NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
(UNAUDITED)
1. BUSINESS ORGANIZATION, NATURE OF OPERATIONS, BASIS OF PRESENTATION AND RISKS AND UNCERTAINTIES
Organization
and Operations
Blink
Charging Co., through its wholly-owned subsidiaries (collectively, the “Company” or “Blink”), is a leading owner,
operator, and provider of electric vehicle (“EV”) charging equipment and networked EV charging services. Blink offers residential
and commercial EV charging equipment, enabling EV drivers to recharge at various location types. Blink’s principal line of products
and services is its Blink EV charging network (the “Blink Network”) and Blink EV charging equipment, also known as electric
vehicle supply equipment (“EVSE”) and other EV-related services. The Blink Network provides property owners, managers, parking
companies, and state and municipal entities (“Property Partners”) with cloud-based services that enable the remote monitoring
and management of EV charging stations. The Blink Network also provides EV drivers with vital station information, including station
location, availability and fees. Blink also operates a ride-sharing program through the Company’s wholly owned subsidiary, BlueLA
Rideshare, LLC and the City of Los Angeles which allows customers the ability to rent electric vehicles through a subscription service.
Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form
10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for
complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring
items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of
March 31, 2022 and for the three months then ended. The results of operations for the three months ended March 31, 2022 are not necessarily
indicative of the operating results for the full year ending December 31, 2021 or any other period. These unaudited condensed consolidated
financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures of the
Company as of December 31, 2021 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”)
on March 16, 2022 as part of the Company’s Annual Report on Form 10-K.
Risks
and Uncertainties
The
Covid-19 pandemic has impacted global stock markets and economies. The Company closely monitors the impact of the continuing presence
of Covid-19 and multiple Covid-19 variants. The Company has taken and continues to take precautions to ensure the safety of its employees,
customers and business partners, while assuring business continuity and reliable service and support to its customers. The Company continues
to receive orders for its products, although some shipments of equipment have been temporarily delayed. The global chip shortage and
supply chain disruption has caused some delays in equipment orders from its contract manufacturer. As federal, state and local economies
begin to return to pre-pandemic levels, the Company expects demand for charging station usage to increase, however, the Company is unable
to predict the extent of such recovery due to the uncertainty of Covid-19. As a result, the Company is unable to predict the ultimate
impact of equipment order delays, chip shortage and continuous presence of Covid-19 will have on its business, future results of operations,
financial position, or cash flows.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Since
the Annual Report for the year ended December 31, 2021, there have been no material changes to the Company’s significant accounting
policies, except as disclosed in this note.
FOREIGN
CURRENCY TRANSLATION
The
Company’s reporting currency is the United States dollar. The functional currency of certain subsidiaries is the Euro and the Indian
Rupee. Assets and liabilities are translated based on the exchange rates at the balance sheet date (1.1112
for the Euro and
0.0132
for the Indian Rupee
as of March 31, 2022), while expense accounts are translated at the weighted average exchange rate for the period (1.1219
for the Euro and 0.0133
for the Indian Rupee
for the three months ended March 31, 2022). Equity accounts are translated at historical exchange rates. The resulting translation adjustments
are recognized in stockholders’ equity as a component of accumulated other comprehensive income. Comprehensive income (loss) is
defined as the change in equity of an entity from all sources other than investments by owners or distributions to owners and includes
foreign currency translation adjustments as described above. Transaction gains and losses are charged to the statement of operations
as incurred. Transaction gains attributable to foreign exchange were $3
during the three
months ended March 31, 2022.
REVENUE
RECOGNITION
The
Company recognizes revenue primarily from five different types of contracts:
● |
Charging
service revenue – company-owned charging stations - Revenue is recognized at the point when a particular charging session
is completed. |
● |
Product
sales – Revenue is recognized at the point where the customer obtains control of the goods and the Company satisfies its
performance obligation, which generally is at the time it ships the product to the customer. |
● |
Network
fees and other – Represents a stand-ready obligation whereby the Company is obligated to perform over a period of time
and, as a result, revenue is recognized on a straight-line basis over the contract term. Network fees are billed annually. |
● |
Ride-sharing
services – Primarily related to ride-sharing services agreement with the City of Los Angeles which allows customers the
ability to rent electric vehicles through a subscription service. The Company recognizes revenue over the contractual period of performance
of the subscription. |
● |
Other
– Primarily related to charging service revenue from non-company-owned charging stations. Revenue is recognized from non-company-owned
charging stations at the point when a particular charging session is completed in accordance with a contractual relationship between
the Company and the owner of the station. Other revenues also comprises of revenues generated from alternative fuel credits. |
The
following table summarizes revenue recognized under ASC 606 in the condensed consolidated statements of operations:
SCHEDULE OF REVENUE RECOGNITION BY CONTRACT
| |
| | |
| |
| |
For The Three Months Ended | |
| |
March 31, | |
| |
2022 | | |
2021 | |
Revenues - Recognized at a Point in Time | |
| | | |
| | |
Product sales | |
$ | 8,052 | | |
$ | 1,671 | |
Charging service revenue - company-owned charging stations | |
| 1,107 | | |
| 182 | |
Other | |
| 99 | | |
| 60 | |
Total Revenues - Recognized at a Point in Time | |
| 9,258 | | |
| 1,913 | |
| |
| | | |
| | |
Revenues - Recognized Over a Period of Time: | |
| | | |
| | |
Ride-sharing services | |
| 239 | | |
| 46 | |
Network and other fees | |
| 228 | | |
| 123 | |
Total Revenues - Recognized Over a Period of Time | |
| 467 | | |
| 169 | |
| |
| | | |
| | |
Total Revenue | |
$ | 9,725 | | |
$ | 2,082 | |
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
REVENUE
RECOGNITION – CONTINUED
The
following table summarizes our revenue recognized under ASC 606 in the consolidated statements of operations by geographical area:
SCHEDULE OF REVENUE RECOGNITION BY GEOGRAPHICAL AREA
| |
| | |
| |
| |
For The Three Months Ended | |
| |
March 31, | |
| |
2022 | | |
2021 | |
Revenues by Geographical Area | |
| | | |
| | |
U.S.A | |
$ | 5,781 | | |
$ | 1,085 | |
International | |
| 3,944 | | |
| 997 | |
Total Revenue | |
$ | 9,725 | | |
$ | 2,082 | |
The
timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when
revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the
provision of the related goods or services, the Company records deferred revenue until the performance obligations are satisfied.
As
of March 31, 2022, the Company had $3,402
related to contract liabilities where performance
obligations have not yet been satisfied, which has been included within deferred revenue on the condensed consolidated balance sheet
as of March 31, 2022. The Company expects to satisfy $2,741
of its remaining performance obligations
for network fees, charging services, warranty revenue, product sales, and other and recognize the revenue within the next twelve months.
During
the three months ended March 31, 2022, the Company recognized $181 of revenues related to network fees and warranty contracts, which
were included in deferred revenues as of December 31, 2021. During the three months ended March 31, 2022, there was no revenue recognized
from performance obligations satisfied (or partially satisfied) in previous periods.
Grants
and rebates which are not within the scope of ASC 606, pertaining to revenues and periodic expenses are recognized as income when the
related revenue and/or periodic expense are recorded. Grants and rebates related to EV charging stations and their installation are deferred
and amortized in a manner consistent with the related depreciation expense of the related asset over their useful lives over the useful
life of the charging station. During the three months ended March 31, 2022 and 2021, the Company recorded $75 and $150, respectively,
related to grant and rebate revenue. At March 31, 2022 and December 31, 2021, there was $70 of deferred grant and rebate revenue to be
amortized.
CONCENTRATIONS
As
of March 31, 2022, accounts receivable from a significant customer were approximately 17%
of total accounts
receivable. As of December 31, 2021, accounts receivable from a significant customer were approximately 18%
of total accounts receivable. During the three months
ended March 31, 2022, sales to a significant customer represented 13%
of total revenue and sales to another significant
customer represented 12% of total revenue. During the three months ended March 31, 2021, sales to a significant customer represented
21%
of total revenue and another significant customer represented 20%
of total revenues. During the three months ended March 31, 2022 and 2021, the Company made purchases
from a significant supplier that represented 14%
and 28% of total purchases,
respectively.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
NET
LOSS PER COMMON SHARE
Basic
net loss per common share is computed by dividing net loss attributable to common shareholders by the weighted average number of common
shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common shareholders
by the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding
if the common share equivalents had been issued (computed using the treasury stock or if converted method), if dilutive.
The
following common share equivalents are excluded from the calculation of weighted average common shares outstanding because their inclusion
would have been anti-dilutive:
SCHEDULE OF OUTSTANDING DILUTED SHARES EXCLUDED FROM DILUTED LOSS PER SHARE COMPUTATION
| |
| | |
| |
| |
For the Three Months Ended | |
| |
March 31, | |
| |
2022 | | |
2021 | |
Warrants | |
| 3,257,989 | | |
| 3,510,129 | |
Options | |
| 977,473 | | |
| 644,987 | |
Unvested restricted common stock | |
| - | | |
| 48,819 | |
Total potentially dilutive shares | |
| 4,235,462 | | |
| 4,203,935 | |
3. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued
expenses consist of the following:
SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
| |
March 31,
2022 | | |
December 31,
2021 | |
| |
(unaudited) | | |
| |
Accrued host fees | |
$ | 130 | | |
$ | 130 | |
Accrued professional, board and other fees | |
| 323 | | |
| 543 | |
Accrued wages | |
| 4,022 | | |
| 2,678 | |
Accrued commissions | |
| 233 | | |
| 144 | |
Warranty payable | |
| 8 | | |
| 10 | |
Accrued income, property and sales taxes payable | |
| 198 | | |
| 462 | |
Accrued issuable equity | |
| 486 | | |
| 454 | |
Accrued purchases | |
| - | | |
| 117 | |
Internal use software liability | |
| 364 | | |
| 383 | |
Other accrued expenses | |
| 1,142 | | |
| 757 | |
Total accrued expenses | |
$ | 6,906 | | |
$ | 5,678 | |
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
(UNAUDITED)
4. STOCKHOLDERS’ EQUITY
COMMON
STOCK
During
the three months ended March 31, 2022, the Company issued an aggregate of 16,811
shares of common stock pursuant to exercises of warrants to purchase an aggregate of
16,811 shares of common stock for aggregate net proceeds of $69.
During
the three months ended March 31, 2022, the Company issued an aggregate of 144,497 shares of common stock for services to employees and
consultants with an aggregate issuance date fair value of $331.
STOCK-BASED
COMPENSATION
The
Company recognized stock-based compensation expense related to common stock, stock options and warrants for the three months ended March
31, 2022 and 2021 of $1,962 and $415, respectively, which is included within compensation expense on the condensed consolidated statements
of operations. As of March 31, 2022, there was $5,692 of unrecognized stock-based compensation expense that will be recognized over the
weighted average remaining vesting period of 1.84 years.
5. RELATED PARTY TRANSACTIONS
See
Note 7 – Commitments and Contingencies – Purchase Commitments for disclosure of a commitment made to a related party.
JOINT
VENTURE
The
Company and a group of three
Cyprus entities entered into a shareholders’
agreement on February 11, 2019, pertaining to the parties’ respective shareholdings in a new joint venture entity, Blink Charging
Europe Ltd. (the “Entity”), that was formed under the laws of Cyprus on the same date. Pursuant to the agreement, the Company
is not required to fund operating losses. The Company owns 40%
of the Entity while the other three entities own 60%
of the Entity. The Entity currently owns 100%
of a Greek subsidiary, Blink Charging Hellas SA (“Hellas”), which started operations in the Greek EV market. There are currently
no plans for the Company to make any capital contributions or investments. During the three months ended March 31, 2022 and 2021, the
Company recognized sales of $68
and $477,
respectively, to Hellas. As of March 31, 2022 and December 31, 2021 the Company had a receivable from Hellas of approximately
$0
and
$6,
respectively. The Company determined that the Entity is a variable interest entity, however, the Company does not have a controlling
financial interest and, as a result, the Company is not required to consolidate the Entity and instead has applied equity method accounting
to its investment in the Entity. From inception through March 31, 2022, the Entity has not generated net income and, as a result, pursuant
to ASC 323, the Company has not recorded a gain or loss on its equity method investment in the Entity during the three months ended March
31, 2022 and 2021.
BLUE
CORNER
As
of March 31, 2022, three senior management employees in the recently acquired entity Blue Corner had an ownership interest in a major
supplier of charging equipment for Blue Corner. As of March 31, 2022 and December 31, 2021, the Company owed approximately $43
and $800
to this supplier, respectively. During the three
months ended March 31, 2022, the Company purchased approximately $1,512
of inventory from this supplier.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
(UNAUDITED)
6. LEASES
OPERATING
LEASES
As
of March 31, 2022, the Company had no leases
that were classified as a financing lease.
As of March 31, 2022, the Company had additional operating leases for vehicles obtained in relation to the operations of Blink
Mobility. As of March 31, 2022, the leases had not commenced since the vehicles were not available to the Company until the second quarter
of 2022. The duration of the leases are three years and the Company is expected to pay approximately $1,044 throughout the term.
Total
operating lease expenses for the three months ended March 31, 2022 and 2021 were $168 and $170, respectively, and are recorded in other
operating expenses on the condensed consolidated statements of operations.
Supplemental
cash flows information related to leases was as follows:
SCHEDULE OF SUPPLEMENTAL CASH FLOWS INFORMATION RELATED TO LEASES
| |
For The Three Months Ended | |
| |
March 31, | |
| |
2022 | | |
2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | |
| | | |
| | |
Operating cash flows from operating leases | |
| | | |
| | |
| |
$ | 66 | | |
$ | 169 | |
Right-of-use assets obtained in exchange for lease obligations: | |
| | | |
| | |
Operating leases | |
| | | |
| | |
| |
$ | - | | |
$ | 1,358 | |
Weighted Average Remaining Lease Term | |
| | | |
| | |
Operating leases | |
| | | |
| | |
| |
| 4.65 | | |
| 5.96 | |
Weighted Average Discount Rate | |
| | | |
| | |
Operating leases | |
| | | |
| | |
| |
| 4.7 | % | |
| 4.9 | % |
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
(UNAUDITED)
6. LEASES – CONTINUED
Future
minimum payments under non-cancellable leases as of March 31, 2022 were as follows:
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
For the Years Ending December 31, | |
Amount | |
2022 | |
$ | 862 | |
2023 | |
| 330 | |
2024 | |
| 236 | |
2025 | |
| 236 | |
2026 | |
| 236 | |
Thereafter | |
| 336 | |
Total future minimum lease payments | |
| 2,236 | |
Less: imputed interest | |
| (227 | ) |
Total | |
$ | 2,009 | |
7. COMMITMENTS AND CONTINGENCIES
PURCHASE
COMMITMENTS
As
of March 31, 2022, the Company had purchase commitments of approximately $35,000
of which, approximately $13,000
is with a related party, which will become payable
upon the suppliers’ delivery of the charging stations and other related items. The purchase commitments were made primarily for
future sales, deployments of charging stations, inventory management planning and other related items, all of which are expected to be
received during the next 12-24 months.
LITIGATION
AND DISPUTES
On
August 24, 2020, a purported securities class action lawsuit, captioned Bush v. Blink Charging Co. et al., Case No. 20-cv-23527, was
filed in the United States District Court for the Southern District of Florida against the Company, Michael Farkas (Blink’s Chairman
of the Board and Chief Executive Officer), and Michael Rama (Blink’s Chief Financial Officer) (the “Bush Lawsuit”).
On September 1, 2020, another purported securities class action lawsuit, captioned Vittoria v. Blink Charging Co. et al., Case No. 20-cv-23643,
was filed in the United States District Court for the Southern District of Florida against the same defendants and seeking to recover
the same alleged damages (the “Vittoria Lawsuit”). On October 1, 2020, the court consolidated the Vittoria Lawsuit with the
Bush Lawsuit and on December 21, 2020 the court appointed Tianyou Wu, Alexander Yu and H. Marc Joseph to serve as the Co-Lead Plaintiffs.
The Co-Lead Plaintiffs filed an Amended Complaint on February 19, 2021. The Amended Complaint alleges, among other things, that the defendants
made false or misleading statements about the size and functionality of the Blink Network, and asserts claims under Sections 10(b) and
20(a) of the Securities Exchange Act of 1934. The Amended Complaint does not quantify damages but seeks to recover damages on behalf
of investors who purchased or otherwise acquired Blink’s common stock between March 6, 2020 and August 19, 2020. On April 20, 2021,
Blink and the other defendants filed a motion to dismiss the Amended Complaint, which has now been fully briefed and is ready for review.
On April 7, 2022, the court held oral argument on the motion to dismiss but did not issue a decision. The Company wholly and completely
disputes the allegations therein. The Company has retained legal counsel in order to defend the action vigorously. The Company has not
recorded an accrual related to this matter as of March 31, 2022 as it determined that any such loss contingency was either not probable
or estimable.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
(UNAUDITED)
7. COMMITMENTS AND CONTINGENCIES – CONTINUED
LITIGATION
AND DISPUTES – CONTINUED
On
September 15, 2020, a shareholder derivative lawsuit, captioned Klein (derivatively on behalf of Blink Charging Co.) v. Farkas et al.,
Case No. 20- 19815CA01, was filed in Miami-Dade County Circuit Court seeking to pursue claims belonging to the Company against Blink’s
Board of Directors and Michael Rama (the “Klein Lawsuit”). Blink is named as a nominal defendant. The Klein Lawsuit asserts
that the Director defendants caused Blink to make the statements that are at issue in the securities class action and, as a result, the
Company will incur costs defending against the consolidated Bush Lawsuit and other unidentified investigations. The Klein Lawsuit asserts
claims against the Director defendants for breach of fiduciary duties and corporate waste and against all of the defendants for unjust
enrichment. Klein did not quantify the alleged damages in his complaint, but he seeks damages sustained by the Company as a result of
the defendants’ breaches of fiduciary duties, corporate governance changes, restitution, and disgorgement of profits from the defendants
and attorneys’ fees and other litigation expenses. The parties agreed to temporarily stay the Klein Lawsuit until there is a ruling
on the motion to dismiss filed in the consolidated Bush Lawsuit. The Company has not recorded an accrual related to this matter as of
March 31, 2022 as it determined that any such loss contingency was either not probable or estimable.
On
December 23, 2020, another shareholder derivative action, captioned Bhatia (derivatively on behalf of Blink Charging Co.) v. Farkas et
al., Case No. 20-27632CA01, was filed in Miami-Dade County Circuit Court against the same defendants sued in the Klein Lawsuit and asserting
similar claims, as well as additional claims relating to the Company’s nomination, appointment and hiring of minorities and women
and the Company’s decision to retain its outside auditor (the “Bhatia Lawsuit”). On February 17, 2021, the parties
agreed to consolidate the Klein and Bhatia actions, which the court consolidated under the caption In re Blink Charging Company Stockholder
Derivative Litigation, Lead Case No. 2020-019815-CA-01. The parties also agreed to keep in place the temporary stay. The court subsequently
vacated the consolidation order and explained the parties should first file a motion to transfer, which the parties have done. The Company
wholly and completely disputes the allegations therein. The Company has retained legal counsel in order to defend the action vigorously.
The Company has not recorded an accrual related to this matter as of March 31, 2022 as it determined that any such loss contingency was
either not probable or estimable.
On
February 12, 2021, another shareholder derivative lawsuit, captioned Wolery (derivatively on behalf of Blink Charging Co.) v. Buffalino
et al., Case No. A-21-829395-C, was filed in the Eighth Judicial District Court in Clark County, Nevada seeking to pursue claims belonging
to the Company against Blink’s Board of Directors (the “Wolery Lawsuit”). Blink is named as a nominal defendant. The
Wolery complaint alleges that the amount of restricted stock awarded to Blink’s outside directors in December 2020 exceeded the
amounts permitted by Blink’s incentive compensation plan. The complaint asks the court to rescind the excess restricted stock awards,
as well as other relief. On September 15, 2021, the parties entered into a term sheet in which they agreed to settle the claims subject
to the court’s approval. On April 18, 2022, the court signed a final judgment approving the settlement and dismissing the lawsuit
with prejudice. As a result of the settlement, the Company has agreed to make certain changes to its compensation practices for its directors
and officers, including, among other things, eliminating the practice of making cash payments to directors to cover expected income taxes
on stock grants and placing a $200 annual limit for two years on the combined stock and cash Awards to outside directors. The defendants
do not admit any liability or wrongdoing in the settlement and will not make any cash payment as part of the settlement, but the Company
will be responsible for paying the costs to give notice of the settlement to the Company’s shareholders and to pay $190 in attorney’s
fees to the plaintiff’s counsel which was accrued for as of March 31, 2022 and December 31, 2021, which was paid in April 2022.
On
February 7, 2022, another shareholder derivative lawsuit, captioned McCauley (derivatively on behalf of Blink Charging Co.) v. Farkas
et al., Case No. A-22-847894-C, was filed in the Eighth Judicial District Court in Clark County, Nevada, seeking to pursue claims belonging
to the Company against six of Blink’s directors and Michael Rama (the “McCauley Lawsuit”). Blink is named as a nominal
defendant. The complaint filed in the McCauley Lawsuit asserts similar allegations to the Klein Lawsuit relating to the statements at
issue in the securities class action and asserts claims for breach of fiduciary duty and unjust enrichment. The McCauley Lawsuit seeks
both injunctive and monetary relief from the individual defendants, as well as an award of attorneys’ fees and costs. On March
29, 2022, the Nevada court approved the parties’ stipulation to temporarily stay the McCauley Lawsuit until there is a ruling on
the motion to dismiss filed in the consolidated Bush Lawsuit. The Company has not recorded an accrual related to this matter as of March
31, 2022 as it determined that any such loss contingency was either not probable or estimable.
WARRANTY
The
Company estimates an approximate cost of $155 to repair deployed chargers, which the Company owns as of March 31, 2022.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
(UNAUDITED)
7. COMMITMENTS AND CONTINGENCIES – CONTINUED
CHARGING
NETWORK UPGRADES
As
electric vehicle charging requirements and technologies change, driven by federal, state or local regulatory authorities or by electric
vehicle manufacturers or other technology or services providers for the charging station industry, in particular cellular connectivity
technology, the Company may need to upgrade or adapt its charging station products or introduce new products in order to serve new vehicles,
conform to new standards, or adapt new technologies to serve existing customers or new customers at substantial research, development,
and network upgrades costs. During 2021, many cellular technology providers announced they will require the upgrade from 2G/3G connectivity
to 4G LTE during 2022 (the “Upgrade”). As of March 31, 2022, the Company estimates the Upgrade will cost approximately
$1,785 to
upgrade certain of the Company’s owned and operated EV charging stations.
8. SUBSEQUENT EVENTS
ACQUISITION
On
April 22, 2022, pursuant to a Sale and Purchase Agreement dated April 22, 2022, the Company closed and acquired, through its
Dutch subsidiary, Blink Holdings B.V., all of the outstanding capital stock of Electric Blue Limited, a private company limited by
shares and registered in England and Wales (“EB”), from its shareholders. Headquartered in St. Albans, United Kingdom, EB
is a leading, independently owned provider of electric vehicle charging and sustainable energy solutions and technologies. EB works with
local authorities and businesses to create the infrastructure the United Kingdom needs to meet the 2050 net zero emissions target and
prepare for the 2030 ban on the sale of new petrol and diesel cars and vans.
The
purchase price for the acquisition of all of EB’s outstanding capital stock was up to 18,000
British Pounds (“GBP”) (approximately
$23,400),
consisting of 10,000
GBP (approximately $13,000)
in cash, and 3,000
GBP (approximately $3,900)
represented by 152,803
shares of the Company’s common stock
(the “Consideration Shares”). The number of Consideration Shares was calculated based on the volume weighted average price
of the Company’s common stock during the 30 consecutive trading days ending on the closing date of the Sale and Purchase
Agreement, which equalled $25.17
per share.
The
Company also agreed in the Sale and Purchase Agreement, provided EB reaches specified gross revenue or new EV charger installation targets
over the three years post-closing, to issue up to 5,000
GBP (approximately $6,500)
in additional shares of its common stock to EB shareholders (the “Earn-Out”).
Of
the Consideration Shares to be issued to the EB shareholders at closing, the sum of 500 GBP (approximately $650) in cash and 25,466 shares
of common stock (valued at 500 GBP or approximately $650) are being held in escrow accounts for periods of 12 months (cash escrow) and
18 months (stock escrow), respectively, following the closing to cover any losses or damages the Company may incur by reason of, among
other things, any misrepresentation or breach of warranty by EB under the Sale and Purchase Agreement.
LETTER
OF INTENT
On
April 19, 2022, the Company signed a non-binding letter of intent with a U.S. privately-held company (the “Target”) providing
for the possible purchase by the Company of all of the outstanding shares of the Target from its shareholders in consideration for cash,
a note and, under certain circumstances, shares of common stock of a subsidiary of the Company or, if such subsidiary’s shares
are not publicly-traded, common stock of the Company. In addition, in the letter of intent, the Company agreed to extend a loan of $1,000
to the Target (the “Loan”), which was subsequently made by the Company pursuant to a 6%
Secured Convertible Promissory Note signed by
the Target. Under the terms of the Loan, if the Company proceeds with the possible stock purchase of the Target, the principal and accrued
interest amount under the Loan will be deducted from the cash consideration paid to the Target’s shareholders at closing. If, however,
the Company determines not to proceed with the possible stock purchase of the Target, the Loan will continue to accrue 6%
interest per annum, and mature on the earliest
of (i) a “Change of Control” (as defined); (ii) the closing of the next investment round by the Target; (iii) an Event of
Default (as defined); or (iv) May 1, 2027.