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PART
I
Overview
Blink
Charging Co., through its consolidated owned subsidiaries, is a leading manufacturer, owner, operator, and provider of electric vehicle (“EV”) charging equipment and networked EV charging services in the rapidly growing
U.S. and international markets for EVs. Blink offers residential and commercial EV charging equipment and services, enabling EV
drivers to recharge at various location types. Blink’s principal line of products and services is its nationwide Blink
EV charging networks (the “Blink Networks”) and Blink EV charging equipment, also known as electric vehicle supply
equipment (“EVSE”), and other EV-related services. The Blink Networks are a proprietary, cloud-based system that operates,
maintains and manages Blink charging stations and handles the associated charging data, back-end operations and payment
processing. The Blink Networks provide property owners, managers, parking companies, and state and municipal entities
(“Property Partners”), among other types of commercial customers, with cloud-based services that enable the remote
monitoring and management of EV charging stations. The Blink Networks also provide EV drivers with vital station information,
including station location, availability, and fees (as applicable).
In
order to capture more revenues derived from providing EV charging equipment to commercial customers and to help differentiate Blink in
the EV infrastructure market, Blink offers Property Partners a comprehensive range of solutions for EV charging equipment and services
that generally fall into one of the business models below, differentiated by who bears the costs of installation, equipment, maintenance,
and the percentage of revenue shared.
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In
our Blink-owned turnkey business model, we incur the costs of the charging equipment and installation. We own and operate
the EV charging station and provide connectivity of the charging station to the Blink Networks. In this model, which favors recurring
revenues, we incur most costs associated with the EV charging stations; thus, we retain substantially all EV charging revenues
after deducting network connectivity and processing fees. Typically, our agreement with the Property Partner lasts seven years with
extensions that can bring it to a total of up to 21 years. |
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In
our Blink-owned hybrid business model, we incur the costs of the charging equipment while the Property Partner incurs the
costs of installation. We own and operate the EV charging station and provide connectivity to the Blink Networks. In this model, the
Property Partner incurs the installation costs associated with the EV station; thus, we share a more generous portion of the EV
charging revenues with the Property Partner generated from the EV charging station after deducting network connectivity and
processing fees. Typically, our agreement with the Property Partner lasts five years with extensions that can bring it up to 15
years. |
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In
our host-owned business model, the Property Partner purchases, owns and operates the Blink EV charging station and incurs
the installation costs. We work with the Property Partner by providing site recommendations, connectivity to the Blink Networks,
payment processing, and optional maintenance services. In this model, the Property Partner retains and keeps all the EV charging
revenues after deducting network connectivity and processing fees. |
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In
our Blink-as-a-Service model, we own and operate the EV charging station, while the Property Partner incurs the installation
costs. The Property Partner pays us a fixed monthly fee for the service and keeps all the EV charging revenues after deducting network connectivity and processing fees. Typically, our
agreement with the Property owner lasts five years. |
We
also own and operate a ride-sharing program through our wholly owned subsidiary, BlueLA Rideshare, LLC (“BlueLA”), with
the City of Los Angeles. The program allows customers the ability to rent electric vehicles through a subscription service and
charge those cars through our charging stations.
As
part of our mission to facilitate the adoption of EVs through the deployment and operation of EV charging infrastructure globally,
we are dedicated to slowing climate change by reducing greenhouse gas emissions caused by road vehicles. With the goal of being a leader in the
build out of EV charging infrastructure and of maximizing our share of the EV charging market, we have established strategic
commercial, municipal and retail partnerships across industry verticals and encompassing numerous transit/destination locations, including
airports, auto dealers, healthcare/medical, hotels, mixed-use, municipal sites, multifamily residential and condos, parks and recreation
areas, parking lots, religious institutions, restaurants, retailers, schools and universities, stadiums, supermarkets, transportation
hubs, and workplace locations.
During
2022, we were awarded several new prominent customers including Mitsubishi, Cushman & Wakefield, Triple J, Q-Park, Best Buy,
UBS, Bosch Mexico, Porsche Puerto Rico and Guatemala, Veris Residential, Greystar, Cambium, and cities of Atlanta, Rockford, Newton,
Winslow, Leeds (UK) and others that expand our potential for unit sales and deployments. Through acquisitions of SemaConnect and
Electric Blue (“Electric Blue”) in 2022, we acquired a number of prominent customers such as Walgreens, Olive Garden,
Dunkin Donuts, Kaiser Permanente, Hilton, Ritz-Carlton, and many others. During 2021, we were awarded several prominent customers
including General Motors, Ford, Jaguar-Land Rover, Hyundai, Kia, Subaru, AutoNation, Berkshire-Hathaway Automotive, Bridgestone, the
City of San Antonio, the Related Group. Commensurate with these new business relationships, we also forged critical strategic
relationships with organizations that directly or indirectly influence EV charging stations purchase decisions. Examples include the
Florida Sheriff’s Association Cooperative, Illinois Region 1 Planning Council, AES El Salvador, and Vizient, which is the
largest member-driven healthcare performance improvement company in the United States, representing more than $130 billion in annual
purchasing volume.
In
2022, through the acquisitions of SemaConnect and Electric Blue, we added new offices in Bowie, Maryland and St. Albans, United
Kingdom and manufacturing facilities in Bowie, Maryland and Bangalore, India. These new office and manufacturing facilities add to
our expanding U.S. and international capacity to develop and manufacture hardware and innovate new software capabilities to better
meet the needs of an evolving EV charging landscape, while also serving as a key hub for operations serving the Europe, Asia Pacific
and Middle East regions. This expansion in footprint is within our strategic goal to grow our global engineering
teams and develop operational hubs to facilitate international expansion into new international regions.
As
of December 31, 2022, we sold or deployed 66,478 chargers, of which 50,167 were in the Blink Networks (31,320 Level 2 publicly accessible
commercial chargers, 17,613 Level 2 private commercial chargers, 199 DC Fast Charging EV publicly accessible chargers, 116 DC Fast Charging
EV private chargers, and 919 residential Level 2 Blink EV chargers, inclusive of 4,802 chargers pending to be commissioned). Included
in the Blink Networks are 4,851 chargers owned by us. The remaining 16,478 were non-networked, on other networks or international
sales or deployments (937 Level 2 commercial chargers, 151 DC Fast Charging chargers, 11,611 residential Level 2 Blink EV chargers, 2,311
sold to other U.S. networks, 1,221 sold internationally and 80 deployed internationally). The charger units noted above are net of swap-out
or replacement units.
Being
among the largest owner and operators of EV charging stations, we understand our corporate social responsibility and are committed
to making the world a cleaner, better place. By focusing on the environmental, social, and governance risks and opportunities for
our business, we continue to strengthen our position in the EV industry as a value-adding and responsible service provider within
the ecosystem. In maintaining sustainable procurement, we intend to persist in aligning ourselves with partners who also believe in
the betterment of society and use ethical business practices. As our technology develops, we are devoted to creating recycling
programs to ensure that older products are repurposed.
Industry
Overview
The
market for plug-in electric vehicles experienced significant growth in recent years with EV adoption hitting an all-time high with 6%
in 2022 in U.S. and growing 11% year over year. We anticipate this to continue to grow in 2023, driven by new EVs being introduced to
the market as major automakers ramp up their production of EVs, and sales are expected to increase as the technology continues to improve
and prices come down.
The
adoption of EVs was also propelled by the “Stay-at-Home Orders” in 2020 and the resulting reductions in global carbon dioxide
emissions that showcased the potential of cleaner, lower-emission air quality worldwide.
In
addition, the advancements made in battery technology have allowed EVs to achieve approximate cost parity with internal combustion engine
vehicles and have extended driving range and consumer confidence moving the market away from range anxiety toward range confidence, creating
further consumer demand.
We
also are seeing the U.S. Administration and private companies’ focus on climate initiatives and its large-scale commitment
and investment in developing and expanding the EV charging infrastructure making it easier for drivers to own and use EVs.
Electric
vehicle demand has also been spurred by government incentive and regulations at federal, state and local levels. Government agencies
around the world are expected to continue providing incentives for the purchase of EVs, and regulations may be introduced to reduce emissions
and encourage the use of clean energy vehicles. At the U.S. federal level, the Bipartisan Infrastructure Law is to provide $7.5 billion
for EV charging network across United States for both DCFC and Level 2 chargers. At state level, California, Oregon, New York, Maryland,
Massachusetts among other states, have created mandates for EVs to achieve more than 6.8 million EVs on the road by 2030 and many states
provide additional EV incentives to consumers. Further, a shift towards EV car-sharing has boosted the transition to EV fleets, leading
to increased EV charging station demand.
2022
saw a revolution made towards EVs and 2023 does not look to slow down as original equipment manufacturers (OEMs) continue to actively
invest in research and development to speed up the production and deployment of EVs. As governments around the world are providing incentives
and subsidies to promote the adoption of EVs, it is further fueling the growth of the industry.
The result is a rapidly expanding market for electric vehicles, with increasing numbers of models available and improved infrastructure
to support them. In 2022, many auto manufacturers such as Mercedes, Ford and General Motors brought dozens of new electric vehicle models
to market and much of this production kicks into gear starting in 2023 and 2024. Some estimates are that by 2025, there could be 74 different
electric vehicle models offered in North America as the number of EVs on U.S. roads is now projected to reach 26.4 million in 2030.
As
a pioneer in the EV charging industry, we continue to lead as market demands for a robust charging infrastructure increase. We are
the only EV charging company to offer complete vertical integration from research and development and manufacturing to EV charger
ownership and operations. This vertical integration creates unparalleled opportunities to control our supply chain and accelerate
our go-to-market speed while reducing operating costs. We believe this opportunistically positions us to meet this demand both
domestically and globally.
Our
EV Charging Solutions
We
offer a variety of EV charging products and services to Property Partners and EV drivers.
EV
Charging Solutions
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■ |
Level 2. We offer a wide range of Level 2 (AC) EV charging equipment, ideal for commercial and residential use, with the North American standard J1772 connector, and Level 2 chargers with the Type 2 connector compatible with electric vehicles in Europe and across Latin America. |
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Our commercial Level 2 chargers consist of the EQ, MQ, and IQ 200 families and the Series 4, 6, 7, and 8 families, which are available in pedestal wall mount and pole mount configurations, and the all-new Vision. The MQ and IQ 200 and the Series 6, 7, and 8 chargers offer an optional cable management system. We also offer three residential Level 2 chargers for the Americas, the wall-mounted HQ 150, HQ 200, Series 4, and one smart charging cable, the newly announced PQ 150, for European markets. Our commercial and residential chargers (except the non-networked HQ 150) can connect to the Blink Networks or a local network. Level 2 charging stations typically provide a full charge in two to eight hours. Level 2 chargers are ideally suited for low-cost installations and frequently used parking locations, such as workplaces, multifamily residential, retail and mixed-use, parking garages, municipalities, colleges/schools, hospitals and airports. |
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International
Products. We offer Level 2 AC and DC products for the rapidly expanding international markets targeted at the residential,
workplace, retail, parking garages, leasing companies, hospitality and other locations. These products are available with the Type
2 and CCS 2 connectors and included the recently announced PQ 150, Series 3 (an ideal product for the 2/3-wheeled vehicles), and
the EQ 200. |
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Mobile
Charger. We offer the IQ 200-M Level 2 charger for the mobile/emergency charging market which requires a portable charger
to be used for roadside or other use cases where a connection to the electricity grid is not available. |
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■ |
Advertising Solution. In January 2023, we announced an
enhanced advertising and charging solution in one product. This product, Vision, consists of a striking 55” LCD screen capable
of static and dynamic advertising and Level 2 charger with two charging ports, targeted at the retail, hospitality and high traffic
locations. |
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DCFC.
We offer a complete line of DC Fast Charging equipment (“DCFC”) that range from 30kW to 360kW, support the ‘CHAdeMo’
and the CCS1 connectors, and typically provide an 80% charge in less than 30 minutes. Installation of DCFC stations and grid requirements
are typically greater than Level 2 charging stations and are ideally suited for transportation hubs and locations between travel
destinations. These include the Series 9 30kW DC Fast Charger that works ideally for the fleet and auto dealership segments and is
available in wall and pedestal mount configurations, the Blink 30kW DC Fast Charger that boasts a small footprint providing up to
100 amps of output, and the Blink 60kW – 360kW DC Fast Charger that provides from 140 to 500 amps of power. |
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Blink
Networks. The all new, rebuilt from the ground-up Blink Networks are a cloud-based product that manages our network of EV chargers
around the world for remote monitoring, management, payment processing, customer support and other features required for operating
the Blink Networks of EV charging locations. |
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Blink Charging Mobile App. We offer our all-new Blink Charging Mobile App (iOS and Android) that provides EV drivers control by giving them improved search capabilities which allows them to search for nearby amenities, as well as chargers by zip-codes, city, business, category, or address, and expanded keyword search. |
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Fleet Management. We offer Fleet Management applications, targeted at commercial, municipal, and federal fleets that are interested in electrifying their fleets, for planning, managing, and optimizing their fleets for departure and energy costs. As a Sourcewell supplier, we are able to help municipalities streamline the procurement process. |
Competitive
Advantages/Operational Strengths
Long-Term
Contracts with Property Owners. We have strategic and often long-term agreements that include location exclusivity with Property
Partners across numerous transit/destination locations, including airports, car dealers, healthcare/medical, hotels, mixed-use, municipal
locations, multifamily residential and condo, parks and recreation areas, parking lots, religious institutions, restaurants, retailers,
schools and universities, stadiums, supermarkets, transportation hubs, and workplace locations. Property Partners include well-recognized
companies, large municipalities and local businesses. Representative examples include the City of Miami Beach, City of Chula Vista, City
of Phoenix, City of Portland, City of Knoxville, City of San Antonio, City of Leeds (UK), University of San Diego, Ohlone College, ACE
Parking, Q-Park, Icon Parking, SP+ Parking, iPark, LAZ Parking, Reef Parking, Federal Realty, Equity Residential, Related Group, Johnson
& Johnson, Kaiser Permanente, Blessing Healthcare, Sony Pictures Entertainment, Starbucks, JBG Associates, Kroger Company, Fred Meyer
Stores, Inc., Fry’s Food & Drug, Inc., Raising Cane’s, McDonald’s, Carl’s Jr., Burger King, Olive Garden,
Walgreens and Ralphs Grocery Company. We continue to establish new contracts with Property Partners that previously secured our services
independently or had contracts with the EV service providers that we acquired in the past.
Vertically
Integrated Supply Chain, Engineering and Manufacturing. With the acquisition of SemaConnect, we have become the only vertically
integrated charging company in the United States and among the few in the world. We believe this strategy provides multiple benefits
among which are the bottom-up approach to design and engineering, compliance with “Buy American” hardware requirements, controlling
the supply chain timing and costs, ensuring adequate levels of inventory in constrained markets, and ability to capture the manufacturing
margin in a high-demand environment.
Differentiated
but Flexible Business Models. We own, operate and supply proprietary electric vehicle charging equipment and networked EV charging
services. We believe that our ability to flexibly provide various business models, including a comprehensive turnkey solution, to Property
Partners and leverage our technology to meet both Property Partners’ and EV drivers’ needs provides us competitive advantage
in addition to more compelling long-term growth opportunities than possible through equipment sales only.
Ownership
and Control of EV Charging Stations and Services. We own a considerable percentage of our charging stations, which is a significant
differentiation between us and some of our primary competitors. This ownership model allows us to control the settings and pricing for
our EV charging services, service the equipment as necessary, and have more effective brand management and price uniformity. As for those
stations that we do not own, we are using our best efforts to encourage their owners to keep the stations operating in good order and,
in some cases, to replace faulty stations with our new charging stations equipment.
Experience
with Products and Services of Other EV Charging Service Providers. From our early days and through our acquisitions, we have
had the experience of owning and operating EV charging equipment manufactured by other EV charging service providers, including General
Electric, ChargePoint, Tellus, and Tritium. This experience has provided us with the working knowledge of other equipment manufacturers’
benefits and drawbacks and their applicable EV charging networks.
Our
Growth Strategy
Our
objective is to continue becoming a vertically integrated leading provider of EV charging solutions by deploying mass-scale EV charging
infrastructure. By doing so, we aim to enable the accelerated growth of EV adoption and the EV industry. Key elements of our growth strategy
include:
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Pursue
Strategic Opportunities to Expand Blink-Owned Turnkey and Hybrid Models. We have structured our business to identify and
pursue opportunities to develop Blink’s owner and operator business model with locations with potential high utilization, where
grant funds are available, and where we can realize long-term benefit for the EV charging location and establish long-term recurring
revenue relationships. |
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Relentless
Focus on Customer Satisfaction. We aim to increase overall customer satisfaction with new and existing Property Partners
and EV drivers by upgrading and expanding the EV charging footprint throughout high-demand, high-density geographic areas. Another
objective is to improve productivity and utilization of existing EV charging stations and enhance the valuable features of our EV
charging station hardware and the Blink Networks. |
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Continue
to Invest in Technology Innovations. We will continue to enhance the product offerings available in our EV charging hardware,
cloud-based software, and networking capability. In October 2022, we unveiled our all-new Blink Networks and Blink Charging
Mobile App, redesigned from the ground-up, with industry-leading architecture, improving reliability, user experience, and flexibility
capable of iterating as the industry matures. The new Network is capable of serving a wide variety of EV equipment, languages, currencies,
and applications, allowing Blink to stay competitive in the fast-moving EV charging landscape. Concurrently, the new mobile app creates
a seamless driver charging experience across the globe. Our key service solutions allow us to remain technology agnostic so that
we can onboard OCPP compliant equipment from other manufacturers onto our newly designed network. |
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Strengthen
and Support our Human Capital. Our experienced employees and management team are our most valuable resources. Attracting,
training, and retaining key personnel has been and will remain critical to our success. To achieve our human capital goals, we intend
to stay focused on providing our personnel with entrepreneurial opportunities to expand our business within their areas of expertise.
We will also continue to provide our personnel with personal and professional growth opportunities, including additional training,
performance-based incentives such as opportunities for stock ownership, and other competitive benefits. |
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Expand
Sales and Marketing Resources. We intend to invest in sales and marketing infrastructure to capitalize on the growth in the
market and expand our go-to-market strategy. Today, we use a direct sales force, as well as resellers, and will continue expanding
through the use of independent sales agents, utilities, solar distributors, contractors, automotive manufacturers and dealers. |
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Seek
Strategic Acquisition Opportunities. We seek domestic and international acquisition opportunities which will allow us to
expeditiously expand our footprint of EV charging station locations, product offerings, and enhance our Blink Networks. |
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Leverage
Our Early Mover Advantage. We continue to leverage our extensive and defendable first-mover advantage and the digital customer
experience we have created for both EV drivers and Property Partners. We believe that hundreds of thousands of Blink driver registrants
appreciate the value of transacting charging sessions on established robust networks. Blink chargers are deployed mainly across the
United States, Europe and South America, and the tendency, among users, is to stay within one consistent network. |
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Appropriately
Capitalize Our Business. We continue to pursue new potential capital sources to deliver critical operational objectives and
the necessary resources to execute our overall strategy. The EV charging industry as a whole is undercapitalized to deliver the full
potential of the expected EV market growth in the near future. We expect to retain our leadership position with new growth capital
as required. |
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International
Expansion with Three Recent Acquisitions. On June 15, 2022, we completed the acquisition of SemaConnect, Inc., a leading provider of EV charging
infrastructure solutions in North America with manufacturing facilities in both the United States and India. Upon the closing of
the acquisition, SemaConnect became a wholly owned subsidiary of our company, allowing Blink to comply with “Buy America”
mandates and adding nearly 13,000 active chargers and over 150,000 registered users to the Blink Networks. On April
22, 2022, pursuant to a Sale and Purchase Agreement dated April 22, 2022, we acquired, through our wholly owned subsidiary
in the Netherlands, Blink Holdings B.V., all 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 provider of electric vehicle charging and sustainable energy solutions and technologies. |
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On May 10, 2021, we, through our wholly owned subsidiary in the Netherlands, Blink Holdings, B.V.,
closed on the acquisition of the outstanding capital stock of a Belgian company, Blue Corner NV (“Blue Corner”),
from its shareholders. Headquartered in Belgium, with sales representative offices in several other European cities, Blue Corner
owns and operates an EV charging network across Europe. The acquisition of Blue Corner was made to enter the European market and
provide an opportunity to expand our footprint in this region. |
Sales
Our
sales organization builds and maintains long-term business relationships with our customers by utilizing our four core business models.
These business models provide a high degree of flexibility to match host location goals and objectives for EV charging with our industry-leading
equipment acquisition solutions. Our team identifies locations that have the potential to create long-term, recurring value for the Property
Partner and Blink. Sales personnel are able to pivot to traditional equipment sales or charging-as-a-service models when, and if, a location
is not identified as a promising generator of future recurring revenues. The team strives to maintain a balance between equipment sales
that grow revenue today, and site locations that have potential to generate strong revenues in the future under our owner-operator business
models.
We
also engage with strategic distributor and reseller partners across a range of vertical markets both within the U.S. and globally. These
organizations typically have unique relationships or capabilities within their respective markets and provide Blink with additional sales
opportunities. These partnerships amplify Blink’s sales reach and are authorized to sell our EV charging hardware, software services
(connectivity to the Blink Networks), and extended warranty service plans, to strategic customers in specific locations.
We are making further inroads into the residential charging station market where we sell Level 2 chargers through various internet channels,
such as Amazon, Walmart.com, Lowes.com, and other online retailers, to reach the single-family residential charging market in the United
States.
During
2022, we were awarded several new prominent customers including Mitsubishi, Cushman & Wakefield, Triple J, Q-Park, Best Buy, UBS,
Bosch Mexico, Porsche Puerto Rico and Guatemala, Veris Residential, Greystar, Cambium, and cities of Atlanta, Rockford, Newton, Winslow,
Leeds (UK) and others that expand Blink’s potential for unit sales and deployments. Through acquisitions of SemaConnect and Electric
Blue in 2022, Blink acquired a number of prominent customers such as Walgreens, Olive Garden, Dunkin Donuts, Kaiser Permanente, Hilton,
Ritz-Carlton, and many others. During 2021, we were awarded several prominent customers including General Motors, Ford, Jaguar-Land
Rover, Hyundai, Kia, Subaru, AutoNation, Berkshire-Hathaway Automotive, Bridgestone, the City of San Antonio, the Related Group, and
others. Commensurate with these new business relationships, we also forged critical strategic relationships with organizations that directly
or indirectly influence EV charging station purchase decisions. Examples include Sustainable Westchester in New York, and Clean Cities
Organizations in Virginia, Vermont and Ohio, Florida Sheriff’s Association Cooperative, Illinois Region 1 Planning Council, AES
El Salvador, and Vizient.
In
addition to adding sales personnel within key markets, we solidified our organizational structure through hiring talented business development
professionals and establishing a new account management team to onboard customers and maintain long-term relationships.
Our
in-house staff performs a variety of marketing activities. Our marketing team works to promote and sell our services to property owners
and managers, parking companies, and EV drivers. We also utilize marketing and communication channels, including press releases, email
marketing, website (www.blinkcharging.com), pay-per-click advertising, social media marketing, webinars, sponsorships and partnerships,
advertising, and conferences. Our websites’ information is not, and will not be deemed, a part of this Annual Report or incorporated
into any other filings we make with the SEC.
We
continue to invest in improving our company-owned stations’ service and maintenance and those stations with service and maintenance
plans and expanding our cloud-based network capabilities. We anticipate continuing to grow our revenues by (i) selling our next generation
of EV charging equipment to current as well as to new Property Partners, which includes airports, auto dealers, healthcare/medical, hotels,
mixed-use, municipal locations, multifamily residential and condos, parks and recreation areas, parking lots, religious institutions,
restaurants, retailers, schools and universities, stadiums, supermarkets, transportation hubs, and workplace locations, and (ii) expanding
our sales channels to wholesale distributors, utilities, auto original equipment manufacturers (“OEMs”), solar integrators,
and dealers, which will include implementing EV charging station occupancy fees (after charging is completed, fees for remaining connected
to the charging station beyond an allotted grace period), and subscription plans for EV drivers on our company-owned public charging
locations.
Our
Customers and Partners
We
have strategic partnerships across numerous transit/destination locations, including airports, auto dealers, healthcare/medical,
hotels, mixed use and municipal locations, multifamily residential and condos, parks and recreation areas, parking lots, religious
institutions, restaurants, retailers, schools and universities, stadiums, supermarkets, transportation hubs, and workplace
locations. We have hundreds of Property Partners that include well recognized companies, large municipalities, and local businesses.
We strive to engage all Blink-owned turnkey and hybrid property partners with exclusive EV charging contracts. This strategy further
supports our owner-operator model to generate recurring revenue for both the Property Partner and Blink. Representative examples are
McDonald’s, Sony Pictures, Caltrans, Audi of America, Porsche Design Tower, City of Azusa, City of Chula Vista, City of
Springfield, City of Tucson, City of Fayetteville, BJ’s Inc., Federal Realty, Fred Meyer Stores, Inc., Fry’s Food &
Drug, Inc., Kana Hotel Group, Kroger Company and Ralphs Grocery Company. We continue to establish new contracts with Property
Partners that previously secured our services independently or had contracts with the EV services providers that we acquired,
including Ecotality, the former owner of the Blink-related assets.
Our
revenues are primarily derived from fees charged to EV drivers for EV charging in public locations, EV charging hardware sales, government
grants, and sales of equipment warranties. EV charging fees to drivers are based on an hourly rate, by energy dispensed per kilowatt-hour
(“kWh”), or by session. Such fees are calculated based on various factors, including associated station costs and local electricity
tariffs. EV charging hardware is sold to our Property Partners such as InterEnergy, Green Commuter, Nashville Music Center, Wendy’s,
and other Property Partners engaged with our host-owned business model. Other income sources from EV charging services are network fees,
extended warranty fees, membership fees, and payment processing fees paid by our Property Partners. Blink generates revenues from its
ride-sharing program through BlueLA and the City of Los Angeles which allows customers the ability to rent electric vehicles through
a subscription service.
We
teamed up with Google Maps to make locating EV charging stations straightforward and accessible. Our charging stations are displayed
in Google Maps, along with other relevant information.
We
are focused on international expansion and have made significant progress at expanding our business across the globe, focusing primarily
on Europe, United Kingdom, Israel, and Latin America.
On
June 15, 2022, we completed the acquisition of SemaConnect, Inc., a leading provider of EV charging infrastructure solutions
in North America with manufacturing facilities in both the United States and India. Upon the closing of the acquisition, SemaConnect
became a wholly owned subsidiary of our company, allowing us to comply with “Buy America” mandates and adding nearly 13,000 active chargers and over 150,000 registered users to the Blink Networks. On April 22, 2022, pursuant to a Sale and
Purchase Agreement dated April 22, 2022, we acquired, through our wholly owned subsidiary in the Netherlands, Blink Holdings
B.V., all 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 provider
of electric vehicle charging and sustainable energy solutions and technologies. On May 10, 2021, we, through our wholly owned
subsidiary in the Netherlands, Blink Holdings, B.V., closed on the acquisition of the outstanding capital stock of a Belgian company,
Blue Corner NV (“Blue Corner”), from its shareholders. Headquartered in Belgium, with sales representative offices in several
other European cities, Blue Corner owns and operates an EV charging network across Europe. The acquisition of Blue Corner was made to
enter the European market and provide an opportunity to expand our footprint in this region. Additionally, we operate through
Blink Charging Ltd. for our expansion in Israel and Blink Hellas SA for our expansion in Greece. We are in the process of establishing
numerous subsidiaries in Latin America as we further concentrate our international efforts. Finally, we established a new software development
team in India, managed by our Indian subsidiary, Blink Charging Software Solutions Ltd.
Our
Competition
The
EV charging equipment and service market is highly competitive, and we expect the market to become increasingly competitive as new entrants
enter this growing market. Our products and services compete on product performance and features, the total cost of ownership, sales
capabilities, financial stability, brand recognition, product reliability, and the installed base’s size. Our existing competition
in the U.S. currently includes ChargePoint, which manufactures EV charging equipment and operates the ChargePoint Network, and Evgo,
which offers home and public charging with pay-as-you-go and subscription models. Other entrants into the connected EV charging station
equipment market include Volta, Clipper Creek, Wallbox, Freewire, Autel, and EV Connect. We believe these additional competitors struggle
with gaining the necessary network traction but could gain momentum in the future. While Tesla does offer EV charging services, the connector
type currently restricts the chargers to Tesla vehicles only in North America. Many other EV charging companies offer non-networked or
“basic” chargers with limited customer leverage but could provide a low-cost solution for basic charger needs in commercial
and home locations.
Our
competitive advantage in this market includes vertical integration and our exclusive, long-term contracts with our Property Partners
and flexible business models. We offer our EV charging station equipment and provide access to a robust EV charging network.
Government
Grants
We
have a full-time dedicated team to identify and process federal and state funding opportunities for EV charging infrastructure
development. We are committed to pursuing EV charging development grant opportunities in all 50 states. Funding sources in the
U.S. include the Department of Energy, Department of Transportation, Department of Agriculture, the VW mitigation settlement trust
fund, funding initiatives from utility service providers and various state and local jurisdictions. In Europe, we have a
significant presence both in the European Union and the United Kingdom through our acquisitions of Blue Corner and Electric Blue. Our staff in Europe has significant experience in applying and taking advantage of various European
jurisdictions incentives and rebate programs.
Disclosure
Related to Climate Change
On
March 21, 2022, the Securities and Exchange Commission (“SEC”) proposed rules mandating climate-related disclosures in companies’
annual reports and registration statements. The proposed rules contemplate phase-in periods based on SEC filer status, with extended
phase-in periods for Scope 3 disclosures and third-party attestation requirements. Under the direction and supervision of senior management
and with board oversight, our Environmental, Social, and Governance (“ESG”) Committee has initiated a process to implement
and maintain compliance with the SEC’s climate disclosure requirements as they are enacted.
Privacy
and Data Security Laws
We
are currently subject, and/or may in the future be subject, to numerous privacy and data security laws. For example, some U.S. states,
members of the European Economic Area, the United Kingdom, and many other jurisdictions in which we operate have adopted some form of
privacy and data security laws and regulations which impose significant compliance obligations.
The
European Union’s General Data Protection Regulation (“GDPR”), which is wide-ranging in scope, imposes several requirements
relating to a variety of matters, including the control over personal data by individuals to whom the personal data relates, the information
provided to the individuals, the documentation we must maintain, the security and confidentiality of the personal data, data breach notification,
and the use of third-party processors in connection with the processing of personal data. The GDPR also imposes strict rules on the transfer
of personal data outside of the European Union (“EU”), provides an enforcement authority, and authorizes the imposition of
large penalties for noncompliance, including the potential for significant fines. The GDPR requirements apply not only to third-party
transactions, but also to transfers of information between Blink Charging and its subsidiaries, including employee information. The GDPR
has increased our responsibility and potential liability in relation to all types of personal data that we process and we may be required
to put in place additional mechanisms to ensure compliance with the GDPR, which could divert management’s attention and increase
its cost of doing business, and despite our ongoing efforts to bring its practices into compliance with the GDPR, it may not be successful.
Additionally,
we are governed by a California state privacy law called the California Consumer Privacy Act of 2018 (“CCPA”), which contains
requirements similar to GDPR for the handling of personal information of California residents. The CCPA establishes a privacy framework
for covered businesses, including an expansive definition of personal information and data privacy rights for California residents. The
CCPA includes a framework with potentially severe statutory damages and private rights of action. The CCPA requires covered companies
to provide new disclosures to California consumers (as that word is broadly defined in the CCPA), and new ways for such consumers to
opt out of certain sales of personal information, and to allow for a new cause of action for data breaches. Further, California voters
approved a new privacy law, the California Privacy Rights Act (“CPRA”) in November 2020. Effective starting on January 1,
2023, the CPRA will significantly modify the CCPA, including by expanding the consumers’ rights with respect to certain sensitive
personal information. The CPRA also creates a new state agency that will be vested with authority to implement and enforce the CCPA and
the CPRA. New legislation proposed or enacted in various other states will continue to shape the data privacy environment nationally.
For example, the Virginia Consumer Data Protection Act became effective on January 1, 2023, the Colorado Privacy Act becomes effective
on July 1, 2023, the Connecticut Act Concerning Personal Data Privacy and Online Monitoring becomes effective on July 1, 2023, and the
Utah Privacy Act becomes effective on December 1, 2023.
The
GDPR, CCPA, CPRA, CPA, and CDPA exemplify the vulnerability of our business to the evolving regulatory environment related to personal
data. Our compliance costs and potential liability may increase as a result of additional national and international regulatory requirements
related to data privacy and data security. We are currently subject, and/or may in the future be subject, to numerous privacy and data
security laws. For example, some U.S. states, members of the European Economic Area, the United Kingdom, and many other jurisdictions
in which we operate have adopted some form of privacy and data security laws and regulations which impose significant compliance obligations.
Environmental,
Social, and Governance (ESG)
We are committed to sourcing only responsibly produced materials We have a zero-tolerance policy when it comes to child or forced labor
and human trafficking by our suppliers. We believe that sound corporate governance is critical to helping us achieve our goals, including
with respect to ESG. We are focused on further enhancing sustainability of operations and continue to evolve a governance framework that
exercises appropriate oversight of responsibilities at all levels throughout the company. Our board-level ESG Committee, with active management
participation, will oversee our ESG initiatives and priorities.
Government
Regulation and Incentives
State,
regional and local regulations for installing EV charging stations vary from jurisdiction to jurisdiction and may include permitting
requirements, inspection requirements, licensing of contractors, and certifications. Compliance with such regulations may cause installation
delays.
Currently,
we apply charging fees by the kWh for our services in most states that permit this policy, while there are a handful of other states
that only allow charging fees on hourly and by session for our services (Georgia, Louisiana, Michigan, Mississippi, Nebraska, Tennessee
and Wisconsin).
We
intend to continue to vigorously seek additional grants, loans, rebates, subsidies, and incentives as cost-effective means of reducing
our capital investment in the promotion, purchase and installation of charging stations where applicable. We expect these incentives,
rebates, and tax credits to be critical to our future growth. Additionally, some incentives are currently offered to encourage electric
vehicle adoption at the federal, state and local levels. The Federal Government provides a personal income tax credit for qualified plug-in
electric vehicles, with a maximum of $7,500, depending on vehicle weight and battery capacity, income levels, and battery sourcing origin.
We expect Federal Government to continue to provide additional details about the vehicles and customers that qualify for Federal Government
incentives. States such as California, Colorado, Delaware, Louisiana, Massachusetts, New York, and Rhode Island offer various rebates,
grants, and tax credits to incentivize EV and EVSE purchases.
CESQG
As
a Conditionally Exempt Small Quantity Generator (“CESQG”), we generate a limited quantity of hazardous waste, mainly solvent
contaminated wipes, which are transported to local solid waste facilities. Scrapped electronic boards are transported to a local recycler.
A CESQG of hazardous waste is defined as a generator that:
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no more than 100 kg (220 lbs.) of hazardous waste per calendar month; |
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no more than 1 kg (2.2 lbs.) of acute hazardous waste per calendar month; |
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never
accumulates more than 1,000 kg (2,204 lbs.) of hazardous waste at any one time; and |
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Never
accumulates more than 1 kg (2.2 lbs.) of acute hazardous waste at any one time. |
The
use of our machinery and equipment must comply with the following applicable laws and regulations, including safety and environmental
regulations:
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General
Safety for All Employees – Includes health hazard communication, emergency exit plans, electrical safety-related work practices,
office safety, and hand-powered tools. |
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Technicians
and Engineers – Only authorized persons (technicians and engineers) perform product testing and repair in the facility’s
production and engineering areas, including those engineers involved in field service work. Regulations include control of hazardous
energy and personal protective equipment. |
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Logisticians
– Includes forklift operations performed only by certified shipping/receiving personnel and material handling and storage. |
We
fully comply with the general industry category’s environmental regulations applicable to us as a CESQG.
OSHA
We
are subject to the Occupational Safety and Health Act of 1970, as amended (“OSHA”). OSHA establishes specific employer responsibilities,
including maintaining a workplace free of recognized hazards likely to cause death or serious injury, compliance with standards promulgated
by the Occupational Safety and Health Administration and various recordkeeping, disclosure and procedural requirements. Multiple standards,
including standards for notices of hazards, safety in excavation and demolition work and the handling of asbestos, may apply to our operations.
We are in full compliance with OSHA regulations.
NEMA
The
National Electrical Manufacturers Association (“NEMA”) is the association of electrical equipment and medical imaging manufacturers.
NEMA provides a forum for developing technical standards in the industry and users’ best interests, advocating industry policies
on legislative and regulatory matters, and collecting, analyzing, and disseminating industry data. All of our US products comply with
the NEMA standards that apply to such products.
Waste
Handling and Disposal
We
are subject to laws and regulations regarding the handling and disposal of hazardous substances and solid wastes, including electronic
wastes and batteries. These laws generally regulate the generation, storage, treatment, transportation, and disposal of solid and hazardous
waste, and may impose strict, joint, and several liability for the investigation and remediation of areas where hazardous substances
may have been released or disposed. For instance, CERCLA, also known as the Superfund law, in the United States and comparable state
laws impose liability, without regard to fault or the legality of the original conduct, on certain classes of persons that contributed
to the release of a hazardous substance into the environment. These persons include current and prior owners or operators of the site
where the release occurred as well as companies that disposed of or arranged for the disposal of hazardous substances found at the site.
Under CERCLA, these persons may be subject to joint and several strict liability for the costs of cleaning up the hazardous substances
that have been released into the environment, for damages to natural resources and for the costs of certain health studies. CERCLA also
authorizes the EPA and, in some instances, third parties to act in response to threats to the public health or the environmental and
to seek to recover from the responsible classes of persons the costs they incur. We may handle hazardous substances within the meaning
of CERCLA, or similar state statutes, in the course of ordinary operations and, as a result, may be jointly and severally liable under
CERCLA for all or part of the costs required to clean up sites at which these hazardous substances have been released into the environment.
We
also generate solid wastes, which may include hazardous wastes that are subject to the requirements of the Resource Conservation and
Recovery Act (“RCRA”) and comparable state statutes. While RCRA regulates both solid and hazardous wastes, it imposes strict
requirements on the generation, storage, treatment, transportation, and disposal of hazardous wastes. Certain components of our products
are excluded from RCRA’s hazardous waste regulations, provided certain requirements are met. However, if these components do not
meet all of the established requirements for the exclusion, or if the requirements for the exclusion change, we may be required to treat
such products as hazardous waste, which are subject to more rigorous and costly disposal requirements. Any such changes in the laws and
regulations, or our ability to qualify the materials it uses for exclusions under such laws and regulations, could adversely affect our
operating expenses.
Similar
laws exist in other jurisdictions where we operate. Additionally, in the EU, we are subject to the Waste Electrical and Electronic Equipment
Directive (“WEEE Directive”). The WEEE Directive provides for the creation of a collection scheme where consumers return
waste electrical and electronic equipment to merchants, such as Blink Charging. If we fail to properly manage such waste electrical and
electronic equipment, it may be subject to fines, sanctions, or other actions that may adversely affect on our financial operations.
Intellectual
Property
We
rely on a combination of patent, trademark, copyright, unfair competition and trade secret laws, as well as confidentiality procedures
and contractual restrictions, to establish, maintain and protect our proprietary rights. Our success depends partly on our ability to
obtain and maintain proprietary protection for our products, technology and know-how, to operate without infringing the proprietary rights
of others, and to prevent others from infringing our proprietary rights.
As
of December 31, 2022, we had four active patents issued in the United States (in the name of our subsidiary Ecotality, Inc.). These patents
relate to various EV charging station designs. We intend to regularly assess opportunities for seeking patent protection for those aspects
of our technology, designs and methodologies that we believe provide a meaningful competitive advantage. If we cannot do so, our ability
to protect our intellectual property or prevent others from infringing our proprietary rights may be impaired.
Human
Capital Resources
Our
experienced employees and management team are some of our most valuable resources, and we are committed to attracting, motivating, and
retaining top talent. As of December 31, 2022, we had 620 employees, including 564 full-time employees. None of our employees are represented
by a union or covered by a collective bargaining agreement. We have not experienced any work stoppages, and we consider our relationship
with our employees to be good.
Our
success is directly related to the satisfaction, growth, and development of our employees. We strive to offer a work environment where
employee opinions are valued and allow our employees to use and augment their professional skills. To achieve our human capital goals,
we intend to remain focused on providing our personnel with entrepreneurial opportunities to expand our business within their areas of
expertise and continue to provide our personnel with personal and professional growth. We emphasize several measures and objectives
in managing our human capital assets, including, among others, employee safety and wellness, talent acquisition and retention, employee
engagement, development and training, diversity and inclusion, and compensation and pay equity.
COVID-19
and Employee Safety and Wellness. In response to the COVID-19 pandemic, we implemented significant changes that we determined were
in the best interest of our employees as well as the communities in which we operate. These measures include allowing most employees
to work from home and implementing additional safety measures for employees continuing critical on-site work. We believe in supporting
our employees’ health and well-being. Our goal is to help employees make informed decisions about their health by providing the
tools and resources necessary to achieve a healthier lifestyle. We offer our employees a wide array of benefits such as life and health
(medical, dental, and vision) insurance, paid time off and retirement benefits, as well as emotional well-being services through our
health insurance program.
Diversity
and Inclusion and Ethical Business Practices. We believe that a company culture focused on diversity and inclusion is a crucial driver
of creativity and innovation. We also believe that diverse and inclusive teams make better business decisions, ultimately driving better
business outcomes. We are committed to recruiting, retaining, and developing high-performing, innovative and engaged employees with diverse
backgrounds and experiences. This commitment includes providing equal access to, and participation in, equal employment opportunities,
programs, and services without regard to race, religion, color, national origin, disability, sex, sexual orientation, gender identity,
stereotypes, or assumptions based thereon. We welcome and celebrate our teams’ differences, experiences, and beliefs, and we are
investing in a more engaged, diverse, and inclusive workforce.
We
also foster a strong corporate culture that promotes high standards of ethics and compliance for our business, including policies that
set forth principles to guide employee, officer, director, and vendor conduct, such as our Code of Business Conduct and Ethics. We also
maintain a whistleblower policy and anonymous hotline for the confidential reporting of any suspected policy violations or unethical
business conduct on the part of our businesses, employees, officers, directors, or vendors.
Available
Information
We
maintain a corporate website at www.blinkcharging.com. Our website’s information is not, and will not be deemed, a part of
this Annual Report or incorporated into any other filings we make with the SEC. Our Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of
the Exchange Act are made available, free of charge, on our website as soon as reasonably practicable after we electronically file such material
with, or furnish it to, the SEC. Our corporate governance documents, including our code of conduct and ethics, are also available on
our website. In this Annual Report on Form 10-K, we incorporate by reference as identified herein certain information from parts of
our proxy statement for our 2023 Annual Meeting of Stockholders, which we will file with the SEC and will be available, free of
charge, on our website. Reports of our executive officers, directors and any other persons required to file securities ownership
reports under Section 16(a) of the Exchange Act are also available on our website.
In
addition to other information in this Annual Report on Form 10-K and in other filings we make with the Securities and Exchange
Commission (“SEC”), the following risk factors should be carefully considered in evaluating our business as they may have a significant
impact on our business, operating results and financial condition. If any of the following risks occurs, our business, financial
condition, results of operations and future prospects could be materially and adversely affected. Because of the following factors,
as well as other variables affecting our operating results, past financial performance should not be considered as a reliable
indicator of future performance and stockholders and investors should not use historical trends to anticipate results or trends in
future periods.
Relating
to Our Business
We
have a history of substantial net losses and expect losses to continue in the future; if we do not achieve and sustain profitability,
our financial condition could suffer.
We
have experienced substantial net losses, and we expect to continue to incur substantial losses for the foreseeable future. We incurred
net losses of $91.6 million, $55.1 million and $17.8 million for the years ended December 31, 2022, 2021 and 2020, respectively. As of
December 31, 2022, we had net working capital of approximately $49 million and an accumulated deficit of approximately $334 million.
We have not yet achieved profitability.
If
our revenue grows slower than we anticipate, or if our operating expenses are higher than we expect, we may not be able to achieve
profitability and our financial condition could suffer. We can give no assurance that we will ever achieve profitable operations.
Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Whether we can
achieve cash flow levels sufficient to support our operations cannot be accurately predicted. While we recently completed an
underwritten public offering raising $100 million in gross proceeds, we may need to borrow additional funds or sell our debt or
equity securities, or some combination of both, to provide funding for our operations in the future. Such additional funding may not be available
on commercially reasonable terms, or at all.
Our
revenue growth ultimately depends on consumers’ willingness to adopt electric vehicles in a market which is still in its early
stages.
Our
growth is highly dependent upon the adoption by consumers of EVs, and we are subject to a risk of any reduced demand for EVs. If the
market for EVs does not gain broader market acceptance or develops slower than we expect, our business, prospects, financial condition
and operating results will be harmed. The market for alternative fuel vehicles is relatively new, rapidly evolving, characterized by
rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent
new vehicle announcements, long development cycles for EV original equipment manufacturers, and changing consumer demands and behaviors.
Factors that may influence the purchase and use of alternative fuel vehicles, specifically EVs, include:
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perceptions
about EV quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost, especially if adverse
events or accidents occur that are linked to the quality or safety of EVs; |
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the
limited range over which EVs may be driven on a single battery charge and concerns about running out of power while in use; |
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concerns
regarding the stability of the electrical grid; |
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improvements
in the fuel economy of the internal combustion engine; |
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consumers’
desire and ability to purchase a luxury automobile or one that is perceived as exclusive; |
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the
environmental consciousness of consumers; |
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volatility
in the cost of oil and gasoline; |
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consumers’
perceptions of the dependency of the United States on oil from unstable or hostile countries and the impact of international conflicts; |
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government
regulations and economic incentives promoting fuel efficiency and alternate forms of energy; |
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access
to charging stations, standardization of EV charging systems and consumers’ perceptions about convenience and cost to charge
an EV; and |
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the
availability of tax and other governmental incentives to purchase and operate EVs or future regulation requiring increased use of
nonpolluting vehicles. |
The
influence of any of the factors described above may negatively impact the widespread consumer adoption of EVs, which would materially
and adversely affect our business, operating results, financial condition and prospects.
Changes
to corporate average fuel economy standards may negatively impact the EV market and demand for our products.
As
regulatory initiatives have required an increase in the consumption of renewable transportation fuels, such as ethanol and biodiesel,
consumer acceptance of electric and other alternative vehicles is increasing. To meet higher fuel efficiency and greenhouse gas emission
standards for passenger vehicles, automobile manufacturers are increasingly using technologies, such as turbocharging, direct injection
and higher compression ratios, which require high octane gasoline. If fuel efficiency of vehicles continues to rise, and affordability
of vehicles using renewable transportation fuels increases, the demand for electric and high energy vehicles could diminish. If consumers
no longer purchase EVs, it would materially and adversely affect our business, operating results, financial condition and prospects.
We
are unable to predict the ultimate impact of continuing equipment order delays, chip shortages and presence of COVID-19 on our business
and future results of operations, financial position and cash flows.
The
Covid-19 pandemic has impacted global stock markets, economies and businesses. We continue to receive orders for our 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 our contract manufacturer. As federal, state, local and foreign economies are beginning to return to pre-pandemic
levels, we expect demand for charging station usage to increase; however, we are unable to predict the extent of such recovery due to
the uncertainty of the possible recurrence or spread of Covid-19 and its variants. As a result, we are unable to predict the ultimate
impact that continuing equipment order delays, chip shortages and presence of Covid-19 will have on our business and our future results
of operations, financial position and cash flows.
War,
terrorism, other acts of violence or natural or man-made disasters may affect the markets in which we operate, our customers, our delivery
of products and customer service, and could have a material adverse impact on our business, results of operations, or financial condition.
Our
business may be adversely affected by instability, disruption or destruction in a geographic region in which we operate, regardless of
cause, including war, terrorism, riot, civil insurrection or social unrest, and natural or man-made disasters, including famine, flood,
fire, earthquake, storm or pandemic events and spread of disease. Such events may cause customers to suspend their decisions on using
our services, make it impossible for us to render our services, cause restrictions, and give rise to sudden significant changes in regional
and global economic conditions and cycles. These events also pose significant risks to our personnel and to physical facilities and operations,
which could materially adversely affect our financial results.
Further,
the current Russia-Ukraine conflict has created extreme volatility in the global financial markets and is expected to have further global
economic consequences, including disruptions of the global supply chain and energy markets and heightened volatility of commodity and
raw material prices. In addition, recently there has been increasing geopolitical tension between China and Taiwan that may affect future
shipments from Taiwan based electronics suppliers for certain of our EV chargers. Any such volatility or disruptions may have adverse
consequences on us or the third parties on whom we rely. If the equity and credit markets deteriorate, including as a result of political
unrest or war, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms,
more costly or more dilutive. Our business, financial condition and results of operations may be materially and adversely affected by
any negative impact on the global economy, capital markets or commodity and raw material prices resulting from the conflict in Ukraine,
the recent geopolitical tensions between China and Taiwan or any other geopolitical tensions.
We
rely on a limited number of vendors for our EV charging equipment and related support services. A loss of any of these partners would
negatively affect our business.
We
rely on a limited number of vendors for design, testing and manufacturing of EV charging equipment which generally singularly sourced
with respect to components as well as aftermarket maintenance and warranty services. The reliance on a limited number of vendors increases
our risks, since we do not currently have proven reliable alternative or replacement vendors beyond these key parties. In the event of
production interruptions or supply chain disruptions including but not limited to availability of certain key components such as semiconductors,
we may not be able to take advantage of increased production from other sources or develop alternate or secondary vendors without incurring
material additional costs and substantial delays. Therefore, our business would be adversely affected if one or more of our vendors is
impacted by any interruption at a particular location.
As
the demand for public charging increases, the EV charging equipment vendors may not be able to dedicate sufficient supply chain, production
or sales channel capacity to keep up with the required pace of charging infrastructure expansion. In addition, as the EV market grows,
the industry may be exposed to deteriorating design requirements, undetected faults or the erosion of testing standards by charging equipment
and component suppliers, which may adversely impact the performance, reliability and lifecycle cost of the chargers. If we or our suppliers
experience a significant increase in demand, or if we need to replace an existing supplier, we may not be able to supplement service
or replace them on acceptable terms, which may impact our ability to install chargers in a timely manner. Thus, a loss of any significant
vendor would have an adverse effect on our business, financial condition and operating results.
We
may be adversely affected by inflationary or market fluctuations, including impact of tariffs, in the cost of products consumed in providing
our services or our cost of labor.
The
prices we pay for the principal items we consume in performing our services are dependent primarily on current market prices. We have
consolidated certain supply purchases with national vendors through agreements containing negotiated prospective pricing. In the event
such vendors are not able to comply with their obligations under the agreements and we are required to seek alternative suppliers, we
may incur increased costs of supplies.
EV
chargers are impacted by commodity pricing factors, including the impact of tariffs, which in many cases are unpredictable and outside
of our control. We seek to pass on to customers such increased costs but sometimes we are unable to do so. Even when we are able to pass
on such costs to our customers, from time to time, sporadic unanticipated increases in the costs of certain supply items due to market
or economic conditions may result in a timing delay in passing on such increases to our customers. This type of spike and unanticipated
increase in EV charger costs could adversely affect our operating performance, and the adverse effect could be greater if we are delayed
in passing on such additional costs to our customers (e.g., where we may not be able to pass such increase on to our customers until
the time of our next scheduled service billing review). We seek to mitigate the impact of an unanticipated increase in such supplies’
costs through consolidation of vendors, which increases our ability to obtain more favorable pricing.
Our
cost of labor may be influenced by factors in certain market areas. Our hourly employees could be affected by wage rate increases in
the federal or state minimum wage rates, wage inflation or local job market adjustments. We do not have a contractual right to automatically
pass through all wage rate increases resulting from wage rate inflation or local job market adjustments, and we may be delayed in doing
so. Our delay in, or inability to pass such wage increases through to our customers could have a material adverse effect on our financial
condition, results of operations, and cash flows.
We
will need additional capital to fund our growing operations but cannot assure you that we will be able to obtain sufficient capital from
potential sources, and we may have to limit the scope of our operations or take actions that may dilute your financial interest.
We
will need additional capital to fund our growing operations in the future. The proceeds from our recent underwritten public offering
and funds from other potential sources, along with our cash and cash equivalents, may not be sufficient to fund our long-term
operations and we may not be able to obtain additional financing. If adequate additional financing is not available on reasonable
terms or available at all, we may not be able to undertake expansion or continue our marketing efforts and we would have to modify
our business plans accordingly. The extent of our capital needs will depend on numerous factors, including (i) our profitability;
(ii) the release of competitive products and/or services by our competition; (iii) the level of our investment in research and
product development; (iv) the amount of our capital expenditures, including acquisitions; and (v) our growth. We cannot be certain
that additional funding and incremental working capital will be available to us on acceptable terms, if at all, or that it will
exist in a timely and/or adequate manner to allow for the proper execution of our near and long-term business strategy. If
sufficient funds are not available on terms and conditions acceptable to management and stockholders, we may be required to delay,
reduce the scope of, or eliminate further development of our business operations.
Even
if we obtain requisite financing, it may be on terms not favorable to us, it may be costly and it may require us to agree to covenants
or other provisions that will favor new investors over existing stockholders or other restrictions that may adversely affect our business.
Additional funding, if obtained, may also result in significant dilution to our stockholders.
Our
quarterly operating results may fluctuate significantly.
We
expect that our operating results may be subject to substantial quarterly fluctuations. If our quarterly operating results fall below
the expectations of investors or securities analysts, the price of our common stock could decline substantially. We believe that quarterly
comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance.
Climate
change may have a long-term impact on our business.
While
we seek to partner with organizations that mitigate their business risks associated with climate change, we recognize that there are
inherent risks wherever business is conducted. Access to clean water and reliable energy in the communities where we conduct our business,
whether for our offices or for our vendors, is a priority. Our major sites in Miami, Florida, Los Angeles, California, Tempe, Arizona,
and Bowie, Maryland are vulnerable to climate change effects. For example, in Florida, residents are facing increasing flood risk and
storm intensity. This is especially evident in Miami, due to its low-lying topography, porous limestone, dense coastal development and
encroaching seas. In California, increasing intensity of drought throughout the state and annual periods of wildfire danger increase
the probability of planned power outages in the communities where we work and live. While this danger has a low-assessed risk of disrupting
normal business operations, it has the potential impact on employees’ abilities to commute to work or to work from home and stay
connected effectively. Climate-related events, including the increasing frequency of extreme weather events and their impact on critical
infrastructure throughout the United States and in other countries where we have operations, have the potential to disrupt our business,
our third-party suppliers and/or the business of our customers, and may cause us to experience higher attrition, losses and additional
costs to maintain or resume our EV charging operations.
Computer
malware, viruses, hacking, phishing attacks and spamming that could result in security and privacy breaches and interruption in service
could harm our business and our customers.
Computer
malware, viruses, physical or electronic break-ins and similar disruptions could lead to interruption and delays in our services and
operations and loss, misuse or theft of data. Computer malware, viruses, computer hacking and phishing attacks against online networking
platforms have become more prevalent and may occur on our systems in the future. Any attempts by hackers to disrupt our website service
or our internal systems, if successful, could harm our business, be expensive to remedy and damage our reputation or brand. Our network
security business disruption insurance may not be sufficient to cover significant expenses and losses related to direct attacks on our
website or internal systems. Efforts to prevent hackers from entering our computer systems are expensive to implement and may limit the
functionality of our services. Though it is difficult to determine what, if any, harm may directly result from any specific interruption
or attack, any failure to maintain performance, reliability, security and availability of our products and services and technical infrastructure
may harm our reputation, brand and our ability to attract customers. Any significant disruption to our website or internal computer systems
could result in a loss of customers and could adversely affect our business and results of operations.
We
have previously experienced, and may in the future experience, service disruptions, outages and other performance problems due to a variety
of factors, including infrastructure changes, third-party service providers, human or software errors and capacity constraints. If our
mobile application is unavailable when customers attempt to access it or it does not load as quickly as they expect, customers may seek
other services.
Our
platform functions on software that is highly technical and complex and may now or in the future contain undetected errors, bugs, or
vulnerabilities. Some errors in our software code may only be discovered after the code has been deployed. Any errors, bugs or vulnerabilities
discovered in our code after deployment, inability to identify the cause or causes of performance problems within an acceptable period
of time or difficultly maintaining and improving the performance of our platform, particularly during peak usage times, could result
in damage to our reputation or brand, loss of revenues, or liability for damages, any of which could adversely affect our business and
financial results.
We
expect to continue to make significant investments to maintain and improve the availability of our platform and to enable rapid releases
of new features and products. To the extent that we do not effectively address capacity constraints, upgrade our systems and equipment
as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology,
our business and operating results may be harmed. If we do not make the necessary investments or upgrades to maintain a network capable
of operating on current and future generations of broadband cellular network technology, namely the 4G and 5G systems, our business and
operating results could be adversely impacted.
We
have a disaster recovery program to transition our operating platform and data to an alternative location in the event of a catastrophe.
However, there are several factors ranging from human error to data corruption that could materially lengthen the time our platform is
partially or fully unavailable to our user base as a result of the transition. If our platform is unavailable for a significant period
of time as a result of such a transition, especially during peak periods, we could suffer damage to our reputation or brand, or loss
of revenues any of which could adversely affect our business and financial results.
Growing
our customer base depends upon the effective operation of our mobile applications with mobile operating systems, networks and standards
that we do not control.
We
are dependent on the interoperability of our mobile applications with popular mobile operating systems that we do not control, such as
Google’s Android and iOS, and any changes in such systems that degrade our products’ functionality or give preferential treatment
to competitive products could adversely affect the usage of our applications on mobile devices. Additionally, to deliver high quality
mobile products, it is important that our products work well with a range of mobile technologies, systems, networks and standards that
we do not control. We may not be successful in developing relationships with key participants in the mobile industry or in developing
products that operate effectively with these technologies, systems, networks or standards.
If
we are unable to keep up with advances in EV technology, we may suffer a decline in our competitive position. The EV industry is characterized
by rapid technological change. If we are unable to keep up with changes in EV technology, our competitive position may deteriorate which
would materially and adversely affect our business, prospects, operating results and financial condition. As technologies change, we
plan to upgrade or adapt our EV charging stations and Blink Networks’ software in order to continue to provide EV charging services with
the latest technology. However, due to our limited cash resources, our efforts to do so may be limited. Any failure of our charging stations
to compete effectively with other manufacturers’ charging stations will harm our business, operating results and prospects.
We
need to manage growth in operations to realize our growth potential and achieve expected revenues; our failure to manage growth could
disrupt our operations and ultimately prevent us from generating the revenues we expect.
In
order to take advantage of the growth that we anticipate in our current and potential markets, we believe that we must expand our marketing
operations. This expansion will place a significant strain on our management and our operational, accounting, and information systems.
We expect that we will need to continue to improve our financial controls, operating procedures and management information systems. We
will also need to effectively train, motivate and manage our employees. Our failure to manage our growth could disrupt our operations
and ultimately prevent us from generating the revenues we expect.
In
order to achieve the above-mentioned targets, the general strategies of our company are to maintain and search for hard-working employees
who have innovative initiatives, as well as to keep a close eye on expansion opportunities through merger and/or acquisition.
We
may be unable to successfully integrate recent acquisitions in a cost-effective and non-disruptive manner.
Our
success depends on our ability to grow our business and enhance and broaden our product offerings in response to changing customer
demands, competitive pressures and advances in technologies. We continue to search for viable acquisition candidates or strategic
alliances that would expand our market opportunity and/or global presence. Accordingly, we have previously and may in the future
pursue the acquisition of, investments in or joint ventures relating to, new businesses, products or technologies as a part of our
growth strategy instead of developing them internally. Our future success will depend, in part, upon our ability to manage the
expanded business following these transactions, including challenges related to the management and monitoring of new operations and
associated increased costs and complexity associated with the recent acquisitions of SemaConnect and Electric Blue, as well as future acquisitions.
Other risks involving potential future and completed acquisitions and strategic investments include:
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risks
associated with conducting due diligence; |
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problems
integrating the purchased businesses, products and technologies; |
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inability
to achieve the anticipated synergies and overpaying for acquisitions or unanticipated costs associated with acquisitions; |
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invalid
sales assumptions for potential acquisitions; |
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issues
maintaining uniform standards, procedures, controls and policies; |
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diversion
of management’s attention from our core business; |
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adverse
effects on existing business relationships with suppliers, distributors and customers; |
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risks
associated with entering new markets in which we have limited or no experience; |
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potential
loss of key employees of acquired businesses; and |
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legal, accounting and compliance costs. |
We
compete with other companies for these opportunities, and we may be unable to consummate such acquisitions or joint ventures on commercially
reasonable terms, or at all. In addition, acquired businesses may have ongoing or potential liabilities, legal claims (including tort
and/or personal injury claims) or adverse operating issues that we fail to discover through due diligence prior to the acquisition.
Even
if we are aware of such liabilities, claims or issues, we may not be able to accurately estimate the magnitude of the related liabilities
and damages. In particular, to the extent that prior owners of any acquired businesses or properties failed to comply with or otherwise
violated applicable laws or regulations, failed to fulfill their contractual obligations to their customers, or failed to satisfy legal
obligations to employees or third parties, we, as the successor, may be financially responsible for these violations and failures and
may suffer reputational harm or otherwise be adversely affected. Acquisitions also frequently result in the recording of goodwill and
other intangible assets which are subject to potential impairment in the future that could harm our financial results. If we were to
issue additional equity in connection with such acquisitions, this may dilute our stockholders.
We
have limited insurance coverage for various liabilities and damages, including potential injuries, and such insurance coverage may not
be adequate in a catastrophic situation.
We
hold employer liability insurance generally covering death or work-related injury of employees. We hold product and general liability
insurance covering certain incidents involving third parties that occur on or in the premises of our company. We maintain business interruption
insurance for key locations. Our insurance coverage may be insufficient to cover any claim for product liability, damage to our fixed
assets, inventory or employee injuries. Any liability or damage to, or caused by, our facilities or our personnel beyond our insurance
coverage may result in our incurring substantial costs and a diversion of resources.
Our
future success is largely dependent on the performance and continued service of Michael D. Farkas, our Chairman and Chief Executive Officer.
We
presently depend to a significant extent upon the experience, abilities and continued services of Michael D. Farkas, our Chairman and
Chief Executive Officer. Although we have an employment agreement in place with Mr. Farkas that extends to May 28, 2024, which includes
automatic successive one-year renewal terms thereafter if not otherwise timely terminated by either party, the loss of Mr. Farkas’
services for any reason could prove disruptive to our daily operations, require a disproportionate amount of resources and management
attention and could have a material and adverse effect on our business, financial condition and results of operations.
Our
future success also depends on our ability to attract and retain highly qualified personnel.
Our
future success also depends upon our ability to attract and retain highly qualified personnel. Expansion of our business and the management
and operation of our company will require additional managers and employees with industry experience, and our success will be highly
dependent on our ability to attract and retain skilled management personnel and other employees. There can be no assurance that we will
be able to attract or retain highly qualified personnel. As our industry continues to evolve, competition for skilled personnel with
the requisite experience will be significant. This competition may make it more difficult and expensive to attract, hire and retain qualified
managers and employees.
We
are in a highly competitive EV charging services industry and there can be no assurance that we will be able to compete with many of
our competitors which are larger and have greater financial resources.
We
face strong competition from competitors in the EV charging services industry, including competitors who could duplicate our model. Many
of these competitors may have substantially greater financial, marketing and development resources and other capabilities than us. In
addition, there are very few barriers to entry into the market for our services. There can be no assurance, therefore, that any of our
current and future competitors, many of whom may have far greater resources, will not independently develop services that are substantially
equivalent or superior to our services. Therefore, an investment in our company is very risky and speculative due to the competitive
environment in which we may operate.
Our
competitors may be able to provide customers with different or greater capabilities or benefits than we can provide in areas such as
technical qualifications, past contract performance, geographic presence and driver price. Further, many of our competitors may be able
to utilize substantially greater resources and economies of scale to develop competing products and technologies, divert sales away from
us by winning broader contracts or hire away our employees by offering more lucrative compensation packages. In the event that the market
for EV charging stations expands, we expect that competition will intensify as additional competitors enter the market and current competitors
expand their product lines. In order to secure contracts successfully when competing with larger, well-financed companies, we may be
forced to agree to contractual terms that provide for lower aggregate payments to us over the life of the contract, which could adversely
affect our margins. Our failure to compete effectively with respect to any of these or other factors could have a material adverse effect
on our business, prospects, financial condition or operating results.
We
have experienced significant customer concentration in recent periods, and our revenue levels would likely decline if any significant
customer failed to purchase product from us at anticipated levels.
During
the year ended December 31, 2022, there were no customers that accounted for more than 10% of total revenues. During the year ended
December 31, 2021, sales to a significant customer represented 12% of total revenue. During the year ended December 31, 2020, sales
to a significant customer represented 25% of total revenue. Our revenue levels would likely decline if any significant customer
failed to purchase product from us at anticipated levels.
If
a third party asserts that we are infringing upon its intellectual property rights, whether successful or not, it could subject us to
costly and time-consuming litigation or expensive licenses, and our business may be harmed.
The
EV and EV charging industries are characterized by the existence of many patents, copyrights, trademarks and trade secrets. As we face
increasing competition, the possibility of intellectual property rights claims against us grows. Our technologies may not be able to
withstand any third-party claims or rights against their use. Additionally, although we have acquired from other companies’ proprietary
technology covered by patents, we cannot be certain that any such patents will not be challenged, invalidated or circumvented. Intellectual
property infringement claims against us could harm our relationships with our customers, may deter future customers from subscribing
to our services or could expose us to litigation with respect to these claims. Even if we are not a party to any litigation involving
a customer and third party, an adverse outcome in any such litigation could make it more difficult for us to defend our intellectual
property in any subsequent litigation in which we are a named party. Any of these results could harm our brand and operating results.
Any
intellectual property rights claim against us or our customers, with or without merit, could be time-consuming, expensive to litigate
or settle and could divert management resources and attention. An adverse determination also could prevent us from offering our services
to our customers and may require that we procure or develop substitute services that do not infringe.
With
respect to any intellectual property rights claim against us or our customers, we may have to pay damages or stop using technology found
to be in violation of a third party’s rights. We may have to seek a license for the technology, which may not be available on reasonable
terms, may significantly increase our operating expenses or require us to restrict our business activities in one or more respects. The
technology also may not be available for license to us at all. As a result, we may also be required to develop alternative non-infringing
technology, which could require significant effort and expense.
The
success of our business depends in large part on our ability to protect our proprietary information and technology and enforce our intellectual
property rights against third parties.
We
rely on a combination of patent, copyright, service mark, trademark and trade secret laws, as well as confidentiality procedures and
contractual restrictions, to establish and protect our proprietary rights, all of which provide only limited protection. We cannot assure
you that any patents will issue with respect to our currently pending patent applications, in a manner that gives us the protection that
we seek, if at all, or that any future patents issued to us will not be challenged, invalidated or circumvented. Our currently issued
patents and any patents that may issue in the future with respect to pending or future patent applications may not provide sufficiently
broad protection or they may not prove to be enforceable in actions against alleged infringers. Also, we cannot assure you that any future
service mark registrations will be issued with respect to pending or future applications or that any registered service marks will be
enforceable or provide adequate protection of our proprietary rights.
We
endeavor to enter into agreements with our employees and contractors and agreements with parties with whom we do business to limit access
to and disclosure of our proprietary information. We cannot be certain that the steps we have taken will prevent unauthorized use of
our technology or the reverse engineering of our technology. Moreover, others may independently develop technologies that are competitive
to ours or infringe our intellectual property. The enforcement of our intellectual property rights also depends on our legal actions
against these infringers being successful, but we cannot be sure these actions will be successful, even when our rights have been infringed.
Further,
effective patent, trademark, service mark, copyright and trade secret protection may not be available in every country in which our services
are available over the Internet. In addition, the legal standards relating to the validity, enforceability and scope of protection of
intellectual property rights in EV-related industries are uncertain and still evolving.
Risks Related to Legal Matters and Regulations
Changes
to existing federal, state or international laws or regulations applicable to us could cause an erosion of our current competitive strengths.
Our
business is subject to a variety of federal, state and international laws and regulations, including those with respect government incentives
promoting fuel efficiency and alternate forms of energy, electric vehicles and others. These laws and regulations, and the interpretation
or application of these laws and regulations, could change. Any reduction, elimination or discriminatory application of government subsidies
and economic incentives because of policy changes, fiscal tightening or other reasons may result in diminished revenues from government
sources and diminished demand for our products. In addition, new laws or regulations affecting our business could be enacted. These laws
and regulations are frequently costly to comply with and may divert a significant portion of management’s attention. If we fail
to comply with these applicable laws or regulations, we could be subject to significant liabilities which could adversely affect our
business.
There
are many federal, state and international laws that may affect our business, including measures to regulate EVs and charging systems.
If we fail to comply with these applicable laws or regulations, we could be subject to significant liabilities which could adversely
affect our business.
There
are a number of significant matters under review and discussion with respect to government regulations which may affect business and/or
harm our customers, and thereby adversely affect our business, financial condition and results of operations.
In
addition to government and regulatory agency activity, ESG and privacy advocacy groups, the technology industry, and other industries
have established or may establish various new, additional, or different self-regulatory standards that may place additional burdens on
technology companies. Customers may expect that we will meet voluntary certifications or adhere to other standards established by them
or third parties. If we are unable to maintain these certifications or meet these standards, it could reduce demand for our solutions
and adversely affect our business.
Privacy
concerns and laws, or other domestic or foreign regulations, may adversely affect our business.
We
are currently subject, and/or may in the future be subject, to numerous privacy and data security laws. For example, some U.S. states,
members of the European Economic Area, the United Kingdom, and many other jurisdictions in which we operate have adopted some form of
privacy and data security laws and regulations which impose significant compliance obligations.
The
European Union’s General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act of 2018 (“CCPA”),
the California Privacy Rights Act (“CPRA”), the Colorado Privacy Act (“CPA”), and the Connecticut Act Concerning
Personal Data Privacy and Online Monitoring (“CDPA”) exemplify the vulnerability of our business to the evolving regulatory
environment related to personal data. Management’s attention may be diverted, and our compliance costs and potential liability may increase
as a result of additional national and international regulatory requirements related to data privacy and data security.
Failure
to comply with anticorruption and anti-money laundering laws, including the FCPA and similar laws associated with activities outside
of the United States, could subject us to penalties and other adverse consequences.
We
are subject to the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act,
the Anti-Bribery Act, and possibly other anti-bribery and anti-money laundering laws in countries in which it conducts activities. It
faces significant risks if it fails to comply with the FCPA and other anti-corruption laws that prohibit companies and their employees
and third-party intermediaries from promising, authorizing, offering, or providing, directly or indirectly, improper payments or benefits
to foreign government officials, political parties and private-sector recipients for the purpose of obtaining or retaining business,
directing business to any person or securing any advantage. Any violation of the FCPA, other applicable anti-corruption laws, and anti-money
laundering laws could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, or severe
criminal or civil sanctions, which could have a materially adverse effect on our reputation, business, operating results, and prospects.
In addition, ensuring compliance may be costly and time-consuming, and responding to any enforcement action may result in a significant
diversion of management’s attention and resources, significant defense costs, and other professional fees.
Existing
and future environmental health and safety laws and regulations could result in increased compliance costs or additional operating costs
or construction costs and restrictions. Failure to comply with such laws and regulations may result in substantial fines or other limitations
that may adversely impact our financial results or the results of operation.
Blink
and its operations, as well as those of its contractors, suppliers, and customers, are subject to certain environmental laws and regulations,
including laws related to the use, handling, storage, transportation, and disposal of hazardous substances and wastes as well as electronic
wastes and hardware, whether hazardous or not. These laws may require us or others in our value chain to obtain permits and comply with
procedures that impose various restrictions and obligations that may have material effects on our operations. If key permits and approvals
cannot be obtained on acceptable terms, or if other operational requirements cannot be met in a manner satisfactory for our operations
or on a timeline that meets our commercial obligations, it may adversely impact our business.
Environmental
and health and safety laws and regulations can be complex and may be subject to change, such as through new requirements enacted at the
supranational, national, sub-national, and/or local level or new or modified regulations that may be implemented under existing law.
The nature and extent of any changes in these laws, rules, regulations, and permits may be unpredictable and may have material effects
on our business. Future legislation and regulations or changes in existing legislation and regulations, or interpretations thereof, including
those relating to hardware manufacturing, electronic waste, or batteries, could cause additional expenditures, restrictions, and delays
in connection with our operations as well as other future projects, the extent of which cannot be predicted.
Further, we currently rely on third parties
to ensure compliance with certain environmental laws, including those related to the disposal of hazardous and non-hazardous wastes.
Any failure to properly handle or dispose of such wastes, regardless of whether such failure is Blink’s or its contractors, may
result in liability under environmental laws, including, but not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act (“CERCLA”), under which liability may be imposed without regard to fault or degree of contribution for the
investigation and clean-up of contaminated sites, as well as impacts to human health and damages to natural resources. Additionally,
we may not be able to secure contracts with third parties to continue their key supply chain and disposal services for our business,
which may result in increased costs for compliance with environmental laws and regulations.
The
enactment of legislation implementing changes in tax legislation or policies in different geographic jurisdictions including the United
States and several European countries could materially impact our business, financial condition and results of operations.
We
conduct business globally and file income tax returns in multiple jurisdictions. Our consolidated effective income tax rate could be
materially adversely affected by several factors, including: changing tax laws, regulations and treaties, or the interpretation thereof
(such as the United States Inflation Reduction Act of 2022 which, among other changes, introduced a 15% corporate minimum tax on certain
United States corporations and a 1% excise tax on certain stock redemptions by United States corporations); tax policy initiatives and
reforms under consideration (such as those related to the Organization for Economic Co-Operation and Development’s (“OECD”)
Base Erosion and Profit Shifting, or BEPS, project, the European Commission’s state aid investigations and other initiatives);
the practices of tax authorities in jurisdictions in which we operate; the resolution of issues arising from tax audits or examinations
and any related interest or penalties. Such changes may include (but are not limited to) the taxation of operating income, investment
income, dividends received or (in the specific context of withholding tax) dividends, royalties and interest paid.
We
are unable to predict what tax reforms may be proposed or enacted in the future or what effect such changes would have on our business,
but such changes, to the extent they are brought into tax legislation, regulations, policies or practices in jurisdictions in which we
operate, could increase the estimated tax liability that we have expensed to date and paid or accrued on our Consolidated Statement of
Financial Position, and otherwise affect our future results of operations, cash flows in a particular period and overall or effective
tax rates in the future in countries where we have operations, reduce post-tax returns to our shareholders and increase the complexity,
burden and cost of tax compliance.
Our
failure to maintain effective internal control over financial reporting could have a material adverse effect on our ability to report
our financial results on a timely and accurate basis.
During the fourth quarter of 2022, we identified IT deficiencies relating to change management and the restriction of access to a sub-system
at a subsidiary. Fiscal 2022 was the initial year that this subsidiary was subjected to testing its internal controls over financial reporting.
Further, we did not detect a miscalculation of a certain non-cash share-based compensation transaction which management views as an isolated
occurrence. These deficiencies, individually or in the aggregate, combined with inadequate compensating controls, created a reasonable
possibility that a material misstatement to the consolidated financial statements might not be prevented or detected on a timely basis.
We expect to remediate these control deficiencies during 2023.
As disclosed under Item 9A. Controls and Procedures, in our Annual Report on Form 10-K for the year ended December 31, 2021, management concluded that a material weakness in our internal control over financial reporting existed as of December 31, 2021. We identified certain design deficiencies in our management and analytical review controls associated with the financial close, revenue and inventory processes. During 2022, we completed the remediation measures related to this material weakness as of December 31, 2022.
Our
failure to maintain appropriate and effective internal controls over our financial reporting could result in misstatements in our financial
statements and potentially subject us to sanctions or investigations by the SEC or other regulatory authorities and could cause us to
delay the filing of required reports with the SEC and our reporting of financial results. Any of these events could result in a decline
in the market price of our common stock. Although we have taken steps to maintain our internal control structure as required, we cannot
guarantee that a control deficiency will not result in a misstatement in the future. See “Item 9A – Controls
and Procedures – Management’s Annual Report on Internal Control Over Financial Reporting”
for further information on material weaknesses.
If
our estimates or judgments relating to our critical accounting policies prove to be incorrect, our financial condition and results of
operations could be adversely affected.
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and
on various other assumptions that we believe to be reasonable under the circumstances, as discussed under “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” included elsewhere in this Annual Report and in our consolidated
financial statements included herein. The results of these estimates form the basis for making judgments about the carrying values of
assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant
assumptions and estimates used in preparing our consolidated financial statements include those related to revenue recognition, allowance
for doubtful accounts, inventory reserves, impairment of goodwill, indefinite-lived and long-lived assets, pension and other post-retirement
benefits, product warranty, valuation allowances for deferred tax assets, valuation of common stock warrants, and share-based compensation.
Our financial condition and results of operations may be adversely affected if our assumptions change or if actual circumstances differ
from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and
investors, resulting in a decline in the price of our common stock.
Risks
Associated with Our Securities
Our
common stock price fluctuated significantly in 2022 and is likely to continue to fluctuate from its current level in 2023.
The
market price of shares of our common stock fluctuated significantly in
2022 and is likely to continue to fluctuate from its current level in 2023. During 2022 and through December 31, 2022, for example, the
market closing price of our shares ranged from a low of $10.01 per share to a high of $29.29 per share and, as of March 10, 2023, our stock
price was $7.92 per share. Future announcements concerning the introduction of new products, services or technologies or changes in product
pricing policies by us or our competitors or changes in earnings estimates by analysts, among other factors, could cause the market price
of our common stock to fluctuate substantially. Also, stock markets have experienced extreme price and volume volatility in the last year.
This volatility has had a substantial effect on the market prices of securities of many public companies for reasons frequently unrelated
to the operating performance of the specific companies. These broad market fluctuations may also cause declines in the market price of
our common stock. Investors seeking short-term liquidity should be aware that we cannot assure that our stock price will increase to previously
higher levels.
A
possible “short squeeze” due to a sudden increase in demand of our common stock that largely exceeds supply may lead to further
price volatility in our common stock.
Investors
may purchase shares of our common stock to hedge existing exposure in our common stock or to speculate on the price of our common stock.
Speculation on the price of our common stock may involve long and short exposures. To the extent aggregate short exposure exceeds the
number of shares of our common stock available for purchase in the open market, investors with short exposure may have to pay a premium
to repurchase our common stock for delivery to lenders of our common stock. Those repurchases may in turn, dramatically increase the
price of our common stock until investors with short exposure are able to purchase additional shares of common stock to cover their short
position. This is often referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in shares
of our common stock that are not directly correlated to the performance or prospects of our company and once investors purchase the shares
necessary to cover their short position the price of our common stock may decline. We believe that the recent volatility in our common
stock may be due, in part, to short squeezes that may be temporarily increasing the price of our common stock, which could result in
a loss of some or all of your investment in our common stock.
We
have a number of shares of common stock issuable upon exercise of outstanding warrants and stock options, and an ATM common
stock program in place; the issuance of such shares could have a significant dilutive impact on our stockholders.
As of March 10, 2023, we had outstanding warrants to purchase 1,164,793 shares of common stock and stock options to purchase 1,060,535
shares of common stock. Our Articles of Incorporation authorize us to issue up to 500 million shares of common stock, which would permit
us to issue up to an additional approximately 405 million authorized, unissued shares of common stock, after giving effect to the approximate
number of shares of common stock currently outstanding and the number of shares reserved for issuance under warrants and stock options
We also have an at-the-market (“ATM”) program in place pursuant to which we may issue up to $250 million of our common stock
from time to time in the public markets and have reserved shares of common stock for this purpose. Accordingly, we have the ability to
issue a substantial number of additional shares of common stock in the future, which would dilute the percentage ownership held by existing
stockholders.
Sales
of a substantial number of shares of our common stock in the public market could cause the market price of our common stock to decline.
If there are more shares of common stock offered for sale than buyers are willing to purchase, then the market price of our common stock
may decline to a market price at which buyers are willing to purchase the offered shares of common stock and sellers remain willing to
sell the shares.
Our
executive officers and directors, including our Chairman and Chief Executive Officer and his affiliates, concentrated insider
ownership of our common stock, which will limit your influence on corporate matters.
As of March 10, 2023, our directors and executive officers collectively beneficially owned approximately 15% of our
outstanding shares of common stock, including the beneficial ownership of Michael D. Farkas and his affiliates of approximately 12% of
our outstanding shares of common stock.
As
a result, our insiders have the ability to influence our management and affairs through the election and removal of our
Board and all other matters requiring stockholder approval, including any future merger, consolidation or sale of all or substantially
all of our assets. This concentrated voting power could discourage others from initiating any potential merger, takeover or other change-of-control
transaction that may otherwise be beneficial to our stockholders. Further, this concentrated insider ownership will limit the practical effect
of your influence over our business and affairs, through any stockholder vote or otherwise. Any of these effects could depress the price
of our common stock.
Our
Articles of Incorporation grant our board the power to issue additional shares of common and preferred stock and to designate additional
series of preferred stock, all without stockholder approval.
We
are authorized to issue 540,000,000 shares of capital stock, of which 40,000,000 shares are authorized as preferred stock. Our Board,
without any action by our stockholders, may designate and issue shares of preferred stock in such series as it deems appropriate and
establish the rights, preferences and privileges of such shares, including dividends, liquidation and voting rights, provided it is consistent
with Nevada law.
The
rights of holders of our preferred stock that may be issued could be superior to the rights of holders of our shares of common stock.
The designation and issuance of shares of capital stock having preferential rights could adversely affect other rights appurtenant to
shares of our common stock. Further, any issuances of additional stock (common or preferred) will dilute the percentage of ownership
interest of then-current holders of our capital stock and may dilute our book value per share.
Certain
provisions of our corporate governing documents and Nevada law could discourage, delay or prevent a merger or acquisition at a premium
price.
Certain
provisions of our organizational documents and Nevada law could discourage potential acquisition proposals, delay or prevent a change
in control of our company, or limit the price that investors may be willing to pay in the future for shares of our common stock. For
example, our Articles of Incorporation and Bylaws permit us to issue, without any further vote or action by stockholders, up to 40,000,000
shares of preferred stock in one or more series and, with respect to each series, to fix the number of shares constituting the series
and the designation of the series, the voting powers (if any) of the shares of the series, and the preferences and relative, participating,
optional, and other special rights, if any, and any qualifications, limitations or restrictions of the shares of the series.
If
securities or industry analysts do not publish research or reports about our business or publish inaccurate or unfavorable research reports
about our business, our share price and/or trading volume could decline.
The
trading market for our common stock will, to some extent, depend on the research and reports that securities or industry analysts publish
about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us from time to time
should downgrade our shares or change their opinion of our business prospects, our share price would likely decline. If one or more of
these analysts ceases coverage of our company or fails to regularly publish reports on us, we could lose visibility in the financial
markets, which could cause our share price or trading volume to decline.
Our
business could be negatively affected as a result of actions of activist shareholders, and such activism could impact the trading value
of our securities.
Shareholders
may, from time to time, engage in proxy solicitations or advance shareholder proposals, or otherwise attempt to effect changes and assert
influence on our Board of Directors and management. Activist campaigns that contest or conflict with our strategic direction or seek
changes in the composition of our Board of Directors could have an adverse effect on our operating results and financial condition. A
proxy contest would require us to incur significant legal and advisory fees, proxy solicitation expenses and administrative and associated
costs and require significant time and attention by our Board of Directors and management, diverting their attention from the pursuit
of our business strategy. Any perceived uncertainties as to our future direction and control, our ability to execute on our strategy,
or changes to the composition of our Board of Directors or senior management team arising from a proxy contest could lead to the perception
of a change in the direction of our business or instability which may result in the loss of potential business opportunities, make it
more difficult to pursue our strategic initiatives, or limit our ability to attract and retain qualified personnel and business partners,
any of which could adversely affect our business and operating results. If individuals are ultimately elected to our Board of Directors
with a specific agenda, it may adversely affect our ability to effectively implement our business strategy and create additional value
for our shareholders. We may choose to initiate, or may become subject to, litigation as a result of a proxy contest or matters arising
from a proxy contest, which would serve as a further distraction to our Board of Directors and management and would require us to incur
significant additional costs. In addition, actions such as those described above could cause significant fluctuations in our stock price
based upon temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and
prospects of our business.
We
do not intend to pay cash dividends on our common stock for the foreseeable future, and you must rely on increases in the market price
of our common stock for returns on your investment.
For
the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate
paying any cash dividends on our common stock. Accordingly, stockholders and investors must be prepared to rely on sales of their common
stock after price appreciation to earn an investment return, which may never occur. Stockholders and investors seeking cash dividends
should not purchase our common stock. Any determination to pay dividends in the future will be made at the discretion of our Board and
will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other
factors the Board deems relevant.
ITEM
1B. |
UNRESOLVED
STAFF COMMENTS. |
Not
applicable.
We
maintain our principal executive offices and international headquarters at 605 Lincoln Road, 5th Floor, Miami Beach,
Florida 33139.
These
offices consist of approximately 10,000 square feet of owned condominium space.
In
addition, we lease office spaces in Tempe, Arizona; Bowie, Maryland; Los Angeles, California; Amsterdam, the Netherlands; Antwerp, Belgium;
St Albans, England; Israel; and India (Delhi and Bangalore), from which we operate our current business.
ITEM
3. |
LEGAL
PROCEEDINGS. |
We
have been party to certain legal proceedings that have arisen in the ordinary course of our business and have been incidental to our
business. Certain of the claims that have been made against us allege, among other things, breach of contract or breach of express and
implied warranties with regard to our products. Although litigation is inherently uncertain, and we believe we are insured against many
such instances, based on past experience and the information currently available, management does not believe that any currently pending
and threatened litigation or claims will have a material adverse effect on our financial position, liquidity or results of operations.
However, future events or circumstances, currently unknown to management, will determine whether the resolution of pending or threatened
litigation or claims will ultimately have a material effect on our financial position, liquidity or results of operations in any future
reporting periods.
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 December 31, 2022 as it determined that any such loss contingency was either not probable or estimable.
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. On June 17, 2022, the court substituted the executrix of Klein’s
estate as the plaintiff. The Company has not recorded an accrual related to this matter as of December 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. On June
22, 2022, the court re-consolidated the Klein and Bhatia actions and reinstated the temporary stay. 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 December 31, 2022 as it determined that any such loss contingency was either not probable
or estimable.
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 December
31, 2022 as it determined that any such loss contingency was either not probable or estimable.
ITEM
4. |
MINE
SAFETY DISCLOSURES. |
Not
applicable.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
1.
BUSINESS ORGANIZATION, NATURE OF OPERATIONS 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 networks (the “Blink Networks”) and Blink EV charging equipment, also known as electric
vehicle supply equipment (“EVSE”) and other EV-related services. The Blink Networks provide 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 Networks also provide 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.
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
have reopened and returns 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. Additionally, other recent macroeconomic events
including rising inflation, slowing economic growth, changes in U.S. and foreign government monetary policies, supply chain disruptions,
fluctuations in currency exchange rates and the Russian invasion of Ukraine have led to further economic uncertainty. As a result, the
Company is unable to predict the ultimate impact of continuing equipment order delays, chip shortages, the impact of other economic conditions
and continuous presence of Covid-19 will have on its business, future results of operations, financial position, or cash flows.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES
OF CONSOLIDATION
The
consolidated financial statements include the accounts of Blink Charging Co. and its wholly-owned subsidiaries. All intercompany transactions
and balances have been eliminated in consolidation. The results of operations for the years ended December 31, 2022, 2021 and 2020 include
the results of operations of BlueLA Carsharing LLC, U-Go Stations Inc., Blue Corner NV, Electric Blue and SemaConnect, Inc. of their
respective dates of acquisition.
USE
OF ESTIMATES
Preparation
of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The
Company’s significant estimates used in these financial statements include, but are not limited to, stock-based compensation,
accounts receivable reserves, inventory valuations, goodwill, the valuation allowance related to the Company’s deferred tax
assets, the carrying amount of intangible assets, right of use assets and related leases payable estimates of future EV sales and
the effects thereon, derivative liabilities and the recoverability and useful lives of long-lived assets. Certain of the
Company’s estimates could be affected by external conditions, including those unique to the Company and general economic
conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could
cause actual results to differ from those estimates.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
LIQUIDITY
As of December 31, 2022, the Company had cash and
working capital of $36,562 and $48,962, respectively. During the year ended December 31, 2022, 2021, and 2020, the Company incurred a
net loss of $91,560, $55,119, $17,846 and respectively. During the year ended December 31, 2022, 2021, and 2020 the Company used cash
in operating activities of $82,365, $40,570, and $18,070, respectively.
During the year ended December
31, 2022, the Company sold an aggregate of 558,721 shares of common stock under an “at-the-market” equity offering program
for aggregate gross proceeds of $7,697, less issuance costs of $311 which were recorded as a reduction to additional paid-in capital.
See Note 12 – Stockholders’ Equity.
In February 2023, the Company completed an underwritten
registered public offering of 8,333,333 shares of its common stock at a public offering price of $12.00 per share. The Company received
approximately $100,000 in gross proceeds from the public offering and approximately $95,000 in net proceeds after deducting the underwriting
discount and offering expenses paid by the Company. In addition, the underwriters have a 30-day option to purchase up to an additional
1,249,999 shares of common stock from the Company at the public offering price, less the underwriting discounts and commissions. See Note
17 – Subsequent Events.
The Company expects that Its cash on hand will fund
its operations for at least 12 months after the issuance date of these financial statements.
Since inception, the Company’s operations have
primarily been funded through proceeds received in equity and debt financings. The Company believes it has access to capital resources
and continues to evaluate additional financing opportunities. There is no assurance that the Company will be able to obtain funds on commercially
acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete
its development initiatives or attain profitable operations.
The Company’s operating needs include the planned costs to operate its business, including amounts required
to fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds
will depend on many factors, including the Company’s ability to successfully commercialize its products and services, competing
technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies
to enhance or complement its product and service offerings.
FAIR
VALUE OF FINANCIAL INSTRUMENTS
Fair
value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date and is measured using inputs in one of the following three categories:
Level
1 measurements are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to
access. Valuation of these items does not entail a significant amount of judgment.
Level
2 measurements are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar
assets or liabilities in markets that are not active or market data other than quoted prices that are observable for the assets or liabilities.
Level
3 measurements are based on unobservable data that are supported by little or no market activity and are significant to the fair value
of the assets or liabilities.
The Company considers cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities to meet the definition of financial instruments. As of December 31, 2022
and 2021, the carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate
their fair value due to the relatively short period of time between their origination and their expected realization or payment. The
carrying amount of consideration payable approximate its fair value as the terms are comparable to terms currently offered by local lending
institutions for arrangements with similar terms to industry peers with comparable credit characteristics.
CASH
AND CASH EQUIVALENTS
The
Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents in
the consolidated financial statements. The Company has cash on deposits in several financial institutions which, at times, may be in
excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced losses in such
accounts and periodically evaluates the creditworthiness of its financial institutions. The Company reduces its credit risk by placing
its cash and cash equivalents with major financial institutions.
ACCOUNTS AND OTHER RECEIVABLES
Accounts
and other receivables are carried at their contractual amounts, less a provision for current expected credit losses. The reserve
represents the Company’s best estimate of expected credit losses it may experience in the Company’s receivable
portfolio. As of December 31, 2022 and 2021, there was an allowance for expected credit losses of $2,548
and $1,262,
respectively. Management estimates the allowance for credit losses based on an ongoing review of existing economic
conditions, the financial conditions of the customers, historical trends in credit losses, and the amount and age of past due
accounts.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
INVENTORY
Inventory
is comprised of electric charging stations, related parts and components, sub-components, sub-assemblies and finished products. Inventory
is stated at the lower of cost and net realizable value. Cost is determined by the first-in, first-out method. Inventory that is sold
to third parties is included within cost of sales and inventory that is installed on the premises of participating owner/operator properties,
where the Company retains ownership, is transferred to property and equipment at the carrying value of the inventory. Cost of parts and
components include the purchase and related costs incurred in bringing the products to their present location and condition. The Company
periodically reviews for slow-moving, excess or obsolete inventories. Products that are determined to be obsolete, if any, are written
down to net realizable value. Based on the aforementioned periodic reviews, the Company recorded an inventory reserve for slow-moving
or excess inventory of $298 and $162 as of December 31, 2022 and 2021, respectively. As of December 31, 2022, the Company’s inventory
was comprised $25,754 of finished goods that were available for sale and $8,986 of raw material and work in process. As of December 31,
2021, the Company’s inventory was comprised of finished goods inventory that were available for sale. Changes in the balance of inventory reflected on the balance sheet are the result of the impact of the change in
foreign currency exchange rates.
PROPERTY
AND EQUIPMENT
Property
and equipment is stated at cost, net of accumulated depreciation and amortization which is recorded commencing at the in-service date
using the straight-line method over the estimated useful lives of the assets.
SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY AND EQUIPMENT
| |
Useful
Lives | |
Asset | |
(In
Years) | |
| |
| |
Computer
software and office and computer equipment | |
| 3
- 5 | |
Machinery
and equipment, automobiles, furniture and fixtures | |
| 3
- 10 | |
Installed
Level 2 electric vehicle charging stations | |
| 3
- 7 | |
Installed
Level 3 (DC Fast Chargers (“DCFC”)) electric vehicle charging stations | |
| 5 | |
Building | |
| 39 | |
When
property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and
any resulting gain or loss is included in the statements of operations for the respective period. Minor additions and repairs are expensed
in the period incurred. Major additions and repairs which extend the useful life of existing assets are capitalized and depreciated using
the straight-line method over their remaining estimated useful lives.
EV
charging stations represents the cost, net of accumulated depreciation, of charging equipment and installation of the charging equipment
that have been installed on the premises of participating owner/operator properties or are earmarked to be installed.
The
Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of the asset may not be recoverable. The Company assesses the recoverability of its long-lived assets by monitoring current selling
prices of car charging units in the open market, the adoption rate of various auto manufacturers in the EV market and projected car charging
utilization at various public car charging stations throughout its network in determining fair value. An impairment loss would be recognized
when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying
amount.
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”). During the year ended December 31, 2022, the Company incurred $3,809 related to these
upgrades. As of December 31, 2022, the charger upgrades were substantially complete.
See
Note 4 – Property and Equipment for additional details.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
GOODWILL
Goodwill
is the excess of consideration paid for an acquired entity over the fair value of the amounts assigned to assets acquired, including
other identifiable intangible assets, and liabilities assumed in a business combination. To determine the amount of goodwill resulting
from a business combination, the Company performs an assessment to determine the acquisition date fair value of the acquired company’s
tangible and identifiable intangible assets and liabilities.
Goodwill
is required to be evaluated for impairment on an annual basis or whenever events or changes in circumstances indicate the asset may be
impaired. An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances
leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. These
qualitative factors include: macroeconomic and industry conditions, cost factors, overall financial performance and other relevant entity-specific
events. If the entity determines that this threshold is met, then the Company may apply a one-step quantitative test and record the amount
of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount
of goodwill allocated to the reporting unit. The Company determines fair value through multiple valuation techniques and weights the
results accordingly. The Company is required to make certain subjective and complex judgments in assessing whether an event of impairment
of goodwill has occurred, including assumptions and estimates used to determine the fair value of its reporting units. The Company has
elected to perform its annual goodwill impairment review on November 1 of each year utilizing a qualitative assessment to determine if
it was more likely than not that the fair value of each of its reporting units was less than their respective carrying values and concluded
that no impairment existed.
During
the years ended December 31, 2022, 2021 and 2020, no impairment charge relating to goodwill was recognized. See Note 7 - Goodwill for
further information.
INTANGIBLE
ASSETS
Identifiable
intangible assets primarily include trade name, customer relationships, favorable leases, internally developed technology, capitalized
engineering costs and non-compete agreements. Amortizable intangible assets are amortized on a straight-line basis over their estimated
useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the assets may be impaired. If an
indicator of impairment exists, the Company will compare the estimated future cash flows of the asset, on an undiscounted basis, to the
carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted
cash flows do not exceed the carrying value, then impairment, if any, is measured as the difference between fair value and carrying value,
with fair value typically based on a discounted cash flow model. There were no indicators, events or changes in circumstances that would
indicate intangible assets were impaired during the years ended December 31, 2022, 2021 or 2020.
SEGMENTS
The
Company operates a single segment business. The Company’s Chief Executive Officer and Chief Operating Officer, who is the chief
operating decision maker, views the Company’s operating performance on a consolidated basis as Blink’s only business is the
sale and distribution of electric vehicle charging equipment and its associated revenues earned from customers and/or Property Partners
who use equipment connected to its network.
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 (1.0701
for the Euro, and 0.0121 for
the Indian Rupee, as of December 31, 2022 and 1.1325
for the Euro as of December 31, 2021), while expense accounts are translated at the weighted average exchange rate for the period
(1.0527
for the Euro and 0.0121
for the Indian Rupee, for the year ended December 31, 2022 and 1.1722
for the Euro during the year ended December 31, 2021). 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 losses attributable to
foreign exchange were $600
and $124
during the years ended December 31, 2022 and 2021, respectively.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
REVENUE
RECOGNITION
The
Company recognizes revenue primarily from four different types of contracts with customers:
● |
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 or installation of the product. |
● |
Charging
service revenue – company-owned charging stations - Revenue is recognized at the
point when a particular charging session is completed. |
● |
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. |
● |
Other
– Other revenues primarily comprises of revenues generated from alternative fuel
credits. |
The
following table summarizes our revenue recognized in the consolidated statements of operations:
SCHEDULE OF REVENUE RECOGNITION BY CONTRACT
| |
| | | |
| | | |
| | |
| |
For
The Years Ended | |
| |
December
31, | |
| |
2022 | | |
2021 | | |
2020 | |
Revenues
- Recognized at a Point in Time | |
| | | |
| | | |
| | |
Product
sales | |
$ | 46,018 | | |
$ | 15,480 | | |
$ | 4,432 | |
Charging
service revenue - company-owned charging stations | |
| 6,866 | | |
| 2,978 | | |
| 773 | |
Other | |
| 1,393 | | |
| 426 | | |
| 362 | |
Total
Revenues - Recognized at a Point in Time | |
| 54,277 | | |
| 18,884 | | |
| 5,567 | |
| |
| | | |
| | | |
| | |
Revenues
- Recognized Over a Period of Time: | |
| | | |
| | | |
| | |
Network
and other fees | |
| 5,298 | | |
| 887 | | |
| 474 | |
Total
Revenues - Recognized Over a Period of Time | |
| 5,298 | | |
| 887 | | |
| 474 | |
| |
| | | |
| | | |
| | |
Revenues - Other: | |
| | | |
| | | |
| | |
Ride-sharing services | |
| 1,268 | | |
| 769 | | |
| 168 | |
Grant and rebate | |
| 296 | | |
| 400 | | |
| 22 | |
Total Revenues - Other | |
| 1,564 | | |
| 1,169 | | |
| 190 | |
| |
| | | |
| | | |
| | |
Total
Revenues | |
$ | 61,139 | | |
$ | 20,940 | | |
$ | 6,231 | |
The
following table summarizes our revenue recognized in the consolidated statements of operations by geographical area:
SCHEDULE
OF REVENUE RECOGNITION BY GEOGRAPHICAL AREA
| |
| | | |
| | | |
| | |
| |
For
The Years Ended | |
| |
December
31, | |
| |
2022 | | |
2021 | | |
2020 | |
Revenues
by Geographical Area | |
| | | |
| | | |
| | |
U.S.A | |
$ | 40,828 | | |
$ | 10,978 | | |
$ | 3,543 | |
International | |
| 20,311 | | |
| 9,962 | | |
| 2,688 | |
Total
Revenues | |
$ | 61,139 | | |
$ | 20,940 | | |
$ | 6,231 | |
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
REVENUE
RECOGNITION – CONTINUED
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 services, the Company records deferred revenue until the performance obligations are satisfied.
As
of December 31, 2022, the Company had $15,830 related to contract liabilities where performance obligations have not yet been satisfied,
which has been included within deferred revenue on the consolidated balance sheets as of December 31, 2022. The Company expects to satisfy
$10,572 of its remaining performance obligations for network fees, warranty revenue, product sales, and other and recognize the revenue
within the next twelve months.
The Company has elected to apply the practical expedient to expense costs to obtain contracts at the time the liability is incurred when
the expected amortization periods is one year or less.
During
the year ended December 31, 2022, the Company recognized $1,136
of revenues related to network fees and warranty contracts that were included in deferred revenues as of December 31, 2021. During
the year ended December 31, 2021, the Company recognized $514
of revenues related to network fees and warranty contracts that were included in deferred revenues as of December 31, 2020. During
the year ended December 31, 2020, the Company recognized $466
of revenues related to network fees and warranty contracts that were included in deferred revenues as of December 31,
2019.
During
the years ended December 31, 2022, 2021, and 2020, there was no revenue recognized from performance obligations satisfied (or partially
satisfied) in previous periods.
Grants,
rebates and alternative fuel credits, 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 the useful life of the charging station. During the years ended December 31, 2022, 2021 and 2020, the Company
recorded $296,
$400 and
$22,
respectively, related to grant and rebate revenue. During the years ended December 31, 2022, 2021 and 2020, the Company recognized
$296,
$207 and
$225,
respectively, of revenue related to alternative fuel credits, which is included within other revenue on the consolidated statements
of operations.
Furthermore, ride-sharing services, which are not within scope of ASC 606, pertain to revenues and expenses related
to a 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 which
are short term in nature. During the years ended December 31, 2022, 2021 and 2020, the Company recognized $1,268,
$769 and
$168,
respectively, related to ride-sharing services revenue.
ADVERTISING
COSTS
The
Company participates in various advertising programs. All costs related to advertising of the Company’s products and services are
expensed in the period incurred. Advertising costs charged to operations for the years ended December 31, 2022, 2021 and 2020 were $2,618,
$84 and $15, respectively, and are included in selling and marketing on the consolidated statements of operations.
CONCENTRATIONS
As
of December 31, 2022, accounts payable to a significant vendor were approximately 15% of total accounts payable. During the year
ended December 31, 2021, sales to a significant customer represented 12%
of total revenue. During the year ended December 31, 2020, sales to a significant customer represented 25%
of total revenue. During the year ended December 31, 2020, sales to another significant customer represented 11%
of total revenue. During the year ended December 31, 2022 and 2021, the Company made purchases from a significant supplier that
represented 19% and 23%
respectively, of total purchases.
STOCK-BASED
COMPENSATION
The
Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The
fair value of the award is measured on the grant date and then is recognized over the period during which services are required to be
provided in exchange for the award, usually the vesting period. The Company computes the fair value of equity-classified warrants and
options granted using the Black-Scholes option pricing model.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
LEASES
The
Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”)
assets and operating lease liabilities in our consolidated balance sheets. Finance leases are included in property and equipment and
finance lease liabilities on the consolidated balance sheets.
ROU
assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease
payments arising from the lease. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments
over the lease term. As most of our leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on
the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating
lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or
terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on
a straight-line basis over the lease term.
The
Company provides charging services at designated locations on the hosts property at which the charging station is situated. In consideration
thereof, the host shares in the monthly revenue generated by the charging station on a percentage basis. As the charging station monthly
revenue generated is variable, the host’s monthly revenue derived there from is similarly variable. In accordance with ASC 842
the hosts’ portion of revenue is variable and not predicated on an index or rate, as defined, these payments are not within the
scope ASC 842.
INCOME
TAXES
The
Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included in the
financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the
financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are
expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than
not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
the statements of operations in the period that includes the enactment date. As of December 31, 2022 and 2021, the Company maintained
a full valuation allowance against its deferred tax assets, since it is more likely than not that the future tax benefit on such temporary
differences will not be realized.
The
Company recognizes the tax benefit from an uncertain income tax position only if it is more likely than not that the tax position will
be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in
the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood
of being realized upon ultimate settlement by examining taxing authorities. The Company has open tax years going back to 2019 (or the
tax year ended December 31, 2009 if the Company were to utilize its NOLs) which will be subject to audit by federal and state authorities
upon filing. The Company’s policy is to recognize interest and penalties accrued on uncertain income tax positions in interest
expense in the Company’s consolidated statements of operations. Prior to acquiring SemaConnect, Inc., the Company had no material
unrecognized tax benefits and no adjustments to its financial position. However, the acquisition of SemaConnect, Inc. brought with it
certain unrecognized tax benefits. As of December 31, 2022 the Company had gross unrecognized tax benefits of $1,436. The Company does
not expect the unrecognized tax benefits to change significantly over the next 12 months.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
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 Years Ended | |
| |
December
31, | |
| |
2022 | | |
2021 | | |
2020 | |
Warrants | |
| 1,592,203 | | |
| 3,274,800 | | |
| 3,897 | |
Options | |
| 1,060,535 | | |
| 983,505 | | |
| 573 | |
Unvested
restricted common stock | |
| - | | |
| 50,831 | | |
| - | |
Total
potentially dilutive shares | |
| 2,652,738 | | |
| 4,309,136 | | |
| 4,470 | |
COMMITMENTS
AND CONTINGENCIES
Liabilities
for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable
that a liability has been incurred and the amount of the assessment can be reasonably estimated.
RECENTLY
ISSUED ACCOUNTING STANDARDS
In
October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805)” (“ASU 2021-08”). The ASU improves
the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency
related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.
The update is effective for annual and interim periods within the fiscal year beginning after December 15, 2022, and early adoption is
permitted, including adoption in an interim period. The Company adopted ASU 2021-08 effective January 1, 2023 and its adoption did not have a material impact on its
consolidated financial statements and disclosures.
In
March 2022, the FASB issued ASU 2022-02, “Financial Instruments—Credit Losses (Topic 326), Troubled Debt Restructurings
(TDRs) and Vintage Disclosures” that eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40,
Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings
and restructurings by creditors when a borrower is experiencing financial difficulty. Rather than applying the recognition and
measurement guidance for TDRs, an entity must apply the loan refinancing and restructuring guidance to determine whether a
modification results in a new loan or a continuation of an existing loan. The amendment also requires an entity disclose
current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of
Subtopic 326. The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within
those fiscal years. Entities should apply the amendments prospectively except for the transition method related to the recognition
and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting in a
cumulative-effect adjustment to retained earnings in the period of adoption. Early adoption of the amendments are permitted,
including adoption in an interim period. If an entity elects to early adopt the amendments in an interim period, the guidance should
be applied as of the beginning of the fiscal year that includes the interim period. An entity may elect to early adopt the
amendments about TDRs and related disclosure enhancements separately from the amendments related to vintage disclosures. The Company
adopted ASU 2022-02 effective January 1, 2023 and its adoption did not have a material impact on its consolidated financial
statements and disclosures.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
RECENTLY
ISSUED ACCOUNTING STANDARDS - CONTINUED
In
June 2022, the FASB issued ASU 2022-03, “Fair
Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”
which amends guidance in Topic 820, Fair Value Measurement. The guidance clarifies that a contractual restriction on the sale of an
equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring
the fair value. The guidance also clarifies that an entity cannot, as a separate unit of account, recognize and measure
a contractual sale restriction. The amendment requires the following disclosures for equity securities subject
to contractual sale restrictions: the fair value of equity securities subject
to contractual sale restrictions; the nature and remaining duration of the restriction(s); and the circumstances
that could cause a lapse in the restriction(s). The amended guidance is effective January 1, 2024 on a prospective basis. Early
adoption is permitted. The Company is currently assessing the impact of adopting this
new accounting standard on its consolidated financial statements and related
disclosures.
In
September 2022, the FASB issued ASU 2022-04, “Liabilities
- Supplier Finance Programs (Subtopic 405-50) Disclosure of Supplier Finance Program Obligations” to
require entities that use supplier finance programs in connection with purchase of goods and services to disclose the key terms of such
programs and information about obligations outstanding at the end of the reporting period, including a rollforward
of those obligations of where in the financial statements outstanding amounts are present. The guidance does not affect the recognition,
measurement, or financial statement presentation of supplier finance program obligations. The Company adopted ASU 2022-04 effective January
1, 2023 and its adoption did not have a material impact on its consolidated financial statements and related disclosures.
In
December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848), Deferral of the Sunset Date of Topic
848” that extends the period of time preparers can utilize the reference rate reform relief guidance provided by ASU
2020-04 and ASU 2021-01, which are discussed above. ASU 2022-06, which was effective upon issuance, defers the sunset date of this
prior guidance from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief
guidance in Topic 848. The Company adopted ASU 2022-06 effective January 1, 2023 and its
adoption did not have a material impact on its consolidated financial statements and disclosures.
3.
BUSINESS COMBINATIONS
SEMACONNECT, INC.
On
June 15, 2022, the Company completed the acquisition of SemaConnect, Inc., a Delaware corporation (“SemaConnect”) pursuant
to an Agreement and Plan of Merger, dated as of June 13, 2022 (“Acquisition Agreement”), by and among the Company, Blink
Sub I Corp., Blink Sub II LLC, SemaConnect and Shareholder Representative Services LLC (solely in its capacity as the stockholders’
representative). Following the closing of the acquisition, SemaConnect became a wholly owned subsidiary of the Company. SemaConnect is
a leading provider of EV charging infrastructure solutions in North America.
The
aggregate purchase price was $200,573,
which included excess working capital of $1,229
and closing date cash of $3,639. The
consideration paid in the acquisition consisted of: (a) $86,736 in cash, (i) of which $46,136 was paid at the closing of the
Acquisition Agreement (“Closing”) and (ii) the remaining $40,600 is payable (bearing interest at 7%) until not earlier
than nine months following the Closing and not later than three years following the Closing; and (b) 7,454,975 shares of
the Company’s common stock with a fair value of $113,837. The fair value of the common stock consideration was
determined by the closing price of the Company’s common stock on the acquisition date. Included in the cash consideration was
$8,103
related to payments due to stock option holders of SemaConnect. Subsequent to the closing of the acquisition, payments to the stock
option holder were made after the stock option holder signed an option cash-out agreement.
Goodwill
was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is attributable
to the reputation of the business acquired, the workforce in place and the synergies to be achieved from this acquisition. Goodwill of
$174,439 from the acquisition of SemaConnect is not expected to be deductible for income tax purposes.
The
following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date of SemaConnect:
SCHEDULE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
|
|
|
|
|
Purchase
Consideration: |
|
|
|
|
Cash |
|
$ |
46,136 |
|
Deferred
cash consideration |
|
|
40,600 |
|
Common
stock |
|
|
113,837 |
|
|
|
|
|
|
Total
Purchase Consideration |
|
$ |
200,573 |
|
|
|
|
|
|
Less: |
|
|
|
|
Trade
name |
|
$ |
1,831 |
|
Customer
relationships |
|
|
15,055 |
|
Internally
developed technology |
|
|
3,607 |
|
Non-compete
agreements |
|
|
241 |
|
Property
and equipment |
|
|
614 |
|
Right
of use asset |
|
|
1,092 |
|
Other
assets |
|
|
449 |
|
Deferred
revenue- non current portion |
|
|
(702 |
) |
Lease
liability- non current portion |
|
|
(611 |
) |
Debt-free
net working capital |
|
|
4,558 |
|
|
|
|
|
|
Fair
Value of Identified Net Assets |
|
$ |
26,134 |
|
|
|
|
|
|
Remaining
Unidentified Goodwill Value |
|
$ |
174,439 |
|
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
3.
BUSINESS COMBINATIONS – CONTINUED
SEMACONNECT,
INC. - CONTINUED
In
connection with the acquisition of SemaConnect, the Company acquired tradename, customer relationships, internally developed technology
and non-compete agreements.
The
Company used the relief from royalty method when determining the fair value of the acquired trademark and internally developed technology.
The fair value was determined by applying an estimated royalty rate to revenues, measuring the
value the Company would pay in royalties to a market participant if it did not own the trademark and internally developed technology
and had to license it from a third party. The trademark was assigned a useful life of two years and the internally developed technology
was assigned a useful life of three years.
When
determining fair value of customer relationships, a form of income approach, known as the multi period excess earnings method was used.
The fair value was determined by calculating the present value of estimated future operating
cash flows generated from the existing customers less costs to realize the revenue. The Company applied a discount rate of 20%,
which reflected the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows. Other
significant assumptions used to estimate the fair value of the customer contracts include an assumed income tax rate of 26%. The
customer relationships were assigned a 5 year useful life.
The
Company used a discounted cash flow model when determining the fair value of the non-compete agreements, significant assumptions include
a discount rate of 20% and an assumed income tax rate of 26%. The non-compete agreements were assigned a useful life of two years.
The
fair value of working capital accounts were determined to be the carrying values due to the short-term nature of the assets and liabilities.
The fair value of property and equipment
was estimated by applying the cost approach. The cost approach uses the replacement or reproduction cost as an indicator of fair value.
The assumptions of the cost approach include replacement cost new, projected capital expenditures, and physical deterioration factors
including economic useful life, remaining useful life, age, and effective age.
The
components of debt free net working capital are as follows:
The
consolidated financial statements of the Company include the results of operations of SemaConnect from June 15, 2022 to December 31,
2022 and do not include results of operations for periods prior to June 15, 2022. The results of operations of SemaConnect from June
15, 2022 to December 31,2022 included revenues of $18,411 and a net loss of $3,295.
The
following table presents the unaudited pro forma consolidated results of operations for the years ended December 31, 2022 and 2021 as
if the acquisition of SemaConnect had occurred at the beginning of fiscal year 2021. The pro forma information provided below is compiled
from the pre-acquisition financial information of SemaConnect and includes pro forma adjustments for adjustments to certain expenses.
The pro forma results are not necessarily indicative of (i) the results of operations that would have occurred had the operations of
this acquisition actually been acquired at the beginning of fiscal year 2021 or (ii) future results of operations:
SCHEDULE OF PROFORMA INFORMATION OF OPERATIONS
| |
| | | |
| | |
| |
For
the Years Ended December 31, | |
| |
2022 | | |
2021 | |
| |
(Unaudited) | | |
(Unaudited) | |
Revenues | |
$ | 70,078 | | |
$ | 33,390 | |
Net
loss | |
$ | (102,444 | ) | |
$ | (69,012 | ) |
The
above pro forma information includes pro forma adjustments to give effect to the amortization of the acquired intangible assets to the
2021 historical period.
As
of the date of the acquisition, the Company expected to collect all contractual cash flows related to receivables acquired in the acquisition.
Acquisition-related costs are expensed as incurred and are recorded within general and administrative expenses on the consolidated statements
of operations. Acquisition-related costs were $3,407 during the year ended December 31, 2022.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
3.
BUSINESS COMBINATIONS – CONTINUED
ELECTRIC
BLUE LIMITED
On
April 22, 2022, pursuant to a Sale and Purchase Agreement dated April 22, 2022, the Company acquired, through its Dutch subsidiary,
Blink Holdings B.V., all of the outstanding capital stock of Electric Blue Limited (“EB”), a private company limited by shares and
registered in England and Wales, from its shareholders. Headquartered in St. Albans, United Kingdom, EB is a
leading 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
fair value purchase price for the acquisition of all of EB’s outstanding capital stock was $19,317,
consisting of $12,651
in cash, 152,803 shares of the Company’s common stock with a fair value of $2,852,
plus the contingent consideration described in the following paragraph. The fair value of the common stock consideration was determined by the closing price of the Company’s common
stock on the acquisition date.
In
addition, provided EB reaches specified gross revenue or new EV charger installation targets over the three years post-closing, the Company
also agreed to issue up to approximately $6,400 in additional shares of its common stock to EB shareholders (the “Contingent Consideration”).
The Contingent Consideration was recorded at an estimated fair value of $3,814. As of December 31, 2022, the estimated fair value of
the Contingent Consideration was $1,316. The Company uses a probability-weighted discounted cash flow approach as a valuation technique
to determine the fair value of the contingent consideration liabilities on the acquisition date and at each reporting period. The significant
unobservable inputs used in the fair value measurements are projections over the earn-out period, and the probability outcome percentages
that are assigned to each scenario. Significant increases or decreases to either of these inputs in isolation could result in a significantly
higher or lower liability with a higher liability capped by the contractual maximum of the contingent consideration liabilities.
Of
the purchase price to be issued to the EB shareholders at closing, approximately $650 in cash and 25,466 shares of common stock 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 we may incur by reason of, among other things, any misrepresentation or breach of warranty by EB under the Sale
and Purchase Agreement.
Goodwill
was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is attributable
to the reputation of the business acquired, the workforce in place and the synergies to be achieved from this acquisition. Goodwill of
$10,443 from the acquisition of EB is expected to be deductible for income tax purposes.
The
following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date of EB:
SCHEDULE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
|
|
| | |
Purchase
Consideration: |
|
| | |
Cash |
|
$ | 12,651 | |
Common
stock |
|
| 2,852 | |
Contingent
consideration |
|
| 3,814 | |
|
|
| | |
Total
Purchase Consideration |
|
$ | 19,317 | |
|
|
| | |
Less: |
|
| | |
Trade
name |
|
$ | 500 | |
Customer
relationships |
|
| 4,856 | |
Internally
developed technology |
|
| 515 | |
Non-compete
agreements |
|
| 1,992 | |
Property
and equipment |
|
| 4,325 | |
Deferred
revenue- non current portion |
|
| (2,689 | ) |
Debt-free
net working capital deficit |
|
| (625 | ) |
|
|
| | |
Fair
Value of Identified Net Assets |
|
$ | 8,874 | |
|
|
| | |
Remaining
Unidentified Goodwill Value |
|
$ | 10,443 | |
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
3.
BUSINESS COMBINATIONS – CONTINUED
ELECTRIC
BLUE LIMITED – CONTINUED
The
components of debt free net working capital deficit are as follows:
Current assets: | |
| | |
Cash | |
$ | 1,291 | |
Accounts receivable | |
| 1,618 | |
Prepaid expenses and other current assets | |
| 508 | |
Total current assets | |
$ | 3,417 | |
| |
| | |
Less current liabilities: | |
| | |
Accounts payable | |
$ | 647 | |
Current portion of lease liabilities | |
| 22 | |
Current portion of notes payable | |
| 611 | |
Accrued expenses and other current liabilities | |
| 2,762 | |
| |
| | |
Total current liabilities | |
$ | 4,042 | |
| |
| | |
Debt free net working capital deficit | |
$ | (625 | ) |
The
Company used the relief from royalty method when determining the fair value of the acquired trademark and internally developed technology.
The fair value was determined by applying an estimated royalty rate to revenues, measuring the
value the Company would pay in royalties to a market participant if it did not own the trademark and internally developed technology
and had to license it from a third party. The trademark was assigned a useful life of one and half years and the internally developed
technology was assigned a useful life of one year.
When
determining fair value of customer relationships, a form of income approach, known as the multi period excess earnings method was used.
The fair value was determined by calculating the present value of estimated future operating
cash flows generated from the existing customers less costs to realize the revenue. The Company applied a discount rate of 23%,
which reflected the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows. Other
significant assumptions used to estimate the fair value of the customer contracts include an assumed income tax rate of 25%. The
assigned useful life for customer relationships was approximately six years.
The
Company used a discounted cash flow model when determining the fair value of the non-compete agreements, significant assumptions include
a discount rate of 23% and an assumed income tax rate of 25%. The non-compete agreements were assigned a useful life of two years.
The
Company used a Monte-Carlo based simulation model when determining the fair value of the contingent consideration. The model takes into
account the Company’s projections as well as an assumed discount rate of 12%.
The
fair value of working capital accounts were determined to be the carrying values due to the short-term nature of the assets and liabilities.
The fair value of property and equipment
was estimated by applying the cost approach. The cost approach uses the replacement or reproduction cost as an indicator of fair value.
The assumptions of the cost approach include replacement cost new, projected capital expenditures, and physical deterioration factors
including economic useful life, remaining useful life, age, and effective age.
Changes
in the balance of identified intangible assets and goodwill reflected on the balance sheet are the result of the impact of the change
in foreign currency exchange rates.
The
consolidated financial statements of the Company include the results of operations of EB from April 22, 2022 to December 31, 2022 and
do not include results of operations for periods prior to April 22, 2022. The results of operations of EB from April 22, 2022 to December
31, 2022 included revenues of $4,601 and a net loss of $4,355.
The
following table presents the unaudited pro forma consolidated results of operations for the years ended December 31, 2022 and 2021 as
if the acquisition of EB had occurred at the beginning of fiscal year 2021. The pro forma information provided below is compiled from
the pre-acquisition financial information of EB and includes pro forma adjustments for adjustments to certain expenses. The pro forma
results are not necessarily indicative of (i) the results of operations that would have occurred had the operations of this acquisition
actually been acquired at the beginning of fiscal year 2021 or (ii) future results of operations:
SCHEDULE OF PROFORMA INFORMATION OF OPERATIONS
| |
| | | |
| | |
| |
For
the Years Ended December 31, | |
| |
2022 | | |
2021 | |
| |
(Unaudited) | | |
(Unaudited) | |
Revenues | |
$ | 62,002 | | |
$ | 25,076 | |
Net
loss | |
$ | (92,705 | ) | |
$ | (60,076 | ) |
The
above pro forma information includes pro forma adjustments to give effect to the amortization of the acquired intangible assets to the
2021 historical period. As of the date of the acquisition, the Company expected to collect all contractual cash flows related to receivables
acquired in the acquisition.
Acquisition-related
costs are expensed as incurred and are recorded within general and administrative expenses on the consolidated statements of operations.
Acquisition-related costs were $376 during the year ended December 31, 2022.
See
Note 11 – Fair Value Measurement for additional information.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
3.
BUSINESS COMBINATIONS – CONTINUED
BLUE
CORNER NV
On
May 10, 2021, pursuant to a Share Purchase Agreement dated April 21, 2021, the Company through its wholly-owned subsidiary in the Netherlands,
Blink Holdings, B.V. closed on the acquisition from the shareholders of Blue Corner NV, a Belgian company (“Blue Corner”),
of all of the outstanding capital stock of Blue Corner. Headquartered in Belgium, with sales representative offices in several other
European cities, Blue Corner owns and operates an EV charging network across Europe. The acquisition of Blue Corner was made to enter
the European market and provide an opportunity to expand the Company’s footprint in this region. The purchase price for the acquisition
of all of Blue Corner’s outstanding capital stock was approximately $23,775
(or €20,000),
consisting of approximately $22,985
(or €19,000)
in cash and approximately $790
(€700)
represented by 32,382
shares of the Company’s common stock (the
“Consideration Shares”). The fair value of the Consideration Shares was calculated based on the average price of the Company’s
common stock during the 30 consecutive trading days immediately preceding the closing date of the Share Purchase Agreement, which equaled
$37.66
(or €30.88)
per share, reduced by a discount for illiquidity due to the 12-month lockup that exists on any sales or transfers. The Company executed
management agreements with key Blue Corner personnel, including equity incentive packages consisting of additional shares of the Company’s
common stock which is compensatory and not included in the purchase price for this acquisition. The Company entered into an escrow agreement
pursuant to the Share Purchase Agreement, under which the Company paid approximately $2,100
(€1,725)
of the purchase price into an escrow account for a period of up to 18 months following the closing to cover any losses or damages the
Company may incur by reason of any misrepresentation or breach of warranty by Blue Corner under the Share Purchase Agreement.
In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for Blue
Corner, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. The price purchase
price allocation was finalized during fiscal 2022 within the one-year measurement period.
The
following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date of Blue Corner:
SCHEDULE
OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
| |
| | |
Purchase
Consideration: | |
| | |
Cash | |
$ | 22,985 | |
Common
stock | |
| 790 | |
| |
| | |
Total
Purchase Consideration | |
$ | 23,775 | |
| |
| | |
Less: | |
| | |
| |
| | |
Fixed
assets | |
| 1,322 | |
Trade
name | |
| 343 | |
Customer
relationships | |
| 1,800 | |
Favorable
leases | |
| 292 | |
Internally
developed technology | |
| 1,233 | |
Non-compete
agreements | |
| 148 | |
Other
liabilities | |
| (144 | ) |
Other
assets | |
| 283 | |
Debt-free
net working capital deficit | |
| (529 | ) |
| |
| | |
Fair
Value of Identified Net Assets | |
| 4,748 | |
| |
| | |
Remaining
Unidentified Goodwill Value | |
$ | 19,027 | |
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
3.
BUSINESS COMBINATIONS – CONTINUED
BLUE
CORNER NV - CONTINUED
Changes
in the balance of identified intangible assets and goodwill reflected on the balance sheet are the result of the impact of the change
in foreign currency exchange rates.
The
components of debt free net working capital are as follows:
Goodwill
was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is attributable
to the reputation of the business acquired, the workforce in place and the synergies to be achieved from this acquisition. Goodwill of
$19,027 from the acquisition of Blue Corner is expected to be deductible for income tax purposes.
The
consolidated financial statements of the Company include the results of operations from Blue Corner as of May 10, 2021 to December 31,
2021 and do not include results of operations for the year ended December 31, 2020. The results of operations of Blue Corner from May
10, 2021 to December 31, 2021 included revenues of $7,553 and a net loss of $2,567.
The
following table presents the unaudited pro forma consolidated results of operations for the year ended December 31, 2021 as if the acquisition
of Blue Corner had occurred at the beginning of fiscal year 2020. The pro forma information provided below is compiled from the pre-acquisition
financial information of Blue Corner and includes pro forma adjustments for interest expense and adjustments to certain expenses. The
pro forma results are not necessarily indicative of (i) the results of operations that would have occurred had the operations of this
acquisition actually been acquired at the beginning of fiscal year 2020 or (ii) future results of operations:
SCHEDULE
OF PROFORMA INFORMATION OF OPERATIONS
| |
| | | |
| | |
| |
For
the Years Ended December 31, | |
| |
2021 | | |
2020 | |
Revenues | |
$ | 23,882 | | |
$ | 10,771 | |
Net
loss | |
$ | (55,942 | ) | |
$ | (20,255 | ) |
The
above pro forma information includes pro forma adjustments to remove the effect of interest expense recognized in the results of operations
of Blue Corner during the years ended December 31, 2021 and 2020 of $276 and $579,
respectively.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
3.
BUSINESS COMBINATIONS – CONTINUED
U-GO
STATIONS, INC.
On
November 19, 2020 (“Closing Date”), the Company (the “Buyer”), entered into a Stock Purchase Agreement (the “SPA
Agreement”) with U-Go Stations, Inc. (the “Target”), and pursuant thereto acquired from the Seller all of the ownership
interests of U-Go Stations, Inc. (“U-Go”).
The
consideration by the Buyer for the acquisition of U-Go included: (a) 66,454 shares of the Company’s common stock and (b) $60 cash
payment on the later of (i) the first anniversary of the closing date; or (ii) the date on which the final project of the Additional
Projects is awarded to U-Go and paid in full, the funds shall be held in escrow by the escrow agent until the second anniversary of the
closing date. At the expiration of the escrow agreement, the balance of the $60, if any, shall be converted to the Company’s common
stock determined by a formula outlined in the agreement.
The
SPA Agreement contains customary representations, warranties and covenants for a transaction of this type and nature. Pursuant to the
terms of the SPA Agreement, the Seller indemnified the Company, the Purchaser and their respective affiliates and representatives for
breaches of the Seller’s representations and warranties, breaches of covenants and losses. The Purchaser agreed to indemnify the
Seller and its affiliates and representatives for any breaches of the Purchaser’s representations and warranties, breaches of covenants
and losses.
The
Company has accounted for this transaction as a business combination under ASC 805. Accordingly, the assets acquired and the liabilities
assumed were recorded at their estimated fair value based on the date of acquisition. Goodwill from the acquisition principally relates
to the fair value of the common stock consideration as well as the excess value of assumed liabilities over the fair value of identified
net assets. Since this transaction was a stock acquisition, goodwill is not tax deductible.
At
the date of acquisition, the purchase consideration consisted of the Company’s common stock. The aggregate purchase price was allocated
to the assets acquired and liabilities assumed as follows:
SCHEDULE
OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
Purchase
Consideration: | |
| | |
Share
consideration | |
$ | 1,279 | |
| |
| | |
Total
Purchase Consideration | |
$ | 1,279 | |
| |
| | |
Less: | |
| | |
Fixed
assets | |
| 418 | |
Notes
payable | |
| (165 | ) |
Debt-free
net working capital deficit | |
| (388 | ) |
| |
| | |
Fair
Value of Identified Net Assets | |
| (135 | ) |
| |
| | |
Remaining
Unidentified Goodwill Value | |
$ | 1,414 | |
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
3.
BUSINESS COMBINATIONS – CONTINUED
U-GO
STATIONS, INC. – CONTINUED
The
components of debt free net working capital deficit are as follows:
The
below table provides select unaudited, pro forma consolidated results of operations as if the acquisition of U-Go had occurred on January
1, 2020. The pro forma results are not indicative of (i) the results of operations that would have occurred had the operations of this
acquisition actually occurred at the beginning of fiscal year 2020 or (ii) future results of operations.
SCHEDULE
OF PROFORMA INFORMATION OF OPERATIONS
| |
| |
|
| |
For
the Years Ended December 31, | |
| |
2020 |
|
Revenues | |
$ | 6,468 |
|
Net
loss | |
$ | (18,022 |
) |
The
above pro forma information includes pro forma adjustments to remove the effect of the following non-recurring transactions:
|
1) |
Nonrecurring
merger expenses of $6 recognized in the Company’s results of operations during the year ended December 31, 2020. |
As
of the date of the acquisition, the Company expects to collect all contractual cash flows related to receivables acquired in the acquisition.
Acquisition related costs are expensed as incurred and are recorded within general and administrative expenses on the consolidated statements
of operations. Acquisition-related costs were $6 during the year ended December 31, 2020.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
3.
BUSINESS COMBINATIONS – CONTINUED
BLUELA
CARSHARING, LLC
On
September 11, 2020 (“Closing Date”), the Company’s wholly-owned subsidiary, Blink Mobility, LLC (the “Purchaser”),
entered into an Ownership Interest Purchase Agreement (the “Agreement”) with Blue Systems USA, Inc. (the “Seller”),
and pursuant thereto acquired from the Seller all of the ownership interests of BlueLA Carsharing, LLC (“BlueLA”).
The
consideration by the Purchaser for the acquisition of BlueLA included: (a) a cash payment of $1.00, which was paid to the Seller at closing,
and (b) in the event BlueLA timely amends its carsharing services agreement with the City of Los Angeles, California, a cash payment
to the Seller of $1,000, payable within three business days after such amendment (“Contingent Consideration”). Under the
Agreement, the amendment to the carsharing services agreement with the City of Los Angeles was to be obtained by BlueLA no later than
December 31, 2020, subject to an extension to March 31, 2021 if a representative of the City of Los Angeles indicates to the Purchaser
by the December 31, 2020 deadline its approval of the modifications to the carsharing services agreement, as more particularly outlined
in the Agreement. As of December 31, 2021 and 2020, the Company did not receive an amendment nor indication to amend the carsharing service
agreement thus the Company is not obligated to the Contingent Consideration.
The
Agreement contains customary representations, warranties and covenants for a transaction of this type and nature. Pursuant to the terms
of the Agreement, the Seller will indemnify the Company, the Purchaser and their respective affiliates and representatives for breaches
of the Seller’s representations and warranties, breaches of covenants and losses related to pre-closing taxes of BlueLA. The Purchaser
has agreed to indemnify the Seller and its affiliates and representatives for any breaches of the Purchaser’s representations and
warranties, breaches of covenants and losses related to post-closing taxes of BlueLA. The representations and warranties under the Agreement
survived until December 10, 2021.
Pursuant
to the Agreement, the Seller and BlueLA entered into a Transition Service Agreement pursuant to which the Seller and its affiliate, Bluecarsharing,
S.A.S., provided certain transition and support services to BlueLA and the Purchaser following the closing and until December 31, 2020.
The Seller also guaranteed the payment of up to $175 in parking fees payable by BlueLA to the City of Los Angeles, and BlueLA agreed
to pay the Seller for any as-yet uncollected grants and rebates that BlueLA is entitled to obtain under its carsharing services agreement
with the City of Los Angeles. In addition, the Seller agreed that, until September 10, 2023, the Seller will not and will cause its subsidiaries
or affiliates not to directly or indirectly, (i) own, operate, acquire, or establish a business, or in any other manner engage alone
or with others in carsharing and/or electric vehicle charging operation, or activity in the State of California (whether as an operator,
manager, employee, officer, director, consultant, advisor, representative or otherwise) excluding any de minimis ownership interest
in any business); or (ii) intentionally induce or attempt to induce any customer, supplier or other business relation of BlueLA to cease
or refrain from working with BlueLA, or in any way adversely interfere with the relationship between any such customer, supplier or other
business relation and BlueLA. The Company had acquired BlueLA in order to expand its presence in the State of California.
Under
the terms of the City of Los Angeles Agreement, amongst other obligations, during the initial term of the City of Los Angeles Agreement
(defined as approximately six years from the effective date of the City of Los Angeles Agreement), BlueLA shall provide, manage, operate
and maintain (i) usage agreements for electric vehicles in a quantity of no less than one hundred (100) (see payment terms of Car Lease
Agreement) and (ii) charging stations in a quantity of no less than two hundred (200) at approximately forty (40) locations for an aggregate
cost of approximately $20 per month. Following the initial term, the City of Los Angeles shall have the right to renew the City of Los
Angeles Agreement for renewal terms of two (2) years each, with prior notice required, for a maximum of three renewal terms.
The
Company has accounted for this transaction as a business combination under ASC 805. Accordingly, the assets acquired and the liabilities
assumed were recorded at their estimated fair value based on the date of acquisition. Goodwill from the acquisition principally relates
to the Contingent Consideration as well as the excess value of assumed liabilities over the fair value of identified net assets. Since
this transaction was a stock acquisition, goodwill is not tax deductible.
At
the date of acquisition, the purchase consideration consisted of cash, assumed liabilities and Contingent Consideration. The Contingent
Consideration of $1,000 is non-interest bearing and was recorded at its estimated fair value of $245 based on a probability-weighted
valuation technique used to determine the fair value of the Contingent Consideration on the acquisition date. See Note 11 – Fair
Value Measurement for assumptions utilized in the estimate of fair value of the Contingent Consideration. During the fourth quarter of
2020, the Company recorded a measurement period adjustment in order reduce the Contingent Consideration to $0 as of December 31, 2020
with a corresponding decrease to goodwill.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
3.
BUSINESS COMBINATIONS – CONTINUED
BLUELA
CARSHARING, LLC – CONTINUED
The
aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows:
SCHEDULE
OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
Purchase
Consideration: | |
| | |
Cash | |
$ | - | |
Assumed
liabilities | |
| 88 | |
| |
| | |
Total
Purchase Consideration | |
$ | 88 | |
| |
| | |
Less: | |
| | |
Right
of use assets | |
| 598 | |
Debt-free
net working capital deficit | |
| (286 | ) |
Non-current
portion of lease liabilities | |
| (371 | ) |
| |
| | |
Fair
Value of Identified Net Liabilities | |
| (59 | ) |
| |
| | |
Remaining
Unidentified Goodwill Value | |
$ | 147 | |
The
components of debt free net working capital deficit are as follows:
Current
assets: | |
| | |
Cash | |
$ | 3 | |
Accounts
receivable | |
| 73 | |
Prepaid
expenses and other current assets | |
| 88 | |
| |
| | |
Total
current assets | |
$ | 164 | |
| |
| | |
Less
current liabilities: | |
| | |
Accounts
payable | |
| 163 | |
Current
portion of lease liabilities | |
| 227 | |
Accrued
expenses and other current liabilities | |
| 60 | |
| |
| | |
Total
current liabilities | |
$ | 450 | |
| |
| | |
Debt
free net working capital deficit | |
$ | (286 | ) |
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
3.
BUSINESS COMBINATIONS – CONTINUED
BLUELA
CARSHARING, LLC – CONTINUED
The
below table provides select unaudited, pro forma consolidated results of operations as if the acquisition of BlueLA had occurred on January
1, 2020. The pro forma results are not indicative of (i) the results of operations that would have occurred had the operations of this
acquisition actually occurred at the beginning of fiscal year 2020 or (ii) future results of operations.
SCHEDULE
OF PROFORMA INFORMATION OF OPERATIONS
| |
For
the Year Ended
December
31, | |
| |
2020 |
|
| |
(Unaudited) |
|
Revenues | |
$ | 6,699 |
|
Net loss | |
$ | (20,511 |
) |
The
above pro forma information includes pro forma adjustments to remove the effect of the following non-recurring transactions:
|
1) |
Gain
of $15,550
recognized in the Seller’s results
of operations during the year ended December 31, 2020 related to the forgiveness of debt associated with liabilities to the Seller’s
parent; |
|
2) |
Interest
expense of $165
and $322
recognized in the Seller’s results
of operations during the year ended December 31, 2020 and 2019, respectively, associated with the debt due to the Seller’s
parent that was subsequently forgiven; and |
|
3) |
Nonrecurring
merger expenses of $18
recognized in the Company’s results of operations
during the year ended December 31, 2020. |
As
of the date of the acquisition, the Company expected to collect all contractual cash flows related to receivables acquired in the acquisition.
Acquisition related costs are expensed as incurred and are recorded within general and administrative expenses on the consolidated statements
of operations. Acquisition-related costs were $18
during the year ended December 31, 2020.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
4.
PROPERTY AND EQUIPMENT
Property
and equipment consisted of the following:
SCHEDULE
OF PROPERTY AND EQUIPMENT
| |
| | | |
| | |
| |
December
31, | |
| |
2022 | | |
2021 | |
EV
charging stations | |
$ | 22,718 | | |
$ | 10,906 | |
Building | |
| 4,718 | | |
| 4,000 | |
Software | |
| 2,137 | | |
| 1,700 | |
Automobiles | |
| 2,993 | | |
| 2,009 | |
Office
and computer equipment | |
| 1,371 | | |
| 844 | |
Leasehold
improvements | |
| 536 | | |
| 202 | |
Machinery
and equipment | |
| 712 | | |
| 139 | |
Property
and equipment, gross | |
| 35,185 | | |
| 19,800 | |
Less:
accumulated depreciation | |
| (9,323 | ) | |
| (5,237 | ) |
Property
and equipment, net | |
$ | 25,862 | | |
$ | 14,563 | |
Depreciation
and amortization expense related to property and equipment was $5,432, $1,904, and $378 for the years ended December 31, 2022, 2021 and
2020, respectively, of which, $3,113, $1,533 and $345, respectively, was recorded within cost of sales in the accompanying consolidated
statements of operations.
During
the years ended December 31, 2022, 2021 and 2020, the Company disposed of property and equipment with a net book value of $463, $798
and $368 which resulted in a loss on disposal of $113, $156 and $279, respectively, which was included within general and administrative
expenses in the consolidated statements of operations.
During
the years ended December 31, 2022, 2021, and 2020, the Company transferred charging stations of $5,283, $2,189 and $1,980 from inventory
into property and equipment.
On
January 22, 2021, the Company completed its purchase of approximately 10,000 square feet of office condominium space which became the
Company’s corporate headquarters. The purchase price was $4,000, of which, $600 was paid in the form of the Company’s common
stock (13,123 shares) and $3,400 in cash.
See
Note 3 - Business
Combination for additional details of the acquisition of property and equipment.
Changes in the balance of property and equipment reflected on the balance sheet are the result of the impact of the
change in foreign currency exchange rates.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
5.
INTANGIBLE ASSETS
Intangible
assets consisted of the following:
SCHEDULE OF INTANGIBLE ASSETS
| |
December
31, | | |
|
| |
2022 | | |
2021 | | |
Useful
Lives |
Internal
use software | |
$ | 1,123 | | |
$ | 600 | | |
3 years |
Capitalized
engineering costs | |
| 237 | | |
| 237 | | |
Indefinite |
Trade
name and patents | |
| 2,759 | | |
| 340 | | |
1.5 years |
Customer
relationships | |
| 21,398 | | |
| 1,677 | | |
5.6 years |
Favorable
leases | |
| 257 | | |
| 272 | | |
1.6 years |
Internally
developed technology | |
| 5,031 | | |
| 1,148 | | |
3 years |
Non-compete
agreements | |
| 2,253 | | |
| 139 | | |
2
years |
| |
| 33,058 | | |
| 4,413 | | |
|
Less:
accumulated amortization | |
| (6,476 | ) | |
| (958 | ) | |
|
Intangible
assets, net | |
$ | 26,582 | | |
$ | 3,455 | | |
|
Amortization
expense during the years ended December 31, 2022, 2021, and 2020 were $5,954, $938, and $61, respectively.
Changes
in the balance of intangible assets and goodwill reflected on the balance sheet are the result of the impact of the change in foreign
currency exchange rates.
See
Note 3 - Business Combination and Note 6 - Goodwill for additional details.
SCHEDULE OF CHANGES IN BALANCE OF INTANGIBLE ASSETS
AND GOODWILL
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Internal
Use Software | | |
Capitalized
Engineering Costs | | |
Trade
Name and Patents | | |
Customer
Relationships | | |
Favorable
Leases | | |
Internally
Developed Technology | | |
Non-Compete
Agreements | | |
Accumulated
Amortization | | |
Total | |
Balance
as of January 1, 2021 | |
$ | 184 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | (138 | ) | |
$ | 46 | |
Additions | |
| 416 | | |
| 237 | | |
| 340 | | |
| 1,677 | | |
| 272 | | |
| 1,148 | | |
| 139 | | |
| - | | |
| 4,229 | |
Amortization
expense | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (820 | ) | |
| (820 | ) |
Balance as of December
31, 2021 | |
| 600 | | |
| 237 | | |
| 340 | | |
| 1,677 | | |
| 272 | | |
| 1,148 | | |
| 139 | | |
| (958 | ) | |
| 3,455 | |
Intangible assets beginning balance | |
| 600 | | |
| 237 | | |
| 340 | | |
| 1,677 | | |
| 272 | | |
| 1,148 | | |
| 139 | | |
| (958 | ) | |
| 3,455 | |
Additions | |
| 523 | | |
| - | | |
| 2,331 | | |
| 19,911 | | |
| - | | |
| 4,122 | | |
| 2,233 | | |
| - | | |
| 29,120 | |
Foreign
currency translation | |
| - | | |
| - | | |
| 88 | | |
| (190 | ) | |
| (15 | ) | |
| (239 | ) | |
| (119 | ) | |
| - | | |
| (475 | ) |
Amortization
expense | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (5,518 | ) | |
| (5,518 | ) |
Balance
as of December 31, 2022 | |
$ | 1,123 | | |
$ | 237 | | |
$ | 2,759 | | |
$ | 21,398 | | |
$ | 257 | | |
$ | 5,031 | | |
$ | 2,253 | | |
$ | (6,476 | ) | |
$ | 26,582 | |
Intangible assets ending balance | |
$ | 1,123 | | |
$ | 237 | | |
$ | 2,759 | | |
$ | 21,398 | | |
$ | 257 | | |
$ | 5,031 | | |
$ | 2,253 | | |
$ | (6,476 | ) | |
$ | 26,582 | |
Weighted
average remaining amortization period at December 31, 2022 (in years) | |
| 1.6 | | |
| 0.0 | | |
| 1.3 | | |
| 4.6 | | |
| 0.0 | | |
| 2.3 | | |
| 1.4 | | |
| | | |
| | |
SCHEDULE OF CHANGES IN ACCUMULATED AMORTIZATION
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Internal
Use Software | | |
Capitalized
Engineering Costs | | |
Trade
Name and Patents | | |
Customer
Relationships | | |
Favorable
Leases | | |
Internally
Developed Technology | | |
Non-Compete
Agreements | | |
Accumulated
Amortization | |
Balance
as of January 1, 2021 | |
$ | 138 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 138 | |
Amortization
expense | |
| 69 | | |
| - | | |
| 155 | | |
| 198 | | |
| 109 | | |
| 245 | | |
| 44 | | |
| 820 | |
Balance as of December
31, 2021 | |
| 207 | | |
| - | | |
| 155 | | |
| 198 | | |
| 109 | | |
| 245 | | |
| 44 | | |
| 958 | |
Intangible assets excluding goodwill beginning balance | |
| 207 | | |
| - | | |
| 155 | | |
| 198 | | |
| 109 | | |
| 245 | | |
| 44 | | |
| 958 | |
Amortization
expense | |
| 294 | | |
| - | | |
| 896 | | |
| 2,547 | | |
| 154 | | |
| 1,254 | | |
| 809 | | |
| 5,954 | |
Foreign
currency translation | |
| - | | |
| - | | |
| (65 | ) | |
| (250 | ) | |
| (6 | ) | |
| (100 | ) | |
| (15 | ) | |
| (436 | ) |
Balance
as of December 31, 2022 | |
$ | 501 | | |
$ | - | | |
$ | 986 | | |
$ | 2,495 | | |
$ | 257 | | |
$ | 1,399 | | |
$ | 838 | | |
$ | 6,476 | |
Intangible assets excluding goodwill ending balance | |
$ | 501 | | |
$ | - | | |
$ | 986 | | |
$ | 2,495 | | |
$ | 257 | | |
$ | 1,399 | | |
$ | 838 | | |
$ | 6,476 | |
The
estimated future amortization expense is as follows:
SCHEDULE
OF ESTIMATED FUTURE AMORTIZATION EXPENSE
| |
| | |
For
the Years Ending December 31, | |
Total | |
2023 | |
$ | 8,081 | |
2024 | |
| 6,422 | |
2025 | |
| 4,652 | |
2026 | |
| 4,036 | |
2027 | |
| 2,050 | |
Thereafter | |
| 1,341 | |
Finite-lived
intangible assets, net | |
$ | 26,582 | |
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
6.
GOODWILL
Changes
in goodwill during the years ended December 31, 2022 and 2021 were as follows:
SCHEDULE
OF GOODWILL
| |
| | | |
| | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Beginning
balance - January 1, | |
$ | 19,390 | | |
$ | 1,501 | |
Goodwil - beginning balance | |
$ | 19,390 | | |
$ | 1,501 | |
Acquisition
of Electric Blue | |
| 10,443 | | |
| - | |
Acquisition of SemaConnect | |
| 174,439 | | |
| - | |
Accrual of additional consideration for U-Go Stations, Inc. | |
| - | | |
| 60 | |
Acquisition of Blue Corner | |
| - | | |
| 19,027 | |
Acquisition of Goodwill | |
| | | |
| | |
Effect
of translation adjustments | |
| (562 | ) | |
| (1,198 | ) |
Ending
balance - December 31, | |
$ | 203,710 | | |
$ | 19,390 | |
Goodwill
- ending balance | |
$ | 203,710 | | |
$ | 19,390 | |
7.
OTHER ASSETS
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 $1,250
to the Target (the “Initial Loan”), of which, $1,000 was loaned by the Company during the second quarter of 2022 and $250
was loaned in July 2022 pursuant to a 6% Secured Convertible Promissory Note signed by the Target. Under the terms of the Initial Loan,
if the Company proceeds with the possible stock purchase of the Target, the principal and accrued interest amount under the Initial 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 Initial Loan will continue to accrue 6% interest per annum, and mature
on the earliest of (i) a “Change of Control” (as defined in such note); (ii) the closing of the next investment round by
the Target; (iii) an Event of Default (as defined in such note); or (iv) May 1, 2027.
On September 22, 2022, the Company signed a letter agreement concerning the extension of the development work that
the Target was performing for a wholly owned subsidiary of the Company (the “Subsidiary”) under a Master Service Agreement
that was executed on April 29, 2022 (the “Letter Agreement”). Under the Letter Agreement, the Company agreed to extend additional
loans to the Target to enable it to expand the development work and to expedite the delivery of the development outcomes (the “Product”)
to the Subsidiary. In addition, the Company extended to the Target additional funding of $350 for hiring additional developers and an
additional $600 to support the Target’s operations until the development work is finalized and accepted by the Company. The total
amount of the loans is $950 (the “Development Loan”), which had been loaned to the Target as of December 31, 2022. The Development
Loan was made pursuant to a 6% Grid Secured Convertible Promissory Note and an additional letter agreement, dated September 22, 2022,
signed by the Target with terms and conditions similar to those of the Initial Loan (the “Grid Note”). The Development Loan
has additional terms which provide that the Company may forfeit the Development Loan if the Target timely delivers the Product and the
Company fails to close the acquisition of the Target shortly thereafter. If, however, the Target fails to complete the development work
on time, the Company will not be obligated to close the acquisition of the Target and the entire Development Loan will be payable to the
Company under the same terms of the Initial Loan.
As
of December 31, 2022, a total of $2,200 of loans made by the Company to the Target were included in other assets on the consolidated
balance sheet.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
8.
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued
expenses and other current liabilities consisted of the following:
SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
| |
2022 | | |
2021 | |
| |
December 31, | |
| |
2022 | | |
2021 | |
| |
| | |
| |
Accrued wages | |
$ | 5,456 | | |
$ | 2,678 | |
Other accrued expenses | |
| 2,473 | | |
| 757 | |
Accrued host fees | |
| 130 | | |
| 130 | |
Accrued professional, board and other fees | |
| 451 | | |
| 543 | |
Accrued commissions | |
| 827 | | |
| 144 | |
Warranty payable | |
| 176 | | |
| 10 | |
Accrued income, property and sales taxes payable | |
| 371 | | |
| 462 | |
Accrued issuable equity | |
| 433 | | |
| 454 | |
Accrued purchases | |
| 549 | | |
| 117 | |
Internal use software liability | |
| 372 | | |
| 383 | |
Accrued interest | |
| 1,871 | | |
| - | |
Total accrued expenses | |
$ | 13,109 | | |
$ | 5,678 | |
See
Note 16 – Commitments and Contingencies – Taxes.
9.
NOTES PAYABLE
PAYCHECK
PROTECTION PROGRAM
On
May 7, 2020, the Company received $856 in connection with a loan (the “PPP Loan”) under the CARES Act Paycheck Protection
Program (the “PPP”). The PPP provides for loans to qualifying businesses for amounts of up to 2.5 times their average monthly
payroll expenses. The loan principal and accrued interest are forgivable, as long as the borrower uses loan proceeds for eligible purposes
during the covered period following disbursement, such as payroll, benefits, rent, and utilities, and maintains its payroll levels. The
amount of loan forgiveness is reduced if the borrower terminates employees or reduces salaries during the covered period, subject to
certain qualifications and exclusions. As of December 31, 2020, the Company had utilized all $856 of the proceeds of the PPP Loan.
During
the year ended December 31, 2021, the Company obtained forgiveness for its PPP Loans in the amount of $856
and recorded a gain on settlement of debt on the consolidated statement of operations for the year
ended December 31, 2021.
OTHER
NOTES PAYABLE
In
connection with the U-Go acquisition, the Company had also assumed $165 in notes payable, however, these notes were subsequently repaid
during the year ended December 31, 2020. See Note 3 – Business Combination – U-GO Stations, Inc. Acquisition for details.
In
connection with the SemaConnect and EB acquisitions, the Company had also assumed certain notes payable, however, $681 of principal were
subsequently repaid during the year ended December 31, 2022. See Note 3 – Business Combination for details.
As
of December 31, 2022 and 2021, the Company had an outstanding note payable in the principal amount of $10.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
10.
DEFERRED REVENUE
The
Company is the recipient of various private and governmental grants, rebates and marketing incentives. Reimbursements of periodic expenses
are recognized as income when the related expense is incurred. Private and government grants and rebates related to EV charging stations
and their installation are deferred and amortized in a manner consistent with the recognition of the related depreciation expense of
the related asset over their useful lives.
Deferred
revenue consisted of the following:
SCHEDULE
OF DEFERRED REVENUE
| |
| | | |
| | |
| |
December
31, | |
| |
2022 | | |
2021 | |
Grant and other | |
$ | 6,516 | | |
$ | 339 | |
Prepaid
network, charging and maintenance fees | |
| 9,314 | | |
| 2,647 | |
Total
deferred revenue | |
| 15,830 | | |
| 2,986 | |
Deferred
revenue, non-current portion | |
| (5,258 | ) | |
| (128 | ) |
Current
portion of deferred revenue | |
$ | 10,572 | | |
$ | 2,858 | |
It
is anticipated that deferred revenue as of December 31, 2022 will be recognized as follows:
SCHEDULE
OF DEFERRED REVENUE RECOGNIZED
For
the Year Ending | |
| |
December
31, | |
Revenue | |
2023 | |
$ | 10,572 | |
2024 | |
| 1,228 | |
2025 | |
| 220 | |
2026 | |
| 449 | |
2027 | |
| 393 | |
Thereafter | |
| 2,968 | |
Total | |
$ | 15,830 | |
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
11.
FAIR VALUE MEASUREMENT
Assumptions
utilized in the valuation of Level 3 liabilities are described as follows:
SUMMARY
OF ASSUMPTIONS USED FOR VALUATION OF FAIR VALUE LIABILITIES
| |
For
the Years Ended | |
| |
December
31, | |
| |
2022 | | |
2021 | | |
2020 | |
Risk-free
interest rate | |
| 1.63%-4.73 | % | |
| 0.07%-0.39 | % | |
| 0.16%-1.69 | % |
Contractual
term (years) | |
| 1.00 | | |
| 1.00 | | |
| 1.00-8.00 | |
Expected
volatility | |
| 74%-85 | % | |
| 90%-148 | % | |
| 78%-143.8 | % |
Expected
dividend yield | |
| 0.00 | % | |
| 0.00 | % | |
| 0.00 | % |
The
following table sets forth a summary of the changes in the fair value of Level 3 warrant liabilities that are measured at fair value
on a recurring basis:
SUMMARY
OF CHANGES IN FAIR VALUE OF LEVEL 3 WARRANT LIABILITIES MEASURED AT RECURRING BASIS
| |
2022 | | |
2021 | |
Contingent
Consideration | |
| | | |
| | |
Beginning balance -
January 1, | |
$ | - | | |
$ | - | |
Contingent
consideration assumed in BlueLA acquisition | |
| 3,814 | | |
| - | |
Change
in fair value of contingent consideration | |
| (2,498 | ) | |
| - | |
Ending
balance - December 31, | |
$ | 1,316 | | |
$ | - | |
| |
| | | |
| | |
Warrant
Liability | |
| | | |
| | |
Beginning balance -
January 1 | |
$ | 90 | | |
$ | 159 | |
Change
in fair value of warrant liability | |
| (66 | ) | |
| (69 | ) |
Ending
balance - December 31, | |
$ | 24 | | |
$ | 90 | |
Assets
and liabilities measured at fair value on a recurring basis are as follows:
SUMMARY
OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE RECURRING AND NONRECURRING BASIS
| |
December
31, 2022 | |
| |
Level
1 | | |
Level
2 | | |
Level
3 | | |
Total | |
Assets: | |
| | | |
| | | |
| | | |
| | |
Alternative
fuel credits | |
$ | - | | |
$ | 32 | | |
$ | - | | |
$ | 32 | |
Total
assets | |
$ | - | | |
$ | 32 | | |
$ | - | | |
$ | 32 | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Option liability | |
$ | 409 | | |
$ | - | | |
$ | - | | |
$ | 409 | |
Contingent consideration | |
| - | | |
| - | | |
| 1,316 | | |
| 1,316 | |
Warrant
liability | |
| - | | |
| - | | |
| 24 | | |
| 24 | |
Total
liabilities | |
$ | 409 | | |
$ | - | | |
$ | 1,340 | | |
$ | 1,749 | |
| |
December 31, 2021 | |
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
Assets: | |
| | | |
| | | |
| | | |
| | |
Alternative fuel credits | |
$ | - | | |
$ | 58 | | |
$ | - | | |
$ | 58 | |
Total assets | |
$ | - | | |
$ | 58 | | |
$ | - | | |
$ | 58 | |
| |
| | | |
| | | |
| | | |
| | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Common stock liability | |
$ | 364 | | |
$ | - | | |
$ | - | | |
$ | 364 | |
Warrant liability | |
| - | | |
| - | | |
| 90 | | |
| 90 | |
Total liabilities | |
$ | 364 | | |
$ | - | | |
$ | 90 | | |
$ | 454 | |
See Note 3 - Business Combinations for additional details.
In
addition to assets and liabilities that are measured at fair value on a recurring basis, we also measure certain assets and liabilities
at fair value on a nonrecurring basis. Our non-financial assets, including goodwill, intangible assets, operating lease right of use
assets, and property, plant and equipment, are measured at fair value when there is an indication of impairment and the carrying amount
exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only when an impairment charge is
recognized.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
12.
STOCKHOLDERS’ EQUITY
AUTHORIZED
CAPITAL
The
Company is authorized to issue 500,000,000 shares of common stock, $0.001 par value, and 40,000,000 shares of preferred stock, $0.001
par value. The holders of the Company’s common stock are entitled to one vote per share. The preferred stock is designated as follows:
20,000,000 shares to Series A Convertible Preferred Stock; 10,000 shares to Series B Convertible Preferred Stock; 250,000 shares to Series
C Convertible Preferred Stock; 13 shares to Series D Convertible Preferred Stock; and 19,727 shares undesignated.
OMNIBUS
INCENTIVE PLANS
On
September 7, 2018, the Board of the Company, as well as a majority of the Company’s shareholders approved the Company’s 2018
Incentive Compensation Plan (the “2018 Plan”), which enables the Company to grant stock options, restricted stock, dividend
equivalents, stock payments, deferred stock, restricted stock units, stock appreciation rights, performance share awards, and other incentive
awards to associates, directors, consultants, and advisors of the Company and its affiliates, and to improve the ability of the Company
to attract, retain, and motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing
such persons with an opportunity to acquire or increase their proprietary interest in the Company. Stock options granted under the 2018
Plan may be non-qualified stock options or incentive stock options, within the meaning of Section 422(b) of the Internal Revenue Code
of 1986, except that stock options granted to outside directors and any consultants or advisers providing services to the Company or
an affiliate shall in all cases be non-qualified stock options. The option price must be at least 100% of the fair market value on the
date of grant and if issued to a 10% or greater shareholder must be at least 110% of the fair market value on the date of the grant.
The 2018 Plan is to be administered by the Compensation Committee of the Board, which shall have discretion over the awards and grants
thereunder.
The
aggregate maximum number of shares of common stock for which stock options or awards may be granted pursuant to the 2018 Plan is 5,000,000,
adjusted as provided in Section 4 of the 2018 Plan. No awards may be issued on or after September 7, 2028.
As
of December 31, 2022 and 2021, options to purchase 1,060,535 and 983,505 shares of options were outstanding, respectively. As of December
31, 2022 and 2021, 2,230,755 and 1,244,232 shares of common stock, respectively, were outstanding to employees and members of the Board
of Directors of the Company. As of December 31, 2022 and 2021, there were 2,769,245 and 2,772,263 securities available for future issuance
under the 2018 Plan, respectively.
PUBLIC
OFFERING
In
January 2021, the Company completed an underwritten registered public offering of 5,660,000 shares of common stock at a public offering
price of $41.00 per share. The Company received $232,060 in gross proceeds from the public offering, and $221,406 in net proceeds after
deducting the underwriting discount and offering expenses paid by the Company. The Company’s Chief Executive Officer and one other
officer participated in the offering by selling a total of 550,000 shares of the Company’s common stock from the exercise of the
underwriter’s option to purchase additional shares. The public offering was made pursuant to the Company’s automatic shelf
registration statement on Form S-3 filed with the SEC on January 6, 2021 and prospectus supplement dated January 7, 2021.
See
Note 17 – Subsequent Events – Public Offering for details of an offering the Company closed subsequent to December 31, 2022.
2022
AT-THE-MARKET OFFERING
On
September 2, 2022, the Company entered into a Sales Agreement (“Sales Agreement”) with Barclays Capital Inc., BofA Securities,
Inc., HSBC Securities (USA) Inc., ThinkEquity LLC, H.C. Wainwright & Co., LLC and Roth Capital Partners, LLC (the “Agents”)
to conduct an “at-the-market” equity offering program (the “2022 ATM”) pursuant to which the Company may issue
and sell from time to time shares of its common stock, having an aggregate offering price of up to $250,000 through the Agents, as the
Company’s sales agents. The shares are being offered pursuant to the Sales Agreement under the Company’s automatic shelf
registration statement on Form S-3ASR and a prospectus supplement thereto filed with the SEC on January 6, 2021 and September 2, 2022,
respectively. During 2022 and through December 31, 2022, the Company sold an aggregate of 558,721 shares of common stock under the ATM
program for aggregate gross proceeds of $7,697, less issuance costs of $311 which were recorded as a reduction to additional paid-in
capital.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
12.
STOCKHOLDERS’ EQUITY – CONTINUED
2020
AT-THE-MARKET OFFERING
On
April 17, 2020, the Company entered into a sales agreement (“Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”)
to conduct an “at-the-market” equity offering program (the “ATM”), pursuant to which the Company may issue and
sell from time-to-time shares of its common stock having an aggregate offering price of up to $20,000 (the “Shares”) through
the Agent. Sales of the Shares under the Sales Agreement were made in transactions that were deemed to be “at-the-market offerings”
as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made by means of ordinary brokers’ transactions,
including on the Nasdaq Capital Market, at market prices or as otherwise agreed to with the Agent. A “shelf” registration
statement on Form S-3 for the Shares was filed with the SEC, which became effective on September 16, 2019, and a prospectus supplement
thereto was filed with the SEC on April 17, 2020.
During
2020 and through December 31, 2020, the Company sold an aggregate of 3,597,833 shares of common stock under the ATM program for aggregate
gross proceeds of $20,000, less issuance costs of $819 which were recorded as a reduction to additional paid-in capital.
PREFERRED
STOCK
SERIES
D CONVERTIBLE PREFERRED STOCK
During
the year ended December 31, 2020, a holder elected to convert 5,125 shares of Series D Convertible Preferred Stock into 1,642,628 shares
of the Company’s common stock at a conversion price of $3.12 per share. The Company determined that the Series D Convertible Preferred
Stock did not include a beneficial conversion feature. There are no longer any currently outstanding shares of Series D Convertible Preferred
Stock.
COMMON
STOCK
2020
During
the year ended December 31, 2020, the Company issued an aggregate of 233,124 shares of common stock to employees of the Company and consultants
with an aggregate issuance date fair value of $525,769.
See
Note 12 – Stockholder’s Equity - Preferred Stock for details associated with the issuance of common stock in connection with
the conversion of Series D Convertible Preferred Stock.
2021
During
the year ended December 31, 2021, the Company issued 32,382 shares as partial consideration for its acquisition of Blue Corner.
During
the year ended December 31, 2021, the Company issued an aggregate of 127,841 shares as compensation for services. The shares had an issuance
date fair value of $3,950.
During
the year ended December 31, 2021, the Company issued 13,123 shares as partial consideration for the purchase of property and equipment.
See Note 4 – Property and Equipment for additional details.
During
the year ended December 31, 2021, the Company issued an aggregate of 104,496 shares of common stock pursuant to cashless warrant and
options exercises.
2022
During
the year ended December 31, 2022, the Company issued an aggregate of 799,048 shares as compensation for services. The shares had an issuance
date fair value of $6,087.
See
elsewhere within this Note, Note 3 - Business Combinations and Note 14 – Related Parties for additional details related to the
issuance of common stock.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
12.
STOCKHOLDERS’ EQUITY – CONTINUED
STOCK-BASED
COMPENSATION
The
Company recognized stock-based compensation expense related to common stock, stock options and warrants for the years ended December
31, 2022, 2021, and 2020 of $15,913, $19,108, and $948, respectively, which is included within compensation expense on the consolidated
statement of operations. As December 31, 2022, there was $13,239 of unrecognized stock-based compensation expense that will be recognized
over the weighted average remaining vesting period of 3.53 years.
On
July 29, 2022, Michael D. Farkas, the Company’s Chairman and Chief Executive Officer, and other senior executives of the Company
who are responsible for the acquisition and integration of SemaConnect were granted one-time performance-based restricted stock awards
under the Company’s 2018 Incentive Compensation Plan. A total number of 590,458 shares of common stock, with a market value on
the grant date of $12,000, were awarded to the executives. The agreements provide that Messrs. Farkas, Brendan S. Jones, President, Michael
P. Rama, Chief Financial Officer, Aviv Hillo, General Counsel, and Harjinder Bhade, Chief Technology Officer, will each receive 472,367,
47,237, 23,618, 23,618 and 23,618 shares of common stock, respectively. The awards of performance-based restricted stock are intended
to provide an appropriate incentive structure for the executive management team of the Company to integrate and commercialize the SemaConnect
acquisition given the transformational nature of the acquisition in a way that is aligned with stockholder interests. The awards of these
performance-based restricted stock become vested based on a series of six performance hurdles that must be achieved before the third
anniversary of the grants, as described in greater detail below. In addition to the closing of the SemaConnect acquisition with certain
cost savings as the initial 20% vesting event, the vesting of the remaining 80% of the restricted stock is generally determined based
on the (i) integration of SemaConnect’ s hardware and software platforms, (ii) integration of its business processes, (iii) integration
of its human capital processes, (iv) delivery and execution of a product rationalization roadmap and new production ready units for UL
certification, and (v) our common stock’s closing price reaching on average for a period of ten consecutive trading days a price
of $23.78, which is 50% over the price paid by us to SemaConnect shareholders in the acquisition, in each case without regard to the
order of achieving the foregoing hurdles. The Board has discretion to determine when each performance hurdle has been achieved and to
accelerate awards pursuant to the program. As of December 31, 2022, the vesting performance hurdles related to the closing of the SemaConnect
acquisition and clause (v) outlined above was met.
WARRANT
AND OPTION VALUATION
The
Company has computed the fair value of certain warrants and options granted using the Black-Scholes option pricing model. Option forfeitures
are reduction of previous expensed amount at the time of occurrence. The expected term used for options issued is the estimated period
of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate
of the expected term of “plain vanilla” employee option grants. The Company is utilizing an expected volatility figure based
on a review of the historical volatility of the Company over a period equivalent to the expected life of the instrument being valued.
The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent
with the expected term of the instrument being valued.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
12.
STOCKHOLDERS’ EQUITY – CONTINUED
STOCK
OPTIONS
In
applying the Black-Scholes option pricing model to options granted, the Company used the following assumptions:
SUMMARY OF BLACK-SCHOLES OPTION PRICING MODEL TO STOCK OPTIONS GRANTED ASSUMPTION
| |
For
the Years Ended | |
| |
December
31, | |
| |
2022 | | |
2021 | | |
2020 | |
| |
| | |
| | |
| |
Risk
free interest rate | |
| 2.47%-3.25 | % | |
| 0.09%-1.539 | % | |
| 0.33%-1.44 | % |
Expected
term (years) | |
| 1.00-8.00 | | |
| 1.00-8.00 | | |
| 5.00-8.00 | |
Expected
volatility | |
| 115%-133.4 | % | |
| 115.3%-140.7 | % | |
| 121.8%-139.9 | % |
Expected
dividends | |
| 0.00 | % | |
| 0.00 | % | |
| 0.00 | % |
During
the year ended December 31, 2020, the Company issued an aggregate of 8,256 shares of the Company’s common stock pursuant to the
cashless exercise of options.
During
the year ended December 31, 2021, the Company issued an aggregate of 38,496 shares of the Company’s common stock pursuant to the
cashless exercise of options.
During
the year ended December 31, 2021, the Company issued an aggregate of 136,500 shares of the Company’s common stock pursuant to an
option exercise for aggregate net proceeds of $307.
During
the year ended December 31, 2022, the Company issued an aggregate of 5,955 shares of common stock pursuant to warrant exercises for aggregate
net proceeds of $10.
See
Note 16 – Commitments and Contingencies – CEO Employment Agreement for details associated with options granted to the Company’s
CEO.
A
summary of the option activity during the year ended December 31, 2022 is presented below:
SUMMARY OF OPTIONS ACTIVITY
| |
| | |
| | |
Weighted | | |
| |
| |
| | |
Weighted | | |
Average | | |
| |
| |
| | |
Average | | |
Remaining | | |
Aggregate | |
| |
Number
of | | |
Exercise | | |
Life | | |
Intrinsic | |
| |
Shares | | |
Price | | |
In
Years | | |
Value | |
Outstanding,
January 1, 2022 | |
| 983,505 | | |
$ | 25.25 | | |
| | | |
| | |
Granted | |
| 84,052 | | |
| 16.35 | | |
| | | |
| | |
Exercised | |
| (6,032 | ) | |
| 1.73 | | |
| | | |
| | |
Cancelled/forfeited/expired | |
| (990 | ) | |
| 15.70 | | |
| | | |
| | |
Outstanding,
December 31, 2022 | |
| 1,060,535 | | |
$ | 24.68 | | |
| 3.5 | | |
$ | 3,015,160 | |
| |
| | | |
| | | |
| | | |
| | |
Exercisable,
December 31, 2022 | |
| 778,065 | | |
$ | 27.14 | | |
| 2.8 | | |
$ | 2,015,805 | |
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
12.
STOCKHOLDERS’ EQUITY – CONTINUED
STOCK
OPTIONS – CONTINUED
The
following table presents information related to stock options at December 31, 2022:
SCHEDULE OF STOCK OPTIONS
| | |
Options
Outstanding | | |
Options
Exercisable | |
| | |
Weighted | | |
| | |
Weighted | | |
| |
Range
of | | |
Average | | |
Outstanding | | |
Average | | |
Exercisable | |
Exercise | | |
Exercise | | |
Number
of | | |
Remaining
Life | | |
Number
of | |
Price | | |
Price | | |
Options | | |
In
Years | | |
Options | |
$ | 1.73-$9.14
| | |
| 2.25 | | |
| 345,621 | | |
| 1.0 | | |
| 233,644 | |
$ | 15.70-$38.45
| | |
| 34.87 | | |
| 674,382 | | |
| 1.7 | | |
| 524,889 | |
$ | 40.82-$59.22
| | |
| 46.50 | | |
| 40,532 | | |
| 0.1 | | |
| 19,532 | |
| | | |
| | | |
| 1,060,535 | | |
| 2.8 | | |
| 778,065 | |
STOCK
WARRANTS
Note
11– Fair Value Measurement and elsewhere within this note for additional details.
During
the year ended December 31, 2021, the Company issued an aggregate of 388,101 shares of the Company’s common stock pursuant to the
exercise of warrants at an exercise price of $4.25 per share for aggregate gross proceeds of $1,619.
During
the year ended December 31, 2021, the Company issued 66,000 shares of the Company’s common stock representing a modification of
the initial warrant exercise pursuant to a legal settlement. See Note 16 – Commitments and Contingencies – Litigation and
Disputes for details.
During
the year ended December 31, 2022, the Company issued an aggregate of 8,093
shares of common stock pursuant to cashless warrant exercises (of which, warrants to purchase 9,600 shares of common stock with a
weighted average exercise price of $3.40 per share were exercised) and an aggregate of 73,336
shares of common stock pursuant to warrant exercises for aggregate net proceeds of $210.
The
following table accounts for the Company’s warrant activity for the year ended December 31, 2022:
SCHEDULE OF WARRANT ACTIVITY
| |
| | |
| | |
Weighted | | |
| |
| |
| | |
Weighted | | |
Average | | |
| |
| |
| | |
Average | | |
Remaining | | |
Aggregate | |
| |
Number
of | | |
Exercise | | |
Life | | |
Intrinsic | |
| |
Shares | | |
Price | | |
In
Years | | |
Value | |
Outstanding,
January 1, 2022 | |
| 3,270,562 | | |
$ | 5.06 | | |
| | | |
| | |
Issued | |
| - | | |
| - | | |
| | | |
| | |
Exercised | |
| (82,936 | ) | |
| 13.64 | | |
| | | |
| | |
Cancelled/forfeited/expired | |
| (1,599,661 | ) | |
| 5.41 | | |
| | | |
| | |
Outstanding,
December 31, 2022 | |
| 1,587,965 | | |
$ | 4.25 | | |
| 0.2 | | |
$ | 10,671,125 | |
| |
| | | |
| | | |
| | | |
| | |
Exercisable,
December 31, 2022 | |
| 1,587,965 | | |
$ | 4.25 | | |
| 0.2 | | |
$ | 10,671,125 | |
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
12.
STOCKHOLDERS’ EQUITY – CONTINUED
STOCK
WARRANTS – CONTINUED
The
following table presents information related to stock warrants at December 31, 2022:
SCHEDULE OF STOCK WARRANTS
| | |
Warrants Outstanding | | |
Warrants Exercisable | |
| | |
Weighted | | |
| | |
Weighted | | |
| |
Range of | | |
Average | | |
Outstanding | | |
Average | | |
Exercisable | |
Exercise | | |
Exercise | | |
Number of | | |
Remaining Life | | |
Number of | |
Price | | |
Price | | |
Warrants | | |
In Years | | |
Warrants | |
$ | 4.25 | | |
$ | 4.25 | | |
| 1,587,965 | | |
| 0.2 | | |
| 1,587,965 | |
| | | |
| | | |
| 1,587,965 | | |
| 0.2 | | |
| 1,587,965 | |
13.
INCOME TAXES
The
Company is subject to U.S. federal and various state income taxes.
The
income tax provision (benefit) for the years ended December 31, 2022, 2021 and 2020 consisted of the following:
SCHEDULE OF INCOME TAX PROVISION (BENEFIT)
| |
For
the Years Ended | |
| |
December
31, | |
| |
2022 | | |
2021 | | |
2020 | |
Federal: | |
| | | |
| | | |
| | |
Current | |
$ | - | | |
$ | - | | |
$ | - | |
Deferred | |
| (22,605 | ) | |
| (5,691 | ) | |
| (4,452 | ) |
| |
| | | |
| | | |
| | |
State: | |
| | | |
| | | |
| | |
Current | |
| - | | |
| - | | |
| - | |
Deferred | |
| (1,430 | ) | |
| (1,348 | ) | |
| (1,060 | ) |
| |
| | | |
| | | |
| | |
Foreign: | |
| | | |
| | | |
| | |
Current | |
| 317 | | |
| - | | |
| - | |
Deferred | |
| (4,120 | ) | |
| - | | |
| - | |
| |
| (27,837 | ) | |
| (7,039 | ) | |
| (5,512 | ) |
Change in valuation allowance | |
| 28,145 | | |
| 7,039 | | |
| 5,512 | |
Provision for income taxes | |
$ | 308 | | |
$ | - | | |
$ | - | |
No federal or state current tax provision has been recorded for the years
ended December 31, 2022, 2021, and 2020 because the Company had net operating losses for federal and state tax purposes. However, due
to the merger with SemaConnect, for the year ended December 31, 2022, a current foreign tax provision was recorded related to the Company’s
operations in India. The net operating loss carryovers may be subject to annual limitations under Internal Revenue Code Section 382, and
similar state provisions, should there be a greater than 50% ownership change as determined under the applicable income tax regulations.
The amount of the limitation would be determined based on the value of the company immediately prior to the ownership change and subsequent
ownership changes could further impact the amount of the annual limitation. An ownership change pursuant to Section 382 may have occurred
in the past or could happen in the future, such that the NOLs available for utilization could be significantly limited. The Company will
perform a Section 382 analysis in the future. The related decrease in the deferred tax asset will be offset by the decrease in valuation
allowance.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
13.
INCOME TAXES – CONTINUED
A
reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:
SUMMARY OF RECONCILIATION OF STATUTORY FEDERAL INCOME TAX RATE AND EFFECTIVE INCOME TAX RATE
| |
| | | |
| | | |
| | |
| |
For
the Years Ended | |
| |
December
31, | |
| |
2022 | | |
2021 | | |
2020 | |
Tax
benefit at federal statutory rate | |
| (21.0 | )% | |
| (21.0 | )% | |
| (21.0 | )% |
State
income taxes, net of federal benefit | |
| (1.3 | )% | |
| (2.4 | )% | |
| (5.0 | )% |
Permanent
differences: | |
| | | |
| | | |
| | |
Stock-based compensation | |
| 0.6 | % | |
| 0.2 | % | |
| (5.0 | )% |
Other | |
| 2.3 | % | |
| 7.9 | % | |
| 1.0 | % |
Tax
credits | |
| 0.0 | % | |
| (0.1 | )% | |
| 0.0 | % |
Income
from non-includable foreign entities | |
| 4.3 | % | |
| 1.6 | % | |
| 0.0 | % |
Prior
year differences | |
| (11.2 | )% | |
| 1.0 | % | |
| (1.0 | )% |
Change
in valuation allowance | |
| 30.8 | % | |
| 12.8 | % | |
| 31.0 | % |
Foreign tax | |
| (4.2 | )% | |
| 0.0 | % | |
| 0.0 | % |
Effective
income tax rate | |
| 0.3 | % | |
| 0.0 | % | |
| 0.0 | % |
The
Company has determined that a valuation allowance for the entire net deferred tax asset is required. A valuation allowance is required
if, based on the weight of evidence, it is more likely than not that some or the entire portion of the deferred tax asset will not be
realized. After consideration of all the evidence, both positive and negative, management has determined that a full valuation allowance
is necessary to reduce the deferred tax asset to zero, the amount that will more likely not be realized.
The
disaggregation of the Company’s domestic and foreign pre-tax loss for the years ended December 31, 2022, 2021, and 2020 is as follows:
SCHEDULE OF DISAGGREGATION OF DOMESTIC AND FOREIGN PRE-TAX LOSS
| |
| | | |
| | | |
| | |
| |
For
the Year Ended December 31 | |
| |
2022 | | |
2021 | | |
2020 | |
U.S. | |
$ | (76,528 | ) | |
$ | (50,803 | ) | |
$ | (17,635 | ) |
Foreign | |
| (14,724 | ) | |
| (4,316 | ) | |
| (211 | ) |
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
13.
INCOME TAXES – CONTINUED
The
tax effects of temporary differences that give rise to deferred tax assets and liabilities are presented below:
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES
| |
| | | |
| | |
| |
December
31, | |
| |
2022 | | |
2021 | |
Deferred
Tax Assets: | |
| | | |
| | |
Net
operating loss carryforwards - federal | |
$ | 51,722 | | |
$ | 32,351 | |
Net operating loss carryforwards - states | |
| 8,392 | | |
| - | |
Net operating loss carryforwards - UK | |
| 2,584 | | |
| - | |
Net operating loss carryforwards -
Belgium | |
| 3,022 | | |
| - | |
Tax credits | |
| 626 | | |
| 593 | |
Stock-based
compensation | |
| 5,137 | | |
| 1,210 | |
Accruals | |
| 1,425 | | |
| 663 | |
Deferred revenue | |
| 441 | | |
| - | |
Allowance
for doubtful accounts | |
| 441 | | |
| 216 | |
Goodwill | |
| 712 | | |
| 728 | |
Capitalized Sec. 174 R&E | |
| 297 | | |
| - | |
Intangible assets | |
| - | | |
| 183 | |
Other | |
| 522 | | |
| 115 | |
Deferred
tax assets, gross | |
| 75,321 | | |
| 36,059 | |
Deferred
Tax Liabilities: | |
| | | |
| | |
Intangibles | |
| (5,791 | ) | |
| - | |
Fixed
assets | |
| (488 | ) | |
| (793 | ) |
Unrealized gain/loss | |
| (134 | ) | |
| - | |
Deferred
tax asset reserve | |
| (370 | ) | |
| - | |
Other | |
| (123 | ) | |
| 2 | |
Deferred
tax Liabilities, gross | |
| (6,905 | ) | |
| (791 | ) |
| |
| | | |
| | |
Net
deferred tax assets | |
| 68,417 | | |
| 35,268 | |
Valuation
allowance | |
| (68,390 | ) | |
| (35,268 | ) |
Deferred
tax assets, net of valuation allowance | |
| 27 | | |
| - | |
| |
| | | |
| | |
Change
in valuation allowance | |
$ | 33,122 | | |
$ | 7,039 | |
As
of December 31, 2022, the Company had net operating loss carry forwards for federal income tax purposes of approximately $246,296 of
which, $84,934 may be used to offset future taxable income through 2037 and the remaining $161,361 of net operating loss carry forwards
incurred after 2017, do not have an expiration date. In addition, state NOLs carryforwards available are approximately $165,872, as of
December 31, 2022.The Company also has approximately $623 in business credits expiring between 2030 and 2042.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
14.
RELATED PARTIES
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 another entity owns 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 year ended December 31, 2022, 2021,
2020, the Company recognized sales of $0, $811
and $273,
respectively, to Hellas. As of December 31, 2022 and 2021 the Company had a receivable from Hellas of approximately $0 and $6,
respectively, and payable of $84 and $0, 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 December 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 years ended December 31, 2022, 2021, and 2020.
BLUE
CORNER
As
of December 31, 2021, three senior management employees in Blue Corner had an ownership interest in a major supplier of charging equipment
for Blue Corner. As of December 31, 2021, the Company owed approximately $800
to this supplier. As of December 31, 2022, this
related party relationship does not exist since, as of December 31, 2022, those senior management employees are no longer with Blue Corner.
During the year ended December 31, 2022, the Company made purchases of $1,444 with these related parties.
ELECTRIC
BLUE LIMITED
As
of December 31, 2022, several close family members of a senior management employee are providing services to Electric Blue Limited.
For the year ended December 31, 2022, these related parties have collectively provided services worth $95 to Electric Blue
Limited. Furthermore, as of December 31, 2022, there were purchase commitments of $112
to the same related parties.
15.
LEASES
OPERATING
LEASES
See
Note 3 – Business Combination regarding details associated with lease agreements for (i) certain parking locations in connection
with the City of Los Angeles Agreement.
During
the year ended December 31, 2021, the Company entered into a lease agreement for approximately 27,540 square feet of space in Arizona.
The lease commenced on January 1, 2021 and will terminate on May 31, 2028. The lease includes a build-out allowance of $137. Monthly
payments under the lease are $18 per month. The lease also includes a security deposit of $22.
Total
operating lease expenses for the year ended December 31, 2022, 2021, and 2020 was $789, $566, and $220, respectively, and is recorded
in other operating expenses on the consolidated statements of operations. Operating lease expenses consist of rent expense, CAM adjustments
and other expenses.
As
of December 31, 2022, the Company had $931 of right-of-use assets that were classified as financing leases for vehicles associated with
the operations of Blink Mobility are included as a component of property and equipment on the consolidated balance sheet as of December
31, 2022. The duration of the leases are three years and the Company is expected to pay approximately $1,020 throughout the term.
As
of December 31, 2022, the Company did not have additional operating and financing leases that have not yet commenced.
During
the year ended December 31, 2022, the Company recorded $38 of interest expense related to finance leases, which were recorded within
interest expense on the consolidated statements of operations. During the year ended December 31, 2022, the Company recorded amortization
expense of $659 related to finance leases. There were no finance leases as of December 31, 2021 and 2020.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
15.
LEASES – CONTINUED
OPERATING
LEASES – CONTINUED
Supplemental
cash flows information related to leases was as follows:
SCHEDULE OF SUPPLEMENTAL CASH FLOWS INFORMATION RELATED TO LEASES
| |
For
The Years Ended | |
| |
December
31, | |
| |
2022 | | |
2021 | | |
2020 | |
Cash
paid for amounts included in the measurement of lease liabilities: | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Operating
cash flows from operating leases | |
$ | 825 | | |
$ | 1,019 | | |
$ | 207 | |
Financing
cash flows from finance leases | |
$ | 217 | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | |
Right-of-use
assets obtained in exchange for lease obligations: | |
| | | |
| | | |
| | |
Operating
leases | |
$ | 1,787 | | |
$ | 2,129 | | |
$ | 598 | |
Finance
leases | |
$ | 931 | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | |
Weighted
Average Remaining Lease Term | |
| | | |
| | | |
| | |
Operating
leases | |
| 3.66 | | |
| 4.77 | | |
| 2.10 | |
Finance
leases | |
| 2.50 | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | |
Weighted
Average Discount Rate | |
| | | |
| | | |
| | |
Operating
leases | |
| 4.9 | % | |
| 4.7 | % | |
| 6.0 | % |
Finance
leases | |
| 6.2 | % | |
| 0.0 | % | |
| 0.0 | % |
Future
minimum payments under non-cancellable leases as of December 31, 2022 were as follows:
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
For
the Years Ending December 31, | |
Operating
Lease | | |
Finance
Lease | |
2023 | |
$ | 1,835 | | |
$ | 340 | |
2024 | |
| 1,163 | | |
| 340 | |
2025 | |
| 955 | | |
| 85 | |
2026 | |
| 760 | | |
| - | |
2027 | |
| 501 | | |
| - | |
Total
future minimum lease payments | |
| 5,214 | | |
| 765 | |
Less:
imputed interest | |
| (446 | ) | |
| (51 | ) |
Total | |
$ | 4,768 | | |
$ | 714 | |
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
16.
COMMITMENTS AND CONTINGENCIES
PURCHASE
COMMITMENTS
As
of December 31, 2022, the Company had purchase commitments of approximately $60,532 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.
PATENT
LICENSE AGREEMENT
On
March 29, 2012, the Company, as licensee (the “Licensee”) entered into an exclusive patent license agreement with the Executive
Chairman of the Board and Balance Holdings, LLC (an entity controlled by the Executive Chairman) (collectively, the “Licensor”),
whereby the Company agreed to pay a royalty of 10% of the gross profits received by the Company from commercial sales and/or use of two
provisional patent applications, one relating to an inductive charging parking bumper and one relating to a process which allows multiple
EVs to plug into an EV charging station simultaneously and charge as the current becomes available.
On
March 11, 2016, the Licensee and the Licensor entered into an agreement related to the March 29, 2012 patent license agreement. The parties
acknowledged that the Licensee has paid a total of $9 in registration and legal fees for the U.S. Provisional Patent Application No.
61529016 (the “Patent Application”) (related to the inductive charging parking bumper) to date. Effective March 11, 2016,
the patent license agreement, solely with respect to the Patent Application and the parties’ rights and obligations thereto, was
terminated. The Executive Chairman of the Board agreed to be solely responsible for all future costs and fees associated with the prosecution
of the patent application. In the event the Patent Application is successful, the Executive Chairman of the Board shall grant a credit
to the Licensee in the amount of $9 to be applied against any outstanding amount(s) owed to him. If the Licensee does not have any outstanding
payment obligations to the Executive Chairman of the Board at the time the Patent Application is approved, the Executive Chairman of
the Board shall remit the $9 to the Licensee within twenty (20) days of the approval. The parties agreed to a mutual release of any claims
associated with the patent license agreement. As of December 31, 2022, the Company has not paid nor incurred any royalty fees related
to this patent license agreement.
LITIGATION,
DISPUTES AND SETTLEMENTS
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 December 31, 2022 as it determined that any such loss contingency was either not probable or estimable.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
16.
COMMITMENTS AND CONTINGENCIES – CONTINUED
LITIGATION,
DISPUTES AND SETTLEMENTS – 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. On June 17, 2022, the court substituted the executrix of Klein’s
estate as the plaintiff. The Company has not recorded an accrual related to this matter as of December 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. On June
22, 2022, the court re-consolidated the Klein and Bhatia actions and reinstated the temporary stay. 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 December 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 did 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 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 December
31, 2022 as it determined that any such loss contingency was either not probable or estimable.
BLINK
CHARGING CO.
Notes
to Consolidated Financial Statements
(in
thousands except for share and per share amounts)
16.
COMMITMENTS AND CONTINGENCIES – CONTINUED
WARRANTY
The
Company estimates an approximate cost of $250 to repair deployed chargers, which the Company owns as of December 31, 2022.
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”). During the year ended December 31, 2022, we incurred $3,809 related to these upgrades.
As of December 31, 2022, the charger upgrades were substantially complete.
EMPLOYMENT
AGREEMENTS
MICHAEL
D. FARKAS EMPLOYMENT AGREEMENT
On
May 28, 2021, the Company entered into a new employment agreement (the “Employment Agreement”) with the Company’s Executive
Chairman and Chief Executive Officer (the “CEO”). The term of the Employment Agreement is January 1, 2021 through December
31, 2023 (the “Term”).
Under
the Employment Agreement, the CEO will receive a base salary of $800 for 2021 and $850 and $900 for 2022 and 2023, respectively. The
CEO will be eligible to receive an annual performance bonus (payable in cash and securities), with a target bonus of 100% of the base
salary, with the CEO eligible to receive up to 200% of the base salary based on the achievement of key performance indicators established
by the Board of Directors and the CEO (“KPIs”). The CEO will receive equity awards (one-half in restricted stock and one-half
in stock options) with a target aggregate value of $1,000, the CEO is eligible to receive up to 200% of the target aggregate value based
on the achievement of KPIs during each year of the Term. The CEO also received a special four-year performance option to purchase 475,285
shares of common stock at an exercise price of $37.40 per share, which will vest if the Company’s stock price on the NASDAQ exchange
reaches and remains on average for a period of 20 consecutive market days at a closing price of $90 per share during the four-year term
of the option. The performance option had a grant date fair value of approximately $13,500, which was estimated using a third-party specialist
who utilized a Monte Carlo simulation model. The assumptions used in the Monte Carlo simulation model were as follows: the closing stock
price on the valuation date of $34.00, exercise price of $37.40, the contractual term of four years, expected volatility of the Company’s
stock of 143.98%, and the risk free rate of interest of 0.54%. The Company is recognizing the fair value over the derived service period
of the award, which was determined to be 0.64 years.
Additionally,
the CEO received one-time awards and payments in satisfaction of his 2020 bonuses, equity awards, and a salary catch-up since the expiration
of his prior agreement in September 2020. The Employment Agreement provides that, if the CEO is terminated without cause, resigns for
good reason, dies or becomes disabled during the Term, he will receive his base salary for the remainder of the Term and payment of 2.6
times his target performance bonus/equity awards and base salary. In the event of a termination without cause or resignation for good
reason within nine months prior to or 18 months following a change in control, the multiple in the previous sentence will be 3.5 times.
The Employment Agreement also contains covenants (a) restricting Mr. Farkas from engaging in any activities competitive with the Company’s
business during the Term and one year thereafter, (b) prohibiting Mr. Farkas from disclosure of confidential information regarding the
Company at any time and (c) confirming that all intellectual property developed by Mr. Farkas during the term of the employment agreement
which specifically relates to the EV charging business constitutes the Company’s sole and exclusive property. Mr. Farkas may be
entitled to additional bonuses should his developments be commercialized by the Company.
The
Employment Agreement provides that a commission sales agreement entered into on November 17, 2009 between an entity controlled by the
CEO and a predecessor to the Company will remain suspended and no payments will be due thereunder for as long as the CEO is a full-time
employee of the Company and is paid a monthly salary of at least $30. Finally, the Company and the CEO agreed to resolve a dispute over
the CEO’s transfer of 260,000 shares of the Company’s common stock to a prior institutional investor through a settlement
agreement and payment of $1,000 from the Company to the CEO. The payment of $1,000 was recognized as a part of other operating expenses
in the statements of operations during the year ended December 31, 2021.
MATERIAL
AGREEMENT
In
October 2021, the Company negotiated and executed an amendment and extension to its agreement with a contract manufacturer of the Company.
The amendment extends the term of the agreement for an additional five (5) years. Accordingly, the Company could potentially incur additional
costs related to units ordered that were subsequently canceled or otherwise not fulfilled.
17.
SUBSEQUENT EVENTS
PUBLIC
OFFERING
In
February 2023, the Company completed an underwritten registered public offering of 8,333,333 shares of its common stock at a public offering
price of $12.00 per share. The Company received approximately $100,000 in gross proceeds from the public offering and approximately $95,000
in net proceeds after deducting the underwriting discount and offering expenses paid by the Company. In addition, the underwriters have
a 30-day option to purchase up to an additional 1,249,999 shares of common stock from the Company at the public offering price, less
the underwriting discounts and commissions. The public offering was made pursuant to our automatic shelf registration statement on Form
S-3 filed with the SEC on January 6, 2021, and prospectus supplement dated February 8, 2023. Barclays acted as the sole book-running
manager for the offering. H.C. Wainwright & Co., Roth Capital Partners and ThinkEquity acted as co-managers for the offering.