UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16
OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of August 2023
Commission file number: 001-40744
(Translation of registrant’s name into English)
+(972) 52-432-9955
(Address of principal executive offices)
_____________________
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
EXPLANATORY NOTE
The following exhibits are furnished hereto:
|
Exhibit No.
|
Description
|
The information included in Exhibits 99.1 and 99.2 are hereby incorporated by reference into Otonomo Technologies Ltd.’s Registration Statements on Form F-3 (File No. 333-264771) and Form S-8 (File No. 333-261641).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
Otonomo Technologies Ltd.
|
|||
|
By:
|
/s/ Ben Volkow
|
||
|
Name: Ben Volkow
|
|||
|
Title: Chief Executive Officer and Director
|
|||
Date: August 25, 2023
Exhibit 99.1
Otonomo Technologies Ltd.
Interim Unaudited Condensed
Consolidated Financial Statements
As at June 30, 2023
(Unaudited)
Otonomo Technologies Ltd.
Interim Condensed Consolidated Financial Statements as at June 30, 2023 (Unaudited)
Contents | Page |
F-3 | |
F-4 | |
F-5 | |
F-6 | |
F-7 |
F - 2
Otonomo Technologies Ltd.
Interim Unaudited Condensed Consolidated Balance Sheets
(in USD thousands, except share and per share data)
|
June 30
|
December 31
|
|||||||
|
2023
|
2022
|
|||||||
|
Unaudited
|
Audited
|
|||||||
|
Assets
|
||||||||
|
Current assets
|
||||||||
|
Cash and cash equivalents
|
|
|
||||||
|
Short-term restricted cash
|
|
|
||||||
|
Short-term deposits
|
|
|
||||||
|
Marketable securities
|
|
|
||||||
|
Trade receivables, net
|
|
|
||||||
|
Other receivables and prepaid expenses
|
|
|
||||||
|
Total current assets
|
|
|
||||||
|
Non-current assets
|
||||||||
|
Other long-term assets
|
|
|
||||||
|
Property and equipment, net
|
|
|
||||||
|
Operating lease right-of-use assets, net
|
|
|
||||||
|
Total non-current assets
|
|
|
||||||
|
Total assets
|
|
|
||||||
|
Liabilities and Shareholders' Equity
|
||||||||
|
Current liabilities
|
||||||||
|
Account payables
|
|
|
||||||
|
Other payables and accrued expenses
|
|
|
||||||
|
Deferred revenue
|
|
|
||||||
|
Current portion of operating lease liabilities
|
|
|
||||||
|
Current portion of contingent consideration
|
|
|
||||||
|
Total current liabilities
|
|
|
||||||
|
Non-Current liabilities
|
||||||||
|
Warrants for ordinary shares
|
|
|
||||||
|
Operating lease liabilities, less current portion
|
|
|
||||||
|
Contingent consideration, less current portion
|
|
|
||||||
|
Other non-current liabilities
|
|
|
||||||
|
Total non-current liabilities
|
|
|
||||||
|
Total liabilities
|
|
|
||||||
|
Shareholders’ equity:
|
||||||||
|
Ordinary shares,
|
||||||||
|
June 30, 2023, and December 31, 2022;
|
||||||||
|
and outstanding as of June 30, 2023 and December 31, 2022, respectively;
|
|
|
||||||
|
Additional paid-in capital
|
|
|
||||||
|
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
|
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
|
Total shareholders’ equity
|
|
|
||||||
|
Total liabilities and Shareholders' Equity
|
|
|
||||||
The accompanying notes are an integral part of the interim unaudited condensed consolidated financial statements.
F - 3
Otonomo Technologies Ltd.
Interim Unaudited Condensed Consolidated Statements of Comprehensive Loss
(in USD thousands, except share and per share data)
|
Six-month
|
Six-month
|
|||||||
|
period ended
|
period ended
|
|||||||
|
June 30
|
June 30
|
|||||||
|
2023
|
2022
|
|||||||
|
Revenues
|
|
|
||||||
|
Costs and operating expenses:
|
||||||||
|
Cost of services
|
|
|
||||||
|
Cloud infrastructure
|
|
|
||||||
|
Research and development
|
|
|
||||||
|
Sales and marketing
|
|
|
||||||
|
General and administrative
|
|
|
||||||
|
Depreciation and amortization
|
|
|
||||||
|
Contingent consideration expense (income)
|
|
(
|
)
|
|||||
|
Impairment of Goodwill
|
|
|
||||||
|
Impairment of intangible assets
|
|
|
||||||
|
Total costs and operating expenses
|
|
|
||||||
|
Operating loss
|
(
|
)
|
(
|
)
|
||||
|
Financial income, net
|
|
|
||||||
|
Loss before income tax expense
|
(
|
)
|
(
|
)
|
||||
|
Income tax expense
|
(
|
)
|
(
|
)
|
||||
|
Net loss for the period
|
(
|
)
|
(
|
)
|
||||
|
Net loss per share attributable to ordinary shareholders, basic and diluted
|
(
|
)
|
(
|
)
|
||||
|
Weighted-average shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted
|
|
|
||||||
|
Net loss for the period
|
(
|
)
|
(
|
)
|
||||
|
Other comprehensive loss, net of tax:
|
||||||||
|
Foreign currency translation adjustments
|
(
|
)
|
(
|
)
|
||||
|
Unrealized gains on available-for-sale marketable securities, net
|
(
|
)
|
|
|||||
|
Total comprehensive loss for the period
|
(
|
)
|
(
|
)
|
||||
The accompanying notes are an integral part of the interim unaudited condensed consolidated financial statements.
F - 4
Otonomo Technologies Ltd.
Interim Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity
(in USD thousands, except share and per share data)
|
Ordinary shares
|
Additional paid-in capital
|
Accumulated deficit
|
Accumulated other comprehensive loss
|
Total
equity
|
||||||||||||||||||||
|
Number of Shares
|
USD thousands
|
USD thousands
|
USD thousands
|
USD thousands
|
USD thousands
|
|||||||||||||||||||
|
Balance as of December 31, 2022
|
|
|
|
(
|
)
|
(
|
)
|
|
||||||||||||||||
|
Issuance of shares in connection with stock-based compensation plans
|
|
|
|
|
|
|
||||||||||||||||||
|
Share based compensation
|
-
|
|
|
|
|
|
||||||||||||||||||
|
Comprehensive loss
|
-
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||
|
Balance as of June 30, 2023
|
|
|
|
(
|
)
|
(
|
)
|
|
||||||||||||||||
|
Balance as of January 1, 2022
|
|
|
(
|
)
|
|
|
||||||||||||||||||
|
Shares issued related to the business acquisitions
|
|
|
|
|
|
|
||||||||||||||||||
|
Issuance of shares in connection with stock-based compensation plans
|
|
|
|
|
|
|
||||||||||||||||||
|
Share based compensation
|
-
|
|
|
|
|
|
||||||||||||||||||
|
Comprehensive loss
|
-
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
|||||||||||||||
|
Balance as of June 30, 2022
|
|
|
|
(
|
)
|
(
|
)
|
|
||||||||||||||||
The accompanying notes are an integral part of the interim unaudited condensed consolidated financial statements.
F - 5
Otonomo Technologies Ltd.
Interim Unaudited Condensed Consolidated Statements of Cash Flows
(in USD thousands, except share and per share data)
|
Six-month
|
Six-month
|
|||||||
|
period ended
|
period ended
|
|||||||
|
June 30
|
June 30
|
|||||||
|
2023
|
2022
|
|||||||
|
Cash flows from operating activities
|
||||||||
|
Net loss
|
(
|
)
|
(
|
)
|
||||
|
Adjustments to reconcile net loss to net cash
used in operating activities:
|
||||||||
|
Depreciation and amortization
|
|
|
||||||
|
Share based compensation
|
|
|
||||||
|
Revaluation of warrants
|
(
|
)
|
(
|
)
|
||||
|
Impairment of Goodwill
|
|
|
||||||
|
Impairment of intangible assets
|
|
|
||||||
|
Contingent consideration expense (income)
|
|
(
|
)
|
|||||
|
Deferred tax expense (benefit)
|
(
|
)
|
(
|
) |
||||
|
Interest income and foreign currency translation loss
|
(
|
) |
|
|||||
|
Other
|
(
|
)
|
|
|||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Trade receivables, net
|
|
(
|
)
|
|||||
|
Other receivables and prepaid expenses
|
|
|
||||||
|
Other payables and accrued expenses
|
(
|
)
|
|
|||||
|
Account payables
|
(
|
)
|
|
|||||
|
Other assets and liabilities
|
|
(
|
)
|
|||||
|
Net cash used in operating activities
|
(
|
)
|
(
|
)
|
||||
|
Cash flows from investing activities
|
||||||||
|
Proceeds from sale of property and equipment
|
|
|
||||||
|
Purchases of property and equipment
|
|
(
|
)
|
|||||
|
Proceeds from short-term bank deposits, net
|
|
(
|
)
|
|||||
|
Other long-term assets, net
|
|
(
|
)
|
|||||
|
Payments for business acquisitions, net of cash acquired
|
|
(
|
)
|
|||||
|
Net cash provided by (used in) investing activities
|
|
(
|
)
|
|||||
|
Cash flows from financing activities
|
||||||||
|
Proceeds from exercise of share options and warrants
|
|
|
||||||
|
Net cash provided by financing activities
|
|
|
||||||
|
Foreign currency effect on cash and cash equivalents and short-term restricted cash
|
(
|
)
|
(
|
)
|
||||
|
Net increase (decrease) in cash and cash equivalents and short-term restricted cash
|
(
|
)
|
(
|
)
|
||||
|
Cash and cash equivalents and short-term restricted cash at
|
||||||||
|
the beginning of the period
|
|
|
||||||
|
Cash and cash equivalents and short-term restricted cash
|
||||||||
|
at the end of the period
|
|
|
||||||
|
Appendix A – Material non-cash financing activities:
|
||||||||
|
Shares issued related to the business acquisitions
|
|
|
||||||
The accompanying notes are an integral part of the interim unaudited condensed consolidated financial statements.
F - 6
Otonomo Technologies Ltd.
Notes to the Interim Unaudited Condensed Consolidated Financial Statements
Note 1 - General
| A. |
Otonomo Technologies Ltd. (together with its subsidiaries, “Otonomo”, or the “Company”) was incorporated as an Israeli corporation in December 2015. The Company provides an automotive data service platform enabling car manufacturers, drivers, insurance carriers and service providers to be part of a connected ecosystem as well as mobility intelligence which transforms vast amounts of anonymized data and activity signals into actionable, impactful, and valuable insights.
|
On February 9, 2023, the Company and Urgent.ly, Inc. (“Urgently”), a provider of digital roadside and mobility assistance technology and services, entered into a definitive agreement to merge and the Company will become a wholly owned subsidiary of Urgently. Upon closing of the transaction, holders of the Company’s ordinary shares will receive common stock of Urgently. The Company’s shareholders and other equity holders will own, in the aggregate, approximately 33 % of the combined company on a fully diluted basis, subject to the determination of the final exchange ratio pursuant to the terms set forth in the definitive agreement. The transaction is expected to close in the third or fourth quarter of 2023, subject to the approval of the Company’s shareholders and the satisfaction of other customary closing conditions.
| B. |
In the six months ended June 30, 2023, the Company sunsetted its connected vehicle data services (“CVD services”), which included services relating to multi-layered data, standardized and blurred to remove identifiers. The sunsetting of CVD services resulted in a further workforce reduction. The Company concluded that the services were not considered as a component according to ASC 205 and therefore were not considered as a discontinued operation.
|
| C. |
On August 3, 2023, the Company executed a
|
F - 7
Otonomo Technologies Ltd.
Notes to the Interim Unaudited Condensed Consolidated Financial Statements
Note 2 - Summary of Significant Accounting Policies
A. Basis of Preparation
The accompanying interim unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements due to the permitted exclusion of certain disclosures for interim reporting. In management’s opinion, the interim financial data presented includes all adjustments necessary for a fair statement. All intercompany accounts and transactions have been eliminated. Operating results for the six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2023.
These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2022.
B. Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and such differences may have a material impact on the Company’s financial statements. As applicable to these consolidated financial statements, the most significant estimate relates to the fair value of contingent consideration.
C. Significant Accounting Policies
The Company’s significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, in the Company’s Annual Report for the year ended December 31, 2022.
D. Foreign currencies
The functional currency of the Company is the U.S. dollar. Accordingly, monetary accounts maintained in currencies other than the U.S. dollar are re-measured into U.S. dollars in accordance with Accounting Standard Codification ("ASC") Topic 830 "Foreign Currency Matters." All transaction gains and losses of the re-measured monetary balance sheet items are reflected in the consolidated statements of operations as financial income or expenses, as appropriate.
F - 8
Otonomo Technologies Ltd.
Notes to the Interim Unaudited Condensed Consolidated Financial Statements
Note 3 - Segments
Otonomo operates its business and reports its financial results in two segments:
| (a) |
Connected Vehicles – connected vehicle data platform, which provides customers access to vehicle data and other value-added services (“Connected Vehicle”), complemented by Mobility Intelligence platform (“MI services”).
|
| (b) |
Insurance related Services – connected insurance technology to insurance carriers, comprised of The Floow acquired activity.
|
The chief operating decision maker (“CODM”) reviews financial information prepared on a consolidated basis, accompanied by disaggregated information about revenues and contributed profit by the two identified reportable segments, to make decisions about resources to be allocated to the segments and assess their performance.
Otonomo’s CODM does not regularly review asset information by reportable segment and, therefore, Otonomo does not report asset information by reportable segment.
Segment loss is comprised of operating loss and does not include amortization, depreciation and certain other items.
| A. |
Segment information
|
|
Six-month period ended June 30, 2023
|
||||||||||||
|
Connected
Vehicles
|
Insurance
related
Services
|
Total
|
||||||||||
|
USD thousands
|
USD thousands
|
USD thousands
|
||||||||||
|
(Unaudited) |
||||||||||||
|
Revenues
|
|
|
|
|||||||||
|
Segment loss
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Amounts not allocated to segments:
|
||||||||||||
|
Depreciation and amortization
|
(
|
)
|
||||||||||
|
Contingent consideration expense
|
(
|
)
|
||||||||||
|
Share-based compensation
|
(
|
)
|
||||||||||
|
Operating loss
|
(
|
)
|
||||||||||
|
Financial income, net
|
|
|||||||||||
|
Loss before income tax expense
|
(
|
)
|
||||||||||
F - 9
Otonomo Technologies Ltd.
Notes to the Interim Unaudited Condensed Consolidated Financial Statements
Note 3 - Segments (cont'd)
| A. |
Segment information (cont’d)
|
|
Six-month period ended June 30, 2022
|
||||||||||||
|
Connected
Vehicles
|
Insurance
related
Services
|
Total
|
||||||||||
|
USD thousands
|
USD thousands
|
USD thousands
|
||||||||||
|
(Unaudited) |
||||||||||||
|
Revenues
|
|
|
|
|||||||||
|
Segment loss
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||
|
Amounts not allocated to segments:
|
||||||||||||
|
Depreciation and amortization
|
(
|
)
|
||||||||||
|
Contingent consideration expense
|
|
|||||||||||
|
Impairment of Goodwill
|
(
|
)
|
||||||||||
|
Impairment of intangible assets
|
(
|
)
|
||||||||||
|
Share-based compensation
|
(
|
)
|
||||||||||
|
Operating loss
|
(
|
)
|
||||||||||
|
Financial income, net
|
|
|||||||||||
|
Loss before income tax expense
|
(
|
)
|
||||||||||
| B. |
Revenue by geographical region of the Company’s customers
|
|
Six-month
|
Six-month
|
|||||||
|
period ended
|
period ended
|
|||||||
|
June 30
|
June 30
|
|||||||
|
2023
|
2022
|
|||||||
|
USD thousands
|
USD thousands
|
|||||||
|
(Unaudited) |
||||||||
|
Americas
|
|
|
||||||
|
APAC
|
|
|
||||||
|
EMEA
|
|
|
||||||
|
Total revenues
|
|
|
||||||
F - 10
Otonomo Technologies Ltd.
Notes to the Interim Unaudited Condensed Consolidated Financial Statements
Note 3 - Segments (cont'd)
| C. |
Number of customers accounted for over 10% of the revenues
|
For the six-month period ended June 30, 2023, the Company had two customers that accounted for 18 % and 25 % respectively, of its revenues. For the six-month period ended June 30, 2022, the Company had two customers that accounted for 14 % and 12 % respectively, of its revenues.
Note 4 - Fair Value Measurement
The Company's financial assets and liabilities measured at fair value on a recurring basis, consisted of the following types of instruments:
|
June 30, 2023
|
December 31, 2022
|
|||||||||||||||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||||||
|
USD thousands
|
||||||||||||||||||||||||
|
(Unaudited)
|
||||||||||||||||||||||||
|
Money Market funds (1)
|
|
|
|
|
|
|
||||||||||||||||||
|
U.S. Treasury securities (1)
|
|
|
|
|
|
|
||||||||||||||||||
|
Corporate bonds (1)
|
|
|
|
|
|
|
||||||||||||||||||
|
Commercial papers (1)
|
|
|
|
|
|
|
||||||||||||||||||
|
U.S. government agency securities (1)
|
|
|
|
|
|
|
||||||||||||||||||
|
Foreign bonds (1)
|
|
|
|
|
|
|
||||||||||||||||||
|
Contingent consideration (2)
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
|
Warrants for ordinary shares (3)
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
|
|
|
(
|
)
|
|
|
(
|
)
|
|||||||||||||||||
| (1) |
The following tables summarize the composition of marketable securities as of June 30, 2023:
|
|
June 30, 2023
|
||||||||||||
|
Amortized Cost
|
Unrealized Gain/Losses
|
Fair Value
|
||||||||||
|
USD thousands
|
||||||||||||
|
(Unaudited)
|
||||||||||||
|
Money market funds
|
|
|
|
|||||||||
|
Available-for-sale debt securities
|
||||||||||||
|
Corporate bonds
|
|
(
|
)
|
|
||||||||
|
Commercial papers
|
|
|
|
|||||||||
|
U.S. government agency securities
|
|
(
|
)
|
|
||||||||
|
U.S. Treasury securities
|
|
(
|
)
|
|
||||||||
|
Total
|
|
(
|
)
|
|
||||||||
|
|
(
|
)
|
|
|||||||||
Accrued interest in an amount of $254 thousand are included in marketable securities on the consolidated balance sheets as of June 30, 2023.
The following table summarizes the fair value and amortized cost of the available-for-sale debt securities by contractual maturity as of June 30, 2023:
|
June 30, 2023
|
||||||||
|
Amortized Cost
|
Fair Value
|
|||||||
|
USD thousands
|
||||||||
|
(Unaudited)
|
||||||||
|
Due within one year
|
|
|
||||||
|
Due after one year through two years
|
|
|
||||||
|
Total
|
|
|
||||||
F - 11
Otonomo Technologies Ltd.
Notes to the Interim Unaudited Condensed Consolidated Financial Statements
Note 4 - Fair Value Measurement (cont'd)
| (2) |
Contingent consideration represents liabilities recorded at fair value in connection with acquisitions, and thus represents a level 3 measurement within the fair value hierarchy.
|
The following table sets forth a summary of the changes in the fair value of the contingent consideration:
|
USD thousands
|
||||
|
(Unaudited)
|
||||
|
Fair value as of January 1, 2023
|
|
|||
|
Change in fair value
|
|
|||
|
Fair value as of June 30, 2023
|
|
|||
As of June 30, 2023, the Company evaluated the contingent consideration based on updated revenue growth assumptions, the Company’s ordinary shares fair value, and predominantly on the probability of the merger with Urgently Inc., resulting with an increase in the liability for contingent consideration of $2,061 thousand during the six-month period ended June 30, 2023.
| (3) |
In connection with the recapitalization, on August 13, 2021, the Company issued
|
Other financial instruments consist mainly of cash and cash equivalents, deposits, receivables, and accounts payable. The fair value of these financial instruments approximates their carrying values.
Note 5 - Share-Based Compensation
Share Options
A summary of the stock option activity is as follows:
|
Number of Options
|
Weighted Average exercise price
|
|||||||
|
Outstanding - Balance at January 1, 2023
|
|
$
|
|
|||||
|
Forfeited
|
(
|
)
|
$
|
|
||||
|
Exercised
|
(
|
)
|
$
|
|
||||
|
Outstanding - Balance at June 30, 2023
|
|
$
|
|
|||||
F - 12
Otonomo Technologies Ltd.
Notes to the Interim Unaudited Condensed Consolidated Financial Statements
Note 5 - Share-Based Compensation (cont'd)
Restricted Share Units ("RSU")
A summary of RSU activity and related information under the Company's equity incentive plan and the RSU award is as follows:
|
Weighted Average
|
||||||||
|
Number of
|
Grant Date
|
|||||||
|
RSUs
|
Fair Value
|
|||||||
|
Unvested Balance at January 1, 2023
|
|
$
|
|
|||||
|
Granted *
|
|
$
|
|
|||||
|
Vested
|
(
|
)
|
$
|
|
||||
|
Forfeited
|
(
|
)
|
$
|
|
||||
|
Unvested Balance at June 30, 2023
|
|
$
|
|
|||||
| * |
The RSU awards generally vest over four years, with no exercise price.
|
The share-based compensation expenses by line item in the accompanying condensed consolidated statements of comprehensive loss is summarized as follows:
|
Six-months
|
Six-months
|
|||||||
|
period ended
|
period ended
|
|||||||
|
June 30
|
June 30
|
|||||||
|
2023
|
2022
|
|||||||
|
USD thousand
|
USD thousand
|
|||||||
|
Cost of services
|
|
|
||||||
|
Research and development
|
|
|
||||||
|
Sales and marketing
|
|
|
||||||
|
General and administrative
|
|
|
||||||
|
|
|
|||||||
Note 6 - Warrants for Ordinary Shares
The Fair value of the Warrants:
|
June 30
|
December 31
|
|||||||
|
2023
|
2022
|
|||||||
|
Value of warrant per share
|
$
|
|
$
|
|
||||
|
Number of ordinary shares issuable upon exercise of warrants
|
|
|
||||||
|
Fair value of warrant liability (in USD thousand)
|
$
|
|
$
|
|
||||
For the period ended June 30, 2023, the Company recorded a financial expense of $51 thousand to the condensed consolidated statements of comprehensive loss as part of the financial income, net, relating to the warrant’s fair value increased in the period.
F - 13
Otonomo Technologies Ltd.
Notes to the Interim Unaudited Condensed Consolidated Financial Statements
Note 6 - Warrants for ordinary shares (cont'd)
The Black-Scholes assumptions used to value the private warrants are as follows:
|
June 30
|
December 31
|
|||||||
|
2023
|
2022
|
|||||||
|
Volatility
|
|
%
|
|
%
|
||||
|
Risk-free interest rate
|
|
%
|
|
%
|
||||
|
Expected dividends
|
|
%
|
|
%
|
||||
|
Expected life (in years)
|
|
|
||||||
Note 7 - Net Loss Per Share Attributable to Ordinary Shareholders
The following table sets forth the computation of basic and diluted net loss per share attributable to ordinary shareholders for the periods presented:
|
Six-months
|
Six-months
|
|||||||
|
period ended
|
period ended
|
|||||||
|
June 30
|
June 30
|
|||||||
|
2023
|
2022
|
|||||||
|
In USD thousands, except share data
|
||||||||
|
Numerator:
|
||||||||
|
Net loss
|
(
|
)
|
(
|
)
|
||||
|
Denominator:
|
||||||||
|
Weighted-average shares used in computing net loss per share
|
||||||||
|
attributable to ordinary shareholders, basic and diluted
|
|
|
||||||
|
Net loss per share attributable to ordinary shareholders, basic
|
||||||||
|
and diluted
|
(
|
)
|
(
|
)
|
||||
Since the Company incurred net losses for each of the periods presented, diluted net loss per share is the same as basic net loss per share. All of the Company’s outstanding stock options and RSUs, as well as the warrants, were excluded in the calculation of diluted net loss per share as the effect would be anti-dilutive.
F - 14
Otonomo Technologies Ltd.
Notes to the Interim Unaudited Condensed Consolidated Financial Statements
Note 8 - Subsequent events
| A. |
Exchange Offer and Consent Solicitation
|
On July 24, 2023, the Company announced that it had commenced an exchange offer and consent solicitation relating to its outstanding warrants. On August 23, 2023, the Company announced the expiration and results of its exchange offer and consent solicitation relating to its outstanding warrants. The Company has been advised that 5,496,433 public warrants, or approximately 63.7 % of the outstanding public warrants, and 5,200,000 private placement warrants, representing all of the outstanding private placement warrants, were validly tendered and not withdrawn prior to the expiration of the offer and consent solicitation. The Company expects to accept all validly tendered warrants in exchange for 0.0167 ordinary shares per warrant on or before August 25, 2023.
In addition, pursuant to the consent solicitation, the Company received approval from the holders of a majority of the public warrants of an amendment to the warrant agreement governing the warrants (the “Warrant Amendment”). On August 23, 2023, the Company executed the Warrant Amendment and announced that it will exercise its right, in accordance with the terms of the Warrant Amendment, to exchange all remaining untendered warrants for ordinary shares at an exchange ratio of
| B. |
Headquarters office lease
|
On July 3, 2023, the Company amended its headquarters lease agreement as part of the Cost Reduction Initiative. The leased space and the lease payments were reduced by half, down to 745.5 sqm. This lease agreement covers the third quarter of 2023 with an option to extend until September 30, 2024, with a 30-day notice.
F - 15
Exhibit 99.2
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited interim consolidated financial statements as of and for the six months ended June 30, 2023, included as Exhibit 99.2 to this Report on Form 6-K (this “Report”) and our audited consolidated financial statements and other financial information as of and for the year ended December 31, 2022 appearing in our Annual Report on Form 20-F for the year ended December 31, 2022 (our “Annual Report”) and Item 5 - “Operating and Financial Review and Prospects” of that Annual Report. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled “Cautionary Statement Regarding Forward-Looking Statement” and in the section entitled Item 3.D. “Risk Factors” of our Annual Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Unless otherwise designated, the terms “we”, “us”, “our”, “Otonomo”, “the Company” and “our company” refer to Otonomo Technologies Ltd.
Forward-Looking Statements
Statements in this Report may constitute “forward-looking statements” within the meaning of the United States Federal securities laws. These forward-looking statements can generally be identified as such because the context of the statement will include words such as “may,” “might,” “will,” “could,” “would,” “intends,” “plans,” “believes,” “anticipates,” “expects,” “seeks,” “estimates,” “predicts,” “potential,” “continue,” “contemplate” or “opportunity,” the negative of these words or words of similar import. Similarly, statements that describe our business outlook or future economic performance, anticipated revenues, expenses or other financial items, introductions and advancements in development of products, and plans and objectives related thereto, and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters, are also forward-looking statements. Forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. Factors that could cause or contribute to such differences include, but are not limited to, those set forth Item 3.D. “Risk Factors” in our Annual Report, as well as those discussed elsewhere in our Annual Report and in our other filings with the Securities and Exchange Commission.
Overview
We are a leading one-stop shop for mobility data. Otonomo fuels a data ecosystem of OEMs, fleets and service providers spanning the transportation, mobility and automotive industries. Our platform securely processes data globally from vehicles licensed on the platform and mobility demand data from multimodal sources, then reshapes and enriches it to accelerate time to market for new services that improve the mobility and transportation experience. We provide deeper visibility and actionable insights to empower strategic data-driven decisions – taking the guesswork out of mobility and transportation planning, deployment and operations.
As part of our proprietary data platform, we have developed a robust suite of SaaS offerings that provide both OEMs and service providers with additional capabilities, and that incorporate vertically specific applications to meet different privacy, regulation, storage, visualization and data insight needs.
Privacy by design and neutrality are at the core of our platform, which enables compliance with regulations such as GDPR, CCPA, and other vehicle specific regulations, such as the EU requirement/directive that OEMs share connected car data with third parties or the Massachusetts’ Right to Repair Act allowing access to vehicle data for maintenance and repair purposes.
We generate the majority of our revenue from subscription fees from customers accessing the Company’s enterprise cloud computing services (“SaaS subscriptions”).
Our customers typically enter into contractual arrangements with terms up to three-years. Some customers, especially smaller organizations, consume data points on our platform through the self-serve platform on an on-demand basis for which we charge based on data points or trips taken.
Our go-to-market strategy is focused on expanding our access to data through partnering with OEMs, fleets and other data providers, acquiring new customers and driving continued use of our platform for existing customers.
We pursue strategic partnerships with OEMs, fleets and other data providers through a dedicated team segmented by geographical regions. We focus our selling efforts on organizations of various sizes, within specific customer segments, and licenses access to our platform through a direct sales force which is geographically separated. Our platform is used globally by organizations of all sizes across a broad range of industries. In 2022, we had 107 total customers, which was an increase from 55 total customers in 2021.
Key Factors Affecting Otonomo’s Performance
Cost Reduction Initiative
During the fourth quarter of 2022, the Company commenced the Cost Reduction Initiative, which included a workforce reduction of a significant number of employees in connection with the Company adjusting its budget for 2023 to focus on managing expenses and preserving operating capital to achieve its growth and profitability goals. In connection with the Cost Reduction Initiative, the Company sunsetted its MI services in December 2022 and sunsetted its Connected Vehicle Data services in April 2023.
Focusing on Connected Fleet and Connected Insurance Tech business lines
In connection with the Cost Reduction Initiative, the Company is focusing on the Connected Fleet and Connected Insurance Tech business lines. The Company sunsetted its MI services in December 2022 and sunsetted its Connected Vehicle Data services in April 2023. We may not achieve anticipated revenue growth due to the Cost Reduction Initiative, which includes a workforce reduction of a significant number of employees.
Expanding Within Our Existing Customer Base
We believe that there is a substantial opportunity to expand the usage of our platform within our existing customers. We plan to continue investing in our direct sales force to encourage increased data consumption and adoption of new use cases among our existing customers.
Once deployed, our customers often expand their use of our platform more broadly within the enterprise and across their ecosystem of customers and partners as they identify new use cases and realize the benefits of our platform.
In any given period, there is a risk that customer consumption of our platform will be lower than we expect, which may cause fluctuations in our revenue and results of operations. Our ability to increase usage of our platform by existing customers, and, in particular, by large enterprise customers, will depend on a number of factors, including our customers’ satisfaction with our platform, competition, pricing, availability and quality of data, overall changes in our customers’ spending levels and the effectiveness of our efforts to help our customers realize the benefits of our platform.
Components of Results of Operations
Revenues
The revenue comprised mainly of subscription fees from customers accessing the Company’s enterprise cloud computing services (“SaaS subscriptions”). In addition, the Company provides customization, research, and analytical services to its customers, such professional services revenues are recognized as services are delivered.
The following table sets forth the geographic breakdown of revenues for the periods indicated.
Six Month Period Ended March 31, | ||||||||
2023 | 2022 | |||||||
USD thousands | USD thousands | |||||||
Americas | 1,590 | 1,316 | ||||||
APAC | 68 | 60 | ||||||
EMEA | 1,807 | 1,575 | ||||||
Total revenues | 3,465 | 2,951 | ||||||
Cost of Services
Cost of services consists primarily of expenses related to the purchasing of data from data suppliers, amounts paid to data suppliers under revenue sharing or fixed price arrangements, software licenses, and personnel-related costs associated with customer support and professional services, including salaries and benefits.
Operating Expenses
Our operating expenses consist of third-party cloud infrastructure, sales and marketing, research and development, and general and administrative expenses. Personnel costs are the most significant component of operating expenses and consist of salaries, benefits, bonuses and share-based compensation. Operating expenses also include allocated overhead costs. Overhead costs that are not substantially dedicated for use by a specific functional group are allocated based on headcount. Such costs include costs associated with office facilities, IT-related personnel and other expenses, such as software and subscription services.
Third-Party Cloud Infrastructure
Third-party cloud infrastructure expenses include expenses incurred in connection with the Company’s customers’ use of the Company’s platform and the maintenance of the Company’s platform on public clouds, such as cloud computing or other hosting and data storage, including different regional deployments. In addition, cloud infrastructure also includes the third-party cloud infrastructure expenses incurred with internal research and development use.
We expect that our third-party cloud infrastructure expenses will decrease due to our Cost Reduction Initiative we started during the fourth quarter of 2022 and completed in the second quarter of 2023.
Research and Development
Research and development costs include personnel-related expenses associated with the Company’s engineering personnel responsible for the design, development and testing of its products, cost of development environments and tools and allocated overhead. Research and development costs are expensed as incurred.
We expect that our research and development expenses will decrease due to our Cost Reduction Initiative we started during the fourth quarter of 2022 and completed in the second quarter of 2023.
Sales and Marketing
Sales and marketing expenses consist primarily of personnel-related expenses associated with our sales and marketing staff, including salaries, benefits, bonuses, share-based compensation and travel. Marketing expenses also include third-party software tools required for marketing automation and consulting and advertising costs. We expect these costs to increase over time as the market expands and additional tools are implemented. Prior to the disruption of international travel caused by the COVID-19 pandemic beginning in January 2020, sales and marketing expenses also included international travel of personnel and expenses related to trade shows and other marketing events. We expect that our sales and marketing expenses will decrease due to our Cost Reduction Initiative we started during the fourth quarter of 2022 and completed in the second quarter of 2023.
General and Administrative
General and administrative expenses consist primarily of personnel-related expenses for our finance, legal, human resources, and administrative personnel, including salaries, benefits, bonuses, and share-based compensation. General and administrative expenses also include external legal, accounting, bookkeeping and other professional services fees, software and subscription services dedicated for use by our general and administrative functions, and other corporate expenses. General and administrative expenses also include allocated overhead costs.
We incur additional expenses as a result of becoming a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations, and increased expenses for insurance, investor relations, and professional services. We expect that our sales and marketing expenses will decrease due to our Cost Reduction Initiative we started during the fourth quarter of 2022 and completed in the second quarter of 2023.
Financial Income (Expense), Net
Financial income (expense), net, consists primarily of adjustments related to changes in value of our warrants for Otonomo Ordinary Shares, which were charged to financial income (expenses), net.
In addition, financial income (expense), net also include interest income earned on our cash equivalents and short-term and long-term deposits and investments as well as currency related adjustments.
Provision for (Benefit from) Income Taxes
Provision for (benefit from) income taxes consists primarily of income taxes in certain foreign and state jurisdictions in which we conduct business. Valuation allowances are provided when necessary to reduce deferred tax assets to the amount more likely than not to be realized.
Impairment of goodwill and intangible assets
Goodwill is not amortized but rather tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. 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 has determined that it has one operating segment and one reporting unit. Goodwill impairment is recognized when the quantitative assessment results in the carrying value exceeding the fair value, in which case an impairment charge is recorded to the extent the carrying value exceeds the fair value.
Intangible assets are amortized over the estimated useful life of the respective asset. Each period the Company evaluates the estimated remaining useful lives of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization
Results of Operations
The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this Report.
Comparison of the Six Month Periods Ended June 30, 2023 and June 30, 2022
Revenue
Six Month Period Ended June 30, | Change | Change | ||||||||||||||
2023 | 2022 | $ | % | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Americas | $ | 1,590 | $ | 1,316 | $ | 274 | 21 | % | ||||||||
APAC | $ | 68 | $ | 60 | $ | 8 | 13 | % | ||||||||
EMEA | $ | 1,807 | $ | 1,575 | $ | 232 | 15 | % | ||||||||
Total | $ | 3,465 | $ | 2,951 | $ | 514 | 17 | % | ||||||||
Revenue increased by approximately $514 thousand, or 17%, to approximately $3,465 thousand for the six month period ended June 30, 2023, from approximately $2,951 thousand for the six month period ended June 30, 2022. Growth was primarily driven by the contribution of $1,913 thousand revenue mostly The Floow, acquired in April 2022, which was offset by a reduction of $1,399 thousand mainly due to the Cost Reduction Initiative during the six month period ended June 30, 2023.
Costs of Services and Operating Expenses
Six Month Period Ended June 30, | Change | Change | ||||||||||||||
2023 | 2022 | $ | % | |||||||||||||
(Dollars in thousands) | ||||||||||||||||
Cost of services | $ | 1,644 | $ | 1,341 | $ | 303 | 23 | % | ||||||||
Cloud infrastructure | $ | 1,289 | $ | 2,492 | $ | (1,203 | ) | (48 | )% | |||||||
Research and development | $ | 6,205 | $ | 10,656 | $ | (4,451 | ) | (42 | )% | |||||||
Sales and marketing | $ | 6,512 | $ | 10,503 | $ | (3,991 | ) | (38 | )% | |||||||
General and administrative | $ | 10,908 | $ | 11,072 | $ | (164 | ) | (1 | )% | |||||||
Depreciation and amortization | $ | 148 | $ | 1,728 | $ | (1,580 | ) | (91 | )% | |||||||
Contingent consideration income | $ | 2,061 | $ | (1,541 | ) | $ | 3,602 | (234 | )% | |||||||
Impairment of goodwill | $ | - | $ | 37,000 | $ | (37,000 | ) | (100 | )% | |||||||
Impairment of intangible assets | $ | - | $ | 8,785 | $ | (8,785 | ) | (100 | )% | |||||||
Total costs of services and operating expenses | $ | 28,767 | $ | 82,036 | $ | (53,269 | ) | 17 | % | |||||||
Cost of services
Cost of services increased by approximately $303 thousand, or 23%, to approximately $1,644 thousand for the six month period ended June 30, 2023, from approximately $1,341 thousand for the six month period ended June 30, 2022. Cost of services includes the purchasing of data for $661 thousand, a decrease of 31% year over year, which reflects the cost we paid to the OEMs and other data providers for their data. The decrease is a result of the sunsetting of the activity from Connected Vehicle Data. Cost of services also includes $711 thousand related to the cost of services provided to The Floow customers, an increase due to the acquisition of The Floow in April 2022, and $272 thousand related to the Cost Reduction Initiative during the six month period ended June 30, 2023.
Third‑Party Cloud Infrastructure
Third‑party cloud infrastructure expenses decreased by approximately $1,203 thousand, or 48%, to approximately $1,289 thousand for the six month period ended June 30, 2023, from approximately $2,492 thousand for the six month period ended June 30, 2022. Although there was an increase in the costs during the second quarter of 2022 due to The Floow acquisition in April 2022, it was offset by a decrease which largely occurred as a result of our Cost Reduction Initiative.
Research and Development
Research and development expenses decreased by approximately $4,451 thousand, or 42%, to approximately $6,205 thousand for the six month period ended June 30, 2023, from approximately $10,656 thousand for the six month period ended June 30, 2022. Although there was an increase in the costs during the second quarter of 2022 due to The Floow acquisition in April 2022, this was offset by the workforce reduction in connection with our Cost Reduction Initiative.
Sales and Marketing
Sales and marketing expenses decreased by approximately $3,991 thousand, or 38%, to approximately $6,512 thousand for the six month period ended June 30, 2023 from approximately $10,503 thousand for the six month period ended June 30, 2022. Although there was an increase in the costs during the second quarter of 2022 due to The Floow acquisition in April 2022, this was offset by the workforce reduction in connection with our Cost Reduction Initiative.
General and Administrative
General and administrative expenses decreased by approximately $164 thousand, or 1%, to approximately $10,908 thousand for the six month period ended June 30, 2023 from approximately $11,072 thousand for the six month period ended June 30, 2022. The decrease was primarily attributable to our Cost Reduction Initiative was offset by $4,068 thousand of transaction expenses related to the Merger and $84 thousand of restructuring costs. Net expenses, excluding restructuring and transaction expenses decrease by 39% mainly due to our Cost Reduction Initiative.
Depreciation and amortization
Depreciation and amortization decreased by approximately $1,580 thousand, or 91%, to approximately $148 thousand for the six month period ended June 30, 2023, from approximately $1,728 thousand for the six month period ended June 30, 2022. The decrease was primarily attributable to the amortization of technology, customer relationships and trademarks that were acquired in connection with the Neura and The Floow acquisitions which began amortizing in October 2021 and April 2022, respectively.
Contingent consideration income
During the six month period ended June 30, 2023, the contingent consideration liability accrual in relation to The Floow Acquisition increased by approximately $3,602 thousand, or 234%, to an expense of approximately $2,061 thousand for the six month period ended June 30, 2023, from an income of approximately $1,541 thousand for the six month period ended June 30, 2022 due to revaluation updating.
Impairment of goodwill and intangible assets
During the six month period ended June 30, 2023, impairment of goodwill and intangible assets decreased by approximately $45,785 thousand, or 100%, to approximately $0 for the six month period ended June 30, 2023, from approximately $45,785 thousand for the six month period ended June 30, 2022. The decrease in the six month period ended June 30, 2023 primarily stems from Neura and The Floow’s goodwill and intangibles impairment charge, respectively, which were triggered by the decrease in the trading price of our securities and recorded in compliance with ASC 350 “Intangibles-Goodwill and Other”.
Financial (Expense) Income, Net
| & |