ITEM
1. FINANCIAL STATEMENTS.
BLINK
CHARGING CO.
Condensed
Consolidated Balance Sheets
(in
thousands except for share amounts)
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BLINK
CHARGING CO.
Condensed
Consolidated Statements of Operations
(in
thousands except for share and per share amounts)
(unaudited)
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BLINK
CHARGING CO.
Condensed
Consolidated Statements of Comprehensive Loss
(in
thousands)
(unaudited)
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BLINK
CHARGING CO.
Condensed
Consolidated Statement of Changes in Stockholders’ Equity
For
the Three Months Ended March 31, 2023
(in
thousands except for share amounts)
(unaudited)
[1] | | Includes gross
proceeds of $100,000, less issuance costs of $5,234. |
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BLINK
CHARGING CO.
Condensed
Consolidated Statement of Changes in Stockholders’ Equity
For
the Three Months Ended March 31, 2022
(in
thousands except for share amounts)
(unaudited)
| |
| | |
| | |
| | |
Accumulated | | |
| | |
| |
| |
| | |
| | |
Additional | | |
Other | | |
| | |
Total | |
| |
Common Stock | | |
Paid-In | | |
Comprehensive | | |
Accumulated | | |
Stockholders’ | |
| |
Shares | | |
Amount | | |
Capital | | |
Loss | | |
Deficit | | |
Equity | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Balance - January 1, 2022 | |
| 42,423,514 | | |
$ | 42 | | |
$ | 458,046 | | |
$ | (1,784 | ) | |
$ | (242,470 | ) | |
$ | 213,834 | |
Balance | |
| 42,423,514 | | |
$ | 42 | | |
$ | 458,046 | | |
$ | (1,784 | ) | |
$ | (242,470 | ) | |
$ | 213,834 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Common stock issued upon exercises of warrants | |
| 16,811 | | |
| - | | |
| 69 | | |
| - | | |
| - | | |
| 69 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Stock-based compensation | |
| 144,497 | | |
| 1 | | |
| 1,932 | | |
| - | | |
| - | | |
| 1,933 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Other comprehensive loss | |
| - | | |
| - | | |
| - | | |
| (606 | ) | |
| - | | |
| (606 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| (15,143 | ) | |
| (15,143 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance - March 31, 2022 | |
| 42,584,822 | | |
$ | 43 | | |
$ | 460,047 | | |
$ | (2,390 | ) | |
$ | (257,613 | ) | |
$ | 200,087 | |
Balance | |
| 42,584,822 | | |
$ | 43 | | |
$ | 460,047 | | |
$ | (2,390 | ) | |
$ | (257,613 | ) | |
$ | 200,087 | |
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BLINK
CHARGING CO.
Condensed
Consolidated Statements of Cash Flows
(in
thousands)
(unaudited)
[1] | | Includes
gross proceeds of $100,000,
less issuance costs of $5,654
deducted directly from the offering proceeds. |
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BLINK
CHARGING CO.
Condensed
Consolidated Statements of Cash Flows — Continued
(in
thousands)
(unaudited)
| |
2023 | | |
2022 | |
| |
For The Three Months Ended | |
| |
March 31, | |
| |
2023 | | |
2022 | |
Supplemental Disclosures of Cash Flow Information: | |
| | | |
| | |
Cash paid during the period for: | |
| | | |
| | |
Interest | |
$ | - | | |
$ | - | |
Income taxes | |
$ | - | | |
$ | 10 | |
Non-cash investing and financing activities: | |
| | | |
| | |
Right-of-use assets obtained in exchange for lease obligations | |
$ | 1,209 | | |
$ | - | |
Intangible assets obtained in exchange for financing liability | |
$ | - | | |
$ | 660 | |
Transfer of inventory to property and equipment | |
$ | (427 | ) | |
$ | (698 | ) |
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BLINK
CHARGING CO.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
1.
BUSINESS ORGANIZATION, NATURE OF OPERATIONS, BASIS OF PRESENTATION AND RISKS AND UNCERTAINTIES
Organization
and Operations
Blink
Charging Co., through its wholly-owned subsidiaries (collectively, the “Company” or “Blink”), is a leading owner,
operator, and provider of electric vehicle (“EV”) charging equipment and networked EV charging services. Blink offers residential
and commercial EV charging equipment, enabling EV drivers to recharge at various location types. Blink’s principal line of products
and services is its Blink EV charging 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.
Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form
10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for
complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring
items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of
March 31, 2023 and for the three months then ended. The results of operations for the three months ended March 31, 2023 are not necessarily
indicative of the operating results for the full year ending December 31, 2023 or any other period. These unaudited condensed consolidated
financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures of the
Company as of December 31, 2022 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”)
on March 14, 2023 as part of the Company’s Annual Report on Form 10-K.
Risks
and Uncertainties
The
Covid-19 pandemic has impacted global stock markets and economies. The Company closely monitors the impact of the outbreak on all
aspects of our business. The extent to which its operations may be impacted by the Covid-19 pandemic will depend largely in future
developments, which are highly uncertain and cannot be accurately predicted.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Since
the Annual Report for the year ended December 31, 2022, there have been no material changes to the Company’s significant accounting
policies, except as disclosed in this note.
FOREIGN
CURRENCY TRANSLATION
The
Company’s reporting currency is the United States dollar. The functional currency of certain subsidiaries is the Euro, Indian
Rupee, and the Pound Sterling. Assets and liabilities are translated based on the exchange rates at the balance sheet date (1.0884
for the Euro, .0122
for the Indian Rupee, and 1.2368 for the Pound Sterling as of March 31, 2023), while expense accounts are translated at the weighted
average exchange rate for the period (1.0741
for the Euro, .0122
for the Indian Rupee, and 1.2206 for the Pound Sterling for the three months ended March 31, 2023). Equity accounts are translated
at historical exchange rates. The resulting translation adjustments are recognized in stockholders’ equity as a component of
accumulated other comprehensive income. Comprehensive income (loss) is defined as the change in equity of an entity from all sources
other than investments by owners or distributions to owners and includes foreign currency translation adjustments as described
above. Transaction gains and losses are charged to the condensed consolidated statement of operations as incurred. Transaction gains
attributable to foreign exchange were $1,807
and $3
during the three months ended March 31, 2023 and 2022, respectively.
REVENUE
RECOGNITION
The
Company recognizes revenue primarily from four different types of contracts:
● |
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. |
● |
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 is primarily comprised of revenues generated from alternative fuel credits. |
BLINK
CHARGING CO.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
REVENUE
RECOGNITION - CONTINUED
The
following table summarizes revenue recognized in the condensed consolidated statements of operations:
SCHEDULE OF REVENUE RECOGNITION BY CONTRACT
| |
2023 | | |
2022 | |
| |
For The Three Months Ended | |
| |
March 31, | |
| |
2023 | | |
2022 | |
Revenues - Recognized at a Point in Time | |
| | | |
| | |
Product sales | |
$ | 16,389 | | |
$ | 8,052 | |
Charging service revenue - company-owned charging stations | |
| 2,885 | | |
| 1,107 | |
Other | |
| 72 | | |
| 99 | |
Total Revenues - Recognized at a Point in Time | |
| 19,346 | | |
| 9,258 | |
| |
| | | |
| | |
Revenues - Recognized Over a Period of Time: | |
| | | |
| | |
Network and other warranty fees | |
| 2,021 | | |
| 228 | |
Total Revenues - Recognized Over a Period of Time | |
| 2,021 | | |
| 228 | |
| |
| | | |
| | |
Revenues- Other | |
| | | |
| | |
Ride-sharing services | |
| 252 | | |
| 239 | |
Grant and rebate | |
| 49 | | |
| 75 | |
Total Revenues - Other | |
| 301 | | |
| 314 | |
| |
| | | |
| | |
Total Revenue | |
$ | 21,668 | | |
$ | 9,800 | |
The
following table summarizes our revenue recognized in the condensed consolidated statements of operations by geographical area:
SCHEDULE
OF REVENUE RECOGNITION BY GEOGRAPHICAL AREA
| |
2023 | | |
2022 | |
| |
For The Three Months Ended | |
| |
March 31, | |
| |
2023 | | |
2022 | |
Revenues by Geographical Area | |
| | | |
| | |
U.S.A | |
$ | 13,175 | | |
$ | 5,856 | |
International | |
| 8,493 | | |
| 3,944 | |
Total Revenue | |
$ | 21,668 | | |
$ | 9,800 | |
The
timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when
revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the
provision of the related goods or services, the Company records deferred revenue until the performance obligations are satisfied.
As
of March 31, 2023, the Company had $16,902 related to contract liabilities where performance obligations have not yet been satisfied,
which has been included within deferred revenue on the condensed consolidated balance sheet as of March 31, 2023. The Company expects
to satisfy $11,496 of its remaining performance obligations for network fees, charging services, warranty revenue, product sales, and
other and recognize the revenue within the next twelve months.
During
the three months ended March 31, 2023, the Company recognized $435 of revenues related to network fees and warranty contracts, which
were included in deferred revenues as of December 31, 2022. During the three months ended March 31, 2023, 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 their
useful lives over the useful life of the charging station. During the three months ended March 31, 2023 and 2022, the Company recorded
$49 and $75, respectively, related to grant and rebate revenue. During the three months ended March 31, 2023 and 2022, the Company recognized
$51 and $67 of revenue related to alternative fuel credits.
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 three months
ended March 31, 2023 and 2022, the Company recognized $252 and $239, respectively, related to ride-sharing services revenue.
BLINK
CHARGING CO.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
CONCENTRATIONS
During
the three months ended March 31, 2023 and 2022, sales to a significant customer represented 13%
of total revenue. During the three months ended
March 31, 2022, sales to another significant customer represented 12%
of total revenue. During the three months ended
March 31, 2023 and 2022, the Company made purchases from a significant supplier that represented 16%
and 14%
of total purchases, respectively.
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
| |
2023 | | |
2022 | |
| |
For the Three Months Ended | |
| |
March 31, | |
| |
2023 | | |
2022 | |
Warrants | |
| 1,169,031 | | |
| 3,257,989 | |
Options | |
| 1,084,580 | | |
| 977,473 | |
Total potentially dilutive shares | |
| 2,253,611 | | |
| 4,235,462 | |
3.
STOCKHOLDERS’ EQUITY
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 $94,766
in net proceeds after deducting the underwriting discount and offering expenses paid by the Company. In addition, the underwriters
had 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-3ASR 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. The underwriters did not exercise their
over-allotment option.
COMMON
STOCK
During
the three months ended March 31, 2023, the Company issued an aggregate of 557,733 shares of common stock pursuant to exercises of warrants
to purchase an aggregate of 557,733 shares of common stock for aggregate net proceeds of $835.
During
the three months ended March 31, 2023, the Company issued an aggregate of 5,866 shares of common stock for services
to a board member with an issuance date fair value of $132.
STOCK-BASED
COMPENSATION
The
Company recognized stock-based compensation expense related to common stock, stock options and warrants for the three months ended March
31, 2023 and 2022 of $7,775 and $1,962, respectively, which is included within compensation expense on the condensed consolidated statements
of operations. As of March 31, 2023, there was $7,632 of unrecognized stock-based compensation expense that will be recognized over the
weighted average remaining vesting period of 1.29 years.
BLINK
CHARGING CO.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
4.
RELATED PARTY TRANSACTIONS
See
Note 6 – Commitments and Contingencies – Purchase Commitments for disclosure of a commitment made to a related
party.
JOINT
VENTURE
The
Company and a group of three
Cyprus entities entered into a shareholders’ agreement on February 11, 2019, pertaining to the parties’ respective
shareholdings in a new joint venture entity, Blink Charging Europe Ltd. (the “Entity”), that was formed under the laws
of Cyprus on the same date. Subsequently, two of the Cyprus entities sold its interest to the remaining Cyprus entity. Pursuant to
the agreement, the Company is not required to fund operating losses. The Company owns 40%
of the Entity while the other 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 additional capital contributions or investments. During the three months ended March
31, 2023 and 2022, the Company recognized sales of $0
and $68,
respectively, to Hellas. As of March 31, 2023 and December 31, 2022 the Company had a payable of approximately $53
and $84,
respectively, to Hellas. The Company determined that the Entity is a variable interest entity; however, the Company does not have a
controlling financial interest and, as a result, the Company is not required to consolidate the Entity and instead has applied
equity method accounting to its investment in the Entity. From inception through March 31, 2023, the Entity has not generated net
income and, as a result, pursuant to ASC 323, the Company has not recorded a gain or loss on its equity method investment in the
Entity during the three months ended March 31, 2023 and 2022.
BLINK CHARGING UK LIMITED
As
of March 31, 2023, several close family members of a senior management employee are providing services to Blink Charging UK Limited
(“Blink UK”), formerly known as Electric Blue Limited. For the three months ended March 31, 2023, these related parties
have collectively provided services worth $86
to Blink UK. Furthermore, as of March 31, 2023, there were purchase commitments of $142
to the same related parties.
5.
LEASES
OPERATING
LEASES
Total
operating lease expenses for the three months ended March 31, 2023 and 2022 were $493 and $168, respectively, and were recorded in other
operating expenses on the condensed consolidated statements of operations. Operating lease expenses consist of rent expense, common area maintenance adjustments
and other expenses.
As
of March 31, 2023, the Company had $652
of right-of-use assets that were classified as financing leases for vehicles associated with the operations of Blink Mobility which
are included as a component of property and equipment on the condensed consolidated balance sheet as of March 31, 2023. The duration
of the leases are three
years and the Company is expected to pay approximately $1,020
throughout the term.
As
of March 31, 2023, the Company did not have additional operating and financing leases that have not yet commenced.
During
the three months ended March 31, 2023, the Company recorded $10 of interest expense related to finance leases, which were recorded within
interest expense on the condensed consolidated statement of operations. During the three months ended March 31, 2023, the Company recorded
amortization expense of $169 related to finance leases. There were no expenses incurred related to finance leases during the three months
ended March 31, 2022.
BLINK
CHARGING CO.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
5.
LEASES – CONTINUED
Supplemental
cash flows information related to leases was as follows:
SCHEDULE OF SUPPLEMENTAL CASH FLOWS INFORMATION RELATED TO LEASES
| |
2023 | | |
2022 | |
| |
For The Three Months Ended | |
| |
March 31, | |
| |
2023 | | |
2022 | |
Cash paid for amounts included in the measurement of lease liabilities: | |
| | | |
| | |
| |
| | | |
| | |
Operating cash flows from operating leases | |
$ | 346 | | |
$ | 66 | |
Financing cash flows from finance leases | |
$ | 92 | | |
$ | - | |
| |
| | | |
| | |
Right-of-use assets obtained in exchange for lease obligations: | |
| | | |
| | |
Operating leases | |
$ | 1,209 | | |
$ | - | |
| |
| | | |
| | |
Weighted Average Remaining Lease Term | |
| | | |
| | |
Operating leases | |
| 3.45 | | |
| 4.65 | |
Finance leases | |
| 2.00 | | |
| - | |
| |
| | | |
| | |
Weighted Average Discount Rate | |
| | | |
| | |
Operating leases | |
| 5.5 | % | |
| 4.7 | % |
Finance leases | |
| 6.2 | % | |
| 0.0 | % |
Future
minimum payments under non-cancellable leases as of March 31, 2023 were as follows:
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
For the Years Ending December 31, | |
Operating Lease | | |
Finance Lease | |
2023 | |
$ | 2,271 | | |
$ | 340 | |
2024 | |
| 1,827 | | |
| 340 | |
2025 | |
| 1,297 | | |
| - | |
2026 | |
| 716 | | |
| - | |
2027 | |
| 464 | | |
| - | |
Total future minimum lease payments | |
| 6,575 | | |
| 680 | |
Less: imputed interest | |
| (794 | ) | |
| (58 | ) |
Total | |
$ | 5,781 | | |
$ | 622 | |
6.
COMMITMENTS AND CONTINGENCIES
PURCHASE
COMMITMENTS
As
of March 31, 2023, the Company had purchase commitments of approximately $62,088 of which, approximately $142 is with a related party,
which will become payable upon the suppliers’ delivery of the charging stations and other related items. The purchase commitments
were made primarily for future sales, deployments of charging stations, inventory management planning and other related items, all of
which are expected to be received during the next 12-24 months.
LITIGATION
AND DISPUTES
On
August 24, 2020, a purported securities class action lawsuit, captioned Bush v. Blink Charging Co. et al., Case No. 20-cv-23527, was
filed in the United States District Court for the Southern District of Florida against the Company, Michael Farkas (Blink’s Chairman
of the Board and Chief Executive Officer), and Michael Rama (Blink’s Chief Financial Officer) (the “Bush Lawsuit”).
On September 1, 2020, another purported securities class action lawsuit, captioned Vittoria v. Blink Charging Co. et al., Case No. 20-cv-23643,
was filed in the United States District Court for the Southern District of Florida against the same defendants and seeking to recover
the same alleged damages (the “Vittoria Lawsuit”). On October 1, 2020, the court consolidated the Vittoria Lawsuit with the
Bush Lawsuit and on December 21, 2020 the court appointed Tianyou Wu, Alexander Yu and H. Marc Joseph to serve as the Co-Lead Plaintiffs.
The Co-Lead Plaintiffs filed an Amended Complaint on February 19, 2021. The Amended Complaint alleges, among other things, that the defendants
made false or misleading statements about the size and functionality of the Blink Network and asserts claims under Sections 10(b) and
20(a) of the Securities Exchange Act of 1934. The Amended Complaint does not quantify damages but seeks to recover damages on behalf
of investors who purchased or otherwise acquired Blink’s common stock between March 6, 2020 and August 19, 2020. On April 20, 2021,
Blink and the other defendants filed a motion to dismiss the Amended Complaint, which has now been fully briefed and is ready for review.
On April 7, 2022, the court held oral argument on the motion to dismiss but did not issue a decision. The Company wholly and completely
disputes the allegations therein. The Company has retained legal counsel in order to defend the action vigorously. The Company has not
recorded an accrual related to this matter as of March 31, 2023 as it determined that any such loss contingency was either not probable
or estimable.
BLINK
CHARGING CO.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in
thousands except for share and per share amounts)
6.
COMMITMENTS AND CONTINGENCIES – CONTINUED
LITIGATION
AND DISPUTES – CONTINUED
On
September 15, 2020, a shareholder derivative lawsuit, captioned Klein (derivatively on behalf of Blink Charging Co.) v. Farkas et al.,
Case No. 20- 19815CA01, was filed in Miami-Dade County Circuit Court seeking to pursue claims belonging to the Company against Blink’s
Board of Directors and Michael Rama (the “Klein Lawsuit”). Blink is named as a nominal defendant. The Klein Lawsuit asserts
that the Director defendants caused Blink to make the statements that are at issue in the securities class action and, as a result, the
Company will incur costs defending against the consolidated Bush Lawsuit and other unidentified investigations. The Klein Lawsuit asserts
claims against the Director defendants for breach of fiduciary duties and corporate waste and against all of the defendants for unjust
enrichment. Klein did not quantify the alleged damages in his complaint, but he seeks damages sustained by the Company as a result of
the defendants’ breaches of fiduciary duties, corporate governance changes, restitution, and disgorgement of profits from the defendants
and attorneys’ fees and other litigation expenses. The parties agreed to temporarily stay the Klein Lawsuit until there is a ruling
on the motion to dismiss filed in the consolidated Bush Lawsuit. 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 March 31, 2023 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 March 31, 2023 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 March
31, 2023 as it determined that any such loss contingency was either not probable or estimable.
WARRANTY
The
Company estimates an approximate cost of $275 to repair deployed chargers, which the Company owns as of March 31, 2023.
7.
SUBSEQUENT EVENTS
ACQUISITION
On
April 18, 2023, the Company, Blink Mobility, LLC, a California limited liability company and wholly-owned subsidiary of the Company (“Mobility”),
and Mobility Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Mobility (“Merger Sub”), entered into
and, after all parties met the closing conditions, consummated the transactions contemplated under an Agreement and Plan of Merger, dated
as of April 18, 2023 (the “Acquisition Agreement”), with Envoy Technologies, Inc., a Delaware corporation (“Envoy”).
Pursuant to the Acquisition Agreement, Merger Sub merged with and into Envoy, whereupon the separate corporate existence of Merger Sub
ceased, and Envoy was the surviving corporation of the merger and a wholly-owned subsidiary of Mobility (the “Acquisition”).
Envoy
is a car sharing platform with an iOS/Android app that provides on-demand electric vehicles as an amenity to apartments, office buildings
and hotels. The company equips real estate owners and operators with a new and innovative way to enhance the lifestyle of their tenants,
members and guests by providing “Mobility as an Amenity™ service,” a platform that offers a technology to reserve and
access vehicles, driver insurance, maintenance, electric vehicle chargers, electric fleet, fleet maintenance, full-service mobile app,
customer support and robust analytics. Envoy provides the technology, operations and vehicles to implement private and dedicated auto-sharing
as an amenity for any community.
Under
the terms of the Acquisition Agreement, the acquisition consideration was up to $35,500, paid as follows: (i) $6,000 in cash paid upon
the closing of the Acquisition Agreement (the “Closing”); (ii) a promissory note of Mobility in the principal amount of $5,000; (iii) a promissory note of Mobility in the principal amount of $2,000; and (iv)(a) in the event of an initial public offering or direct
listing of Mobility or Mobility’s successor within 24 months after the Closing (and shares of common stock of the Company are not
issued in lieu thereof), $18,500, $21,000 or $22,500 worth of shares of common stock of Mobility or Mobility’s successor, depending
on the timing of such offering or listing, (b) in the event there is no initial public offering or direct listing of Mobility or Mobility’s
successor within 24 months after the Closing, $21,000 worth of shares of common stock of the Company, or (c) at the Company’s option,
a combination of cash and common stock of the Company with an aggregate value of $21,000.
The
payment of shares of common stock of Mobility or Mobility’s successor, if any, will be based on the public offering price per share
of such stock in the initial public offering. The payment of shares of common stock of the Company, if any, will be based on the average
of the daily-weighted average prices for such stock on each of the 60 days ending on the day prior to issuance thereof.
Additionally,
certain key employees of Envoy entered into employment offer letters with Mobility, including Aric Ohana, the Chief Executive Officer
of the Company’s Envoy subsidiary.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Special
Note Regarding Forward-Looking Information
The
following discussion and analysis of the results of operations and financial condition of Blink Charging Co. (together with its subsidiaries,
“Blink” and the “Company”) as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 should
be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this
Quarterly Report on Form 10-Q. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations
to “us,” “we,” “our” and similar terms refer to Blink. This Quarterly Report contains forward-looking
statements as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this
Quarterly Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits
or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections
involving anticipated revenues, earnings or other aspects of our operating results. The words “may,” “will,”
“expect,” “believe,” “anticipate,” “project,” “plan,” “intend,”
“estimate,” and “continue,” and their opposites and similar expressions, are intended to identify forward-looking
statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties,
risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections
upon which the statements are based. Factors that may affect our results include, but are not limited to, the risks and uncertainties
set forth under Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as discussed
elsewhere in this Quarterly Report, particularly in Part II, Item IA - Risk Factors.
Any
one or more of these uncertainties, risks and other influences, could materially affect our results of operations and whether forward-looking
statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from
those expressed or implied in these forward-looking statements. Except as required by federal securities laws, we undertake no obligation
to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.
U.S.
dollars are reported in thousands except for share and per share amounts.
Overview
We
are 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.
|
● |
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. |
|
|
|
|
● |
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 5 years with extensions that can bring it up to 15 years. |
|
|
|
|
● |
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. |
|
|
|
|
● |
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 5 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. This 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.
As
of March 31, 2023, we sold or deployed 72,939 chargers, of which 53,488 were in Blink’s Networks (31,662 Level 2 publicly
accessible commercial chargers, 20,985 Level 2 private commercial chargers, 240 DC Fast Charging EV publicly accessible chargers,
136 DC Fast Charging EV private chargers, and 465 residential Level 2 Blink EV chargers, inclusive of 3,523 chargers pending to be
commissioned). Included in the Blink Networks are 4,851 chargers owned by us. The remaining were non-networked, on other networks or
international sales or deployments (3,416 Level 2 commercial chargers, 151 DC Fast Charging chargers, 11,989 residential Level 2
Blink EV chargers,2,414 sold to other U.S. networks, 1,401 sold internationally and 80 deployed internationally). The charger
units noted above are net of swap-out or replacement units.
As
reflected in our consolidated financial statements as of March 31, 2023, we had a cash balance of $103,202, working capital of $120,547
and an accumulated deficit of $363,831. During the three months ended March 31, 2023 and 2022, we incurred net losses of $29,801 and
$15,143, respectively. We have not yet achieved profitability.
Recent
Developments
Acquisition
On
April 18, 2023, the Company, Blink Mobility, LLC, a California limited liability company and wholly-owned subsidiary of the Company (“Mobility”),
and Mobility Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Mobility (“Merger Sub”), entered into
and, after all parties met the closing conditions, consummated the transactions contemplated under an Agreement and Plan of Merger, dated
as of April 18, 2023 (the “Acquisition Agreement”), with Envoy Technologies, Inc., a Delaware corporation (“Envoy”).
Pursuant to the Acquisition Agreement, Merger Sub merged with and into Envoy, whereupon the separate corporate existence of Merger Sub
ceased, and Envoy was the surviving corporation of the merger and a wholly-owned subsidiary of Mobility (the “Acquisition”).
Envoy
is a car sharing platform with an iOS/Android app that provides on-demand electric vehicles as an amenity to apartments, office buildings
and hotels. The company equips real estate owners and operators with a new and innovative way to enhance the lifestyle of their tenants,
members and guests by providing “Mobility as an Amenity™ service,” a platform that offers a technology to reserve and
access vehicles, driver insurance, maintenance, electric vehicle chargers, electric fleet, fleet maintenance, full-service mobile app,
customer support and robust analytics. Envoy provides the technology, operations and vehicles to implement private and dedicated auto-sharing
as an amenity for any community.
Under
the terms of the Acquisition Agreement, the acquisition consideration was up to $35,500, paid as follows: (i) $6,000 in cash paid upon
the closing of the Acquisition Agreement (the “Closing”); (ii) a promissory note of Mobility in the principal amount of $5,000; (iii) a promissory note of Mobility in the principal amount of $2,000; and (iv)(a) in the event of an initial public offering or direct
listing of Mobility or Mobility’s successor within 24 months after the Closing (and shares of common stock of the Company are not
issued in lieu thereof), $18,500, $21,000 or $22,500 worth of shares of common stock of Mobility or Mobility’s successor, depending
on the timing of such offering or listing, (b) in the event there is no initial public offering or direct listing of Mobility or Mobility’s
successor within 24 months after the Closing, $21,000 worth of shares of common stock of the Company, or (c) at the Company’s option,
a combination of cash and common stock of the Company with an aggregate value of $21,000.
The
payment of shares of common stock of Mobility or Mobility’s successor, if any, will be based on the public offering price per share
of such stock in the initial public offering. The payment of shares of common stock of the Company, if any, will be based on the average
of the daily-weighted average prices for such stock on each of the 60 days ending on the day prior to issuance thereof.
Additionally,
certain key employees of Envoy entered into employment offer letters with Mobility, including Aric Ohana, the Chief Executive Officer
of the Company’s Envoy subsidiary.
February
2023 Underwritten Public Offering
In
February 2023, we completed an underwritten registered public offering of 8,333,333 shares of our common stock at a public offering price
of $12.00 per share. We 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 us. In addition, the underwriters had a 30-day option
to purchase up to an additional 1,249,999 shares of common stock from us 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-3ASR 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. The underwriters did not exercise the over-allotment option.
New
Product and Service Offerings
In
January 2023, we announced the new products which included the Vision, EQ 200, Series 3, PQ 150, and 30kW DC Fast Charger, which are
designed to serve the increasing demands of the growing EV markets across the U.S., Europe, Asia and Latin America.
The
reimagined Vision is designed as a two-in-one solution to attract and captivate drivers and provide site hosts and advertisers an innovative
media solution. With a newly designed 55” LCD screen capable of displaying static and dynamic advertising, the Vision is the ideal
point-of-charge advertising solution with two 80 amp, 19.2kW ports that can charge simultaneously. The Vision offers easy payment via
RFID, Apple Pay, Google Wallet, and all major credit cards. Additional features include cloud connectivity via built-in 4G LTE signal,
retractable cable management and dual cable configurations with two universal J1772 plugs and a built-in camera for additional security.
Site owners can benefit from charging and advertising revenue share models for this product.
The
EQ 200 is an intelligent, affordable, and scalable charging solution designed for European and South American markets. Offering up to
22kW of power and an innovative modular design, this product fits any location and can be tailored to the specific needs of market segments.
The EQ 200 is prepared for the future by supporting technologies like ISO-15118, OCPP 2.0, and bi-directional charging, also known as
Vehicle-to-Grid (V2G). The charger also offers customization and rebranding options available to fit each user’s needs.
The
Series 3 is a flexible and versatile EV charging solution designed for both two- and three-wheeler EVs. Designed for the APAC and Latin
American markets, the Series 3 provides up to 15 amps of output in a compact form, making it ideal for installation at small shops and
residential and commercial parking areas. Its built-in electric metering allows customers to manage electricity costs with an intuitive,
smart network connection. Further, up to 45 charging points can be connected with a single communication gateway.
The
PQ 150 is a smart charging cable designed for residential charging in European markets. Offering up to 22kW of power, the PQ 150 is simple
and easy-to-use with no installation necessary and provides the highest safety level on the market today. With Bluetooth, Wi-Fi and optional
SIM/GSM & GPS functionality, this product offers advanced technology in a simple, sleek design.
The
Series 9 30kW DC Fast Charger is our latest solution for fast charging across global markets. A small footprint charging station designed
for speed and flexibility, this product was designed to quickly charge tomorrow’s EVs today and offers the perfect balance of size
and power, providing up to 100 amps and 1,000 volts of output. A 7-inch LCD touchscreen display provides drivers with an intuitive charging
process and the charger integrates with the newly redesigned Blink Networks over a Wi-Fi, ethernet, or 4G connection, offering high-performance,
compatibility, and remote monitoring.
Impact of Covid-19
on Our Business
The Covid-19 pandemic has impacted global stock markets and economies. We closely monitor the impact of the outbreak
on all aspects of our business. The extent to which our operations maybe impacted by the Covid-19 pandemic will depend largely in future
developments, which are highly uncertain and cannot be accurately predicted.
Key
Factors Affecting Operating Results
We
believe our performance and future success depend on several factors, including those discussed below:
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. Existing competitors
may expand their product offerings and sales strategies, and new competitors may enter the market. If our market share decreases due
to increased competition, its revenue and ability to generate profits in the future may be impacted.
Growth
- 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.
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, and specifically EVs, include perceptions about EV quality, safety (in particular with respect to lithium-ion
battery packs), design, performance and cost; the limited range over which EVs may be driven on a single battery charge and concerns
about running out of power while in use; improvements in the fuel economy of the internal combustion engine; consumers’ desire
and ability to purchase a luxury automobile or one that is perceived as exclusive; the environmental consciousness of consumers; volatility
in the cost of oil and gasoline; consumers’ perceptions of the dependency of the United States on oil from unstable or hostile
countries and the impact of international conflicts; government regulations and economic incentives promoting fuel efficiency and alternate
forms of energy; access to charging stations, standardization of EV charging systems and consumers’ perceptions about convenience
and cost to charge an EV; and the availability of tax and other governmental incentives to purchase and operate EVs or future regulation
requiring increased use of nonpolluting vehicles. If the market for EVs does not gain broad market acceptance or develops slower than
we expect, our business, prospects, financial condition and operating results may be adversely affected.
Regulations
- 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.
Changes to these applicable laws or regulations could affect business and/or harm our customers, thereby adversely affect our business,
financial condition and results of operations.
Expansion
through Acquisitions - We may pursue strategic domestic and international acquisitions to expand our operations. Risks in acquisition
transactions include difficulties in the integration of acquired businesses into our operations and control environment, difficulties
in assimilating and retaining employees and intermediaries, difficulties in retaining the existing clients of the acquired entities,
assumed or unforeseen liabilities that arise in connection with the acquired businesses, the failure of counterparties to satisfy any
obligations to indemnify us against liabilities arising from the acquired businesses, and unfavorable market conditions that could negatively
impact our growth expectations for the acquired businesses. Fully integrating an acquired company or business into our operations may
take a significant amount of time. If we are unable to integrate or pursue strategic acquisitions, our financial condition and results
of operations would be negatively impacted.
Results
of Operations
Three
Months Ended March 31, 2023 Compared Three Months Ended March 31, 2022
| |
For The Three Months Ended | | |
| |
| |
March 31, | | |
| |
| |
2023 | | |
2022 | | |
Difference $ | | |
Difference % | |
| |
| | |
| | |
| | |
| |
Revenues: | |
| | | |
| | | |
| | | |
| | |
Product sales | |
$ | 16,389 | | |
$ | 8,052 | | |
$ | 8,337 | | |
| 104 | % |
Charging service revenue - company-owned charging stations | |
| 2,885 | | |
| 1,107 | | |
| 1,778 | | |
| 161 | % |
Network fees | |
| 1,628 | | |
| 161 | | |
| 1,467 | | |
| 911 | % |
Warranty | |
| 393 | | |
| 67 | | |
| 326 | | |
| 487 | % |
Grant and rebate | |
| 49 | | |
| 75 | | |
| (26 | ) | |
| -35 | % |
Ride-sharing services | |
| 252 | | |
| 239 | | |
| 13 | | |
| 5 | % |
Other | |
| 72 | | |
| 99 | | |
| (27 | ) | |
| -27 | % |
| |
| | | |
| | | |
| | | |
| | |
Total Revenues | |
| 21,668 | | |
| 9,800 | | |
| 11,868 | | |
| 121 | % |
| |
| | | |
| | | |
| | | |
| | |
Cost of Revenues: | |
| | | |
| | | |
| | | |
| | |
Cost of product sales | |
| 11,731 | | |
| 6,044 | | |
| 5,687 | | |
| 94 | % |
Cost of charging services - company-owned charging stations | |
| 887 | | |
| 523 | | |
| 364 | | |
| 70 | % |
Host provider fees | |
| 1,647 | | |
| 551 | | |
| 1,096 | | |
| 199 | % |
Network costs | |
| 437 | | |
| 234 | | |
| 203 | | |
| 87 | % |
Warranty and repairs and maintenance | |
| 948 | | |
| 111 | | |
| 837 | | |
| 754 | % |
Ride-sharing services | |
| 637 | | |
| 426 | | |
| 211 | | |
| 50 | % |
Depreciation and amortization | |
| 838 | | |
| 325 | | |
| 513 | | |
| 158 | % |
| |
| | | |
| | | |
| | | |
| | |
Total Cost of Revenues | |
| 17,125 | | |
| 8,214 | | |
| 8,911 | | |
| 108 | % |
| |
| | | |
| | | |
| | | |
| | |
Gross Profit | |
| 4,543 | | |
| 1,586 | | |
| 2,957 | | |
| 186 | % |
| |
| | | |
| | | |
| | | |
| | |
Operating Expenses: | |
| | | |
| | | |
| | | |
| | |
Compensation | |
| 22,709 | | |
| 9,259 | | |
| 13,450 | | |
| 145 | % |
General and administrative expenses | |
| 8,478 | | |
| 4,427 | | |
| 4,051 | | |
| 92 | % |
Other operating expenses | |
| 4,195 | | |
| 2,942 | | |
| 1,253 | | |
| 43 | % |
| |
| - | | |
| | | |
| | | |
| | |
Total Operating Expenses | |
| 35,382 | | |
| 16,628 | | |
| 18,754 | | |
| 113 | % |
| |
| | | |
| | | |
| | | |
| | |
Loss From Operations | |
| (30,839 | ) | |
| (15,042 | ) | |
| (15,797 | ) | |
| 105 | % |
| |
| | | |
| | | |
| | | |
| | |
Other Income (Expense): | |
| | | |
| | | |
| | | |
| | |
Interest income | |
| (617 | ) | |
| - | | |
| (617 | ) | |
| N/A | |
Foreign transaction gain | |
| 1,807 | | |
| 3 | | |
| 1,804 | | |
| 60133 | % |
Change in fair value of derivative and other accrued liabilities | |
| 10 | | |
| - | | |
| 10 | | |
| N/A | |
Other income (expense), net | |
| 50 | | |
| (104 | ) | |
| 154 | | |
| -148 | % |
| |
| | | |
| | | |
| | | |
| | |
Total Other Income (Expense) | |
| 1,250 | | |
| (101 | ) | |
| 1,351 | | |
| -1338 | % |
| |
| | | |
| | | |
| | | |
| | |
Loss Before Income Taxes | |
$ | (29,589 | ) | |
$ | (15,143 | ) | |
$ | (14,446 | ) | |
| 95 | % |
| |
| | | |
| | | |
| | | |
| | |
Provision for income taxes | |
| (212 | ) | |
| - | | |
| (212 | ) | |
| N/A | |
| |
| | | |
| | | |
| | | |
| | |
Net Loss | |
$ | (29,801 | ) | |
$ | (15,143 | ) | |
$ | (14,658 | ) | |
| 95 | % |
Revenues
Total
revenue for the three months ended March 31, 2023 increased by $11,868, or 121%, to $21,668 compared to $9,800 during the three months
ended March 31, 2022.
Charging
service revenue from Company-owned charging stations was $2,885 for the three months ended March 31, 2023 as compared to $1,107 for the
three months ended March 31, 2022, an increase of $1,778, or 161%. The increase is due to the increase in utilization of chargers and
an increased number of chargers on the Blink Networks. Also contributing to the increase in charging service revenue was $196 from Blink UK
which we acquired in April 2022.
Revenue
from product sales was $16,389 for the three months ended March 31, 2023 compared to $8,052 during the three months ended March 31, 2022,
an increase of $8,337, or 104%. This increase was attributable to increased sales of commercial chargers, DC fast chargers and residential
chargers when compared to the same period in 2022. Also contributing to the increase in product sales was $2,019 from Blink UK, which we acquired
in April 2022, and $3,100 from SemaConnect, which we acquired in June 2022.
Network
fee revenues were $1,628 for the three months ended March 31, 2023 compared to $161 for the three months ended March 31, 2022, an increase
of $1,467, or 911%. The increase was attributable to increases in host owned units as well as billings and invoicing to Property Partners
during the three months ended March 31, 2023, as compared to the three months ended March 31, 2022. Also contributing to the increase
in network fee revenue was $1,119 from SemaConnect, which we acquired in June 2022.
Warranty
revenues were $393 for the three months ended March 31, 2023 compared to $67 for the three months ended March 31, 2022, an increase of
$326, or 487%. The increase was primarily attributable to an increase in warranty contracts sold for the three months March 31, 2023
compared to the three months March 31, 2022. As of March 31, 2023, we recorded a liability of $193 which represents the estimated cost
of existing backlog of known warranty cases.
Grant
and rebate revenues were $49 during the three months ended March 31, 2023, compared to $75 during the three months ended March 31, 2022,
a decrease of $26, or 35%. Grant and rebates relating to equipment and the related installation are deferred and amortized in a manner
consistent with the depreciation expense of the related assets over their useful lives. The decrease in revenue was primarily related
to the timing of the amortization of previous years’ state grants/rebates associated with the installation of chargers during the
three months March 31, 2023, and 2022.
Ride-sharing
services revenues were $252 during the three months ended March 31, 2023 compared to $239 during the three months ended March 31, 2022,
an increase of $13, or 5%. These revenues are derived from ride-sharing subscription services through a program with the City of Los
Angeles, which was associated with the acquisition of BlueLA in September 2020.
Other
revenue decreased by $27 to $72 for the three months ended March 31, 2023 as compared to $99 for the three months ended March 31, 2022.
The increase was primarily attributable to higher Low Carbon Fuel Standard (LCFS) credits generated during the three months March 31,
2023 compared to the same period in 2022. We generate these credits from the electricity utilized by our electric car charging stations
as a byproduct from our charging services in the states of California and Oregon.
Cost
of Revenues
Cost
of revenues primarily consists of electricity reimbursements, revenue share payments to our Property Partner hosts, the cost of charging
stations sold, connectivity charges provided by telco and other networks, warranty, repairs and maintenance services, and depreciation
of our installed charging stations. Cost of revenues for the three months ended March 31, 2023 were $17,125 as compared to $8,214 for
the three months ended March 31, 2022, an increase of $8,911, or 108%. There is a degree of variability in our costs in relationship to
our revenues from period to period, primarily due to:
|
● |
electricity
reimbursements that are unique to those Property Partner host agreements which provide for such reimbursements; |
|
● |
revenue
share payments are predicated on the contractual obligation under the property partner agreement and the revenue generated by the
applicable chargers; |
|
● |
cost
of charging stations sold is predicated on the mix of types of charging stations and parts sold during the period; |
|
● |
network
costs are fixed in nature based on the number of chargers connected to the telco network regardless of whether the charger generates
revenue; |
|
● |
provisions
for excess and obsolete inventory; and |
|
● |
warranty
and repairs and maintenance expenses are based on both the number of service cases completed during the period. |
Cost
of product sales increased by $5,687, or 94%, from $6,044 for the three months ended March 31, 2022 as compared to $11,731 for the three
months ended March 31, 2023. The increase was primarily due to the increase in product sales of commercial chargers, DC fast chargers
and home residential chargers during the three months ended March 31, 2023 compared to the same period in 2022, as well as cost of product
sales of $1,613 from Blink UK, which we acquired in April 2022, and $1,375 from SemaConnect, which we acquired in June 2022.
Cost
of charging services-company-owned charging stations (electricity reimbursements) increased by $364, or 70%, to $887 for the three months
ended March 31, 2023 as compared to $523 for the three months ended March 31, 2022. The increase in 2023 was attributable to the mix
of charging stations generating charging service revenues subject to electricity reimbursement.
Host
provider fees increased by $1,096, or 199%, to $1,647 during the three months ended March 31, 2023 as compared to $551 during the three
months ended March 31, 2022. This increase was a result of the mix of chargers generating revenue and their corresponding revenue share
percentage payments to Property Partner hosts pursuant to their agreements.
Network
costs increased by $203, or 87%, to $437 during the three months ended March 31, 2023 as compared to $234 during the three months ended
March 31, 2022. The increase was a result of the increase in charging stations on our network and costs incurred related to the upgrading
of our network system compared to the same period in 2022. Also contributing to the increase in network costs was $166 from SemaConnect,
which we acquired in June 2022.
Warranty and repairs and maintenance
costs increased by $837, or 754%, to $948 during the three months ended March 31, 2023 from $111 during the three months ended March 31,
2022. The increase in 2023 was attributable to significant efforts expended to reduce the backlog in warranty and repairs and maintenance
cases. Also contributing to the increase was $20 from Blink UK. As of March 31, 2023, we recorded a liability of $193 which represents the estimated
cost of existing backlog of known warranty cases.
Cost
of ride-sharing services was $637 during the three months ended March 31, 2023 compared to $426 during the 2022 period. The increase
was due to an increase in operating expenses as a result of an increase in vehicles used in this operation. These costs are from
ride-sharing subscription services through a program with the City of Los Angeles, which was associated with the acquisition of
BlueLA in September 2020.
Depreciation
and amortization expense increased by $513, or 158%, to $838 for the three months ended March 31, 2023 as compared to $325 for the three
months ended March 31, 2022. The increase in depreciation expense was attributable to an increase in the number of EV charging stations
and vehicles associated with the ride-share services.
Operating
Expenses
Compensation
expense increased by $13,450, or 145%, to $22,709 (consisting of approximately $7,800 of cash compensation and benefits and approximately
$14,900 of non-cash compensation) for the three months ended March 31, 2023. Compensation expense was $9,259 (consisting of approximately
$7,300 of cash compensation and benefits and approximately $2,000 of non-cash compensation) for the three months ended March
31, 2022. The increase in compensation expense for the three months ended March 31, 2023 compared
to the same period in 2022 was primarily related to increases in personnel and compensation in executive, marketing, sales and operations
departments as a result of the anticipated domestic and international growth of our company. In addition, compensation expense during
the March 31, 2023 compared to the same period in 2022 increased due to additional personnel in conjunction with the acquisitions of
SemaConnect and Blink UK which were acquired subsequent to March 31, 2022.
General
and administrative expenses increased by $4,051 or 92%, to $8,478 for the three months ended March 31, 2023 as compared to $4,427
for the three months ended March 31, 2022. The increase was primarily attributable to increases in legal, investor relations,
consulting , software licensing and other professional service expenditures of $1,652. Further,
general and administrative expenses increased due to increases in amortization expense of $1,823 related to the acquisitions of
SemaConnect and Blink UK which were acquired subsequent to March 31, 2022
Other
operating expenses increased by $1,252, or 43%, to $4,194 for the three months ended March 31, 2023 from $2,942 for the three months
ended March 31, 2022. The increase was primarily attributable to increases in software expense,
rent, hardware and software development costs and property/use tax expenditures of $836. Further, increases in travel and vehicle expenses
of $543, contributed to the increase in other operating expenses for three months ended March 31, 2022 compared to the same period in
2022. Also contributing to the increase in other operating expenses were operating expenditures related to the 2022 acquisitions of SemaConnect
and Blink UK which were acquired subsequent to March 31, 2022.
Other
Income (Expense)
We
recorded other income (expense) of $1,250 during the three months ended March 31, 2023 as compared to $(101) for the three months ended
March 31, 2022. The increase was primarily due to an increase in foreign transaction gains of $1,804, offset by interest expense of $617
recorded during the three months ended March 31, 2023.
Net
Loss
Our
net loss for the three months ended March 31, 2023 increased by $14,658, or 97%, to $29,801 as compared to $15,143 for the three months
ended March 31, 2022. The increase was primarily attributable to an increase in compensation expense and general and administrative expenses.
Total
Comprehensive Loss
Our
total comprehensive loss for the three months ended March 31, 2023 was $30,651 whereas our total comprehensive loss for the three months
ended March 31, 2022 was $15,749.
Liquidity
and Capital Resources
We
measure our liquidity in a number of ways, including the following:
| |
March 31, 2023 | | |
December 31, 2022 | |
| |
(unaudited) | | |
| |
| |
| | |
| |
Cash and Cash Equivalents | |
$ | 103,202 | | |
$ | 36,562 | |
| |
| | | |
| | |
Working Capital | |
$ | 120,547 | | |
$ | 48,962 | |
| |
| | | |
| | |
Debt | |
$ | 40,630 | | |
$ | 40,618 | |
During
the three months ended March 31, 2023, we financed our activities from proceeds derived from equity financings occurring in
prior periods. A significant portion of the funds raised from the sale of capital stock has been used to cover working capital needs
and personnel, office expenses and various consulting and professional fees.
For
the three months ended March 31, 2023 and 2022, we used cash of $24,177 and $11,383, respectively, in operations. Our cash use for the
three months ended March 31, 2023 was primarily attributable to our net loss of $29,801, adjusted for net non-cash expenses in the aggregate
amount of $10,214, partially offset by $4,590 of net cash provided by changes in the levels of operating assets and liabilities. Our
cash use for the three months ended March 31, 2022 was primarily attributable to our net loss of $15,143, adjusted for net non-cash expenses
in the aggregate amount of $3,572, partially offset by $188 of net cash provided by changes in the levels of operating assets and liabilities.
During
the three months ended March 31, 2023, net cash used in investing activities was $2,215, of which $1,665 was used to purchase charging
stations and other fixed assets and $550 related to the capitalization of certain engineering costs. During the three months ended March
31, 2022, net cash used in investing activities was $1,368 which was used to purchase charging stations and other fixed assets.
During
the three months ended March 31, 2023, cash provided by financing activities was $95,360, of which, $94,766 was provided by offering
proceeds related to the sale of common stock, $835 was provided by the exercise of options and warrants, offset by $92 used to pay down
our liability in connection with a finance lease and $149 used to pay down our liability in connection with internal use software. During
the three months ended March 31, 2022, cash used in financing activities was $77, of which, $69 was provided by the exercise of warrants,
offset by $146 used to pay down our liability in connection with internal use software.
As
of March 31, 2023, we had cash, working capital and an accumulated deficit of $103,202, $120,547 and $363,831, respectively. During the
three months ended March 31, 2023, we had a net loss of $29,801.
In
February 2023, we completed an underwritten registered public offering of 8,333,333 shares of our common stock at a public offering price
of $12.00 per share. We 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 us. In addition, the underwriters had a 30-day option
to purchase up to an additional 1,249,999 shares of common stock from us 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-3ASR 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. The underwriters did not exercise the over-allotment option.
We
have not yet achieved profitability and expect to continue to incur cash outflows from operations. It is expected that our operating
expenses will continue to increase and, as a result, we will eventually need to generate significant product revenues to achieve profitability.
Historically, we have been able to raise funds to support our business operations, although there can be no assurance that we will be
successful in raising significant additional funds in the future. We expect that our cash on hand will fund our operations for at least
12 months after the issuance date of the financial statements included in this Quarterly Report.
Since
inception, our operations have primarily been funded through proceeds received in equity and debt financings. We believe we have access
to capital resources and continue to evaluate additional financing opportunities. There is no assurance that we will be able to obtain
funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds we might raise will enable us
to complete our EV development initiatives or attain profitable operations.
On
September 2, 2022, we 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 “ATM” equity offering program pursuant to which we may issue and sell from time to
time shares of our common stock, par value $0.001 per share, having an aggregate offering price of up to $250,000 through the
Agents, as our sales agents. We currently anticipate using the net proceeds from the sale of our shares of common stock under the
ATM program to supplement our operating cash flows to fund EV charging station deployment and our acquisition growth plan. We also
plan to use any remaining proceeds we receive for working capital and other corporate purposes. The amounts and timing of our use of
the net proceeds will depend on a number of factors, such as the timing and progress of our EV charging station deployment efforts,
the timing and progress of any partnering and collaboration efforts and technological advances. As of March 31, 2023, an aggregate
of 558,721 shares have been sold pursuant to the ATM program representing gross proceeds of approximately $7,697. During the three-month period ended March 31, 2023, we did not sell any shares of our common stock pursuant to the
ATM program.
Contractual
Obligations and Commitments
We
entered into purchase commitments that include purchase orders and agreements in the normal course of business with contract manufacturers,
parts manufacturers, vendors for research and development services and outsourced services. As of March 31, 2023, we had purchase commitment
of approximately $62,088, which will become payable upon the suppliers’ delivery of the charging stations, services 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.
Further,
we have operating and finance lease obligations over the next five years of approximately $6,403. These operating lease obligations are
primarily related to corporate office space, warehousing, and parking spaces related to our ride-sharing services.
Critical
Accounting Estimates
The
preparation of the condensed consolidated financial statements and related disclosures in conformity with U.S. GAAP. These
accounting principles require us to make estimates and judgments that can affect the reported amounts of assets and liabilities as
of the date of the financial statements as well as the reported amounts of revenue and expense during the periods presented. We
believe that the estimates and judgments upon which it relies are reasonably based upon information available to us at the time that
it makes these estimates and judgments. To the extent that there are material differences between these estimates and actual
results, our condensed consolidated financial results will be affected. The accounting policies that reflect our more significant
estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported
financial results are described below.
The
following is not intended to be a comprehensive list of all of our accounting policies or estimates. Our accounting policies are more
fully described in Note 2 – Summary of Significant Accounting Policies, in our financial statements included elsewhere in this
quarterly report. For a comprehensive list of our critical accounting estimates, refer to Part II, Item 7, Critical Accounting Estimates
in our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes to our critical accounting
policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2022.
Revenue
Recognition
We
recognize revenue primarily from four different types of contracts:
● |
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
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.
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 their
useful lives over the useful life of the charging station.
Stock-Based
Compensation
We
measure the cost of services received in exchange for an award of equity instruments based on the fair value of the award on the date
of grant. The fair value amount of the shares expected to ultimately vest is then recognized over the period for which services are required
to be provided in exchange for the award, usually the vesting period. The estimation of stock-based awards that will ultimately vest
requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as
a cumulative adjustment in the period that the estimates are revised. We account for forfeitures as they occur.
Long-Lived
Assets
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. We assess 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.
Income
Taxes
We
account for income taxes pursuant to the asset and liability method of accounting for income taxes pursuant to FASB ASC 740, “Income
Taxes.” Deferred tax assets and liabilities are recognized for taxable temporary differences and operating loss carry forwards.
Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets
are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized.
Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Operating
Leases
We
determine 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.
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. Operating 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, we use an 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.
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.
Recently
Issued Accounting Standards
For
a description of our recently issued accounting standards, see Note 2 – Summary of Significant Accounting Policies in Part 1, Item
1 of this Quarterly Report on Form 10-Q.