Wejo Group Ltd [WEJOW] Filings

10-Q 1 wejo-20230331.htm 10-Q wejo-20230331

_________________________________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_____ to_____

Commission file number 001-41091

Wejo Group Limited

(Exact name of registrant as specified in its charter)

Bermuda

98-1611674

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

Canon’s Court

22 Victoria Street

Hamilton HM12, Bermuda

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code:

+44 8002 343065

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Shares, $0.001 par value

WEJO

NASDAQ Stock Market LLC

Warrants, each whole warrant exercisable for one share of common shares at an exercise price of $11.50 per share

WEJOW

NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of May 15, 2023, there were 109,900,592 common shares, $0.001 par value per share, outstanding.

_________________________________________________________________________________________


	TABLE OF CONTENTS


	PART I FINANCIAL INFORMATION	Page
Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets (unaudited)	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)	5
	Condensed Consolidated Statements of Shareholders’ (Deficit) Equity (unaudited)	6
	Condensed Consolidated Statements of Cash Flows (unaudited)	7
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

	PART II OTHER INFORMATION
Item 1.	Legal Proceedings.	42
Item 1A.	Risk Factors.	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	4 5
Item 3.	Defaults Upon Senior Securities.	4 5
Item 4.	Mine-Safety Disclosure.	4 5
Item 5.	Other Information.	46
Item 6.	Exhibits.	47

Signatures		48

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that are based on current expectations, estimates, forecasts and projections about us, the industry in which we operate and other matters, as well as management’s beliefs, plans, objectives, assumptions or projections regarding future events or future results and therefore are, or may be deemed to be, “forward-looking statements.” These forward-looking statements can generally be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “seeks,” “projects,” “intends,” “plans,” “may,” “will,” or “should” or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Quarterly Report on Form 10-Q and these forward-looking statements reflect management’s expectations regarding our future growth, results of operations, operational and financial performance and business prospects and opportunities. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties.

Forward-looking statements speak only as of the date they are made. These cautionary statements are being made pursuant to federal securities laws with the intention of obtaining the benefits of the “safe harbor” provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Readers are cautioned against relying on forward-looking statements, and Wejo Group Limited (“Wejo,” “we,” “our,” “us,” or the “Company”) assumes no obligation and do not intend to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. The Company does not give any assurance that it will achieve its expectations.

Forward-looking statements are based on current assumptions, estimates, expectations, and projections of the management of Wejo Group Limited (the “Company” or “Wejo”) and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this Annual Report, including but not limited to: (i) the projected financial information, anticipated growth rate and market opportunity of the Company; (ii) the ability to maintain the listing of the Company’s common shares and Company warrants on the NASDAQ Stock Market LLC (“NASDAQ”); (iii) the Company’s public securities’ potential liquidity and trading; (iv) the Company’s ability to continue as a going concern; (v) the Company’s ability to raise financing in the future and access to capital facilities; (vi) the Company’s ability to close its pending merger with TKB Critical Technologies 1; (vii) the Company’s success in retaining or recruiting, or changes required in, our officers, key employees or directors; (viii) the impact of the regulatory environment and complexities with compliance related to such environment, including compliance with restrictions imposed by federal law and data/privacy law in “internet of things” milieu; (ix) economic impacts, including inflation and a potential recession; (x) the Company’s ability to successfully implement cost reduction initiatives; (xi) the impact of war, acts of terrorism, mass casualty events, social unrest, civil disturbance or disobedience; (xii) the Company’s ability to cure any defaults under its debt agreements; (xiii) the Company’s ability to service its debt obligations; and (xiv) factors relating to the business, operations and financial performance of the Company and its subsidiaries.

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those that the Company has anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the Company’s control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described within the risk factors disclosed in Part I, Item 1A in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. You should carefully consider the risks and uncertainties described in this Quarterly Report as they identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

PART 1. Financial Information

Item 1. Financial Statements

Wejo Group Limited

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share amounts)


	March 31, 2023		December 31, 2022
Assets
Current assets:
Cash	$	842	$	8,626
Accounts receivable, net	4,396		4,264
Forward Purchase Agreement	1,742		2,687
Prepaid expenses and other current assets	7,197		6,727
Total current assets	14,177		22,304
Property and equipment, net	413		474
Operating lease right-of-use asset	214		452
Intangible assets, net	7,029		7,337

Other assets	747		566
Total assets	$	22,580	$	31,133
Liabilities and Shareholders’ (Deficit) Equity
Current liabilities:
Accounts payable, including due to related party of $2,352 and $967, respectively	$	28,492	$	21,851
Accrued expenses and other current liabilities	34,164		26,599
Current portion of operating lease liability	208		431
Second Lien Note	4,054		—
Unsecured Note	2,114		—
Secured Convertible Notes	11,510		11,390

Total current liabilities	80,542		60,271
Non-current liabilities:
Long term portion of operating lease liability	—		21
Long term debt, net of unamortized debt discount and debt issuance costs	36,874		36,426
Warrant Liability - GM Securities Purchase Agreement	380		343
Warrant Liability - Second Lien Securities Purchase Agreement	2,051		—
Warrant Liability - Unsecured Note Offering	1,063		—
Public Warrants	586		594
Exchangeable Right liability	366		403
Other non-current liability	1,531		1,838
Total liabilities	123,393		99,896
Commitments and contingencies
Shareholders’ (deficit) equity
Common shares, $0.001 par value, 634,000,000 shares authorized; 109,771,513 and 109,461,562 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	110		109
Additional paid in capital	447,218		445,478
Accumulated deficit	(560,202)		(529,204)
Accumulated other comprehensive income	12,061		14,854
Total shareholders’ (deficit) equity	(100,813)		(68,763)
Total liabilities and shareholders’ (deficit) equity	$	22,580	$	31,133

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Wejo Group Limited

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except share and per share amounts)


	Three Months Ended March 31,
	2023		2022
Revenue, net	$	3,860	$	568
Costs and operating expenses:
Cost of revenue (exclusive of depreciation and amortization shown separately below)	4,224		1,317
Technology and development	9,709		7,297
Sales and marketing	4,441		5,214
General and administrative	10,483		17,729
Depreciation and amortization	909		1,098
Restructuring costs	2,385		—
Total costs and operating expenses	32,151		32,655
Loss from operations	(28,291)		(32,087)
Interest expense	(1,490)		(1,243)
Other expense, net	(1,179)		(6,916)
Loss before taxation	(30,960)		(40,246)
Income tax expense	(38)		(96)
Net loss	(30,998)		(40,342)
Other comprehensive (loss) income:
Foreign currency exchange translation adjustment	(2,793)		2,983
Total comprehensive loss	$	(33,791)	$	(37,359)
Net loss per common share - basic and diluted	$	(0.28)	$	(0.43)
Weighted-average common shares - basic and diluted	109,681,972		94,300,245

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Wejo Group Limited

Condensed Consolidated Statements of Shareholders' (Deficit) Equity

(unaudited)

(in thousands, except share amounts)


	Common Shares			Additional Paid in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Shareholders' (Deficit) Equity
	Shares	Value
Balance at December 31, 2022	109,461,562	$	109	$	445,478	$	14,854	$	(529,204)	$	(68,763)
Issuance of common shares1	309,951	1		99		—		—		100



Share-based compensation expense	—	—		1,641		—		—		1,641
Unrealized loss on foreign currency translation	—	—		—		(2,793)		—		(2,793)
Net loss	—	—		—		—		(30,998)		(30,998)
Balance at March 31, 2023	109,771,513	$	110	$	447,218	$	12,061	$	(560,202)	$	(100,813)

Balance at December 31, 2021	93,950,205	$	94	$	415,304	$	2,247	$	(369,951)	$	47,694
Issuance of common shares	715,991	1		2,999		—		—		3,000


Share-based compensation expense	—	—		996		—		—		996
Unrealized gain on foreign currency translation	—	—		—		2,983		—		2,983
Net loss	—	—		—		—		(40,342)		(40,342)
Balance at March 31, 2022	94,666,196	$	95	$	419,299	$	5,230	$	(410,293)	$	14,331

1 See Note 3 for additional information on the shares issued during the three months ended March 31, 2023.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Wejo Group Limited

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)


	Three Months Ended March 31,
	2023		2022
Operating activities
Net loss	$	(30,998)	$	(40,342)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount	449		1,243
Change in estimated fair value on financial instruments measured at fair value	666		3,791
Loss on issuance on financial instruments measured at fair value	3,370		—
Depreciation and amortization	909		1,098
Expenses relating to capital raising activities	421		—
Non-cash share-based compensation expense	1,711		996
Non-cash expense settled by issuance of commitment shares	—		3,000
Non-cash share-based payment expense	100		—
Non-cash lease expense	(6)		156
Non-cash (gain) loss on foreign currency remeasurement	(1,963)		4,174
Other adjustments	45		—
Changes in operating assets and liabilities:
Accounts receivable	(131)		(656)
Prepaid expenses and other current assets	508		1,332
Accounts payable	5,909		3,839
Operating lease liability	—		(155)
Other assets	(162)		(480)
Other long-term liability	(352)		—
Accrued expenses and other current liabilities	7,247		(1,407)
Income tax payable	21		96
Net cash used in operating activities	(12,256)		(23,315)
Investing activities
Purchases of property and equipment	—		(145)
Development of internal software	(328)		(662)
Other investing activities	(170)		—
Net cash used in investing activities	(498)		(807)
Financing activities

Proceeds from related party borrowing	482		—
Repayment of related party borrowing	(482)		—
Payment of ATM transaction costs	(275)		—
Payment of transaction costs of Second Lien Securities Purchase Agreement	(365)		—
Payment of other financing costs	(3)		—
Payment of Virtuoso Business Combination costs	—		(2,085)
Proceeds from issuance of Second Lien Securities Purchase Agreement	3,500		—
Proceeds from issuance of Unsecured Note Offering	2,000		—
Settlement of Forward Purchase Agreement	45		—
Net cash provided by (used in) financing activities	4,902		(2,085)
Effect of exchange rate changes on cash	68		(1,384)
Net decrease in cash	(7,784)		(27,591)
Cash at beginning of period	8,626		67,322
Cash at end of period	$	842	$	39,731
Non-cash investing and financing activities
Settlement of Forward Purchase Agreement in prepaid expenses and other current assets	$	760	$	—
Property and equipment purchases in accounts payable	$	—	$	24


Virtuoso Business Combination costs included in accounts payable and accrued expenses	$	6,175	$	6,391
Capital raising costs included in accounts payable and accrued expenses	$	571	$	—

Right-of-use asset obtained in exchange for new operating lease liability	$	—	$	3,481

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Wejo Group Limited

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Nature of Business

Wejo Group Limited is a publicly traded holding company incorporated under the laws of Bermuda. The Company was originally incorporated as an exempted company limited by shares incorporated under the laws of Bermuda on May 21, 2021 for purposes of effectuating the transactions (the “Virtuoso Business Combination”) contemplated by that certain Agreement and Plan of Merger (the “Agreement and Plan of Merger”) dated as of May 28, 2021, by and among Virtuoso Acquisition Corp. (“Virtuoso”), Yellowstone Merger Sub, Inc. (the “Merger Sub”), Wejo Bermuda Limited (“Wejo Bermuda”) and Wejo Limited (a private limited liability company incorporated under the laws of England and Wales on December 13, 2013, herein referred to as “Legacy Wejo” or “Accounting Predecessor”). In connection with the Virtuoso Business Combination, the Company’s common shares and warrants were listed on the NASDAQ Stock Market LLC under the symbols WEJO and WEJOW, respectively.

The Virtuoso Business Combination closed on November 18, 2021. In order to effectuate the Virtuoso Business Combination, Wejo Group Limited acquired all of the shares of the Accounting Predecessor on November 18, 2021. Immediately following the acquisition of the Accounting Predecessor’s shares, Wejo Group Limited merged with Virtuoso, which was effectuated through a merger between Merger Sub and Virtuoso. Merger Sub became a newly formed subsidiary of Wejo Group Limited. Virtuoso survived the merger. The Accounting Predecessor and Virtuoso became indirect, wholly-owned subsidiaries of Wejo Group Limited following the Virtuoso Business Combination. Prior to the Virtuoso Business Combination, Wejo Group Limited had no material operations, assets or liabilities.

On January 10, 2023, the Company entered into the a business combination agreement (the “TKB Business Combination Agreement”) with TKB Critical Technologies 1, an exempted company limited by shares incorporated under the laws of the Cayman Islands (“TKB”), Green Merger Subsidiary Limited, an exempted company limited by shares incorporated under the laws of the Cayman Islands and a direct, wholly owned subsidiary of the Company (“Merger Sub 1”) which agreed to participate in the series of transactions in amongst and with Wejo Holdings Ltd., an exempted company limited by shares incorporated under the laws of Bermuda and a direct, wholly owned subsidiary of the Company (“Holdco”) and Wejo Acquisition Company Ltd, an exempted company limited by shares incorporated under the laws of Bermuda and a direct, wholly-owned subsidiary of Holdco (“Merger Sub 2”).

Products and services

The Company provides software and technology solutions to multiple market verticals in combination with services that utilize ingested and standardized connected vehicle and other high volume, high value datasets, through its proprietary cloud software and analytics platform, Wejo Neural Edge (which is the Company’s technology that includes the Wejo ADEPT platform). The Company’s sector solutions, primarily located in the United States and Europe, provide valuable insights to its customers in public and private organizations, including, but not limited to, automotive original equipment manufacturers (“OEMs”), first tier (“Tier 1”) automotive suppliers, fleet management companies (“Fleets”), departments of transportation, retailers, mapping companies, insurance companies, universities, advertising firms, construction firms and research departments. In particular, these solutions can be used to unlock unique insights about mobility journeys, city planning, electric vehicle (“EV”) usage, driver safety, audience and media measurements and more. Over the next several years, the Company expects to further expand its platform to ingest data globally from numerous additional OEMs and other valuable sources, enabling the expansion into additional market verticals and geographic regions, as well as to provide broader and deeper business insights to its OEMs and Tier 1 preferred partners.

Wejo Neural Edge is a cloud-based software and analytics platform that makes accessing and sharing vast volumes of connected vehicle data easier, by simplifying and standardizing data sets to maximize the insights gleaned from connected vehicle data to create a more robust mobility experience for drivers, and generate value for vehicle manufacturers and other adjacent businesses. The Wejo Neural Edge platform interfaces with the electronic data originating from vehicles from OEMs, Fleets, and Tier 1s who have partnered with Wejo. This data can be leveraged by the OEM partners as well as other private and public sector businesses in order to create rich analytics, machine learning and rapid insights. The Wejo Neural Edge platform also includes flexible implementation options and adaptable interfaces to ensure a successful and rapid roll out across territories. In addition, Wejo Neural Edge compliance approach supports legal and regulatory compliance, including country, federal, state and local regulations.

The Company has two primary business lines, Wejo Marketplace Data Solutions, which includes its data visualization platform (“Wejo Studio”), and Wejo Software & Cloud Solutions. Wejo Marketplace Data Solutions utilizes ingested data from multiple sources that is transformed into standardized data sets, which generate rich insights to be utilized by its customers. Wejo Marketplace Data Solutions interacts with customers through Wejo Studio, the Company’s platform for data visualization tools that displays these valuable insights to its customers in a consumable and actionable format, as well as through data licenses of its proprietary data used by customers for ongoing and efficient access to quickly evolving data trends. Wejo Software & Cloud Solutions utilizes these same valuable data sets to support design and development of solutions such as software platforms, software analytical tools, data management software, and data privacy solutions for its OEM partners, its Tier 1 partners and Fleet. Wejo Software & Cloud Solutions empowers customers to improve the management of their operations and creates a better customer experience through SaaS licenses of software platforms, software analytical tools, data management software, privacy and data compliance software, and data visualization software. Each business vertical leverages the Company’s exclusive, proprietary

dataset, which unlocks insights that are derived from the vehicle sensors of the connected vehicles of its automotive partners, Tier 1, and Fleet partners. The Company partners with the world’s leading automotive manufacturers to standardize connected car data through the Wejo ADEPT platform, including traffic intelligence, analysis of high frequency vehicle movements and analysis of common driving events and trends. For customers and marketplaces, the Company will provide insights, solutions and analytics through software and visualization tools available for license and subscription by its customers.

Going Concern

In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued (the “Going Concern Period”). This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued, which are described below. When substantial doubt about the Company’s ability to continue as a going concern exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Generally, to be considered probable of being effectively implemented, the plans must have been approved before the date that the financial statements are issued.

As is common in early-stage companies with limited operating histories, the Company is subject to risks and uncertainties such as its ability to influence the connected vehicle market; successfully invest in technology, attract and retain resources and new business capabilities; maintain and grow the customer base; secure additional capital to support the investments needed and working capital requirements for its anticipated growth; comply with governing laws and regulations; and other risks and uncertainties such as those described in the Company’s 2022 Annual Report in Part I, Item 1A.

The Company has incurred significant operating losses since its formation. During the periods ended March 31, 2023 and December 31, 2022, the Company incurred a loss from operations of $28.3 million and $119.9 million, respectively, and used $12.3 million and $85.5 million of cash in operating activities, respectively. As of March 31, 2023, the Company had cash of $0.8 million, an accumulated deficit of $560.2 million, and the Company’s current liabilities exceeded its current assets by $66.4 million ($38.0 million as of December 31, 2022). Subsequent to March 31, 2023, the Company's cash balance has continued to decrease and has become overdrawn, using an uncommitted facility, and the Company's current liabilities have continued to increase as it continues to operate considering its current liquidity constraints. Operating losses will continue until the Company can grow revenue to a sufficient scale to cover investments to develop new products. Accordingly, the Company has historically relied on private equity and debt to fund operations.

Commencing in 2022 and continuing into 2023, management has taken measurable actions to significantly reduce expenses. Cost reductions implemented to date include a reduction in workforce, elimination of non-revenue projects, reductions in expenditures by negotiations with vendors in areas such as data acquisition, cloud costs, license fees for software, legal and professional fees, insurance and other costs. Furthermore, the Company has decreased its cash utilization from $10.0 million per month at the start of 2022 to an average of $7.0 million per month during the fourth quarter of 2022 and the first quarter of 2023. However, as set out below, the Company needs to raise further funds to meet its obligations.

Until the Company reaches cash flow breakeven operationally, it is in discussions with key vendors to allow the Company to pay for past and current services with the Company’s common shares in lieu of cash for some or all of the amounts owed. This partial payment in common shares, and any modification of the timing for payment, would help the Company to manage its cash obligations while it completes the capital raising initiatives discussed below or that otherwise may be available to the Company. The Secured Loan Notes (as defined in Note 3 to the accompanying unaudited condensed consolidated financial statements) may provide the lenders thereunder with certain rights if the Company commences negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness or grants a lien to another lender with respect to the collateral securing the Company’s obligations under the Secured Loan Notes. The Company believes it has the support of the lenders under its Secured Loan Notes to allow the above transactions to proceed, and anticipates that this support will continue to be provided. There can be no certainty that the creditors will continue to support the Company, and if they took action against the Company then the Company would have to take protective action.

The Company has one ongoing source of funding through the forward purchase agreement (the “Forward Purchase Agreement” or the “FPA”) Wejo Limited entered into with Apollo AN Credit Fund (Delaware), L.P., Apollo Atlas Master Fund, LLC, Apollo Credit Strategies Master Fund Ltd., Apollo PPF Credit Strategies, LLC, and Apollo SPAC Fund I, L.P. (collectively “Apollo”). Funding under the FPA is driven by the future price and volume of the Company’s common shares, which will likely limit the timing and actual level of funds that can be raised. In addition, the window in which the Company can utilize the FPA may be restricted during “black-out periods” under the Company’s insider trading policy and if it is in possession of material non-public information. The FPA facility expires in November 2023 and the Company has 3.5 million shares that it may sell.

The Company has spent significant effort in 2022 and the first quarter of 2023 identifying and optimizing alternative capital pathways to fund operations for the long-term, culminating with the raising over $38.0 million of bridge capital over that period through the following transactions, among others: a Common Stock Purchase Agreement (the “CFPI Stock Purchase Agreement”) with CF Principal Investments LLC (“CFPI”); (ii) a private placement of common shares and warrants (the “July 2022 PIPE”) with various investors, which included a significant investment coming from Sompo Light Vortex, Inc. (“Sompo Light Vortex”), a wholly-owned subsidiary of Sompo Holdings, as well as current investors and certain members of the Company’s Board of Directors; (iii) the Forward Purchase Agreement, (iv) a $10 million secured convertible note (the “SCN” or “Secured Convertible Note”) with General Motors Holdings LLC (“GM”); (v) a $3.5 million second lien note (the “Second Lien Note”) with an investor (the “Second Lien Noteholder”); and (vi) a $2.0 million unsecured note (the “Unsecured Note”) with the Company’s Chairman, Tim Lee (see Notes 3 and 22). Subsequent to March 31, 2023, Richard Barlow, Founder and CEO, has provided short-term loan funding to enable the Company to meet essential payments (see Note 21).

In furtherance of its long-term capital strategy, on January 10, 2023, the Company announced it entered into the TKB Business Combination Agreement as a result of which, at the closing of the transaction, the Company expects to acquire up to $57.0 million in cash TKB has retained in trust, net of any redemptions by TKB shareholders in connection with the vote to approve the transaction. The completion of the TKB Business Combination is subject to certain key conditions, including completion of the merger by June 29, 2023 (the “TKB Consummation Deadline”) as discussed in greater detail below. Also as part of the Company’s long-term capital strategy, and as contemplated in the TKB Business Combination Agreement, the Company has been reaching out to strategic, institutional and other investors to fund a PIPE equity financing transaction in conjunction with the TKB Business Combination from which it is targeting a capital raise of $75.0 million (the “PIPE”). As of March 31, 2023, the Company entered into a non-binding letter of intent, subject to certain closing and other conditions, with a strategic investor to anchor the PIPE with a potential $20.0 million investment.

To provide financing sufficient to sustain operations until the closing of the TKB Business Combination and PIPE transactions, the Company is working to raise up to $30.0 million (which would be an advance on the targeted $75.0 million PIPE) from investors through a private placement of unsecured convertible notes (the “Pre-PIPE Convertible Notes”). The Company is in the final stages of an initial closing of $7.0 million in Pre-PIPE Convertible Notes with the strategic investor noted above, which is subject to conditions and which would constitute a portion of its $20 million investment. The Company is also engaged in discussions with strategic and financial investors to raise the remaining $23.0 million in Pre-PIPE Convertible Notes in the next few weeks. The Company is also working to secure a binding commitment for an unsecured bridge loan in the amount of $7.0 million (the “Pre-IP Facility Bridge Loan”) until a senior secured debt transaction can be completed among the parties to refinance the Secured Loan Notes and GM Senior Convertible Note, which may lead to additional funds being raised before the completion of the TKB Business Combination and PIPE transactions. Like the existing senior debt facilities, the new facility will be secured by the intellectual property assets of the Company, including the data asset.

On May 17, 2023, the Company and the Second Lien Noteholder entered into a Third Amendment to Secured Note (the “Third Amendment”) under which they agreed, in exchange for an extension fee in the amount of $100,000, that (i) certain notices delivered by the Second Lien Noteholder on May 3, 2023 (collectively, the “May 3 Notices”) were not delivered as required under the Second Lien Note to declare an event of default or demand immediate payment under the Second Lien Note, (ii) a second notice delivered by the Second Lien Noteholder on May 10, 2023 (the “Notice of Intent”) was properly delivered under the Second Lien Note, (iii) the Second Lien Noteholder may provide the Company with a Demand Notice after May 19, 2023, at which time the Company will be in default under the Note and the “Demand Payment Date” and “Maturity Date” of the Second Lien Note will be the next business day after delivery of the Demand Notice.

The Company’s cash flow forecasts indicate that the business can now only continue to operate for a very short period of time, which at the time of filing is expected to be no more than a few days, without raising new financing. If the Company does not pay off its obligations under the Second Lien Note prior to the issuance by the Second Lien Noteholder of a Demand Notice, it will be in default under the Second Lien Note, which could cross default to, and cause an acceleration of the Company’s obligations to GM under, the Secured Convertible Note absent a waiver from GM. If the Company does not obtain a waiver of any cross default and acceleration under the Secured Convertible Note, such default itself may cause a cross default under the Loan Note Instrument under which the Secured Loan Notes (together with the Second Lien Note and the Secured Convertible Note, the “Secured Notes Facilities”) were issued. Further, interest is due on the Secured Loan Notes on May 22, 2023. Failure to make such payment would be another event of default thereunder. Finally, the Unsecured Note matures on May 22, 2023. While the Company believes that Mr. Lee will agree to extend the maturity date thereunder, failure to do so prior to the maturity date before paying off the Company’s obligations would be an event of default. See Part II, Item 1A. Risk Factors in this report for a discussion of risks associated with a default under one or more of our Secured Notes Facilities or Unsecured Note.

The Company’s Board continues to be mindful of its fiduciary duties in the zone of insolvency and has sought the advice of insolvency experts in the key jurisdictions in which it operates to ensure it remains compliant with those obligations and any applicable regulations. If the Company has exhausted all options and no longer has a reasonable expectation of obtaining sufficient new funding before it defaults under one or more of its Secured Notes Facilities and it no longer retains the support of such creditors, then a filing for bankruptcy or administration would occur in the coming days. No legally binding agreement is yet in place for the Pre-PIPE Convertible Notes, the PIPE, the Pre-IP Facility Bridge Loan, or a refinancing of the Secured Loan Note, and for that reason and others, there can be no assurances that any such transaction or the TKB Business Combination will close or that the Company will raise sufficient funds from these transactions within the timing required to continue operating. Further, the Company does not anticipate that the parties can close the TKB Business Combination by the TKB Consummation Deadline. As such, TKB must receive approval from its shareholders of an additional extension of such deadline. This condition to the closing of

the TKB Business Combination and certain others are beyond the control of the Company. The Company cannot predict whether and when these other conditions will be satisfied. The Company cannot provide any assurance that the TKB Business Combination will be completed or that there will not be a delay in the completion of the TKB Business Combination.

Given the Company’s current liquidity, cash burn rate and capital readily available to us, management has concluded there is substantial doubt regarding the Company's ability to continue as a going concern within one year from the issuance date of the Company’s unaudited condensed consolidated financial statements. Further, there can be no assurances that it is probable the financing transactions discussed above will be completed on time or at all and the Company’s expectations will be achieved. The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The unaudited condensed consolidated financial statements do not reflect any adjustments relating to the recoverability and reclassification of assets and liabilities that might be necessary from the outcome of this uncertainty.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of Wejo Group Limited and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation.

The Company has summarized certain non-operating income (expense) lines in its unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2022 into a single line, Other expense, net in order to conform to the current year presentation. These non-operating income (expense) lines include: Gain on fair value of warrant liabilities, Loss on fair value of Forward Purchase Agreement, Gain on fair value of Exchangeable Right liability, and Other expense, net (see Note 11).

The Company has also summarized certain non-operating (gain) loss lines in its unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 into one line, Change in estimated fair value on financial instruments measured at fair value which includes Gain on fair value of warrant liabilities, Loss on fair value of Forward Purchase Agreement, and Gain on fair value of Exchangeable Right liability. There were no gains or losses on issuance on financial instruments measured at fair value during the three months ended March 31, 2022.

These reclassifications were made for the period ended December 31, 2022 and for prior periods, including the three months ended March 31, 2022 presented for a comparative purpose have no impact on the historical operating income, net income, total assets, liabilities, shareholders’ (deficit) equity or cash flows as previously reported by the Company.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of the unaudited condensed consolidated financial statements. Significant estimates and assumptions reflected in these unaudited condensed consolidated financial statements include, but are not limited to, the fair value of the common shares, Forward Purchase Agreement, Exchangeable Right Liability, Second Lien Securities Purchase Agreement, Unsecured Note Offering, GM Securities Purchase Agreement, warrant liabilities, income taxes, software development costs and the estimate of useful lives with respect to developed software, warrants, accounting for share-based payments, and timing of contractual obligations. The Company bases its estimates, judgments and assumptions on historical experience, its forecasts and budgets and other factors that the Company considers relevant. Other than as discussed herein, the significant accounting policies are described in Note 2 to the audited consolidated financial statements as of December 31, 2022 which are included in the Company’s Annual Report on Form 10-K as filed with the SEC on April 3,2023.

Concentrations of Credit Risk and Off-Balance Sheet Risk

Financial instruments that subject the Company to credit risk consist of accounts receivable and cash. The Company places cash in established financial institutions. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company periodically assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited. The Company has no significant off-balance-sheet risk or concentration of credit risk, such as foreign exchange contracts, options contracts, or other foreign hedging arrangements.

Emerging Growth Company

The Company is an emerging growth company (“EGC”), as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not EGCs including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts EGCs from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-EGCs but any such election to opt out is irrevocable. The Company has elected to avail itself of this exemption from new or revised accounting standards and, therefore, the Company is not subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. As a result, the Company’s unaudited condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Unaudited Condensed Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These unaudited condensed consolidated financial statements are unaudited and, in the Company’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals necessary for a fair presentation of the Company’s consolidated cash flows, operating results, and balance sheets for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for 2023 due to seasonal and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of the Company’s 2022 Annual Report on Form 10-K filed on April 3, 2023.

Accounts Receivable, net

The Company performs ongoing credit evaluations of its customers and assesses each customer’s credit worthiness. The policy for determining when receivables are past due or delinquent is based on the contractual terms agreed upon. The Company monitors collections and payments from its customers and maintains an allowance for credit losses. The allowance for credit losses is based upon applying an expected credit loss rate to receivables based on the historical loss rate and is adjusted for current conditions, including any specific customer collection issues identified, and economic conditions forecast. Delinquent account balances are written off after management has determined that the likelihood of collection is remote. The allowance for credit losses as of March 31, 2023 and December 31, 2022 was not material.

2. New Accounting Standards

Recently Issued Accounting Pronouncements Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and also issued subsequent amendments to the initial guidance, ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, ASU 2019-11, ASU 2020-02, and ASU 2020-03 (collectively, “Topic 326”), to introduce a new impairment model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. Topic 326 requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amounts. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. As an ESG, Topic 326 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. On January 1, 2023, the Company adopted ASU 2016-13. The adoption of this standard did not have a material effect in the Company’s unaudited condensed consolidated financial statements and related disclosures.

No other new accounting pronouncements recently adopted or issued had or are expected to have a material impact on the unaudited condensed consolidated financial statements.

3. Transactions

CFPI Stock Purchase Agreement

On February 14, 2022, the Company entered into the CFPI Stock Purchase Agreement, which allows the Company to obtain, depending on its common share’s market price and meeting other conditions, up to the lesser of $100 million and the “Exchange Cap” (as defined in the CFPI Stock Purchase Agreement) through an equity financing facility. Sales of common shares pursuant to the CFPI Stock Purchase Agreement, and the timing of any sales, are solely at the Company’s option, and it is under no obligation to sell any securities to CFPI under the CFPI Stock Purchase Agreement. To the extent the Company sells common shares under the CFPI Stock Purchase Agreement, it planned to use any proceeds therefrom for working capital and general corporate purposes. As consideration for CFPI’s commitment to purchase common shares at the Company’s direction upon the terms and subject to the conditions set forth in the CFPI Stock Purchase Agreement, upon execution of the CFPI Stock Purchase Agreement, on February 15, 2022, the Company issued 715,991 shares of its common shares to CFPI. The Company recognized expense of $3.0 million related to these shares within general and administrative expenses in the Company’s unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2022. Pursuant to the terms of the CFPI Stock Purchase Agreement, on December 14, 2022, the Company delivered notice to CFPI of its election to terminate the CFPI Stock Purchase Agreement in accordance with its terms effective on December 19, 2022.

Private Placement of Common Shares and Warrants

On July 27, 2022, the Company entered into subscription agreements with various investors, which included a significant investment coming from Sompo Light Vortex, a wholly-owned subsidiary of Sompo Holdings, as well as current investors and certain members of the Company’s Board of Directors, pursuant to which the Company agreed to issue and sell in a private placement 11,329,141 of the Company’s Units, each consisting of (i) one of the Company’s common shares, and (ii) one third of one warrant (the “July 2022 Warrants”, and together with the common shares, the “PIPE Units”) to purchase one common share, exercisable for a period of five years at an exercise price of $1.56 per Unit at a purchase price of $1.40 per Unit. The purchase price of $1.40 per Unit satisfied the minimum price requirement under NASDAQ rules. The aggregate purchase price for the Units was $15.9 million before costs of $0.2 million.

The July 2022 Warrants do not contain any contingent exercise features and may be exercised only during the period commencing on July 29, 2022 and terminating five (5) years after the date of the closing of the sale of the PIPE Units, subject to certain conditions. As part of the July 2022 PIPE, the Company entered into a registration rights agreement, which requires the Company to use its best faith efforts to file a resale registration statement with the SEC to register for resale of the common shares, the July 2022 Warrants and the common shares issuable upon exercise of the July 2022 Warrants on or prior to December 31, 2022, at any time the Company is eligible to file a registration statement on Form S-3 (the “Shelf Registration Statement”) with the SEC. On December 21, 2022, the Company filed the Shelf Registration Statement with the SEC. The SEC has not yet declared the Shelf Registration Statement effective. As of March 31, 2023, there were no warrants exercised.

GM Securities Purchase Agreement

On December 16, 2022, the Company entered into a Securities Purchase Agreement (“GM Securities Purchase Agreement”) with GM. Pursuant to the GM Securities Purchase Agreement, the Company issued and sold to GM a secured convertible note in the aggregate principal amount of a $10.0 million SCN with an interest rate of 5.0% per annum and the warrants (“GM Warrants”) to acquire up to an aggregate amount of 1,190,476 common shares at an exercise price of $0.75112 per common share (see Note 12). On February 27, 2023, GM consented to the Company’s offering of the Second Lien Notes to the Second Lien Noteholder and agreed to amend the SCN, solely to add additional events of default, and outside of such addition, the Secured Convertible Note remains unchanged and in full force and effect.

Open Market Sales Agreement

On December 22, 2022, the Company entered into the Open Market Sales Agreement (“ATM Agreement”), with Jefferies LLC (“Jefferies”). Pursuant to the ATM Agreement, the Company may direct Jefferies to sell up to $100,000,000 of the Company’s common shares from time to time during the term of the ATM Agreement. Jefferies is not required to sell any specific amount, but will act as the Company’s sales agent using commercially reasonable efforts consistent with its normal trading and sales practices. Jefferies will be entitled to compensation at a commission rate of 3.0% of the gross sales price per share sold under the ATM Agreement. The net proceeds, if any, that the Company receives from the sales of its common shares will depend on the number of shares actually sold and the offering price for such shares. The ATM agreement is not yet effective and as such, the Company cannot sell securities under this agreement at this time.

Private Placement of Second Lien Note and Warrant

On February 27, 2023, the Company entered into that certain Second Lien Securities Purchase Agreement (the “Second Lien Securities Purchase Agreement” or “Second Lien SPA”) with the Second Lien Noteholder. Under the Second Lien SPA, for a purchase price of $3,500,000, the Company issued and sold to the Second Lien Noteholder the Second Lien Note in the aggregate principal amount of $3,684,210. The Second Lien SPA also requires the Company to issue a warrant to acquire the Company’s common shares (the “Second Lien Warrant”) upon the occurrence of a subsequent financing (the issuance of the Second Lien SPA and the Company’s obligation to issue the Second Lien Warrant upon a subsequent financing together being referred to as the “Second Lien Offering”). The Company’s obligations under the Second Lien Note are secured by a second lien on certain assets of its subsidiaries, which are the same assets that are subject to first lien security interests under the Company’s SCN, namely certain assets of Legacy Wejo and the shares held by Wejo Bermuda in Legacy Wejo (collectively, the “Second Lien Collateral”); such

second lien is subordinated to the first lien security interests under the SCN. The security interest does not secure assets that were previously encumbered in connection with the issuance of the Company’s Secured Loan Notes in April 2021. The Second Lien Note accrues compounding interest at the rate of 10.0% per annum, which will be payable in cash, in arrears semi-annually in accordance with the terms of the Second Lien Note. If the Company effects, directly or indirectly, an offering of any shares of any kind of its securities in a financing completed during the one-year period following the issuance of the Second Lien Note, then it must issue the Second Lien Noteholder a warrant exercisable for such number of the Company’s common shares determined by dividing $3,850,000 by the closing price of the Company’s common shares. The Second Lien Note matures on March 29, 2023 (the “Second Lien Note Maturity Date”). At the Second Lien Noteholder’s option at any time during the 20-business day period following certain fundamental transactions, the Second Lien Noteholder may require the Company to redeem all or any part of the outstanding principal and accrued but unpaid interest of the Second Lien Note, in whole or in part, at a price of 120% of the then-outstanding principal amount plus all accrued and unpaid interest. See Note 4 for the fair value measurement of the Second Lien Note and Second Lien Warrant.

On February 27, 2023, GM consented to the Second Lien Offering and agreed to amend the Secured Convertible Note, solely to add additional events of default, and outside of such addition, the Secured Convertible Note remains unchanged and in full force and effect.

On March 28, 2023, the Company and the Second Lien Noteholder executed that certain First Amendment to Secured Note (the “Second Lien Note Amendment”) under which they agreed to extend the Second Lien Note Maturity Date to April 17, 2023 in exchange for an extension fee in the amount of $368,421, representing 10% of the principal amount of the Second Lien Note. On April 17, 2023 and May 17, 2023, the Company entered into second and third amendments with the Second Lien Noteholder, which, among other things, further extended Second Lien Note Maturity Date to May 1, 2023 in exchange for an additional extension fees of $310,346.07, provided for repayment of $1 million in principal under the Second Lien Notes, and memorialized the agreement among the parties with respect to the delivery of certain notices by the Second Lien Noteholder to the Company in exchange for an additional $100,000 extension fee. See Note 22 for additional information.

On May 17, 2023, the Company and the Second Lien Noteholder entered into a Third Amendment under which they agreed, in exchange for an extension fee in the amount of $100,000, that (i) the May 3 notices were not delivered as required under the Second Lien Note to declare an event of default or demand immediate payment under the Second Lien Note, (ii) the Notice of Intent was properly delivered under the Second Lien Note, (iii) the Second Lien Noteholder may provide the Company with a Demand Notice after May 19, 2023, at which time the Company will be in default under the Note and the “Demand Payment Date” and “Maturity Date” of the Second Lien Note will be the next business day after delivery of the Demand Notice.

As allowed under ASC 825, Financial Instruments (“ASC 825”), the Company has elected the fair value option in accounting for the Second Lien Note. The Company determined it was appropriate to apply the fair value option to the Second Lien Note as there are no precluding features associated with this instrument as noted in ASC 825. The fair value of the Second Lien Note was calculated using a probability-weighted discounted cash flow model.

The Company accounts for the Second Lien Warrant in accordance with the guidance contained in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and determined that the Second Lien Warrant meets the criteria to be recorded as a liability. As such, the Second Lien Warrant is subject to re-measurement at each balance sheet date. The fair value of the Second Lien Warrant was calculated using the option pricing model with a probability percentage applied for each scenario.

Changes in fair value for the Second Lien Securities Purchase Agreement are recognized in loss on fair value of the Second Lien Securities Purchase Agreement in Other expense, net on the Company’s unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

Private Placement of Unsecured Note and Warrant

On March 21, 2023 (the “Unsecured Note Issuance Date”), the Company issued and sold to Tim Lee, the Company’s Chairman of its Board (the “Unsecured Noteholder”), the Unsecured Note in the aggregate principal amount of $2,000,000 (the “Principal”). The Unsecured Note also requires the Company to issue an Unsecured Note Warrant (as defined below) to acquire the Company’s common shares upon the occurrence of a subsequent financing (the issuance of the Unsecured Note and the Company’s obligation to issue the Unsecured Note Warrant upon a Subsequent Financing (as defined below) together being referred to as the “Unsecured Note Offering”). The Unsecured Note Offering closed on March 21, 2023. The Company has used the proceeds from the Unsecured Note Offering for general corporate purposes. The Unsecured Note matures on May 22, 2023 (the “Unsecured Note Maturity Date”). The Unsecured Note does not accrue interest, but the Company must pay a redemption premium of 110% of the outstanding principal (the “Redemption Premium”) amount to redeem the Unsecured Note at or before the Unsecured Note Maturity Date. The Unsecured Note provides for customary events of default. If an event of default occurs, the Unsecured Noteholder can provide notice to the Company that it is requiring the Company to repay the outstanding principal at the Redemption Premium within five business days of the delivery of receipt of such written notice. The Company will be subject to certain customary affirmative and negative covenants pursuant to the Unsecured Note. If the Company effects, directly or indirectly, an offering of any shares of capital stock, convertible securities, rights, options, warrants or any other kind of its securities in a financing completed

during the one-year period following the issuance of the Unsecured Note (a “Subsequent Financing”) then it must issue the Unsecured Noteholder a five-year warrant exercisable for such number of the common shares determined by dividing 100% of the Principal by the closing price of the common shares as reported by NASDAQ on the trading day immediately prior to the issuance of securities in a Subsequent Financing, subject to a floor price equal to the higher of the closing bid price of the common shares and the “NASDAQ Minimum Price” (as defined in NASDAQ Rule 5635) as of the Unsecured Note Issuance Date, at an exercise price per share equal to 110% the closing bid price of the common shares as reported by NASDAQ on the trading day immediately prior to the Subsequent Financing, subject to a floor price equal to the higher of the closing bid price of the common shares and the NASDAQ Minimum Price as of the Issuance Date (the “Unsecured Note Warrant”). See Note 4 for the fair value measurement of the Unsecured Note Offering.

As allowed under ASC 825, the Company has elected the fair value option in accounting for the Unsecured Note. The Company determined it was appropriate to apply the fair value option to the Unsecured Note as there are no precluding features associated with this instrument as noted in ASC 825. The fair value of the Unsecured Note was calculated using a discounted cash flow model.

The Company accounts for the Unsecured Note Warrant in accordance with the guidance contained in ASC 480 and determined that the Unsecured Note Warrant meets the criteria to be recorded as a liability. As such, the Unsecured Note Warrant is subject to re-measurement at each balance sheet date. The fair value of the Unsecured Note Warrant was calculated using the option pricing model.

Changes in fair value for the Unsecured Note Offering are recognized in loss on fair value of the Unsecured Note Offering in Other expense, net on the Company’s unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

MAP Restricted Share Awards

On January 27, 2023, the Company and Moneta Advisory Partners, LLC (“MAP”) entered into a service agreement (the “MAP Service Agreement”) under which MAP agreed to provided certain services to the Company. The term of the MAP Service Agreement is from January 27, 2023 (the “Grant Date”) to April 30, 2023 (the “Term”). In return, the Company will pay MAP cash of $50,000 plus a 309,951 restricted share award (“RSAs”), 81,566 of which vested on February 28, 2023, another 81,566 of which vested on March 31, 2023, and the remaining 146,818 of which will vest on April 30, 2023. The Company notes that the RSAs granted include a substantive future requisite service condition (three months’ service) in which any unvested RSAs will be forfeited upon termination. As such, the grant date fair value will be recognized straight-line over the requisite service period, which is consistent with the pattern of the services provided and would have been the same pattern of recognition had cash been paid.

4. Fair Value Measurement

Assets and liabilities that are measured at fair value on a recurring basis, and the level of the fair value hierarchy utilized to determine such fair values, as shown in the following tables (in thousands):


	Balance as of March 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Forward Purchase Agreement	$	—	$	1,742	$	—	$	1,742
Total	$	—	$	1,742	$	—	$	1,742
Liabilities:
Public Warrants	$	586	$	—	$	—	$	586
Exchangeable Right liability	—		—		366		366
Second Lien Note	—		—		4,054		4,054
Unsecured Note	—		—		2,114		2,114
Warrant Liability - Second Lien Securities Purchase Agreement	—		—		2,051		2,051
Warrant Liability - Unsecured Note Offering	—		—		1,063		1,063
Secured Convertible Note	—		—		11,510		11,510
Warrant Liability - GM Securities Purchase Agreement	—		—		380		380
Total	$	586	$	—	$	21,538	$	22,124


	Balance as of December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Forward Purchase Agreement	$	—	$	2,687	$	—	$	2,687
Total	$	—	$	2,687	$	—	$	2,687
Liabilities:
Public Warrants	$	594	$	—	$	—	$	594
Exchangeable Right liability	—		—		403		403
Secured Convertible Note	—		—		11,390		11,390
Warrant Liability - GM Securities Purchase Agreement	—		—		343		343
Total	$	594	$	—	$	12,136	$	12,730

There were no transfers into or out of Level 3 instruments as of March 31, 2023. The Company transferred the FPA out of Level 3 and into Level 2 as of December 31, 2022. As a result of the amendment to the FPA, the Company’s share price now approximates the fair value of the FPA most closely because the $10 per share ceiling is not probable to be triggered.

The following table provides a roll forward of the aggregate fair value of the Company’s public warrant liability, Exchangeable Right Liability, Forward Purchase Agreement, GM Securities Purchase Agreement, Second Lien Securities Purchase Agreement, and Unsecured Note Offering (in thousands):


	Public Warrant Liability		Exchange- able Right Liability		Forward Purchase Agreement		GM Securities Purchase Agreement		Second Lien Securities Purchase Agreement		Unsecured Note Offering
Balance as of December 31, 2022	$	594	$	403	$	2,687	$	11,733	$	—	$	—
Initial fair value of financial instruments	—		—		—		—		5,687		3,181
Settlement of FPA shares	—		—		(805)		—		—		—
Change in estimated fair value	(8)		(37)		(140)		157		418		(4)
Balance as of March 31, 2023	$	586	$	366	$	1,742	$	11,890	$	6,105	$	3,177

The changes in estimated fair value are recorded in Other expense, net on the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss.

The Exchangeable Right Liability was valued using a Black-Scholes model. The following table summarizes the significant unobservable inputs that are included in the valuation of Exchangeable right liability as of March 31, 2023 and December 31, 2022:


	March 31, 2023				December 31, 2022
Unobservable Inputs	Input Value or Range		Weighted Average		Input Value or Range		Weighted Average
Estimated term	3.6 years		3.6 years		3.9 years		3.9 years
Estimated volatility	93.6	%	93.6	%	93.0	%	93.0	%
Risk-free rate	3.7	%	3.7	%	4.1	%	4.1	%

Changes in the unobservable inputs noted above would impact the fair value of the Exchangeable Right Liability. Increases (decreases) in the estimates of the estimated volatility or the risk-free rate would increase (decrease) in the Exchangeable Right Liability and an increase (decrease) in the Company’s common share price would increase (decrease) the value of the Exchangeable Right Liability.

The Company has elected the fair value option in accounting for the fair value of the SCN under the GM Securities Purchase Agreement. The fair value was determined using a hybrid of the probability-weighted expected return method, scenario-based method, and binomial lattice methods as the ultimate maturity date and put price are contingent upon the Company’s engagement (or lack thereof) in certain qualifying transactions; accordingly, the Company estimates the SCN’s fair value in each scenario and determines the probability-weighted value. Within each scenario, the binomial lattice model was applied to capture the various optionality available to the borrower and lender. As of March 31, 2023 the outstanding principal and fair value of the SCN was $10.0 million and $11.5 million, respectively.

The following table summarizes the significant unobservable inputs that are included in the valuation of the SCN as of March 31, 2023 and December 31, 2022:


	March 31, 2023						December 31, 2022
Unobservable Inputs	Input Value or Range			Weighted Average			Input Value or Range			Weighted Average
Probability of scenarios:
Financing of $35 million or more within 1 year	45.0		%	45.0		%	45.0		%	45.0		%
Financing of $25 to $35 million within 1 year	30.0		%	30.0		%	30.0		%	30.0		%
Financing of less than $25 million within 1 year	25.0		%	25.0		%	25.0		%	25.0		%
Timing of scenarios:
Term to maturity	0.7 years			0.7 years			1.0 years			1.0 years
Estimated market yield	17.3		%	17.3		%	18.0		%	18.0		%
Risk-free rate	4.8		%	4.8		%	4.7		%	4.7		%
Estimated credit spread	17.5		%	17.5		%	13.2		%	13.2		%
Value of common share	$	0.49		$	0.49		$	0.48		$	0.48

Changes in the unobservable inputs noted above would impact the fair value of the SCN. Increases (decreases) in the estimates of the risk-free rate would increase (decrease) the fair value of the SCN and an increase (decrease) in the Company’s common share price would decrease (increase) the value of the SCN.

The GM Warrants under the GM Securities Purchase Agreement were valued using a Black-Scholes model. The following table summarizes the significant unobservable inputs that are included in the valuation of GM Warrants as of March 31, 2023 and December 31, 2022:


	March 31, 2023				December 31, 2022
Unobservable Inputs	Input Value or Range		Weighted Average		Input Value or Range		Weighted Average
Estimated term	2.7 years		2.7 years		3.0 years		3.0 years
Estimated volatility	125.0	%	125.0	%	110.0	%	110.0	%
Risk-free rate	3.9	%	3.9	%	4.2	%	4.2	%

Changes in the unobservable inputs noted above would impact the fair value of the GM Warrants. Increases (decreases) in the estimates of the estimated volatility or the risk-free rate would increase (decrease) the fair value of the GM Warrants and an increase (decrease) in the Company’s common share price would decrease (increase) the value of the GM Warrants.

The Company has elected the fair value option in accounting for the fair value of the Second Lien Note under the Second Lien SPA. The fair value was determined using a probability-weighted discounted cash flow model. Accordingly, the Company estimates the Second Lien Note fair value in each scenario and determines the probability-weighted value. As of March 31, 2023 the outstanding principal and fair value of the Second Lien Note was $3.7 million and $4.1 million, respectively.

The following table summarizes the significant unobservable inputs that are included in the valuation of the Second Lien Note as of March 31, 2023 and February 27, 2023 (date of issuance):


	March 31, 2023				February 27, 2023
Unobservable Inputs	Input Value or Range		Weighted Average		Input Value or Range		Weighted Average
Probability of scenarios:
Held to extended maturity	70.0	%	70.0	%	90.0	%	90.0	%
Additional extension of maturity	30.0	%	30.0	%	10.0	%	10.0	%
Timing of scenarios:
Term to maturity	0.1 years		0.1 years		0.1 years		0.1 years
Estimated market yield	25.0	%	25.0	%	17.9	%	17.9	%
Contractual Interest	10.0	%	10.0	%	10.0	%	10.0	%

Changes in the unobservable inputs noted above would impact the fair value of the Second Lien Note. Increases (decreases) in the estimates of the estimated market yield would increase (decrease) the fair value of the Second Lien Note.

The Second Lien Warrant was valued using a Black-Scholes model. The following table summarizes the significant unobservable inputs that are included in the valuation of the Second Lien Warrant as of March 31, 2023 and February 27, 2023 (date of issuance):


	March 31, 2023				February 27, 2023
Unobservable Inputs	Input Value or Range		Weighted Average		Input Value or Range		Weighted Average
Estimated term	5.0 years		5.0 years		5.0 years		5.0 years
Estimated volatility	62.1	%	62.1	%	60.1	%	60.1	%
Risk-free rate	3.6	%	3.6	%	4.2	%	4.2	%

Changes in the unobservable inputs noted above would impact the fair value of the Second Lien Warrant. Increases (decreases) in the estimates of the estimated volatility or the risk-free rate would increase (decrease) the fair value of the Second Lien Warrant and an increase (decrease) in the Company’s common share price would decrease (increase) the value of the Second Lien Warrant.

The Company has elected the fair value option in accounting for the fair value of the Unsecured Note under the Unsecured Note Offering. The fair value was determined utilizing discounted cash flow model. As of March 31, 2023 the outstanding principal and fair value of the Unsecured Note was $2.0 million and $2.1 million, respectively.

The following table summarizes the significant unobservable inputs that are included in the valuation of the Unsecured Note as of March 31, 2023 and March 21, 2023 (date of issuance):


	March 31, 2023				March 21, 2023
Unobservable Inputs	Input Value or Range		Weighted Average		Input Value or Range		Weighted Average
Probability of scenarios:
Default or held to maturity	100.0	%	100.0	%	100.0	%	100.0	%
Timing of scenarios:
Term to maturity	0.1 years		0.1 years		0.2 years		0.2 years
Estimated market yield	27.5	%	27.5	%	24.0	%	24.0	%
Contractual Interest	10.0	%	10.0	%	10.0	%	10.0	%

Changes in the unobservable inputs noted above would impact the fair value of the Unsecured Note. Increases (decreases) in the estimates of the estimated market yield would increase (decrease) the fair value of the Unsecured Note.

The Unsecured Note Warrant was valued using a Black-Scholes model. The following table summarizes the significant unobservable inputs that are included in the valuation of Unsecured Note Warrant as of March 31, 2023 and March 21, 2023 (date of issuance):


	March 31, 2023				March 21, 2023
Unobservable Inputs	Input Value or Range		Weighted Average		Input Value or Range		Weighted Average
Estimated term	5.0 years		5.0 years		5.0 years		5.0 years
Estimated volatility	62.1	%	62.1	%	62.1	%	62.1	%
Risk-free rate	3.6	%	3.6	%	3.7	%	3.7	%

Changes in the unobservable inputs noted above would impact the fair value of the Unsecured Note Warrant. Increases (decreases) in the estimates of the estimated volatility or the risk-free rate would increase (decrease) the fair value of the Unsecured Note Warrant and an increase (decrease) in the Company’s common share price would decrease (increase) the value of the Unsecured Note Warrant.

5. Revenue from Customers

Connected Vehicle Data Marketplace

The Company’s data marketplace customer agreements include one or a combination of the following contractual promises for a fixed contractual fee: (i) the supply of specified connected vehicle data and derived insights through the Wejo Neural Edge platform made available via a secured access to the Wejo Neural Edge platform or via the Company’s web-based portal, Wejo Studio; (ii) the granting of a nontransferable license to use the specified data in the manner described in each customer agreement; and (iii) Wejo Neural Edge Platform set up and connectivity services. The Company assessed these customer agreements under ASC 606 and determined that the above contractual promises collectively represent one distinct performance obligation.

The transaction price is comprised of the contractual fixed fee specified in each customer agreement and is allocated to the single performance obligation. The Company recognizes revenue when the performance obligation is satisfied through the fulfillment of the contractual promises. The performance obligation is generally fulfilled by the Company providing access to the specified data either throughout the duration of each customer agreement’s contractual term or upon delivery of a one-time batch of historic data. The Company may deliver data and the license without supplying connectivity services. As such, the Company generally recognizes revenue for customers with a contractual agreement to provide data over a period ratably over the term of the contract, which is typically one year. The Company recognizes revenue for historic batches of data to the customer upon delivery of such data. Standard payment terms are 30 days from the date of the invoice, which is typically sent to the customer monthly or upon delivery of the one-time historic batch of data.

In arrangements where another party (i.e. OEMs) is involved in providing specified services to a customer, the Company evaluates whether it is the principal or the agent. In this evaluation, the Company considers if it obtains control of the specified goods or services before they are transferred to the customer, as well as other indicators such as the party primarily responsible for fulfillment, and discretion in establishing price. The terms of the Company’s OEM data sharing agreements vary, and in some situations, certain rights retained by the OEMs over the connected vehicle data being supplied to the customers were determined to provide the OEMs with control over the data, and the Company has determined it acts as the agent in this arrangement and recognizes revenue on a net basis. During the three months ended March 31, 2023 and 2022, the Company has recognized a reduction of revenue of $0.2 million and $1.0 million, respectively, arising from revenue sharing and other fees paid to the Company’s OEM partners, where the Company has determined that it is acting as an agent in the relationship. However, in situations where the Company has control over the connected vehicle data, the Company has determined that it acts as the principal and recognizes revenue on a gross basis. In revenue arrangements where the Company provides intelligence data, visualization tools, or analytical products to customers, as well as in circumstances where it provides significant integration services to create a combined output, the Company has control over the underlying data and is acting as the principal, and, as a result, the Company recognizes revenue on a gross basis.

Software & Cloud Solutions

The Company’s software and cloud customer agreements contain one or a combination of the following contractual promises: (i) access to a single-tenant SaaS platform; and (ii) professional services, which may include consulting, design, data evaluation, engineering, implementation and training. The Company assessed these customer agreements under ASC 606 and determined that the above contractual promises each represent distinct performance obligations. In cases where the customer has a unilateral right to terminate the contract for convenience and without penalty, the contract term is limited to the period through which the parties have enforceable rights and obligations, which in turn impacts the Company’s determination of performance obligations, transaction price, and revenue recognition pattern.

To date, the transaction price of the Company’s software and cloud contracts has been comprised of contractual fixed fees specified in each customer agreement with milestone-based payment terms. The transaction price is allocated based on standalone selling price for contracts with more than one performance obligation identified. SaaS performance obligations are satisfied over time as the Company provides the customer with access to the platform, and related revenue is recognized ratably over the term of the contract. Professional services performance obligations are satisfied over time as the Company renders the service, and related revenue is recognized proportionate with performance on the basis of labor hours expended in relation to total budgeted labor hours.

General

During the three months ended March 31, 2023, the Company had one customer that individually generated 10% or more of the Company’s revenue for the period. For the three months ended March 31, 2023, this significant customer generated 36% of the Company’s revenue. For the three months ended March 31, 2022, the Company had one customer that individually generated 10% or more of the Company's revenue for the period. The significant customer generated 10% of the Company’s revenue. In addition, the revenue recognized over time and at a point in time was 58% and 42%, respectively, during the three months ended March 31, 2023 and 69% and 31%, respectively, during the three months ended March 31, 2022.

For the three months ended March 31, 2023 and 2022, the Company earned 99% and 100% of its revenue from the Wejo Marketplace Data Solutions. For the three months ended March 31, 2023 and 2022, the Company earned 99% and 95% of its revenue within the U.S., respectively. The country in which the revenue is generated is based on the address of the ultimate customer utilizing the solutions provided.

6. Forward Purchase Agreement

On November 10, 2021, Apollo entered into the FPA with Wejo Limited, a subsidiary of Wejo Group Limited. Subject to certain termination provisions, the FPA provides that on the 2-year anniversary of the effective date (the “Maturity Date”) of the FPA, each Apollo seller will sell to the Company the number of shares purchased by such seller (up to a maximum of 7,500,000 shares across all sellers) of Virtuoso Class A common shares (or any shares received in a share-for-share exchange pursuant to the Virtuoso Business Combination (the “FPA Shares”). On November 19, 2021, such seller was paid an amount equal to $75.0 million (the “Prepayment Amount”).

At any time, and from time to time, after November 18, 2021 (the closing of the Virtuoso Business Combination), each Apollo seller may sell FPA Shares at its sole discretion in one or more transactions, publicly or privately and, in connection with such sales, terminate the FPA in whole or in part in an amount corresponding to the number of FPA Shares sold (the “Terminated Shares”). On the settlement date of any such early termination, such Apollo seller will pay to the Company all proceeds of any such sales up to $10 per share regardless of the sale price and Apollo will retain any amounts in excess of $10 per share. The Company may deliver a written notice to each seller requesting partial settlement of the transaction subject to there being a remaining percentage of the FPA Shares (the “Excess Shares”) that have not become Terminated Shares within six months or a one year period. The amount paid in such early settlement to the Company is equal to the lesser of (i) the number of such Excess Shares sold in the early settlement multiplied by $10 per share or (ii) the net sale proceeds received by such seller for such Excess Shares sold in the early settlement.

Apollo Amendment

On August 22, 2022, Wejo Limited entered into the FPA Amendment with Apollo to allow the Company on or after the effective date of the FPA Amendment to direct each Apollo seller to sell the 5.6 million FPA Shares remaining at that time, provided that such direction is made outside of a blackout period under the Company’s insider trading policy (the “Blackout Period”). The FPA Amendment also allows the Company to direct each Apollo seller to stop and subsequently resume, selling such Excess Shares, provided as well that such direction is made outside of the Blackout Period.

For the three months ended March 31, 2023, pursuant to the FPA, Apollo sold 2,051,830 common shares at a weighted average price of $0.39, which generated aggregate proceeds of $0.8 million. As of March 31, 2023 and December 31, 2022, there were 3,533,753 and 5,585,583 total outstanding shares available, respectively. As of March 31, 2023, the fair value of the FPA was $1.7 million, compared to $2.7 million at December 31, 2022 and was recognized in its respective line in the unaudited Condensed Consolidated Balance Sheets.

The FPA was initially and subsequently measured at fair value using an option pricing approach up until the date of the FPA Amendment at which time the embedded derivative was terminated. A $0.1 million and $16.7 million loss on the fair value of the FPA was recognized and is included in Other expense, net in the unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss during the three months ended March 31, 2023 and 2022, respectively.

7. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	March 31, 2023		December 31, 2022
Prepayments1	$	2,731	$	2,683
VAT recoverable	1,272		1,385
Prepaid insurance	1,060		1,117
Data and IT Implementation Costs	665		662
Research and development expenditure credit receivable	379		241
Other current assets	1,090		639
Total	$	7,197	$	6,727

__________________

1 Prepayments are largely related to the Master Subscription Agreement, dated May 28, 2021, by and between Wejo Limited and Palantir Technologies Inc (“Palantir”).

8. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):


	March 31, 2023		December 31, 2022
Office equipment	$	1,470	$	1,429
Furniture and fixtures	32		31
Total property and equipment	1,502		1,460
Less accumulated depreciation	(1,089)		(986)
Total	$	413	$	474

Depreciation expense was $0.1 million for each of the three months ended March 31, 2023 and 2022, respectively.

9. Intangible Assets, Net

Intangible assets, net consisted of the following (in thousands):

As of March 31, 2023

Gross Book Value

Accumulated Amortization

Net Book Value

General Motors Data Sharing Agreement

9,644

Wejo Group Ltd [WEJOW] Filings
Wejo Group Ltd [WEJO] Filings
10-Q	[2023-05-22]
10-K	[2023-04-03]
10-Q	[2022-11-21]
10-Q	[2022-08-15]
10-Q	[2022-05-16]
S-1	[2022-04-14]
10-K	[2022-03-31]
S-1	[2021-12-17]
10-Q	[2021-11-26]

Wejo Group Ltd [WEJOW] Filings

Wejo Group Ltd [WEJO] Filings