Financial liabilities, net

6 Months Ended

Jun. 30, 2025

7. Financial liabilities, net

The Company's Financial liabilities from continuing operations consisted of the following.

Schedule of financial liabilities
	Weighted Average Interest Rate			June 30, 2025		December 31, 2024
Secured Convertible loan, net (Related-Party)		9	%		6,625		6,298
Promissory Note (Related-Party)		0	%		318		228
2025 Convertible note, net (Third-Party)		5	%		415		—
Unsecured loans, net (Third-Party)		N/A			3,854		3,854
Other financial liabilities (Third-Party)		N/A			97		94
Total Current Financial Liabilities, net from continuing operations					11,309		10,475

The table below shows the amounts recorded for interest expenses, net and change in fair values of financial liabilities, in the condensed consolidated statement of operations from continuing operations for the three and six months ended on June 30, 2025, and June 30, 2024.

Schedule of interest expense
	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Secured Convertible loan	$	(148	)	$	(671	)	$	(327	)	$	(1,339	)
2023 Convertible debt		—			(130	)		—			(260	)
Unsecured loans		—			(2	)		—			(9	)
Total Interest expenses, net	$	(148	)	$	(803	)	$	(327	)	$	(1,608

2025 Convertible note, net (Third-Party)	$	(10	)	$	—		$	(10	)	$	—
Other financial liabilities (Third-Party)		2			—			2			—
Total Changes in fair value of financial liabilities, net	$	(8	)	$	—		$	(8	)	$	—

Promissory Note (Related-Party)		—			94			—			94
Unsecured loans		—			—			—			728
2025 Convertible note, net (Third-Party)		(250	)		—			(250	)		—
Total Gain (Loss) on extinguishment/issuance of financial debts, net		(250	)		94			(250	)		822

Secured convertible loan (Related-Party)

On December 8, 2023, the Company entered into a Secured Loan Agreement with YA II PN, Ltd. The secured loan has a principal amount of $5,750, with 37.5% issuance discount, December 8, 2024, as maturity date, 9.25% as annum interest rate and 13.25% as annum default interest rate, applicable only at the election and request of the lender. The secured loan shall be convertible into shares of the Company’s common stock at the option of the Note Holder, who could convert any portion of the outstanding and unpaid conversion amount into fully paid and nonassessable shares of Common Stock in accordance with the Conversion Price defined as $1.25.

On December 9, 2024, YA II PN, Ltd. sold the Secured Loan agreement to Palella Holdings LLC, which is qualified as a related party because it is the Company’s major shareholder, and it is fully owned by the former Company’s Chief Executive Officer.

The Company was in default for non-payment under the terms of the Secured Loan Agreement. The Company continues to accrue interest based on 9.25% interest rate, considering that Palella Holdings LLC did not request the application of the default interest rate.

As of June 30, 2025, the Company has $6,625 outstanding as principal and accrued interests.

Promissory Notes (Related-Party)

During the six months ended June 30, 2025, Palella Holdings LLC, which is qualified as a related party because it is the Company’s major shareholder, and it is fully owned by the former Company’s Chief Executive Officer, provided to the Company $407, under the original Promissory Note with maturity date January 31, 2025, and on an interest free basis. Additionally, during the six months ended June 30, 2025, the Company repaid $317.

As a result of the above transactions, on June 30, 2025, the Company has $318 as outstanding principal. Considering the maturity date, January 31, 2025, the Company was in default for non-payment the principal under the terms of the Promissory Note.

2025 Convertible note, net (Third-Party)

Terms and conditions

On April 21, 2025, the Company entered into a Convertible Note with YA II PN, Ltd. (“YA”), for a principal amount of $2,750, with April 21, 2026 as maturity date, 5% as annum interest rate and 18% as annum default interest rate; of such funds:

$155 was used to settle a bridge loan in an equal amount from YA to the Company dated April 15, 2025;

ii)

$250 was used as payment of an implementation fee for the Convertible Note,

iii)

$1,500 was deposited into escrow subject to an escrow agreement (the “Judgment Escrow Agreement”) for the settlement of an outstanding judgment, and

iv)

$845 was deposited into escrow subject to an escrow agreement (the “Company Escrow Agreement”) for general administrative expenses.

The Company, at its option, has the right, but not the obligation, to redeem early a portion or all amounts outstanding under the Convertible Note.

The Convertible Note may be converted by YA into shares of Company’s Class A common stock, such shares shall be valued at the lower of (i) $.006 per share (“Fixed Price”) or (ii) 95% of the lowest daily VWAP during the 10 consecutive Trading Days immediately preceding the date of such conversion (the “Variable Price”), but which Variable Price shall not be lower than the Floor Price then in effect. On the fourth Trading Day following the listing of the common stock on a national exchange (the “Fixed Price Reset Date”), the Fixed Price shall be adjusted (downwards only) to equal the average VWAP for the three trading days immediately prior to the Fixed Price Reset Date. The Floor Price respect to the Variable Price, shall mean, (i) prior to an uplisting of the Common Stock to a national exchange, nil, and (ii) following such an uplisting, 20% of the initial listing price on such exchange.

If one of the following events occurred, then the Company shall make monthly cash payments amounting to $250 plus interest:

daily VWAP is less than the Floor Price for five trading days during a period of seven consecutive trading days,

the Company has issued to the Investor, in excess of 99% of the Common Shares available under the Exchange Cap,

YA is unable to utilize a Registration Statement to re-sell Class A Common Shares issued by the Company under the 2025 Convertible Note for ten consecutive days.

The aforementioned Company’s obligation to make monthly cash payments will cease if the Company provides to YA with a reset notice setting forth a reduced Floor Price which shall be equal to no more than 75% of the closing price on the Trading Day immediately prior to such reset notice, or in the event of an Exchange Cap event, the date the Company has obtained stockholder approval to increase the number of Common Shares under the Exchange Cap and/or the Exchange Cap no longer applies, or in the event of a Registration Event, the condition or event causing the Registration Event has been cured or YA is able to resell the Common Shares issuable upon conversion of the 2025 Convertible Note in accordance with Rule 144 under the Securities Act.

The funds held in escrow pursuant to the Judgment Escrow Agreement are to be released upon the earlies to occur of (a) written instruction of the Company, YA and the judgment holder, (b) to YA if a resolution has not been reached with the judgment holder to YA’s satisfaction by May 16, 2025, (c) to YA if a proposed business combination had not occurred within 120 days from the issuance of the Convertible Note and (d) to the judgment holder upon the occurrence of the proposed business combination. The funds held in escrow pursuant to the Company Escrow Agreement are to be released upon the earlies to occur of (a) written instruction of the Company and YA, (b) as directed in YA’s written instruction to release received after May 16, 2025 and (c) to the Company upon the occurrence of the proposed business combination.

On May 16, 2025, the amounts held in escrows, amounting to $2,345, have been released to YA.

Initial recognition – Remeasurement

At the issuance date of the 2025 Convertible Note, the Company has elected the fair value option to account for the financial instrument. The Company recorded the Note at fair value upon issuance, amounted to $2,750, based on a third-party valuation. The difference between the fair value and the cash proceeds received, amounting to $250 has been recorded in the condensed consolidated statement of operations for the six months ended June 30, 2025 as Loss on extinguishment/issuance of financial debts, net.

As mentioned above, in May 2025, $2,345 have been released from escrows to YA, in line with the original agreements.

The 2025 Convertible note fair value has been re-measured on June 30, 2025, and it resulted on $415. The difference between original fair value at inception less release from escrows and fair value on June 30, 2025 amounted to $10 has been recorded in the condensed consolidated statement of operations for the six months ended June 30, 2025 as Changes in fair value of financial liabilities, net. No change in fair value resulted from changes in instrument-specific credit risk.

As of June 20, 2025, the 2025 Convertible note, net was in default and YA agreed to waive the application of the default interest rate.

Unsecured loans

2022 unsecured note

On July 15, 2022, the Company issued an Unsecured Note to an investor in exchange for 2,000 Euro (approximately $2,345, using June 30, 2025 exchange rate) with 6.75% as interest on an annual basis to be paid every three months. The Company was in default for not paying the interests.

On October 30, 2024, the Company received a judgment against it from the Supreme Court of the State of New York for the payment of the full principal, interest and costs and disbursements in connection with the 2022 unsecured note. The Company is currently identifying and evaluating the alternative paths for facing the judgement. The Company stopped accruing interest, starting from October 30, 2024.

As a result on June 30, 2025, the Company has $2,454 as outstanding principal and accrued interest recorded as Short-term financial liabilities.

Unsecured debts – assumed from previous business combination

As of June 30, 2025, the Company has $1,400 outstanding as principal and accrued interests under unsecured debts. In detail, the Company was in default for non-payment the principal and interests under the terms of the Loan Amendment. The Company is currently negotiating with the holders of the debts a new repayment plan.

micromobility.com Inc. 10-Q