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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2022

 

or

 

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

 

For the transition period from _____________ to _____________

 

Commission File No. 001-38392

 

BLINK CHARGING CO.

(Exact name of registrant as specified in its charter)

 

Nevada   03-0608147
(State or other jurisdiction
of incorporation or organization)
  (I.R.S. Employer
Identification No.)
     
605 Lincoln Road, 5th Floor    
Miami Beach, Florida   33139-3024
(Address of principal executive offices)   (Zip Code)

 

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

 

Not Applicable

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

As of November 7 2022, the registrant had 50,864,965 shares of common stock outstanding.

 

 

 

 
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

FORM 10-Q

 

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

 

TABLE OF CONTENTS

 

  Page
PART I - FINANCIAL INFORMATION  
   
Item 1. Financial Statements.  
   
Condensed Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021 1
   
Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 2
   
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021 3
   
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 4
   
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 5
   
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 6
   
Notes to Unaudited Condensed Consolidated Financial Statements 8
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 24
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 36
   
Item 4. Controls and Procedures. 37
   
PART II - OTHER INFORMATION  
   
Item 1. Legal Proceedings. 38
   
Item 1A. Risk Factors. 38
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 38
   
Item 3. Defaults Upon Senior Securities. 39
   
Item 4. Mine Safety Disclosures. 39
   
Item 5. Other Information. 39
   
Item 6. Exhibits. 39
   
SIGNATURES 40

 

i
 

 

PART 1 – FINANCIAL INFORMATION

 

ITEM 1.FINANCIAL STATEMENTS.

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Balance Sheets

(in thousands, except for share amounts)

 

   September 30, 2022   December 31, 2021 
   (unaudited)     
Assets          
Current Assets:          
Cash and cash equivalents  $57,019   $174,795 
Accounts receivable, net   18,752    6,346 
Inventory, net   24,330    10,369 
Prepaid expenses and other current assets   3,337    1,020 
           
Total Current Assets   103,438    192,530 
Restricted cash, non-current portion   70    81 
Property and equipment, net   22,274    14,563 
Operating lease right-of-use asset   2,550    1,664 
Intangible assets, net   28,644    3,455 
Goodwill   201,448    19,390 
Other assets   2,493    230 
Total Assets  $360,917   $231,913 
           
Liabilities and Stockholders’ Equity          
           
Current Liabilities:          
Accounts payable  $16,416   $7,134 
Accrued expenses and other current liabilities   11,958    5,678 
Current portion of operating lease liabilities   1,417    547 
Current portion of financing lease liabilities   306    - 
Current portion of deferred revenue   8,823    2,858 
Notes payable   76    10 
           
Total Current Liabilities   38,996    16,227 
Contingent consideration   4,030    - 
Consideration payable, non-current portion   40,600    - 
Operating lease liabilities, non-current portion   1,734    1,531 
Financing lease liabilities, non-current portion   486    - 
Deferred revenue, non-current portion   4,900    128 
Other liabilities   680    193 
           
Total Liabilities   91,426    18,079 
           
Commitments and contingencies (Note 11)   -      
           
Stockholders’ Equity:         
Common stock, $0.001 par value, 500,000,000 shares authorized, 50,867,937 and 42,423,514 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively   51    42 
Additional paid-in capital   582,419    458,046 
Accumulated other comprehensive loss   (7,098)   (1,784)
Accumulated deficit   (305,881)   (242,470)
           
Total Stockholders’ Equity   269,491    213,834 
           
Total Liabilities and Stockholders’ Equity  $360,917   $231,913 

 

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

 

1
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Operations

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

(unaudited)

 

   2022   2021   2022   2021 
   For The Three Months Ended   For The Nine Months Ended 
   September 30,   September 30, 
   2022   2021   2022   2021 
                 
Revenues:                    
Product sales  $13,358   $4,824   $30,238   $9,762 
Charging service revenue - company-owned charging stations   1,256    908    3,857    1,676 
Network fees   1,456    205    2,089    421 
Warranty   309    87    475    119 
Grant and rebate   83    55    283    280 
Ride-sharing services   367    270    885    504 
Other   418    53    706    228 
                     
Total Revenues   17,247    6,402    38,533    12,990 
                     
Cost of Revenues:                    
Cost of product sales   8,663    3,632    21,134    7,115 
Cost of charging services - company-owned charging stations   235    200    769    310 
Host provider fees   973    463    2,345    842 
Network costs   508    115    924    307 
Warranty and repairs and maintenance   803    258    1,437    743 
Ride-sharing services   470    422    1,555    1,092 
Depreciation and amortization   814    420    2,045    1,118 
                     
Total Cost of Revenues   12,466    5,510    30,209    11,527 
                     
Gross Profit   4,781    892    8,324    1,463 
                     
Operating Expenses:                    
Compensation   17,605    11,745    37,643    25,663 
General and administrative expenses   6,594    3,067    20,023    7,110 
Other operating expenses   5,079    1,903    12,159    4,246 
    -                
Total Operating Expenses   29,278    16,715    69,825    37,019 
                     
Loss From Operations   (24,497)   (15,823)   (61,501)   (35,556)
                     
Other (Expense) Income:                    
Interest (expense) income   (917)   (3)   (1,056)   6 
Loss on settlement   -    -    -    (1,000)
Dividend and interest income   233    100    233    162 
Loss on foreign exchange   (595)   (16)   (836)   (124)
Gain on forgiveness of PPP loan   -    379    -    379 
Change in fair value of other liabilities   108    53    35    60 
Other income (expense)   21    (11)   (286)   (72)
                     
Total Other (Expense) Income   (1,150)   502    (1,910)   (589)
                     
Net Loss  $(25,647)  $(15,321)  $(63,411)  $(36,145)
Net Loss Per Share:                    
Basic  $(0.51)  $(0.36)  $(1.39)  $(0.87)
Diluted  $(0.51)  $(0.36)  $(1.39)  $(0.87)
                     
Weighted Average Number of Common Shares Outstanding:                    
Basic   50,627,173    42,162,228    45,543,518    41,780,669 
Diluted   50,627,173    42,162,228    45,543,518    41,780,669 

 

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

 

2
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)

 

   2022   2021   2022   2021 
   For the Three Months Ended   For the Nine Months Ended 
   September 30,   September 30, 
   2022   2021   2022   2021 
                 
Net Loss  $(25,647)  $(15,321)  $(63,411)  $(36,145)
Other Comprehensive Loss:                    
Cumulative translation adjustments   (2,436)   (527)   (5,314)   (915)
Change in fair value of marketable securities   -    (29)   -    (72)
                     
Total Comprehensive Loss  $(28,083)  $(15,877)  $(68,725)  $(37,132)

 

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

 

3
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statement of Changes in Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2022

(in thousands, except for share amounts)

(unaudited)

 

   Shares   Amount   Capital   Loss   Deficit   Equity 
   Common Stock   Additional Paid-In   Accumulated Other Comprehensive   Accumulated   Total Stockholders’ 
   Shares   Amount   Capital   Loss   Deficit   Equity 
                         
Balance - January 1, 2022   42,423,514   $42   $458,046   $(1,784)  $(242,470)  $213,834 
                               
Common stock issued upon exercises of warrants   16,811    -    69    -    -    69 
                               
Stock-based compensation   144,497    1    1,932    -    -    1,933 
                               
Other comprehensive loss   -    -    -    (606)   -    (606)
                               
Net loss   -    -    -    -    (15,143)   (15,143)
                               
Balance - March 31, 2022   42,584,822    43    460,047    (2,390)   (257,613)   200,087 
                               
Stock-based compensation   -    -    686    -    -    686 
                               
Common stock issued as purchase consideration of SemaConnect   7,454,975    7    113,830    -    -    113,837 
                               
Common stock issued as purchase consideration of Electric Blue   152,803    -    2,852    -    -    2,852 
                               
Common stock issued upon exercise of warrants   3,131    -    13    -    -    13 
                               
Common stock issued upon exercise of options   5,955    -    10    -    -    10 
                               
Other comprehensive loss   -    -    -    (2,272)   -    (2,272)
                               
Net loss   -    -    -    -    (22,621)   (22,621)
                               
Balance - June 30, 2022   50,201,686   $50   $577,438   $(4,662)  $(280,234)  $292,592 
                               
Stock-based compensation   617,328    1    4,872    -    -    4,873 
                               
Common stock issued upon cashless exercise of warrants   8,093    -    -    -    -    - 
                               
Common stock issued upon exercise of warrants   40,830    -    109    -    -    109 
                               
Other comprehensive loss   -    -    -    (2,436)   -    (2,436)
                               
Net loss   -    -    -    -    (25,647)   (25,647)
                               
Balance - September 30, 2022   50,867,937   $51   $582,419   $(7,098)  $(305,881)  $269,491 

 

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

 

4
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statement of Changes in Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2021

(in thousands, except for share amounts)

(unaudited)

 

   Common Stock   Additional Paid-In   Accumulated Other Comprehensive   Accumulated   Total Stockholders’ 
   Shares   Amount   Capital   Loss   Deficit   Equity 
                         
Balance - January 1, 2021   35,951,097   $36   $214,479   $-   $(187,351)  $27,164 
                               
Common stock issued in public offering, net of issuance costs [1]   5,660,000    6    221,400    -    -    221,406 
                               
Common stock issued upon exercise of warrants   239,202    -    999    -    -    999 
                               
Common stock issued upon cashless option exercise   15,522    -    -    -    -    - 
                               
Common stock issued upon cashless warrant exercise   66,000    -    -    -    -    - 
                               
Common stock issued as consideration for property and equipment   13,123    -    600    -    -    600 
                               
Stock-based compensation   470    -    419    -    -    419 
                               
Other comprehensive loss   -    -    -    (56)   -    (56)
                               
Net loss   -    -    -    -    (7,365)   (7,365)
                               
Balance - March 31, 2021   41,945,414   $42   $437,897   $(56)  $(194,716)  $243,167 
                               
Issuance costs related to common stock issued in public offering   -    -    (73)   -    -    (73)
                               
Common stock issued pursuant to cashless option exercise   22,974    -    -    -    -    - 
                               
Common stock issued upon exercise of warrants   102,684    -    428    -    -    428 
                               
Common stock issued as purchase consideration of Blue Corner   32,382    -    790    -    -    790 
                               
Stock-based compensation   36,691    -    3,523    -    -    3,523 
                               
Other comprehensive loss   -    -    -    (375)   -    (375)
                               
Net loss   -    -    -    -    (13,459)   (13,459)
                               
Balance - June 30, 2021   42,140,145   $42   $442,565   $(431)  $(208,175)  $234,001 
                               
Common stock issued upon exercise of warrants   46,215    -    192    -    -    192 
                               
Stock-based compensation   13,384    -    6,050    -    -    6,050 
                               
Other comprehensive loss   -    -    -    (556)   -    (556)
                               
Net loss   -    -    -    -    (15,321)   (15,321)
                               
Balance - September 30, 2021   42,199,744   $42   $448,807   $(987)  $(223,496)  $224,366 

 

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

 

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

 

5
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

   2022   2021 
   For The Nine Months Ended 
   September 30, 
   2022   2021 
Cash Flows From Operating Activities:          
Net loss  $(63,411)  $(36,145)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   5,175    1,686 
Non-cash lease expense   596    690 
Dividend and interest income   -    (162)
Change in fair value of other liabilities   1,128    60 
Provision for bad debt   1,024    730 
Provision for slow moving and obsolete inventory   (14)   149 
Gain on settlement of debt   -    (379)
Stock-based compensation:          
Common stock   4,986    1,532 
Options   2,835    8,776 
Changes in operating assets and liabilities:          
Accounts receivable   (7,289)   (2,986)
Inventory   (15,790)   (3,575)
Prepaid expenses and other current assets   3,372    (2,240)
Other assets   (391)   240 
Accounts payable, accrued expenses and other current liabilities   6,811    1,151 
Other liabilities   54    39 
Lease liabilities   (412)   (505)
Deferred revenue   3,550    986 
           
Total Adjustments   5,635    6,192 
           
Net Cash Used In Operating Activities   (57,776)   (29,953)
           
Cash Flows From Investing Activities:          
Proceeds from sale of marketable securities   -    6,804 
Note receivable   

(1,500

)   - 
Purchase consideration of SemaConnect, net of cash acquired   (38,338)   - 
Purchase consideration of Electric Blue, net of cash acquired   (11,360)   - 
Purchase of marketable securities   -    (60,267)
Capitalization of engineering costs paid   (797)   (237)
Cash acquired in the purchase of Blue Corner   -    243 
Purchase consideration of Blue Corner   -    (22,985)
Purchases of property and equipment   (2,230)   (5,540)
           
Net Cash Used In Investing Activities   (54,225)   (81,982)
           
Cash Flows From Financing Activities:          
Proceeds from sale of common stock in public offering [1]  -    221,333 
Repayment of notes payable   (588)   - 
Proceeds from exercise of options and warrants   201    1,619 
Repayment of financing liability in connection with finance lease   (144)   - 
Repayment of financing liability in connection with internal use software   (235)   (39)
           
Net Cash (Used In) Provided By Financing Activities   (766)   222,913 
           
Effect of Exchange Rate Changes on Cash and Cash Equivalents and Restricted Cash   (5,193)   (165)
           
Net (Decrease) Increase In Cash and Cash Equivalents and Restricted Cash   (117,960)   110,813 
           
Cash and Cash Equivalents and Restricted Cash - Beginning of Period   175,049    22,417 
           
Cash and Cash Equivalents and Restricted Cash - End of Period  $57,089   $133,230 
           
Cash and cash equivalents and restricted cash consisted of the following:          
Cash and cash equivalents  $57,019   $133,153 
Restricted cash   70    77 
Total Cash and cash equivalents and restricted cash  $57,089   $133,230 

 

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

 

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

 

6
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Cash Flows — Continued

(in thousands)

(unaudited)

 

   For The Nine Months Ended 
   September 30, 
   2022   2021 
Supplemental Disclosures of Cash Flow Information:          
Cash paid during the period for:          
Interest  $-   $- 
Income taxes  $55   $- 
Non-cash investing and financing activities:          
Common stock issued as consideration for property and equipment  $-   $600 
Common stock issued as purchase consideration of SemaConnect  $113,837   $- 
Common stock issued as purchase consideration of Electric Blue  $2,852   $- 
Common stock issued as purchase consideration of Blue Corner  $-   $790 
Interest expense converted into principal  $-   $2 
Right of use assets obtained in exchange for operating lease liabilities  $398   $1,713 
Property and equipment obtained in exchange for finance lease obligations  $931   $- 
Change in fair value of marketable securities  $-   $(49)
Intangible assets obtained in exchange for financing liability  $660   $- 
Transfer of inventory to property and equipment  $(3,131)  $1,839 

 

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

 

7
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

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

 

Organization and Operations

 

Blink Charging Co., through its wholly-owned subsidiaries (collectively, the “Company” or “Blink”), is a leading owner, operator, and provider of electric vehicle (“EV”) charging equipment and networked EV charging services. Blink offers residential and commercial EV charging equipment, enabling EV drivers to recharge at various location types. Blink’s principal line of products and services is its Blink EV charging networks (the “Blink Networks”) and Blink EV charging equipment, also known as electric vehicle supply equipment (“EVSE”), and other EV-related services. The Blink Networks provide property owners, managers, parking companies, and state and municipal entities (“Property Partners”) with cloud-based services that enable the remote monitoring and management of EV charging stations. The Blink Networks also provide EV drivers with vital station information, including station location, availability and fees. Blink also operates a ride-sharing program through the Company’s wholly owned subsidiary, BlueLA Rideshare, LLC, and the City of Los Angeles which allows customers the ability to rent electric vehicles through a subscription service.

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of September 30, 2022 and for the three and nine months then ended. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the operating results for the full year ending December 31, 2022 or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures of the Company as of December 31, 2021 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on March 16, 2022 as part of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

 

Risks and Uncertainties

 

The Covid-19 pandemic has impacted global stock markets and economies. The Company closely monitors the impact of the continuing presence of Covid-19 and multiple Covid-19 variants. The Company has taken and continues to take precautions to ensure the safety of its employees, customers and business partners, while assuring business continuity and reliable service and support to its customers. The Company continues to receive orders for its products, although some shipments of equipment have been temporarily delayed. The global chip shortage and supply chain disruption has caused some delays in equipment orders from its contract manufacturer. As federal, state and local economies have reopened and returns to pre-pandemic levels, the Company expects demand for charging station usage to increase, however, the Company is unable to predict the extent of such recovery due to the uncertainty of Covid-19. Additionally, other recent macroeconomic events including rising inflation, slowing economic growth, changes in U.S. and foreign government monetary policies, supply chain disruptions, fluctuations in currency exchange rates and the Russian invasion of Ukraine have led to further economic uncertainty. As a result, the Company is unable to predict the ultimate impact of continuing equipment order delays, chip shortages, the impact of other economic conditions and continuous presence of Covid-19 will have on its business, future results of operations, financial position, or cash flows.

 

8
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Since the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note.

 

FOREIGN CURRENCY TRANSLATION

 

The Company’s reporting currency is the United States dollar. The functional currency of certain subsidiaries is the Euro and the Indian Rupee. Assets and liabilities are translated based on the exchange rates at the balance sheet date (0.9797 for the Euro, 0.0122 for the Indian Rupee, and 1.1156 for the Pound Sterling as of September 30, 2022), while expense accounts are translated at the weighted average exchange rate for the period (0.9797 for the Euro, 0.0123 for the Indian Rupee, and 1.1156 for the Pound Sterling for the nine months ended September 30, 2022). Equity accounts are translated at historical exchange rates. The resulting translation adjustments are recognized in stockholders’ equity as a component of accumulated other comprehensive income. Comprehensive income (loss) is defined as the change in equity of an entity from all sources other than investments by owners or distributions to owners and includes foreign currency translation adjustments as described above. Transaction gains and losses are charged to the statement of operations as incurred. Transaction losses attributable to foreign exchange were $595 and $836 during the three and nine months ended September 30, 2022, respectively. Transaction losses attributable to foreign exchange were $16 and $124 during the three and nine months ended September 30, 2021, respectively.

 

REVENUE RECOGNITION

 

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

 

Product sales – Revenue is recognized at the point where the customer obtains control of the goods and the Company satisfies its performance obligation, which generally is at the time it ships the product to the customer.
Charging service revenue – company-owned charging stations - Revenue is recognized at the point when a particular charging session is completed.
Network fees and other – Represents a stand-ready obligation whereby the Company is obligated to perform over a period of time and, as a result, revenue is recognized on a straight-line basis over the contract term. Network fees are billed annually.
Ride-sharing services – Primarily related to ride-sharing services agreement with the City of Los Angeles which allows customers the ability to rent electric vehicles through a subscription service. The Company recognizes revenue over the contractual period of performance of the subscription.
Other – Other revenues primarily comprises of revenues generated from alternative fuel credits.

 

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

 

   2022   2021   2022   2021 
   For The Three Months Ended   For The Nine Months Ended 
   September 30,   September 30, 
   2022   2021   2022   2021 
                 
Revenues - Recognized at a Point in Time:                    
Charging service revenue - company-owned charging stations  $1,256   $908   $3,857   $1,676 
Product sales   13,358    4,824    30,238    9,762 
Other   418    53    706    228 
Total Revenues - Recognized at a Point in Time   15,032    5,785    34,801    11,666 
                     
Revenues - Recognized Over a Period of Time:                    
Ride-sharing services   367    270    885    504 
Network and other fees   1,765    292    2,564    540 
Total Revenues - Recognized Over a Period of Time   2,132    562    3,449    1,044 
                     
Total Revenue  $17,164   $6,347   $38,250   $12,710 

 

9
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

 

REVENUE RECOGNITION - CONTINUED

 

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

 

   2022   2021   2022   2021 
   For The Three Months Ended   For The Nine Months Ended 
   September 30,   September 30, 
   2022   2021   2022   2021 
Revenues by Geographical Area                    
U.S.A  $12,395   $4,129   $25,374   $9,495 
International   4,769    2,218    12,876    3,215 
Total Revenue  $17,164   $6,347   $38,250   $12,710 

 

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, 2022, the Company had $13,723 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, 2022. The Company expects to satisfy $8,823 of its remaining performance obligations for network fees, charging services, warranty revenue, product sales, and other revenues and recognize the revenue within the next twelve months.

 

During the three and nine months ended September 30, 2022, the Company recognized $333 and $824, respectively, of revenues related to network fees and warranty contracts, which were included in deferred revenues as of December 31, 2021. During the nine months ended September 30, 2022, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.

 

Grants and rebates which are not within the scope of ASC 606, pertaining to revenues and periodic expenses are recognized as income when the related revenue and/or periodic expense are recorded. Grants and rebates related to EV charging stations and their installation are deferred and amortized 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, 2022 and 2021, the Company recognized $83 and $55, respectively, related to grant and rebate revenue. During the nine months ended September 30, 2022 and 2021, the Company recognized $283 and $280, respectively, related to grant and rebate revenue. At September 30, 2022 and December 31, 2021, there was $4,304 and $70 of deferred grant and rebate revenue to be amortized.

 

CONCENTRATIONS

 

There were no accounts receivable concentrations as of September 30, 2022. As of December 31, 2021, accounts receivable from a significant customer were approximately 18% of total accounts receivable. There were no customer concentrations during the three and nine months ended September 30, 2022. During the three months ended September 30, 2021, sales to a significant customer represented 11% of total revenue. During the three months ended September 30, 2021, sales to another significant customer represented 10% of total revenue. During the three months ended September 30, 2022, the Company made purchases from a significant supplier that represented 19% of total purchases. During the nine months ended September 30, 2022, the Company made purchases from a significant supplier that represented 26% of total purchases. During the nine months ended September 30, 2022, the Company made purchases from another significant supplier that represented 12% of total purchases.

 

10
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

 

NET LOSS PER COMMON SHARE

 

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

 

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

 

   2022   2021 
   For the Three and Nine Months 
   Ended September 30, 
   2022   2021 
Warrants   3,156,861    3,293,079 
Options   1,055,217    983,110 
Unvested restricted common stock   -    53,755 
Total potentially dilutive shares   4,212,078    4,329,944 

 

 

3. OTHER ASSETS

 

On April 19, 2022, the Company signed a non-binding letter of intent with a U.S. privately-held company (the “Target”) providing for the possible purchase by the Company of all of the outstanding shares of the Target from its shareholders in consideration for cash, a note and, under certain circumstances, shares of common stock of a subsidiary of the Company or, if such subsidiary’s shares are not publicly-traded, common stock of the Company. In addition, in the letter of intent, the Company agreed to extend a loan of $1,250 to the Target (the “Initial Loan”), in which $1,000 was loaned by the Company during the second quarter of 2022 and $250 was loaned in July 2022 pursuant to a 6% Secured Convertible Promissory Note signed by the Target. Under the terms of the Initial Loan, if the Company proceeds with the possible stock purchase of the Target, the principal and accrued interest amount under the Initial Loan will be deducted from the cash consideration paid to the Target’s shareholders at closing. If, however, the Company determines not to proceed with the possible stock purchase of the Target, the Initial Loan will continue to accrue 6% interest per annum, and mature on the earliest of (i) a “Change of Control” (as defined in such note); (ii) the closing of the next investment round by the Target; (iii) an Event of Default (as defined in such note); or (iv) May 1, 2027.

 

On September 22, 2022, the Company signed a letter agreement concerning the extension of the development work that the Target was performing for a wholly owned subsidiary of the Company (the “Subsidiary”) under a Master Service Agreement that was executed on April 29, 2022 (the “Letter Agreement”). Under the Letter Agreement, the Company agreed to extend additional loans to the Target to enable it to expand the development work and to expedite the delivery of the development outcomes (the “Product”) to the Subsidiary. In addition, the Letter Agreement provided that the Company will extend to the Target additional funding of up to $350 for hiring additional developers and an additional $600 to support the Target’s operations until the development work is finalized and accepted by the Company, which will be no later than November 30, 2022, or such later date that the parties may agree upon. The total amount of the loans may reach up to $950 (the “Development Loan”), in each case upon the Target’s request along with appropriate back-up documentation for such loan. $250 was loaned by the Company in September 2022. The Development Loan was made pursuant to a 6% Grid Secured Convertible Promissory Note and an additional letter agreement, dated September 22, 2022, signed by the Target with terms and conditions similar to those of the Initial Loan (the “Grid Note”). The Development Loan has additional terms which provide that the Company may forfeit the Development Loan if the Target timely delivers the Product and the Company fails to close the acquisition of the Target shortly thereafter. If, however, the Target fails to complete the development work on time, the Company will not be obligated to close the acquisition of the Target and the entire Development Loan will be payable to the Company under the same terms of the Initial Loan.

 

4. BUSINESS COMBINATONS

 

ELECTRIC BLUE LIMITED ACQUISITION

 

On April 22, 2022, pursuant to a Sale and Purchase Agreement dated April 22, 2022, the Company acquired, through its Dutch subsidiary, Blink Holdings B.V., all of the outstanding capital stock of Electric Blue Limited, a private company limited by shares and registered in England and Wales (“EB”), from its shareholders. Headquartered in St. Albans, United Kingdom, EB is a leading provider of electric vehicle charging and sustainable energy solutions and technologies. EB works with local authorities and businesses to create the infrastructure the United Kingdom needs to meet the 2050 net zero emissions target and prepare for the 2030 ban on the sale of new petrol and diesel cars and vans.

 

The fair value purchase price for the acquisition of all of EB’s outstanding capital stock was $19,317, consisting of $12,651 in cash, 152,803 shares of the Company’s common stock with a fair value of $2,852, plus the contingent consideration described in the following paragraph.

 

11
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

4. BUSINESS COMBINATONS – CONTINUED

 

ELECTRIC BLUE LIMITED ACQUISITION – CONTINUED

 

In addition, provided EB reaches specified gross revenue or new EV charger installation targets over the three years post-closing, the Company also agreed to issue up to approximately $6,400 in additional shares of its common stock to EB shareholders (the “Contingent Consideration”). The Contingent Consideration was recorded at an estimated fair value of $3,814. As of September 30, 2022, the estimated fair value of the Contingent Consideration was $4,030. The Company uses a probability-weighted discounted cash flow approach as a valuation technique to determine the fair value of the contingent consideration liabilities on the acquisition date and at each reporting period. The significant unobservable inputs used in the fair value measurements are projections over the earn-out period, and the probability outcome percentages that are assigned to each scenario. Significant increases or decreases to either of these inputs in isolation could result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent consideration liabilities.

 

Of the purchase price to be issued to the EB shareholders at closing, approximately $650 in cash and 25,466 shares of common stock are being held in escrow accounts for periods of 12 months (cash escrow) and 18 months (stock escrow), respectively, following the closing to cover any losses or damages we may incur by reason of, among other things, any misrepresentation or breach of warranty by EB under the Sale and Purchase Agreement.

 

During the quarter ended September 30, 2022, the Company finalized its fair value determination on the acquired assets and assumed liabilities and completed its assessment of the purchase price allocation. As a result, the Company recognized certain measurement period adjustments, as summarized in the fair values of assets acquired and liabilities assumed in the tables below. Measurement period adjustments were recognized in the reporting period in which the adjustments were determined and calculated as if the accounting had been completed at the acquisition date. The measurement period adjustments did not result in material adjustments to previously reported income statement amounts.

 

Goodwill was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is attributable to the reputation of the business acquired, the workforce in place and the synergies to be achieved from this acquisition. Goodwill of $10,443 from the acquisition of EB is expected to be deductible for income tax purposes.

 

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

 

    Purchase Price Allocation (Preliminary)     Measurement Period Adjustments     Purchase Price Allocation
(As Revised)
 
Purchase Consideration:                        
Cash   $ 12,651     $ -     $ 12,651  
Common stock     2,852       -       2,852  
Contingent consideration     3,400       414       3,814  
                         
Total Purchase Consideration   $ 18,903     $ 414     $ 19,317  
                         
Less:                        
Trade name   $ 486     $ 14     $ 500  
Customer relationships     3,075       1,781       4,856  
Internally developed technology     504       11       515  
Non-compete agreements     1,908       84       1,992  
Property and equipment     4,162       163       4,325  
Deferred revenue- non current portion     (730 )     (1,959 )     (2,689 )
Debt-free net working capital deficit     (1,047 )     422       (625 )
                         
Fair Value of Identified Net Assets   $ 8,358     $ 516     $ 8,874  
                         
Remaining Unidentified Goodwill Value   $ 10,545     $ (102 )   $ 10,443  

 

Changes in the balance of identified intangible assets and goodwill reflected on the balance sheet are the result of the impact of the change in foreign currency exchange rates.

 

12
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

4. BUSINESS COMBINATONS – CONTINUED

 

ELECTRIC BLUE LIMITED ACQUISITION – CONTINUED

 

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

 

    Purchase Price Allocation (Preliminary)     Measurement Period Adjustments     Purchase Price Allocation
(As Revised)
 
Current assets:                        
Cash   $ 1,291     $ -     $ 1,291  
Accounts receivable     1,618       -       1,618  
Prepaid expenses and other current assets     508       -       508  
                         
Total current assets   $ 3,417     $ -     $ 3,417  
                         
Less current liabilities:                        
Accounts payable   $ 647     $ -     $ 647  
Current portion of lease liabilities     22       -       22  
Current portion of notes payable     611       -       611  
Accrued expenses and other current liabilities     3,184       (422 )     2,762  
                         
Total current liabilities   $ 4,464     $ (422 )   $ 4,042  
                         
Debt free net working capital deficit   $ (1,047 )   $ 422     $ (625 )

 

The condensed consolidated financial statements of the Company include the results of operations of EB from April 22, 2022 to September 30, 2022 and do not include results of operations for periods prior to April 22, 2022. The results of operations of EB from April 22, 2022 to September 30, 2022 included revenues of $2,584 and a net loss of $2,143.

 

The following table presents the unaudited pro forma condensed consolidated results of operations for the three and nine months ended September 30, 2022 and 2021 as if the acquisition of EB had occurred at the beginning of fiscal year 2021. The pro forma information provided below is compiled from the pre-acquisition financial information of EB and includes pro forma adjustments for adjustments to certain expenses. The pro forma results are not necessarily indicative of (i) the results of operations that would have occurred had the operations of this acquisition actually been acquired at the beginning of fiscal year 2021 or (ii) future results of operations:

 

   For the Three Months Ended
September 30,
   For the Nine Months Ended
September 30,
 
   2022   2021   2022   2021 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
Revenues  $17,247   $7,606   $40,530   $15,258 
Net loss  $(25,647)  $(16,546)  $(65,224)  $(40,632)

 

The above pro forma information includes pro forma adjustments to give effect to the amortization of the acquired intangible assets to the 2021 historical period. As of the date of the acquisition, the Company expected to collect all contractual cash flows related to receivables acquired in the acquisition.

 

Acquisition-related costs are expensed as incurred and are recorded within general and administrative expenses on the condensed consolidated statements of operations. Acquisition-related costs were $198 and $376 during the three and nine months ended September 30, 2022, respectively.

 

See Note 10 – Fair Value Measurement for additional information.

 

13
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

4. BUSINESS COMBINATONS – CONTINUED

 

SEMACONNECT ACQUISITION

 

On June 15, 2022, the Company completed the acquisition of SemaConnect, Inc., a Delaware corporation (“SemaConnect”) pursuant to an Agreement and Plan of Merger, dated as of June 13, 2022 (“Acquisition Agreement”), by and among the Company, Blink Sub I Corp., Blink Sub II LLC, SemaConnect and Shareholder Representative Services LLC (solely in its capacity as the stockholders’ representative). Following the closing of the acquisition, SemaConnect became a wholly owned subsidiary of the Company. SemaConnect is a leading provider of EV charging infrastructure solutions in North America.

 

The aggregate purchase price was $200,573, which included excess working capital of $1,229 and closing date cash of $3,639. The consideration paid in the acquisition consisted of: (a) $86,736 in cash, (i) of which $46,136 was paid at the closing of the Acquisition Agreement (“Closing”) and (ii) the remaining $40,600 is payable (bearing interest at 7%) until not earlier than nine months following the Closing and not later than three years following the Closing; and (b) 7,454,975 shares of the Company’s common stock with a fair value of $113,837. Included in the cash consideration was $8,103 related to payments due to stock option holders of SemaConnect. Subsequent to the closing of the acquisition, payments to the stock option holder were made after the stock option holder signed an option cash-out agreement

 

During the quarter ended September 30, 2022, the Company finalized its fair value determination on the acquired assets and assumed liabilities and completed its assessment of the purchase price allocation. As a result, the Company recognized certain measurement period adjustments, as summarized in the fair values of assets acquired and liabilities assumed in the tables below. Measurement period adjustments were recognized in the reporting period in which the adjustments were determined and calculated as if the accounting had been completed at the acquisition date. The measurement period adjustments did not result in material adjustments to previously reported income statement amounts.

 

Goodwill was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is attributable to the reputation of the business acquired, the workforce in place and the synergies to be achieved from this acquisition. Goodwill of $174,439 from the acquisition of SemaConnect is not expected to be deductible for income tax purposes.

 

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

 

 

    Purchase Price Allocation (Preliminary)     Measurement Period Adjustments     Purchase Price Allocation
(As Revised)
 
Purchase Consideration:                        
Cash   $ 46,136     $ -     $ 46,136  
Deferred cash consideration     40,600       -       40,600  
Common stock     113,837       -       113,837  
                         
Total Purchase Consideration   $ 200,573     $ -     $ 200,573  
                         
Less:                        
Trade name   $ 4,097     $ (2,266 )   $ 1,831  
Customer relationships     40,973       (25,918 )     15,055  
Internally developed technology     2,049       1,558       3,607  
Non-compete agreements     20,487       (20,246 )     241  
Property and equipment     614       -       614  
Right of use asset     1,092       -       1,092  
Other assets     449       -       449  
Deferred revenue- non current portion     (702 )     -       (702 )
Lease liability- non current portion     (611 )     -       (611 )
Debt-free net working capital     4,558       -       4,558  
                         
Fair Value of Identified Net Assets   $ 73,006     $ (46,872 )   $ 26,134  
                         
Remaining Unidentified Goodwill Value   $ 127,567     $ 46,872     $ 174,439  

 

14
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

4. BUSINESS COMBINATONS – CONTINUED

 

SEMACONNECT ACQUISITION - CONTINUED

 

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

 

Current assets:     
Cash  $3,753 
Restricted cash   8,103 
Accounts receivable   5,515 
Inventory   5,472 
Prepaid expenses and other current assets   1,309 
      
Total current assets  $24,152 
      
Less current liabilities:     
Accounts payable  $2,305 
Merger consideration payable   8,103 
Current portion of lease liability   481 
Current portion of notes payable   186 
Deferred revenue   2,677 
Accrued expenses and other current liabilities   5,842 
      
Total current liabilities  $19,594 
      
Debt free net working capital  $4,558 

 

The condensed consolidated financial statements of the Company include the results of operations of SemaConnect from June 15, 2022 to September 30, 2022 and do not include results of operations for periods prior to June 15, 2022. The results of operations of SemaConnect from June 15, 2022 to September 30, 2022 included revenues of $8,778 and a net loss of $1,216.

 

The following table presents the unaudited pro forma consolidated results of operations for the three and nine months ended September 30, 2022 and 2021 as if the acquisition of SemaConnect had occurred at the beginning of fiscal year 2021. The pro forma information provided below is compiled from the pre-acquisition financial information of SemaConnect and includes pro forma adjustments for adjustments to certain expenses. The pro forma results are not necessarily indicative of (i) the results of operations that would have occurred had the operations of this acquisition actually been acquired at the beginning of fiscal year 2021 or (ii) future results of operations:

 

   For the Three Months Ended
September 30,
   For the Nine Months Ended
September 30,
 
   2022   2021   2022   2021 
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited) 
Revenues  $17,247   $9,244   $47,472   $21,532 
Net loss  $(25,647)  $(19,698)  $(74,295)  $(45,473)

 

The above pro forma information includes pro forma adjustments to give effect to the amortization of the acquired intangible assets to the 2021 historical period.

 

15
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

4. BUSINESS COMBINATONS – CONTINUED

 

SEMACONNECT ACQUISITION – CONTINUED

 

As of the date of the acquisition, the Company expected to collect all contractual cash flows related to receivables acquired in the acquisition. Acquisition-related costs are expensed as incurred and are recorded within general and administrative expenses on the consolidated statements of operations. Acquisition-related costs were $311 and $3,407 during the three and nine months ended September 30, 2022, respectively.

 

5. INTANGIBLE ASSETS AND GOODWILL

 

Intangible assets consist of the following:

 

              
   September 30, 2022   December 31, 2021   Useful Lives
Internal use software  $1,667   $600   3 years
Capitalized engineering costs   237    237   Indefinite
Trade name and patents   2,700    340   1.5 years
Customer relationships   20,896    1,677   5.6 years
Favorable leases   235    272   1.6 years
Internally developed technology   4,913    1,148   3 years
Non-compete agreements   2,097    139   2 years
Intangible assets, gross   32,745    4,413    
Less: accumulated amortization   (4,101)   (958)   
Intangible assets, net  $28,644   $3,455    

 

The following represents the change in goodwill during the nine months ended September 30, 2022:

Goodwill

Beginning balance January 1, 2022  $19,390 
Acquisition of Electric Blue   10,443 
Acquisition of SemaConnect   174,439 
Effect of translation adjustments   (2,824)
Ending balance September 30, 2022  $201,448 

 

Changes in the balance of intangible assets and goodwill reflected on the balance sheet include the impact of the change in foreign currency exchange rates. See Note 4 - Business Combinations for additional details.

 

16
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 

Accrued expenses consist of the following:

 

           
   September 30, 2022   December 31, 2021 
   (unaudited)     
Accrued host fees  $130   $130 
Accrued professional, board and other fees   354    543 
Accrued wages   5,013    2,678 
Accrued commissions   499    144 
Warranty payable   140    10 
Accrued income, property and sales taxes payable   1,147    462 
Accrued issuable equity   542    454 
Accrued purchases   

1,303

    117 
Internal use software liability   415    383 
Accrued interest   829    - 
Other accrued expenses   1,586    757 
Total accrued expenses  $11,958   $5,678 

 

7. STOCKHOLDERS’ EQUITY

 

COMMON STOCK

 

During the nine months ended September 30, 2022, the Company issued an aggregate of 60,772 shares of common stock pursuant to exercises of warrants to purchase an aggregate of 60,772 shares of common stock for aggregate net proceeds of $191.

 

During the nine months ended September 30, 2022, the Company issued an aggregate of 5,955 shares of common stock pursuant to exercises of options to purchase an aggregate of 5,955 shares of common stock for aggregate net proceeds of $10.

 

During the nine months ended September 30, 2022, the Company issued an aggregate of 8,093 shares of the Company’s common stock pursuant to the cashless exercise of warrants.

 

During the nine months ended September 30, 2022, the Company issued an aggregate of 761,825 shares of common stock for services to employees and consultants with an aggregate issuance date fair value of $4,956.

 

See Note 4 – Business Combinations – Electric Blue Limited Acquisition and SemaConnect Acquisition for additional information of common stock issued as partial consideration for acquisitions.

 

AT-THE-MARKET OFFERING

 

On September 2, 2022, the Company entered into a Sales Agreement (“Sales Agreement”) with Barclays Capital Inc., BofA Securities, Inc., HSBC Securities (USA) Inc., ThinkEquity LLC, H.C. Wainwright & Co., LLC and Roth Capital Partners, LLC (the “Agents”) to conduct an “at-the-market” (ATM) equity offering program pursuant to which the Company may issue and sell from time to time shares of its common stock, having an aggregate offering price of up to $250,000 through the Agents, as the Company’s sales agents. The shares are being offered pursuant to the Sales Agreement under the Company’s automatic shelf registration statement on Form S-3ASR and a prospectus supplement thereto filed with the SEC on January 6, 2021 and September 2, 2022, respectively.

 

17
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

7. STOCKHOLDERS’ EQUITY – CONTINUED

 

STOCK-BASED COMPENSATION

 

The Company recognized stock-based compensation expense related to common stock, stock options and warrants for the three and nine months ended September 30, 2022 of $4,832 and $7,821, 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 and stock options for the three and nine months ended September 30, 2021 of $6,224 and $10,308, respectively, As of September 30, 2022, there was $14,394 of unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period of 1.9 years.

 

On July 29, 2022, Michael D. Farkas, the Company’s Chairman and Chief Executive Officer, and other senior executives of the Company who are responsible for the acquisition and integration of SemaConnect were granted one-time performance-based restricted stock awards under the Company’s 2018 Incentive Compensation Plan. A total number of 590,458 shares of common stock, with a market value on the grant date of $12,000, were awarded to the executives. The agreements provide that Messrs. Farkas, Brendan S. Jones, President, Michael P. Rama, Chief Financial Officer, Aviv Hillo, General Counsel, and Harjinder Bhade, Chief Technology Officer, will each receive 472,367, 47,237, 23,618, 23,618 and 23,618 shares of common stock, respectively. The awards of performance-based restricted stock are intended to provide an appropriate incentive structure for the executive management team of the Company to integrate and commercialize the SemaConnect acquisition given the transformational nature of the acquisition in a way that is aligned with stockholder interests. The awards of these performance-based restricted stock become vested based on a series of six performance hurdles that must be achieved before the third anniversary of the grants, as described in greater detail below. In addition to the closing of the SemaConnect acquisition with certain cost savings as the initial 20% vesting event, the vesting of the remaining 80% of the restricted stock is generally determined based on the (i) integration of SemaConnect’s hardware and software platforms, (ii) integration of its business processes, (iii) integration of its human capital processes, (iv) delivery and execution of a product rationalization roadmap and new production ready units for UL certification, and (v) our common stock’s closing price reaching on average for a period of ten consecutive trading days a price of $23.78, which is 50% over the price paid by us to SemaConnect shareholders in the acquisition, in each case without regard to the order of achieving the foregoing hurdles. The Board has discretion to determine when each performance hurdle has been achieved and to accelerate awards pursuant to the program. As of September 30, 2022, the vesting performance hurdles related to the closing of the SemaConnect acquisition and clause (v) outlined above was met.

 

8. RELATED PARTY TRANSACTIONS

 

JOINT VENTURE

 

The Company and a group of three Cyprus entities entered into a shareholders’ agreement on February 11, 2019, pertaining to the parties ‘respective shareholdings in a new joint venture entity, Blink Charging Europe Ltd. (the “Entity”), that was formed under the laws of Cyprus on the same date. Subsequently, two of the three Cyprus entities exited from the Entity. Pursuant to the agreement, the Company is not required to fund operating losses. The Company owns 40% of the Entity while another entity owns 60%of the Entity. The Entity currently owns 100% of a Greek subsidiary, Blink Charging Hellas SA (“Hellas”), which started operations in the Greek EV market. There are currently no plans for the Company to make any capital contributions or investments. During the three and nine months ended September 30, 2022, the Company recognized sales of $0 and $68, respectively, and $28 and $800 during the three and nine months ended September 30, 2021, respectively, to Hellas. As of September 30, 2022 and December 31, 2021,the Company had a receivable from Hellas of approximately $0 and $6, respectively and a payable to Hellas of approximately $33 and $0 respectively. The Company determined that the Entity is a variable interest entity, however, the Company does not have a controlling financial interest and, as a result, the Company is not required to consolidate the Entity and instead has applied equity method accounting to its investment in the Entity. From inception through September 30, 2022, the Entity has not generated net income and, as a result, pursuant to ASC 323, the Company has not recorded a gain or loss on its equity method investment in the Entity during the three and nine months ended September 30, 2022 and 2021.

 

BLUE CORNER

 

Earlier during 2022, two senior management employees in the recently acquired entity, Blue Corner, had an ownership interest in a major supplier of charging equipment for Blue Corner. As of September 30, 2022, this related party relationship does not exist since, as of September 30, 2022, those two senior management employees are no longer with Blue Corner.

 

ELECTRIC BLUE LIMITED 

 

As of September 30, 2022, several close family members of a senior management employee are providing services to Electric Blue Limited.  For the quarter ended September 30, 2022, these related parties have collectively provided services worth $50 to Electric Blue Limited  Furthermore, as of September 30, 2022, there was a payable of $12 and purchase commitments of $112 to the same related parties.

 

18
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

9. LEASES

 

As of September 30, 2022, the Company had $745 of right of use assets that were classified as financing leases for vehicles associated with the operations of Blink Mobility are included as a component of property and equipment on the condensed consolidated balance sheet as of September 30, 2022. The duration of the leases are three years and the Company is expected to pay approximately $1,020 throughout the term.

 

Total operating lease expenses for the three and nine months ended September 30, 2022 were $185 and $528, respectively, and for the three and nine months ended September 30, 2021 were $155 and $429, respectively, which were recorded in other operating expenses on the condensed consolidated statements of operations.

 

During the three and nine months ended September 30, 2022, the Company recorded $13 and $26 of interest expense, respectively, related to finance leases, which were recorded within interest expense on the condensed consolidated statements of operations. During the three and nine months ended September 30, 2022, the Company recorded amortization expense of $210 and $390, respectively, related to finance leases. Finance lease liabilities are included within accrued expenses and other liabilities on the condensed consolidated balance sheet as of September 30, 2022.

 

Supplemental cash flows information related to leases was as follows:

 

   For The Nine Months Ended 
   September 30, 
   2022   2021 
Cash paid for amounts included in the measurement of lease liabilities:          
           
Operating cash flows from operating leases  $412   $440 
Financing cash flows from finance leases  $144   $- 
           
Right-of-use assets obtained in exchange for lease obligations:          
Operating leases  $398   $1,713 
Finance leases  $931   $- 
           
Weighted Average Remaining Lease Term          
Operating leases   3.21    4.90 
Finance leases   2.50    - 
           
Weighted Average Discount Rate          
Operating leases   3.8%   6.0%
Finance leases   6.2%   0.0%

 

 

For the Years Ending December 31,  Operating Lease   Finance Lease 
2022  $1,505   $340 
2023   649    340 
2024   405    170 
2025   350    - 
2026   283    - 
Thereafter   154    - 
Total future minimum lease payments   3,346    850 
Less: imputed interest   (195)   (58)
Total  $3,151   $792 

 

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BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

10. FAIR VALUE MEASUREMENT

 

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

   September 30, 2022 
   Level 1   Level 2   Level 3   Total 
Assets:                    
Alternative fuel credits  $-   $35   $-   $35 
Total assets  $-   $35   $-   $35 
                     
Liabilities:                    
Common stock liability  $558   $-   $-   $558 
Contingent consideration   -    -    4,030    4,030 
Warrant liability   -    -    55    55 
Total liabilities  $558   $-   $4,085   $4,643 

 

   December 31, 2021 
   Level 1   Level 2   Level 3   Total 
Assets:                    
Alternative fuel credits  $-   $58   $-   $58 
Total assets  $-   $58   $-   $58 
                     
Liabilities:                    
Common stock liability  $364   $-   $-   $364 
Warrant liability   -    -    90    90 
Total liabilities  $364   $-   $90   $454 

 

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:

 

Contingent Consideration    
Beginning balance as of January 1, 2022  $- 
Contingent consideration assumed in Electric Blue acquisition   3,814 
Change in fair value of contingent consideration   216 
Ending balance as of September 30, 2022  $4,030 

 

Warrant Liability    
Beginning balance as of January 1, 2022  $90 
Change in fair value of warrant liability   (35)
Ending balance as of September 30, 2022  $55 

 

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BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

11. COMMITMENTS AND CONTINGENCIES

 

PURCHASE COMMITMENTS

 

As of September 30, 2022, the Company had purchase commitments of approximately $55,000 which will become payable upon the suppliers’ delivery of the charging stations and other related items. The purchase commitments were made primarily for future sales, deployments of charging stations, inventory management planning and other related items, all of which are expected to be received during the next 12 to 24 months.

 

LITIGATION AND DISPUTES

 

On August 24, 2020, a purported securities class action lawsuit, captioned Bush v. Blink Charging Co. et al., Case No. 20-cv-23527, was filed in the United States District Court for the Southern District of Florida against the Company, Michael Farkas (Blink’s Chairman of the Board and Chief Executive Officer), and Michael Rama (Blink’s Chief Financial Officer) (the “Bush Lawsuit”). On September 1, 2020, another purported securities class action lawsuit, captioned Vittoria v. Blink Charging Co. et al., Case No. 20-cv-23643, was filed in the United States District Court for the Southern District of Florida against the same defendants and seeking to recover the same alleged damages (the “Vittoria Lawsuit”). On October 1, 2020, the court consolidated the Vittoria Lawsuit with the Bush Lawsuit and on December 21, 2020 the court appointed Tianyou Wu, Alexander Yu and H. Marc Joseph to serve as the Co-Lead Plaintiffs. The Co-Lead Plaintiffs filed an Amended Complaint on February 19, 2021. The Amended Complaint alleges, among other things, that the defendants made false or misleading statements about the size and functionality of the Blink Network, and asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The Amended Complaint does not quantify damages but seeks to recover damages on behalf of investors who purchased or otherwise acquired Blink’s common stock between March 6, 2020 and August 19, 2020. On April 20, 2021, Blink and the other defendants filed a motion to dismiss the Amended Complaint, which has now been fully briefed and is ready for review. On April 7, 2022, the court held oral argument on the motion to dismiss but did not issue a decision. The Company wholly and completely disputes the allegations therein. The Company has retained legal counsel in order to defend the action vigorously. The Company has not recorded an accrual related to this matter as of September 30, 2022 as it determined that any such loss contingency was either not probable or estimable.

 

21
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Notes to Unaudited Condensed Consolidated Financial Statements

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

 

11. COMMITMENTS AND CONTINGENCIES – CONTINUED

 

LITIGATION AND DISPUTES – CONTINUED

 

On September 15, 2020, a shareholder derivative lawsuit, captioned Klein (derivatively on behalf of Blink Charging Co.) v. Farkas et al., Case No. 20- 19815CA01, was filed in Miami-Dade County Circuit Court seeking to pursue claims belonging to the Company against Blink’s Board of Directors and Michael Rama (the “Klein Lawsuit”). Blink is named as a nominal defendant. The Klein Lawsuit asserts that the Director defendants caused Blink to make the statements that are at issue in the securities class action and, as a result, the Company will incur costs defending against the consolidated Bush Lawsuit and other unidentified investigations. The Klein Lawsuit asserts claims against the Director defendants for breach of fiduciary duties and corporate waste and against all of the defendants for unjust enrichment. Klein did not quantify the alleged damages in his complaint, but he seeks damages sustained by the Company as a result of the defendants’ breaches of fiduciary duties, corporate governance changes, restitution, and disgorgement of profits from the defendants and attorneys’ fees and other litigation expenses. The parties agreed to temporarily stay the Klein Lawsuit until there is a ruling on the motion to dismiss filed in the consolidated Bush Lawsuit. The Company has not recorded an accrual related to this matter as of September 30, 2022 as it determined that any such loss contingency was either not probable or estimable.

 

On December 23, 2020, another sharehold