Organization and Summary of Significant Accounting Policies
|9 Months Ended
Sep. 30, 2022
|Organization, Consolidation and Presentation of Financial Statements [Abstract]
|Organization and Summary of Significant Accounting Policies
|Organization and Summary of Significant Accounting Policies
Bird Global, Inc. (“Bird Global” and, together with its subsidiaries, “Bird”, the “Company”, “our”, or “we”) was incorporated in Delaware on May 4, 2021 as a wholly owned subsidiary of Bird Rides, Inc. (“Bird Rides”). Bird Global was formed for the purpose of completing the transactions contemplated by the Business Combination Agreement, dated May 11, 2021 (as amended, the “Business Combination Agreement” and the transactions contemplated thereby, the “Business Combination”), by and among Switchback II Corporation (“Switchback”), Maverick Merger Sub Inc., a direct and wholly owned subsidiary of Switchback (“Merger Sub”), Bird Rides, and Bird Global.
Bird is a micromobility company engaged in delivering electric transportation solutions for short distances. The Company partners with cities to bring lightweight, electric vehicles to residents and visitors in an effort to replace car trips by providing an alternative sustainable transportation option. Bird’s offerings include its core vehicle-sharing business and operations (“Sharing”), and sales of Bird-designed vehicles for personal use (“Product Sales”).
Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements (“condensed consolidated financial statements”) include the accounts of the Company and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the accounting disclosure rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. 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. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2021 (the "2021 Form 10-K/A"). All intercompany balances and transactions are eliminated upon consolidation.
The consolidated balance sheet as of December 31, 2021 included herein was derived from the audited annual consolidated financial statements as of that date. The condensed consolidated financial statements have been prepared on the same basis as the audited 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’ (deficit) equity, and cash flows for the periods presented, but are not necessarily indicative of the results of operations to be anticipated for any future annual or interim period.
There have been no material changes to the Company’s significant accounting policies as described in the audited consolidated financial statements as of December 31, 2021.
Certain amounts from prior periods have been reclassified to conform to the current period’s presentation. None of these reclassifications had a material impact on the Company's condensed consolidated financial statements.
The Company has incurred recurring losses and negative cash flows since inception and has an accumulated deficit of $1,503.5 million as of September 30, 2022. For the nine months ended September 30, 2022, the Company used approximately $44.9 million of cash in operations. The Company’s ability to fund working capital, make capital expenditures, and service its debt will depend on its ability to generate cash from operating activities, which is subject to its future operating success, and obtain financing on reasonable terms, which is subject to factors beyond its control, including general economic, political, and financial market conditions. The capital markets have in the past experienced, are currently experiencing, and may in the future experience, periods of volatility that could impact the availability and cost of equity and debt financing and there can be no assurances that such financing will be available to the Company on satisfactory terms, or at all. As of September 30, 2022, the Company had $38.5 million in unrestricted cash and cash equivalents which, without additional funding, will not be sufficient to meet the Company’s obligations within the next twelve months from the date of issuance of these condensed consolidated financial statements. If the Company is unable to raise additional capital or generate cash flows necessary to expand its operations and invest in continued innovation, it may not be able to
compete successfully and may need to scale back or discontinue certain or all of its operations in order to reduce costs or seek bankruptcy protection, which would harm its business, financial condition, and results of operations. As such, these factors raise substantial doubt about the Company’s ability to continue as a going concern.
Accordingly, the Company plans to continue to closely monitor its operating forecast, reduce its operating expenses, and pursue additional sources of outside capital. On October 18, 2022, the Company announced plans to fully exit three unprofitable European countries (Germany, Sweden, and Norway), and to wind down operations in several dozen additional, primarily small to mid-sized unprofitable markets across the United States and Europe, the Middle East and Africa (“EMEA”), as part of its previously announced business plan to reduce costs. Along with this global footprint realignment, the Company is targeting additional reductions in its operating expenses.
The condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Therefore, the condensed consolidated financial statements for the three and nine months ended September 30, 2022 do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the substantial doubt about the Company’s ability to continue as a going concern.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements, the reported amounts of revenues and expenses during the reporting period, and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements. On an ongoing basis, management evaluates estimates, which are subject to significant judgment, including, but not limited to, those related to useful lives associated with vehicles, valuation of goodwill, Product Sales inventory and inventory deposits, and other long-lived assets, assumptions utilized in the valuation of derivative liabilities and certain equity awards, loss contingencies, valuation allowance for deferred income taxes, and the collectability of accounts receivable. Actual results could differ from those estimates.
Inventory consists of vehicles and spare parts available for sale, valued at the lower of cost based on an average cost method or net realizable value (“lower of cost or net realizable value”). This valuation requires the Company to make judgments, based on currently available information. The average cost of inventory consists of the price paid for the aforementioned vehicles and spare parts plus freight from manufacturers and any customs or duties incurred.
During the nine months ended September 30, 2022, given our initiative announced in May 2022 to slow the expansion of our Product Sales portfolio offering and realign our resources to prioritize Sharing operations within our existing regions, combined with the current adverse macroeconomic environment, including a shift in consumer demand away from longer lead time discretionary items, the Company recognized a lower of cost or net realizable value impairment on Product Sales inventory of $31.8 million, which is reflected in the condensed consolidated statements of operations.
Our capital expenditure cycle often requires us to pay deposits to secure orders for the Product Sales business. The Company records deposits based on the amount of cash paid to secure future production, and evaluates the assets for impairment, as needed.
During the nine months ended September 30, 2022, given our initiative announced in May 2022 to slow the expansion of our Product Sales portfolio offering and realign our resources to prioritize Sharing operations within our existing regions, combined with the current adverse macroeconomic environment, including a shift in consumer demand away from longer lead time discretionary items, the Company recognized an impairment on certain contractual deposits of $14.7 million, which is included within Impairment of assets in the condensed consolidated statements of operations.
Evaluation of Long-Lived Assets for Impairment
The Company evaluates its held-and-used long-lived assets for indicators of possible impairment when events or changes in circumstances indicate the carrying amount of an asset or asset group (collectively, the “asset group”) may not be recoverable. The Company measures the recoverability of the asset group by comparing the carrying amount of such asset group to the future undiscounted cash flows it expects the asset group to generate. If the Company considers the asset
group to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset group exceeds its fair value.
During the nine months ended September 30, 2022, the Company estimated the recoverability of certain vehicle deposits, vehicles, and spare parts within the North America, EMEA, and Other asset groups by comparing the estimated fair value of each asset group to its carrying value. Due to the sustained decline in the Company’s market capitalization and current adverse macroeconomic environment, the Company recorded an impairment charge of $89.4 million within the EMEA and Other asset groups, which is included within Impairment of assets in the condensed consolidated statements of operations.
Recently Issued Accounting Standards Not Yet Adopted
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-02—Leases (Topic 842), which introduces a lessee model that brings most leases on the balance sheet and aligns many of the underlying principles of the new lessor model with those in the new revenue recognition standard. The FASB also subsequently issued guidance amending and clarifying various aspects of the new leases guidance. The new leasing standard represents a wholesale change to lease accounting for lessees and requires additional disclosures regarding leasing arrangements. 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 ASU 2016-02 for the annual period beginning January 1, 2022, using a prospective adoption method in accordance with ASU 2018-11—Leases (Topic 842): Targeted Improvements, which eliminated the requirement to present prior year comparative lease disclosures upon adoption of ASU 2016-02. The Company is continuing to assess the potential impacts of ASU 2016-02 on its consolidated financial statements and related disclosures. While the Company anticipates the guidance will result in an increase in its assets and liabilities as certain operating lease commitments will be subject to the new standard and recognized as right-of-use assets and lease liabilities, the Company does not anticipate any material changes to its revenue recognition policy.
The Company does not believe there are any other recently issued and effective or not yet effective standards or pronouncements that would have or are expected to have any significant effect on the Company’s financial position, cash flows or results of operations.
Restatement of Condensed Consolidated Financial Statements
In connection with the preparation of this Quarterly Report, the Company identified an error related to its business system configuration that impacted the recognition of revenue on certain trips completed by customers of its Sharing business ("Rides") for which collectability was not probable. Specifically, for customers with insufficient preloaded "wallet" balances, following the completion of Rides our business systems recorded revenue for uncollectible balances. The error resulted in an overstatement of Sharing revenue in the condensed consolidated statements of operations for the nine months ended September 30, 2022 and the three and nine months ended September 30, 2021, and an understatement of deferred revenue in the condensed consolidated balance sheet as of December 31, 2021. We also corrected certain other previously identified immaterial errors included in the financial statements as of and for the three and nine months ended September 30, 2021 and 2020, and as of and for the year ended December 31, 2020, as disclosed in the 2021 Form 10-K/A.
Impact of RestatementThe correction of this misstatement resulted in a decrease in Sharing revenue of $12.5 million for the nine months ended September 30, 2022 and $4.3 million and $10.1 million for the three and nine months ended September 30, 2021, respectively, in the condensed consolidated statements of operations, and an increase in deferred revenue of $19.1 million as of December 31, 2021 in the condensed consolidated balance sheets.