micromobility.com Inc. SEC 10-Q Report

Micromobility.com Inc., a company specializing in electric vehicle operations and mobility solutions, has released its Form 10-Q report for the third quarter of 2024. The report highlights significant financial improvements, strategic shifts in business operations, and emerging challenges as the company navigates a complex market environment.

Financial Highlights

• Total Revenue: $0.775 million, a decrease of 37% from the same period last year due to a decline in Media and European Mobility revenues.
• Loss from Operations: $(0.584) million, an improvement from a loss of $(5.499) million in the prior year, reflecting significant cost reductions.
• Net Income (Loss) from Continuing Operations: $(1.658) million, compared to $(7.456) million in the previous year, indicating a reduction in losses.
• Net Income (Loss) from Discontinued Operations: $6.632 million, primarily due to the gain from the sale of Wheels Lab, Inc.
• Net Income (Loss): $4.974 million, a significant improvement from a loss of $(9.477) million in the prior year, driven by gains from discontinued operations.
• Net Income (Loss) Per Share, Basic: $0.05, compared to $(8.92) in the previous year, reflecting improved financial performance.
• Net Income (Loss) Per Share, Diluted: $0.05, compared to $(8.92) in the previous year, indicating a positive shift in earnings.

Business Highlights

• Revenue Segments: The company experienced a significant decrease in European Mobility revenues, which fell by 65% for the three months ended September 30, 2024, compared to the same period in 2023. This decline was attributed to the company's strategy to exit non-profitable markets in Italy.
• Geographical Performance: The company has suspended its mobility operations in the United States due to high costs and sold its Wheels Lab, Inc. subsidiary. The company now focuses its electric vehicle operations in Europe, particularly in Italy and Serbia.
• Future Outlook: The company plans to continue funding its operations through debt and equity financing. It aims to focus on achieving profitable operations by concentrating on markets that support its cost structure and reducing operating cash burn.

Strategic Initiatives

• Strategic Shifts: Micromobility.com, Inc. has strategically suspended its mobility operations in the United States to reduce operating cash burn and sold its subsidiary, Wheels Lab, Inc., to a third party. The company is focusing on its European operations and has entered into agreements with Everli S.p.A. to provide software development services and prepare for an IPO. Additionally, the company is renegotiating or exiting multiple agreements to decrease cash burn.
• Capital Management: The company has been actively managing its capital through debt and equity financing. It issued a secured convertible loan and convertible debts, and entered into a Standby Equity Purchase Agreement (SEPA) to raise capital. The company also converted a portion of a related-party promissory note into common stock. Furthermore, the company is involved in a settlement agreement with LNPB to reduce its financial obligations. As of September 30, 2024, the company had $16,973 in financial liabilities, with a significant portion classified as current liabilities.
• Future Outlook: Micromobility.com plans to continue funding its operations through debt and equity financing over the next twelve months. The company is focused on achieving profitable operations by reducing its cost structure and exploring new business lines. It is also addressing legal contingencies and financial obligations to improve its financial position. The company is evaluating alternative paths to address a judgment related to a defaulted unsecured note.

Challenges and Risks

• Operational Challenges: The company has indefinitely suspended its micro-mobility offerings in the United States due to high operational costs and a strategic decision to reduce cash burn. This suspension may prevent the company from recouping its investments in intellectual property and other assets related to its U.S. operations. Additionally, the company has sold its Wheels Lab, Inc. subsidiary, which was part of its U.S. mobility operations, indicating a significant shift in its business strategy.
• Revenue Decline: The company has experienced a substantial decrease in revenue from both its European mobility and media segments, primarily due to exiting unprofitable markets and the early termination of key agreements. This has led to a significant reduction in operating expenses, including general and administrative costs, as part of a broader strategy to decrease cash burn.
• Liquidity Challenges: The company is also facing liquidity challenges, with a need to raise additional capital to fund operations and expand its business. As of September 30, 2024, the company had cash and cash equivalents of only $141, highlighting the urgency of securing additional financing.
• Legal Risks: The company is involved in ongoing litigation, including a significant claim for breach of contract, which could result in substantial financial liabilities. The range of potential losses from legal contingencies is estimated to be between $0 to $7,120, with additional claims that are not yet reasonably estimable.
• Media Business Challenges: The company has also faced challenges with its media business, particularly due to the early termination of agreements with LNPB, which has led to a significant reduction in operations and potential financial liabilities.

SEC Filing: micromobility.com Inc. [ MCOM ] - 10-Q - Nov. 19, 2024