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 checkmark 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, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

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 ~~November 5, 2020,~~May 3, 2021, there were ~~29,325,581~~31,307,336 shares of the Company’s common stock issued and outstanding.

	September 30, 2020			December 31, 2019			March 31, 2021			December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	31,514		$	16,103		$	35,507		$	32,970
Restricted cash		-			20,894
Short-term investments		5,138			5,124			4,287			4,843
Trade receivables, net		40,006			39,509			41,611			43,651
Prepaid expenses		1,227			648			1,233			1,447
Other current assets		1,774			4,224			5,222			2,134
Total current assets		79,659			86,502			87,860			85,045
Property and equipment, net		5,825			3,393			7,113			6,726
Intangible assets, net		7,937			9,353			7,156			7,574
Goodwill		16,558			16,953			16,612			16,657
Deferred tax assets								40			703
Other long-term assets		1,783			1,203			299			1,797
Total Assets	$	111,762		$	117,404		$	119,080		$	118,502
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	48,076		$	63,320		$	46,135		$	51,768
Debt for forward share purchase agreements		480			34,013			—			483
Notes payable		—			1,667
Notes payable due to related parties		3,750			9,411			3,750			7,500
Lines of credit		4,567			3,627			4,439			5,273
Current portion of bank and other borrowings		9,675			7,564			8,082			10,798
Deferred revenue		1,519			1,397			3,107			3,666
Preference shares		—			683
Preference shares due to related parties		—			1,847
Payroll and payroll related accrued liabilities		3,819			1,038			3,374			3,292
Other current liabilities		1,759			1,379			2,786			5,988
Total current liabilities		73,645			125,946			71,673			88,768
Long-term portion of bank and other borrowings		33,462			16,134			31,020			31,974
Long-term portion of notes payable		2,700			—			405			2,700
Long-term portion of notes payable due to related parties		3,750			7,500
Long-term portion of employee benefit obligation		1,641			1,398			1,886			1,886
Deferred tax liabilities		1,093			2,045
Other long-term liabilities		1,335			3,155			2,158			603
Total Liabilities		117,626			156,178			107,142			125,931
Commitments and contingencies (Note 13)
Commitments and contingencies (Note 14)
Stockholders’ equity (deficit):
Preferred stock, par value of $0.0001 per share; 1,000,000 shares authorized; 0 shares issued or outstanding		—			—			—			—
Common stock, par value of $0.0001 per share; 100,000,000 shares authorized as of September 30, 2020 and December 31, 2019; 31,273,139 shares issued and 28,475,081 shares outstanding as of September 30, 2020 and 19,977,113 shares issued and outstanding as of December 31, 2019		3			2
Common stock, par value of $0.0001 per share; 100,000,000 shares authorized as of March 31, 2021 and December 31, 2020; 33,728,675 shares issued and 30,930,617 shares outstanding as of March 31, 2021 and 33,086,745 shares issued and 30,288,687 shares outstanding as of December 31, 2020								3			3
Additional paid-in capital		89,574			2,143			122,252			93,628
Treasury stock, at cost; 2,798,058 and 0 shares as of September 30, 2020 and December 31, 2019, respectively		(30,431	)		—
Accumulated other comprehensive income (loss)		(1,733	)		74
Treasury stock, at cost; 2,798,058 shares as of March 31, 2021 and December 31, 2020								(30,431	)		(30,431	)
Accumulated other comprehensive loss								(1,725	)		(2,826	)
Accumulated deficit		(63,277	)		(40,993	)		(78,161	)		(67,803	)
Total stockholders’ equity (deficit)		(5,864	)		(38,774	)		11,938			(7,429	)
Total liabilities and stockholders’ equity (deficit)	$	111,762		$	117,404		$	119,080		$	118,502

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2020			2019			2020			2019			2021			2020
Revenue	$	38,268		$	35,329		$	103,100		$	93,925		$	39,714		$	33,633
Cost of revenue		30,763			28,321			86,511			75,645			33,390			28,902
Gross profit		7,505			7,008			16,589			18,280			6,324			4,731
Operating expenses:
Research and development		2,259			1,279			7,415			3,869			2,868			2,810
Sales and marketing		3,423			1,432			10,155			4,392			2,859			3,743
General and administrative		6,441			2,927			20,737			10,667			10,602			7,759
Total operating expenses		12,123			5,638			38,307			18,928			16,329			14,312
Income (loss) from operations		(4,618	)		1,370			(21,718	)		(648	)
Loss from operations														(10,005	)		(9,581	)
Other income, net		38			11			91			106			45			42
Financial income (expense), net		(468	)		(141	)		(1,027	)		(206	)
Foreign currency income (loss)		(548	)		(260	)		(795	)		(402	)
Financial expense, net														(719	)		(41	)
Foreign currency income														355			168
Loss before income tax expense (benefit)		(5,596	)		980			(23,449	)		(1,150	)		(10,324	)		(9,412	)
Income tax expense (benefit)		(263	)		168			(1,165	)		719			34			(589	)
Net income (loss)	$	(5,333	)	$	812		$	(22,284	)	$	(1,869	)
Net income (loss) per common share, basic and diluted (1)	$	(0.19	)	$	0.08		$	(0.97	)	$	(0.17	)
Weighted-average shares used in computing net income (loss) per common share, basic and diluted (1)		28,330,869			10,687,106			22,972,425			10,687,106
Net loss													$	(10,358	)	$	(8,823	)
Net loss per common share, basic and diluted													$	(0.34	)	$	(0.44	)
Weighted-average shares used in computing net loss per common share, basic and diluted														30,364,943			19,979,589

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

	Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended March 31,
	2020			2019		2020			2019			2021			2020
Net income (loss)	$	(5,333	)	$	812	$	(22,284	)	$	(1,869	)
Net loss												$	(10,358	)	$	(8,823	)
Other comprehensive income (loss):
Foreign currency translation adjustments		(619	)		634		(1,812	)		952			1,105			(502	)
Net unrealized gain on marketable securities, net of tax (1)		1			9		5			35
Net change in unrealized gain on marketable securities, net of tax													(4	)		4
Total other comprehensive income (loss)		(618	)		643		(1,807	)		987			1,101			(498	)
Total comprehensive income (loss)	$	(5,951	)	$	1,455	$	(24,091	)	$	(882	)
Total comprehensive loss												$	(9,257	)	$	(9,321	)

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

Condensed Consolidated Statements of ~~Stockholders��~~Stockholders’ Equity (Deficit)

	Common Stock					Additional Paid-in			Treasury Stock					Accumulated Other Comprehensive			Accumulated			Total Stockholders' Equity
	Shares			Amount		Capital			Shares		Amount			Income (Loss)			Deficit			(Deficit)
Balance as of December 31, 2020		30,288,687		$	3	$	93,628			2,798,058	$	(30,431	)	$	(2,826	)	$	(67,803	)	$	(7,429	)
Conversion of Cowen Note		303,171			—		2,295			—		—			—			—			2,295
Forfeiture of 2020 Sponsors' Earnout Shares (1)		(469,343	)		—		1,244			—		—			—			—			1,244
Forward share purchase agreement transactions		—			—		17,528			—		—			—			—			17,528
Stock-based compensation (RSUs)		558,396			—		5,011			—		—			—			—			5,011
Warrants exercised for common stock		249,706			—		2,872			—		—			—			—			2,872
Fair value of warrants		—			—		(326	)		—		—			—			—			(326	)
Net loss		—			—		—			—		—			—			(10,358	)		(10,358	)
Other comprehensive loss		—			—		—			—		—			1,101			—			1,101
Balance as of March 31, 2021		30,930,617		$	3	$	122,252			2,798,058	$	(30,431	)	$	(1,725	)	$	(78,161	)	$	11,938

Three Months Ended September 30, 2020

Common Stock

Additional
Paid-in

Treasury Stock

Accumulated
Other
Comprehensive

Accumulated

Total
Stockholders'
Equity

Shares

Amount

Capital

Shares

Amount

Income (Loss)

Deficit

(Deficit)

Balance as of June 30, 2020

27,999,713

$
3

$
74,284

2,258,510

$
(24,218
)

$
(1,115
)

$
(57,944
)

$
(8,990
)
Common stock repurchased in connection with forward share purchase agreements

(539,548
)

—

6,213

539,548

(6,213
)

—

—

—

Stock-based compensation (RSUs)

30,000

—

4,922

—

—

—

—

4,922

Proceeds from issuance of common stock in public offering, net of issuance costs

984,916

—

4,155

—

—

—

—

4,155

Net loss

—

—

—

—

—

—

(5,333
)

(5,333
)
Other comprehensive loss

—

—

—

—

—

(618
)

—

(618
)
Balance as of September 30, 2020

28,475,081

$
3

$
89,574

2,798,058

$
(30,431
)

$
(1,733
)

$
(63,277
)

$
(5,864
)

Nine Months Ended September 30, 2020

Common Stock

Additional
Paid-in

Treasury Stock

Accumulated
Other
Comprehensive

Accumulated

Total
Stockholders'
Equity

Shares

Amount

Capital

Shares

Amount

Income (Loss)

Deficit

(Deficit)

Balance as of December 31, 2019

19,977,113

$
2

$
2,143

—

$
—

$
74

$
(40,993
)

$
(38,774
)
Common stock repurchased in connection with forward share purchase agreements

(2,798,058
)

—

30,431

2,798,058

(30,431
)

—

—

—

Change in forward share purchase agreement liability

—

—

1,671

—

—

—

—

1,671

Stock-based compensation (RSUs)

189,104

—

15,756

—

—

—

—

15,756

Proceeds from issuance of common stock in public offering, net of issuance costs

8,762,694

1

36,151

—

—

—

—

36,152

Common stock issued to sellers (Earn-out 2019)

1,763,633

—

—

—

—

—

—

—

Common stock issued to settle a payable (1) (2)

580,595

—

3,422

—

—

—

—

3,422

Net loss

—

—

—

—

—

—

(22,284
)

(22,284
)
Other comprehensive loss

—

—

—

—

—

(1,807
)

—

(1,807
)
Balance as of September 30, 2020

28,475,081

$
3

$
89,574

2,798,058

$
(30,431
)

$
(1,733
)

$
(63,277
)

$
(5,864
)

Nine Months Ended September 30, 2019

Common Stock

Additional
Paid-in

Treasury Stock

Accumulated
Other
Comprehensive

Accumulated

Total
Stockholders'
Equity

Shares

Amount

Capital(3)

Shares

Amount

Income (Loss)

Deficit

(Deficit)

Balance as of December 31, 2018

10,687,106

$
1

$
10,186

—

$
—

$
31

$
(5,292
)

$
4,926

Net loss

—

—

—

—

—

—

(1,869
)

(1,869
)
Other comprehensive income

—

—

—

—

—

987

—

987

Balance as of September 30, 2019 (3)

10,687,106

$
1

$
10,186

—

$
—

$
1,018

$
(7,161
)

$
4,044

	Common Stock					Additional Paid-in			Treasury Stock					Accumulated Other Comprehensive			Accumulated			Total Stockholders' Equity
	Shares			Amount		Capital			Shares		Amount			Income (Loss)			Deficit			(Deficit)
Balance as of December 31, 2019		19,977,113		$	2	$	2,143			—	$	—		$	74		$	(40,993	)	$	(38,774	)
Common stock repurchased in connection with forward share purchase agreements		(235,169	)		—		2,587			235,169		(2,587	)		—			—			—
Change in forward share purchase agreement liability		—			—		(271	)		—		—			—			—			(271	)
Stock-based compensation (RSUs)		137,104			—		6,204			—		—			—			—			6,204
Common stock issued to settle a payable		140,000			—		527			—		—			—			—			527
Net loss		—			—		—			—		—			—			(8,823	)		(8,823	)
Other comprehensive loss		—			—		—			—		—			(498	)		—			(498	)
Balance as of March 31, 2020		20,019,048		$	2	$	11,190			235,169	$	(2,587	)	$	(424	)	$	(49,816	)	$	(41,635	)

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

	Nine Months Ended September 30,						Three Months Ended March 31,
	2020			2019			2021			2020
Cash Flows from Operating Activities:
Net loss	$	(22,284	)	$	(1,869	)	$	(10,358	)	$	(8,823	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,907			1,980			909			638
Stock-based compensation, preference share and unpaid bonuses		16,055			446
Stock-based compensation, preference shares and others								4,560			6,308
Non-cash settlement of preference share liability		(2,486	)		—			—			(2,486	)
Allowance for doubtful accounts		144			75
Provision for doubtful accounts								813			117
Realized gains on marketable securities								(2	)		—
Employee benefit obligation		376			228			69			89
Non-cash interest expense, net		151			437
Change in fair value of warrant liability								1,263			—
Reversal of accrued interest on forward share purchase agreement								(659	)		—
Non-cash interest expense								115			72
Deferred taxes		(898	)		(724	)		663			(323	)
Change in operating assets and liabilities:
Trade receivables		921			(12,224	)		440			1,710
Other current assets		1,884			(896	)		(164	)		1,111
Other long-term assets		(487	)		(514	)		1,499			(808	)
Accounts payable		(13,727	)		13,605			(4,128	)		(5,694	)
Other current liabilities		3,463			2,520			(2,735	)		3,526
Deferred revenue		152			89			(474	)		206
Long-term liabilities		815			(2,065	)		(18	)		1,505
Net cash provided by (used in) operating activities		(14,014	)		1,088
Net cash used in operating activities								(8,207	)		(2,852	)
Cash Flows from Investing Activities:
Purchase of short-term investments		(7,917	)		(4,328	)		—			(3,179	)
Sale of short-term investments		7,815			2,493			546			5,041
Purchase of property and equipment		(969	)		(1,307	)		(91	)		(89	)
Sale of property and equipment		16			—			—			16
Capitalized software development costs		(2,074	)		—			(768	)		(731	)
Purchase of intangible assets		(6	)		(14	)		(2	)		(6	)
Net cash used in investing activities		(3,135	)		(3,156	)
Net cash provided by (used in) investing activities								(315	)		1,052
Cash Flows from Financing Activities:
Payment of deferred consideration for the acquisition of Buc Mobile		—			(4,000	)
Payment of deferred consideration for the acquisition of Solutions Infini		—			(5,097	)
Change in line of credit		749			20
Proceeds from (repayments on) in line of credit, net								(663	)		1,721
Borrowings on term loans		24,437			16,670			—			8,800
Repayments on term loans		(6,344	)		(2,684	)		(1,869	)		(5,463	)
Repayments on notes payable		(11,478	)		—
Repayments on notes								(3,750	)		—
Repurchase of common stock in connection with forward share purchase agreements		(30,431	)		—			—			(2,587	)
Payments related to forward share purchase agreements		(1,452	)		—
Proceeds from issuance of stock in public offering, net of issuance costs		36,152			—
Receipts (payments) related to forward share purchase agreements								17,045			(167	)
Proceeds related to settlement of non-forfeited 2020 Sponsor Earnout Shares								1,244			—
Repayments on capital lease								(37	)		—
Net cash provided by financing activities		11,633			4,909			11,970			2,304
Effect of exchange rate changes on cash, cash equivalents and restricted cash		33			(346	)		(911	)		(454	)
Net increase (decrease) in cash, cash equivalents and restricted cash		(5,483	)		2,495
Cash, cash equivalents and restricted cash, beginning of period (1)		36,997			8,207
Cash, cash equivalents and restricted cash, end of period (1)	$	31,514		$	10,702
Net increase in cash, cash equivalents and restricted cash								2,537			50
Cash, cash equivalents and restricted cash, beginning of period								32,970			36,997
Cash, cash equivalents and restricted cash, end of period							$	35,507		$	37,047
Supplemental disclosures of cash flow information:
Cash paid for interest	$	737		$	296		$	368		$	153
Cash paid for income taxes	$	—		$	432
Non-cash financing activities:
Non-cash investing and financing activities
Change in value of forward share purchase agreements	$	(1,671	)	$	—		$	(483	)	$	271
Common stock issued to settle a payable	$	3,123		$	—		$	—		$	423
Note payable issued to settle a payable	$	3,100		$	—		$	—		$	400

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

Kaleyra, Inc., formerly GigCapital, Inc., (“Kaleyra,” the “Company,” “we,” “us,” and “our” refer to Kaleyra, Inc. and all of its consolidated subsidiaries) was incorporated in Delaware on October 9, 2017. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

On December 12, 2017, the Company completed the initial closing of its initial public offering (the “IPO”) whereby the Company sold 12,500,000 Units at a price of $10.00 per Unit. On January 9, 2018, the Company completed the second closing of the IPO with the exercise of the over-allotment option with the consummation of the sale of an additional 1,875,000 Units at a price of $10.00 per Unit. Each Unit consisted of 1 share of the Company’s common stock, $0.0001 par value, ~~three-fourths~~ ~~(3/4) of one warrant to purchase one share of common stock (the “Warrants”), and one right to receive~~ ~~one-tenth~~ (1/10) of one share of common stock upon consummation of a business combination (the “Rights”). Warrants will only be exercisable for whole shares at $11.50 per share. On January 16, 2018, the Company announced that the holders of the Company’s Units may elect to separately trade the securities underlying such Units which commenced on January 17, 2018. No fractional warrants were issued upon separation of the Units and only whole warrants will trade. Any Units that were not separated, prior to the consummation of the Company’s business combination, continued to trade on the New York Stock Exchange under the symbol “GIG.U”. Any underlying shares of common stock, warrants and rights that were separated, prior to the consummation of the Company’s business combination, traded on the New York Stock Exchange under the symbols “GIG,” “GIG.WS” and “GIGr,” respectively.

On February 22, 2019, the Company entered into a stock purchase agreement (the “Stock Purchase Agreement”) by and among the Company, Kaleyra S.p.A., Shareholder Representative Services LLC, ~~(the “Seller Representative”)~~ as representative for the holders of the ordinary shares of Kaleyra S.p.A. immediately prior to the closing of ~~the Business Combination,~~a business combination (the “Business Combination”), and all of the stockholders of all of the Kaleyra S.p.A. stock (collectively, such Kaleyra S.p.A. stockholders, the “Sellers”), for the purpose of the Company acquiring all of the shares of Kaleyra S.p.A.

~~Kaleyra S.p.A. is~~As a result of the Business Combination, the Company (headquartered in Milan, Italy) became a cloud communications software provider delivering secure Application Protocol Interfaces (“APIs”) and ~~connectivity solutions~~user interface based tools for business-to-consumer communications on a global basis. Kaleyra operates in the ~~API/~~Communication Platform as a Service ~~or CPaaS~~(“CPaaS”) market ~~headquartered in Milan, Italy and~~ with operations in Italy, India, Dubai and the United States. ~~Kaleyra S.p.A.’s~~

Kaleyra’s underlying technology used in the platform is the same across all of its communication services which can generally be described as “omni-channel mobile first interactive notifications via a public or private cloud implementation”. These services include programmable voice/Interactive Voice Response (IVR) configurations, inbound/outbound messaging capabilities, hosted telephone numbers, conversational marketing solutions, ~~include identity authentication, mobile~~ and ~~voice~~other types of IP communications services such as e-mail, push notifications, ~~on transactions,~~ and ~~banking services authorizations, most notably via different integrated mobile channels through its platform.~~WhatsApp®.

On ~~November 25, 2019,~~February 18, 2021, Kaleyra entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Kaleyra, its wholly-owned subsidiary, Volcano Merger Sub, Inc. (“Merger Sub”), Vivial Inc. (“Vivial”) and GSO Special Situations Master Fund LP, solely in its capacity as the ~~Business Combination~~Stockholder Representative (the “Stockholder Representative”), for the acquisition of the business owned by Vivial known as mGage (“mGage”), a leading global mobile messaging provider (the transaction contemplated by the Merger Agreement, the “mGage Merger”). Kaleyra will acquire mGage for a total purchase price of approximately $215 million, subject to adjustments. The consideration to mGage shareholders will consist of cash in the amount of $195 million and 1,600,000 shares of Kaleyra common stock. The mGage Merger is expected to be consummated in the second fiscal quarter of 2021. In support of the consummation of the mGage Merger, on February 18, 2021, Kaleyra entered into subscription agreements (the “PIPE Subscription Agreements”), each dated February 18, 2021, with certain institutional investors (the “PIPE Investors”), pursuant to which, among other things, Kaleyra ~~S.p.A. (the “Business Combination”) was completed.~~

~~Effective as of~~agreed to issue and sell, in private placements to close immediately prior to the closing of the ~~Business Combination, the Company changed its name to Kaleyra, Inc. Upon the consummation~~mGage Merger, an aggregate of the Business Combination, the Company also changed its fiscal year end to December 31st from its previous fiscal year ending September 30th, such change first being effective for its fiscal year ended December 31, 2019. For accounting purposes, Kaleyra S.p.A. was deemed the acquiror in the Business Combination.

The Business Combination was accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Under this method of accounting, Kaleyra, Inc. has been treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination has been treated as the equivalent of Kaleyra S.p.A. issuing stock for the net assets of Kaleyra, Inc., accompanied by a recapitalization.

As a result of the accounting for the Business Combination, the number of common shares authorized and outstanding during periods prior to the Business Combination, have been retrospectively adjusted to reflect the exchange ratio established in the Business Combination. The common stock and additional paid-in capital have also been retrospectively adjusted accordingly. Specifically, the number of common shares outstanding during periods prior to the Business Combination have been computed on the basis of the number of common8,400,000 shares of Kaleyra ~~S.p.A. (accounting acquiror) during those periods multiplied by~~common stock (the “PIPE Shares”) to the ~~exchange ratio established~~PIPE Investors at $12.50 per share. Kaleyra also entered into convertible note subscription agreements (the “Convertible Notes”), each dated February 18, 2021, with certain institutional investors (the “Convertible Note Investors”), pursuant to which Kaleyra agreed to issue and sell, in ~~the Stock Purchase Agreement. Accordingly, weighted-average shares outstanding for purposes of the net loss per share calculation have been retrospectively adjusted~~private placements to ~~reflect the exchange ratio established in the Business Combination. See Note 16 – Net Loss Per Share – for further details.~~

~~Upon~~close immediately prior to the closing of the Business Combination, the Company’s rights and Units ceased trading, and the Company’s common stock began trading on the NYSE American stock exchange under the symbol “KLR”. Furthermore, on December 2, 2019, Kaleyra’s warrants began trading on the NYSE American stock exchange as “KLR WS”mGage Merger, $200 million aggregate principal amount of unsecured convertible notes (the “Merger Convertible Notes”).

The accompanying condensed consolidated financial statements of the Company are unaudited, and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US ~~GAAP~~GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, this interim quarterly financial report does not include all disclosures required by US GAAP. In the opinion of our management, the unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, considered necessary to present fairly the financial position, results of operations and cash flows of Kaleyra and our consolidated subsidiaries for all periods presented. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 are not necessarily indicative of the results to be expected in the future or for the full fiscal year. It is recommended that these condensed consolidated financial statements be read in conjunction with our consolidated financial statements and the notes thereto included in our ~~2019~~2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on ~~April 22, 2020.~~March 16, 2021.

These condensed consolidated financial statements have been prepared in conformity with US GAAP applicable for an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”). The JOBS Act provides ~~among others,~~ that an

emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. In particular, an emerging growth company can delay the adoption of certain accounting standards until those standards would apply to private companies. For the purpose of these condensed consolidated financial statements, the Company availed itself of an extended transition period for complying with new or revised accounting standards and, as a result, did not adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for public companies.

In connection with Accounting Standards Update (“ASU”) 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40), Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern, the Company evaluated its ability to continue as a going concern. The Company has negative cash flows from operating activities as of ~~September 30, 2020.~~March 31, 2021. The condensed consolidated balance sheet as of ~~September 30, 2020~~March 31, 2021 includes total current assets of ~~$79.7~~$87.9 million and total current liabilities of ~~$73.6~~$71.7 million, resulting in net current assets of ~~$6.0~~$16.2 million.

The Business Combination generated significant obligations including (i) $13.1 million of liabilities related to non-recurring Business Combination transaction related costs; (ii) $15.0 million of deferred consideration to ~~sellers~~the Sellers in the Business Combination ~~transaction~~transaction; (iii) $13.2 million of net obligations under certain ~~forward share purchase agreements~~Shares Purchase Forward Agreements entered into by GigCapital, Inc. prior to the Business Combination; and (iv) $3.6 million of notes payable acquired as a result of the Business Combination. As of ~~September 30, 2020,~~March 31, 2021, the Company still had the following remaining obligations as a result of the Business Combination:

~~(ii) $7.5 million of deferred consideration to sellers in the Business Combination transaction; and~~

~~(iii) $480,000 of obligations under certain forward share purchase agreements entered into by GigCapital Inc. prior to the Business Combination.~~

~~On June 24, 2020,~~March 31, 2021, the Company entered into a new loan agreement with Simest S.p.A., and entered into an ~~Underwriting Agreement (the “Underwriting Agreement”) with Oppenheimer & Co. Inc. and Nomura Securities International, Inc. acting as joint book-running managers and as representatives~~agreement to postpone repayment of the ~~underwriters named therein (collectively,~~principal amounts due under the ~~“Underwriters”) relating to the issuance and sale of 7,777,778 shares~~existing Line 3 of the ~~Company’s common stock, par value $0.0001 per share (the “Offering”). The price to the public in the Offering was $4.50 per share, before underwriting discounts and commissions. Under the terms~~long-term unsecured financing agreement with Banco Popolare di Milano S.p.A. for a period of ~~the Underwriting Agreement, the Company has granted the Underwriters an option, exercisable~~six (6) months. See Note 21 – Subsequent Events – for 30 days, to purchase up to an additional 1,166,666 shares of common stock at the public offering price less underwriting discounts. The Offering closed on June 29, 2020 and resulted in net proceeds to the Company of approximately $32.0 million, after deducting underwriting discounts and commissions and estimated Offering expenses payable by the Company, assuming no exercise by the Underwriters of their option to purchase additional shares of common stock.

On July 22, 2020, the Underwriters issued notice under the terms of the Underwriting Agreement, that they were partially exercising and closed on their option to purchase an additional 984,916 shares of common stock of the Company at the public offering price less underwriting discounts. On the settlement date of July 24, 2020, the additional net proceeds from the overallotment option amounted to $4.2 million, after deducting underwriting discounts and commissions and estimated Offering expenses payable by the Company.further details.

Considering the effects of the ~~Offering~~new financing and the renegotiation described above, and the typical financial cycle of ~~Kaleyra, Kaleyra’s~~the Company, management believes that the Company’s cash, cash flows from operations, debt and equity financings and availability of borrowings, will be sufficient to support its planned operations for at least the next 12 months from the date these condensed consolidated financial statements were issued.

~~The Company’s results are affected by the business cycles of~~Historically, Kaleyra has experienced clear seasonality in its ~~customer base, which generally results in stronger~~ revenue generation, with slower traction in the first calendar quarter, and increasing revenues as the year progresses toward the higher revenues in messaging and notification services during the fourth ~~quarter~~calendar quarter. This patterned revenue generation behavior takes place due to Kaleyra’s customers sending more messages to their end-user customers who are engaged in consumer transactions at the end of the calendar ~~year. We believe this variability is largely due to the market demand for our customers’ and/or business partners’ services due to higher levels of purchasing activity~~year, resulting in ~~the holiday season. As a result of our historically higher portion of sales in the fourth quarter of each year, our cost of revenue increases during such period relative to any~~an increase in ~~revenue. The increase in cost~~notifications of ~~revenue~~electronic payments, credit card transactions and ~~other impacts of seasonality may affect profitability in a given quarter.~~e-commerce.

The condensed consolidated financial statements include the Company and its wholly owned subsidiaries, including Kaleyra S.p.A., Solutions Infini, ~~and~~ Buc Mobile and The Campaign Registry, which represent its major operations. All significant intercompany balances and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are used for, but not limited to, allowance for doubtful accounts; valuation of the Company’s stock-based awards; recoverability of long-lived and intangible assets; capitalization and useful life of the Company’s capitalized internal-use software development costs; fair value of acquired intangible assets and goodwill; accruals and contingencies, including tax related ~~provision~~provisions and the valuation allowance on deferred taxes. Estimates are based on historical experience and on various assumptions that the Company believes are reasonable under current circumstances. However, future events are subject to change and best estimates and judgments may require further adjustments; therefore, actual results could differ materially from those estimates. Management periodically evaluates such estimates and they are adjusted prospectively based upon such periodic evaluation. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to the recent outbreak of a novel strain of the coronavirus (“COVID-19”).

Financial instruments that potentially expose the Company to a concentration of credit risk consist primarily of cash, restricted cash and cash equivalents, ~~restricted cash,~~ short-term investments and trade receivables. The Company maintains cash and cash equivalents and short-term investments with financial institutions that management believes are financially sound.

The Company sells its services to a wide variety of customers. If the financial condition or results of operations of any significant customers deteriorate substantially, operating results could be adversely affected. To reduce credit risk, management performs ongoing credit evaluations of the financial condition of significant customers. The Company maintains reserves for estimated credit losses on customer accounts when considered necessary. Actual credit losses may differ from the Company’s estimates. In ~~both~~ the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ there ~~was 1 customer~~were 0 customers that individually accounted for more than 10% of the Company’s consolidated total revenues. In both the nine months ended September 30, 2020 and 2019, there was 1 customer that individually accounted for more than 10% of the Company’s consolidated total revenues. In the three months ended September 30, 2020, revenues generated by that one customer accounted for $4.9 million. In the three months ended September 30, 2019, revenues generated by that one customer accounted for $3.5 million. In the nine months ended September 30, 2020, revenues generated by that one customer accounted for $10.5 million. In the nine months ended September 30, 2019, revenues generated by that one customer accounted for $9.7 million.revenue. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, 0 customers and 1 individual customer, respectively, accounted for more than 10% of the Company’s consolidated total trade receivables. As of December 31, 2020, trade receivables accounted for by that one customer amounted to $4.5 million.

~~Certain reclassifications have been made~~The Company accounts for warrants for shares of the Company’s common stock that are not indexed to its own stock as liabilities at fair value on the condensed consolidated balance sheets. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized in “Financial expense, net” on the condensed consolidated statements of operations. The liability is included in the condensed consolidated balance sheet line item “Other long-term liabilities”. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the common stock warrants. At that time, the portion of the warrant liability related to the ~~2019 presentation~~common stock warrants will be reclassified to ~~conform to the current period’s presentation, none of which had an effect on total assets, total liabilities, stockholders’ equity (deficit), or net loss.~~additional paid-in capital.

In ~~August 2020,~~May 2021, the Financial Accounting Standards Board (“FASB”) issued ASU ~~2020-06 “Debt - Debt with Conversion~~2021-04 “Earnings Per Share (Topic 260), Debt—Modifications and ~~Other Options~~Extinguishments (Subtopic ~~470-20)~~470-50), Compensation— Stock Compensation (Topic 718), and Derivatives and ~~Hedging -~~ Hedging—Contracts in Entity’s Own Equity (Subtopic ~~815-40)~~815- 40) Issuer’s Accounting for ~~Convertible Instruments~~Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options” which clarifies and ~~Contracts~~reduces diversity in an ~~Entity’s Own Equity”, with the purpose to simplify the~~issuer’s accounting for ~~convertible instruments by removing certain separation models in Subtopic 470-20, Debt - Debt with Conversion and Other Options,~~modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. An entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as follows: i) for ~~convertible instruments. Under the amendments in this update, embedded conversion features no longer are separated from the host contract for convertible instruments with conversion features~~a modification or an exchange that ~~are not required~~is a part of or directly related to ~~be accounted for as derivatives under Topic 815, Derivatives and Hedging,~~a modification or ~~that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible~~

an exchange of an existing debt instrument ~~will be accounted for~~or line-of-credit or revolving-debt arrangements (hereinafter, referred to as a ~~single liability measured at its amortized cost~~“debt” or “debt instrument”), as the difference between the fair value of the modified or exchanged written call option and ~~a convertible preferred stock will be accounted~~the fair value of that written call option immediately before it is modified or exchanged; ii) for all other modifications or exchanges, as ~~a single equity instrument measured at its historical cost, as long as no other features require bifurcation and recognition as derivatives. By removing those separation models,~~ the ~~interest rate~~excess, if any, of ~~convertible debt instruments typically will be closer to~~ the ~~coupon interest rate when applying~~fair value of the ~~guidance in Topic 835, Interest. Further,~~modified or exchanged written call option over the ~~amendments in this update to the derivatives scope exception for contracts in an entity’s own equity change the population~~fair value of ~~contracts~~ that ~~are recognized as assets~~written call option immediately before it is modified or liabilities. For a freestanding instrument, if the instrument qualifies for the derivatives scope exception under the amendments, an entity should record the instrument in equity. For an embedded feature, if the feature qualifies for the derivatives scope exception under the amendments, an entity should no longer bifurcate the feature and account for it separately.exchanged. The amendments in this ~~update~~Update are effective for ~~public business~~all entities ~~that meet the definition of a SEC filer, excluding emerging growth companies and entities eligible to be smaller reporting companies as defined by the SEC,~~ for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. ~~For all other entities,~~An entity should apply the amendments ~~are~~prospectively to modifications or exchanges occurring on or after the effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.date of the amendments. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

In January 2021, the FASB issued ASU 2021-01 “Reference Rate Reform (Topic 848)”, which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Specifically, certain provisions in Topic 848, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. Amendments in this Update to the expedients and exceptions in Topic 848 capture the incremental consequences of the scope clarification and tailor the existing guidance to derivative instruments affected by the discounting transition. The amendments in this Update apply to all entities that elect to apply the optional guidance in Topic 848. The amendments do not apply to contract modifications made after December 31, 2022 or new hedging relationships entered into after December 31, 2022. For existing hedging relationships evaluated for effectiveness in periods after December 31, 2022, an exception is made for those hedging relationships that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship (including periods after December 31, 2022). The Company is currently evaluating the impact of the optional expedients and exceptions of this standard on its condensed consolidated financial statements.

In June 2020, the ~~Financial Accounting Standards Board (“FASB”)~~FASB issued ASU 2020-05 “Revenue from contracts with customers (Topic 606) and Leases (Topic 842): Effective dates for certain entities” (“ASU 2020-05”), which provides a limited one year deferral of the effective dates of the following updates (including amendments issued after the issuance of the original update) to provide immediate, near-term relief for certain entities for whom these updates are either currently effective or imminently effective: i) ~~Accounting Standards Update~~ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) ~~(Revenue)~~(“Revenue”); ii) ~~Accounting Standards Update~~ASU No. 2016-02, Leases (Topic 842) ~~(Leases)~~(“Leases”). In November 2019, the ~~Board~~FASB issued ASU 2019-10 “Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates” (“ASU 2019-10”). The amendments in this ASU amended certain effective dates for the above ASU

2016-02, Leases (including amendments issued after the issuance of the original ASU). The effective dates for Leases after applying ASU 2019-10 were as follows: public business entities, excluding emerging growth companies and smaller reporting companies, for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. All other entities for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Early application continues to be allowed. In ~~Update~~ASU 2019-10, the ~~Board~~FASB noted that challenges associated with transition to a major update are often magnified for private companies and smaller public companies. Those challenges have been significantly amplified by the current business and capital market disruptions caused by the COVID-19 pandemic. For this reason, the FASB issued the amendments in ~~this~~ ASU 2020-05 by deferring the effective date for one additional year for entities in the “all other” category that have not yet issued their financial statements (or made financial statements available for issuance) reflecting the adoption of Leases. Therefore, under the amendments, Leases (Topic 842) is effective for entities within the “all other” category for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early application continues to be permitted, which means that an entity may choose to implement Leases before those deferred effective dates. ~~The~~While the Company ~~is currently evaluating~~expects the adoption of the Leases standard (Leases Topic 842) to result in a material increase to the reported assets and liabilities, the Company has not yet determined the full impact that the adoption of this standard will have on its condensed consolidated financial statements.

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04 “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this ASU provide optional expedients and exceptions for applying generally accepted accounting principles (GAAP) to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply to contract modifications that replace a reference rate (e.g. LIBOR) affected by reference rate reform and contemporaneous modifications of other contract terms related to the replacement of the reference rate (including contract modifications to add or change fallback provisions). The following optional expedients for applying the requirements of certain Topics or Industry Subtopics in the Codification are permitted for contracts that are modified because of reference rate reform and that meet certain scope guidance: (i) modifications of contracts within the scope of Topics 310, Receivables, and 470, Debt, should be accounted for by prospectively adjusting the effective interest rate; (ii) modifications of contracts within the scope of Topics 840, Leases, and 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate or remeasurements of lease payments. For other Topics or Industry Subtopics in the Codification, the amendments also include a general principle that permits an entity to consider contract modifications due to reference rate reform to be an event that does not require contract remeasurement at the modification date or reassessment of a previous accounting determination. When elected, the optional expedients for contract modifications must be applied consistently for all eligible contracts or eligible transactions within the relevant Topic or Industry Subtopic. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. The Company adopted the amendments, and the adoption did not have a material impact on its condensed consolidated financial statements.

In March 2020, the FASB issued ASU 2020-03 “Codification Improvements to Financial Instruments”, which improves various financial instruments Topics in the Codification in order to increase stakeholder awareness of the amendments and to expedite the improvement process. The amendments in this ASU clarify or address stakeholders’ specific issues as described below:

For Issue 1, 2, 4 and 5, for public business entities, the amendments are effective upon issuance of this final ASU. For all other entities, including emerging growth companies as defined in the JOBS Act, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years beginning after December 15, 2020. Early application is permitted. The Company adopted the amendments in the three-month period ended March 31, 2020, and the adoption did not have a material impact on its condensed consolidated financial statements.

For Issue 3, the effective dates and transition requirements for the amendments are the same as the effective dates and transition requirements in ASU 2019-04, for the guidance related to the amendments in ASU 2016-01. The effective date of ASU 2019-04 for the amendments to ASU 2016-01 is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted the amendments in the three-month period ended March 31, 2020, and the adoption did not have a material impact on its condensed consolidated financial statements.

For Issue 6 and 7, the effective dates and transition requirements for the amendments are the same as the effective dates and transition requirements in ASU 2016-13. For entities that have not adopted the amendments in ASU 2016-13, the effective dates and the transition requirements for these amendments are the same as the effective date and transition requirements in ASU 2016-13 which for an emerging growth company is in 2023. Early adoption is permitted in any interim period as long as the entity has adopted the amendments in ASU 2016-13. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

In February 2020, the FASB issued ASU 2020-02 “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842), Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842)”. This ASU applies to all registrants that are creditors in loan transactions that, individually or in the aggregate, have a material effect on the registrant’s financial condition. This ASU guidance is applicable upon a registrant’s adoption of Accounting Standards Codification (“ASC”) Topic 326. On November 15, 2019, the FASB delayed the effective date of ASC Topic 326 for certain small public companies and other private companies. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for U.S. Securities and Exchange Commission (“SEC”) filers that are eligible to be smaller reporting companies under the SEC’s definition, as well as private companies and not-for-profit entities. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

In ~~January 2020,~~November 2019, the FASB issued ASU ~~2020-01 “Investments—Equity Securities~~2019-10 “Financial Instruments—Credit Losses (Topic ~~321)~~326), ~~Investments—Equity Method and Joint Ventures (Topic 323), and~~ Derivatives and Hedging (Topic 815)”, ~~clarifying~~and Leases (Topic 842): Effective Dates”. The amendments in ASU 2019-10 amend certain effective dates for the ~~Interactions between Topic 321, Topic 323, and Topic 815.~~following major ASUs (including amendments issued after the issuance of the original ASU):

a)ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (Credit Losses) (“ASU 2016-13”). The amendments in this ASU ~~clarify~~amend the ~~interaction of the accounting~~mandatory effective dates for ~~equity securities under Topic 321 and investments accounted~~Credit Losses for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The amendments clarify that: (a) an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method; (b) an entity should not consider

whether, upon the settlement of the forward contract or exercise of the purchased option, individually or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the fair value option in accordance with the financial instruments guidance in Topic 825. For publicall entities as follows: Public business entities that meet the ~~amendments in~~definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. All other entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application continues to be allowed. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

b)ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities (Hedging). The effective dates for Hedging after applying this ASU are ~~effective~~as follows: Public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. All other entities for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Early application continues to be allowed. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract”. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other entities, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption is permitted, including ~~emerging growth companies as~~adoption in any interim period, for all entities. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company adopted the amendments, and the adoption did not have a material impact on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, “Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20)”, which modifies the disclosure requirements for employers that sponsor defined ~~in the JOBS Act, the~~benefit pension or other postretirement plans. The amendments are effective for fiscal years ending after December 15, 2020 for public business entities and for fiscal years ending after December 15, 2021 for all other entities. Early adoption is permitted for all entities. The Company adopted the amendments, and the adoption did not have a material impact on its condensed consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test for Goodwill Impairment”, which removes the second step of the goodwill impairment test that requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This guidance is effective prospectively for public business entities for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2020 and for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2021 ~~and interim periods within those fiscal years.~~for other entities. Early adoption is permitted ~~including early adoption in an~~for interim period, (1) for public business entities for periods for which financial statements have not yet been issued and (2) for all other entities for periods for which financial statements have not yet been made available for issuance.or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

In ~~August~~June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments”, which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. In November 2018, the FASB issued ASU ~~2018-13, “Fair Value Measurement (Topic 820) Disclosure Framework—Changes~~2018-19, “Codification Improvements to Topic 326, Financial Instruments— Credit Losses”, which clarifies that receivables arising from operating leases are not within the ~~Disclosure Requirements~~scope of Topic 326, Financial Instruments—Credit Losses. Instead, impairment of receivables arising from operating leases should be accounted for ~~Fair Value Measurement”. The amendments under ASU 2018-13 remove, add, and modify certain disclosure requirements on fair value measurements~~ in ASC 820. In particular, the following disclosure were added: (i) The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period; (ii) The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendmentsaccordance with Topic 842, Leases. These ASUs are effective for ~~all~~public entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, and for other entities for fiscal years beginning after December 15, ~~2019.~~2020 and interim periods within fiscal years beginning after December 15, 2021. Earlier application is permitted. As noted above, the effective date of this ASU has now been delayed for two years by the issuance of ASU 2019-10. The ~~amendments~~Company is currently evaluating the impact of this standard on ~~changes~~its condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases”, which was further clarified by ASU 2018-10, “Codification Improvements to Topic 842, Leases”, and ASU 2018-11, “Leases—Targeted Improvements”, both issued in ~~unrealized gains~~July 2018. ASU 2016-02 affects all entities that lease assets and ~~losses,~~will require lessees to recognize a lease liability and a right-of-use asset for all leases (except for short-term leases that have a duration of less than one year) as of the ~~range~~date on which the lessor makes the underlying asset available to the lessee. For lessors, accounting for leases is substantially the same as in prior periods. ASU 2018-10 clarifies or corrects unintended application of guidance related to ASU 2016-02. The amendment affects narrow aspects of ASU 2016-02 related to the implicit rate in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and ~~weighted average~~purchase options, variable payments that depend on an index or rate and certain transition adjustments. ASU 2018-11 adds a transition option for all entities and a practical expedient only for lessors. The transition option allows entities to not apply the new lease standard in the comparative periods they present in their financial statements in the year of ~~significant unobservable inputs used~~adoption. Under the transition option, entities can opt to ~~develop Level 3 fair value measurements should be applied prospectively for only~~continue to apply the ~~most recent interim or annual period~~legacy guidance in ASC 840, “Leases”, including its disclosure requirements, in the comparative prior periods presented in the ~~initial~~year they adopt the new lease standard. Entities that elect this transition option will still be required to adopt the new leases standard using the modified retrospective transition method required by the standard, but they will recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. The new standards are effective for fiscal ~~year of adoption. All~~years beginning after December 15, 2018, including interim periods within those fiscal years for a public business entity. For all other ~~amendments should be applied retrospectively to all periods presented upon their effective date. The Company adopted~~entities, the amendments in this ASU are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Earlier application is permitted. As noted above, the ~~three-month period ended March 31, 2020, and~~effective date of this ASU has now been delayed for two years by the issuance of ASU 2020-05. While the Company expects the adoption ~~did not have~~of these standards to result in a material increase to the reported assets and liabilities, the Company has not yet determined the full impact that the adoption of this standard will have on its condensed consolidated financial statements.

The following tables provide the assets and liabilities measured at fair value on a recurring basis as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 (in thousands):

	Fair Value Hierarchy as of September 30, 2020						Aggregate		Fair Value Hierarchy as of March 31, 2021						Aggregate
	Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3		Fair Value
Assets:
Mutual funds (1)	$	579	$	—	$	—	$	579	$	593	$	—	$	—	$	593
Certificates of deposit (2)		—		4,559		—		4,559		—		3,694		—		3,694
Total Assets	$	579	$	4,559	$	—	$	5,138	$	593	$	3,694	$	—	$	4,287
Liabilities:
Interest Rate Swap (3)	$	—	$	121	$	—	$	121	$	—	$	92	$	—	$	92
Debt for forward share purchase agreements (4)		—		480		—		480
Warrant liability (4)										—		1,589		—		1,589
Total Liabilities	$	—	$	601	$	—	$	601	$	—	$	1,681	$	—	$	1,681

The values of short-term investments as of ~~September 30, 2020~~March 31, 2021 and as of December 31, ~~2019~~2020 were as follows (in thousands):

~~The following table presents changes during the three and nine months ended September 30, 2020 in Level 3 assets and liabilities measured at fair value on a recurring basis (in thousands):~~

Fair
Value
Beginning
of Period

Net
Realized
and
Unrealized
(Gains)
Losses
Included
in Income

Other
Comprehensive
(Income)
Loss

Purchases,
Sales,
Issuances and
Settlements,
Net

Change in
Scope of
Consolidation

Gross
Transfers
In

Fair
Value
End of
Period

Three and nine months ended September 30, 2020

Liabilities:

Preference shares

$
2,530

$
(2,486
)

$
(42
)

$
(2
)

$
—

$
—

$
—

	As of March 31,								As of December 31,
	2021								2020
	Cost		Unrealized gains		Unrealized losses		Fair value		Cost		Unrealized gains		Unrealized losses		Fair value
Mutual funds	$	587	$	6	$	—	$	593	$	580	$	10	$	—	$	590
Certificates of deposit		3,694		—		—		3,694		4,253		—		—		4,253

There were 0 transfers of liabilities into or out of Level 2 or Level 3 for the three months ended March 31, 2021 and the ~~nine months~~year ended ~~September 30,~~December 31, 2020.

Net realized and unrealized (gains) and losses ~~included in income~~ related to the Company’s preference shares, which were classified as Level 3 liabilities ~~shown above~~during the quarter ended March 31, 2020, are reported in the condensed consolidated statements of operations as follows (in thousands):

	Research and development			Sales and marketing			General and administrative			Financial income (expense), net			Foreign currency Income (loss)		Total			Research and development			Sales and marketing			General and administrative			Financial income (expense), net			Foreign currency Income (loss)		Total
Nine months ended September 30, 2020
Three months ended March 31, 2020
Liabilities:
Preference shares	$	(941	)	$	(372	)	$	(756	)	$	(417	)	$	—	$	(2,486	)	$	(941	)	$	(372	)	$	(756	)	$	(417	)	$	—	$	(2,486	)
Nine months ended September 30, 2019
Liabilities:
Preference shares		203			80			163			189			—		635

The gross notional amount of interest rate swap derivative contracts not designated as hedging instruments, outstanding as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, was ~~€10.3~~€8.6 million ($~~12.1~~10.0 million) and ~~€6.3~~€9.5 million ($~~7.0~~11.6 million), respectively.

The amount and location of the gains (losses) in the condensed consolidated statements of operations related to derivative contracts is as follows (in thousands):

The following table presents the fair value and the location of derivative contracts reported in the condensed consolidated balance sheets (in thousands):

									As of March 31,		As of December 31,
Derivatives Not Designed As Hedging Instruments	Line Items	As of September 30, 2020			As of December 31, 2019			Line Items	2021		2020
Interest Rate Swap	Other long-term liabilities	$	(121	)	$	(80	)	Other long-term liabilities	$	92	$	109
Total		$	(121	)	$	(80	)		$	92	$	109

Goodwill as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 was as follows (in thousands):

	As of September 30, 2020						As of December 31, 2019						As of March 31, 2021						As of December 31, 2020
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net		Gross		Accumulated amortization		Net		Gross		Accumulated amortization		Net
Amortizable Intangible Assets:
Developed technology	$	2,731	$	1,408	$	1,323	$	2,775	$	952	$	1,823	$	2,737	$	1,731	$	1,006	$	2,742	$	1,576	$	1,166
Customer relationships		8,873		2,341		6,532		9,077		1,631		7,446		8,903		2,829		6,074		8,925		2,598		6,327
Patent		126		44		82		113		29		84		127		51		76		130		49		81
Total amortizable intangible assets	$	11,730	$	3,793	$	7,937	$	11,965	$	2,612	$	9,353	$	11,767	$	4,611	$	7,156	$	11,797	$	4,223	$	7,574

Amortization expense was ~~$406,000~~$403,000 and ~~$440,000~~$422,000 for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $1.2~~ ~~million and $1.3 million for the nine months ended September 30, 2020 and 2019,~~ respectively.

Total estimated future amortization expense as of ~~September 30, 2020~~March 31, 2021 is as follows (in thousands):

	As of September 30, 2020		As of March 31, 2021
2020 (remaining three months)	$	417
2021		1,425
2021 (remaining nine months)			$	1,004
2022		1,149		1,160
2023		1,044		1,056
2024		842		853
2025 and thereafter		3,060
2025				639
2026 and thereafter				2,444
Total	$	7,937	$	7,156

	As of September 30,		As of December 31,		As of March 31,		As of December 31,
	2020		2019		2021		2020
VAT receivables	$	1,013	$	3,136	$	236	$	1,347
Receivables from suppliers		112		398		1,249		542
Credit for tax other than income tax		341		358		589		119
Income tax receivables		268		270		94		69
Other receivables		40		62		3,054		57
Total other current assets	$	1,774	$	4,224	$	5,222	$	2,134

	As of September 30,		As of December 31,		As of March 31,		As of December 31,
	2020		2019		2021		2020
Non-current income tax credit (advances and tax reduced at sources)	$	1,461	$	1,029	$	54	$	1,509
Miscellaneous		322		174		245		288
Total other long-term assets	$	1,783	$	1,203	$	299	$	1,797

As of ~~September 30, 2020,~~March 31, 2021, the Company had credit line facilities granted for a total amount of ~~$7.4~~$7.5 million, of which ~~$4.6~~$4.4 million had been ~~used, including a credit revolving facility denominated in US Dollars for $1.0 million granted to Buc Mobile in January 2020.~~used. As of December 31, ~~2019,~~2020, the Company had available credit line facilities ~~denominated in Euro~~ for ~~$5.6~~$7.7 million, of which ~~$3.6~~$5.3 million had been used.

The credit lines denominated in Euro may be drawn upon at variable interest rates in the following range: 0.6% - 7.6%. The weighted average interest rate on ~~those~~the credit line facilities outstanding as of ~~September 30, 2020,~~March 31, 2021, was ~~1.21%.~~

As mentioned above, on January 23, 2020, Buc Mobile entered into a revolving facility with Intesa Sanpaolo S.p.A. for a total amount of $1.0 million to be used solely for the purpose of Buc Mobile general working capital needs. As of September 30, 2020, this credit revolving facility was drawn for $954,000. The average effective interest rate for the three months ended September 30, 2020 was 1.5%1.11%.

									Interest Nominal Rate														Interest Nominal Rate
	As of September 30,		As of December 31,			Interest			As of September 30,			As of December 31,			As of March 31,		As of December 31,			Interest			As of March 31,			As of December 31,
	2020		2019		Maturity	Contractual Rate			2020			2019			2021		2020		Maturity	Contractual Rate			2021			2020
UniCredit S.p.A. (Line A Tranche (1)	$	3,435	$	3,609	January 2023	Euribor 3 months + 3.10%				2.80	%		2.80	%	$	2,750	$	3,235	July 2023	Euribor 3 months + 3.10%				2.80	%		2.80	%
UniCredit S.p.A. (Line A Tranche (2)		161		167	May 2023	Euribor 3 months + 3.10%				2.80	%		2.80	%		132		153	November 2023	Euribor 3 months + 3.10%				2.80	%		2.80	%
UniCredit S.p.A. (Line B)		3,137		3,229	November 2023	Euribor 3 months + 2.90%				2.60	%		2.60	%		2,656		3,030	May 2024	Euribor 3 months + 2.90%				2.60	%		2.60	%
UniCredit S.p.A. (Line C)		2,665		2,787	February 2023	Euribor 3 months + 3.90%				3.40	%		3.53	%		2,153		2,521	August 2023	Euribor 3 months + 3.90%				3.36	%		3.36	%
Intesa Sanpaolo S.p.A. (Line 1)		889		988	April 2022	Euribor 3 months + 1.80%				1.30	%		1.88	%		744		931	April 2022	Euribor 3 months + 1.80%				1.26	%		1.26	%
Intesa Sanpaolo S.p.A. (Line 2)		4,102		4,183	April 2024	Euribor 3 months + 2.60%				2.10	%		2.60	%		3,824		4,292	April 2024	Euribor 3 months + 2.60%				2.06	%		2.06	%
Intesa Sanpaolo S.p.A. (Line 3)		9,263		—	June 2026	Euribor 3 months + 1.65%				1.15	%		—			9,265		9,688	June 2026	Euribor 3 months + 1.65%				1.11	%		1.11	%
Intesa Sanpaolo S.p.A. (Line 4)		6,437		—	July 2026	Euribor 3 months + 1.70%				1.20	%		—			6,439		6,734	July 2026	Euribor 3 months + 1.70%				1.16	%		1.16	%
UBI Banca S.p.A. (Line 1)		274		332	August 2021	Euribor 3 months + 1.25%				1.25	%		1.25	%		125		209	August 2021	Euribor 3 months + 1.25%				1.25	%		1.25	%
UBI Banca S.p.A. (Line 2)		1,279		1,499	October 2021	Euribor 3 months +1.95%				1.45	%		1.55	%		692		1,031	October 2021	Euribor 3 months +1.95%				1.41	%		1.41	%
Monte dei Paschi di Siena S.p.A. (Line 1)		372		521	April 2022		0.95	%		0.95	%		0.95	%		256		328	April 2022		0.95	%		0.95	%		0.95	%
Monte dei Paschi di Siena S.p.A. (Line 2)		2,337		—	June 2023		1.50	%		1.50	%		—			1,949		2,037	June 2023		1.50	%		1.50	%		1.50	%
Banco Popolare di Milano S.p.A. (Line 1)		1,107		1,336	June 2023	Euribor 3 months + 2.00%				2.00	%		2.00	%
Banco Popolare di Milano S.p.A. (Line 2)		—		3,893	September 2022	Euribor 3 months + 2.00%				—			2.00	%
Banco Popolare di Milano S.p.A. (Line 3)		6,517		—	March 2024	Euribor 3 months + 3.00%				2.50	%		—
Banco BPM S.p.A. (Line 1)																912		1,056	June 2023	Euribor 3 months + 2.00%				2.00	%		2.00	%
Banco BPM S.p.A. (Line 3)																6,086		6,355	September 2024	Euribor 3 months + 3.00%				2.46	%		2.46	%
Simest 1		293		280	December 2023		0.50	%		0.50	%		0.50	%		293		307	December 2023		0.50	%		0.50	%		0.50	%
Simest 2		291		279	December 2023		0.50	%		0.50	%		0.50	%		291		305	December 2023		0.50	%		0.50	%		0.50	%
Simest 3		535		512	December 2023		0.50	%		0.50	%		0.50	%		535		560	December 2023		0.50	%		0.50	%		0.50	%
Finlombarda S.p.A.		43		83	December 2020		0.50	%		0.50	%		0.50	%
Total bank and other borrowings		43,137		23,698												39,102		42,772
Less: current portion		9,675		7,564												8,082		10,798
Total long-term portion	$	33,462	$	16,134											$	31,020	$	31,974

On ~~March 11, 2020,~~February 23, 2021, Kaleyra ~~S.p.A.~~ entered into ~~a 36-month (from first repayment date)~~an amendment to the existing unsecured loan agreement with ~~Monte dei Paschi di Siena~~Intesa Sanpaolo S.p.A. ~~for $2.2 million (€2.0 million). The total amount of this new facility was drawn in full~~(the “Intesa Sanpaolo S.p.A. - Line 1”) and an amendment to the ~~same date. This facility bears interest at a fixed rate equal to 1.5%.~~

~~On March 20, 2020, Kaleyra S.p.A. entered into a general~~existing unsecured loan agreement with Intesa Sanpaolo S.p.A. (the ~~“BPM Loan Agreement”) with Banco BPM~~“Intesa Sanpaolo S.p.A. ~~(formerly Banco Popolare di Milano S.p.A.~~- Line 2”) ~~for a total of $6.5 million (€6.0 million)~~. The ~~BPM Loan Agreement included a new financing of $2.7 million with the remaining balance used~~amendments each provide that certain financial covenants be amended in order to pay off the original loan dated July 23, 2019, by and between Kaleyra S.p.A. and Banco BPM S.p.A. The BPM Loan Agreement has a maturity of 45 months from the date of first repayment and bears interest at a variable rate equalmake them less restrictive to the ~~three-month Euribor plus a spread of 3.00%. The BPM Loan Agreement is~~Company, in particular as they relate to ~~be repaid in 15 quarterly installments. The total amount of~~ the ~~BPM Loan Agreement, less amounts related to commissions, fees~~previously agreed net financial position/equity ratio and ~~expenses, was drawn in full~~ the ~~same date as the BPM Loan Agreement.~~net financial position/gross operating income ratio.

On March ~~31, 2020,~~9, 2021 and March 10, 2021, respectively, Kaleyra ~~S.p.A.~~ received the approval by ~~Intesa Sanpaolo~~UniCredit S.p.A. to postpone ~~payment~~repayment of the principal amounts due under the existing Line 1A Tranche (2), Line B and Line ~~2 loans~~C of the long-term financing agreements with UniCredit S.p.A. for a period of six (6) months starting from March 1, 2021 until August 8, 2021, and under Line A Tranche (1) of the long-term financing agreement with UniCredit S.p.A. starting from February 1, 2021 until July 31, 2021. Consequently, the repayment schedule under all financing agreements mentioned above has been extended for the ~~following 3 months. As a result~~period equal to that of ~~this approval~~ the ~~Company has postponed the payments of approximately $404,000 beyond December~~six (6) month suspension period.

~~On April 7, 2020,~~2021, Kaleyra ~~S.p.A.~~ received the approval by ~~UBI Banca~~Banco Popolare di Milano S.p.A. to postpone ~~the amounts due under the existing loans for the following 6 months. As a result of this approval, the Company has postponed the payments of approximately $694,000 beyond the following 6 months.~~

On April 9, 2020, Kaleyra S.p.A. received the approval by UniCredit to postpone the amounts due under the existing loans for the following 6 months. As a result of this approval, the Company has postponed the payments of approximately $1.6 million beyond the following 6 months.

On April 24, 2020, Kaleyra S.p.A. received the approval by Simest S.p.A. to postpone the amounts due under the existing loans in 2020. As a result of this approval, the Company has postponed the payments of approximately $350,000 beyond December 31, 2020.

~~On June 29, 2020, Kaleyra S.p.A. received the approval by Intesa Sanpaolo S.p.A. to postpone payment~~repayment of the principal amounts due under the existing Line ~~1 and Line 2 loans for an additional~~ 3 ~~months. As a result~~ of ~~this approval~~ the ~~Company has postponed the payments of approximately $404,000 beyond December 31, 2020.~~

~~On July 16, 2020, Kaleyra S.p.A. entered into a general unsecured loan~~long-term financing agreement ~~(the “Intesa Loan Agreement – Line 3”)~~ with ~~Intesa Sanpaolo~~Banco Popolare di Milano S.p.A. for a ~~total amount~~period of $9.0 million. The Intesa Loan Agreement – Line 3 was disbursed in Euros for an amount of €7.9 million with an exchange rate equal to 0.87602 at the signing date of July 16, 2020. The Intesa Loan Agreement – Line 3 has a maturity of 72six (6) months starting from the date of disbursement and bears interest at a variable rate equal to the three-month Euribor plus a spread of 1.65%. The loan is to be repaid in 16 quarterly installments with a grace period for principal payments for the first 24 months. The loan is subject to financial covenants, in accordance with the terms and conditions set forth within the Intesa Loan Agreement – Line 3. The loan is guaranteed up to 90 percent of its principal amount by SACE S.p.A., the Italian state-owned export credit finance agency, and is made pursuant to a program to address COVID‑19 and the Italian Government’s support for Italian businesses, as stated within Article 1 of the Decree Law 23/2020 (the “Decree”) and conversion Law 40/2020. In consideration of the facilitated nature of the guarantee that secures this loan, and pursuant to the general conditions of the SACE guarantee, Kaleyra S.p.A. undertakes to comply with a number of obligations and representations, including the payment of the guarantee annual fee (SACE guarantee remuneration), pursuant to Article 1 of the Decree. The total amount of the loan, less amounts related to commissions, fees and expenses, was drawn in full the same date as of the agreement.

Further, on July 29, 2020, Kaleyra S.p.A. entered into a general unsecured loan agreement (the “Intesa Loan Agreement – Line 4”) with Intesa Sanpaolo S.p.A. for a total of $6.5 million (the loan was disbursed in Euros for an amount of €5.5 million at the July 29, 2020 exchange rate equal to 0.84801). The proceeds of the loan may be used for general corporate purposes, including to help accelerate the Company’s growth. The Intesa Loan Agreement – Line 4 has a maturity of 72 months from the date of disbursement and bears interest at a variable rate equal to the three-month Euribor plus a spread of 1.70%. The loan is to be repaid in 20 quarterly installments with a grace period for principal payments for the first 12 months. The loan is subject to financial covenants, in accordance with the terms and conditions set forth within the Intesa Loan Agreement – Line 4. The loan is guaranteed up to 90 percent of its principal amount by Mediocredito Centrale S.p.A., the Italian state-owned export credit finance agency, and is made pursuant to a program to address COVID-19 and the Italian Government’s support for Italian businesses, as stated within Article 13 of the Decree Law 23/2020 and conversion Law 40/2020, and obligations and representations included therein. The total amount of the loan, less amounts related to commissions, fees and expenses, was drawn in full the same date as of the agreement.

On October 7, 2020, Kaleyra S.p.A. received the approval by Intesa Sanpaolo S.p.A. to postpone payment of the amounts due under the existing Line 1 and Line 2 loans for an additional 3 months. As a result of this approval the Company will postpone the payments of approximately $404,000 beyond DecemberMarch 31, ~~2020.~~2021 until September 30, 2021. See Note 1921 – Subsequent Events – for further details.

Subsequent to March 31, 2021, Kaleyra entered into a new general unsecured loan agreement with Simest S.p.A. for a total of $3.6 million (€3.0 million at the April 15, 2021 exchange rate). See Note 21 – Subsequent Events – for further details.

As of ~~September 30, 2020,~~March 31, 2021, all of the available long-term facilities were drawn in full.

Interest expense on bank and other borrowings was ~~$206,000~~$190,000 for the three months ended ~~September 30, 2020~~March 31, 2021 and ~~$173,000~~$218,000 for the three months ended ~~September 30, 2019, and $623,000 for the nine months ended September 30, 2020 and $366,000 for the nine months ended September 30, 2019.~~March 31, 2020.

As of ~~September 30, 2020,~~March 31, 2021, the Company is obliged to make payments as follows (in thousands):

	As of September 30, 2020		As of March 31, 2021
2020 (remaining three months)	$	2,247
2021		10,245
2021 (remaining nine months)			$	5,807
2022		10,866		10,819
2023		9,298		10,537
2024		4,706		6,160
2025 and thereafter		5,775
2025				3,626
2026 and thereafter				2,153
Total	$	43,137	$	39,102

As of ~~September 30, 2020,~~March 31, 2021, the Company’s debt for forward share purchase agreements amounted to ~~$480,000 and accrued interest amounted to $508,000.~~

On September 27, 2019, the Company and Greenhaven Road Capital Fund 1, LP, a Delaware limited partnership (“Greenhaven Fund 1”), and Greenhaven Road Capital Fund 2, LP, a Delaware limited partnership (“Greenhaven Fund 2” and together with Greenhaven Fund 1, “Greenhaven”) entered into a forward share purchase agreement (the “Greenhaven Purchase Agreement”) pursuant to which the Company agreed to purchase the shares of its common stock into which Rights of the Company held by Greenhaven and any additional Rights that Greenhaven acquired, converted into shares upon the closing of the Business Combination as amended as of December 13, 2019 at the following prices: (1) $11.00 per share for the first 196,195 shares sold to the Company; (2) $10.70 per share for the next 250,000 shares sold to the Company; and (3) $10.50 per share for the next 550,000 shares sold to the Company. The Company agreed to purchase the shares on the later of the sixtieth day after the Closing of the Business Combination or January 1, 2020 (the “Greenhaven Purchase Closing Date”).

In exchange for Kaleyra, Inc.’s commitment to acquire the shares on the Greenhaven Purchase Closing Date, each of Greenhaven Fund 1 and Greenhaven Fund 2 agreed to continue to hold, and not to offer, sell, contract to sell, pledge, transfer, assign, or otherwise dispose of, directly or indirectly, or hedge (including any transactions involving any derivative securities of Kaleyra, Inc. and including any short sales involving any of Kaleyra, Inc.’s securities), the Rights (including any additional Rights) held by Greenhaven, and any shares that such Rights (including any additional Rights) converted into, until the Greenhaven Purchase Closing Date, including not to tender the Rights (or any additional Rights) to Kaleyra, Inc. in response to any tender offer that Kaleyra, Inc. may commence for the Rights. As amended on December 13, 2019, notwithstanding anything to the contrary herein, the parties agreed that Greenhaven shall after the closing of the Business Combination have the right but not the obligation to sell its shares that the Rights converted into in blocks of at least 25,000 shares (the “Minimum Block Size Condition”) in the open market if the sale price exceeds $8.50 per share, or, without meeting the Minimum Block Size Condition, Greenhaven shall have the right but not the obligation to sell any or all of its shares that the Rights converted into in the open market if the share price equals or exceeds $10.50 per share. In furtherance of the foregoing, Greenhaven shall have the right to sell such shares at any time provided that the price received by Greenhaven (not including any commissions due by Greenhaven for the sale) is at least $10.50 (or at least $8.50 if Greenhaven meets the Minimum Block Size Condition). In the event that Greenhaven sells any shares (including any Additional Shares), at a sale price of less than $10.50, and provided that Greenhaven meets the Minimum Block Size Condition, it shall provide notice to the Company within three (3) Business Days of such sale, and such notice shall include the date of the sale, the number of shares sold, and confirmation that the sale price per share was greater than $8.50, and the Company shall pay Greenhaven in accordance with Greenhaven’s written instructions an amount equal to (x) the number of shares (including any Additional Shares) sold multiplied by (y) the amount by which $10.50 exceeds the sale price per share. Furthermore, the parties agreed that nothing in the Greenhaven Purchase Agreement shall prohibit Greenhaven from entering into a contract to purchase and/or sell warrants of Kaleyra, Inc.

On January 23, 2020, the Company entered into Amendment No. 3 to the Greenhaven Purchase Agreement (the “Greenhaven Amendment No. 3”). The Greenhaven Amendment No. 3 provided that Greenhaven had the right to put its subject shares to the Company on the following dates and at the following purchase prices: (i) $11.00 per share for up to 248,963 shares to be sold to the Company on February 21, 2020; and (ii) $11.70 per share for the next 700,000 shares to be sold to the Company on August 30, 2020. Greenhaven Amendment No. 3 also provided that Greenhaven may continue to sell its subject shares in the open market, at its sole discretion, as long as the sales price is above $8.50 per share. On February 20, 2020, the Company repurchased an aggregate of 235,169 of its common stock for $2.6 million. In addition, the Company paid Greenhaven $152,000 for the 60,996 shares that Greenhaven sold on the open market representing the amount at which the $11.00 exceeded the selling price. Pursuant to Greenhaven Amendment No. 3, on August 30, 2020, the Company was to pay Greenhaven an amount equal to (1) the number of shares (including any Additional Shares) sold by Greenhaven in the open market between February 21, 2020 and August 30, 2020 multiplied by (2) the amount by which $11.70 exceeds the sale price per share. The Company understands that Greenhaven as of June 30, 2020 had sold 160,452 shares in the open market, for which the aggregate difference between the sale price per share and $11.70 totaled $832,000. In addition, the Company understands that Greenhaven as of June 30, 2020 owned 539,548 shares.

On July 18, 2020, the Company entered into Amendment No. 4 to the Greenhaven Purchase Agreement (the “Greenhaven Amendment No. 4”). The Greenhaven Amendment No. 4 provided that Greenhaven had the right to put the remaining 539,548 subject shares that Greenhaven held to the Company at $11.70 per share minus $100,000 on July 21, 2020, or $6.2 million, which was a reduction of $100,000 to the amount for which these shares could otherwise have been sold to the Company on August 30, 2020. As a result of the Greenhaven Amendment No. 4, the Company owed Greenhaven the sum of $832,000 plus $6.2 million, or $7.0 million. Under the terms of the Greenhaven Amendment No. 4, on July 21, 2020, Kaleyra paid Greenhaven this outstanding debt of $7.0 million in satisfaction of all obligations under the Greenhaven Purchase Agreement. As of September 30, 2020, there was 0 longer any amount owed to Greenhaven.0.

~~On November 19, 2019,~~During the ~~Company and~~period from January 25, 2021 through March 2, 2021, Yakira Capital Management, Inc. (“Yakira”) entered into a forward share purchase agreement (the “Yakira Purchase Agreement”) pursuant to which (i) Yakira may elect to sell and transfer to the Company, and the Company will purchase shares of common stock of the Company held by Yakira at the Business Combination Date (the “Yakira Shares”), and (ii) the Company will purchase the shares of common stock of the Company into which the Rights held by Yakira (the “Yakira Rights Shares”) were converted upon the Business Combination Date. At the Business Combination Date, Yakira held 439,299 rights, and 1,084,150 Yakira Shares.

The Company agreed that it will purchase the Yakira Rights Shares from Yakira at $1.05 per Right (which reflects $10.50 per Yakira Rights Share) (the “Yakira Rights Share Purchase Price”) as soon as practicable on or after the later of the sixtieth day after the Business Combination Date or January 1, 2020 (the “Yakira Rights Shares Closing Date”). In exchange for the Company’s agreement to purchase the Yakira Rights Shares, Yakira agreed to continue to hold, and not offer, sell, contract to sell, pledge, transfer, assign, or otherwise dispose of, directly or indirectly, or hedge the Rights (including any transactions involving any derivative securities of Yakira and any Short Sales involving any of the Company’s securities), and any Yakira Rights Shares that the rights converted into, until the Yakira Rights Shares Closing Date, including not to tender the Rights to the Company in response to any Tender Offer that the Company may commence for the Rights.

Yakira has the right to terminate the agreement for the Company to purchase the Yakira Rights Shares, without penalty, commencing on the thirtieth day after the Business Combination Date and ending on the day prior to the Yakira Rights Shares Closing Date, by giving written notice to the Company, in which case it will not be restricted after such time with respect to its ability to dispose of the Yakira Rights Shares (subject to the restrictions against transactions involving any derivative securities of the Company and any Short Sales involving any of the Company’s securities).

Except as described below, Yakira also agreed to continue to hold, and not offer, sell, contract to sell, pledge, transfer, assign, or otherwise dispose of, directly or indirectly, or hedge (including any transactions involving any derivative securities of the Company and any short sales involving any of the Company’s securities) the Yakira Shares prior to the six-month anniversary of the Business Combination Date. Yakira further agreed to not redeem any of the Yakira Shares in conjunction with the Company’s stockholders’ approval of the Business Combination. Notwithstanding anything to the contrary herein, commencing on the day after the Business Combination Date, Yakira had the right to sell the Yakira Shares in the open market as long as the sales price is above $10.50 per Yakira Share.

Yakira had the right to sell the Yakira Shares between the four-month anniversary and six-month anniversary of the Business Combination Date to the Company for a per share price (the “Yakira Shares Purchase Price”) equal to (a) $10.5019, plus (b) $0.03 per share for each month (prorated for a partial month) following the Business Combination Date that Yakira has held the Yakira Shares. At the closing of the sale of the Yakira Shares to the Company, Yakira agreed to deliver the Yakira Shares to the Company against receipt of the aggregate Yakira Shares Purchase Price, which the Company agreed to pay by wire transfer of immediately available funds from the escrow account described below.

Following the Business Combination Date, the Company deposited into an escrow account with the Escrow Agent, subject to an escrow agreement, with a nationally chartered bank the amount of $11.6 million related to Yakira. The Company agreed that its purchase of the Yakira Shares would be made with funds from the escrow account attributed to the Yakira Shares.

On February 7, 2020, the Yakira Purchase Agreement with Yakira was amended (the “First Yakira Amendment”). The First Yakira Amendment provides that the Company may be obligated to purchase some or all of the 43,930 Yakira Rights Shares if Yakira exercises an option to sell such shares to the Company at a purchase price of $10.93 per share (which is an increase from $10.50 per share) as soon as practicable on or after the six-month anniversary of the Business Combination Date.

On May 9, 2020, the Company entered into a second amendment to the Yakira Purchase Agreement (the “Second Amendment”). The Second Amendment provides that the Company will purchase from Yakira its 43,930 Rights Shares as soon as practicable on or after December 31, 2020.

In addition, on May 11, 2020, Yakira issued notice under the Yakira Purchase Agreement for Kaleyra to repurchase the 1,084,150 Yakira Shares at $10.6819 per share, for an aggregate purchase price of $11.6 million with such payment to be made with restricted cash previously placed in the escrow account described above, plus an additional $4,000. These shares were repurchased by Kaleyra on May 18, 2020 and are unrelated to the 43,930 Yakira Rights Shares discussed above. As a result of this repurchase, no cash remains in the escrow account in accordance with the terms of the Yakira Purchase Agreement.

~~As of September 30, 2020, the Company’s debt in connection with the Yakira Purchase Agreement amounted to $480,000.~~

On October 1, 2019, the Company and Kepos Alpha Fund L.P., a Cayman Islands limited partnership (“KAF”), entered into a forward share purchase agreement (“KAF Purchase Agreement”) pursuant to which the Company agreed to purchase the shares of common stock of the Company into which the Rights of the Company held by KAF, including any additional Rights that KAF acquired, converted into upon the closing of the Business Combination. The KAF Purchase Agreement was amended the following day to provide that the total number of additional Rights that KAF may acquire is 3,750,000 Rights. As amended December 13, 2019, the KAF Purchase Agreement provides that the Company would purchase such shares at the following price: (1) $10.70 per share for the first 102,171 shares sold to the Company; and (2) $10.50 per share for the next 93,676 shares sold to the Company. The Company agreed to purchase the shares on the earlier of the sixtieth day after the Business Combination or February 15, 2020 (the “KAF Purchase Closing Date”).

In exchange for the Company’s commitment to acquire the shares on the KAF Purchase Closing Date, KAF agreed to continue to hold, and not to offer, sell, contract to sell, pledge, transfer, assign, or otherwise dispose of, directly or indirectly, or hedge (including any transactions involving any derivative securities of Kaleyra, Inc. and including any short sales involving any of the Company’s securities), the Rights (including any additional Rights) held by KAF, and any shares that such Rights (including any additional Rights) converted into, until the KAF Purchase Closing Date, including not to tender the Rights (or any additional Rights) to the Company in response to any Tender Offer that the Company may commence for the Rights. As amended on December 13, 2019, notwithstanding anything to the contrary herein, the parties agreed that KAF shall after the closing of the Business Combination have the right but not the obligation to sell its shares that the Rights converted into in blocks of at least the Minimum Block Size Condition in the open market if the sale price exceeds $8.50 per share, or, without meeting the Minimum Block Size Condition, KAF shall have the right but not the obligation to sell any or all of its shares that the Rights converted into in the open market if the share price equals or exceeds $10.50 per share. In furtherance of the foregoing, KAF shall have the right to sell such shares at any time provided that the price received by KAF (not including any commissions due by KAF for the sale) is at least $10.50 (or at least $8.50 if KAF meets the Minimum Block Size Condition). In the event that KAF sells any shares (including any Additional Shares), at a sale price of less than $10.50, and provided that KAF meets the Minimum Block Size Condition, it shall provide notice to the Company within three (3) Business Days of such sale, and such notice shall include the date of the sale, the number of shares sold, and confirmation that the sale price per share was greater than $8.50, and the Company shall pay KAF in accordance with KAF’s written instructions an amount equal to (x) the number of shares (including any Additional Shares) sold multiplied by (y) the amount by which $10.50 exceeds the sale price per share. Furthermore, the parties agreed that nothing in the KAF Purchase Agreement shall prohibit KAF from entering into a contract to purchase and/or sell warrants of the Company.

On January 23, 2020, the Company entered into Amendment No. 3 to the KAF Forward Share Purchase Agreement and on April 7, 2020, the Company entered into Amendment No. 4 (the “KAF Amendments”). According to the last amendment, KAF has the right to put its subject shares to the Company on May 7, 2020 at a purchase price of: (i) $10.92 per share for the first 46,137 shares sold to the Company; and (ii) $10.82 per share for the next 93,676 Shares sold to the Company (collectively, the “KAF Share Purchase Price”). In the event the closing occurs after May 7, 2020, the KAF Share Purchase Price shall increase for the 93,676 shares sold to Kaleyra by 1% per full month until the closing date. KAF may elect, in its sole and absolute discretion, to extend the date on which it exercises its put right to a date that is provided upon 10 calendar days’ written notice. The KAF Amendments further provide that KAF may sell its subject shares in the open market, at its sole discretion, as long as the sales price is above $7.00 per share. In the

event that KAF sells any shares (including any Additional Shares) at a sale price of less than $10.92 per share for the first 46,137 shares and $10.82 per share for the next 93,676 shares, the Company shall pay KAF an amount equal to (A) the number of shares (including any Additional Shares) sold multiplied by (B) the amount by which $10.92 or $10.82, as applicable, exceeds the sale price per share.

~~On March 30, 2020, Kepos~~ provided notice to the Company that it ~~was exercising its option under~~sold all but 219 of the ~~Forward Share Purchase Agreement to have 50,000~~43,930 shares ~~of common stock repurchased by the Company on April 7, 2020 at $10.92 per share, for an aggregate purchase price of $546,000.~~

~~On May 18, 2020, Kepos informed the Company~~ that it ~~sold~~held on December 31, 2020 in the open market at a price above ~~$7.00~~$11.00 per share ~~all shares that it had held~~ that were subject to the ~~Forward Share Purchase Agreement other than 25,098 shares, and it~~Third Yakira Amendment. On March 29, 2021, Yakira provided notice ~~that it was exercising its option under the Forward Share Purchase Agreement~~ to ~~have these remaining 25,098 shares of common stock repurchased by the Company on May 20, 2020 at $10.92 per share, for an aggregate purchase price of $274,000. The May 18, 2020 notice also informed~~ the Company that ~~the amount due to Kepos for the sales that~~ it had made in the open market above $7.00 per share was $431,000, which represented the difference in price between the amount for which these shares were sold by Kepos in the open market and the Kepos Share Purchase Price, as set forth above, for a total aggregate payment to be made bywould not require the Company to ~~Kepos~~purchase its remaining 219 shares by the term date of ~~$706,000.~~

March 31, 2021. Following the ~~closing~~sale of shares and the lapse of the ~~repurchase~~Third Yakira Amendment mentioned above, the ~~Forward Share Purchase Agreement~~forward share purchase agreement with ~~Kepos has~~Yakira was terminated pursuant to its terms, and, as a result, the Company has no0 further obligations under the ~~Forward Share~~Yakira Purchase ~~Agreement following the settlement of the repurchase.~~

On November 19, 2019, the Company and Glazer Capital, LLC (“Glazer”) entered into a forward share purchase agreement (the “Glazer Purchase Agreement”) pursuant to which Glazer may elect to sell and transfer to the Company, and the Company will purchase the shares of the common stock of the company held by Glazer ( the “Glazer Shares”) at a price of $10.6819 per share (the “Glazer Shares Purchase Price”). Glazer shall notify the Company in writing five business days prior to the six month anniversary of the Business Combination Date if it is not exercising its right to sell the Glazer Shares to the Company; otherwise, absent written notification to the contrary, Glazer shall be deemed to have exercised its right to sell all of its Glazer Shares to the Company. The Company will purchase the Glazer Shares from Glazer on the ~~six-month~~ ~~anniversary of the closing of the Business Combination (the “Glazer Shares Closing Date”). As of the Business Combination Date, Glazer held 922,933 shares of common stock.~~

In exchange for the Company’s commitment to purchase the Glazer Shares on the Glazer Shares Closing Date, Glazer agreed to continue to hold, and not offer, sell, contract to sell, pledge, transfer, assign, or otherwise dispose of, directly or indirectly, or hedge (including any transactions involving any derivative securities of the Company and any Short Sales involving any of the Company’s securities) the Glazer Shares prior to the six month anniversary of the Business Combination Date. Glazer further agreed that it will not redeem any of the Glazer Shares in conjunction with the Company’s stockholders’ approval of the Business Combination. As amended on December 13, 2019, notwithstanding anything to the contrary herein, the parties agreed that Glazer shall, commencing on the day after the Business Combination Closing Date, have the right but not the obligation to sell its shares (including any Additional Shares) in blocks of at least the Minimum Block Size Condition in the open market if the sale price exceeds $8.50 per share prior to payment of any commissions due by Glazer for the sale, or, without meeting the Minimum Block Size Condition, Glazer shall have the right but not the obligation to sell any or all of its Shares (including any Additional Shares) in the open market if the sale price exceeds $10.50 per share prior to payment of any commissions due by Glazer for such sale. Glazer shall give written notice to the Company of any sale of shares (including any Additional Shares) within three (3) Business Days following the date of such sale, and such notice shall include the date of the sale, the number of shares sold, and confirmation that the sale price per share was greater than $10.50 per share (or greater than $8.50 per Share provided that Glazer meets the Minimum Block Size Condition) prior to the payment of any commissions due by Glazer for the sale.

Simultaneously with the closing of the Business Combination, the Company deposited $9.9 million which is the aggregate amount necessary to purchase the Glazer Shares, into an escrow account with Continental Stock Transfer and Trust Company (the “Escrow Agent”), subject to the terms of an escrow agreement. The Company’s purchase of the Glazer Shares will be made with funds from the escrow account attributed to the Glazer Shares. In the event that Glazer sells any Glazer Shares as provided for above, it shall provide notice to the Company within three business days of such sale, and Glazer shall instruct the Escrow Agent to release from the escrow account for the Company’s use without restriction an amount equal to the pro rata portion of the escrow attributed to the Glazer Shares which Glazer has sold. In the event that Glazer chooses not to sell to the Company any Glazer Shares that it owns as of the six-month anniversary of the Business Combination Date, Glazer shall instruct the Escrow Agent to release all remaining funds from the escrow account for the Company’s use without restriction.

Notwithstanding the Company’s commitment to deposit funds into the escrow account for the purchase of the Glazer Shares, Kaleyra, Inc. shall use its best efforts to enter into a letter of credit agreement for the issuance of a standby letter of credit for the

benefit of Glazer with a bank acceptable to Glazer (the “Issuing Bank”) as soon as possible to replace the escrow account. When the letter of credit agreement is entered into, Glazer will instruct the Escrow Agent to deposit the funds held in the escrow account into the collateral account with the Issuing Bank. Concurrently with the execution of the letter of credit agreement, the Issuing Bank shall issue the letter of credit for the benefit of Glazer in the amount of the escrow account. Glazer shall drawdown from the letter of credit to satisfy the payment due to Glazer by the Company for the purchase of the Glazer Shares. In the event that Glazer sells any Glazer Shares pursuant to the sales price restriction set forth above, it shall provide notice to the Company and the Issuing Bank within three business days of such sale, and the Issuing Bank shall release from the collateral account an amount equal to the number of Glazer Shares sold multiplied by $10.6819 to the Company for the Company’s use without restriction, with a corresponding reduction in the amount of the letter of credit. In the event that Glazer elects not to sell to the Company any Glazer Shares, the Issuing Bank shall release all funds in the collateral account to the Company for the Company’s use without restriction and terminate the letter of credit.

On January 7, 2020, the Company entered into a Letter of Credit and Reimbursement agreement with EagleBank pursuant to which EagleBank issued a standby letter of credit in the initial stated amount of $9.3 million for the benefit of Glazer. The Letter of Credit expired on June 15, 2020. The Letter of Credit could be used to draw down by Glazer upon its sale of shares of common stock of the Company pursuant to the terms and conditions set forth in the Forward Share Purchase Agreement. ~~The Letter of Credit was secured by cash in the amount of $9.3 million, which was held in a deposit account at EagleBank.~~

On May 15, 2020, Glazer provided notice that it was exercising its option under the Forward Share Purchase Agreement to have its remaining 864,093 shares of common stock repurchased by the Company on May 19, 2020 at $10.6819 per share, for an aggregate purchase price of $9.2 million, which is the full amount remaining under the Letter of Credit as of that date.

Following the repurchase mentioned above, both the Forward Share Purchase Agreement with Glazer and the Letter of Credit and Reimbursement Agreement with EagleBank have terminated pursuant to their respective terms, and as a result the Company has no further obligations under either respective agreement following the settlement of the repurchase.

On ~~October 31, 2019,~~February 25, 2021, in accordance with the ~~Company entered into an~~terms of the agreement (the “Confirmation”) with Nomura Global Financial Products, Inc. (“NGFP”) ~~for an OTC Equity Prepaid~~, NGFP fully terminated the Forward Transaction ~~(the “Forward Transaction”). Pursuant~~and made a payment in the aggregate amount of $17.0 million to Kaleyra. Following the cash settlement of the Forward Transaction mentioned above, the Forward Transaction with NGFP has terminated pursuant to the terms of the Confirmation, ~~NGFP agreed to waive any redemption right that would require the redemption of shares that it holds at the Business Combination Date in exchange for~~and, as a pro rata amount of the funds held in the Trust Account provided that the Business Combination date occurred prior to December 12, 2019. Rather, NGFP, at its sole discretion, may either sell such shares in one or more transactions, publicly or privately, at a market price of at least $10.50 per share, or hold such shares for a period of time following the consummation of the Business Combination, at which timeresult, the Company will be required to purchase from NGFP, and NGFP will be required to sell to the Company, any such shares not otherwise previously sold by NGFP. The Confirmation provides that the Forward Transaction with NGFP is for up to 2,000,000 shares of common stock. The actual number of shares held by NGFP at the Business Combination Date was 1,623,000 shares of common stock (the “Subject Shares”).

The Confirmation provided that following the closing of the Business Combination, the Company transferred from the Trust Account an amount equal to (a) the aggregate number of the Subject Shares held by NGFP, multiplied by (b) the per share redemption price for shares of common stock out of the Trust Account (the “Forward Price”) (such actual aggregate cash amount, the “Prepayment Amount”), as a partial prepayment to NGFP of the amount to be paid to NGFP in settlement of the Forward Transaction upon the Valuation Date (as defined below) for the number of shares owned by NGFP at the closing of the Business Combination. The amount of the Prepayment Amount transferred to NGFP on November 25, 2019 was $17.0 million.

After the Business Combination Date, NGFP may sell the Subject Shares at its sole discretion in one or more transactions, publicly or privately, at any time prior to the Original Valuation Date or Extended Valuation Date (each as defined below, and each a “Valuation Date”) at a price per Subject Share not less than the Forward Price. Any Subject Shares sold by NGFP during the term of the Transaction will cease to be Subject Shares. NGFP will give written notice to the Company of any sale of Subject Shares by NGFP within two business days of the date of such sale, such notice to include the date of the sale, the number of Subject Shares sold, and confirmation that the sale price per Subject Share was not less than the Forward Price.

After the Business Combination Date, NGFP may also buy and sell additional shares for its own account or on behalf of third parties, and the pricing limitation set forth in the prior paragraph will not apply to any shares purchased after the closing of the Business Combination.

On each quarterly anniversary of the Business Combination Date (any such date, a “Cash Settlement Date”), NGFP will terminate the transaction in whole or in part by reducing the number of Subject Shares for the Forward Transaction (the reduction being “Terminated Shares”). The number of Terminated Shares with respect to any Cash Settlement Date will equal the number of Subject Shares sold by NGFP since the prior Cash Settlement Date (or with respect to the first Cash Settlement Date, the closing of the Business Combination). NGFP will notify the Company of the expected number of Terminated Shares not less than ten days prior to the applicable Cash Settlement Date. On each Cash Settlement Date, NGFP will pay the Company an amount equal to the product of (A) the number of Terminated Shares and (B) the Forward Price. With effect from the Cash Settlement Date, the remaining number of Subject Shares for the Forward Transaction will be reduced by the Terminated Shares.

The “Original Valuation Date” for the Forward Transaction will be the first anniversary of the closing of the Business Combination, provided that NGFP and the Company may, not later than ten days prior to the Original Valuation Date, agree, each in their sole discretion, to extend the Valuation Date to the second anniversary of the Business Combination (the “Extended Valuation Date”). At the Original Valuation Date or Extended Valuation Date, the Forward Transaction will be settled by NGFP delivering the remaining Subject Shares to the Company, and the Company paying NGFP an amount equal to the product of (x) the Forward Price, (y) the applicable Accrual Percentage (as defined below), and (z) the number of remaining Subject Shares. The “Accrual Percentage” is the product of (a) with respect to any settlement occurring on or before the Original Valuation Date, 2.75% per annum, and with respect to any settlement occurring after the Original Valuation Date, 3.50% per annum, and (b) the number of actual days divided by the number of days in a year beginning on the date of the Business Combination and ending on the applicable day of the settlement.

On June 4, 2020, the Company and NGFP entered into a letter agreement (the “NGFP Amendment”) to provide for the extension of the Original Valuation Date to the Extended Valuation Date such that the Valuation Date now is November 25, 2021. As a result, if NGFP sells Subject Shares to the Company, NGFP will keep that portion of the cash transferred to it following the closing of the Business Combination attributable to such shares sold to the Company, plus be paid the Accrual Percentage equal to 3.50% per annum, on November 25, 2021

For the three and nine months ended September 30, 2020, financial expense amounted to $150,000 and $461,000, respectively. Accrued interest payable of $508,000 is included in “Other long-term liabilities” in the accompanying condensed consolidated balance sheets.has 0 further obligations.

As consideration for the Business Combination, on November 25, 2019 the Company issued unsecured convertible promissory notes to each of Esse Effe and Maya in the amount of $6.0 million and $1.5 million, respectively, (the ~~“Convertible~~“Business Combination Convertible Notes”) and also issued other unsecured promissory notes to each of Esse Effe and Maya in the identical respective amounts (the “Non-convertible Notes”). The Non-convertible Notes held by Esse Effe and Maya were paid in full during fiscal year 2020 and 0 amount remains outstanding for such notes as of March 31, 2021.

As of ~~September 30, 2020,~~March 31, 2021, the amount outstanding for the Business Combination Convertible Notes was ~~$7.5~~$3.75 million and accrued interest on the Business Combination Convertible Notes was ~~$186,000. For the convertible notes payable, $3.75 million is~~$65,000.

The Business Combination Convertible Notes are classified as “Notes ~~payable due to related parties” and $3.75 million is classified as “Long-term portion of notes~~ payable due to related parties” in the accompanying condensed consolidated balance sheets. The accrued interest payable is included in “Other ~~long-term~~current liabilities” in the accompanying condensed consolidated balance sheets.

Interest on the Business Combination Convertible Notes will accrue at a fixed interest rate equal to the one-year US dollar LIBOR interest rate published in The Wall Street Journal on the Business Combination Date, plus a margin of one percent (1%) per annum. Interest will be due and payable annually on each of (1) the date which is the twelve-month anniversary of the Business Combination Date and (2) on the date which is the twenty-four-month anniversary of the Business Combination Date. All interest shall be computed on the basis of a 365-day year and the actual number of days elapsed.

Fifty percent (50%) of the outstanding principal balance of these ~~Notes will be~~notes was due and payable on the fifteen-month anniversary of the Business Combination Date. The remaining outstanding principal balance of these ~~Convertible Notes~~notes plus all accrued and unpaid interest and fees due under these ~~Notes~~notes will be due and payable in full on the twenty-four-month anniversary of the Business Combination Date.

In the event that the Company receives, at any time while principal on these ~~Convertible Notes~~notes remains outstanding, cash proceeds of an equity financing (the “Financing”) in an amount not less than $50.0 million (the “Notes Financing Proceeds”), fifty percent (50%) of the outstanding principal balance of these ~~Notes~~notes will be due and payable no later than ten business days after the Company receives such Notes Financing Proceeds. In the event of a Financing where at any time the Company receives cash proceeds of such Financing in an amount not less than $75.0 million (the “Payoff Financing Proceeds”), one hundred percent ~~(100%)~~ of the remaining outstanding principal balance of these ~~Convertible Notes,~~notes, plus all accrued and unpaid interest and fees due under the ~~Notes~~notes will be due and payable no later than ten business days after the Company receives such Payoff Financing Proceeds. The date which is the earlier of (a) the twenty-four-month anniversary of the Business Combination Date, or (b) the date payment is received from Payoff Financing Proceeds, is the “Maturity Date”.

In the event that these Business Combination Convertible Notes are not paid in full on or before the applicable Maturity Date, then at any time after the sixtieth business day after the Maturity Date, assuming payment in full has not been made prior to such date, the outstanding principal amount of these ~~Notes,~~notes, together with all accrued but unpaid interest on these ~~Convertible Notes,~~notes, may be converted into shares of Company common stock, in part or in whole, at the option of the holder of these ~~Convertible Notes~~notes by providing written notice at least three business days prior to the date of conversion. A conversion of any portion of these ~~Convertible Note~~notes into shares of Company common stock will be effected at a conversion price equal to the Current Market Price as of the date of such conversion (the

~~“Conversion~~ “Conversion Price”). The term “Current Market Price” means, generally, the average VWAP for the twenty consecutive trading days ending on the date that is five trading days prior to the date of conversion. The term “VWAP” means, for any trading day, the volume weighted average trading price of the Company’s common stock for such trading day on the NYSE (or if the Company’s common stock is no longer traded on the NYSE, on such other exchange as the Company’s common stock is then traded).

~~Non-convertible~~On the fifteen-month anniversary of the Business Combination Date or February 25, 2021, the fifty percent (50%) of the previously outstanding amount of Business Combination Convertible Notes

~~As of June 30, 2020, the amount outstanding for the Non-convertible Note~~ held by Esse Effe and Maya was ~~$6.0~~repaid, with a total of $3.0 million and $750,000 in principal and $176,000 and $44,000 in accrued interest ~~on the Non-convertible Note was $105,000.~~

~~The Non-convertible Notes accrued interest at a fixed interest rate equal~~being paid to ~~LIBOR, which interest rate was one~~Esse Effe and ninety-one hundredths percent (1.91%), plus a margin of one percent (1%) per annum. As used herein, “LIBOR” means the one-year US Dollar LIBOR interest rate published in The Wall Street Journal on the Business Combination Date. All interest was computed on the basis of a 365-day year and the actual number of days elapsed.

~~Under~~Maya, respectively, pursuant to the terms of the Non-convertible Notes, the outstanding principal balance of the Non-convertible Notes, plus all accrued and unpaid interest and fees due under these notes, became due and payable, upon the receipt by the Company, in the equity financing event, namely the Offering mentioned above, of cash proceeds in an amount not less than $11.5 million (the “Financing Proceeds”), no later than ten (10) business days after the Company receives the Financing Proceeds. The principal amount of $6.0 million plus accrued interest of $105,000 for the Non-convertible Note held by Esse Effe was paid in full on July 2, 2020.

~~As of September 30, 2020, 0 amount remained outstanding for the Non-convertible~~Business Combination Convertible Notes.

On April 16, 2020, the Company entered into a Settlement Agreement and Release (the “Settlement Agreement”) with its Business Combination financial advisory service firms, Cowen and Company, LLC (“Cowen”) and Chardan Capital Markets, LLC, (“Chardan” and collectively the “Service Firms”), pursuant to which it agreed to pay an affiliate of Cowen, Cowen Investments II LLC (“Cowen Investments”), and Chardan, in full satisfaction of all amounts owed to the Service Firms as of December 31, 2019, $5.4 million in the aggregate, as follows: (i) $2.7 million in the aggregate in common stock of the Company (the “Settlement Shares”) to be issued the business day prior to the filing of a resale registration statement for such Settlement Shares (the ~~“Resale~~“Bank Resale Registration Statement”), (ii) convertible notes totaling $2.7 million in the aggregate with a maturity date three years after issuance and bearing interest at five percent (5%) per annum (but with lower interest rates if the notes are repaid earlier than one year or two years after issuance) and with interest paid in arrears to the payee on March 15, June 15, September 15 and December 15 of each year, with such convertible notes to also be issued the business day prior to the filing of the Resale Registration Statement and (iii) in the event that the Beneficial Ownership Limitation (as defined below) would otherwise be exceeded upon delivery of the Settlement Shares above, a warrant agreement also to be entered into with and issued to the Services Firms the business day prior to the filing of the Resale Registration Statement, whereby the amount of common stock of the Company by which the Beneficial Ownership Limitation would otherwise have been exceeded upon delivery of the Settlement Shares will be substituted for by warrants with an exercise price of $0.01 per share issued pursuant to a Warrant Agreement (the “Warrant Agreement”) and the common stock underlying the Warrant Agreement (the “Warrant Shares”). The Beneficial Ownership Limitation shall initially be 4.99% of the number of shares of the common stock outstanding of the Company immediately after giving effect to the issuance of these shares of common stock. The number of Settlement Shares was calculated using as the price per Settlement Share an amount equal to a fifteen percent (15%) discount to the ten-day (10-day) trailing dollar volume-weighted average price for the common stock of the Company on the NYSE American LLC stock exchange (the “VWAP”) on the business day immediately prior to the date on which Kaleyra ~~files~~filed the Resale Registration Statement. In addition, the price per share for determining the number of shares of common stock of the Company to be issued upon the conversion of the convertible notes shall be a five percent (5%) premium to the ten-day (10-day)

trailing VWAP as of the date immediately prior to the issuance date of the convertible notes, rounded down to the nearest whole number.

On May 1, 2020, in connection with the Settlement Agreement, the Company issued: (i) an aggregate of 440,595 Settlement Shares to Cowen Investments and Chardan, consisting of 374,506 Settlement Shares issued to Cowen Investments, and 66,089 Settlement Shares issued to Chardan, which resulted in a $0.2 million loss on settlement on the issuance date of May 1, 2020; and (ii) convertible promissory notes in the aggregate principal amount of $2.7 million to Cowen Investments and Chardan, consisting of a convertible promissory note in the principal amount of $2.3 million issued to Cowen Investments (the “Cowen Note”) and a convertible promissory note in the principal amount of $405,000 issued to Chardan (the “Chardan Note”). The unpaid principal of the Cowen Note is convertible at the option of Cowen Investments into 303,171 shares of common stock of the Company, if there has been no principal reduction, and the unpaid principal of the Chardan Note is convertible at the option of Chardan into 53,501 shares of common stock of the Company, if there has been no principal reduction. As the Beneficial Ownership Limitation was not triggered by the issuance of the Settlement Shares, 0no Warrant Agreement was necessary and no0 warrants were issued.

As of ~~September 30,~~December 31, 2020, the outstanding amount of the Cowen Note was $2.3 million and accrued interest was ~~$34,000.~~$63,000. As of ~~September 30,~~December 31, 2020, the outstanding amount of the Chardan Note was $405,000 and accrued interest was ~~$8,000.~~$14,000. These notes payable

~~totaling $2.7 million~~ are included in “Long-term portion of notes payable” and the accrued interest ~~payables are~~payable is included in “Other current liabilities” in the accompanying condensed consolidated balance sheets.

On February 4, 2021, Cowen Investments elected to convert the outstanding amount of the Cowen Note into 303,171 shares of common stock pursuant to the terms of the Cowen Note, and, as a result, the Company has 0 further obligations with respect to the Cowen Note.

As of March 31, 2021, the outstanding amount of the Chardan Note was $405,000 and accrued interest was $19,000.

The accumulated balances related to each component of accumulated other comprehensive loss are as follows (in thousands):

Preference shares liabilities amounting to 0 ~~and $2.5 million~~ as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019, respectively, represent Kaleyra’s~~2020, represented the Company’s obligation to purchase in 2020 the preference shares from certain employees of Solutions Infini as a part of the Solutions Infini 2018 Purchase Agreement.

~~On March 9,~~During fiscal year 2020, ~~Kaleyra signed a modification of~~following the 2018 Solutions Infini Purchase Agreement to reduce the price of the preference shares to be purchased from the eligible employees of Solutions Infini in July 2020 to their face value, amounting to Indian Rupee 10.0 per each preference share. As a result of this modification, the total preference shares obligation was reduced to Indian Rupee 132,000 ($2,000 at the July 31, 2020 exchange rate) and paid in full on July 31, 2020.

~~On January 31, 2020, Kaleyra agreed to pay to~~agreement with the eligible employees of the preference shares to pay performance bonuses for a total amount of $3.5 million, ~~to be paid in 2020,~~ as a replacement of the preference shares ~~obligation.~~

~~On March 24, 2020, given~~obligation, the ~~prevailing situation of the COVID-19 pandemic both globally and in India, Kaleyra agreed with 2 of~~performance bonus obligation payable to the eligible employees ~~to delay payment of their performance bonuses, for a total amount~~was paid in 2 different installments of $1.4 million on August 31, 2020, and ~~evaluate the timeline for payment thereof at a later date.~~of $883,000 on November 30, 2020.

On ~~July 31, 2020, following the resolution of the Board of Directors of Solutions Infini, the payment of~~February 3, 2021, the previously outstanding performance bonus obligation ~~with 2 of~~payable to the eligible employees was agreed to be paid in 2 different installments of $826,000 on ~~August 31, 2020 for $1.4 million~~February 15, 2021 and $340,000 (at the ~~August~~March 31, ~~2020~~2021 exchange rate). on April 15, 2021, under the full and final settlement agreements signed with the eligible employees. See Note 21 – Subsequent Events – for further details.

As of ~~September 30, 2020,~~March 31, 2021, the outstanding performance bonus obligation payable to the ~~other~~ eligible employees amounted to ~~$2.1 million.~~$340,000. This amount is included in the condensed consolidated balance sheets line item “Payroll and payroll related accrued liabilities”.

	As of September 30,		As of December 31,		As of March 31,		As of December 31,
	2020		2019		2021		2020
Liabilities for tax other than income tax	$	809	$	583	$	437	$	2,942
Social security liabilities		233		256		295		383
Current tax liabilities						886		434
Accrued financial interest		64		149		265		1,066
Other liabilities		653		391
Capital leases						125		138
Other miscellaneous						778		1,025
Total other current liabilities	$	1,759	$	1,379	$	2,786	$	5,988

Revenue by geographic area is determined on the basis of the location of the customer. The Company generates its revenue primarily in Italy and India. The following table sets forth revenue by geographic area for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2020		2019		2020		2019		2021		2020
Italy	$	15,943	$	15,587	$	44,098	$	43,458	$	16,087	$	14,608
India		8,893		9,146		24,010		26,439		11,718		8,893
United States		7,969		2,118		18,611		5,973		5,121		4,289
Europe (excluding Italy)		1,876		5,099		7,023		11,955		1,418		2,573
Rest of the world		3,587		3,379		9,358		6,100		5,370		3,270
Total	$	38,268	$	35,329	$	103,100	$	93,925	$	39,714	$	33,633

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2020			2019			2020			2019			2021			2020
Italy		41.7	%		44.1	%		42.7	%		46.3	%		40.5	%		43.4	%
India		23.2	%		25.9	%		23.3	%		28.1	%		29.5	%		26.4	%
United States		20.8	%		6.0	%		18.1	%		6.4	%		12.9	%		12.8	%
Europe (excluding Italy)		4.9	%		14.4	%		6.8	%		12.7	%		3.6	%		7.7	%
Rest of the world		9.4	%		9.6	%		9.1	%		6.5	%		13.5	%		9.7	%

As of March 31, 2021, the majority of the Company’s long-lived assets are located in Italy and India. The following table sets forth long-lived assets by geographic area as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 (in thousands):

	As of September 30,		As of December 31,		As of March 31,		As of December 31,
	2020		2019		2021		2020
Italy	$	2,515	$	1,772	$	3,288	$	2,827
India		1,337		1,162		2,098		1,667
United States		1,951		437		1,719		2,225
Rest of the world		22		22		8		7
Total	$	5,825	$	3,393	$	7,113	$	6,726

	As of September 30,			As of December 31,			As of March 31,			As of December 31,
	2020			2019			2021			2020
Italy		43.2	%		52.2	%		46.2	%		42.0	%
India		23.0	%		34.2	%		29.5	%		24.8	%
United States		33.4	%		12.9	%		24.2	%		33.1	%
Rest of the world		0.4	%		0.7	%		0.1	%		0.1	%

The Company entered into various operating lease agreements that expire over various years in the next 7 years. The Company’s Milan office lease contains an option to renew the lease for 6 years under terms and conditions set forth in the lease agreement. Certain of the Company’s leases contain provisions for rental adjustments. Operating lease rentals are expensed on a straight-line basis over the life of the lease beginning on the date the Company takes possession of the property. Rent expense was ~~$362,000~~$192,000 and ~~$259,000~~$235,000 for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $1.0 million and $679,000 for the nine months ended September 30, 2020 and 2019,~~ respectively.

Future minimum lease payments under ~~operating leases~~leasing obligations as of ~~September 30, 2020~~March 31, 2021 are as follows (in thousands):

Future minimum lease payment under capital leases as of March 31, 2021, consisted of the following (in thousands):

As of ~~September 30, 2020,~~March 31, 2021, the Company had contingent liabilities of $128,000, relating to a tax appeal of Solutions Infini for which 0 provision was recognized as its occurrence was deemed remote.

On March 24, 2020, the Board’s Compensation Committee approved the grant of 113,506 RSUs to a new manager of the Company. These RSUs have no performance conditions and vest as follows: (i) 25% of the shares vest on February 1, 2021 and (ii) the remaining 75% vests in equal quarterly installments over a ~~three-year~~ ~~period starting from February 1, 2021.~~

~~In May 2020, the Board approved the grant of 447,714 RSUs to 3 new managers and 2 new advisory board members of Kaleyra. These RSUs have no performance conditions and vest as follows:~~

•~~435,714 RSUs under this vesting timeline: (i) 25% of the shares vest on May 1, 2021 and (ii) the remaining 75% vests in equal quarterly installments over a~~ ~~three-year~~ ~~period starting from May 1, 2021;~~

On August 6, 2020, the Board’s Compensation Committee approved the grant of 500,200 RSUs to NaN employees of the Company as part of Kaleyra’s retention plan. These RSUs have no performance conditions and vest as follows: (i) 25% of the shares vest on August 1, 2021 and (ii) the remaining 75% vests in equal quarterly installments over a ~~three-year~~ ~~period starting from August 1, 2021.~~

The following table sets forth the activity related to the number of outstanding RSUs for the ~~nine~~three months ended ~~September 30, 2020:~~March 31, 2021:

	Number of shares			Weighted- average grant date fair value (per share)		Number of shares			Weighted- average grant date fair value (per share)
Non-vested as of December 31, 2019		3,336,095		$	8.25
Non-vested as of December 31, 2020							3,331,037		$	7.48
Vested		(189,104	)		8.20		(558,396	)		8.08
Granted		1,061,420			5.93		939,450			16.23
Cancelled		(132,897	)		8.25		(8,150	)		7.01
Non-vested as of September 30, 2020		4,075,514		$	7.65
Non-vested as of March 31, 2021							3,703,941		$	9.61

RSUs compensation expense for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 was ~~$4.9~~$4.6 million, ~~and $15.8 million, (0 in the three and nine months ended September 30, 2019), respectively,~~ which was recorded as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2020		2019		2020		2019		2021		2020
Research and development	$	1,161	$	—	$	3,613	$	—	$	971	$	1,312
Sales and marketing		1,281		—		3,434		—		522		1,053
General and administrative		2,480		—		8,709		—		3,067		3,839
Total	$	4,922	$	—	$	15,756	$	—	$	4,560	$	6,204

As of ~~September 30, 2020,~~March 31, 2021, there was ~~$16.0~~$23.4 million of unrecognized compensation cost related to non-vested RSUs to be recognized over a weighted-average remaining period of ~~1.28~~1.56 years.

The Company provides for income taxes using an asset and liability approach under which deferred income taxes are provided for based upon enacted tax laws and rates applicable to periods in which the taxes become payable.

The Company continues to maintain a full valuation allowance against its domestic deferred tax assets and ~~2019, respectively.~~most foreign jurisdictions other than India also maintain a full valuation against its deferred tax assets.

As of ~~September 30, 2020,~~March 31, 2021, the Company ~~had $2.2~~maintained $4.9 million of undistributed earnings and profits generated by a foreign subsidiary (Solutions Infini) for which 0 deferred tax liabilities have been recorded, since the Company intends to indefinitely reinvest such earnings in the subsidiary to fund the international operations and certain obligations of the subsidiary. Should the above undistributed earnings be distributed in the form of dividends or otherwise, the distributions would result in ~~approximately $326,000~~$737,000 of tax expense.

The Company files income tax returns in the United States and in foreign jurisdictions including Italy, India, and Switzerland. As of ~~September 30, 2020,~~March 31, 2021, the tax years ~~2007~~2008 through the current period remain open to examination in each of the major jurisdictions in which the Company is subject to tax.

The Business Combination was accounted for as a reverse recapitalization in accordance with US GAAP. Accordingly, weighted average shares outstanding for purposes of the net loss per share calculation have been retrospectively adjusted to reflect the exchange ratio established in the Business Combination.

~~The following table sets forth the calculation of basic and diluted net loss per share during the period presented (in thousands, except share and per share data):~~

The Company generated a net loss for the three and nine months ended September 30, 2020 and generated a net income and a net loss for the three and nine months ended September 30, 2019, respectively. Accordingly, the effect of dilutive securities is not considered in the net loss per share for the periods in which a net loss was generated because their effect would be anti-dilutive on the net loss per share.

For the three and nine months ended September 30, 2020, the weighted-average number of outstanding shares of common stock equivalents, which were excluded from the calculation of the diluted net loss per share as their effect would be anti-dilutive, was 16,803,358 and 17,184,630, respectively (0 for the three and nine months ended September 30, 2019, respectively).

Warrants will only be exercisable for whole shares at $11.50 per share. Under the terms of the ~~Warrant~~warrant agreement dated December 12, 2017 (the “Warrant Agreement”), the Company has agreed to use its best efforts to file a new registration statement ~~under the Securities Act,~~ following the completion of the Business Combination, for the registration of the shares of common stock issuable upon exercise of the ~~Warrants there were included in the Units.~~warrants. That registration statement was filed by the Company on May 4, 2020 and declared effective by the SEC on May 8, 2020. NaN fractional shares will be issued upon exercise of the ~~Warrants.~~warrants. If, upon exercise of the ~~Warrants,~~warrants, a holder would be entitled to receive a fractional interest in a share, the Company will, upon exercise, round down to the

nearest whole number for the number of shares of common stock to be issued to the ~~Warrant~~warrant holder. Each ~~Warrant~~warrant became exercisable 30 days after the completion of the Business Combination and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation. If the Company is unable to deliver registered shares of common stock to the holder upon exercise of the Warrants during the exercise period, there will be 0 net cash settlement of these Warrants and the Warrants will expire worthless, unless they may be exercised on a cashless basis in the circumstances described in the Warrant agreement. Once the ~~Warrants become~~warrants became exercisable, the Company may redeem the outstanding ~~Warrants~~warrants in whole and not in part at a price of $0.01 per ~~Warrant~~warrant upon a minimum of 30 days’ prior written notice of redemption, only in the event that the last sale price of the Company’s shares of common stock equals or exceeds $18.00 per share for any 20 trading days within the 30-trading day period ending on the third trading day before the Company sends the notice of redemption to the ~~Warrant~~warrant holders.

On ~~September 30, 2020, Kaleyra entered into~~April 12, 2021, the SEC issued a ~~Warrant Exchange Agreement with Riverview Group LLC~~SEC Staff Statement on “Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“~~Riverview”~~SPACs”) (the ~~“Riverview Agreement”~~“SEC Staff Statement”). ~~Riverview previously acquired~~The SEC Staff Statement addresses certain accounting and reporting considerations related to warrants of a kind similar to ~~purchase an aggregate of 3,780,000 shares of the Company’s common stock, par value $0.0001 per share, initially~~those issued by the Company inat the time of its initial public offering in December 2019. Based on ASC 815-40, “Contracts in Entity’s Own Equity”, warrant instruments that do not meet the criteria to be considered indexed to an entity’s own stock shall be initially classified as liabilities at their estimated fair values. In periods subsequent to issuance, changes in the estimated fair value of the derivative instruments should be reported in the consolidated statements of operations. Following the SEC Staff Statement, management evaluated the fact pattern set forth within Kaleyra’s Warrant Agreement and concluded that the warrants issued in connection with private placements that occurred in December ~~7, 2017. Pursuant~~2017 and January 2018 concurrently with its initial public offering (the “Private Placement Warrants”) should have been recorded as a liability at fair value as the Private Placement Warrants were not considered to be indexed to the ~~Riverview Agreement,~~entity’s own stock. Because the transfer of Private Placement Warrants to anyone other than the initial purchasers or their permitted transferees would result in the Private Placement Warrants having substantially the same terms as warrants issued in the Company’s initial public offering, management determined that the fair value of each Private Placement Warrant approximates the fair value of its publicly traded warrants.

Management analyzed the impact of this error on ~~October 2, 2020, Riverview surrendered~~ the ~~warrant shares~~Company’s prior consolidated financial statements beginning from the date when the Private Placement Warrants were issued and concluded that the adjustments were immaterial to any period presented in previously issued consolidated financial statements. The out-of-period adjustment related to the prior periods was also immaterial to the three months ended March 31, 2021. As a result of this analysis, the Company ~~issued~~corrected this error in the three months ended March 31, 2021.

The correction resulted in an ~~aggregate~~increase of ~~850,500~~$534,000 in other long-term liabilities, a decrease of $344,000 in additional paid-in capital and an increase of $190,000 in financial expense, net. During the three months ended March 31, 2021, the Company recorded $1.3 million, including the $190,000 attributable to prior periods, in financial expense, net on the condensed consolidated statements of operations for the change in fair value of the Private Placement Warrants.

As of March 31, 2021, there were 7,125,232 warrants outstanding, following the exercise of 249,706 warrants during the three-month period ended thereof.

The following table sets forth the calculation of basic and diluted net loss per share during the period presented (in thousands, except share and per share data):

The Company generated a net loss for each of the three months ended March 31, 2021 and 2020. Accordingly, the effect of dilutive securities is not considered in the loss per share for such periods because their effect would be anti-dilutive on the net loss per share.

For the three months ended March 31, 2021, the weighted average number of outstanding shares of common stock ~~to Riverview in exchange~~equivalents, which were excluded from the calculation of the diluted net loss per share as their effect would be anti-dilutive, was 12,704,582 (14,346,056 for the ~~warrants. There was no incremental value incurred in this exchange transaction. See Note 19 – Subsequent Events – for further details.~~three months ended March 31, 2020).

Subsequent to September 30, 2020, pursuant to the effects of the Riverview Agreement, the total number of outstanding warrants was reduced to 7,374,938 outstanding warrants from the 11,154,938 previously outstanding warrants. See Note 19 – Subsequent Events – for further details.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ related party transactions, other than compensation and similar arrangements in the ordinary course of business, were as follows:

The following table presents the expenses for transactions with related parties reported in the condensed consolidated statements of operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2020		2019		2020		2019		2021		2020
Research and development	$	—	$	19	$	—	$	163	$	12	$	5
Sales and marketing										60		57
General and administrative		107		19		249		163		80		56
Financial expense, net		55		—		299		—		44		122

The Company enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of allowances for credits and any taxes collected from customers. Taxes collected are subsequently remitted to governmental authorities.

The Company's revenue is primarily derived from usage-based fees earned from the sale of communications services offered through software solutions to large enterprises, as well as small and medium-sized customers.

The Company’s revenue is recognized upon the sending of a SMS message or by the authentication of a financial transaction of an end user of the Company’s customer using the Company’s platform in an amount that reflects the consideration the Company expects to receive in exchange for those services which is generally based upon agreed fixed prices per unit.

Platform access is considered a monthly ~~service~~series comprised of one performance obligation and usage-based fees are recognized as revenue in the period in which the usage occurs. After usage occurs, there are no remaining obligations that would preclude revenue recognition. Revenue from usage-based fees represented 98% ~~and 98%~~ of total revenue ~~for~~in both the ~~three~~three-month period ended March 31, 2021 and ~~the nine months ended September 30, 2020, respectively~~ ~~(98% and 98% of total revenue for the three and nine months ended September 30, 2019, respectively).~~2020.

Subscription-based fees are derived from certain term-based contracts, such as with the sales of short codes and customer support, which is generally one year. Term-based contract revenue is recognized on a ratable basis over the contractual term of the arrangement beginning on the date that the service is made available to the customer.

Revenue from term-based fees represented 2% ~~and 2%~~ of total revenue ~~for~~in both the ~~three~~three-month period ended March 31, 2021 and ~~the nine months ended September 30, 2020, respectively~~ ~~(2% and 2% of total revenue for the three and nine months ended September 30, 2019, respectively~~).2020.

The Company's arrangements do not contain general rights of return. The contracts do not provide customers with the right to take possession of the software supporting the applications. Amounts that have been invoiced are recorded in trade receivables and in revenue or deferred revenue depending on whether the revenue recognition criteria have been met.

The Company receives payments from customers based on a billing schedule as established in its contracts. Contract assets are recorded when the Company has a conditional right to consideration for its completed performance under the contracts. Trade receivables are recorded when the right to this consideration becomes unconditional, which is as usage occurs. The Company did not have any contract assets as of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

Deferred revenue is recorded when cash payments are received in advance of future usage on non-cancellable contracts. As of ~~September 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the Company recorded ~~$1.5~~$3.1 million and ~~$1.4~~$3.7 million, respectively, as deferred revenue in its condensed consolidated balance sheets. In the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, the Company recognized ~~$80,000 and $1.0~~$1.6 million ~~respectively,~~ of revenue ~~in its condensed consolidated statements of operations~~ that was included in deferred revenue as of December 31, ~~2019.~~2020.

In general, revenue disaggregated by geography is aligned according to the nature and economic characteristics of the Company’s business and provides meaningful disaggregation of the Company’s results of operations. Refer to Note 1213 – Geographic Information for details of revenue by geographic area.

On ~~September 30, 2020,~~April 15, 2021, the previously outstanding performance bonus obligation of $340,000 (at March 31, 2021 exchange rate) payable to the eligible employees under the Solutions Infini 2018 Purchase Agreement was paid in full, as such the obligation terminated pursuant to its terms and 0 more obligation remains outstanding.

On April 15, 2021, Kaleyra S.p.A. and Banco Popolare di Milano S.p.A. entered into ~~a Warrant Exchange Agreement with Riverview Group LLC (the “Riverview agreement”). Riverview previously acquired warrants~~an agreement to ~~purchase an aggregate of 3,780,000 shares~~postpone repayment of the Company’s common stock, par value $0.0001 per share, initially issued by the Company in its initial public offering on December 7, 2017. Pursuant to the Riverview Agreement, on October 2, 2020, Riverview surrendered the warrant shares and the Company issued an aggregate of 850,500 shares of common stock to Riverview in exchange for the warrants. There was no incremental value incurred in this exchange transaction. On October 2, 2020, pursuant to the effects of the Riverview Agreement, the total number of outstanding warrants was reduced to 7,374,938 outstanding warrants from the 11,154,938 previously outstanding warrants.

~~On October 7, 2020, Kaleyra S.p.A. received the approval by Intesa Sanpaolo S.p.A. to postpone payment of the~~principal amounts due under the existing Line 13 of the long-term unsecured financing agreement for a period of six (6) months starting from March 31, 2021 until September 30, 2021, without prejudice to Kaleyra S.p.A.’s obligations to continue to pay interest in relation to the principal amount at the original due dates.

On April 15, 2021, Kaleyra entered into a general unsecured loan agreement with Simest S.p.A for a total of $3.6 million (€3.0 million at the April 15, 2021 exchange rate) relating to the Fund 394/81 (the “Simest Financing”) and ~~Line 2 loans~~Fund for ~~an additional 3 months. As~~Integrated Promotion (the “Co-financing”) for implementation of a ~~result~~program to break into foreign markets. The principal amount of ~~this approval,~~$505,000 (€422,000 at the ~~Company~~April 15, 2021 exchange rate) of the financing applies to the Co-financing and has been granted in accordance with Section 3.1 of the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak of the European Commission, and as such does not require repayment if used for the purposes stated within Fund 394/81.

The principal amount of $3.1 million (€2.6 million at the April 15, 2021 exchange rate) applies to the Simest Financing. The Simest Financing bears a subsidized interest rate of 0.055% and a reference interest rate of 0.55%. The loan will ~~postpone~~have a duration of six (6) years starting from the ~~payments~~date of ~~approximately $404,000 beyond December 31, 2020.~~disbursement and will have to be repaid in half-yearly installments starting after a two-year pre-amortization period.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following management’s discussion and analysis in conjunction with the condensed consolidated financial statements of Kaleyra, Inc. (“Kaleyra,” the “Company,” “we,” “us,” and “our” refer to Kaleyra, Inc. and all of its consolidated subsidiaries) and the related notes included elsewhere in our Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2020.~~March 31, 2021. The discussion below includes forward-looking statements about Kaleyra’s business, operations and industry that are based on current expectations that are subject to uncertainties and unknown or changed circumstances. Kaleyra’s actual results may differ materially from these expectations as a result of many factors, including, but not limited to, those risks and uncertainties described under “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 and this Quarterly Report on Form 10-Q. We assume no obligation to update the forward-looking statements or such risk factors.

This Quarterly Report on Form 10-Q and the documents incorporated herein by reference include forward‑looking statements within the meaning and protections of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements are also made in reliance upon the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements with respect to Kaleyra’s beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

On November 25, 2019, the Company (f/k/a GigCapital, Inc.) completed the acquisition of Kaleyra S.p.A., pursuant to the terms of a Stock Purchase Agreement (the “Business Combination”). In connection with the ~~Closing,~~closing, the Company changed its name from GigCapital, Inc. to Kaleyra, Inc. GigCapital, Inc. was incorporated in Delaware on October 9, 2017 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Kaleyra S.p.A. is a cloud communications software provider delivering secure Application Protocol Interfaces (“APIs”) and connectivity solutions in the API/Communication Platform as a Service ~~market~~ (“CPaaS”), market, headquartered in Milan, Italy and with operations in Italy, Germany, India, Dubai and the United States.

Kaleyra S.p.A. is a result of the expansion of the former Ubiquity, which was founded in Milan, Italy in 1999.

After securing a leading market position in mobile messaging in the Italian financial services industry, Kaleyra S.p.A. sought to expand its products and geographic offerings. Ubiquity acquired Solutions Infini in Bangalore, India beginning in 2017 and Buc Mobile in Vienna, Virginia in 2018. It was rebranded Kaleyra S.p.A. in February 2018.

On April 23, 2020, Kaleyra strengthened its commitment to delivering solutions for the financial services industry with the launch by Buc Mobile of k-lab, a dedicated innovation lab for new product development to support enterprise mobile communications. This innovation lab is the center of excellence dedicated to supporting Kaleyra in developing new solutions to enhance customer experiences, and in particular, for the financial service companies to be served by Kaleyra in the U.S. markets.

On July 29, 2020, Kaleyra registered a German branch of Kaleyra S.p.A. with the German Chamber Tax Authority of Commerce. Kaleyra established its branch in Germany, by far the most important country in Europe to Kaleyra after Italy, to expand Kaleyra’s footprint in Central Europe and the Nordic countries and allow it to leverage Kaleyra’s trusted business solutions for customers in additional jurisdictions.

Kaleyra’s subsidiary, Campaign Registry Inc., a systems initiative to reduce spam by collecting robotically driven campaign information and processing and sharing that information with mobile operators and the messaging ecosystem, began its soft launch during the second quarter of fiscal year 2020 and obtained its first revenue contracts in the second half of 2020.

On February 18, 2021, Kaleyra executed the Merger Agreement for the acquisition of the business known as mGage, a leading global mobile messaging provider. Kaleyra will acquire mGage for a total purchase price of approximately $215 million, subject to adjustments. The consideration to mGage shareholders will consist of cash in the amount of $195 million and 1,600,000 shares of Kaleyra common stock. The Merger and the acquisition of mGage is expected to be consummated in the second fiscal quarter of 2021. In support of the consummation of the Merger, on February 18, 2021, Kaleyra entered into the PIPE Subscription Agreements with the PIPE Investors, pursuant to which, among other things, Kaleyra agreed to issue and sell, in private placements to close immediately prior to the closing of the Merger, an aggregate of 8,400,000 shares of Kaleyra common stock to the PIPE Investors at $12.50 per share, and Kaleyra also entered into the Convertible Note Subscription Agreements with the Convertible Note Investors, pursuant to which Kaleyra agreed to issue and sell, in private placements to close immediately prior to the closing of the Merger, $200 million aggregate principal amount of unsecured Merger Convertible Notes.

Kaleyra provides its customers and business partners with a trusted cloud communications platform ~~(the “Platform”)~~ that seamlessly integrates software services and applications for business-to-consumer communications between Kaleyra’s customers and their end-user customers and partners on a global basis. These communications are increasingly managed through mobile network operators as the gateway to reach end-user consumers’ mobile devices. Kaleyra’s ~~Platform~~platform enables these communications by integrating mobile alert notifications and interactive capabilities to reach and engage ~~end user~~end-user customers. It does so, coupled with a “software as a service” (SaaS) business model, creating what is generally referred to as a “cloud communications platform as a service”, or simply CPaaS. Kaleyra’s solutions include identity authentication, mobile and voice notifications on transactions, and banking services authorizations, most notably via different integrated mobile channels through its ~~Platform.~~platform.

Kaleyra’s vision is to be the CPaaS provider which best aligns with its customers’ communication requirements, or most trusted provider, in the world. This requires a combination of security, compliance and integration capabilities that protects the integrity and privacy of Kaleyra’s customers’ and business partners’ transactions and includes other key features such as ease of provisioning, reliable network connectivity, high availability for scaling, redundancy, embedded regulatory compliance, configurable monitoring and reporting. Kaleyra believes the percentage of CPaaS customers that will require security, compliance and integration will represent an increasingly larger portion of the market, particularly with the expected exponential growth of transactional-by-nature cloud communications applications, better enabling Kaleyra to set itself apart from its competition.

During the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, Kaleyra processed nearly ~~6.3 billion and 18.6~~7.0 billion billable messages and ~~1.1 billion and 2.5~~1.2 billion voice ~~calls, respectively.~~calls. Kaleyra organizes its efforts in four principal offices in New York, New York, Vienna, Virginia, Milan, Italy and Bangalore, India with an employee base of ~~more than 300~~over 370 employees.

Kaleyra has more than 3,500 customers and business partners worldwide across industry verticals such as financial services, ecommerce and ~~transportation, with no single customer representing more than 15% of revenues.~~transportation. In ~~both~~ the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ Kaleyra had ~~one customer~~no customers which individually accounted for more than 10% of Kaleyra’s consolidated total revenues. ~~In both the nine months ended September 30, 2020 and 2019,~~ Kaleyra ~~had~~has multiple, large European commercial banks as business partners, with one ~~customer which accounted~~of these partners, Intesa Sanpaolo S.p.A., accounting for more than 10% of Kaleyra’s ~~revenues.~~business volume in the three months ended March 31, 2021 and 2020.

For the three months ended March 31, 2020, 85.3% of revenues came from customers which have been on the platform for at least one year. Although Kaleyra continues to expand by introducing new customers to the ~~Platform,~~platform, the breadth and stability of its existing customers provide it with a solid base of revenue upon which it can continue to innovate and make investment to strengthen its product portfolio, expand its global presence, and in particular into the North America and Asia-Pacific markets with the acquired Solutions Infini and Buc Mobile businesses, recruit world-class talent and target accretive acquisitions to capitalize on its growing market penetration opportunities and value creation.

Kaleyra’s underlying technology used in the ~~Platform~~platform is the same across all of its communication services which can generally be described as ~~“omni-channel mobile first~~“omnichannel mobile-first interactive notifications via a public or private cloud implementation.” These services include programmable voice/Interactive Voice Response (IVR) configurations, inbound/outbound short message service capabilities, hosted telephone numbers, and other types of IP communications services such as e-mail and WhatsApp®.

Kaleyra’s customers are enterprises which use digital, mobile communications in the conduct of their business. Kaleyra’s ~~Platform~~platform enables these communications by integrating mobile alert notifications and interactive capabilities to reach and engage ~~end user~~end-user customers. Kaleyra enables its customers and business partners to connect enterprise software and applications to mobile network operators by providing a single simple interface by which Kaleyra can undertake as necessary to make upgrades in its service offerings to account for new end-user consumer behavior changes and progress (such as adding ~~WhatsApp~~WhatsApp® integration).

Kaleyra services a broad base of customers throughout the world operating in diverse businesses and regions. Kaleyra’s business is generated by providing data to the telecommunications provider and transmitting message data from its customers or business partners. Kaleyra has a concentration of business within the financial services industry that serves their major European banking end-user customers. With each relationship Kaleyra is the link between the financial institutions and their unique, end-user customers. In linking these two parties, Kaleyra’s ~~Platform~~platform leverages the telecommunications provider to transmit critical message data to these end-user customers.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ all of Kaleyra’s revenue was derived from its ~~messaging~~communications products in the CPaaS market.

Kaleyra’s revenue is primarily driven by the number of messages delivered and voice calls connected to its customers and business partners. Kaleyra’s fees vary depending on the contract. In the three months ended ~~September 30, 2020,~~March 31, 2021, the number of messages delivered to customers increased by ~~22.2% in voice services~~2%, compared to the three months ended ~~September 30, 2019.~~

~~Kaleyra~~March 31, 2020, and the number of voice calls connected to customers increased by 55%, compared to the three months ended March 31, 2020. The number of messages delivered to customers is ~~exposed to fluctuations~~still affected by the spread of the ~~currencies~~COVID-19 pandemic which resulted in ~~which~~significant fluctuations in Kaleyra’s services carrying less revenue-generating traffic in areas subject to “shelter in place” restrictions or related government orders. The increase in voice calls connected to its ~~transactions are denominated. Specifically, a material portion~~customers was mainly the result of ~~Kaleyra’s revenues and purchases are denominated~~higher voice activities in ~~Euros and Indian Rupees.~~India.

Kaleyra’s business partners in Italy mainly consist of banks and other credit card issuers that connect to their customers (end-user customers) sending highly secured and reliable messages through Kaleyra’s platform.

Volume increase has been driven by the increased number of ~~messages delivered~~digital payments transactions made by the end-user customers (such as credit card transactions and other digital payments) and by the increasing penetration rate of digital payments in the underlying payments markets. Kaleyra is exposed to ~~these customers is~~fluctuations of the currencies in ~~line with the same period~~which its transactions are denominated. Specifically, a material portion of ~~last year.~~Kaleyra’s revenues and purchases are denominated in Euro, Indian Rupees and United Arab Emirates Dirham.

The Business Combination is accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Under this method of accounting, Kaleyra, Inc. is treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the business combination is treated as the equivalent of Kaleyra S.p.A. issuing stock for the net assets of Kaleyra, Inc., accompanied by a recapitalization.

The net assets of Kaleyra, Inc. are stated at historical cost, with no goodwill or other intangible assets recorded. Reported amounts from operations included herein prior to the Business Combination are those of Kaleyra S.p.A. The shares and net loss per share available to holders of Kaleyra’s common stock, prior to the Business Combination, have been retrospectively adjusted to reflect the exchange ratio established in the Business Combination.

As consideration for the Business Combination, on November 25, 2019 (the “Business Combination Date”), Kaleyra issued, in the aggregate, 10,687,106 shares of common stock to the Sellers. Furthermore, on April 29, 2020, as additional consideration for the Business Combination as an earn-out, Kaleyra issued 1,763,633 shares of its common stock to the Sellers.

In addition, as consideration for the Business Combination, on November 25, 2019 Kaleyra issued unsecured convertible promissory notes to each of Esse Effe S.p.A (“Esse Effe”) and Maya Investments Limited (“Maya”) in the amount of $6.0 million and $1.5 million, respectively, and also issued other unsecured promissory notes to each of Esse Effe and Maya in the identical respective amounts. See “Liquidity and Capital Resources” below.

The current COVID-19 pandemic has affected and will continue to affect economies and business around the world. To date, various governmental authorities and private enterprises have implemented numerous measures to contain the pandemic, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns, which have led to severe disruptions to the global economies that may continue for a prolonged duration and trigger a recession or a period of economic slowdown. ~~We do not yet know~~The magnitude and duration of the ~~full extent~~resulting decline in business activity and operations cannot be measured with any degree of ~~potential impacts on our~~certainty. Indeed, during the pandemic, Kaleyra experienced fluctuations in its services carrying less revenue-generating traffic in areas subject to “shelter in place” restrictions or related government orders. Nonetheless, in the three months ended March 31, 2021, Kaleyra accounted for increasing revenues ~~business operations or overall financial condition. At this stage, revenues are expected to confirm their increasing trend once~~when compared to the ~~previous~~same period of prior year, despite a ~~foreseen~~ negative impact in terms of gross marginality. ~~The~~At this stage, the extent and duration of the pandemic, and its foreseeable unfolding following the worldwide vaccine campaigns, is ~~highly~~still uncertain and difficult to ~~predict.~~predict, also considering the severity of the second wave of the COVID-19 pandemic currently hitting the Indian regions. Kaleyra is actively monitoring and managing its response and assessing actual and potential impacts to its operating results and financial condition, which could also impact trends and expectations.

In December 2019, RSUs were granted to certain employees, directors and advisory board members of Kaleyra for a total of 3,336,095 RSUs shares with an aggregate grant date fair value of $27.5 million, based on a per share grant date fair value of $8.25.

~~In March 2020, the Board��s Compensation Committee approved the grant of 113,506 RSUs to a new manager of Kaleyra.~~

~~In May 2020, the Board approved the grant of 447,714 RSUs to three new mangers and two new advisory board members of Kaleyra.~~

~~On August 6, 2020, the Board’s Compensation Committee approved the grant of 500,200 RSUs to sixty-nine employees of the Company as part of Kaleyra’s retention plan.~~

RSUs compensation expense for the three months ended September 30, 2020 was $4.9 million of which $1.2 million is recorded in research and development, $1.3 million in sales and marketing, and $2.5 million in general and administrative.

~~As of September 30, 2020, there was $16.0 million of unrecognized compensation cost related to non-vested RSUs.~~

Preference shares liabilities amounting to zero and $2.5 million as of September 30, 2020 and December 31, 2019, respectively, represent Kaleyra’s obligation to purchase in 2020 the preference shares from certain employees of Solutions Infini as a part of the Solutions Infini 2018 Purchase Agreement.

On March 9, 2020, Kaleyra signed a modification of the 2018 Solutions Infini Purchase Agreement to reduce the price of the preference shares to be purchased from the eligible employees of Solutions Infini in July 2020 to their face value, amounting to Indian Rupee 10.0 per each preference share. As a result of this modification, effective on January 30, 2020, the total preference shares obligation was reduced to Indian Rupee 132,000 ($2,000 at the July 31, 2020 exchange rate) and paid in full on July 31, 2020.

On January 31, 2020, Kaleyra agreed to pay, to the eligible employees of the preference shares, performance bonuses for a total amount of $3.5 million, to be paid in 2020, as a replacement of the preference shares obligation.

On March 24, 2020, given the prevailing situation of the COVID-19 pandemic both globally and in India, Kaleyra agreed with two of the eligible employees to delay payment of their performance bonuses, for a total amount of $1.4 million, and evaluate the timeline for payment thereof at a later date.

On July 31, 2020, following the resolution of the Board of Directors of Solutions Infini, the payment of the previously outstanding performance bonus obligation with two of the eligible employees was paid on August 31, 2020 for $1.4 million (at the August 31, 2020 exchange rate).

~~As of September 30, 2020, the outstanding performance bonus obligation payable to the eligible employees amounted to $2.1 million.~~

As a result of the modification and agreements described above, $2.5 million of preference shares obligation was reversed to the statement of operations for the nine months ended September 30, 2020 and $3.7 million of performance bonuses were recorded in the same period resulting in a $1.2 million net impact to the condensed consolidated statement of operations (before tax).

For the nine months ended September 30, 2020 and 2019, the net impact of the preference shares amendment and the performance bonus agreements, on loss before income tax expense (benefit) was as follows (in thousands):

In addition, the accrual of the performance bonuses mentioned above resulted in a $920,000 tax deduction for the nine months ended September 30, 2020, as, unlike preference shares costs, performance bonus expenses are deductible for tax purposes.

Our critical accounting policies and significant estimates are detailed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020. Our critical accounting policies and significant estimates have not changed substantially from those previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020, except as below. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to the recent outbreak of a novel strain of the coronavirus (“COVID-19”).

The Company accounts for warrants for shares of the Company’s common stock that are not indexed to its own stock as liabilities at fair value on the condensed consolidated balance sheets. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized in “Financial expense, net” on the condensed consolidated statements of operations. The liability is included in the condensed consolidated balance sheet line item “Other long-term liabilities”. The Company will continue to adjust the liability for changes in fair value until the earlier of the exercise or expiration of the common stock warrants. At that time, the portion of the warrant liability related to the common stock warrants will be reclassified to additional paid-in capital.

Kaleyra’s revenue is generated primarily from usage-based fees earned from the sale of communication services offered through software solutions to large enterprises, as well as small and medium-sized customers. Revenue can be billed in advance or in arrears depending on the terms of the agreement; for the majority of customers, revenue is invoiced on a monthly basis in arrears.

Cost of revenue consists primarily of costs of communications services purchased from network service providers. Cost of revenue also includes the cost of Kaleyra’s cloud infrastructure and technology platform, amortization of capitalized internal-use software development costs related to the platform applications and amortization of developed technology acquired in past business combinations.

Gross profit is equal to the revenue less cost of revenue associated with delivering the communication services to Kaleyra’s customers.

Kaleyra’s operating expenses include research and development expense, sales and marketing expense, general and administrative expense, transactions costs and depreciation and amortization, excluding the depreciation and amortization expense related to the technology platform.

Research and development expense ~~consist~~consists primarily of personnel costs, including stock-based compensation, the costs of the technology platform used for staging and development, outsourced engineering services, amortization of capitalized internal-use software development costs (other than those related to the technology platform) and an allocation of general overhead expenses. Kaleyra capitalizes the portion of its software development costs that meet the criteria for capitalization.

Sales and marketing expense is comprised of compensation, variable incentive compensation, benefits related to Kaleyra’s sales personnel, along with travel expenses, other employee related costs including ~~stock-based~~stock- based compensation, and expenses related to advertising, marketing programs and events.

General and administrative expense is comprised of compensation and benefits of administrative personnel, including variable incentive pay and stock-based compensation, and other administrative costs such as facilities expenses, professional fees, and travel expenses.

~~Three and nine months ended September 30, 2020 compared with three and nine months ended September 30, 2019~~

Comparison of the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~ is as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

2020

2019

Revenue

$
38,268

$
35,329

$
103,100

$
93,925

Cost of revenue (1)

30,763

28,321

86,511

75,645

Gross profit

7,505

7,008

16,589

18,280

Operating expenses:

Research and development (2)

2,259

1,279

7,415

3,869

Sales and marketing (1)(2)

3,423

1,432

10,155

4,392

General and administrative (2)

6,441

2,927

20,737

10,667

Total operating expenses

12,123

5,638

38,307

18,928

Income (loss) from operations

(4,618
)

1,370

(21,718
)

(648
)
Other income, net

38

11

91

106

Financial income (expense), net

(468
)

(141
)

(1,027
)

(206
)
Foreign currency income (loss)

(548
)

(260
)

(795
)

(402
)
Loss before income tax expense (benefit)

(5,596
)

980

(23,449
)

(1,150
)
Income tax expense (benefit)

(263
)

168

(1,165
)

719

Net income (loss)

$
(5,333
)

$
812

$
(22,284
)

$
(1,869
)

	Three Months Ended September 30,												Three Months Ended March 31,
	2020			2019			$ Change			% Change			2021			2020			$ Change			% Change
Revenue	$	38,268		$	35,329		$	2,939			8	%	$	39,714		$	33,633		$	6,081			18	%
Cost of revenue		30,763			28,321			2,442			9	%		33,390			28,902			4,488			16	%
Gross profit		7,505			7,008			497			7	%		6,324			4,731			1,593			34	%
Operating expenses:
Research and development		2,259			1,279			980			77	%		2,868			2,810			58			2	%
Sales and marketing		3,423			1,432			1,991		NM				2,859			3,743			(884	)		(24	%)
General and administrative		6,441			2,927			3,514		NM				10,602			7,759			2,843			37	%
Total operating expenses		12,123			5,638			6,485		NM				16,329			14,312			2,017			14	%
Income (loss) from operations		(4,618	)		1,370			(5,988	)	NM
Loss from operations														(10,005	)		(9,581	)		424			4	%
Other income, net		38			11			27		NM				45			42			3			7	%
Financial income (expense), net		(468	)		(141	)		(327	)	NM
Foreign currency income (loss)		(548	)		(260	)		(288	)	NM
Financial expense, net														(719	)		(41	)		678		NM
Foreign currency income														355			168			187		NM
Loss before income tax expense (benefit)		(5,596	)		980			(6,576	)	NM				(10,324	)		(9,412	)		912			10	%
Income tax expense (benefit)		(263	)		168			(431	)	NM				34			(589	)		623		NM
Net income (loss)	$	(5,333	)	$	812		$	(6,145	)	NM
Net loss													$	(10,358	)	$	(8,823	)	$	1,535			17	%

In the three months ended ~~September 30, 2020,~~March 31, 2021, revenue increased by ~~$2.9~~$6.1 million, or 8%18%, compared to the three months ended ~~September 30, 2019.~~March 31, 2020. This increase was ~~mainly driven by a general~~primarily attributable to an increase in ~~volumes, in particular in~~the connectivity business and voice ~~services.~~activity volume.

In the three months ended ~~September 30, 2020,~~March 31, 2021, cost of revenue increased by ~~$2.4~~$4.5 million, or 9%16%, compared to the three months ended ~~September 30, 2019.~~March 31, 2020. The increase in cost of revenue was primarily attributable to ~~the increase~~higher costs in ~~voice activities, partially offset by the effects of the renegotiation of agreements in premium services.~~connectivity business, mainly due to unplanned service outages. In the three months ended ~~September 30, 2020,~~March 31, 2021, gross profit increased by 7%34% compared to the three months ended ~~September 30, 2019,~~March 31, 2020, mainly as a result of the ~~above described effects~~increase in premium services, partially offset by the effects of higher connectivity costs temporarily incurred during the initial delivery phase of new customer accounts that generated significant transaction volumes in the three months ended September 30, 2020.voice activity volume.

In the three months ended ~~September 30, 2020,~~March 31, 2021, research and development expenses increased by ~~$980,000,~~$58,000, or 2%, compared to the three months ended ~~September 30, 2019.~~March 31, 2020. Research and development expenses included ~~$1.2 million~~$971,000 of stock-based compensation ~~compared to zero~~ in the three months ended ~~September 30, 2019.~~March 31, 2021, compared to $1.3 million of stock-based compensation and $524,000 for the Solutions Infini performance bonuses and preference shares amendment in the three months ended March 31, 2020. Excluding such costs and the ~~$697,000~~$788,000 capitalized software development costs, compared to ~~zero~~$714,000 capitalized costs in the three months ended ~~September 30, 2019,~~March 31, 2020, research and development expenses would have increased by ~~$516,000~~$997,000 mainly due to an increase in the headcount compared to ~~same period last year.~~the prior period.

In the three months ended ~~September 30, 2020,~~March 31, 2021, sales and marketing expenses ~~increased~~decreased by ~~$2.0 million~~$884,000, or 24%, compared to the three months ended ~~September 30, 2019.~~March 31, 2020. Sales and marketing expenses included ~~$1.3 million~~$522,000 of stock-based compensation ~~compared to zero~~ in the three months ended ~~September 30, 2019.~~March 31, 2021, compared to $1.1 million of stock-based compensation and $1.1 million for the Solutions Infini performance bonuses and preference shares amendment in the three months ended March 31, 2020. Excluding such costs, sales and marketing expense would have increased by ~~$710,000.~~$740,000. Such increase was primarily ~~driven by~~attributable to an increase in the headcount compared to ~~same period last year.~~the prior period.

In the three months ended ~~September 30, 2020,~~March 31, 2021, general and administrative expenses increased by ~~$3.5~~$2.8 million, or 37%, compared to the three months ended ~~September 30, 2019.~~March 31, 2020. General and administrative expenses included ~~$2.5~~(i) $3.1 million of stock-based compensation in the three months ended ~~September 30, 2020,~~March 31, 2021, compared to ~~zero~~$3.8 million in the three months ended ~~September 30, 2019.~~March 31, 2020; and (ii) $1.8 million of mGage acquisition transaction costs and $773,000 of transaction costs and costs pertaining to initial public company compliance in the three months ended March 31, 2021 and 2020, respectively. Excluding such costs, general and administrative expenses would have increased by ~~$1.0~~$2.6 million mainly due to an increase in the headcount compared to the same period of last year.

~~Other~~In the three-month period ended March 31, 2021, other income, net ~~amounting~~increased by $3,000, or 7%, compared to ~~$38,000 and $11,000 in the~~ three months ended ~~September 30,~~March 31, 2020 ~~and 2019, respectively was~~ substantially ~~unchanged.~~in line compared to the same period of last year.

In the three months ended ~~September 30, 2020,~~March 31, 2021, financial expense, net increased by ~~$327,000,~~$678,000, compared to the same period last year. Such increase in financial expense is mainly attributable to the change in fair value of warrant liability of $1.3 million, partially offset by the reversal of interest expense of $659,000 previously accrued on a forward share purchase agreement. The same period last year accounted for the reversal of interest expense previously accrued on the preference share obligations related to the amendment signed in January 2020. Excluding the change in fair value of warrant liability amounting to $1.3 million and the non-recurring reversal of interest expense on a forward share purchase agreement and preference share obligations, amounting to $659,000 and $417,000, respectively, financial expense, net would have decreased by $343,000 in the three months ended March 31, 2021 compared to the same period last year, ~~from a financial expense~~mainly because of ~~$141,000 to a financial expense of $468,000 mainly driven by an increase~~the reduction in ~~interest expense in the three months ended September 30, 2020 compared to same period last year, due to more bank and other borrowings, debt for forward share purchase agreements and~~ notes ~~payable compared to the same period last year.~~payable.

In the three months ended ~~September 30, 2020,~~March 31, 2021, foreign currency ~~loss~~income increased by ~~$288,000,~~$187,000, compared to three months ended ~~September 30, 2019.~~March 31, 2020. Such change was mainly attributable to the effects of the fluctuation of the ~~Indian Rupee and~~ Euro against the U.S. dollar.

In the three months ended ~~September 30, 2020,~~March 31, 2021, income tax expense ~~(benefit) decreased~~increased by ~~$431,000~~$623,000 from an income tax benefit of $589,000 to an income tax expense of ~~$168,000 to an income tax benefit of $263,000 mainly due to deferred tax assets recognized on tax loss carry-forwards.~~

Nine Months Ended September 30,

2020

2019

$ Change

% Change

Revenue

$
103,100

$
93,925

$
9,175

10
%
Cost of revenue

86,511

75,645

10,866

14
%
Gross profit

16,589

18,280

(1,691
)

(9
%)
Operating expenses:

Research and development

7,415

3,869

3,546

92
%
Sales and marketing

10,155

4,392

5,763

NM

General and administrative

20,737

10,667

10,070

94
%
Total operating expenses

38,307

18,928

19,379

NM

Loss from operations

(21,718
)

(648
)

(21,070
)

NM

Other income, net

91

106

(15
)

(14
%)
Financial income (expense), net

(1,027
)

(206
)

(821
)

NM

Foreign currency income (loss)

(795
)

(402
)

(393
)

(98
%)
Loss before income tax expense (benefit)

(23,449
)

(1,150
)

(22,299
)

NM

Income tax expense (benefit)

(1,165
)

719

(1,884
)

NM

Net loss

$
(22,284
)

$
(1,869
)

$
(20,415
)

NM

In the nine months ended September 30, 2020, revenue increased by $9.2 million, or 10%, compared to the nine months ended September 30, 2019. This increase was mainly driven by a general increase in volumes, in particular in voice services.

In the nine months ended September 30, 2020, cost of revenue increased by $10.9 million, or 14%, compared to the nine months ended September 30, 2019. The increase in cost of revenue was primarily attributable to the increase in voice activities, partially offset by the effects of the renegotiation of agreements in premium services. In the nine months ended September 30, 2020, gross profit decreased by 9% compared to the nine months ended September 30, 2019, mainly as a result of the effects of higher connectivity costs temporarily incurred during the initial delivery phase of new customer accounts that generated significant transaction volumes in the nine months ended September 30, 2020, partially offset by the above described effects in premium services.

In the nine months ended September 30, 2020, research and development expenses increased by $3.5 million, compared to the nine months ended September 30, 2019. Research and development expenses included $3.6 million of stock-based compensation and a net impact of $524,000 for the Solutions Infini performance bonuses and preference shares amendment in the nine months ended September 30, 2020, compared to zero for both items, in the nine months ended September 30, 2019. Excluding such costs and the $2.1 million capitalized software development costs, compared to zero capitalized costs in the nine months ended September 30, 2019, research and development expenses would have increased by $1.5 million mainly due to an increase in the headcount compared to same period last year and the pro-rata 2020 MBO bonus accruals.

In the nine months ended September 30, 2020, sales and marketing expenses increased by $5.8 million compared to the nine months ended September 30, 2019. Sales and marketing expenses included $3.4 million of stock-based compensation and a net impact of $1.1 million for the Solutions Infini performance bonuses and preference shares amendment in the nine months ended September 30, 2020, compared to zero for both items, in the nine months ended September 30, 2019. Excluding such costs, sales and marketing expense would have increased by $1.2 million. Such increase was primarily driven by an increase in headcount compared to same period last year and the pro-rata 2020 MBO bonus accruals.

In the nine months ended September 30, 2020, general and administrative expenses increased by $10.1 million compared to the nine months ended September 30, 2019. General and administrative expenses included (i) $8.7 million of stock-based compensation in the nine months ended September 30, 2020, compared to zero in the nine months ended September 30, 2019; and (ii) $3.5 million transaction costs, special performance bonus costs and costs pertaining to initial public company compliance in the nine months ended September 30, 2020 as compared to $3.8 million transaction costs and costs pertaining to initial public company compliance in the nine months ended September 30, 2019. Excluding such costs, general and administrative expenses would have increased by $1.0 million. Such increase was primarily driven by an increase in headcount compared to same period last year and the pro-rata 2020 MBO bonus accruals.

In the nine-month period ended September 30, 2020, other income, net decreased by $15,000, compared to nine months ended September 30, 2019. Such decrease is mainly attributable to the fact that in the nine months ended September 30, 2019 this item included certain government incentives received by Kaleyra in connection with research and development activities which were significantly reduced in the nine-month period ended September 30, 2020.

In the nine months ended September 30, 2020, financial expense, net increased by $821,000, compared to the same period last year, from a financial expense of $206,000 to a financial expense of $1.0 million, mainly driven by an increase in interest expense in the nine months ended September 30, 2020 compared to same period last year, due to more bank and other borrowings, debt for forward share purchase agreements and notes payable compared to the same period last year. The increase in interest expense was partially offset by the reversal of interest expense previously accrued on the Solutions Infini preference share obligations related to the amendment signed in January 2020. Excluding such non-recurring preference share interest reversal of $417,000, financial expense, net would have increased by $1.2 million in the nine months ended September 30, 2020 compared to the same period last year.

In the nine months ended September 30, 2020, foreign currency loss increased by $393,000, compared to nine months ended September 30, 2019. Such change was mainly attributable to the effects of the fluctuation of the Indian Rupee and Euro against the U.S. dollar.

In the nine months ended September 30, 2020, income tax expense (benefit) decreased by $1.9 million from an income tax expense of $719,000 to an income tax benefit of $1.2 million mainly due to deferred tax assets recognized on Solution Infini performance bonuses and tax loss carryforwards.$34,000.

As of ~~September 30, 2020, Kaleyra~~March 31, 2021, the Company had ~~$31.5~~$35.5 million of cash and cash equivalents and ~~$5.1~~$4.3 million of short-term investments with maturity terms between 4 and 12 months held in India. Of the $39.8 million in cash and short-term investments, $17.3 million was held in Italy, $13.4 million was held in U.S. banks, $8.0 million was held in India with the remainder held in other banks. As of December 31, ~~2019,~~2020, the Company had ~~$16.1~~$33.0 million of cash and cash equivalents ~~$20.9 million of restricted cash~~ and ~~$5.1~~$4.8 million of short-term investments. ~~Restricted cash as of December 31, 2019 was held in the Unites States and consisted of cash deposited into savings or escrow accounts with two financial institutions as~~

collateral for Kaleyra’s respective obligations under each of the forward share purchase agreements with Glazer Capital and Yakira Capital Management, Inc. Such obligations were satisfied in May 2020, and as a result, Kaleyra no longer has any restricted cash.

The condensed consolidated balance ~~sheet~~sheets as of ~~September 30, 2020~~March 31, 2021 includes total current assets of ~~$79.7~~$87.9 million and total current liabilities of ~~$73.6~~$71.7 million, resulting in net current assets of ~~$6.0~~$16.2 million.

On ~~June 24, 2020, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”)~~February 25, 2021, in accordance with Oppenheimer & Co. Inc. and Nomura Securities International, Inc. acting as joint book-running managers and as representatives of the underwriters named therein (collectively, the “Underwriters”) relating to the issuance and sale of 7,777,778 shares of the Company’s common stock, par value $0.0001 per share (the “Offering”). The price to the public in the Offering was $4.50 per share, before underwriting discounts and commissions. Under the terms of the ~~Underwriting Agreement,~~Confirmation, NGFP fully terminated the ~~Company granted the Underwriters an option, exercisable for 30 days, to purchase up to an additional 1,166,666 shares of common stock. The Offering closed on June 29, 2020~~Forward Transaction and resulted in net proceeds to the Company of approximately $32.0 million, after deducting underwriting discounts and commissions and estimated Offering expenses payable by the Company. On July 22, 2020, the Underwriters issued notice under the terms of the Underwriting Agreement that they were partially exercising and closed on their option to purchase an additional 984,916 shares of common stock of the Company at the public offering price less underwriting discounts. On the settlement date of July 24, 2020, the additional net proceeds from the overallotment option amounted to $4.2 million, after deducting underwriting discounts and commissions and estimated Offering expenses payable by the Company.

On June 30, 2020, following the Offering described above, the Company used approximately $5.5 million of the net proceeds to repay debt, consisting of: (i) the previously outstanding promissory note in the amount of $400,000 issued to Northland Securities, Inc., (ii) the previously outstanding promissory notes issued to the Founders and certain of their affiliatesmade a payment in the aggregate amount of ~~$3.6~~$17.0 million ~~and (iii)~~to Kaleyra. Following the ~~previously outstanding promissory note issued~~cash settlement of the Forward Transaction

mentioned above, the Forward Transaction with NGFP has terminated pursuant to the ~~former holder~~terms of ~~capital stock~~the Confirmation, and as a result the Company has no further obligations.

On February 18, 2021, and for the purposes of raising the cash portion of the consideration for the proposed Merger, Kaleyra entered into the PIPE Subscription Agreements with the PIPE Investors, pursuant to which, among other things, Kaleyra agreed to issue and sell, in private placements to close immediately prior to the closing of the Merger, an aggregate of 8,400,000 shares of Kaleyra ~~S.p.A., Maya Investments Limited,~~common stock to the PIPE Investors at $12.50 per share, and Kaleyra also entered into the Convertible Note Subscription Agreements with the Convertible Note Investors, pursuant to which Kaleyra agreed to issue and sell, in private placements to close immediately prior to the closing of the Merger, $200 million aggregate principal amount of $1.5 million. In July 2020, the Company also used the Offering proceeds to pay the previously outstanding promissory note issued to the former holder of capital stock of Kaleyra S.p.A., Esse Effe, in the amount of $6.0 million.

unsecured Merger Convertible Notes. Management currently plans to retain the cash in the jurisdictions where these funds are currently held. Kaleyra believes its cash, cash flows from operations and availability of borrowings will be sufficient to support its planned operations for at least the next 12 months.

Kaleyra finances its operations through a combination of cash generated from operations and from borrowings under Kaleyra bank facilities primarily with banks located in Italy. Kaleyra’s long-term cash needs primarily include meeting debt service requirements, working capital requirements and capital expenditures.

Kaleyra may also pursue strategic acquisition opportunities, such as the proposed acquisition of mGage, that may impact its future cash requirements. There are a number of factors that may negatively impact its available sources of funds in the future including the ability to generate cash from operations, obtain additional financing or refinance existing short-term debt obligations, including those related to acquisitions completed in prior ~~periods.~~periods and including the obligation related to the forward share purchase agreements in case the third-parties involved exercise their put options. The amount of cash generated from operations is dependent upon factors such as the successful execution of Kaleyra’s business strategies and worldwide economic conditions. The amount of debt available under future financings is dependent on Kaleyra’s ability to maintain adequate cash flow for debt service and sufficient collateral, and general financial conditions in Kaleyra’s market.

As noted above, Kaleyra entered into the Convertible Note Subscription Agreements with the Convertible Note Investors, pursuant to which Kaleyra agreed to issue and sell, in private placements to close immediately prior to the closing of the Merger, $200 million aggregate principal amount of unsecured Merger Convertible Notes. Subject to the terms of the Merger Convertible Notes, Kaleyra may opportunistically raise additional debt capital, subject to market and other conditions, to refinance its existing capital structure at a lower cost of capital and extend the maturity period of certain debt. Additionally, Kaleyra may also raise debt capital for strategic opportunities which may include acquisitions of additional companies, and general corporate purposes. If additional financing is required from outside sources, Kaleyra may not be able to raise it on terms acceptable to it or at all. If Kaleyra is unable to raise additional capital when desired, Kaleyra’s business, operating results and financial condition may be adversely affected.

Kaleyra has a number of long-standing business and banking relationships with major Italian commercial banks where it maintains both cash accounts and a credit relationship. Historically, Kaleyra has used cash generated from operations to fund its growth and investment opportunities. As Kaleyra’s management made the decision to expand its operations outside of Italy and acquired additional companies, it took on certain additional financing in order to fund cash payments due on the acquisitions. As of ~~September 30, 2020,~~March 31, 2021, Kaleyra’s total bank and other borrowings, including amounts drawn under the revolving credit line facilities was ~~$47.7~~$43.5 million ($~~27.3~~48.0 million as of December 31, ~~2019)~~2020).

Kaleyra has credit line facilities of ~~$7.4~~$7.5 million as of ~~September 30, 2020,~~March 31, 2021, of which ~~$4.6~~$4.4 million has been used. As of December 31, ~~2019,~~2020, Kaleyra had credit line facilities of ~~$5.6~~$7.7 million, of which ~~$3.6~~$5.3 million had been used. Amounts drawn under the credit line facilities are collateralized by specific customer trade receivables and funds available under the line are limited based on eligible receivables.

On April 16, 2020, in connection with the Business Combination, Kaleyra entered into a Settlement Agreement and Release (the “Settlement Agreement”) with its financial advisory service firms, Cowen and ~~Company, LLC (“Cowen”) and~~ Chardan ~~Capital Markets, LLC, (“Chardan” and collectively~~(collectively the “Service Firms”), pursuant to which it agreed to pay an affiliate of Cowen, Cowen Investments II LLC (“Cowen Investments”), and Chardan, in full satisfaction of all amounts owed to the Service Firms as of December 31, 2019, $5.4 million in the aggregate, as follows: (i) $2.7 million in the aggregate in common stock of Kaleyra (the “Settlement Shares”) to be issued the business day prior to the filing of a resale registration statement for such Settlement Shares (the ~~“Resale~~“Bank Resale Registration Statement”), (ii) convertible notes totaling $2.7 million in the aggregate with a maturity date three years after issuance and bearing interest at five percent (5%) per annum (but with lower interest rates if the notes are repaid earlier than one year or two years after issuance) and with interest paid in arrears to the payee on March 15, June 15, September 15 and December 15 of each year, with such convertible notes to also be issued the business day prior to the filing of the Bank Resale Registration Statement and (iii) in the event that the Beneficial Ownership Limitation (as defined below) would otherwise be exceeded upon delivery of the Settlement Shares above, a warrant agreement also to be entered into with and issued to the Services Firms the business day prior to the filing of the Bank Resale Registration Statement, whereby the amount of common stock of Kaleyra by which the Beneficial Ownership Limitation would otherwise have been exceeded upon delivery of the Settlement Shares will be substituted for by warrants with an exercise price of $0.01 per share issued pursuant to a

warrant agreement (the “Bank Warrant ~~Agreement (the “Warrant~~ Agreement”) and the common stock underlying the Bank Warrant Agreement (the ~~“Warrant~~“Bank Warrant Shares”). The Beneficial Ownership Limitation shall initially be 4.99% of the number of shares of the common stock outstanding of Kaleyra immediately after giving effect to the issuance of these shares of common stock. The number of Settlement Shares was calculated using as the price per Settlement Share an amount equal to a fifteen percent (15%) discount to the ten-day (10-day) trailing dollar volume-weighted average price for the common stock of Kaleyra on the NYSE American ~~LLC~~ stock exchange (the “VWAP”) on the business day immediately prior to the date on which Kaleyra files the Bank Resale Registration Statement. In addition, the price per share for determining the number of shares of common stock of Kaleyra to be issued upon the conversion of the convertible notes shall be a five percent (5%) premium to the ten-day (10-day) trailing VWAP as of the date immediately prior to the issuance date of the convertible notes, rounded down to the nearest whole number.

On May 1, 2020, in connection with the Settlement Agreement, Kaleyra issued: (i) an aggregate of 440,595 Settlement Shares to Cowen Investments and Chardan, consisting of 374,506 Settlement Shares issued to Cowen Investments, and 66,089 Settlement Shares issued to Chardan; and (ii) convertible promissory notes in the aggregate principal amount of $2.7 million to Cowen Investments and Chardan, consisting of a convertible promissory note in the principal amount of $2.3 million issued to Cowen Investments (the “Cowen Note”) and a convertible promissory note in the principal amount of $405,000 issued to Chardan (the “Chardan Note”). The unpaid principal of the Cowen Note is convertible at the option of Cowen Investments into 303,171 shares of common stock of Kaleyra, if there has been no principal reduction, and the unpaid principal of the Chardan Note is convertible at the option of Chardan into 53,501 shares of common stock of Kaleyra, if there has been no principal reduction. As the Beneficial Ownership Limitation was not triggered by the issuance of the Settlement Shares, no Bank Warrant Agreement was necessary and no warrants were issued.

~~As of September 30, 2020,~~On February 4, 2021, Cowen Investments elected to convert the outstanding amount of the Cowen Note ~~was $2.3 million~~into 303,171 shares of common stock, par value $0.0001 per share of Kaleyra, pursuant to the terms of the Cowen Note, and ~~accrued interest was $34,000.~~ as a result the Company has no further obligations with respect to the Cowen Note.

As of ~~September 30, 2020,~~March 31, 2021, the outstanding amount of the Chardan Note was $405,000 and accrued interest was ~~$8,000.~~$19,000.

As mentioned above, at the Closing of the Business Combination, Kaleyra issued unsecured convertible promissory notes to each of Esse Effe and Maya in the amount of $6.0 million and $1.5 million, respectively, and also issued other unsecured ~~non-convertible~~ promissory notes to each of Esse Effe and Maya in the identical respective amounts (the “Notes payable to the Sellers”). The unsecured promissory notes held by Esse Effe and Maya were paid in full during fiscal year 2020 and no amount remains outstanding for such notes as of March 31, 2021. Interest on the Notes Payable to the Sellers ~~will~~shall accrue at a fixed interest rate equal to the one-year U.S. dollar LIBOR interest rate published in The Wall Street Journal on the date of the Business Combination, plus a margin of one percent (1%) per annum. ~~The principal amount~~

On the fifteen-month anniversary of ~~$1.5 million plus accrued interest~~the Business Combination Date or February 25, 2021, the fifty percent (50%) of ~~$26,000 for the unsecured non-convertible promissory note held by Maya was paid in full by the Company on June 30, 2020, and no amount remains outstanding for such note. On July 2, 2020,~~ the previously outstanding amount of the unsecured ~~Non-convertible Note~~convertible promissory notes held by Esse Effe and Maya was repaid, ~~in full,~~ with a total of ~~$6.0~~$3.0 million and $750,000 in principal and ~~$105,000~~$176,000 and $44,000 in accrued interest being paid to Esse ~~Effe.~~Effe and Maya, respectively, pursuant to the terms of the Business Combination Convertible Notes.

As of March 31, 2021, the amount outstanding for the Notes payable to the Sellers was $3.75 million in principal and $65,000 in accrued interest.

~~In 2019, Kaleyra entered into certain forward share purchase agreements or similar arrangements~~On February 25, 2021, in accordance with ~~third parties including: Greenhaven, Yakira, Kepos Alpha Fund L.P, (“KAF”~~the terms of the agreement (the “Confirmation��)~~, Glazer Capital and~~ with Nomura Global Financial Products, Inc. (“NGFP”)~~. In connection with such forward share purchase agreements or similar arrangements, Kaleyra assumed~~, NGFP fully terminated the ~~obligations to repurchase its own shares at~~Forward Transaction and made a ~~fixed price subject to certain condition described~~payment in the ~~agreements. See Note 8~~aggregate amount of $17.0 million to Kaleyra. Following the cash settlement of the ~~condensed consolidated financial statements for~~Forward Transaction mentioned above, the ~~three months ended September 30, 2020 for a description of the forward share purchase agreements.~~

~~As of September 30, 2020, Kaleyra’s debt for forward share purchase agreements amounted to $480,000. Pursuant~~Forward Transaction with NGFP has terminated pursuant to the terms of the Confirmation, and as ~~amended, Kaleyra had prepaid $17.0 million for its potential forward repurchase~~a result the Company has no further obligations.

During the period from January 25, 2021 through March 2, 2021, Yakira provided notice to the Company that it sold all but 219 of the ~~Nomura Shares from NGFP, but would owe, in the event of a forward repurchase, an amount equal to the product of (x) $10.5019, (y) the Accrual Percentage (as defined below), and (z) the number of~~43,930 shares ~~being repurchased from NGFP. The “Accrual Percentage” is 3.50% per annum, ending~~that it held on ~~November 25, 2021.~~

~~On January 23,~~December 31, 2020 Kaleyra entered into Amendment No. 3 to the Greenhaven Purchase Agreement (the “Greenhaven Amendment No. 3”). The Greenhaven Amendment No. 3 provided that Greenhaven had the right to put its subject shares to Kaleyra on the following dates and at the following purchase prices: (i) $11.00 per share for up to 248,963 shares to be sold to Kaleyra on February 21, 2020; and (ii) $11.70 per share for the next 700,000 shares to be sold to Kaleyra on August 30, 2020. Greenhaven Amendment No. 3 also provided that Greenhaven may continue to sell its subject shares in the open market at ~~its sole discretion, as long as the sales~~a price is above $8.50 per share. On February 20, 2020, Kaleyra repurchased an aggregate of 235,169 of its common stock for $2.6 million. In addition, Kaleyra paid Greenhaven $152,000 for the 60,996 shares that Greenhaven sold on the open market representing the amount at which the $11.00 exceeded the selling price. Pursuant to Greenhaven Amendment No. 3, on August 30, 2020, Kaleyra was to pay Greenhaven an amount equal to (1) the number of shares (including any Additional Shares) sold by Greenhaven in the open market between February 21, 2020 and August 30, 2020 multiplied by (2) the amount by which $11.70 exceeds the sale price per share. Kaleyra understands that Greenhaven as of June 30, 2020 had sold 160,452 shares in the open market, for which the aggregate difference between the sale price per share ~~and $11.70 totaled $832,000. In addition, the Company understands~~ that ~~Greenhaven as of June 30, 2020 owned 539,548 shares.~~

~~On July 18, 2020, the Company entered into Amendment No. 4~~were subject to the ~~Greenhaven Purchase Agreement (the “Greenhaven Amendment No. 4”). The Greenhaven Amendment No. 4~~Third Yakira Amendment. On March 29, 2021 Yakira provided ~~that Greenhaven had the right to put the remaining 539,548 subject shares that Greenhaven held~~notice to the Company ~~at $11.70 per share minus $100,000 on July 21, 2020, or $6.2 million, which was a reduction of $100,000 to the amount for which these shares could otherwise have been sold to~~that it would not require the Company ~~on August 30, 2020. As a result~~to purchase its remaining 219 shares by the term date of March 31, 2021. Following the sale of shares and the lapse of the Greenhaven Amendment No. 4, the Company owed Greenhaven the sum of $832,000 plus $6.2 million, or $7.0 million. Under the terms of the Greenhaven Amendment No. 4, on July 21, 2020, Kaleyra paid Greenhaven this outstanding debt of $7.0 million in satisfaction of all obligations under the Greenhaven Purchase Agreement. As of September 30, 2020, there was no longer any amount owed to Greenhaven.

~~On February 7, 2020, the Yakira Purchase Agreement was amended (the “First Yakira Amendment”). The First~~Third Yakira Amendment provides that Kaleyra may be obligated to purchase some or all of 43,930 shares that resulted from the conversion of rights if Yakira exercises an option to sell such shares to Kaleyra at a purchase price of $10.93 per share (which is an increase from $10.50 per share) as soon as practicable on or after the six-month anniversary of the Business Combination Date. On May 9, 2020, Kaleyra entered into a second amendment tomentioned above, the forward share purchase agreement with Yakira ~~(the “Second Yakira Amendment”). The Second Yakira Amendment provides that Kaleyra will purchase from Yakira these 43,930 shares~~terminated pursuant to its terms, and as ~~soon as practicable on or after (but~~a result the Company has no ~~later than the fifth business day after) December 31, 2020.~~

~~In addition, on May 11, 2020, Yakira issued notice~~further obligations under the Yakira Purchase Agreement for Kaleyra to repurchase 1,084,150 shares of common stock at $10.6819 per share, for an aggregate purchase price of $11.6 million, with such payment to be made with restricted cash previously placed in an escrow account with an escrow agent pursuant to the terms of the Yakira Purchase Agreement, plus an additional $4,000. These shares were repurchased by Kaleyra on May 18, 2020 and are unrelated to the 43,930 shares discussed above. As a result of this repurchase, no cash remains in the escrow account in accordance with the terms of the Yakira Purchase Agreement.

As of ~~September 30, 2020,~~March 31, 2021 there are no outstanding obligations under the ~~Company’s debt in connection with the Yakira~~Forward Share Purchase ~~Agreement amounted to $480,000.~~Agreement.

Long-term financial obligations, excluding Debt for Forward Share Purchase Agreements, the Notes Payable to the Sellers, the Notes Payable to the Founders, and credit line facilities, consisted of the following (in thousands):

									Interest Nominal Rate														Interest Nominal Rate
	As of September 30,		As of December 31,			Interest			As of September 30,			As of December 31,			As of March 31,		As of December 31,			Interest			As of March 31,			As of December 31,
	2020		2019		Maturity	Contractual Rate			2020			2019			2021		2020		Maturity	Contractual Rate			2021			2020
UniCredit S.p.A. (Line A Tranche (1)	$	3,435	$	3,609	January 2023	Euribor 3 months + 3.10%				2.80	%		2.80	%	$	2,750	$	3,235	July 2023	Euribor 3 months + 3.10%				2.80	%		2.80	%
UniCredit S.p.A. (Line A Tranche (2)		161		167	May 2023	Euribor 3 months + 3.10%				2.80	%		2.80	%		132		153	November 2023	Euribor 3 months + 3.10%				2.80	%		2.80	%
UniCredit S.p.A. (Line B)		3,137		3,229	November 2023	Euribor 3 months + 2.90%				2.60	%		2.60	%		2,656		3,030	May 2024	Euribor 3 months + 2.90%				2.60	%		2.60	%
UniCredit S.p.A. (Line C)		2,665		2,787	February 2023	Euribor 3 months + 3.90%				3.40	%		3.53	%		2,153		2,521	August 2023	Euribor 3 months + 3.90%				3.36	%		3.36	%
Intesa Sanpaolo S.p.A. (Line 1)		889		988	April 2022	Euribor 3 months + 1.80%				1.30	%		1.88	%		744		931	April 2022	Euribor 3 months + 1.80%				1.26	%		1.26	%
Intesa Sanpaolo S.p.A. (Line 2)		4,102		4,183	April 2024	Euribor 3 months + 2.60%				2.10	%		2.60	%		3,824		4,292	April 2024	Euribor 3 months + 2.60%				2.06	%		2.06	%
Intesa Sanpaolo S.p.A. (Line 3)		9,263		—	June 2026	Euribor 3 months + 1.65%				1.15	%		—			9,265		9,688	June 2026	Euribor 3 months + 1.65%				1.11	%		1.11	%
Intesa Sanpaolo S.p.A. (Line 4)		6,437		—	July 2026	Euribor 3 months + 1.70%				1.20	%		—			6,439		6,734	July 2026	Euribor 3 months + 1.70%				1.16	%		1.16	%
UBI Banca S.p.A. (Line 1)		274		332	August 2021	Euribor 3 months + 1.25%				1.25	%		1.25	%		125		209	August 2021	Euribor 3 months + 1.25%				1.25	%		1.25	%
UBI Banca S.p.A. (Line 2)		1,279		1,499	October 2021	Euribor 3 months +1.95%				1.45	%		1.55	%		692		1,031	October 2021	Euribor 3 months +1.95%				1.41	%		1.41	%
Monte dei Paschi di Siena S.p.A. (Line 1)		372		521	April 2022		0.95	%		0.95	%		0.95	%		256		328	April 2022		0.95	%		0.95	%		0.95	%
Monte dei Paschi di Siena S.p.A. (Line 2)		2,337		—	June 2023		1.50	%		1.50	%		—			1,949		2,037	June 2023		1.50	%		1.50	%		1.50	%
Banco Popolare di Milano S.p.A. (Line 1)		1,107		1,336	June 2023	Euribor 3 months + 2.00%				2.00	%		2.00	%
Banco Popolare di Milano S.p.A. (Line 2)		—		3,893	September 2022	Euribor 3 months + 2.00%				—			2.00	%
Banco Popolare di Milano S.p.A. (Line 3)		6,517		—	March 2024	Euribor 3 months + 3.00%				2.50	%		—
Banco BPM S.p.A. (Line 1)																912		1,056	June 2023	Euribor 3 months + 2.00%				2.00	%		2.00	%
Banco BPM S.p.A. (Line 3)																6,086		6,355	September 2024	Euribor 3 months + 3.00%				2.46	%		2.46	%
Simest 1		293		280	December 2023		0.50	%		0.50	%		0.50	%		293		307	December 2023		0.50	%		0.50	%		0.50	%
Simest 2		291		279	December 2023		0.50	%		0.50	%		0.50	%		291		305	December 2023		0.50	%		0.50	%		0.50	%
Simest 3		535		512	December 2023		0.50	%		0.50	%		0.50	%		535		560	December 2023		0.50	%		0.50	%		0.50	%
Finlombarda S.p.A.		43		83	December 2020		0.50	%		0.50	%		0.50	%
Total bank and other borrowings		43,137		23,698												39,102		42,772
Less: current portion		9,675		7,564												8,082		10,798
Total long-term portion	$	33,462	$	16,134											$	31,020	$	31,974

All ~~bank and other borrowings~~financial liabilities are unsecured borrowings of Kaleyra.

Kaleyra funds its short- and long-term liquidity needs through a combination of cash on hand, cash flows generated from operations, and borrowings under credit facilities. Kaleyra’s management regularly monitors certain liquidity measures to monitor performance.

The condensed consolidated balance sheet as of March 31, 2021 includes total current assets of $87.9 million and total current liabilities of $71.7 million, resulting in net current assets of $16.2 million.

The Business Combination generated significant obligations including (i) $13.1 million of liabilities related to non-recurring Business Combination transaction related costs; (ii) $15.0 million of deferred consideration to the Sellers in the Business Combination transaction (iii) $13.2 million of net obligations under certain Shares Purchase Forward Agreements entered into by GigCapital Inc. prior to the Business Combination; and (iv) $3.6 million of notes payable acquired as a result of the Business Combination. As of March 31, 2021, the Company still had the following remaining obligations as a result of the Business Combination:

(i) $405,000 of liabilities related to non-recurring Business Combination transaction related costs;

(ii) $3.75 million of deferred consideration to the Sellers in the Business Combination transaction; and

Subsequent to March 31, 2021, the Company entered into a new loan agreement with Simest S.p.A., and entered into an agreement to postpone repayment of the principal amounts due under the existing Line 3 of the long-term unsecured financing agreement with Banco Popolare di Milano S.p.A. for a period of six (6) months. See Note 21 – Subsequent Events – to the condensed consolidated financial statements included in Part I of this Quarterly Report on Form 10-Q for further details.

Considering the effects of the new financing and the renegotiation described above, and the typical financial cycle of the Company, management believes that the Company’s cash, cash flows from operations, debt and equity financings and availability of borrowings, will be sufficient to support its planned operations for at least the next 12 months from the date these condensed consolidated financial statements were issued.

The following table summarizes cash flows for the periods indicated (in thousands):

In the three months ended March 31, 2021, cash used in operating activities was $8.2 million, primarily consisting of net loss of $10.4 million and $5.6 million of net changes in operating assets and liabilities partially offset by non-cash items, mainly $4.6 million of stock-based compensation, $909,000 of depreciation and amortization expense, $663,000 of deferred taxes changes, $1.3 million of change in fair value of the warrant liability, $659,000 of reversal of interest expense previously accrued on a forward share purchase agreement and $813,000 of provision for doubtful accounts.

In the ~~nine~~three months ended ~~September 30,~~March 31, 2020, cash used in operating activities was ~~$14.0~~$2.9 million, primarily consisting of ~~the~~ net loss of ~~$22.3~~$8.8 million and net cumulative changes in operating assets and liabilities of $7.0 million, partially offset by $15.2 million of non-cash items. Non-cash items consisted primarily of $16.1 million of stock-based compensation and $1.9 million of depreciation and amortization expense partially offset bya $2.5 million settlement on the preference share liability partially offset by non-cash items, mainly $6.3 million of stock-based compensation, and ~~$898,000 change~~$638,000 of depreciation and amortization expense and $1.6 million of net changes in ~~deferred tax assets.~~operating assets and liabilities.

In the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2021, cash used in investing activities was $315,000, primarily consisting of $768,000 of capitalized software development costs, partially offset by $546,000 of proceeds from the sale of short-term investments.

In the three months ended March 31, 2020, cash provided by ~~operating~~investing activities was $1.1 million, primarily consisting of ~~the net loss of $1.9 million more than offset by net cumulative changes in operating assets and liabilities of $515,000 and $2.4~~$5.0 million of ~~non-cash items. Non-cash items consist primarily~~proceeds from sale of ~~$2.0 million of depreciation and amortization expense, $446,000 of non-cash compensation expense for preference shares, $437,000 of non-cash interest expense, net,~~short-term investments, partially offset by ~~a $724,000 change in deferred tax assets.~~

~~In the nine months ended September 30, 2020, cash used in investing activities was $3.1 million, primarily consisting of $7.9~~$3.2 million of purchases of short-term investments ~~$1.0 million of purchases of property~~ and ~~equipment, and $2.1 million~~$731,000 to fund the cost of internally developed ~~software, partially offset by $7.8 million of proceeds from sale of short-term investments.~~software.

In the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2021, cash ~~used~~provided by ~~investing~~financing activities was ~~$3.2~~$12.0 million, primarily consisting of ~~$4.3~~$17.0 million of ~~purchases~~receipts related to forward share purchase agreements, $1.2 million in proceeds related to the settlement of ~~marketable securities and $1.3 million of purchases of property and equipment,~~non-forfeited 2020 Sponsor Earnout Shares, partially offset by ~~$2.5~~$1.9 million of ~~proceeds from sale~~repayments on term loans, $3.8 million of ~~short-term investments.~~repayments on notes and $663,000 in repayments on lines of credit.

In the ~~nine~~three months ended ~~September 30,~~March 31, 2020, cash provided by financing activities was ~~$11.6~~$2.3 million, primarily consisting of ~~$36.2 million in net proceeds from the public offering of the Company’s common stock, $24.4~~$8.8 million in proceeds from borrowings on term loans and net drawings of ~~$749,000~~$1.7 million on the available lines of credit, partially offset by ~~$6.3~~$5.5 million of repayments on term loans, ~~$30.4~~$2.6 million of repurchases of common stock related to forward share purchase agreements ~~$1.5 million~~and $167,000 of other required payments related to ~~aggregate sale price differences under the~~ forward ~~share~~shares purchase ~~agreements, and $11.5 million of repayments on notes payable.~~

In the nine months ended September 30, 2019, cash provided by financing activities was $4.9 million, primarily consisting of $16.7 million in proceeds from borrowings on term loans, partially offset by $2.7 million of repayments on term loans, and $4.0 million and $5.1 million of payments for deferred consideration for the acquisition of Buc Mobile and Solutions Infini, respectively.agreements.

The following table summarizes the obligations as of ~~September 30, 2020,~~March 31, 2021, as derived from the ~~unaudited~~condensed consolidated financial statements of Kaleyra as of that date. The table should be read in connection with the footnotes below describing certain events occurring after ~~September 30, 2020~~March 31, 2021 (in thousands).

	Payment due by period										Payment due by period
	Total		2020 (remaining three months)		2021-2023		2024-2025		Thereafter		Total		2021 (remaining nine months)		2022-2024		2025-2026		Thereafter
Bank and other borrowings (1)	$	43,137	$	2,247	$	30,409	$	4,706	$	5,775	$	39,102	$	5,807	$	27,516	$	5,779	$	—
Line of credit		4,567		4,567		—		—		—		4,439		4,439		—		—		—
Capital lease obligations		370		32		253		85		—
Capital lease obligations (including interest)												326		109		199		18		—
Operating lease obligations (2)		2,739		177		1,710		722		130		2,226		491		1,297		438		—
Convertible notes payable to the Sellers (3)		7,500		3,750		3,750		—		—		3,750		3,750		—		—		—
Other notes payable (4)		2,700		—		2,700						405		—		405		—		—
Debt for forward share purchase agreements (5)		480		480		—		—		—
Total	$	61,493	$	11,253	$	38,822	$	5,513	$	5,905	$	50,248	$	14,596	$	29,417	$	6,235	$	—

Further, on July 29, 2020, Kaleyra S.p.A. entered into a general unsecured loan agreement (the “Intesa Loan Agreement - Line 4”) with Intesa Sanpaolo S.p.A. for a total of $6.5 million (the loan was disbursed in Euros for an amount of €5.5 million at the July 29, 2020 exchange rate equal to 0.84801). The proceeds of the loan may be used for general corporate purposes, including to help accelerate the Company’s growth. The Intesa Loan Agreement – Line 4 has a maturity of 72 months from the date of disbursement and bears interest at a variable rate equal to the three-month Euribor plus a spread of 1.70%. The loan is to be repaid in 20 quarterly installments with a grace period for principal payments for the first 12 months. The loan is guaranteed up to ninety percent of its principal amount by Mediocredito Centrale S.p.A., the Italian state-owned export credit finance agency, and is made pursuant to a program to address COVID-19 and the Italian Government’s support for Italian businesses, as stated within Article 13 of the Decree Law 23/2020 and conversion Law 40/2020, and obligations and representations included therein. The total amount of the loan, less amounts related to commissions, fees and expenses, was drawn in full the same date as of the agreement.

As of ~~September 30, 2020,~~March 31, 2021, Kaleyra did not have any relationships with any entities or financial partnerships, such as structured finance or special purposes entities established for the purpose of facilitating off-balance sheet arrangements or for other purposes.

~~Kaleyra’s results are affected by the business cycles of~~Historically, Kaleyra has experienced clear seasonality in its ~~customer base, which generally results in stronger~~ revenue generation, with slower traction in the first calendar quarter, and increasing revenues as the year progresses toward the higher revenues in messaging and notification services during the fourth ~~quarter~~calendar quarter. This patterned revenue generation behavior takes place due to Kaleyra’s customers sending more messages to their end-user customers who are engaged in consumer transactions at the end of the calendar ~~year. Kaleyra believes this variability is largely due to the market’s demand for its customers’ and/or business partners’ services due to higher levels of purchasing activity~~year, resulting in ~~the holiday season. As a result of our historically higher portion of sales in the fourth quarter of each year, our cost of revenue increases during such period relative to any~~an increase in ~~revenue. The increase in cost~~notifications of ~~revenue~~electronic payments, credit card transactions and ~~other impacts of seasonality may affect profitability in a given quarter.~~e-commerce.

The Company recorded an income tax ~~benefit of $263,000 and an income tax~~ expense of ~~$168,000 for the three months ended September 30, 2020 and 2019, respectively,~~$34,000 and an income tax benefit of ~~$1.2 million and an income tax expense $719,000~~$589,000 for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, respectively. The Company continues to maintain a full valuation allowance against its domestic deferred tax assets and ~~2019, respectively.~~most foreign jurisdictions other than India also maintain a full valuation against its deferred tax assets.

As of ~~September 30, 2020,~~March 31, 2021, the Company ~~had $2.2~~maintained $4.9 million of undistributed earnings and profits generated by a foreign subsidiary (Solutions Infini) for which no deferred tax liabilities have been recorded, since the Company intends to indefinitely reinvest such earnings in the subsidiary to fund the international operations and certain obligations of the subsidiary. Should the above undistributed earnings be distributed in the form of dividends or otherwise, the distributions would result in ~~approximately $326,000~~$737,000 of tax expense.

The Company files income tax returns in the United States and in foreign jurisdictions including Italy, India, and Switzerland. As of March 31, 2021, the tax years 2008 through the current period remain open to examination in each of the major jurisdictions in which the Company is subject to tax.

See Note 2 - Summary of Significant Accounting Policies – to the condensed consolidated financial statements included in Part I of this Quarterly Report on Form 10-Q for more information on new accounting pronouncements.

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this Item.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~September 30, 2020.~~March 31, 2021. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were ~~not~~ effective ~~because~~as of ~~the material weaknesses in our internal control over financial reporting~~December 31, 2020, as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019.~~2020.

During our most recently completed fiscal quarter ended ~~September 30, 2020,~~March 31, 2021, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

From time to time, Kaleyra may be involved in litigation relating to claims arising out of its operations in the normal course of business. Kaleyra is not currently involved in any material legal proceedings as a defendant.

On October 17, 2018, Kaleyra filed a claim against Vodafone Italia S.p.A. (“Vodafone”) before the Court of Milan seeking compensation in the amount of €6.1 million ($~~6.8~~7.5 million at the ~~June 30,~~December 31, 2020 exchange rate) for all the damages suffered as a consequence of the illicit and anticompetitive conduct of Vodafone, as previously determined by the Italian Antitrust Authority (namely, Autorità Garante della Concorrenza e del Mercato or AGCM) in their decisions issued on December 13, 2017; Vodafone has appealed that sanctioning resolution before the Italian Regional Administrative Court.

The deadline for filing a counterclaim by Vodafone has passed and according to Italian Law, Vodafone is no longer entitled to file a counterclaim against Kaleyra in these proceedings. Both Kaleyra and Vodafone have filed their final pleadings on October 1, 2019 and October 21, 2019.

The Court of Milan has decided to suspend the procedure, through order no. 1570 on May 18, 2020. The decision of the Court of Milan is based on procedural reasons only (concerning the unprecedented definition of the relationship between administrative and civil proceedings in the case at hand) and does not analyze or take into any consideration the merits of the action brought by Kaleyra. The procedural suspension ordered by the Court of Milan shall last until the appeal brought by Vodafone before the Italian Regional Administrative Court against the decision of the Italian Antitrust Authority ~~will be~~is concluded with a definitive judgment. Accordingly, following the order of suspension issued by the Civil Court of Milan, on August 10, 2020, Kaleyra filed a request to speed up the scheduling of the hearing in relation to the pending appeal before the Italian Regional Administrative Court brought by Vodafone Italia. The Court upheld Kaleyra’s request and the hearing ~~will take~~has taken place on February 24, 2021. Accordingly, the parties submitted their final defenses. The decision is expected to be released in the second quarter of fiscal year 2021. The outcome of such action cannot be determined at this time. Therefore, no recognition of these actions has been made in ~~any of~~ the condensed consolidated financial statements of the Company.

On April 16, 2019, Kaleyra filed a claim against Telecom Italia S.p.A and Telecom Italia Sparkle S.p.A. before the Court of Milan seeking compensation in the amount of €8.3 million ($~~9.3~~10.2 million at the ~~June 30,~~December 31, 2020 exchange rate) for damages suffered after the illicit conduct of both counterparts, determined by the Italian Antitrust Authority in the decision issued on December 13, 2017.

At the first hearing before the Court of Milan held for the appearance of the parties on December 11, 2019, the judge reserved the decision on the possible suspension of the case in consideration of the appeal brought by Telecom Italia S.p.A and Telecom Italia Sparkle S.p.A. against the Italian Antitrust Authority’s decision of December 13, 2017 before the Regional Administrative Court, which is currently pending.

By order issued on December 14, 2019, the judge released his reserve and referred the issue concerning the relation between the assessment of the pending administrative case and the one to be carried out in the civil case to a panel composed of three judges. The case was therefore adjourned for a hearing on April 29, 2020 where the parties had to file their final pleadings.

On April 9, 2020, following the measures taken by the Italian legislator for the ~~Covid-19 emergency,~~COVID-19 pandemic, the above-mentioned hearing ~~has been~~was postponed to and then held on October 7, ~~2020;~~2020. At the hearing of October 7, 2020, the parties exposed their closing arguments and the decision on the preliminary question as to the suspension of the civil proceedings has been reserved to a panel composed of three judges. The parties also submitted written observations concerning the preliminary question.

On January 7, 2021, the Court issued an order by which the civil proceedings have been ~~assigned~~suspended until the ~~December 28, 2020 due date to file their final pleadings. Afterwards~~decision in the ~~Court will decide the case. Such decision is expected~~pending administrative case – which was deemed to be ~~issued~~prejudicial to the civil one – becomes final (i.e., it is no longer subject to appeal). The order was communicated to the parties via certified electronic mail on January 11, 2021.

In light of the average duration of cases before the Italian Administrative Courts and the Defendants’ interest in ~~approximately ithe first quarter~~both having the Italian Competition Authority’s Decision annulled and procrastinating the administrative case (on which the civil proceedings now depend pursuant to the above-mentioned order) for dilatory purposes, the civil case is unlikely to proceed in the short term. In order to speed up the administrative proceedings (and thus the civil case), on February 9, 2021, Kaleyra filed an application with the Administrative Court of ~~2021.~~Latium requesting that the hearing on the merits of the case be held as soon as possible. However, neither the outcome of Kaleyra’s civil action nor its duration is predictable at this time.

The outcome of such civil action cannot be determined at this time. Therefore, no recognition of these actions has been made in ~~any of~~ the condensed consolidated financial statements of the Company.

In addition to the above, Kaleyra has appealed the resolutions issued by the Italian Communications Authority (namely, Autorità per le Garanzie nelle Comunicazioni or AGCom) concerning ~~the~~their request for the annual ~~contribution~~fee to AGCom for years 2016, 2017, 2018, 2019 and 2020.

The first instance proceeding against AGCom’s resolutions for the 2016 contribution was successful for Kaleyra and the Italian Regional Administrative Court annulled the resolutions Kaleyra had appealed (judgement no. 2161/2019). However, AGCom filed its second instance appeal before the Council of State seeking the overruling of the Court’s decision. The appeal has been regularly discussed at the hearing of September 17, 2020 and the Council of State issued its decision number 6175/2020 on October 13, 2020, overruling in part the Regional Court Decision. AGCom will have to recalculate the annual contribution due from Kaleyra for year 2016. However, the annual contribution is not considered material to Kaleyra’s condensed consolidated financial statements.

For the annual contribution to AGCom relating the years 2017, 2018, 2019 and 2020 the legal proceedings are currently pending before the Italian Regional Administrative Court and no hearing has been scheduled yet. However, the European Court of Justice (“ECJ”) has already delivered its decision on the request for a preliminary ruling submitted by the Council of State on the relevant EU law (case C-399/18). Such decision was delivered on April 29, 2020, in accordance with a simplified procedure due to the previous issuance by the ECJ of a number of judgements on the matter.

Finally, Kaleyra took part in two appeals brought before the Regional Administrative Court of Latium (namely, Tribunale Amministrativo Regionale del Lazio or “TAR Lazio”) by, respectively, an Association of Content Service Providers (“CSP”) for Value Added Services on mobile network (“VAS”), and one singular CSP, against a specific resolution of the Italian Communications Authority regarding the rules for applying a barring mechanism on the SIM of the final users of VAS (resolution no. 10/21/CONS). Kaleyra filed its interventions in both the judicial proceedings to support the measures issued by AGCom.

Specifically, following the hearing before TAR Lazio that took place on March 17, 2021, the Court has issued two orders (no. 1748 and no. 1751, dated March 18, 2021) that rejected the precautionary measures requested by both the plaintiffs, upholding the position represented by Kaleyra to support the legitimacy of the above mentioned resolution. Following the definition of the precautionary phase, both appeals are likely to be discussed on the merits in the next months. As of today, TAR Lazio has not scheduled any further hearing, hence there is no imminent deadline with regard to those judicial proceedings. For the sake of completeness, the final judgments of TAR Lazio on the two appeals above shall not result in any economic direct impact for Kaleyra.

We have revised the risk factors that relate to our business, as set forth below. These risks include any material changes to and supersede any similar the risks previously disclosed in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 and otherwise supplement those risks. We encourage investors to review the risk factors and uncertainties relating to our business disclosed in that Form 10-K, as well as those contained in Part 1, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, above.

~~Unfavorable global economic conditions could adversely affect Kaleyra’s business, financial condition or results of operations.~~

Kaleyra’s results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. Furthermore, the most recent global financial crisis caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn, including due to the impact of the COVID-19 pandemic, could result in a variety of risks to Kaleyra’s business, including a reduced ability to raise additional capital when needed on acceptable terms, or at all. Any of the foregoing could harm its business and Kaleyra cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact its business.

~~Kaleyra is unable to predict the extent to which the global COVID-19 pandemic may adversely impact Kaleyra’s business operations, financial performance, results of operations and stock price.~~

The COVID-19 pandemic and efforts to control its spread have significantly curtailed the movement of people, goods and services worldwide, including in most or all of the regions in which Kaleyra sells its products and services and conducts its business operations. Kaleyra also has its headquarters in Milan, Italy, which has been severely affected by the first wave of COVID-19 and the resulting government lockdowns to attempt to contain the spread of COVID-19. A second wave of COVID-19 pandemic is currently affecting a large number of countries across the globe, and additional government restrictions are expected to reduce the resurgence in the pandemic infections. The magnitude and duration of the resulting decline in business activity cannot be estimated with any degree of certainty and threatens to (1) negatively impact the demand for its products and services, especially in those locations subject to “shelter in place” restrictions or similar government orders, (2) restrict its sales operations and marketing efforts, and (3) disrupt other important business activities in its various locations, some of which are also in areas affected by COVID-19. For example, in response to the COVID-19 pandemic, certain industry events that Kaleyra sponsors or at which Kaleyra presents and certain customer events have been canceled, postponed or moved to virtual-only experiences; Kaleyra is encouraging all of its employees to work remotely; and Kaleyra may deem it advisable to similarly alter, postpone or cancel entirely additional customer, employee or industry events in the future. Additionally, Kaleyra may see its services carrying less revenue-generating traffic in areas subject to “shelter in place” restrictions or related government orders as the population of those areas refrain from traveling and normal commerce activities. Accordingly, Kaleyra expects the COVID-19 pandemic to potentially have a negative impact on its sales and its results of operations in those areas adversely affected by COVID-19, the size and duration of which Kaleyra is currently unable to predict. In addition, Kaleyra’s implementation of business continuity plans in a fast-moving public health emergency could have an adverse effect on its internal controls (potentially giving rise to significant discrepancies or material weaknesses) and increase its vulnerability to information technology and other systems discrepancies. Furthermore, concerns over the economic impact of COVID-19 have caused extreme volatility in financial and other capital markets which has and may continue to adversely impact Kaleyra’s stock price and its ability to access capital.

Kaleyra currently generates significant revenue from its largest customers, and the loss or decline in revenue from any of these customers could limit Kaleyra’s revenue and results of operations.

In the ~~nine~~three months ended ~~September 30, 2020 and 2019,~~March 31, 2021, Kaleyra’s 10 largest customers generated an aggregate of ~~53.1% and 48.9%~~47.4% of its ~~revenue, respectively. The churn rate, calculated as~~revenue. In the ~~annual rate at which~~three months ended March 31, 2020, Kaleyra’s ~~existing~~10 largest customers ~~stopped subscribing for~~generated an aggregate of 49.0% of its ~~services, was equal to zero in the nine-month period ended September 30, 2020.~~revenue. In the event that Kaleyra’s large customers do not continue to use its products, use fewer of its products, or use its products in a more limited capacity, or not at all, Kaleyra’s revenue could be limited and Kaleyra’s business could be harmed.

~~Kaleyra must increase the network traffic and resulting revenue from the services that it offers to realize its targets for anticipated revenue growth, cash flow and operating performance.~~

For the nine-month period ended September 30, 2020, 75.5% of revenues came from customers of Kaleyra which have been on the Platform for at least one year. Kaleyra must increase the network traffic and resulting revenue from its inbound and outbound voice calling, text messaging, telephone numbers and related services at acceptable margins to realize Kaleyra’s targets for anticipated revenue growth, cash flow and operating performance. If Kaleyra does not maintain or improve its current relationships with existing key customers; is not able to expand the available capacity on its network to meet its customers’ demands in a timely manner; does not develop new large enterprise customers; or its customers determine to obtain these services from either their own network or from one of Kaleyra’s competitors, then Kaleyra may be unable to increase or maintain its revenue at acceptable margins.

~~Kaleyra has limited experience with respect to determining the optimal prices for its product.~~

Kaleyra charges its customers based on their use of its products. Kaleyra expects that it may need to change its pricing from time to time. In the past Kaleyra has sometimes reduced their prices either for individual customers in connection with long-term agreements or for a particular product. One of the challenges to Kaleyra’s pricing is that the fees that they pay to network service providers over whose networks Kaleyra transmits communications can vary daily or weekly and are affected by volume and other factors that may be outside of Kaleyra’s control and difficult to predict. This can result in Kaleyra incurring increased costs that Kaleyra may be unable or unwilling to pass through to its customers, which could harm Kaleyra’s business. Kaleyra is seeking to expand its business in the United States as Kaleyra believes that doing so will result in termination fees (which are the pass-through charge to access the network or carrier) that are significantly lower than the termination fees Kaleyra is subject to in the other countries where it operates, which Kaleyra expects would result in higher gross margins, especially with its enterprise customers. However, there are no assurances that Kaleyra will be successful in this expansion or achieving the related termination fee gross margin improvement. Further, as competitors introduce new products or services that compete with Kaleyra’s or reduce their prices, Kaleyra may be unable to attract new customers or retain existing customers based on Kaleyra’s historical pricing. As Kaleyra expands internationally, Kaleyra also must determine the appropriate price to enable Kaleyra to compete effectively internationally. Moreover, enterprises, which are a primary focus for Kaleyra’s direct sales efforts, may demand substantial price concessions. In addition, if the mix of products sold changes, including for a shift to Internet protocol (“IP”) based products, then Kaleyra may need to, or choose to, revise its pricing. As a result, in the future Kaleyra may be required or choose to reduce its prices or change its pricing model, which could harm Kaleyra’s business.

Kaleyra has experienced rapid internal growth as well as growth through acquisitions in recent periods. If Kaleyra fails to manage its growth effectively, or its business does not grow as expected, Kaleyra’s operating results may suffer.

Kaleyra’s headcount and operations have grown substantially. Kaleyra had ~~more than 300~~over 370 employees as of ~~September 30, 2020,~~March 31, 2021, as compared with ~~258~~260 employees as of ~~September 30, 2019.~~March 31, 2020. This growth has placed, and will continue to place, a significant strain on Kaleyra’s operational, financial, and management infrastructure. Kaleyra anticipates further increases in headcount will be required to support increases in its technology offerings and continued expansion. To manage this growth effectively, Kaleyra must continue to improve its operational, financial, and management systems and controls by, among other things:

•effectively attracting, training, and integrating a large number of new employees, particularly technical personnel and members of Kaleyra’s management and sales teams;

•further improving Kaleyra’s key business systems, processes, and information technology infrastructure to support Kaleyra’s business needs;

•enhancing Kaleyra’s information and communication systems to ensure that Kaleyra’s employees are well-coordinated and can effectively communicate with each other and Kaleyra’s customers; and

•improving Kaleyra’s internal control over financial reporting and disclosure controls and procedures to ensure timely and accurate reporting of Kaleyra’s operational and financial results.

If Kaleyra fails to manage its expansion or implement Kaleyra’s new systems, or if Kaleyra fails to implement improvements or maintain effective internal controls and procedures, Kaleyra’s costs and expenses may increase more than expected and Kaleyra may not expand its client base, increase existing customer volumes and renewal rates, enhance its existing applications, develop new applications, satisfy its customers, respond to competitive pressures, or otherwise execute its business plan. If Kaleyra is unable to manage its growth, Kaleyra’s operating results likely will be harmed.

Kaleyra’s future success depends in part on its ability to drive the adoption of its products by international customers.

In the ~~nine~~three months ended ~~September 30,~~March 31, 2021, and 2020, ~~and 2019,~~ Kaleyra derived ~~66.1%~~70.0% and ~~74.4%~~69.9% of its revenue, respectively, from customer accounts located in Italy and India. Revenue deriving from customer accounts located in the United States increased from ~~6.4%~~12.8% in the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 to ~~18.1%~~12.9% in the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, while revenue deriving from customer accounts located in the European countries other than Italy decreased from ~~12.7%~~7.7% in the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 to ~~6.8%~~3.6% in the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. Revenue ~~derived~~deriving from customer accounts located in the rest of the

world increased from ~~6.5%~~9.7% in the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 to ~~9.1%~~13.5% in the ~~nine~~three months ended ~~September 30, 2020.~~March 31, 2021. This is in line with the expansion strategy out of Italy and India identified by ~~Kaleyra.~~the Company. The future success of Kaleyra’s business will depend, in part, on Kaleyra ability to expand its customer base worldwide in new geographies. If Kaleyra is unable to increase the revenue that it derives from international customers, Kaleyra’s business and results of operations could be harmed.

If Kaleyra’s goodwill or intangible assets become impaired, Kaleyra may be required to record a significant charge to earnings.

Kaleyra reviews its intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. As of ~~September 30, 2020,~~March 31, 2021, Kaleyra carried a net ~~$24.5~~$23.8 million of goodwill and intangible assets. An adverse change in market conditions, particularly if such change has the effect of changing one of Kaleyra’s critical assumptions or estimates, could result in a change to the estimation of fair value that could result in an impairment charge to Kaleyra’s goodwill or intangible assets. Any such charges may adversely affect Kaleyra’s results of operations.

~~Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.~~

As of December 31, 2019, we had federal, state and foreign net operating loss (“NOL”) carryforwards totaling $11.6 million, $11.7 million and $1.6 million, respectively. However, our ability to utilize these NOLs to offset taxable income may be limited in the future. A corporation that undergoes an “ownership change” is typically subject to limitations on its ability to utilize its pre-ownership change NOLs to offset future taxable income. In general, under the U.S. Internal Revenue Code of 1986, as amended (the “Code”), an ownership change occurs if the aggregate stock ownership of certain stockholders (generally 5% stockholders, applying certain look-through and aggregation rules) increases by more than 50 percentage points over such stockholders’ lowest percentage ownership during the testing period (generally three years). Purchases or salesCertain of our warrants are accounted for as a warrant liability and are recorded at fair value upon issuance with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of Kaleyra common stock.

Kaleyra has 373,692 warrants that were issued in private placements that occurred concurrently with its initial public offering (the “private warrants”). These private warrants and the shares of Kaleyra common stock ~~in amounts greater than specified levels could create a limitation on our ability to utilize our NOLs for tax purposes in~~issuable upon the ~~future. Limitations imposed on our ability to utilize NOLs could cause U.S. federal and state income taxes to be paid earlier than would be paid if such limitations were not in effect.~~

Furthermore, we may not be able to generate sufficient taxable income to utilize our NOLs before they expire. In addition, NOLs incurred in one state generally are not available to offset income earned in a different state and there may be periods during which the use of NOLs is suspended or otherwise limited for state tax purposes, which could accelerate or permanently increase state taxes owed.

~~Kaleyra S.p.A. is a controlled foreign corporation of Kaleyra for U.S. federal income tax purposes. This means that a substantial part~~exercise of the ~~net income, if any, of Kaleyra S.p.A.~~private warrants are exercisable for cash or on a cashless basis, at the holder’s option, and its non-U.S. subsidiaries will be taxable to Kaleyra without regard to whether a dividend is paid to Kaleyra, subject to available foreign tax credits and a special deduction. Moreover, because Kaleyra S.p.A. has a U.S. subsidiary,are non-redeemable so long as they are held by the resulting structure (sometimes referred to as a “sandwich structure”) would be subject to multiple levels of tax. Generally speaking, it is difficult to simplify a sandwich structure without incurring taxes in oneinitial purchasers or ~~more jurisdictions.~~

~~Kaleyra’s second amended and restated certificate of incorporation provides, subject to limited exceptions, that~~their permitted transferees. If the Court of Chancery of the State of Delaware be the sole and exclusive forum for certain stockholder litigation matters, which could limit Kaleyra’s stockholders’ ability to obtain a favorable judicial forum for disputes with Kaleyra or its directors, officers, employees or stockholders.

~~Kaleyra’s second amended and restated certificate of incorporation requires, to the fullest extent permitted~~private warrants are held by law, that derivative actions brought in Kaleyra’s name, actions against its directors, officers, and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel except any action (A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forumsomeone other than the ~~Court~~initial purchasers or their permitted transferees, the private warrants will be redeemable by the Company and exercisable by such holders on the same basis as the warrants included in the units sold in the Company’s initial public offering, in which case the 373,692 private warrants could be redeemed by the Company for $3,737. Under U.S. GAAP, Kaleyra is required to evaluate contingent exercise provisions of ~~Chancery, (C)~~these warrants and then their settlement provisions to determine whether they should be accounted for ~~which~~as a warrant liability or as equity. Any settlement amount not equal to the ~~Court~~difference between the fair value of Chancery does not have subject matter jurisdiction, or (D) any action arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in sharesa fixed number of Kaleyra’s ~~capital~~equity shares and a fixed monetary amount precludes these warrants from being considered indexed to its own stock, ~~shall be deemed to have notice of~~ and consented to the forum provisions in its second amended and restated certificate of incorporation. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorabletherefore, from being accounted for disputes with Kaleyra or any of its directors, officers, or employees which may discourage lawsuits with respect to such claims, although Kaleyra’s stockholders will not be deemed to have waived Kaleyra’s compliance with federal securities laws and the rules and regulations thereunder. However, there is no assurance that a court would enforce the choice of forum provision contained in Kaleyra’s second amended and restated certificate of incorporation. If a court were to find such provision to be inapplicable or

~~unenforceable in an action, Kaleyra may incur additional costs associated with resolving such action in other jurisdictions, which could harm its business, operating results and financial condition.~~

Kalerya’s second amended and restated certificate of incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.as equity. As a result of the ~~exclusive forum~~ provision that the private warrants, when held by someone other than the initial purchasers or their permitted transferees, will ~~not apply to suits brought to enforce any duty or liability created~~be redeemable by the ~~Exchange Act or any other claim~~Company, the requirements for ~~which the federal courts have exclusive jurisdiction.~~

accounting for these warrants as equity are not satisfied. Therefore, Kaleyra ~~may be~~is required to ~~purchase up to 1,666,930 shares of common stock pursuant to forward share purchase agreements, thereby reducing cash available to Kaleyra~~account for ~~other purposes.~~

~~Kaleyra prior to~~these private warrants as a warrant liability and record (a) that liability at fair value, which was determined as the ~~consummation~~same as the fair value of the ~~Business Combination entered into the Forward Share Purchase Agreement with Yakira Capital Management, Inc. (“Yakira”), as well as the Confirmation with NGFP for the Forward Transaction.~~

The Yakira Purchase Agreement, as amended, pertains to shares issued to Yakira upon the conversion of the rights it held prior to the closing of the Business Combination and provides that Kaleyra may be obligated to purchase the shares if Yakira exercises an option to sell such shares to Kaleyra. The number of shares held by Yakira covered by such Forward Share Purchase Agreement is 43,930 shares. If Yakira exercises its respective option, Kaleyra will have to expend funds to purchase those shares, which will reduce the cash available to Kaleyra for other purposes. The price at which Kaleyra would have to purchase such shares is $10.93 per share. Yakira has the right to put to Kaleyra its shares as soon as practicable on or after (but no later than the fifth business day after) December 31, 2020.

Kaleyra has also entered into the Confirmation with NGFP with regard to the Nomura Shares, which shares NGFP held at the closing of the Business Combination. The Confirmation confirms the terms and conditions of the Forward Transaction entered into between Kaleyra and NGFP. Pursuant to the terms of the Confirmation, as amended, NGFP agreed to waive any redemption right that would have required the redemption of the Nomura Shares at the closing of the Business Combination at a price of $10.5019 per share. Rather, NGFP, at its sole discretion, may either sell such shares in one or more transactions, publicly or privately, at a market price of at least $10.50 per share, or hold such shares through November 25, 2021, at which time Kaleyra will be required to purchase from NGFP, and NGFP will be required to sell to the us, any such shares not otherwise previously sold by NGFP. The Confirmation provided that Kaleyra transfer an amount of cash equal to (a) the aggregate number of shares held by NGFP multiplied by (b) $10.5019. As a result, these amounts transferred to NGFP will not be available to Kaleyra unless and until NGFP sell such shareswarrants included in the ~~market. Furthermore, if NGFP sells shares to Kaleyra, NGFP will keep that portion of the cash transferred to it following the closing of the Business Combination attributable to such shares~~units sold to Kaleyra, plus an accrual amount equal to 3.50% per annum, on November 25, 2021. If NGFP sells shares to it, Kaleyra will have to expend funds to purchase shares from NGFP, which will reduce the cash available to it for other purposes.

~~There may be a limited public market for the shares of common stock of Kaleyra, and the ability of the stockholders of Kaleyra to dispose of their common stock may be limited.~~

Kaleyra’s common stock is traded on the NYSE American stock exchange. Kaleyra cannot foresee the degree of liquidity that will be associated with its common stock. A holder of the common stock may not be able to liquidate his, her or its investment in a short time period or at the market prices that currently exist at the time the holder decides to sell. The market price for the common stock may fluctuate in the ~~future,~~Company’s initial public offering, and ~~such volatility may bear no relation to Kaleyra’s performance.~~

~~Kaleyra has never paid dividends on its common stock, and does not anticipate paying~~(b) any ~~cash dividends on its common stock~~subsequent changes in ~~the foreseeable future.~~

Kaleyra has never declared or paid cash dividends on its common stock. Kaleyra does not anticipate paying any cash dividends on its common stock in the foreseeable future. Kaleyra currently intends to retain all available funds and any future earnings to fund the development and growth of its business. As a result, capital appreciation, if any, of Kaleyra’s common stock will be stockholders’ sole source of gain for the foreseeable future.

Kaleyra qualifies as an emerging growth company, and Kaleyra’s decision to comply with reduced reporting and disclosure requirements applicable to emerging growth companies could make our common stock less attractive to investors.

Kaleyra is an “emerging growth company,” and, for as long as Kaleyra continues to be an emerging growth company, Kaleyra currently intends to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, not being required to have its independent registered public accounting firm audit Kaleyra’s internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its registration statements, periodic reports and proxy statements (including the

registration statement of which this prospectus forms a part) and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Kaleyra will cease to be an emerging growth company upon the earliest of: (i) the end of the fiscal year following the fifth anniversary of the IPO; (ii) the first fiscal year after its annual gross revenue is $1.07 billion or more; (iii) the date on which Kaleyra has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) the end of any fiscal year in which the marketfair value ~~of its common stock held by non-affiliates exceeded $700 million~~ as of the end of each period for which earnings are reported. As the ~~second~~fair value of the warrants is not considered material to the historical consolidated financial statements, it was recorded in the condensed consolidated financial statements for the quarter ended March 31, 2021. The impact of ~~that fiscal year.~~changes in fair value on earnings may have an adverse effect on the market price of Kaleyra common stock.

Failure to complete the mGage Merger could negatively impact the stock price of Kaleyra and future businesses and financial results of Kaleyra.

Completion of the mGage Merger is subject to the satisfaction or waiver of a number of conditions, including the approval of the transaction by the stockholders of Vivial and the approval of the issuance of shares of Kaleyra common stock in connection with the transaction by the stockholders of Kaleyra. Kaleyra cannot ~~predict whether investors~~guarantee when or if all of these conditions will ~~find its common stock less attractive if Kaleyra chooses to rely on these exemptions while Kaleyra is an emerging growth company. If some investors find its common stock less attractive as a result~~be satisfied or that the mGage Merger will be successfully completed. The consummation of ~~any choices to reduce future disclosure, there~~the mGage Merger may be ~~a less active trading market for its common stock and~~delayed, the ~~price of its common stock~~mGage Merger may be ~~more volatile.~~

~~Under~~consummated on terms different than those contemplated by the ~~JOBS Act, emerging growth companies can also delay adopting new~~mGage merger agreement, or revised accounting standards until such time as those standards apply to private companies. Kaleyra has availed itself of this exemption from new or revised accounting standards and, therefore, Kaleyrathe mGage Merger may not be consummated at all. If the mGage Merger is not completed, or is completed on different terms than as contemplated by the mGage

merger agreement, Kaleyra could be adversely affected and subject to a variety of risks associated with the ~~same new~~failure to complete the mGage Merger, or ~~revised accounting standards~~to complete the mGage Merger as contemplated by the mGage merger agreement, including the following:

Any delay in the consummation of the mGage Merger or any uncertainty about the consummation of the mGage Merger on terms other ~~public companies~~than those contemplated by the mGage merger agreement, or if the mGage Merger is not completed, could materially adversely affect Kaleyra’s business, financial results and share price. In addition, if the mGage Merger is not completed, Kaleyra may experience negative reactions from the financial markets, and Kaleyra may experience negative reactions from their respective customers and employees. Kaleyra also could be subject to litigation related to any failure to complete the mGage Merger or to enforcement proceedings commenced against Kaleyra to perform their respective obligations under the mGage merger agreement. If the mGage Merger is not completed, Kaleyra cannot assure their respective stockholders that ~~are~~the risks described above will not ~~emerging growth companies.~~materialize and will not materially affect the business and financial results of Kaleyra and stock price of Kaleyra.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Delaware		82-3027430
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

Via Marco D’Aviano, 2, Milano MI, Italy		20131
(Address of principal executive offices)		(Zip Code)

Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	KLR	NYSE American LLC
Warrants, at an exercise price of $11.50 per share of Common Stock	KLR WS	NYSE American LLC

PART I – FINANCIAL INFORMATION		Page

Item 1.	Condensed Consolidated Financial Statements (unaudited):	1

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Operations	2

	Condensed Consolidated Statements of Comprehensive ~~Income (Loss~~Loss)	3

	Condensed Consolidated Statements of Stockholders’ Equity (Deficit)	4

	Condensed Consolidated Statements of Cash Flows	65

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3226

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4736

Item 4.	Controls and Procedures	4736

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	4837

Item 1A.	Risk Factors	4938

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5340

Item 3.	Defaults Upon Senior Securities	5340

Item 4.	Mine Safety Disclosures	5340

Item 5.	Other Information	5340

Item 6.	Exhibits	5441

Signatures		5542

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

	Three Months Ended September 30, 2020
	Common Stock					Additional Paid-in		Treasury Stock					Accumulated Other Comprehensive			Accumulated			Total Stockholders' Equity
	Shares			Amount		Capital		Shares		Amount			Income (Loss)			Deficit			(Deficit)
Balance as of June 30, 2020		27,999,713		$	3	$	74,284		2,258,510	$	(24,218	)	$	(1,115	)	$	(57,944	)	$	(8,990	)
Common stock repurchased in connection with forward share purchase agreements		(539,548	)		—		6,213		539,548		(6,213	)		—			—			—
Stock-based compensation (RSUs)		30,000			—		4,922		—		—			—			—			4,922
Proceeds from issuance of common stock in public offering, net of issuance costs		984,916			—		4,155		—		—			—			—			4,155
Net loss		—			—		—		—		—			—			(5,333	)		(5,333	)
Other comprehensive loss		—			—		—		—		—			(618	)		—			(618	)
Balance as of September 30, 2020		28,475,081		$	3	$	89,574		2,798,058	$	(30,431	)	$	(1,733	)	$	(63,277	)	$	(5,864	)

	Three Months Ended September 30, 2019
	Common Stock				Additional Paid-in		Treasury Stock				Accumulated Other Comprehensive		Accumulated			Total Stockholders' Equity
	Shares		Amount		Capital(3)		Shares		Amount		Income (Loss)		Deficit			(Deficit)
Balance as of June 30, 2019		10,687,106	$	1	$	10,186		—	$	—	$	375	$	(7,973	)	$	2,589
Net income		—		—		—		—		—		—		812			812
Other comprehensive income		—		—		—		—		—		643		—			643
Balance as of September 30, 2019 (3)		10,687,106	$	1	$	10,186		—	$	—	$	1,018	$	(7,161	)	$	4,044

	Fair Value Hierarchy as of December 31, 2020						Aggregate
	Level 1		Level 2		Level 3		Fair Value
Assets:
Mutual funds (1)	$	590	$	—	$	—	$	590
Certificates of deposit (2)		—		4,253		—		4,253
Total Assets	$	590	$	4,253	$	—	$	4,843
Liabilities
Interest Rate Swap (3)	$	—	$	109	$	—	$	109
Debt for forward share purchase agreements (4)		—		483		—		483
Total Liabilities	$	—	$	592	$	—	$	592

	Fair Value Beginning of Period		Net Realized and Unrealized (Gains) Losses Included in Income			Other Comprehensive (Income) Loss			Purchases, Sales, Issuances and Settlements, Net			Change in Scope of Consolidation		Gross Transfers In		Fair Value End of Period
Three and nine months ended September 30, 2020
Liabilities:
Preference shares	$	2,530	$	(2,486	)	$	(42	)	$	(2	)	$	—	$	—	$	—

		Three Months Ended March 31,
Derivatives Not Designed As Hedging Instruments	Line Items	2021		2020
Interest Rate Swap	Financial expense, net	$	13	$	7
Total		$	13	$	7

Balance as of December 31, 2019	$	16,953
Effect of exchange rate		(395	)
Balance as of September 30, 2020	$	16,558

	Cumulative Foreign Currency Translation Adjustment			Cumulative net unrealized gain (loss) on marketable securities, net of tax			Accumulated Other Comprehensive Income (Loss)
As of December 31, 2020	$	(2,836	)	$	10		$	(2,826	)
Other comprehensive income (loss), net of tax		1,105			(4	)		1,101
As of March 31, 2021	$	(1,731	)	$	6		$	(1,725	)

	As of March 31, 2021
	Operating leases		Capital leases		Total
2021 (remaining nine months)	$	491	$	109	$	600
2022		528		75		603
2023		434		62		496
2024		335		62		397
2025		308		18		326
2026 and thereafter		130		—		130
Total minimum lease payments	$	2,226	$	326	$	2,552

	As of March 31, 2021
	Capital leases
Total payments	$	326
Less: interest portion		26
Net capital lease obligation		300
Less: current portion		125
Long term portion	$	175

	ISSUER PURCHASES OF EQUITY SECURITIES
Period	(a) Total number of shares (or units) purchased		(b) Average price paid per share (or unit)		(c) Total number of shares (or units) purchased as part of publicly announced plans or programs		(d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
July 1, 2020 – July 31, 2020 (1)		539,548	$	11.70		539,548		—
August 1, 2020 – August 31, 2020		—	$	—		—		—
September 1, 2020 – September 30, 2020		—	$	—		—		—
Total		539,548	$	11.70		539,548		—

Exhibit No.		Description

31.1*		Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

	KALEYRA, INC.

Dated: ~~November 9, 2020~~May 10, 2021	By:	/s/ Dario Calogero
	Name:	Dario Calogero
	Title:	Chief Executive Officer, and President (Principal Executive Officer)

	KALEYRA, INC.

Dated: ~~November 9, 2020~~May 10, 2021	By:	/s/ Giacomo Dall’Aglio
	Name:	Giacomo Dall’Aglio
	Title:	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)