Organization and Summary of Significant Accounting Policies
|6 Months Ended|
Jun. 30, 2022
|Organization, Consolidation and Presentation of Financial Statements [Abstract]|
|Organization and Summary of Significant Accounting Policies||
Note 1 – 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. 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.
Restatement of Condensed Consolidated Financial Statements
In connection with the preparation of the Company's condensed consolidated financial statements for the three and nine months ended September 30, 2022, 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 certain customers with insufficient preloaded "wallet" balances, the Company's business systems recorded revenue for uncollectible balances following the completion of certain Rides that should not have been recorded. The error resulted in an overstatement of Sharing revenue in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021, and an understatement of deferred revenue in the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021. The Company also corrected certain other previously identified immaterial errors included in the financial statements as of and for the three
and six months ended June 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 Restatement
See below for a reconciliation from the previously reported amounts to the restated amounts as of June 30, 2022, and for the three and six months ended June 30, 2022 and 2021. The previously reported amounts were derived from the Company's Quarterly Report on Form 10-Q for the six months ended June 30, 2022 filed with the SEC on August 15, 2022 (the “Original Report”). These amounts are labeled as “As Previously Reported” in the tables below. The amounts labeled “Restatement Adjustment” represent the effects of this restatement described above. Also included in the amounts labeled “Restatement Adjustment” are the correction of certain other previously identified immaterial errors as of and for the three and six months ended June 30, 2021 and 2020, and as of and for the year ended December 31, 2020.
The correction of this misstatement resulted in a decrease in Sharing revenue of $9.9 million and $4.4 million for the three months ended June 30, 2022 and 2021, respectively, and $12.5 million and $5.8 million for the six months ended June 30, 2022 and 2021, respectively, in the condensed consolidated statements of operations, and an increase in deferred revenue of $31.6 million and $19.1 million in the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021, respectively. The following presents a reconciliation of the impacted financial statement line items as previously reported to the restated amounts as of June 30, 2022 and December 31, 2021, and for the three and six months ended June 30, 2022 and 2021:
The remainder of the notes to the Company’s condensed consolidated financial statements have been updated and restated, as applicable, to reflect the impacts of the restatement described above.
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, and loss contingencies. 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 three months ended June 30, 2022, given the Company's initiative announced in May 2022 to slow the expansion of its Product Sales portfolio offering and realign its resources to prioritize Sharing operations within the Company's 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 evaluate the assets for impairment, as needed.
During the three months ended June 30, 2022, given the Company's initiative announced in May 2022 to slow the expansion of its Product Sales portfolio offering and realign our resources to prioritize Sharing operations within the Company's 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 three months ended June 30, 2022, the Company estimated the recoverability of certain vehicle deposits, vehicles, and spare parts within the North America, Europe, Middle East, and Africa (“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 Pronouncements 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. While the Company is continuing to assess the potential impacts of ASU 2016-02, it does not expect it to have a material effect on its consolidated financial statements.The Company does not believe there are any other recently issued and effective or not yet effective pronouncements that would have or are expected to have any significant effect on the Company’s financial position, cash flows or results of operations.
The entire disclosure for all significant accounting policies of the reporting entity.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef