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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended June 30, 2022

 

or

 

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

 

For the transition period from _____________ to _____________

 

Commission File No. 001-38392

 

BLINK CHARGING CO.

(Exact name of registrant as specified in its charter)

 

Nevada   03-0608147

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

     
605 Lincoln Road, 5th Floor    
Miami Beach, Florida   33139-3024
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (305) 521-0200

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

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

 

Title of Each Class   Trading Symbol(s)   Name of Each Exchange on Which Registered
Common Stock   BLNK   The NASDAQ Stock Market LLC
Common Stock Purchase Warrants   BLNKW   The NASDAQ Stock Market LLC

 

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

 

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

 

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

 

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

 

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

 

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

 

As of August 5, 2022, the registrant had 50,843,466 shares of common stock outstanding.

 

 

 

 
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

FORM 10-Q

 

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022

 

TABLE OF CONTENTS

 

Page
PART I - FINANCIAL INFORMATION 1
   
Item 1. Financial Statements. 1
   
Condensed Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021 1
   
Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 2
   
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2022 3
   
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2022 4
   
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2021 5
   

Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021

6
   
Notes to Unaudited Condensed Consolidated Financial Statements 8
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 23
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 35
   
Item 4. Controls and Procedures. 35
   
PART II - OTHER INFORMATION 36
   
Item 1. Legal Proceedings. 36
   
Item 1A. Risk Factors. 36
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 36
   
Item 3. Defaults Upon Senior Securities. 36
   
Item 4. Mine Safety Disclosures. 36
   
Item 5. Other Information. 36
   
Item 6. Exhibits. 37
   
SIGNATURES 38

 

i
 

 

PART 1 – FINANCIAL INFORMATION

 

ITEM 1.FINANCIAL STATEMENTS.

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Balance Sheets

(in thousands, except for share amounts)

 

           
   June 30, 2022   December 31, 2021 
    (unaudited)      
           
Assets          
Current Assets:          
Cash and cash equivalents  $85,136   $174,795 
Current portion of restricted cash   4,058    - 
Accounts receivable, net   14,894    6,346 
Inventory, net   17,527    10,369 
Prepaid expenses and other current assets   2,560    1,020 
           
Total Current Assets   124,175    192,530 
Restricted cash, non-current portion   72    81 
Property and equipment, net   22,950    14,563 
Operating lease right-of-use asset   2,809    1,664 
Intangible assets, net   75,412    3,455 
Goodwill   156,092    19,390 
Other assets   1,997    230 
Total Assets  $383,507   $231,913 
           
Liabilities and Stockholders’ Equity          
           
Current Liabilities:          
Accounts payable  $16,364   $7,134 
Accrued expenses and other current liabilities   8,953    5,678 
Current portion of consideration payable   4,058    - 
Current portion of operating lease liabilities   1,430    547 
Current portion of deferred revenue   7,794    2,858 
Notes payable   775    10 
           
Total Current Liabilities   39,374    16,227 
Contingent consideration   3,514    - 
Consideration payable, non-current portion   40,600    - 
Operating lease liabilities, non-current portion   1,875    1,531 
Deferred revenue, non-current portion   4,236    128 
Other liabilities   1,316    193 
           
Total Liabilities   90,915    18,079 
           
Commitments and contingencies (Note 11)   -     -  
           
Stockholders’ Equity:          
Common stock, $0.001 par value, 500,000,000 shares authorized, 50,201,686 and 42,423,514          
shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively   50    42 
Additional paid-in capital   577,438    458,046 
Accumulated other comprehensive loss   (4,662)   (1,784)
Accumulated deficit   (280,234)   (242,470)
           
Total Stockholders’ Equity   292,592    213,834 
           
Total Liabilities and Stockholders’ Equity  $383,507   $231,913 

 

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

 

1
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Operations

(in thousands, except for share and per share amounts)

(unaudited)

 

                     
   For The Three Months Ended   For The Six Months Ended 
   June 30,   June 30, 
   2022   2021   2022   2021 
                 
Revenues:                    
Product sales  $8,828   $3,267   $16,880   $4,938 
Charging service revenue - company-owned charging stations   1,494    586    2,601    768 
Network fees   472    106    633    216 
Warranty   99    19    166    31 
Grant and rebate   125    74    200    224 
Ride-sharing services   279    189    518    235 
Other   189    114    288    175 
                     
Total Revenues   11,486    4,355    21,286    6,587 
                     
Cost of Revenues:                    
Cost of product sales   6,369    2,365    12,471    3,483 
Cost of charging services - company-owned charging stations   351    60    534    110 
Host provider fees   821    140    1,372    267 
Network costs   182    94    416    173 
Warranty and repairs and maintenance   523    196    634    457 
Ride-sharing services   659    424    1,085    670 
Depreciation and amortization   624    432    1,231    687 
                     
Total Cost of Revenues   9,529    3,711    17,743    5,847 
                     
Gross Profit   1,957    644    3,543    740 
                     
Operating Expenses:                    
Compensation   10,779    9,170    20,038    13,918 
General and administrative expenses   9,002    2,532    13,429    4,117 
Other operating expenses   4,138    1,287    7,080    2,437 
                    
Total Operating Expenses   23,919    12,989    40,547    20,472 
                     
Loss From Operations   (21,962)   (12,345)   (37,004)   (19,732)
                     
Other (Expense) Income:                    
Interest (expense) income   (139)   (6)   (139)   9 
Loss on settlement   -    (1,000)   -    (1,000)
Loss on foreign exchange   (244)   (108)   (241)   (108)
Change in fair value of derivative and other liabilities   (73)   (1)   (73)   7 
Other (expense) income   (203)   1    (307)   1 
                     
Total Other Expense   (659)   (1,114)   (760)   (1,091)
                     
Net Loss  $(22,621)  $(13,459)  $(37,764)  $(20,823)
Net Loss Per Share:                    
Basic  $(0.52)  $(0.32)  $(0.88)  $(0.50)
Diluted  $(0.52)  $(0.32)  $(0.88)  $(0.50)
                     
Weighted Average Number of                    
Common Shares Outstanding:                    
Basic   43,509,693    42,037,492    42,973,758    41,587,793 
Diluted   43,509,693    42,037,492    42,973,758    41,587,793 

 

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

 

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BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

 

                     
   For the Three Months Ended   For the Six Months Ended 
   June 30,   June 30, 
   2022   2021   2022   2021 
                 
Net Loss  $(22,621)  $(13,459)  $(37,764)  $(20,823)
Other Comprehensive (Loss) Income:                    
Cumulative translation adjustments   (2,272)   (388)   (2,878)   (388)
Change in fair value of marketable securities   -    13    -    (43)
                     
Total Comprehensive Loss  $(24,893)  $(13,834)  $(40,642)  $(21,254)

 

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

 

3
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statement of Changes in Stockholders’ Equity

For the Three and Six Months Ended June 30, 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 
                               
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 
                               
Stock-based compensation   -    -    686    -    -    686 
                               
Common stock issued as purchase consideration of SemaConnect   7,454,975    7    113,830    -    -    113,837 
                               
Common stock issued as purchase consideration of Electric Blue   152,803    -    2,852    -    -    2,852 
                               
Common stock issued upon exercise of warrants   3,131    -    13    -    -    13 
                               
Common stock issued upon exercise of options   5,955    -    10    -    -    10 
                               
Other comprehensive loss   -    -    -    (2,272)   -    (2,272)
                               
Net loss   -    -    -    -    (22,621)   (22,621)
                               
Balance - June 30, 2022   50,201,686   $50   $577,438   $(4,662)  $(280,234)  $292,592 

 

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

 

4
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statement of Changes in Stockholders’ Equity

For the Three and Six Months Ended June 30, 2021

(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, 2021   35,951,097   $36   $214,479   $-   $(187,351)  $27,164 
                               
Common stock issued in public offering, net of issuance costs [1]   5,660,000    6    221,400    -    -    221,406 
                               
Common stock issued upon exercise of warrants   239,202    -    999    -    -    999 
                               
Common stock issued upon cashless option exercise   15,522    -    -    -    -    - 
                               
Common stock issued upon cashless warrant exercise   66,000    -    -    -    -    - 
                               
Common stock issued as consideration for property and equipment   13,123    -    600    -    -    600 
                               
Stock-based compensation   470    -    419    -    -    419 
                               
Other comprehensive loss   -    -    -    (56)   -    (56)
                               
Net loss   -    -    -    -    (7,365)   (7,365)
                               
Balance - March 31, 2021   41,945,414   $42   $437,897   $(56)  $(194,716)  $243,167 
                               
Issuance costs related to common stock issued in public offering   -    -    (73)   -    -    (73)
                               
Common stock issued pursuant to cashless option exercise   22,974    -    -    -    -    - 
                               
Common stock issued upon exercise of warrants   102,684    -    428    -    -    428 
                               
Common stock issued as purchase consideration of Blue Corner   32,382    -    790    -    -    790 
                               
Stock-based compensation   36,691    -    3,523    -    -    3,523 
                               
Other comprehensive loss   -    -    -    (375)   -    (375)
                               
Net loss   -    -    -    -    (13,459)   (13,459)
                               
Balance - June 30, 2021   42,140,145   $42   $442,565   $(431)  $(208,175)  $234,001 

 

[1]Includes gross proceeds of $232,060, less issuance costs of $10,654.

 

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

 

5
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

           
   For The Six Months Ended 
   June 30, 
   2022   2021 
Cash Flows From Operating Activities:          
Net loss  $(37,764)  $(20,823)
Adjustments to reconcile net loss to net cash  used in operating activities:          
Depreciation and amortization   3,393    1,945 
Non-cash lease expense   215    - 
Dividend and interest income   -    (62)
Change in fair value of derivative and other liabilities   73    7 
Provision for bad debt   798    253 
Provision for slow moving and obsolete inventory   161    - 
Stock-based compensation:          
Common stock   962    1,139 
Options   2,027    2,945 
Changes in operating assets and liabilities:          
Accounts receivable   (2,728)   (1,803)
Inventory   (8,105)   (3,373)
Prepaid expenses and other current assets   4,270    (1,220)
Other assets   (1,339)   245 
Accounts payable, accrued expenses and other current liabilities   4,491    (283)
Other liabilities   50    - 
Lease liabilities   (146)   (177)
Deferred revenue   2,656    262 
           
Total Adjustments   6,778    (122)
           
Net Cash Used In Operating Activities   (30,986)   (20,945)
           
Cash Flows From Investing Activities:          
Proceeds from sale of marketable securities   -    4,553 
Purchase consideration of SemaConnect, net of cash and restricted cash acquired   (38,338)   - 
Purchase consideration of Electric Blue, net of cash acquired   (11,360)   - 
Purchase of marketable securities   -    (58,013)
Capitalization of engineering costs paid   (288)    (237)
Cash acquired in the purchase of Blue Corner   -    243 
Purchase consideration of Blue Corner   -    (22,985)
Purchases of property and equipment   (2,247)   (5,019)
           
Net Cash Used In Investing Activities   (52,233)   (81,458)
           
Cash Flows From Financing Activities:          
Proceeds from sale of common stock in public offering [1]   -    221,333 
Proceeds from exercise of options and warrants   92    1,427 
Repayment of financing liability in connection with finance lease   (71)   - 
Repayment of financing liability in connection with internal use software   (235)   (39)
           
Net Cash (Used In) Provided By Financing Activities   (214)   222,721 
           
Effect of Exchange Rate Changes on Cash and Cash Equivalents and Restricted Cash   (2,350)   (606)
           
Net (Decrease) Increase In Cash and Cash Equivalents and Restricted Cash   (85,783)   119,712 
           
Cash and Cash Equivalents and Restricted Cash - Beginning of Period   175,049    22,418 
           
Cash and Cash Equivalents and Restricted Cash - End of Period  $89,266   $142,130 
           
Cash and cash equivalents and restricted cash consisted of the following:          
Cash and cash equivalents  $85,136   $142,053 
Restricted cash   4,130    77 
Total Cash and cash equivalents and restricted cash  $89,266   $142,130 

 

[1]Includes gross proceeds of $232,060, less issuance costs of $10,727.

 

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

 

6
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Cash Flows — Continued

(in thousands)

(unaudited)

 

   For The Six Months Ended 
   June 30, 
   2022   2021 
Supplemental Disclosures of Cash Flow Information:        
Cash paid during the period for:        
Interest  $ -   $ - 
Income taxes  $20   $- 
Non-cash investing and financing activities:          
Common stock issued as consideration for property and equipment  $-   $600 
Common stock issued as purchase consideration of SemaConnect  $113,837   $- 
Common stock issued as purchase consideration of Electric Blue  $2,852   $- 
Common stock issued as purchase consideration of Blue Corner  $-   $790 
Interest expense converted into principal  $-   $2 
Right of use assets obtained in exchange for operating lease liabilities  $258   $1,358 
Assets obtained in exchange for lease obligations  $931   $- 
Change in fair value of marketable securities  $-   $(43)
Intangible assets obtained in exchange for financing liability  $660   $- 
Transfer of inventory to property and equipment  $(2,024)  $(868)

 

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

 

7
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

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 network (the “Blink Network”) and Blink EV charging equipment, also known as electric vehicle supply equipment (“EVSE”) and other EV-related services. The Blink Network provides property owners, managers, parking companies, and state and municipal entities (“Property Partners”) with cloud-based services that enable the remote monitoring and management of EV charging stations. The Blink Network also provides EV drivers with vital station information, including station location, availability and fees. Blink also operates a ride-sharing program through the Company’s wholly owned subsidiary, BlueLA Rideshare, LLC and the City of Los Angeles which allows customers the ability to rent EVs 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 June 30, 2022 and for the six months then ended. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the operating results for the full year ending December 31, 2022 or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures of the Company as of December 31, 2021 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on March 16, 2022 as part of the Company’s Annual Report on Form 10-K.

 

Risks and Uncertainties

 

The Covid-19 pandemic has impacted global stock markets and economies. The Company closely monitors the impact of the continuing presence of Covid-19 and multiple Covid-19 variants. The Company has taken and continues to take precautions to ensure the safety of its employees, customers and business partners, while assuring business continuity and reliable service and support to its customers. The Company continues to receive orders for its products, although some shipments of equipment have been temporarily delayed. The global chip shortage and supply chain disruption has caused some delays in equipment orders from its contract manufacturer. As federal, state and local economies begin to return to pre-pandemic levels, the Company expects demand for charging station usage to increase, however, the Company is unable to predict the extent of such recovery due to the uncertainty of Covid-19. As a result, the Company is unable to predict the ultimate impact of equipment order delays, chip shortage and continuous presence of Covid-19 will have on its business, future results of operations, financial position, or cash flows.

 

8
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except for share and per share amounts)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Since the Annual Report for the year ended December 31, 2021, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note.

 

FOREIGN CURRENCY TRANSLATION

 

The Company’s reporting currency is the United States dollar. The functional currency of certain subsidiaries is the Euro and the Indian Rupee. Assets and liabilities are translated based on the exchange rates at the balance sheet date (1.043 for the Euro, 0.0127 for the Indian Rupee, and 1.214 for the Pound Sterling as of June 30, 2022), while expense accounts are translated at the weighted average exchange rate for the period (1.0554 for the Euro, 0.0127 for the Indian Rupee, and 1.2281 for the Pound Sterling for the six months ended June 30, 2022). Equity accounts are translated at historical exchange rates. The resulting translation adjustments are recognized in stockholders’ equity as a component of accumulated other comprehensive income. Comprehensive income (loss) is defined as the change in equity of an entity from all sources other than investments by owners or distributions to owners and includes foreign currency translation adjustments as described above. Transaction gains and losses are charged to the statement of operations as incurred. Transaction losses attributable to foreign exchange were $244 and $241 during the three and six months ended June 30, 2022, respectively. Transaction losses attributable to foreign exchange were $108 during the three and six months ended June 30, 2021.

 

REVENUE RECOGNITION

 

The Company recognizes revenue primarily from five 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 upon installation of chargers for which the Company is contracted to perform.
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.
Ride-sharing services – Primarily related to ride-sharing services agreement with the City of Los Angeles which allows customers the ability to rent electric vehicles through a subscription service. The Company recognizes revenue over the contractual period of performance of the subscription.
Other – Primarily related to charging service revenue from non-company-owned charging stations. Revenue is recognized from non-company-owned charging stations at the point when a particular charging session is completed in accordance with a contractual relationship between the Company and the owner of the station. Other revenues also comprises of revenues generated from alternative fuel credits.

 

The following table summarizes revenue recognized under ASC 606 in the condensed consolidated statements of operations:

 

                     
   For The Three Months Ended   For The Six Months Ended 
   June 30,   June 30, 
   2022   2021   2022   2021 
                 
Revenues - Recognized at a Point in Time:                    
Product sales  $8,828   $3,267   $16,880   $4,938 
Charging service revenue - company-owned charging stations   1,494    586    2,601    768 
Other   189    114    288    175 
Total Revenues - Recognized at a Point in Time   10,511    3,967    19,769    5,881 
                     
Revenues - Recognized Over a Period of Time:                    
Ride-sharing services   279    189    518    235 
Network and other fees   571    125    799    247 
Total Revenues - Recognized Over a Period of Time   850    314    1,317    482 
                     
Total Revenue  $11,361   $4,281   $21,086   $6,363 

 

9
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

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 our revenue recognized under ASC 606 in the condensed consolidated statements of operations by geographical area:

 

                     
   For The Three Months Ended   For The Six Months Ended 
   June 30,   June 30, 
   2022   2021   2022   2021 
Revenues by Geographical Area                    
U.S.A  $7,198   $2,063   $12,979   $3,148 
International   4,163    2,218    8,107    3,215 
Total Revenue  $11,361   $4,281   $21,086   $6,363 

 

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 June 30, 2022, the Company had $12,030 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 June 30, 2022. The Company expects to satisfy $7,794 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 and six months ended June 30, 2022, the Company recognized $310 and $491, respectively, of revenues related to network fees and warranty contracts, which were included in deferred revenues as of December 31, 2021. During the six months ended June 30, 2022, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.

 

Grants and rebates which are not within the scope of ASC 606, pertaining to revenues and periodic expenses are recognized as income when the related revenue and/or periodic expense are recorded. Grants and rebates related to EV charging stations and their installation are deferred and amortized over the shorter of the related depreciation expense of the related asset over their useful lives over the useful life of the charging station or the contractual obligation of the grant. During the three months ended June 30, 2022 and 2021, the Company recognized $125 and $74, respectively, related to grant and rebate revenue. During the six months ended June 30, 2022 and 2021, the Company recognized $200 and $224, respectively, related to grant and rebate revenue. At June 30, 2022 and December 31, 2021, there was $3,225 and $70 of deferred grant and rebate revenue to be amortized.

 

CONCENTRATIONS

 

As of December 31, 2021, accounts receivable from a significant customer were approximately 18% of total accounts receivable. During the three months ended June 30, 2022, revenues from one significant customer represented 10% of total revenues. During the six months ended June 30, 2021, sales to a significant customer represented 12% of total revenue. During the six months ended June 30, 2022, the Company made purchases from a significant supplier that represented 13% of total purchases.

 

10
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed 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:

 

           
   For the Three and Six Months Ended 
   June 30, 
   2022   2021 
Warrants   3,255,114    3,339,294 
Options   1,015,787    1,123,110 
Unvested restricted common stock   -    48,819 
Total potentially dilutive shares   4,270,901    4,511,223 

 

3. 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 “Loan”), in which $1,000 was loaned by the Company during 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 Loan, if the Company proceeds with the possible stock purchase of the Target, the principal and accrued interest amount under the Loan will be deducted from the cash consideration paid to the Target’s shareholders at closing. If, however, the Company determines not to proceed with the possible stock purchase of the Target, the Loan will continue to accrue 6% interest per annum, and mature on the earliest of (i) a “Change of Control” (as defined); (ii) the closing of the next investment round by the Target; (iii) an Event of Default (as defined); or (iv) May 1, 2027.

 

4. BUSINESS COMBINATONS

 

ELECTRIC BLUE LIMITED ACQUISITION

 

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, a private company limited by shares and registered in England and Wales (“EB”), from its shareholders. Headquartered in St. Albans, United Kingdom, EB is a leading, independently-owned provider of electric vehicle charging and sustainable energy solutions and technologies. EB works with local authorities and businesses to create the infrastructure the United Kingdom needs to meet the 2050 net zero emissions target and prepare for the 2030 ban on the sale of new petrol and diesel cars and vans.

 

The fair value purchase price for the acquisition of all of EB’s outstanding capital stock is $18,903, consisting of $12,651 in cash, and 152,803 of the Company’s common stock (the “Consideration Shares”) with a fair value of $2,852.

 

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 $3,400. As of June 30, 2022, the estimated fair value of the Contingent Consideration was $3,514. 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.

 

11
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except for share and per share amounts)

 

4. BUSINESS COMBINATONS – CONTINUED

 

ELECTRIC BLUE LIMITED ACQUISITION - CONTINUED

 

The Company engaged a third-party independent valuation specialist to assist in the determination of fair values of tangible and intangible assets acquired and liabilities assumed for EB. The final determination of the fair value of assets and liabilities will be completed within the one-year measurement period as required by ASC Topic 805. The EB acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, accounts receivable and certain fixed assets.

 

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date of EB:

 

Preliminary Purchase Price Allocation    
     
Purchase Consideration:    
Cash  $12,651 
Common stock   2,852 
Contingent consideration   3,400 
      
Total Purchase Consideration  $18,903 
      
Less:     
Trade name   486 
Customer relationships   3,075 
Internally developed technology   504 
Non-compete   1,908 
Property and equipment   4,162 
Non-current portion of deferred revenue   (730)
Debt-free net working capital deficit   (1,047)
      
Fair Value of Identified Net Assets   8,358 
      
Remaining Unidentified Goodwill Value  $10,545 

 

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.

 

12
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except for share and per share amounts)

 

4. BUSINESS COMBINATONS – CONTINUED

 

ELECTRIC BLUE LIMITED ACQUISITION – CONTINUED

 

The components of debt free net working capital deficit are as follows:

 

Current assets:    
Cash  $1,291 
Restricted cash   8,103 
Accounts receivable   1,618 
Inventory   5,472 
Prepaid expenses and other current assets   508 
      
Total current assets  $3,417 
      
Less current liabilities:     
Accounts payable   647 
Current portion of lease liabilities   22 
Merger consideration payable   8,103 
Current portion of notes payable   611 
Deferred revenue   3,380 
Current portion of lease liability   - 
Accrued expenses and other current liabilities   3,184 
      
Total current liabilities  $4,464 
      
Debt free net working capital deficit  $(1,047)

 

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 $10,545 from the acquisition of EB is expected to be deductible for income tax purposes.

 

The condensed consolidated financial statements of the Company include the results of operations of EB from April 22, 2022 to June 30, 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 June 30, 2022 included revenues of $1,362 and a net loss of $743.

 

The following table presents the unaudited pro forma condensed consolidated results of operations for the three and six months ended June 30, 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 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 2021 or (ii) future results of operations

 

   For the Three Months Ended June 30,   For the Six Months Ended June 30, 
   2022   2021   2022   2021 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
Revenues  $13,203   $4,698   $23,439   $7,183 
Net loss  $(23,591)  $(14,373)  $(39,542)  $(22,946)

 

The above pro forma information includes pro forma adjustments to remove the effect of merger expenses recognized in the results of operations of the Company during the three and six months ended June 30, 2022 of $138 and $178, respectively.

 

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 condensed consolidated statements of operations.

 

See Note 10 – Fair Value Measurement for additional information.

 

13
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except for share and per share amounts)

 

4. BUSINESS COMBINATONS – CONTINUED

 

SEMACONNECT ACQUISITION

 

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). Upon consummation 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 fair value purchase price was $200,573, which includes 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) $46,136 of which 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 (the “Stock Payment”) with a fair value of $113,837. Included in the cash consideration is $8,103 related to payments due to stock option holders of SemaConnect. Subsequent to the acquisition date, payments to the stock option holder were made after the stock option holder signed an option cash-out agreement. As of June 30, 2022, there was an unpaid balance of $4,058 which is classified as restricted cash on condensed consolidated balance sheet as of June 30, 2022, all of which was paid during July 2022.

 

In order to determine the estimated fair values of tangible and intangible assets acquired and liabilities assumed for SemaConnect, the Company performed internal calculations and analysis based on information and resources available. The Company engaged a third-party independent valuation specialist to assist in the determination of fair values which will become available during the third quarter of 2022. The final determination of the fair value of assets and liabilities will be completed within the one-year measurement period as required by ASC Topic 805. The SemaConnect acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, accounts receivable and certain fixed assets.

 

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date of SemaConnect:

 

Preliminary Purchase Price Allocation     
      
Purchase Consideration:     
Cash  $46,136 
Deferred cash consideration   

40,600

 
Common stock   113,837 
      
Total Purchase Consideration  $200,573 
      
Less:     
Trade name   4,097 
Customer relationships   40,973 
Internally developed technology   2,049 
Non-compete   20,487 
Fixed Assets   614 
Other assets   449 
Right-of-use asset   

1,092

 
Lease liability, non-current portion   

(611

)
Deferred revenue- non -current portion   (702) 
Debt-free net working capital   4,558 
Fair Value of Identified Net Assets   73,006 
      
Remaining Unidentified Goodwill Value  $127,567 

  

14
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except for share and per share amounts)

 

4. BUSINESS COMBINATONS – CONTINUED

 

SEMACONNECT ACQUISITION - CONTINUED

 

The components of debt free net working capital are as follows:

 

Current assets:    
Cash  $3,753 
Restricted cash   8,103 
Accounts receivable   5,515 
Inventory   5,472 
Prepaid expenses and other current assets   1,309