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 June 30, 2019

 

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 August 12, 2019, the registrant had 26,241,434 shares of common stock outstanding.

 

 

 

 
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

FORM 10-Q

 

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2019

 

TABLE OF CONTENTS

 

  Page
PART I - FINANCIAL INFORMATION  
   
Item 1. Financial Statements.  
   
Condensed Consolidated Balance Sheets as of June 30, 2019 (Unaudited) and December 31, 2018 1
   
Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2019 and 2018 2
   
Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Six Months Ended June 30, 2019 and 2018 3
   
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2019 4
   
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficiency) for the Six Months Ended June 30, 2018 5
   
Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018 6
   
Notes to Unaudited Condensed Consolidated Financial Statements 8
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 19
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 25
   
Item 4. Controls and Procedures. 25
   
PART II - OTHER INFORMATION  
   
Item 1. Legal Proceedings. 27
   
Item 1A. Risk Factors. 27
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 28
   
Item 3. Defaults Upon Senior Securities. 28
   
Item 4. Mine Safety Disclosures. 28
   
Item 5. Other Information. 28
   
Item 6. Exhibits. 29
   
SIGNATURES 30

 

  i 
 

 

PART 1 – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Balance Sheets

 

 

   June 30, 2019   December 31, 2018 
   (unaudited)     
Assets          
           
Current Assets:          
Cash  $10,123,186   $15,538,849 
Marketable securities   3,032,386    2,878,664 
Accounts receivable and other receivables, net   252,648    168,169 
Inventory, net   1,649,557    1,235,334 
Prepaid expenses and other current asset   675,745    839,520 
           
Total Current Assets   15,733,522    20,660,536 
Property and equipment, net   562,649    383,567 
Operating lease right-of-use asset   413,004    439,308 
Intangible assets, net   90,553    95,852 
Other assets   67,077    71,198 
           
Total Assets  $16,866,805   $21,650,461 
           
Liabilities and Stockholders’ Equity          
           
Current Liabilities:          
Accounts payable  $2,232,517   $2,582,196 
Accrued expenses   963,186    1,544,921 
Accrued issuable equity   293,514    318,493 
Notes payable   10,000    287,966 
Current portion of operating lease liabilities   214,248    151,997 
Current portion of deferred revenue   259,295    357,048 
           
Total Current Liabilities   3,972,760    5,242,621 
           
Operating lease liabilities, non-current portion   239,858    299,733 
Deferred revenue, non-current portion   5,387    13,878 
           
Total Liabilities   4,218,005    5,556,232 
           
Series B Convertible Preferred Stock, 10,000 shares designated, 0 issued and outstanding as of June 30, 2019 and December 31, 2018   -    - 
           
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 June 30, 2019 and December 31, 2018   -    - 
Series C Convertible Preferred Stock, 250,000 shares designated, 0 issued and outstanding as of June 30, 2019 and December 31, 2018   -    - 
Series D Convertible Preferred Stock, 13,000 shares designated, 5,125 and 5,141 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively   5    5 
Common stock, $0.001 par value, 500,000,000 shares authorized, 26,236,804 and 26,118,075 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively   26,237    26,118 
Additional paid-in capital   176,468,879    175,924,587 
Accumulated other comprehensive income   141,007    - 
Accumulated deficit   (163,987,328)   (159,856,481)
           
Total Stockholders’ Equity   12,648,800    16,094,229 
           
Total Liabilities and Stockholders’ Equity  $16,866,805   $21,650,461 

 

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 Six Months Ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
                 
Revenues:                    
Charging service revenue - company-owned charging stations  $294,985   $301,350   $619,880   $607,097 
Product sales   282,014    142,839    385,218    278,599 
Network fees   76,359    56,034    150,829    113,285 
Warranty   19,284    33,957    35,792    64,359 
Grant and rebate   6,525    45,107    13,239    61,338 
Other   36,661    45,131    88,260    95,660 
                     
Total Revenues   715,828    624,418    1,293,218    1,220,338 
                     
Cost of Revenues:                    
Cost of charging services - company-owned charging stations   37,283    79,060    67,012    122,821 
Host provider fees   81,037    97,327    163,076    205,732 
Cost of product sales   87,800    39,287    301,120    102,820 
Network costs   86,303    77,297    163,526    144,225 
Warranty and repairs and maintenance   83,543    86,001    172,415    149,729 
Depreciation and amortization   25,318    74,671    57,567    152,415 
Total Cost of Revenues   401,284    453,643    924,716    877,742 
                     
Gross Profit   314,544    170,775    368,502    342,596 
                     
Operating Expenses:                    
Compensation   1,674,042    1,131,179    3,277,527    4,819,815 
General and administrative expenses   485,055    394,048    742,191    495,217 
Other operating expenses   538,768    493,037    1,047,593    676,992 
                     
Total Operating Expenses   2,697,865    2,018,264    5,067,311    5,992,024 
                     
Loss From Operations   (2,383,321)   (1,847,489)   (4,698,809)   (5,649,428)
                     
Other Income (Expense):                    
Interest income (expense), net   22,081    (8,533)   38,153    (113,516)
Interest expense - related party share transfer   -    -    -    (785,200)
Amortization of discount on convertible debt   -    -    -    (528,929)
Gain on settlement of debt   -    -    310,000    - 
Gain on settlement of accounts payable, net   107,923    -    160,423    920,352 
Loss on settlement reserve   -    -    -    (127,941)
Change in fair value of derivative and other accrued liabilities   (35,494)   623,237    (90,236)   3,647,835 
Loss on settlement of liabilities for equity   -    -    -    (2,192,045)
Gain on settlement of liabilities to JMJ for equity   -    -    -    5,800,175 
Other income   51,591    -    149,622    - 
                     
Total Other Income   146,101    614,704    567,962    6,620,731 
                     
Net (Loss) Income   (2,237,220)   (1,232,785)   (4,130,847)   971,303 
Dividend attributable to Series C shareholders   -    -    -    (607,800)
Deemed dividend   -    -    -    (23,458,931)
Net Loss Attributable to Common Shareholders  $(2,237,220)  $(1,232,785)  $(4,130,847)  $(23,095,428)
                     
Net Loss Per Share:                    
Basic  $(0.09)  $(0.05)  $(0.16)  $(1.45)
Diluted  $(0.09)  $(0.05)  $(0.16)  $(1.45)
                     
Weighted Average Number of Common Shares Outstanding:                    
Basic   26,234,376    23,229,166    26,202,898    15,891,388 
Diluted   26,234,376    23,229,166    26,202,898    15,891,388 

 

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) Income

 

(unaudited)

 

   For the Three Months Ended   For the Six Months Ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
                 
Net (Loss) Income  $(2,237,220)  $(1,232,785)  $(4,130,847)  $971,303 
Other Comprehensive Income:                    
Change in fair value of marketable securities   40,321    -    141,007    - 
Total Comprehensive (Loss) Income  $(2,196,899)  $(1,232,785)  $(3,989,840)  $971,303 

 

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 Six Months Ended June 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 

 

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 (Deficiency)

For the Six Months Ended June 30, 2018

 

(unaudited)

 

   Convertible Preferred Stock           Additional       Total Stockholders’ 
   Series A   Series C   Series D   Common Stock   Paid-In   Accumulated   (Deficiency) 
   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Equity 
                                             
Balance - January 1, 2018   11,000,000   $11,000    229,551   $230    -   $-    5,523,673   $5,524   $119,499,141   $(156,435,278)  $(36,919,383)
                                                        
Common stock and warrants issued in public offering [1]   -    -    -    -    -    -    4,353,000    4,353    14,876,462    -    14,880,815 
                                                        
Common stock issued upon conversion of Series A convertible preferred stock   (11,000,000)   (11,000)   -    -    -    -    550,000    550    10,450    -    - 
                                                        
Common stock issued in satisfaction of Series B convertible preferred stock   -    -    -    -    -    -    223,235    223    824,777    -    825,000 
                                                        
Common stock issued upon conversion of Series C convertible preferred stock   -    -    (254,557)   (255)   -    -    9,111,644    9,112    (8,857)   -    - 
                                                        
Series D convertible preferred stock issued in satisfaction of liabilities   -    -    -    -    12,005    12    -    -    12,004,988    -    12,005,000 
                                                        
Common stock issued in partial satisfaction of debt and other liabilities   -    -    -    -    -    -    1,488,021    1,488    4,282,500    -    4,283,988 
                                                        
Warrants reclassified from derivative liabilities   -    -    -    -    -    -    -    -    36,445    -    36,445 
                                                        
Series C convertible preferred stock dividends:                                                       
Accrual of dividends earned   -    -    -    -    -    -    -    -    (607,800)   -    (607,800)
Payment of dividends in kind   -    -    25,006    25    -    -    -    -    2,500,575    -    2,500,600 
                                                        
Stock-based compensation   -    -    -    -    -    -    932,328    932    2,664,343    -    2,665,275 
                                                        
Beneficial conversion feature of Series B and C convertible preferred stock   -    -    -    -    -    -    -    -    23,458,931    -    23,458,931 
                                                        
Deemed dividend related to immediate accretion of beneficial conversion of Series B and C convertible preferred stock   -    -    -    -    -    -    -    -    (23,458,931)   -    (23,458,931)
                                                        
Contribution of capital - related party share transfer (see Note 8)   -    -    -    -    -    -    -    -    785,200    -    785,200 
                                                        
Net income   -    -    -    -    -    -    -    -    -    2,204,088    2,204,088 
                                                        
Balance - March 31, 2018   -   $-    -   $-    12,005   $12    22,181,901   $22,182   $156,868,224   $(154,231,190)  $2,659,228 
                                                        
Common stock issued in partial satisfaction of debt and other liabilities   -    -    -    -    -    -    25,669    25    69,975    -    70,000 
                                                        
Common stock issued upon conversion of Series D convertible preferred stock   -    -    -    -    (4,368)   (4)   1,400,000    1,400    (1,396)   -    - 
                                                        
Proceeds from exercise of warrants   -    -    -    -    -    -    4,033,660    4,034    17,139,022    -    17,143,056 
                                                      - 
Return and retirement of common stock   -    -    -    -    -    -    (2,942,099)   (2,942)   2,942    -    - 
                                                      - 
Warrants issued in satisfaction of accrued issuable equity   -    -    -    -    -    -    -    -    409,042    -    409,042 
                                                      - 
Net loss   -    -    -    -    -    -    -    -    -    (1,232,785)   (1,232,785)
                                                        
Balance - June 30, 2018   -   $-    -   $-    7,637   $8    24,699,131   $24,699   $174,487,809   $(155,463,975)  $19,048,541 

 

[1] Includes gross proceeds of $18,504,320, less issuance costs of $3,623,505.

 

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 Six Months Ended 
   June 30, 
   2019   2018 
Cash Flows From Operating Activities:          
Net (loss) income  $(4,130,847)  $971,303 
Adjustments to reconcile net (loss) income to net cash  used in operating activities:          
Depreciation and amortization   115,426    169,871 
Amortization of discount on convertible debt   -    528,929 
Change in fair value of derivative and other accrued liabilities   (90,236)   (3,647,835)
Provision for bad debt   72,180    56,981 
Gain on settlement of debt   (310,000)   - 
Loss on settlement reserve   -    127,941 
Loss on settlement of liabilities for equity   -    2,192,045 
Gain on settlement of liabilities to JMJ for equity   -    (5,800,175)
Interest expense - related party share transfer   -    785,200 
Provision for slow moving and obsolete inventory   197,240    - 
Loss on disposal of property and equipment   -    12,698 
Gain on settlement of accounts payable, net   (160,423)   (920,352)
Non-cash compensation:          
Common stock   267,997    2,838,808 
Options   126,033    - 
Warrants   -    114,069 
Changes in operating assets and liabilities:          
Accounts receivable and other receivables   (156,659)   (104,994)
Inventory   (671,011)   93,303 
Prepaid expenses and other current assets   163,775    (126,343)
Other assets   4,121    (986,093)
Accounts payable and accrued expenses   (533,658)   (4,167,108)
Deferred revenue   (106,244)   (33,295)
           
Total Adjustments   (1,081,459)   (8,866,350)
           
Net Cash Used in Operating Activities   (5,212,306)   (7,895,047)
           
Cash Flows From Investing Activities:          
Purchases of property and equipment   (203,357)   (34,524)
           
Net Cash Used In Investing Activities   (203,357)   (34,524)
           
Cash Flows From Financing Activities:          
Proceeds from sale of common stock in public offering [1]   -    16,243,055 
Payment of public offering costs   -    (1,190,082)
Proceeds from issuance of notes payable to non-related party   -    55,000 
Proceeds from exercise of warrants   -    17,143,056 
Proceeds from advance from a related party   -    250,000 
Repayment of notes and convertible notes payable   -    (760,000)
           
Net Cash Provided by Financing Activities   -    31,741,029 
           
Net (Decrease) Increase In Cash   (5,415,663)   23,811,458 
           
Cash - Beginning of Period   15,538,849    185,151 
           
Cash - End of Period  $10,123,186   $23,996,609 

 

[1] Includes gross proceeds of $18,504,320, less issuance costs of $2,261,265 deducted directly from the offering proceeds.

 

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

 

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BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Cash Flows — Continued

 

(unaudited)

 

   For The Six Months Ended 
   June 30, 
   2019   2018 
Supplemental Disclosures of Cash Flow Information:        
Cash paid during the periods for:          
Interest expense  $-   $14,278 
Non-cash investing and financing activities:          
Common stock issued in partial satisfaction of debt and other liabilities  $-   $4,283,988 
Reduction of additional paid-in capital for public offering issuance costs that were previously paid  $-   $(172,158)
Common stock issued upon conversion of Series A convertible preferred stock  $-   $11,000 
Common stock issued in satisfaction of Series B convertible preferred stock  $-   $825,000 
Common stock issued upon conversion of Series C convertible preferred stock  $-   $255 
Common stock issued upon conversion of Series D convertible preferred stock  $5   $4 
Return and retirement of common stock  $(8)  $2,942 
Warrants issued in satisfaction of accrued issuable equity  $-   $409,042 
Restricted stock issued in satisfaction of accrued issuable equity  $240,043   $- 
Change in fair value of marketable securities  $141,007   $- 
Warrants reclassified from derivative liabilities  $-   $36,445 
Accrual of contractual dividends on Series C Convertible Preferred Stock  $-   $607,800 
Issuance of Series C Convertible Preferred Stock in satisfaction of contractual dividends  $-   $2,500,600 
Transfer of inventory to property and equipment  $(59,548)  $(27,696)
Series D convertible preferred stock issued in satisfaction of liabilities  $-   $12,005,000 

 

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

 

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BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

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

 

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 both residential and commercial EV charging equipment, enabling EV drivers to easily recharge at various location types. 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, payment processing, and provides EV drivers with vital station information including station location, availability, and applicable fees. Blink offers its Property Partners a range of business models for EV charging equipment and services that generally fall into one of the three 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 keeps 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, 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 keeps substantially all of the EV charging revenue.

 

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. Through June 30, 2019, the Company has approximately 14,687 charging stations deployed, of which, 4,991 were Level 2 commercial charging units, 97 were DC Fast Charging EV chargers and 1,617 were residential charging units in service on the Blink Network. Additionally, as of June 30, 2019, the Company has approximately 403 Level 2 charging units deployed on other networks and 7,579 non-networked, residential Blink EV charging stations. The non-networked, residential Blink EV charging stations are all Property Partner owned.

 

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, 2019 and for the three and six months then ended. The results of operations for the three and six months ended June 30, 2019 are not necessarily indicative of the operating results for the full year ending December 31, 2019 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, 2018 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on April 1, 2019 as part of the Company’s Annual Report on Form 10-K.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

2. GOING CONCERN AND MANAGEMENT’S PLANS

 

As of June 30, 2019, the Company had cash, marketable securities, working capital and an accumulated deficit of $10,123,186, $3,032,386, $11,760,762 and $163,987,328, respectively. During the three and six months ended June 30, 2019, the Company incurred a net loss of $2,237,220 and $4,130,847, respectively. During the six months ended June 30, 2019, the Company used cash in operating activities of $5,212,306. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within a year after the issuance date of these financial statements. The Company expects to have the cash required to fund its operations into the third quarter of 2020 while it continues to apply efforts to raise additional debt and/or equity.

 

Since inception, the Company’s operations have primarily been funded through proceeds received in equity and debt financings. Although management believes that the Company has access to capital resources, there are currently no commitments in place for new financing at this time and 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. If the Company is unable to obtain additional financing on a timely basis, it may have to curtail its development, marketing and promotional activities, which would have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately the Company could be forced to discontinue its operations and liquidate.

 

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.

 

The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustment that might become necessary should the Company be unable to continue as a going concern.

 

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BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Since the Annual Report for the year ended December 31, 2018, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note.

 

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 June 30, 2019, the Company had cash balances in excess of FDIC insurance limits of $9,527,976. As of December 31, 2018, the Company had cash balances in excess of FDIC insurance limits of $15,538,849.

 

INVESTMENTS

 

Available-for-sale 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 our investments as of June 30, 2019 and December 31, 2018:

 

   June 30, 2019   December 31, 2018 
         
Short-term investments:          
Available- for-sale investments  $3,032,386   $2,878,664 

 

The following is a summary of the unrealized gains, and fair value by investment type as of June 30, 2019 and December 31, 2018:

 

   June 30, 2019 
   Gross Unrealized Gains   Fair Value 
Fixed income  $141,007   $3,032,386 

 

   December 31, 2018 
   Gross Unrealized Gains   Fair Value 
Fixed income  $        -   $2,878,664 

 

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BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

 

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.

 

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, 
   2019   2018   2019   2018 
                 
Revenues - Recognized at a Point in Time:                    
Charging service revenue - company-owned charging stations  $294,985   $301,350   $619,880   $607,097 
Product sales   282,014    142,839    385,218    278,599 
Other   36,661    45,131    88,260    95,660 
Total Revenues - Recognized at a Point in Time   613,660    489,320    1,093,358    981,356 
                     
Revenues - Recognized Over a Period of Time:                    
Network fees and other   95,643    89,991    186,621    177,644 
Total Revenues - Recognized Over a Period of Time   95,643    89,991    186,621    177,644 
                     
Total Revenue Under ASC 606  $709,303   $579,311   $1,279,979   $1,159,000 

 

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, 2019, the Company had $169,572 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, 2019. The Company expects to satisfy its remaining performance obligations for network fees and warranty revenue and recognize the revenue within the next twelve months.

 

During the three and six months ended June 30, 2019, the Company recognized $84,906 and $168,185, respectively of revenues related to network fees and warranty contracts, which were included in deferred revenues as of December 31, 2018.

 

During the three and six months ended June 30, 2019, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.

 

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BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

 

REVENUE RECOGNITION - CONTINUED

 

Grants, rebates and alternative fuel credits, which are not within the scope of ASC 606, pertaining to revenues and periodic expenses are recognized as income when the related revenue and/or periodic expense are recorded. Grants and rebates related to EV charging stations and their installation are deferred and amortized in a manner consistent with the related depreciation expense of the related asset over their useful lives over the useful life of the charging station. During the three months ended June 30, 2019 and 2018, the Company recorded $6,525 and $45,107 respectively, related to grant, rebate and alternative fuel credits revenue. During the six months ended June 30, 2019 and 2018, the Company recorded $13,239 and $61,338 respectively, related to grant, rebate and alternative fuel credits revenue.

 

At June 30, 2019 and December 31, 2018, there was $92,827 and $106,066, respectively, of deferred grant and rebate revenue to be amortized.

 

CONCENTRATIONS

 

As of June 30, 2019, and December 31, 2018, accounts receivable from a significant customer was 32% and 35% of accounts receivable, respectively.

 

NET LOSS PER COMMON SHARE

 

Basic net loss per common share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding if the common share equivalents had been issued (computed using the treasury stock or if converted method), if dilutive.

 

The following common share equivalents are excluded from the calculation of weighted average common shares outstanding because their inclusion would have been anti-dilutive:

 

   For the Three and Six Months Ended 
   June 30, 
   2019   2018 
Convertible preferred stock   1,642,628    2,447,756 
Warrants   6,841,049    6,855,224 
Options   135,741    106,408 
Total potentially dilutive shares   8,619,418    9,409,388 

 

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.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

 

RECENTLY ISSUED ACCOUNTING STANDARDS

 

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. The Company will be required to adopt the provisions of this ASU on January 1, 2020, with early adoption permitted. The Company is currently assessing the impact that this pronouncement will have on its condensed consolidated financial statements.

 

In April 2019, the FASB issued 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 Company will be required to adopt the provisions of this ASU on January 1, 2020, with early adoption permitted for certain amendments. The Company is currently assessing the impact that this pronouncement will have on its condensed consolidated financial statements.

 

4. PREPAID EXPENSES AND OTHER CURRENT ASSETS

 

As of June 30, 2019, the Company had remaining purchase commitments to acquire second generation charging stations with an aggregate value of $1,437,400. The Company has a remaining deposit of $175,235 against this commitment, which is included within prepaid expenses and other current assets on the condensed consolidated balance sheet as of June 30, 2019. The remaining commitment of $1,262,165 will become due upon delivery of the charging stations.

 

5. ACCRUED EXPENSES

 

SUMMARY

 

Accrued expenses consist of the following:

 

   June 30, 2019   December 31, 2018 
   (unaudited)     
Accrued taxes payable  $611,630   $556,211 
Accrued host fees   57,011    54,527 
Accrued professional, board and other fees   84,500    159,500 
Accrued wages   160,172    493,069 
Accrued commissions   6,500    22,300 
Warranty payable   21,000    9,700 
Accrued interest expense   -    32,034 
Inventory in transit   -    195,480 
Other accrued expenses   22,373    22,100 
Total accrued expenses  $963,186   $1,544,921 

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

5. ACCRUED EXPENSES – CONTINUED

 

WARRANTY PAYABLE

 

The Company provides a limited product warranty against defects in materials and workmanship for its Blink Network residential and commercial chargers, ranging in length from one to two years. The Company accrues for estimated warranty costs at the time of revenue recognition and records the expense of such accrued liabilities as a component of cost of sales. Estimated warranty costs are based on historical product data and anticipated future costs. Should actual cost to repair and failure rates differ significantly from estimates, the impact of these unforeseen costs would be recorded as a change in estimate in the period identified. For the six months ended June 30, 2019, the change in reserve was approximately $11,000. Warranty expenses for the three and six months ended June 30, 2019 and 2018 were $83,543 and $172,415 and $86,001 and $149,729, respectively, which has been included within cost of revenues on the condensed consolidated statements of operations. As of June 30, 2019 and December 31, 2018, the Company recorded a warranty liability of $21,000 and $9,700, respectively representing the estimated cost to repair those chargers under warranty or host owned chargers for which the host has procured a maintenance contract. The Company records maintenance and repairs expenses for chargers it owns deployed at host locations as incurred. The Company estimates an approximate cost of $167,000 to repair those deployed chargers which it owns as of June 30, 2019.

 

6. ACCRUED ISSUABLE EQUITY

 

Accrued issuable equity consists of the following:

 

   June 30, 2019   December 31, 2018 
   (unaudited)     
Common stock  $284,808   $187,523 
Warrants   8,706    5,965 
Options   -    125,005 
Total accrued issuable equity  $293,514   $318,493 

 

See Note 9 – Stockholders’ Equity for additional information.

 

7. NOTES PAYABLE

 

See Note 11 – Commitments and Contingencies – Litigation and Disputes for additional information.

 

8. FAIR VALUE MEASUREMENT

 

Assumptions utilized in the valuation of Level 3 liabilities are described as follows:

   For the Three Months Ended   For the Six Months Ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
                 
Risk-free interest rate   1.88%-2.45%   2.39% - 2.63%   1.88%-2.45%   1.62% - 2.63%
Contractual term (years)   1.00-10.00    0.28 - 3.00    1.00-10.00    0.25- 3.25 
Expected volatility   106%-139%   131% - 171%   106%-140%   113% - 171%
Expected dividend yield   0.00%   0.00%   0.00%   0.00%

 

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BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

8. FAIR VALUE MEASUREMENT – CONTINUED

 

The following table sets forth a summary of the changes in the fair value of Level 3 warrant liabilities that are measured at fair value on a recurring basis:

 

Warrants Payable    
Beginning balance as of January 1, 2019  $5,965 
Change in fair value of warrants payable   2,741 
Ending balance as of June 30, 2019  $8,706 

 

See Note 6 - Accrued Issuable Equity for additional information.

 

Assets and liabilities measured at fair value on a recurring or nonrecurring basis are as follows:

 

   June 30, 2019 
   Level 1   Level 2   Level 3   Total 
Assets:                
Alternative fuel credits  $357,366   $-   $-   $357,366 
Marketable securities   3,032,386    -    -    3,032,386 
Total assets  $3,389,752   $-   $-   $3,389,752 
                     
Liabilities:                    
Warrants payable  $-   $-   $8,706   $8,706 
Total liabilities  $-   $-   $8,706   $8,706 

 

   December 31, 2018 
   Level 1   Level 2   Level 3   Total 
Assets:                    
Alternative fuel credits  $331,120   $-   $-   $331,120 
Marketable securities   2,878,664    -    -    2,878,664 
Total assets  $3,209,784   $-   $-   $3,209,784 
                     
Liabilities:                    
Warrants payable  $-   $-   $5,965   $5,965 
Total liabilities  $-   $-   $5,965   $5,965 

 

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BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

9. STOCKHOLDERS’ EQUITY

 

PREFERRED STOCK

 

SERIES D CONVERTIBLE PREFERRED STOCK

 

On February 22, 2019, JMJ elected to convert 16 shares of Series D Convertible Preferred Stock into 5,128 shares of the Company’s common stock at a conversion price of $3.12 per share.

 

COMMON STOCK

 

On February 2, 2019, the Company issued 51,724 shares of common stock to independent board members for services rendered during 2018 and 2019 with a grant date fair value of $114,310.

 

On February 19, 2019, the Company retired 8,066 shares of common stock previously in accordance with a settlement agreement with the former members of 350 Green LLC. See Note 10 – Commitments and Contingencies – Litigation and Disputes for additional details.

 

On February 22, 2019, the Company issued 56,948 shares of common stock to Michael J. Calise, the Company’s former CEO, in connection with his repositioning agreement with a grant date fair value of $199,888. Such amount was previously accrued for as of December 31, 2018.

 

On April 18, 2019, the Company issued 12,995 shares of common stock to executives with a grant date fair value of $40,155. Such amount was previously accrued for as of December 31, 2018.

 

STOCK-BASED COMPENSATION

 

The Company recognized stock-based compensation expense related to common stock, stock options and warrants for the three months ended June 30, 2019 and 2018 of $283,394 and $135,563 respectively, which is included within compensation expense on the condensed consolidated statements of operations. The Company recognized stock-based compensation expense related to common stock, stock options and warrants for the six months ended June 30, 2019 and 2018 of $394,030 and $2,952,877, respectively, which is included within compensation expense on the condensed consolidated statements of operations.

 

As of June 30, 2019, there was $209,634 of unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period of 0.6 years.

 

STOCK OPTIONS

 

During the six months ended June 30, 2019, the Company issued ten-year immediately vested options to purchase an aggregate of 4,400 shares of common stock to the Executive Chairman with exercise prices ranging from $2.55 to $3.30 per share. The options had an aggregate grant date fair value of $11,889, which was recognized immediately.

 

During the six months ended June 30, 2019, the Company granted options to purchase an aggregate of 72,000 shares of common stock to an executive with an exercise price of $3.45 per share. The options vest ratably over a six-month period from the date of grant. The options had an aggregate grant date fair value of $220,831, which will be recognized ratably over the vesting period. During the three and six months ended June 30, 2019, the Company recognized $147,221 of expense related to this award.

 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

10. LEASES

 

OPERATING LEASES

 

On March 5, 2019, the Company entered into a 26-month lease agreement for an additional 1,241 square feet of office space in its current Miami Beach office building, beginning April 1, 2019 and ending May 31, 2021. The tenant and