the Company reclassified
the Security deposit balance of $416 as of December 31, 2020, from Current assets to Other assets and the Intangible assets balance
of $167 as of December 31, 2020, from Other assets to Intangible assets, net.
Use of Estimates
The preparation of financial statements in conformity
with US GAAP generally requires management to make estimates and assumptions that affect the reported amount of certain assets, liabilities,
revenues, and expenses, and the related disclosure of contingent assets and liabilities. Specific accounts that require management estimates
include determination of common stock 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.
Warrant Liability
The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance
in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing
Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers
whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480,
and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed
to the Company’s own common shares and whether the warrant holders could potentially require “net cash settlement” in
a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires
the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while
the warrants are outstanding.
For issued or modified warrants that meet all of
the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time
of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to
be recorded at their initial fair value on the date of issuance, and subsequently remeasured at each balance sheet date thereafter.
Acquisitions
The Company accounts
for acquisitions of entities or asset groups that qualify as businesses in accordance with ASC 805, “Business Combinations”
(“ASC 805”). The purchase price of the acquisition is allocated to the tangible and intangible assets acquired and liabilities
assumed based on their estimated fair values at the acquisition dates. The excess of the purchase price over those fair values is recorded
as goodwill. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments
to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period
or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are
recorded in the consolidated statements of operations. Refer to Note 3. MiMoto
Smart Mobility S.r.l. – Acquisition, for further information.
Goodwill
Goodwill
represents the excess of the purchase price over the fair value of net assets acquired in a business combination and is allocated to reporting
units expected to benefit from the business combination. The Company tests goodwill for impairment at least annually, in the fourth quarter,
or whenever events or changes in circumstances indicate that goodwill might be impaired.
There
were no impairment indicators for the nine months ended September 30, 2021.
Intangible assets, net
Intangible
assets are carried at cost and amortized on a straight-line basis over their estimated useful lives, which range from one to three years.
The Company tests intangible assets for impairment whenever events or changes in circumstances indicate that intangible assets
might be impaired.
There
were no impairment indicators for the nine months ended September 30, 2021.
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. The new standard is effective for the Company
starting from January 1, 2022. 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 condensed consolidated balance sheets. The Company is currently assessing the impact of this
accounting standard on its shared vehicles revenues and rental leases.
In August 2020, the FASB issued ASU No. 2020-06,
“Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s
Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which simplifies
the accounting for convertible instruments by eliminating the requirement to separate embedded conversion features from the host contract
when the conversion features are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do
not result in substantial premiums accounted for as paid-in capital. By removing the separation model, a convertible debt instrument will
be reported as a single liability instrument with no separate accounting for embedded conversion features. This new standard also removes
certain settlement conditions that are required for contracts to qualify for equity classification and simplifies the diluted earnings
per share calculations by requiring that an entity use the if-converted method and that the effect of potential share settlement be included
in diluted earnings per share calculations. This new standard will be effective for the Company for fiscal years beginning after December
15, 2021, including interim periods within those fiscal years. The Company is currently assessing the impact of adopting this standard
on the condensed consolidated financial statements.
In May 2021, the FASB issued ASU 2021-04, Issuer’s
Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, (“ASU 2021-04”)
which clarifies the accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity
classified after modification or exchange. Specifically, ASU 2021-04 requires the issuer to treat a modification of an equity-classified
warrant as an exchange of the original warrant. The difference between the fair value of the modified warrant and the fair value of the
warrant immediately before modification is then recognized as an issuance cost or discount of the related transaction. ASU 2021-04 is
effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption
permitted. ASU 2021-04 should be applied prospectively to modifications or exchanges occurring after the effective date. Either
the full or modified retrospective adoption method is allowed. The Company is currently assessing the impact of adopting this standard
on the condensed consolidated financial statements.
In October 2021, the FASB issued ASU No. 2021-8,
“Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, creating an exception to the recognition
and measurement principles in ASC 805, Business Combinations. The amendments require an acquirer to use the guidance in ASC 606, Revenue
from Contracts with Customers, rather than using fair value, when recognizing and measuring contract assets and contract liabilities related
to customer contracts assumed in a business combination. In addition, the amendments clarify that all contracts requiring the recognition
of assets and liabilities in accordance with the guidance in ASC 606, such as contract liabilities derived from the sale of nonfinancial
assets within the scope of ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets, fall within the scope of the amended
guidance in ASC 805. This new standard will be effective for the Company for fiscal years beginning after December 15, 2022, including
interim periods within those fiscal years. The Company is currently assessing the impact of adopting this standard on the condensed consolidated
financial statements.
3. MiMoto Smart Mobility S.r.l. – Acquisition
On April 1, 2021, the
Company acquired 100% of the equity interest of MiMoto Smart Mobility S.r.l. (“MiMoto”), a dockless e-moped sharing private
company based in Milan, Italy. The acquisition of MiMoto has been accounted for as a business combination. The purchase price of $12,544
(paid in 1,057,740 shares of the Company’s common stock assuming a retroactive application of the conversion ratio, and $2,155 in
cash ).
The fair value of the
Company’s Common Stocks issued to MiMoto shareholders have been estimated assuming
a “Public Company scenario”. The Company assigned a 100% probability to the mentioned scenario, supported by the issuance
of a Proxy Statement to the SEC by GreenVision, a NASDAQ listed entity. The Company valued the estimated equity value at listing date
using a discount rate, derived from the capital asset pricing model (“CAPM”). On April 1, 2021, the discount rate applied
was 7.4% and the equity value estimate was driven from the trading price of GreenVision stock and expected conversion ratio with Helbiz
common shares. Fair value measurements are highly sensitive to changes in these inputs; significant changes in these inputs would result
in a significantly higher or lower fair value.
The MiMoto purchase
price has been allocated as follows: $1,870 to government relationship, $887 to customer relationship, $664 to assets acquired
and $1,848 to liabilities assumed based on their estimated fair value on the acquisition date, and the excess of $10,971 of the purchase
price over the fair value of net assets acquired was recorded as goodwill. Goodwill is primarily attributable to the expected synergies
and monetization opportunities arising from the acquisition, including the ability to obtain further licenses in the electric sharing
environment and gain efficiencies with the use of MiMoto’s know-how, technology and existing processes. Government relationships
and Customer relationships accounted as Intangible Assets are amortized on a straight-line basis over their estimated useful life, 3
years. Government relationships represent the operating e-mopeds sharing agreements with municipalities, entered by MiMoto in previous
years. Customer relationships represent the customer based owned by MiMoto through its platform.
Amounts
of assets and liabilities recognized as of the acquisition date are provisional and subject to change within the measurement period as
the fair value assessments are finalized.
Acquisition costs were
immaterial and are included in general and administrative expenses in the condensed consolidated statements of operations.
The following table
summarizes the allocation of the fair value of the assets acquired and liabilities assumed at the Closing Date, April 1, 2021.
|
fair value of the assets acquired and liabilities
|
|
|
|
|
|
Government relationships
|
|
$
|
1,870
|
|
|
Customer relationships
|
|
|
887
|
|
|
Other current Assets
|
|
|
169
|
|
|
Cash and cash equivalents
|
|
|
168
|
|
|
Security Deposits
|
|
|
143
|
|
|
Property and Equipment, net
|
|
|
111
|
|
|
Account Receivables
|
|
|
62
|
|
|
Other non current Assets
|
|
|
11
|
|
|
Total identifiable assets acquired
|
|
$
|
3,421
|
|
|
Financial liabilities
|
|
|
(920
|
)
|
|
Other liabilities
|
|
|
(928
|
)
|
|
Total Liabilities assumed
|
|
$
|
(1,848
|
)
|
|
Goodwill
|
|
|
10,971
|
|
|
Total acquisition consideration
|
|
$
|
12,544
|
|
The results of operations for the acquired business
have been included in the condensed consolidated statements of operations for the period after the Company's acquisition of MiMoto: April
1, 2021.
Revenues and Net Loss of MiMoto included in the
Company’s consolidated income statement from the acquisition date through September 30, 2021 are as follows.
|
Schedule of consolidated income statement
|
|
|
|
|
|
|
|
For the period
April 1, 2021 to
September 30, 2021
|
|
|
Revenues
|
|
$
|
676
|
|
|
Net Loss
|
|
|
(976
|
)
|
Pro forma consolidated revenues and earnings for
the three and nine months ended September 30, 2021, and September 30, 2020, calculated as if MiMoto had been acquired as of January 1,
2020 are as follows.
|
MiMoto had been acquired
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Revenues
|
|
$
|
4,702
|
|
|
$
|
2,351
|
|
|
$
|
8,885
|
|
|
$
|
3,656
|
|
|
Net Loss
|
|
|
(28,316
|
)
|
|
|
(5,574
|
)
|
|
|
(51,226
|
)
|
|
|
(15,936
|
)
|
The
pro forma adjustments reflect the transaction accounting adjustments, in accordance with U.S. GAAP. No autonomous entity adjustments have
been identified and recorded as pro forma adjustments. Additionally, the pro forma adjustments do not reflect management’s adjustments
for potential synergies and dis-synergies. The pro forma combined financial statements do not necessarily reflect what the combined results
of operations would have been had the acquisition occurred on the dates indicated. In detail, the pro forma adjustments are mainly related
to the amortization of Government and Customer relationships and alignment of MiMoto accounting policies to the Company’s
accounting policies. They also may not be useful in predicting the future results
of operations of the combined company. The actual results of operations may differ significantly from the pro forma amounts reflected
herein due to a variety of factors.
4. GreeVision Acquisition Corp. – Business combination
On August 12, 2021 (the “Closing Date”),
the business combination between Helbiz and GRNV, and the PIPE Investment were closed. The business combination was accounted for as a
reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with ASC 805-10-55-12. Based on the analysis
performed GRNV is treated as the “acquired” company for financial reporting purposes. This determination was based primarily
on Helbiz Holdings having the ability to appoint a majority of the initial Board of the combined entity, Helbiz Holdings's senior management
comprising the majority of the senior management of the combined company, and the ongoing operations of Helbiz Holdings comprising the
ongoing operations of the combined company. Accordingly, for accounting purposes, the business combination was treated as the equivalent
of Helbiz issuing shares for the net assets of GRNV, accompanied by a recapitalization.
The Company’s net assets acquired through the consummation
of the business combination consisted of:
|
Schedule of consummation of the business combination
|
|
|
|
|
|
|
|
August 12, 2021
|
|
|
Cash and cash equivalents
|
|
$
|
20,281
|
|
|
Subscription receivable – PIPE Investment in the form of cancelation of Helbiz Holdings promissory notes
|
|
|
5,000
|
|
|
Prepaid expenses and other current assets
|
|
|
739
|
|
|
Liability Warrants
|
|
|
(1,958
|
)
|
|
Liabilities toward Helbiz
|
|
|
(570
|
)
|
|
Accounts payable and accrued expenses
|
|
|
(54
|
)
|
|
Net Asset Acquired, excluding Helbiz transaction costs
|
|
$
|
23,438
|
|
|
Helbiz transaction costs
|
|
|
(3,046
|
)
|
|
Net Asset Acquired from the business combination
|
|
|
20,392
|
|
The Liabilities assumed by Helbiz as result
of the business combination are mainly related to the Warrants classified as Liabilities and amounted to $1,958 on August 12, 2021. The
Warrant liabilities are composed of the following:
|
|
(a)
|
Private Warrants issued
to GRNV Sponsors (“GRNV Sponsor Private Warrants”). Each Private Warrant is exercisable to purchase one share of Class A common
stock at an exercise price of $ per share, (see Note 13. Financial liabilities). On August 12, 2021, the fair value of these
Private Warrants recorded as a liability were $.
|
|
|
(b)
|
287,500 Private Warrants issued
to GRNV’s underwriter, I-Bankers Securities, Inc. (“GRNV Underwriter Private Warrants”). Each Private Warrant is exercisable
to purchase one share of Class A common stock at an exercise price of $12.00 per share, (see Note 13. Financial liabilities). The
warrants are exercisable for cash or on a cashless basis, at the holder’s option. On August 12, 2021, the fair value of the 287,500
Private Warrants recorded as liability was $129.
|
5. Revenue Recognition
The table below shows the revenues breakdown for
the three and nine months ended on September 30, 2021, and on September 30, 2020.
|
Revenue recognition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Mobility revenues
|
|
$
|
3,890
|
|
|
$
|
2,013
|
|
|
$
|
7,888
|
|
|
$
|
2,671
|
|
|
Pay per ride
|
|
|
3,093
|
|
|
|
1,689
|
|
|
|
6,192
|
|
|
|
2,145
|
|
|
Subscriptions
|
|
|
541
|
|
|
|
195
|
|
|
|
1,156
|
|
|
|
209
|
|
|
Partnership revenues
|
|
|
256
|
|
|
|
129
|
|
|
|
540
|
|
|
|
317
|
|
|
Live Revenue
|
|
$
|
760
|
|
|
|
—
|
|
|
$
|
760
|
|
|
|
—
|
|
|
Commercialization of Media rights
|
|
|
671
|
|
|
|
—
|
|
|
|
671
|
|
|
|
—
|
|
|
Subscriptions
|
|
|
89
|
|
|
|
—
|
|
|
|
89
|
|
|
|
—
|
|
|
Other revenues
|
|
$
|
52
|
|
|
$
|
—
|
|
|
$
|
52
|
|
|
$
|
205
|
|
|
Total Revenue
|
|
$
|
4,702
|
|
|
$
|
2,013
|
|
|
$
|
8,700
|
|
|
$
|
2,876
|
|
The table below shows the Deferred revenues breakdown
from December 31, 2020, to September 30, 2021.
|
Deferred revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred revenues
|
|
December
31,
2020
|
|
|
Additions
|
|
|
Utilization
|
|
|
June
30, 2021
|
|
|
Additions
|
|
|
Utilization
|
|
|
September
30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobility - Prepaid Customer wallet
|
|
$
|
89
|
|
|
|
1,627
|
|
|
|
(1,162
|
)
|
|
|
554
|
|
|
|
1,480
|
|
|
|
(1,087
|
)
|
|
|
947
|
|
|
Mobility - Partnership
|
|
|
57
|
|
|
|
189
|
|
|
|
(25
|
)
|
|
|
221
|
|
|
|
—
|
|
|
|
(71
|
)
|
|
|
150
|
|
|
Live - Media Rights
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
588
|
|
|
|
—
|
|
|
|
588
|
|
|
Total
|
|
|
146
|
|
|
$
|
1,816
|
|
|
$
|
(1,187
|
)
|
|
$
|
775
|
|
|
$
|
2,068
|
|
|
$
|
(1,158
|
)
|
|
$
|
1,685
|
|
Deferred revenues related to prepaid customer wallet
will be recorded as Revenues when riders will take a ride or make a subscription, while deferred revenues related to Media rights will
be mainly recorded as Revenues in the three months ended December 31, 2021.
Helbiz Mobility
The Company generates revenue from single-use ride
fees paid by riders of owned e-bikes, e-mopeds and e-scooters. The Company also generated revenues from partnership related to marketing
activities and co-branding of Helbiz vehicles.
Helbiz Live
Starting
from July 2021, the Company recorded revenues related to: (i) the commercialization and distribution of media contents, and (ii)
user subscriptions.
The commercialization and distribution of media
contents
The Company evaluated multi-year media distribution
agreements entered into in Fiscal 2021. The Company concluded that it acts as the principal in those agreements, because the Company:
(i) has inventory risk, (ii) has discretion in establishing the prices, and (iii) obtained control over the media content rights.
The Company recognizes revenue over the period
with which the content is distributed. In detail, the Company identified one performance obligation related to those agreements: the delivery
of media content. The Company recognizes revenues ratably over the licensing period which correlates with the period the media content
is available.
User Subscriptions
The
Company records revenues related to the monthly and yearly subscriptions. In detail, Helbiz Media entered into contracts with customers
every time they accept the Terms of Conditions (“ToC”), included in the Helbiz Live App, and pay the monthly or annual fees. The
ToC defines the fees that the Company charges customers for each subscription, each party’s rights and obligations regarding the
services to be transferred and payment terms. The performance obligation related to the mentioned contract is represented by the availability
of the media contents to the final customer. The Company recognizes revenues over time by measuring the progress of occurrence
of the media contents, toward complete satisfaction of the performance obligation.
6. Contract assets
As
of September 30, 2021, contract assets amounted to $2,367 are mainly composed of the LNPB audiovisual rights to broadcast the 390 Serie
B regular season games for the next three seasons. For those contracts entered with LNPB, the
Company recorded $2,694 in Cost of revenues for the three and nine months ended on September 30, 2021.
7. Prepaid and other current assets
Prepaid and other current assets consist of the
following:
|
Schedule of Prepaid and other current assets
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
D&O Insurance Coverage
|
|
$
|
4,861
|
|
|
$
|
—
|
|
|
VAT
|
|
|
1,443
|
|
|
|
169
|
|
|
Prepaid
|
|
|
1,126
|
|
|
|
671
|
|
|
Other current assets
|
|
|
612
|
|
|
|
326
|
|
|
Total prepaid and other current assets
|
|
$
|
8,042
|
|
|
$
|
1,166
|
|
D&O Insurance coverage is related to a one-year
agreement entered with a third party on August 12, 2021.
8. Property and equipment, net
Property and equipment consist of the following:
|
Property and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Useful Life
|
|
|
September 30,
|
|
|
December 30,
|
|
|
|
|
(in years)
|
|
|
2021
|
|
|
2020
|
|
|
Rental e-scooters
|
|
|
1-1.5
|
|
|
$
|
7,084
|
|
|
$
|
4,390
|
|
|
Rental e-bikes
|
|
|
2
|
|
|
|
401
|
|
|
|
703
|
|
|
Rental e-mopeds
|
|
|
4
|
|
|
|
453
|
|
|
|
—
|
|
|
Furniture, fixtures, and equipment
|
|
|
7-5
|
|
|
|
1,084
|
|
|
|
545
|
|
|
Computers and software
|
|
|
3
|
|
|
|
966
|
|
|
|
875
|
|
|
Leasehold improvements
|
|
|
Note 1
|
|
|
|
679
|
|
|
|
81
|
|
|
Total property and equipment, gross
|
|
|
|
|
|
|
10,667
|
|
|
|
6,594
|
|
|
Less: accumulated depreciation
|
|
|
|
|
|
|
(6,467
|
)
|
|
|
(2,871
|
)
|
|
Total property and equipment, net
|
|
|
|
|
|
$
|
4,200
|
|
|
$
|
3,723
|
|
Note 1 — Leasehold improvements are amortized
on a straight-line basis over the shorter of the remaining term of the lease, or the useful life of the assets.
The Company recorded in Cost of Revenues,
a loss on disposal for Rental vehicles of $23 and $261 for the three and nine months ended on September 30, 2021, and $185 and $692 for
the three and nine months ended on September 30, 2020.
Depreciation expense was $1,531 and $4,391 for
the three and nine months ended on September 30, 2021, and $528 and $1,206 for the three and nine months ended on September 30, 2020.
9. Intangible assets, net
Intangible assets consist of the following:
|
Intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Government Relationships
|
|
|
1,831
|
|
|
|
—
|
|
|
Customer Relationships
|
|
|
869
|
|
|
|
—
|
|
|
Licenses
|
|
|
618
|
|
|
|
438
|
|
|
Other Intangible assets
|
|
|
50
|
|
|
|
44
|
|
|
Total Intangible assets, Gross
|
|
$
|
3,368
|
|
|
$
|
482
|
|
|
Less: accumulated amortization
|
|
|
(980
|
)
|
|
|
(315
|
)
|
|
Total Intangible assets, net
|
|
$
|
2,388
|
|
|
$
|
167
|
|
Government relationships and customer relationships
are related to the MiMoto acquisition, refer to Note 3. MiMoto Smart Mobility S.r.l. – Acquisition, for further information.
The following table summarizes the amortization
expenses for the three and nine months ended on September 30, 2021, and for the three and nine months ended on September 30, 2020.
|
summarizes the amortization
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Cost of revenues
|
|
$
|
249
|
|
|
$
|
75
|
|
|
$
|
643
|
|
|
$
|
199
|
|
|
Sales & marketing
|
|
|
72
|
|
|
|
—
|
|
|
|
146
|
|
|
|
—
|
|
|
General & administrative
|
|
|
2
|
|
|
|
1
|
|
|
|
6
|
|
|
|
2
|
|
|
Total Amortization expenses
|
|
$
|
323
|
|
|
$
|
76
|
|
|
$
|
795
|
|
|
$
|
201
|
|
10. Other Assets
Other assets consist of the following:
|
Other assets
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Security Deposit
|
|
|
1,106
|
|
|
|
418
|
|
|
Other
|
|
|
110
|
|
|
|
33
|
|
|
Total Other Assets
|
|
$
|
1,216
|
|
|
$
|
451
|
|
11. Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following:
|
Accrued expenses and other current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
Payroll Liabilities
|
|
$
|
2,447
|
|
|
$
|
1,007
|
|
|
Other Miscellaneous Accruals
|
|
|
381
|
|
|
|
66
|
|
|
Total accrued expenses and other current liabilities
|
|
$
|
2,828
|
|
|
$
|
1,073
|
|
12. Liability warrants
The Company’s Warrants, classified as a liability,
consisted of the following:
|
Schedule of Warrants, classified as a liability
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
GRNV Sponsor Private Warrants
|
|
$
|
|
|
$
|
|
|
2020 Warrant Purchase Agreement
|
|
|
—
|
|
|
|
6,439
|
|
|
Total Liability warrants
|
|
$
|
5,330
|
|
|
$
|
6,439
|
|
The
table below shows the impact on the statements of operations, Change in fair value of warrant liability account,
related to the Liability warrants for the three and nine months ended September 30, 2021, and September 20, 2020.
|
Schedule of liability warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
Change in fair value of warrant liability
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
2020 Warrant Purchase Agreement – converted on March 26, 2021
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(4,127
|
)
|
|
$
|
—
|
|
|
2019 Warrant Purchase Agreement – converted on June 25, 2020
|
|
|
—
|
|
|
|
(1,702
|
)
|
|
|
—
|
|
|
|
(579
|
)
|
|
GRNV Sponsor Warrants
|
|
|
)
|
|
|
|
|
|
)
|
|
|
|
|
GRNV Underwriter’s Warrants
|
|
|
(4,537
|
)
|
|
|
—
|
|
|
|
(4,537
|
)
|
|
|
—
|
|
|
Total Change in fair value of warrant liability
|
|
$
|
(8,038
|
)
|
|
|
(1,702
|
)
|
|
$
|
(12,165
|
)
|
|
$
|
(579
|
)
|
The following tables summarize the fair value hierarchy
of the Company’s warrants carried at fair value on a recurring basis as of September 30, 2021, and December 31, 2020. No Financial
liabilities, net was measured at fair value on a recurring basis as of September 30, 2021, and December 31, 2020.
|
fair value on a recurring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021
|
|
|
|
|
Fair Value
|
|
|
Expected term
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
2020 Warrant Purchase Agreement
|
|
$
|
2.54 each
|
|
|
|
4.36
|
|
|
$
|
5,330
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
5,330
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
5,330
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,330
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020
|
|
|
|
|
Fair Value
|
|
|
Expected term
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
2020 Warrant Purchase Agreement
|
|
$
|
26.19 each
|
|
|
|
N/A
|
|
|
$
|
6,439
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
6,439
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
$
|
6,439
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,439
|
|
GRNV Sponsor Private Warrants
The GRNV Sponsor Private Warrants are
identical to the Public Warrants (refer to Note 14. Common stock) underlying the Units sold in the GRNV Initial Public Offering
and PIPE transaction. Additionally, the GRNV Sponsor Private Warrants will be exercisable on a cashless basis and be non-redeemable so
long as they are held by the initial purchasers or their permitted transferees. If the GRNV Sponsor Private Warrants are held by someone
other than the initial purchasers or their permitted transferees, the GRNV Sponsor Private Warrants will be redeemable by the Company
and exercisable by such holders on the same basis as the Public Warrants.
The GRNV Sponsor Private Warrants are accounted
as liability in accordance with ASC 815-40 and categorized as Level 3 financial liabilities for the absence of an active market. 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 Underwriter Private Warrants
The
Company assumed the 287,500 GRNV Underwriter Private Warrants on August 12, 2021, as a result of the business combination with GRNV. On
September 21, 2021, the investor exercised the 287,500 warrants on a cashless basis, and Helbiz issued 165,290 Class A Common Shares.
The fair value of each GRNV Underwriter Private Warrants was estimated at September 21, 2021, to be $16.23, based on an expected term
of 3.17 years. At exercise date, the Company recorded, as Other income (expense) — Change in fair value of warrant
liability, a
loss amounted to $4,537.
2020 Warrant Purchase Agreements (5% Warrants)
On
March 26, 2021, the investors converted the 2020 Warrant Purchase Agreement into 232,141 Common Shares. At conversion date, the Company
recorded, as Other income (expense) — Change in fair value of warrant liability,
$4,127 on the condensed statement of operations for the nine months
ended September 30, 2021. The Company calculated the fair value adjustment of the warrant based on PWERM estimated as of March 31, 2021.
13. Financial liabilities, net
The Company’s Financial liabilities consisted
of the following:
|
Financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate
|
|
|
Maturity Date
|
|
|
30-Sept-21
|
|
|
31-Dec-20
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
Non Current
|
|
|
Current
|
|
|
Non Current
|
|
|
Secured Long Term Loan, net (1)
|
|
|
12.7%
|
|
|
|
12/1/2023
|
|
|
|
—
|
|
|
|
12,838
|
|
|
|
—
|
|
|
|
—
|
|
|
Long Term Loan, net (1) (2)
|
|
|
4.5%
|
|
|
|
11/30/2026
|
|
|
|
535
|
|
|
|
3,259
|
|
|
|
—
|
|
|
|
3,941
|
|
|
Long Term Loan, net (1) (2)
|
|
|
5.4%
|
|
|
|
03/31/2024
|
|
|
|
807
|
|
|
|
1,359
|
|
|
|
—
|
|
|
|
—
|
|
|
Revolving Credit (1)
|
|
|
9.0%
|
|
|
|
3/15/2021
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,694
|
|
|
|
—
|
|
|
Promissory Notes (1)
|
|
|
18.0%
|
|
|
|
4/30/2021
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
587
|
|
|
|
—
|
|
|
Long Term Loan, net (1) (2) (3)
|
|
|
2.7%
|
|
|
|
8/31/2024
|
|
|
|
87
|
|
|
|
280
|
|
|
|
—
|
|
|
|
—
|
|
|
Promissory Notes (1)
|
|
|
8.05
|
|
|
|
8/31/2021
|
|
|
|
—
|
|
|
|
—
|
|
|
|
429
|
|
|
|
—
|
|
|
Long Term Loan, net (1) (2) (3)
|
|
|
2.4%
|
|
|
|
11/22/2025
|
|
|
|
74
|
|
|
|
391
|
|
|
|
—
|
|
|
|
—
|
|
|
Other Promissory Notes (1)
|
|
|
3.0%
|
|
|
|
12/31/2022
|
|
|
|
—
|
|
|
|
88
|
|
|
|
—
|
|
|
|
87
|
|
|
Long Term Loan, net (1) (2) (3)
|
|
|
3.5%
|
|
|
|
4/19/2022
|
|
|
|
82
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Other Current financial debts
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
74
|
|
|
|
—
|
|
|
|
151
|
|
|
|
—
|
|
|
Total Financial liabilities, net
|
|
|
|
|
|
|
|
|
|
|
1,659
|
|
|
|
18,215
|
|
|
|
2,861
|
|
|
|
4,028
|
|
|
|
(1)
|
The amounts include principal and accumulated interests.
|
|
|
(2)
|
The currency of those loans is Euro.
|
|
|
(3)
|
Loans agreement entered by MiMoto Smart Mobility S.r.l. before the acquisition occurred on April 1, 2021.
|
The table below shows the impact on the statements
of operations, Interest expense, net account, related to the financial liabilities for the three and nine months ended September
30, 2021, and September 30, 2020.
|
Schedule of financial liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Secured Long Term Loan
|
|
$
|
438
|
|
|
|
—
|
|
|
$
|
892
|
|
|
|
—
|
|
|
Promissory Notes
|
|
|
2
|
|
|
|
319
|
|
|
|
402
|
|
|
|
425
|
|
|
Long Term Loans
|
|
|
122
|
|
|
|
—
|
|
|
|
314
|
|
|
|
—
|
|
|
Revolving Credit
|
|
|
—
|
|
|
|
31
|
|
|
|
28
|
|
|
|
91
|
|
|
Other Current financial debts
|
|
|
—
|
|
|
|
22
|
|
|
|
—
|
|
|
|
71
|
|
|
Convertible Debts
|
|
|
—
|
|
|
|
39
|
|
|
|
—
|
|
|
|
490
|
|
|
Total Interest expenses
|
|
$
|
562
|
|
|
|
411
|
|
|
$
|
1,636
|
|
|
|
1,077
|
|
12.7% Secured Long Term Loan, net
On March 23, 2021, the Company entered into a $15,000
secured term loan facility with an institutional lender. The loan agreement has a maturity date of December 1, 2023, with a prepayment
option for the Company after 12 months. At inception, the company prepaid interests and an insurance premium for $2,783. As of September
30, 2021, the Company accounted the loan as Non-Current Financial liabilities net of intermediary fees and bank fees, and the $436
and $890 in interest expenses respectively for the three and nine months ended on September 30, 2021, as Interest expenses, net.
8% Promissory note, issued in 2021
On
June 18, 2021, and July 1, 2021, the Company entered into two unsecured promissory note agreements with an Helbiz shareholder for cumulative
proceeds of $5,000. On August 12, 2021, the Company consummated the business combination with GRNV and concurrently settle the
$5,000 debt through the issuance of 500,000 GreenVision PIPE units. The interest
expenses recorded for the three and nine months ended on September 30, 2021 are immaterial.
0% CEO Promissory notes – Related
Party
During May and June 2021, Helbiz Chief Executive
Officer, has lent Helbiz, funds on an interest-free basis for cumulative gross proceeds of $2,010 through Promissory Notes. The loan notes
are payable on the earlier of (i) the day of the completion of the business combination between Helbiz and GRNV, (ii) August 19, 2021,
or (iii) completion of a capital raise in either form of debt or equity of a minimum of $5,000.
On August 16, 2021, the Company repaid the principal
of the 0% CEO Promissory Notes.
4.5% Long-term loan, net
On November 5, 2020, the Company obtained a loan
for Euro 3,500 through its wholly-owned Italian subsidiary. The counterparty is an Italian bank, and the loan is guaranteed by the Italian
Government via “Fondo Centrale di Garanzia per le PMI”. As of December 31, 2020, the Company accounted the loan as Non-Current
Financial liabilities net of intermediary fees and bank fees. As of September 30, 2021, the Company accounted the loan between Current
and Non-Current Financial liabilities based on the repayment terms; during the three and nine months ended September 30, 2021,
no repayment of the principal has been made. As a result, the decrease of the net carrying value is mainly related to the change in the
currency rate as of September 30, 2021, and December 31, 2020.
The Company recorded respectively $69 and $202
in interest expenses for the three and nine months ended on September 30, 2021, as Interest expenses, net.
5.4% Long-term loan, net
On March 15, 2021, the Company obtained a loan
for Euro 2,000 through its wholly-owned Italian subsidiary. The counterparty is an Italian bank, and the loan is guaranteed by the Italian
Government via “Fondo Centrale di Garanzia per le PMI”. As of September 30, 2021, the Company accounted the loan between Current
and Non-Current Financial liabilities based on the repayment terms; during the three and nine months ended September 30, 2021 no
repayment of the principal has been made.
The Company recorded respectively $102 and $50
in interest expenses for the three and nine months ended on September 30, 2021, as Interest expenses, net.
2.75% Long-term loan, net – MiMoto
financial liability
On May 31, 2018, MiMoto obtained a loan for Euro
450 from an Italian bank. The loan is guaranteed by the Italian Government via “Fondo Centrale di Garanzia per le PMI”. On
April 1, 2021, as a result of the MiMoto acquisition, the Company assumed the fair value of the loan amounted to Euro 316, approximately
$372. No repayment of the principal has been made by the Company during the nine months ended September 30, 2021. The interest expenses
recorded for the three and nine months ended on September 30, 2021, are immaterial.
2.4% Long-term loan, net – MiMoto
financial liability
On May 21, 2020, MiMoto entered in a loan agreement
with an Italian bank, for Euro 400. The loan is guaranteed by the Italian Government via “Fondo Centrale di Garanzia per le PMI”.
On April 1, 2021, the Company assumed the MiMoto financial liability amounted to Euro 400, approximately $472. No repayment of the principal
has been made by the Company during the nine months ended September 30, 2021. The interest expenses recorded for the three and nine months
ended on September 30, 2021, are immaterial.
3.5 % Long-term loan, net – MiMoto
financial liability
On October 17, 2017, MiMoto obtained a loan for
Euro 200 with an Italian bank, and the loan is guaranteed by the Italian Government via “Fondo Centrale di Garanzia per le PMI”.
On April 1, 2021, as a result of the MiMoto acquisition, the Company assumed the fair value of the loan amounted to Euro 65, approximately
$76. No repayment of the principal has been made by the Company during the nine months ended September 30, 2021. The interest expenses
recorded for the three and nine months ended on September 30, 2021, are immaterial.
8% Promissory Notes, issued in 2020
On March 4, 2020, and on April 3, 2020, the Company
entered into two 8% unsecured promissory note agreements for cumulative proceeds of $400. The Company recorded respectively $1 and $17
in interest expenses for the three and nine months ended on September 30, 2021, as Interest expenses, net.
On August 26, 2021, the Company fully repaid the
two 8% unsecured promissory notes.
Revolving Credit
In March 2018, the Company entered into an unsecured
Senior Revolving Credit Agreement (the “Revolving Credit”). On March 24, 2021, the Company re-paid the Revolving Credit and
the accumulated interests.
18% Promissory Notes
On May 25, 2020, the Company entered into two 18%
promissory note agreements. The two promissory notes have a cumulative principal of $2,000. On March 24, 2021, the Company early re-paid
the remaining outstanding balance, including accumulated interests.
14. Common Stock
As of September 30, 2021, 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.
Public Warrants
As of September 30, 2021, the Public Warrants outstanding
are 8,400,000 with a strike price of $11.50 and they became exercisable on August 12, 2021. On September 23, 2021, the Public Warrants
became exercisable for cash by the effectiveness of a registration statement covering the shares of Class A common stock issuable upon
exercise of the Public Warrants.
The
Public Warrants will expire five 5 years from the consummation of a Business Combination or earlier upon redemption or liquidation.
The Company may call the warrants for redemption,
in whole and not in part, at a price of $0.01 per warrant:
|
|
●
|
at any time while the warrants are exercisable,
|
|
|
●
|
upon not less than 30 days’ prior written notice of redemption to each warrant holder,
|
|
|
●
|
if, and only if, the reported last sale price of the Class A shares of common stock equals or exceeds $18.00 per share, for any 20 trading days within a 30-trading day period ending on the third business day prior to the notice of redemption to warrant holders, and
|
|
|
●
|
if, and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.
|
If the Company calls the Public Warrants for redemption,
management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,”
as described in the warrant agreement. The exercise price and number of shares of common stock issuable upon exercise of the warrants
may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization,
merger or consolidation. However, the warrants will not be adjusted for issuances of shares of common stock at a price below its exercise
price. Additionally, in no event will the Company be required to net cash settle the warrants.
15. Share based compensation
2020 Equity Incentive Plan
On April 1, 2020, the Company adopted the 2020
Equity Incentive Plan (2020 Plan) under which the Company may issue options to purchase its common stock to selected employees, officers,
and director of the Company. Upon original approval, the Company reserved 1,600,000 shares of the Company’s common stock for issuance
under the 2020 Plan. The entire 2020 Plan has been granted by previously hired employees, officers, and directors. Starting from April
1st 2021, Portion of the plan become vested. On August 12, 2021, the 2020 Plan has been assumed by GRNV and converted into
7,409,701 options to acquire shares of GRNV’s Class A Common Shares.
The table
shows further details regarding the 2020 Plan as of December 31, 2020, and September 30, 2021, considering a retroactive application of
the conversion ratio.
|
Schedule of Equity Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Options
under the
2020 Plan
|
|
|
Strike
Price
|
|
|
Number of
Options
granted
|
|
|
Number of
Options
vested
|
|
|
Number of
Options
unvested
|
|
|
2020 Plan, as of December 31, 2020
|
|
|
|
7,415,262
|
|
|
$
|
2.16
|
|
|
|
7,409,701
|
|
|
|
0
|
|
|
|
7,409,701
|
|
|
2020 Plan, as of September 30, 2021
|
|
|
|
7,415,262
|
|
|
|
2.16
|
|
|
|
7,400,362
|
|
|
|
4,195,996
|
|
|
|
3,204,367
|
|
The Company recorded stock-based compensation expenses
in the consolidated statements of operations for the three and nine months ended September 30, 2021, and September 30, 2020, as follows.
|
Schedule of stock-based compensation
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Cost of revenue
|
|
$
|
5
|
|
|
|
12
|
|
|
$
|
22
|
|
|
$
|
24
|
|
|
Research and development
|
|
|
67
|
|
|
|
236
|
|
|
|
372
|
|
|
|
472
|
|
|
Sales and marketing
|
|
|
47
|
|
|
|
170
|
|
|
|
261
|
|
|
|
340
|
|
|
General and administrative
|
|
|
324
|
|
|
|
1,170
|
|
|
|
1,818
|
|
|
|
2,340
|
|
|
Total stock-based compensation expense for the 2020 Plan
|
|
$
|
443
|
|
|
|
1,588
|
|
|
$
|
2,473
|
|
|
$
|
3,176
|
|
2020 CEO Performance Award
On April 1, 2020, the Company adopted the 2020
CEO Performance Award under which the Company issued options to purchase its common stock to its CEO and Founder, Salvatore Palella. The
Company reserved 600,000 shares of the Company’s common stock for issuance under the 2020 CEO Performance Award. Under the 2020
CEO Performance Award, nonqualified stock options are granted at the IPO price. The Company considers August 12, 2021, as the Grant Date
of the 2020 CEO Performance Award.
The table
shows further details regarding the 2020 CEO Performance Award as of September 30, 2021.
|
Schedule of performance Award
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Options
under the
plan
|
|
Strike
Price
|
|
Number of
Options
granted
|
|
Number of
Options
vested
|
|
Number of
Options
unvested
|
|
|
CEO Performance Award as of September 30, 2021.
|
|
|
|
*600,000
|
|
|
$
|
8.14
|
|
|
|
600,000
|
|
|
|
0
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
The 600,000
options are divided in 20 different tranches composed by 30,000 options each.
|
The 2020 CEO Performance Awards vests upon the
satisfaction of the market conditions. In detail, the market conditions will be satisfied in 20 different tranches, with each related
to a certain Market capitalization Milestone. The lowest tranche is $500 million the highest is $100 billion; each of the twenty tranches
has 30,000 options to buy 30,000 Class A common shares.
The Company evaluated the fair value of each tranche
of the award incorporating all aspects of the terms and conditions, probability of vesting, and the derived service period at the date
of grant. In detail, the Company estimated the fair value of each tranche using a Monte Carlo simulation and the following assumptions.
|
Schedule of Monte Carlo assumptions.
|
|
|
|
|
|
|
August 12,
2021 – Grant Date
|
|
|
Expected volatility
|
|
|
66.8
|
%
|
|
|
Expected return (risk-free rate)
|
|
|
0.82
|
%
|
|
|
Time to maturity in years
|
|
|
20.00
|
|
|
|
Trading days per year
|
|
|
251
|
|
|
Based on the above, the cumulative fair value
of the 20 tranches of the awards was estimated at the date of grant, to be $3,586. In detail, the weighted-average period over which compensation
will be recorded and the weighted-average fair value resulted from the Monte Carlo simulation were 10.75 years and $5.98, respectively;
considering that the highest market milestone has a derived service period of 17.54 years.
As a result, the Company calculated the fair
value of each tranche and the related compensation costs will be recorded on a straight-line basis between the grant date and the estimated
vesting date of each tranche.
The
Company recorded stock-based compensation expenses for the 20 tranches amounted to $55 in the General and administrative
account, for the three and nine months ended September 30, 2021.
Stock Options granted to the independent board members
On
August 12, 2021, the Company issued options to purchase its common stock to its independent board members: Lee Stern, Guy Adami and Kimberly
Wilford. The Company reserved 225,000 shares of the Company’s common stock
for issuance under those agreements. Based on the three agreements, nonqualified stock options are granted at $8.14 (closing price on
August 12, 2021). The service condition is satisfied over a period of one year, and the options will vest in equal amount of 56,250 on
a quarterly basis.
The fair value of the stock option assigned to
the three independent board members was estimated at August 12, 2021, to be $1.55, using the modified Black-Scholes option pricing model
and the following assumptions:
|
Schedule of fair value of the stock option
|
|
|
|
|
|
August 12,
2021 – Grant Date
|
|
Expected volatility
|
|
|
66.8
|
%
|
|
Risk-free interest rate
|
|
|
0.10
|
%
|
|
Expected term (years)
|
|
|
1.00
|
|
The
Company recorded stock-based compensation expenses amounted to $47 in the General and administrative account, for
the three and nine months ended September 30, 2021, no compensation costs have been recorded for the three and nine months ended September
30, 2020.
Common Shares issued in exchange of services received
During
the nine months ended September 30, 2021, and September 30, 2020, the Company issued 396,226 and 66,186 Class A Common Shares to Company’s
vendors, respectively; in exchange for services rendered to the Company, the number of common shares issued have been adjusted considering
a retroactive application of the conversion ratio.
A portion of the Common Shares issued during the
first nine months of 2021 and 2020 — 5,720 and 52,574 Common Shares, respectively — are related to a financial advisor for
services rendered in conjunction with private placements. The Company allocated the fair value of the Common Shares issued to the Placement
Agent, as discount of the gross proceeds received for the private placement transaction. During the nine months ended September 30, 2021,
and September 30, 2020, Placement Agent fees paid by Common Shares are $34 and $177, respectively and they were recorded as reduction
of Sales of Common Shares.
The remaining 388,472 Common Shares issued during
the first nine months of 2021 and the 13,162 issued during the first nine months of 2020 have been issued to Company’s lawyers,
financial advisors, marketing and communication consultants. The Company recorded those stock-based compensation expenses to those consultants
in the condensed consolidated statements of operations, based on their fair value as below.
|
stock-based compensation expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Sales and marketing
|
|
|
1,160
|
|
|
|
—
|
|
|
|
1,160
|
|
|
|
65
|
|
|
General and administrative
|
|
|
2,599
|
|
|
|
—
|
|
|
|
2,697
|
|
|
|
—
|
|
|
Total stock-based compensation expense for services received
|
|
$
|
3,759
|
|
|
|
—
|
|
|
$
|
3,857
|
|
|
$
|
65
|
|
16. Commitments and Contingencies
The Company entered into various non-cancellable
operating lease agreements for office facilities, Permit and brand licensing, and corporate housing with lease periods expiring through
2023. These agreements require the payment of certain operating expenses, such as taxes, repairs and insurance and contain renewal and
escalation clauses. Rent expense under these agreements is recognized on a straight-line basis.
Future annual minimum lease payments as of September
30, 2021, are as follows:
|
minimum lease payments
|
|
|
|
|
|
Amount
|
|
|
Year ending December 31:
|
|
|
|
|
|
|
|
Remainder of 2021
|
|
|
$
|
1,418
|
|
|
|
2022
|
|
|
|
1,520
|
|
|
|
2023
|
|
|
|
508
|
|
|
|
Thereafter
|
|
|
|
34
|
|
|
|
Total
|
|
|
$
|
3,479
|
|
Rent expense under operating leases was $663 and
$1,782 for the three and nine months ended on September 30, 2021, and $339 and $877 for the three and nine months ended on September 30,
2020. The terms of the leases provide for rental payments on a monthly basis and 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.
Helbiz Live
In August 2021 the Company launched Helbiz Live,
its streaming media content offering, in conjunction with the beginning of the 2021-2022 season of the Italian Serie B soccer league.
In connection with the launch of Helbiz Live,
Helbiz will bear the following payments:
|
Schedule Helbiz payments
|
|
|
|
|
|
|
|
|
Amount
|
|
Year ending December 31:
|
|
|
|
|
|
|
Remainder of 2021
|
|
|
$
|
5,246
|
|
|
2022
|
|
|
|
16,841
|
|
|
2023
|
|
|
|
17,085
|
|
|
Thereafter
|
|
|
|
8,833
|
|
|
Total
|
|
|
$
|
48,005
|
|
17. Net Loss Per Share
Net
income (loss) per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the
period. As a result of the business combination, the Company has retroactively adjusted the weighted-average number of shares of common
stock outstanding for all periods presented prior to August 12, 2021, by multiplying them by the Conversion Ratio used to determine the
number of common shares into which they converted.
The following table sets forth the computation
of basic and diluted net loss per share.
|
Schedule of basic and diluted net loss per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Net loss adjusted for Deemed Dividends and Deemed Dividends equivalents
|
|
$
|
(28,734
|
)
|
|
|
(5,690
|
)
|
|
$
|
(51,035
|
)
|
|
$
|
(15,564
|
)
|
|
Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted
|
|
|
26,265,400
|
|
|
|
19,923,107
|
|
|
|
23,511,764
|
|
|
|
17,785,025
|
|
|
Net loss per share attributable to common stockholders, basic and diluted
|
|
$
|
(1.09
|
)
|
|
|
(0.29
|
)
|
|
$
|
(2.17
|
)
|
|
$
|
(0.88
|
)
|
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.
|
Schedule of dilutive outstanding shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
2020 Stock Option Plan
|
|
|
7,400,362
|
|
|
|
7,409,701
|
|
|
|
7,400,362
|
|
|
|
7,409,701
|
|
|
Public Warrants
|
|
|
8,400,000
|
|
|
|
—
|
|
|
|
8,400,000
|
|
|
|
—
|
|
|
GRNV Sponsor Private Warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class B Common Shares - Held in escrow for
indemnification purpose
|
|
|
1,600,000
|
|
|
|
—
|
|
|
|
1,600,000
|
|
|
|
—
|
|
|
2020 CEO Performance Award
|
|
|
600,000
|
|
|
|
600,000
|
|
|
|
600,000
|
|
|
|
600,000
|
|
|
Stock Options granted by the independent board members
|
|
|
225,000
|
|
|
|
—
|
|
|
|
225,000
|
|
|
|
—
|
|
|
Convertible Preferred Stock Series B (1)
|
|
|
—
|
|
|
|
1,313,753
|
|
|
|
—
|
|
|
|
1,313,753
|
|
|
Vienna Warrants (2)
|
|
|
—
|
|
|
|
95,921
|
|
|
|
—
|
|
|
|
95,921
|
|
|
Series A Warrants (3)
|
|
|
—
|
|
|
|
192,468
|
|
|
|
—
|
|
|
|
192,468
|
|
|
Other Liability Warrants (4)
|
|
|
—
|
|
|
|
175,088
|
|
|
|
—
|
|
|
|
175,088
|
|
|
Equity Warrants
|
|
|
—
|
|
|
|
479,916
|
|
|
|
—
|
|
|
|
479,916
|
|
|
Equity Award for Non-employees with Performance condition not satisfied
|
|
|
—
|
|
|
|
162,302
|
|
|
|
—
|
|
|
|
162,302
|
|
|
Total number of Common Shares not included in the EPS Basic and diluted
|
|
|
20,325,362
|
|
|
|
10,429,149
|
|
|
|
20,325,362
|
|
|
|
10,429,149
|
|
|
|
(1)
|
The number of Common Shares presented is based on the actual number of Common Shares issued for the conversion of 453 Convertible Preferred Stock Series B, on August 12, 2021.
|
|
|
(2)
|
The number of Common Shares presented is based on the actual number of Common Shares issued for the early exercise of the Vienna Warrants, on December 12, 2020, and converted on August 12, 2021.
|
|
|
(3)
|
The number of Common Shares presented is composed by: (i) 103,638 Common Shares issued on December 12, 2020, for the early exercise of a portion of the Series A Warrants outstanding and converted on August 12, 2021, and (ii) 88,830 Common Shares represents an estimate of the Company.
|
|
|
(4)
|
The number of Common Shares presented is based on the actual number of Common Shares issued for the early conversion of those liability warrants, on December 12, 2020, and converted on August 12, 2021.
|
18. Segment
and geographic information
We
determine our operating segments based on how the chief operating decision maker (“CODM”) manages the business, allocates
resources, makes operating decisions, and evaluates operating performance.
As of September 30, 2021,
the Company has three operating and reportable segments, of which one named Helbiz Kitchen is considered not material and included
in All Other.
|
Segment
|
|
Description
|
|
|
|
|
|
Mobility
|
|
Mobility offering allow consumer to move around the city using green and electric vehicles as scooters, bikes and mopeds. Mobility also includes partnership and sponsorship agreements.
|
|
|
|
|
|
Live
|
|
Contents offerings allow consumer to watch live events on the App Helbiz Live. Live segment also includes business related to the commercialization and distribution of media contents to third-parties, such as media communication operators.
|
|
All Other
|
|
All Other are mainly related to delivery offerings and a licensing agreement.
|
For information about how
our reportable segments derive revenue, refer to Note 5 – Revenue recognition. Our segment operating performance measures
are segment Revenue and Cost of Revenue. The CODM does not evaluate operating segments using asset information and, accordingly, we do
not report asset information by segment. The following table provides information about our segments and a reconciliation of the total
segment Revenue and Cost of revenue to loss from operations:
|
Schedule of segment Revenue and Cost of revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobility
|
|
|
3,890
|
|
|
|
2,013
|
|
|
|
7,888
|
|
|
|
2,671
|
|
|
Live
|
|
|
760
|
|
|
|
—
|
|
|
|
760
|
|
|
|
—
|
|
|
All Other
|
|
|
52
|
|
|
|
—
|
|
|
|
52
|
|
|
|
205
|
|
|
Total revenues
|
|
$
|
4,702
|
|
|
$
|
2,013
|
|
|
$
|
8,700
|
|
|
$
|
2,876
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mobility
|
|
|
(6,438
|
)
|
|
|
(2,235
|
)
|
|
|
(16,920
|
)
|
|
|
(4,806
|
)
|
|
Live
|
|
|
(2,732
|
)
|
|
|
—
|
|
|
|
(2,732
|
)
|
|
|
—
|
|
|
All Other
|
|
|
(562
|
)
|
|
|
—
|
|
|
|
(562
|
)
|
|
|
—
|
|
|
Total Cost of revenue
|
|
$
|
(9,844
|
)
|
|
$
|
(2,235
|
)
|
|
$
|
(20,421
|
)
|
|
$
|
(4,806
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciling Items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
(853
|
)
|
|
|
(441
|
)
|
|
|
(2,017
|
)
|
|
|
(1,031
|
)
|
|
Sales and marketing
|
|
|
(4,374
|
)
|
|
|
(1,717
|
)
|
|
|
(6,782
|
)
|
|
|
(3,298
|
)
|
|
General and administrative
|
|
|
(9,298
|
)
|
|
|
(3,237
|
)
|
|
|
(15,891
|
)
|
|
|
(6,891
|
)
|
|
Loss from operations
|
|
$
|
(19,668
|
)
|
|
$
|
(5,618
|
)
|
|
$
|
(36,411
|
)
|
|
$
|
(13,150
|
)
|
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 and nine months ended
September 30, 2021.
|
Schedule of Revenue by geography
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Italy
|
|
|
3,660
|
|
|
|
1,958
|
|
|
|
6,342
|
|
|
|
2,575
|
|
|
United States
|
|
|
1,042
|
|
|
|
55
|
|
|
|
2,358
|
|
|
|
96
|
|
|
All other countries
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
205
|
|
|
Total revenues
|
|
$
|
4,702
|
|
|
$
|
2,013
|
|
|
$
|
8,700
|
|
|
$
|
2,876
|
|
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 September
30, 2021 and December 31, 2020.
|
Schedule of intangible assets, goodwill and other assets
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
Non-Current Assets
|
|
2021
|
|
|
2020
|
|
|
Italy
|
|
$
|
16,946
|
|
|
$
|
2,785
|
|
|
United States
|
|
|
1,426
|
|
|
|
1,446
|
|
|
All other countries
|
|
|
139
|
|
|
|
110
|
|
|
Total accrued expenses and other current liabilities
|
|
$
|
18,511
|
|
|
$
|
4,341
|
|
19. Related Party Transactions
During
May and June 2021, our majority shareholder and sole director has lent Helbiz, funds on an interest-free basis for cumulative gross
proceeds of $2,010 through Promissory Notes. On August 16, 2021, the Company repaid
the principal of the 0% CEO Promissory Notes.
During the period ended September 30, 2020, our
majority shareholder and sole director repaid $1,042 of a loan that we made to him. Our majority shareholder and sole director completely
settled all amounts that he owed to us during 2020.
20. Subsequent Events
The Company has determined, for recognition or
disclosure in these financial statements, the following material subsequent events.
Exercise of Public Warrants
During the month of October 2021, 663,419 Public
Warrants have been exercised and converted into 633,419 Class A Common Shares for cumulative gross proceeds deposited into Helbiz bank
accounts of $7,629.
Convertible Notes
On
October 12, 2021, 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 first convertible note in the principal amount of $15
million, (iii) 1,000,000
Warrants to buy 1,000,000
Class A common shares with an exercise price of $20.00
per share, (iv) a second convertible in the principal amount of $10 million, issued on October 27, 2021, and (v) a third convertible
note in the principal amount of $5
million, issued on November 12, 2021. In exchange for the issuances of the commitment Shares, the three convertible notes and the
warrants, we received from the Note holder proceeds of $30
million.
Each of the three convertible note matures on the
one-year anniversary date of the issuance of such convertible note 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.
Additionally, the Company is required to pay a
redemption premium in two circumstances: (i) if Helbiz 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 of a Note the daily volume-weighted average is less than $10.00 for ten trading days during a period of
15 consecutive trading days (the “Triggering Date”). Each monthly payment shall be in an amount equal to the sum of
(i) the principal amount outstanding as of the Triggering Date 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. Under certain circumstances,
such payments after a Triggering Date may no longer be required. The maximum value of the redemption premium is $3,000,000.
