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
| 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 |