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 shares of common stock outstanding.
BLINK CHARGING CO. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022
TABLE OF CONTENTS
| 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, $ par value, shares authorized, and | ||||||||
| 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.
| 2 |
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 | ||||||
| $ | 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
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.
| 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 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 | ||
| Accounts receivable | 1,618 | |||
| Prepaid expenses and other current assets | 508 | |||
| Total current assets | $ | 3,417 | ||
| Less current liabilities: | ||||
| Accounts payable | 647 | |||
| Current portion of lease liabilities | 22 | |||
| Current portion of notes payable | 611 | |||
| Accrued expenses and other current liabilities | 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 | |||