Blink Charging Co. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Summary of Significant Accounting Policies (Policies)

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2019

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, 2019, the Company had cash balances in excess of FDIC insurance limits of $7,651,611.

Investments

INVESTMENTS

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

The following summarizes our investments as of September 30, 2019 and December 31, 2018:

	September 30, 2019		December 31, 2018

Short-term investments:
Available- for-sale investments	$	3,032,399	$	2,878,664

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

	September 30, 2019
	Gross Unrealized Gains		Fair Value
Fixed income	$	108,169	$	3,032,399

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

Revenue Recognition

REVENUE RECOGNITION

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

●	Charging service revenue – company-owned charging stations - Revenue is recognized at the point when a particular charging session is completed.
●	Product sales – Revenue is recognized at the point where the customer obtains control of the goods and the Company satisfies its performance obligation, which generally is at the time it ships the product to the customer.
●	Network fees and other – Represents a stand-ready obligation whereby the Company is obligated to perform over a period of time and, as a result, revenue is recognized on a straight-line basis over the contract term. Network fees are billed annually.
●	Other – Primarily related to charging service revenue from non-company-owned charging stations. Revenue is recognized from non-company-owned charging stations at the point when a particular charging session is completed in accordance with a contractual relationship between the Company and the owner of the station.

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

	For The Three Months Ended				For The Nine Months Ended
	September 30,				September 30,
	2019		2018		2019		2018

Revenues - Recognized at a Point in Time:
Charging service revenue - company-owned charging stations	$	317,990	$	320,388	$	937,870	$	927,485
Product sales		319,254		102,958		704,472		381,557
Other		34,148		36,135		122,408		131,795
Total Revenues - Recognized at a Point in Time		671,392		459,481		1,764,750		1,440,837

Revenues - Recognized Over a Period of Time:
Network fees and other		88,516		80,639		275,137		258,283
Total Revenues - Recognized Over a Period of Time		88,516		80,639		275,137		258,283

Total Revenue Under ASC 606	$	759,908	$	540,120	$	2,039,887	$	1,699,120

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, 2019, the Company had $167,118 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, 2019. The Company expects to satisfy its remaining performance obligations for network fees and warranty revenue and recognize the revenue within the next twelve months.

During the three and nine months ended September 30, 2019, the Company recognized $85,674 and $260,823, respectively of revenues related to network fees and warranty contracts, which were included in deferred revenues as of December 31, 2018.

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

Grants, rebates and alternative fuel credits, which are not within the scope of ASC 606, pertaining to revenues and periodic expenses are recognized as income when the related revenue and/or periodic expense are recorded. Grants and rebates related to EV charging stations and their installation are deferred and amortized in a manner consistent with the related depreciation expense of the related asset over their useful lives over the useful life of the charging station. During the three months ended September 30, 2019 and 2018, the Company recorded $4,578 and $6,724, respectively, related to grant, rebate and alternative fuel credits revenue. During the nine months ended September 30, 2019 and 2018, the Company recorded $17,817 and $68,062, respectively, related to grant, rebate and alternative fuel credits revenue.

At September 30, 2019 and December 31, 2018, there was $88,248 and $106,066, respectively, of deferred grant and rebate revenue to be amortized.

Concentrations

CONCENTRATIONS

As of September 30, 2019, and December 31, 2018, accounts receivable from a significant customer was 31% and 35% of accounts receivable, respectively. During the three months ended September 30, 2019 sales to a significant customer represented 12% of the Company’s total revenues and represented 29% of product sales. During the nine months ended September 30, 2019 the same customer represented 13% of product sales. During the three months ended September 30, 2019 and 2018 another significant customer represented 17% and 19% of charging service revenues and less than 10% and 11% of total revenues, respectively. During the nine months ended September 30, 2019 and 2018 the same customer represented 18% and 17% of charging service revenues, respectively.

Net Loss Per Common Share

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.

For the three and nine months ended September 30, 2019 and 2018, the Company calculated the potential diluted earnings per share in accordance with ASC 260, as follows:

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2019			2018			2019			2018
Numerator:
Net loss attributable to common shareholders (numerator for basic earnings per share)	$	(2,622,989	)	$	(2,148,631	)	$	(6,753,836	)	$	(25,231,361	)
Less: change in fair value of derivative liabilities and other accrued liabilities		-			(1,040,273	)		-			(2,897,095	)
Adjusted net loss attributable to common shareholders (denominator for basic earnings per share)	$	(2,622,989	)	$	(3,188,904	)	$	(6,753,836	)	$	(28,128,456	)

Weighted average shares outstanding (denominator for basic earnings per share)		26,242,567			24,867,869			26,216,266			18,916,432
Plus: incremental shares from assumed common stock issuance		-			424,681			-			-
Plus: incremental shares from assumed conversion of debt		-			-			-			196,994
Adjusted weighted average shares outstanding (denominator for diluted earnings per share)		26,242,567			25,292,550			26,216,266			19,113,426

Basic earnings per share	$	(0.10	)	$	(0.09	)	$	(0.26	)	$	(1.33	)
Diluted earnings per share	$	(0.10	)	$	(0.13	)	$	(0.26	)	$	(1.47	)

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,
	2019		2018
Convertible preferred stock		1,642,628		1,747,756
Warrants		6,840,049		6,852,861
Options		128,008		106,108
Total potentially dilutive shares		8,610,685		8,706,725

Reclassifications

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.

Recently Issued Accounting Standards

RECENTLY ISSUED ACCOUNTING STANDARDS

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

In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”). The new ASU provides narrow-scope amendments to help apply these recent standards. The Company will be required to adopt the provisions of this ASU on January 1, 2020, with early adoption permitted for certain amendments. The Company is currently assessing the impact that this pronouncement will have on its condensed consolidated financial statements.