10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2020

 

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.)

 

407 Lincoln Road, Suite 704    
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 [X] 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 [X] 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 [X] Smaller reporting company [X]
    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 [X]

 

As of November 11, 2020, the registrant had 32,291,147 shares of common stock outstanding.

 

 

 

 

 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

FORM 10-Q

 

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020

 

TABLE OF CONTENTS

 

    Page
     
PART I - FINANCIAL INFORMATION    
     
Item 1. Financial Statements.    
     
Condensed Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and December 31, 2019   1
   
Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019   2
   
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2020 and 2019   3
     
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2020   4
   
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2019   5
   

Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019

  6
     
Notes to Unaudited Condensed Consolidated Financial Statements   8
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.   25
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk.   32
     
Item 4. Controls and Procedures.   32
     
PART II - OTHER INFORMATION    
     
Item 1. Legal Proceedings.   34
     
Item 1A. Risk Factors.   34
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.   35
     
Item 6. Exhibits.   35
     
SIGNATURES   36

 

i

 

 

PART 1 – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Balance Sheets

 

   September 30, 2020   December 31, 2019 
    (unaudited)      
Assets          
           
Current Assets:          
Cash  $14,863,434   $4,168,837 
Marketable securities   -    2,956,989 
Subscription receivable   419,494    - 
Accounts receivable and other receivables, net   538,331    206,770 
Inventory, net   2,822,332    2,157,295 
Prepaid expenses and other current assets   523,087    671,033 
           
Total Current Assets   19,166,678    10,160,924 
Restricted cash   27,820    - 
Property and equipment, net   2,999,581    1,347,309 
Operating lease right-of-use asset   

719,241

    258,102 
Intangible assets, net   61,380    107,415 
Goodwill   251,657    - 
Other assets   215,471    73,743 
Total Assets  $23,441,828   $11,947,493 
           
Liabilities and Stockholders’ Equity          
           
Current Liabilities:          
Accounts payable  $3,207,674   $2,372,212 
Accrued expenses   1,402,940    897,548 
Accrued issuable equity   214,907    257,686 
Current portion of notes payable   306,535    10,000 
Current portion of operating lease liabilities   361,312    190,823 
Contingent consideration   245,000    - 
Other current liabilities   78,804    73,598 
Current portion of deferred revenue   365,660    567,613 
           
Total Current Liabilities   6,182,832    4,369,480 
Operating lease liabilities, non-current portion   370,698    84,838 
Notes payable, non-current portion   562,018    - 
Other liabilities   90,000    58,164 
Deferred revenue, non-current portion   -    565 
           
Total Liabilities   

7,205,548

    4,513,047 
           
Series B Convertible Preferred Stock, 10,000 shares designated, 0 issued and outstanding as of September 30, 2020 and December 31, 2019   -    - 
           
Commitments and contingencies (Note 10)          
           
Stockholders’ Equity:          
Preferred stock, $0.001 par value, 40,000,000 shares authorized;          
Series A Convertible Preferred Stock, 20,000,000 shares designated, 0 shares issued and outstanding as of September 30, 2020 and December 31, 2019   -    - 
Series C Convertible Preferred Stock, 250,000 shares designated, 0 shares issued and outstanding as of September 30, 2020 and December 31, 2019   -    - 
Series D Convertible Preferred Stock, 13,000 shares designated, 0 and 5,125 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively   -    5 
Common stock, $0.001 par value, 500,000,000 shares authorized, 31,747,100 and 26,322,583 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively   31,747    26,323 
Additional paid-in capital   195,614,476    176,729,926 
Accumulated other comprehensive income   -    183,173 
Accumulated deficit   (179,409,943)   (169,504,981)
           
Total Stockholders’ Equity   16,236,280    7,434,446 
           
Total Liabilities and Stockholders’ Equity  $

23,441,828

   $11,947,493 

 

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

 

(unaudited)

 

   For The Three Months Ended   For The Nine Months Ended 
   September 30,   September 30, 
   2020   2019   2020   2019 
                 
Revenues:                    
Charging service revenue - company-owned charging stations  $162,654   $317,990   $569,528   $937,870 
Product sales   556,859    319,254    2,608,636    704,472 
Network fees   100,298    80,116    227,128    230,945 
Warranty   13,950    8,400    30,429    44,192 
Grant and rebate   2,580    4,578    11,071    17,817 
Other   69,119    34,148    330,142    122,408 
                     
Total Revenues   905,460    764,486    3,776,934    2,057,704 
                     
Cost of Revenues:                    
Cost of charging services - company-owned charging stations   120,280    47,427    185,768    114,439 
Host provider fees   36,852    110,628    150,367    273,704 
Cost of product sales   34,925    246,071    1,426,801    547,191 
Network costs   106,387    48,097    464,009    211,623 
Warranty and repairs and maintenance   104,690    152,218    237,333    324,633 
Depreciation and amortization   135,691    38,798    223,419    96,365 
Total Cost of Revenues   538,825    643,239    2,687,697    1,567,955 
                     
Gross Profit   366,635    121,247    1,089,237    489,749 
                     
Operating Expenses:                    
Compensation   2,543,755    1,727,487    6,963,960    5,005,014 
General and administrative expenses   1,143,476    455,879    2,460,012    1,198,070 
Other operating expenses   592,279    726,033    1,618,897    1,773,626 
                     
Total Operating Expenses   4,279,510    2,909,399    11,042,869    7,976,710 
                     
Loss From Operations   (3,912,875)   (2,788,152)   (9,953,632)   (7,486,961)
                     
Other (Expense) Income:                    
Interest (expense) income, net   (2,925)   15,961    18,185    54,114 
Gain on settlement of debt   -    -    -    310,000 
Gain on settlement of accounts payable, net   3,492    93,184    22,578    253,607 
Change in fair value of derivative and other accrued liabilities   (52,232)   (1,367)   (68,271)   (91,603)
Other income   50,191    57,385    76,178    207,007 
                     
Total Other (Expense) Income   (1,474)   165,163    48,670    733,125 
                     
Net Loss  $(3,914,349)  $(2,622,989)  $(9,904,962)  $(6,753,836)
                     
Net Loss Per Share:                    
Basic  $(0.12)  $(0.10)  $(0.34)  $(0.26)
Diluted  $(0.12)  $(0.10)  $(0.34)  $(0.26)
                     
Weighted Average Number of Common Shares Outstanding:                    
Basic   31,379,636    26,242,567    28,859,057    26,216,266 
Diluted   31,379,636    26,242,567    28,859,057    26,216,266 

 

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

 

(unaudited)

 

   For the Three Months Ended   For the Nine Months Ended 
   September 30,   September 30, 
   2020   2019   2020   2019 
                 
Net Loss  $(3,914,349)  $(2,622,989)  $(9,904,962)  $(6,753,836)
Other Comprehensive (Loss) Income:                    
Reclassification adjustments of gain on sale of marketable securities included in net loss   (84,836)   -    (183,173)   - 
Change in fair value of marketable securities   20,079    (32,838)   -    108,169 
                     
Total Comprehensive Loss  $(3,979,106)  $(2,655,827)  $(10,088,135)  $(6,645,667)

 

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 Nine Months Ended September 30, 2020

 

(unaudited)

 

   Convertible Preferred Stock           Additional   Accumulated Other       Total 
   Series D   Common Stock   Paid-In   Comprehensive   Accumulated   Stockholders’ 
   Shares   Amount   Shares   Amount   Capital   Income   Deficit   Equity 
                                 
Balance - January 1, 2020   5,125   $5    26,322,583   $26,323   $176,729,926   $183,173   $(169,504,981)  $7,434,446 
                                         
Stock-based compensation   -    -    -    -    276,675    -    -    276,675 
                                         
Common stock issued upon conversion of Series D convertible preferred stock   (5,125)   (5)   1,642,628    1,642    (1,637)   -    -    - 
                                         
Other comprehensive loss   -    -    -    -    -    (181,468)   -    (181,468)
                                         
Net loss   -    -    -    -    -    -    (2,961,100)   (2,961,100)
                                         
Balance - March 31, 2020   -   $-    27,965,211   $27,965   $177,004,964   $1,705   $(172,466,081)  $4,568,553 
                                         
Common stock issued in public offering [1]   -    -    1,660,884    1,661    3,755,948    -    -    3,757,609 
                                         
Stock-based compensation   -    -    57,542    58    72,070    -    -    72,128 
                                         
Other comprehensive income   -    -    -    -    -    63,052    -    63,052 
                                         
Net loss   -    -    -    -    -    -    (3,029,513)   (3,029,513)
                                         
Balance - June 30, 2020   -   $-    29,683,637   $29,684   $180,832,982   $64,757   $(175,495,594)  $5,431,829 
                                         
Common stock issued in public offering [2]   -    -    1,861,087    1,861    14,456,744    -    -    14,458,605 
                                         
Common stock issued upon exercise of warrants   -    -    195,529    196    144,117    -    -    144,313 
                                         
Stock-based compensation   -    -    6,847    6    164,629    -    -    164,635 
                                         
Options issued in satisfaction of accrued issuable equity   -    -    -    -    16,004    -    -    16,004 
                                         
Other comprehensive loss   -    -    -    -    -    (64,757)   -    (64,757)
                                         
Net loss   -    -    -    -    -    -    (3,914,349)   (3,914,349)
                                         
Balance - September 30, 2020   -   $-    31,747,100   $31,747   $195,614,476   $-   $(179,409,943)  $16,236,280 

 

[1] Includes gross proceeds of $3,998,618, less issuance costs of $241,009.

[2] Includes gross proceeds of $14,954,705, less issuance costs of $496,100. As of September 30, 2020, $419,494 of net proceeds had not been received by the Company and was included as a subscription receivable.

 

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 Nine Months Ended September 30, 2019

 

(unaudited)

 

   Convertible Preferred Stock       Additional   Accumulated Other       Total 
   Series D   Common Stock   Paid-In   Comprehensive   Accumulated   Stockholders’ 
   Shares   Amount   Shares   Amount   Capital   Income   Deficit   Equity 
                                 
Balance - January 1, 2019   5,141   $5    26,118,075   $26,118   $175,924,587   $-   $(159,856,481)  $16,094,229 
                                         
Stock-based compensation   -    -    51,724    52    118,684    -    -    118,736 
                                         
Restricted stock issued in satisfaction of accrued issuable equity   -    -    56,948    57    199,831    -    -    199,888 
                                         
Common stock issued upon conversion of Series D convertible preferred stock   (16)   -    5,128    5    (5)   -    -    - 
                                         
Return and retirement of common stock   -    -    (8,066)   (8)   8    -    -    - 
                                         
Other comprehensive income   -    -    -    -    -    100,686    -    100,686 
                                         
Net loss   -    -    -    -    -    -    (1,893,627)   (1,893,627)
                                         
Balance - March 31, 2019   5,125   $5    26,223,809   $26,224   $176,243,105   $100,686   $(161,750,108)  $14,619,912 
                                         
Restricted stock issued in satisfaction of accrued issuable equity   -    -    12,995    13    40,142    -    -    40,155 
                                         
Stock-based compensation   -    -    -    -    185,632    -    -    185,632 
                                         
Other comprehensive income   -    -    -    -    -    40,321    -    40,321 
                                         
Net loss   -    -    -    -    -    -    (2,237,220)   (2,237,220)
                                         
Balance - June 30, 2019   5,125   $5    26,236,804   $26,237   $176,468,879   $141,007   $(163,987,328)  $12,648,800 
                                         
Stock-based compensation   -    -    20,000    20    59,232    -    -    59,252 
                                         
Restricted stock issued in satisfaction of accrued issuable equity   -    -    4,630    4    12,311    -    -    12,315 
                                         
Other comprehensive loss   -    -    -    -    -    (32,838)   -    (32,838)
                                         
Net loss   -    -    -    -    -    -    (2,622,989)   (2,622,989)
                                         
Balance - September 30, 2019   5,125   $5    26,261,434   $26,261   $176,540,422   $108,169   $(166,610,317)  $10,064,540 

 

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

 

(unaudited)

 

   For The Nine Months Ended 
   September 30, 
   2020   2019 
Cash Flows From Operating Activities:          
Net loss  $(9,904,962)  $(6,753,836)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   436,546    210,042 
Dividend and interest income   -    (45,566)
Change in fair value of derivative and other accrued liabilities   (68,271)   (91,603)
Provision for bad debt   98,417    91,507 
Loss on disposal of fixed assets   98,478    72,985 
Accrued interest converted to notes payable   2,887    - 
Gain on settlement of debt   -    (310,000)
(Benefit) provision for slow moving and obsolete inventory   (275,520)   189,243 
Gain on settlement of accounts payable, net   (22,578)   (253,607)
Non-cash compensation:          
Common stock   182,004    380,399 
Options   298,355    210,763 
Changes in operating assets and liabilities:          
Accounts receivable and other receivables   (57,380)   (236,227)
Inventory   (1,713,432)   (595,291)
Prepaid expenses and other current assets   124,533    (167,512)
Other assets   (53,849)   4,121 
Accounts payable and accrued expenses   1,041,742    84,794 
Lease liabilities   (141,463)   (49,440)
Deferred revenue   (202,518)   (115,184)
           
Total Adjustments   (252,049)   (620,576)
           
Net Cash Used In Operating Activities   (10,157,011)   (7,374,412)
           
Cash Flows From Investing Activities:          
Purchase consideration for BlueLA Carsharing, LLC acquisition   (1)   - 
Cash acquired in the purchase of BlueLA Carsharing, LLC   3,379    - 
Proceeds from sale of marketable securities   2,773,816    - 
Purchases of property and equipment   (680,673)   (177,418)
           
Net Cash Provided By (Used In) Investing Activities   2,096,521    (177,418)
           
Cash Flows From Financing Activities:          
Proceeds from issuance of notes payable   855,666    - 
Proceeds from warrant exercise   144,313    - 
Proceeds from sale of common stock in public offering [1]   17,835,886    - 
Payment of financing liability in connection with internal use software   (52,958)   - 
           
Net Cash Provided By Financing Activities   18,782,907    - 
           
Net Increase (Decrease) In Cash   10,722,417    (7,551,830)
           
Cash and Restricted Cash - Beginning of Period   4,168,837    15,538,849 
           
Cash and Restricted Cash - End of Period  $14,891,254   $7,987,019 
           
Cash and restricted cash consisted of the following:          
Cash  $14,863,434   $7,987,019 
Restricted cash   27,820    - 
   $14,891,254   $7,987,019 

 

[1] Includes gross proceeds of $18,520,736, less issuance costs of $684,850.

 

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

 

(unaudited)

 

   For The Nine Months Ended 
   September 30, 
   2020   2019 
Supplemental Disclosures of Cash Flow Information:        
Cash paid during the periods for:          
Interest expense  $-   $- 
Non-cash investing and financing activities:          
Common stock issued upon conversion of Series D convertible preferred stock  $5   $5 
Return and retirement of common stock  $-   $(8)
Reduction of additional paid-in capital for public offering issuance costs that were previously paid  $(39,167)  $- 
Restricted stock issued in satisfaction of accrued issuable equity  $-   $252,358 
Options issued in satisfaction of accrued issuable equity  $16,004   $- 
Change in fair value of marketable securities  $-   $108,169 
Subscription receivable, net of issuance costs of $13,093  $419,494   $- 
Right of use assets obtained in exchange for lease liabilities  $

597,812

   $- 
Net assets (excluding cash) acquired in the acquisition of BlueLA Carsharing, LLC  $84,481   $- 
Transfer of inventory to property and equipment  $(1,323,915)  $(344,217)

 

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

 

7

 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

1. BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES AND BASIS OF PRESENTATION

 

Organization and Operations

 

Blink Charging Co., through its wholly-owned subsidiaries (collectively, the “Company” or “Blink”), is a leading owner, operator, and supplier of proprietary electric vehicle (“EV”) charging equipment and networked EV charging services. Blink serves both residential and commercial EV charging settings, enabling EV drivers to easily recharge at various location types. Blink offers its Property Partners a range of business models for EV charging equipment and services that generally fall into one of the four business models below.

 

  In the Company’s comprehensive turnkey business model, Blink owns and operates the EV charging equipment, undertakes and manages the installation, maintenance and related services, and Blink retains substantially all of the EV charging revenue.
     
  In the Company’s hybrid business model, the Property Partner incurs the installation costs, while Blink provides the charging equipment. Blink operates and manages the EV charging station and provides connectivity of the charging station to the Blink Network. As a result, Blink shares a greater portion of the EV charging revenue with the Property Partner than under the turnkey model above.
     
  In the Company’s host-owned business model, the Property Partner purchases, owns and manages the Blink EV charging station, and incurs the installation costs of the equipment, while Blink provides site recommendations, connectivity to the Blink Network and optional maintenance services, and the Property Partner retains substantially all of the EV charging revenue.
     
  In the Company’s Blink-as-a-service model, the Company owns and operate the EV charging station, while the Property Partner incurs the installation cost. The Company operates and manages the EV charging station and the Property Partner pays Blink a fixed monthly fee and keeps all the charging revenues less network connectivity and processing fees.

 

Blink’s principal line of products and services is its Blink EV charging network (the “Blink Network”) and EV charging equipment, also known as electric vehicle supply equipment (“EVSE”), and EV-related services. The Blink Network is a proprietary cloud-based software that operates, maintains, and tracks the Blink EV charging stations and their associated charging data. The Blink Network provides property owners, managers, and parking companies (“Property Partners”) with cloud-based services that enable the remote monitoring and management of EV charging stations and payment processing, and provides EV drivers with vital station information including station location, availability, and applicable fees.

 

The Company has strategic partnerships across numerous transit/destination locations, including airports, auto dealers, healthcare/medical, hotels, mixed-use, municipal locations, multifamily residential and condos, parks and recreation areas, parking lots, religious institutions, restaurants, retailers, schools and universities, stadiums, supermarkets, transportation hubs, and workplace locations. As of September 30, 2020, the Company had deployed 15,716 charging stations, of which 6,944 were on the Blink Network (5,512 Level 2 commercial charging units, 101 DC Fast Charging EV chargers, and 1,331 residential Level 2 Blink EV charging units), and the remainder are non-networked or on other networks (239 Level 2 commercial charging units, 8,333 residential Level 2 Blink EV charging stations and 200 charging stations acquired with the BlueLA acquisition).

 

Risks and Uncertainties

 

The Company continues to closely monitor the impact on its business of the current outbreak of a novel strain of coronavirus (“COVID-19”). The Company has taken 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 has experienced what it expects is a temporary reduction in the usage of its charging stations, which has resulted in a decrease in its charging service revenue. While the Company has not seen a significant adverse impact to its overall financial results from COVID-19, if the pandemic continues to cause significant negative impacts to economic conditions, the Company’s results of operations, financial condition and liquidity could be adversely impacted.

 

8

 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

1. BUSINESS ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES AND BASIS OF PRESENTATION – CONTINUED

 

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 September 30, 2020 and for the three and nine months then ended. The results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of the operating results for the full year ending December 31, 2020 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, 2019 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on April 2, 2020 as part of the Company’s Annual Report on Form 10-K.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Since the Annual Report on Form 10-K for the year ended December 31, 2019, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note.

 

LIQUIDITY

 

As of September 30, 2020, the Company had cash, working capital and an accumulated deficit of $14,863,434, $12,983,846 and $179,409,943, respectively. During the three and nine months ended September 30, 2020, the Company incurred a net loss of $3,914,349 and $9,904,962, respectively. During the nine months ended September 30, 2020, the Company used cash in operating activities of $10,157,011.

 

Since April 17, 2020 and through November 11, 2020, the Company has sold 3,566,971 shares of common stock under an “at-the-market” equity offering program for aggregate gross proceeds of approximately $19.5 million. See Note 9 – Stockholders’ Equity.

 

The Company expects that its cash on hand will fund its operations for a least 12 months after the issuance date of these financial statements.

 

Since inception, the Company’s operations have primarily been funded through proceeds received in equity and debt financings. The Company believes it has access to capital resources and continues to evaluate additional financing opportunities. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations.

 

The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully commercialize its products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement its product and service offerings.

 

9

 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

 

CASH

 

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents in the condensed consolidated financial statements. The Company has cash on deposits in several financial institutions which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions. The Company reduces its credit risk by placing its cash and cash equivalents with major financial institutions. As of September 30, 2020, the Company had cash balances in excess of FDIC insurance limits of $14,590,675. As of December 31, 2019, the Company had cash balances in excess of FDIC insurance limits of $3,494,360.

 

INVESTMENTS

 

Available-for-sale debt securities are recorded at fair value with the net unrealized gains and losses (that are deemed to be temporary) reported as a component of other comprehensive income (loss). Realized gains and losses and charges for other-than-temporary impairments are included in determining net income, with related purchase costs based on the first-in, first-out method. The Company evaluates its available-for-sale-investments for possible other-than-temporary impairments by reviewing factors such as the extent to which, and length of time, an investment’s fair value has been below the Company’s cost basis, the issuer’s financial condition, and the Company’s ability and intent to hold the investment for sufficient time for its market value to recover. For impairments that are other-than-temporary, an impairment loss is recognized in earnings equal to the difference between the investment’s cost and its fair value at the balance sheet date of the reporting period for which the assessment is made. The fair value of the investment then becomes the new amortized cost basis of the investment and it is not adjusted for subsequent recoveries in fair value.

 

The following summarizes the Company’s investments as of September 30, 2020 and December 31, 2019:

 

   September 30, 2020   December 31, 2019 
         
Short-term investments:          
Available- for-sale investments  $-   $2,956,989 

 

The following is a summary of the unrealized gains, losses, and fair value by investment type as of September 30, 2020 and December 31, 2019:

 

   September 30, 2020 
    Amortized Cost    Gross Unrealized Gains    Gross Unrealized Losses    Fair Value 
Fixed income  $-   $-   $-   $- 

 

   December 31, 2019 
   Amortized Cost   Gross Unrealized Gains   Gross Unrealized Losses   Fair Value 
Fixed income  $2,773,816   $183,173   $               -   $2,956,989 

 

10

 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

 

SUBSCRIPTION RECEIVABLE

 

The Company records stock issuances at the effective date. If the subscription is not funded upon issuance, the Company records a stock subscription receivable as an asset on a balance sheet. When stock subscription receivables are not received prior to the issuance of financial statements at a reporting date in satisfaction of the requirements under FASB ASC 505, the stock subscription receivable is reclassified as a contra account to stockholders’ equity on the balance sheet.

 

REVENUE RECOGNITION

 

The Company recognizes revenue primarily from four different types of contracts:

 

Charging service revenue – company-owned charging stations - Revenue is recognized at the point when a particular charging session is completed.
Product sales – Revenue is recognized at the point where the customer obtains control of the goods and the Company satisfies its performance obligation, which generally is at the time it ships the product to the customer.
Network fees and other – Represents a stand-ready obligation whereby the Company is obligated to perform over a period of time and, as a result, revenue is recognized on a straight-line basis over the contract term. Network fees are billed annually.
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 are also comprised of sales related to 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 Nine Months Ended 
   September 30,   September 30, 
   2020   2019   2020   2019 
                 
Revenues - Recognized at a Point in Time:                    
Charging service revenue - company-owned charging stations  $162,654   $317,990   $569,528   $937,870 
Product sales   556,859    319,254    2,608,636    704,472 
Other   69,119    34,148    330,142    122,408 
Total Revenues - Recognized at a Point in Time   788,632    671,392    3,508,306    1,764,750 
                     
Revenues - Recognized Over a Period of Time:                    
Network and other fees   114,248    88,516    257,557    275,137 
Total Revenues - Recognized Over a Period of Time   114,248    88,516    257,557    275,137 
                     
Total Revenue Under ASC 606  $902,880   $759,908   $3,765,863   $2,039,887 

 

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 September 30, 2020, the Company had $242,258 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 September 30, 2020. The Company expects to satisfy its remaining performance obligations for network fees and warranty revenue and recognize the revenue within the next 12 months.

 

During the three and nine months ended September 30, 2020, the Company recognized $104,865 and $244,525, respectively, of revenues related to network fees and warranty contracts, which were included in deferred revenues as of December 31, 2019. During the three and nine months ended September 30, 2020, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.

 

11

 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

 

REVENUE RECOGNITION – CONTINUED

 

Grants and rebates which are not within the scope of ASC 606, pertaining to revenues and periodic expenses are recognized as income when the related revenue and/or periodic expense are recorded. Grants and rebates related to EV charging stations and their installation are deferred and amortized in a manner consistent with the related depreciation expense of the related asset over their useful lives over the useful life of the charging station. During the three months ended September 30, 2020 and 2019, the Company recognized $2,580 and $4,578, respectively, related to grant and rebate revenue. During the nine months ended September 30, 2020 and 2019, the Company recognized $11,071 and $17,817, respectively, related to grant and rebate revenue. At September 30, 2020 and December 31, 2019, there was $72,598 and $83,670, respectively, of deferred revenues attributable to grants and rebates.

 

CONCENTRATIONS

 

As of September 30, 2020 and December 31, 2019, accounts receivable from a significant customer was 10% and 11% of accounts receivable, respectively. As of September 30, 2020, accounts receivable from another significant customer was 28% of accounts receivable. During the three and nine months ended September 30, 2020, revenues from one significant customer represented 10% and 32%, respectively, of total revenues. There were no revenue concentrations during the three and nine months ended September 30, 2019.

 

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 Nine Months Ended 
   September 30, 
   2020   2019 
Convertible preferred stock   -    1,642,628 
Warrants   7,143,360    6,840,049 
Options   647,218    128,008 
Unvested restricted common stock   103,713    - 
Total potentially dilutive shares   7,894,291    8,610,685 

 

INCOME TAXES

 

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The CARES Act, amongst other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Under ASC 740, the effects of new legislation are recognized upon enactment. Accordingly, the CARES Act is effective beginning in the quarter ended March 31, 2020. The Company does not currently believe that such provisions will have a material impact on the Company’s condensed consolidated financial statements.

 

RECLASSIFICATIONS

 

Certain prior year balances have been reclassified in order to conform to current year presentation. These reclassifications have no effect on previously reported results of operations or loss per share.

 

12

 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

 

RECENTLY ISSUED ACCOUNTING STANDARDS

 

In April 2019, the Financial Accounting Standards Board (‘FASB”) issued Accounting Standards Update (“ASU”) No. 2019-04, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments” (“ASU 2019-04”). The new ASU provides narrow-scope amendments to help apply these recent standards. The adoption of this ASU effective January 1, 2020 did not have a material impact on the Company’s consolidated financial statements.

 

In August 2020, FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost, as long as no other features require bifurcation and recognition as derivatives. The new guidance also requires the if-converted method to be applied for all convertible instruments. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. Adoption of the standard requires using either a modified retrospective or a full retrospective approach. The Company is currently evaluating the effect of the adoption of ASU 2020-06 will have on its condensed consolidated financial statements and related disclosures.

 

3. BUSINESS COMBINATION

 

On July 17, 2020, the Company signed a non-binding term sheet (“Term Sheet”) to acquire certain assets of an EV charging operator (“Operator”). Concurrently with signing the Term Sheet, the Company provided a letter of financial support for a project awarded to the Operator and the state providing the project award. The Company committed to fund and invest up to $2.2 million in this state project representing the capital required to complete the development of the EV charger infrastructure whereby a grant of $1.76 million would be received at the completion of this project. In the event that the Company does not execute an agreement with the Operator and close the acquisition pursuant to the Term Sheet, the Company will be entitled to obtain the grant funds awarded in this project and take ownership and all rights and interests in all EV chargers, assets and rights relating to or arising from this project.

 

On September 11, 2020 (“Closing Date”), the Company’s wholly-owned subsidiary, Blink Mobility, LLC (the “Purchaser”), entered into an Ownership Interest Purchase Agreement (the “Agreement”) with Blue Systems USA, Inc. (the “Seller”), and pursuant thereto acquired from the Seller all of the ownership interests of BlueLA Carsharing, LLC (“BlueLA”).

 

The consideration by the Purchaser for the acquisition of BlueLA included: (a) a cash payment of $1.00, which was paid to the Seller at closing, and (b) in the event BlueLA timely amends its carsharing services agreement with the City of Los Angeles, California dated January 17, 2017 (the “City of Los Angeles Agreement”), a cash payment to the Seller of $1,000,000, payable within three business days after such amendment (“Contingent Consideration”). The amendment to the City of Los Angeles Agreement must be obtained by BlueLA no later than December 31, 2020, subject to an extension to March 31, 2021 if a representative of the City of Los Angeles indicates to the Purchaser by the December 31, 2020 deadline its approval of the modifications to the City of Los Angeles Agreement, as more particularly outlined in the Agreement. The total consideration paid or payable by the Purchaser excludes transaction costs. The Company has agreed to guaranty the performance of the Purchaser’s obligations under the Agreement as an inducement for the Seller to enter into the Agreement. The Company had acquired BlueLA in order to expand its presence in the State of California.

 

The Agreement contains customary representations, warranties and covenants for a transaction of this type and nature. Pursuant to the terms of the Agreement, the Seller will indemnify the Company, the Purchaser and their respective affiliates and representatives for breaches of the Seller’s representations and warranties, breaches of covenants and losses related to pre-closing taxes of BlueLA. The Purchaser has agreed to indemnify the Seller and its affiliates and representatives for any breaches of the Purchaser’s representations and warranties, breaches of covenants and losses related to post-closing taxes of BlueLA. The representations and warranties under the Agreement will survive until December 10, 2021.

 

13

 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

3. BUSINESS COMBINATION – CONTINUED

 

Pursuant to the Agreement, the Seller and BlueLA entered into a Transition Service Agreement pursuant to which the Seller and its affiliate, Bluecarsharing, S.A.S., agreed to provide certain transition and support services to BlueLA and the Purchaser following the closing and until December 31, 2020. The Seller also guaranteed the payment of up to $175,000 in parking fees payable by BlueLA to the City of Los Angeles, and BlueLA agreed to pay the Seller for any as-yet uncollected grants and rebates that BlueLA is entitled to obtain under the City of Los Angeles Agreement. In addition, the Seller agreed that, until September 10, 2023, the Seller will not and will cause its subsidiaries or affiliates not to directly or indirectly, (i) own, operate, acquire, or establish a business, or in any other manner engage alone or with others in carsharing and/or electric vehicle charging operation, or activity in the State of California (whether as an operator, manager, employee, officer, director, consultant, advisor, representative or otherwise) excluding any de minimis ownership interest in any business); or (ii) intentionally induce or attempt to induce any customer, supplier or other business relation of BlueLA to cease or refrain from working with BlueLA, or in any way adversely interfere with the relationship between any such customer, supplier or other business relation and BlueLA. Lastly, the Seller provided a guarantee to BlueLA that BlueLA will only be liable for payments on the lease of 30 cars at a monthly fee of $500 per car per month, or $15,000 per month in the aggregate, under the existing car lease agreement between BlueLA and SDV Cartrading LLC dated May 4, 2017 (“Car Lease Agreement”).

 

Under the terms of the City of Los Angeles Agreement, amongst other obligations, during the initial term of the City of Los Angeles Agreement (defined as approximately six years from the effective date of the City of Los Angeles Agreement), BlueLA shall provide, manage, operate and maintain (i) usage agreements for electric vehicles in a quantity of no less than one hundred (100) (see payment terms of Car Lease Agreement) and (ii) charging stations in a quantity of no less than two hundred (200) at approximately forty (40) locations for an aggregate cost of approximately $20,000 per month. Following the initial term, the City of Los Angeles shall have the right to renew the City of Los Angeles Agreement for renewal terms of two (2) years each, with prior notice required, for a maximum of three renewal terms.

 

The Company has accounted for this transaction as a business combination under ASC 805. Accordingly, the assets acquired and the liabilities assumed were recorded at their estimated fair value based on the date of acquisition. Goodwill from the acquisition principally relates to the Contingent Consideration as well as the excess value of assumed liabilities over the fair value of identified net assets. Since this transaction was a stock acquisition, goodwill is not tax deductible.

 

At the date of acquisition, the preliminary purchase consideration consisted of cash, assumed liabilities and Contingent Consideration. The preliminary purchase price allocation is expected to be completed within 12 months after the acquisition date. The Contingent Consideration of $1,000,000 is non-interest bearing and was recorded at its estimated fair value of $245,000 based on a probability-weighted valuation technique used to determine the fair value of the Contingent Consideration on the acquisition date. See Note 8 – Fair Value Measurement for assumptions utilized in the estimate of fair value of the Contingent Consideration. The aggregate preliminary purchase price was allocated to the assets acquired and liabilities assumed as follows:

 

Purchase Consideration:     
Cash  $1 
Contingent consideration   245,000 
Assumed liabilities   87,860 
      
Total Purchase Consideration  $332,861 
      
Less:     
Right of use assets   

597,812

 
Non-current portion of lease liabilities   

(370,698

)
Debt-free net working capital deficit   

(145,910

) 
      
Fair Value of Identified Net Assets   81,204 
      
Remaining Unidentified Goodwill Value  $251,657 

 

14

 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

3. BUSINESS COMBINATION – CONTINUED