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

Quarterly report pursuant to sections 13 or 15(d)

Accrued Expenses

Accrued Expenses

3 Months Ended

Mar. 31, 2014

7.	ACCRUED EXPENSES

Accrued expenses consisted of the following at:

	March 31, 2014		December 31, 2013
Accrued Department of Energy Fee	$	2,316,508	$	2,316,508
Accrued registration rights penalty		1,543,000		1,543,000
Accrued consulting fees		933,622		985,412
Accrued warranty liability		367,178		514,000
Accrued taxes payable		492,682		415,506
Accrued wages		18,080		23,800
Accrued fees		568,349		135,000
Accrued host fees		471,295		356,414
Due to JNS		52,186		48,797
Accrued interest expense		53,385		19,537
Total	$	6,816,285	$	6,357,684

U.S. Department of Energy

In conjunction with the U.S. Department of Energy (“DOE”) grant, the DOE owns 51% of all property reimbursed under the terms of the grant with a fair value in excess of $5,000 but allows for the grantee to purchase the DOE’s share at the end of the grant. The DOE grant is currently under novation negotiations and terminated as of December 31, 2013. The Company has accrued a liability of 51% of the net book value of all DC fast chargers in inventory and installed as of March 31, 2014 subject to the resolution of the novation negotiations. As of June 2, 2014, the Company has not received a request from the DOE to purchase the units.

Registration Rights Penalty

In connection with the sale of the Company’s stock during the quarter ended December 31, 2013, the Company sold 17,785,714 shares of its common stock and issued 17,785,714 warrants for gross proceeds of $15,450,000. In conjunction with these sales, the Company also issued 112,000 shares of common stock, 988,000 warrant units and 112,000 warrants to placement agents. The Company granted the purchasers’ and the placement agents’ registration rights on both the shares and the underlying shares related to the warrants within 60 days of the date of the sale of the stock, as amended. The stock purchase agreement provided for a penalty provision imposed upon the Company of 1% of the gross proceeds per month for each month that the shares are not registered not to exceed 10%. As of February 9, 2014, the amended 60 day threshold, the Company had not filed a registration statement with the Securities and Exchange Commission (“SEC”) but initially filed on February 18, 2014 and amended its filing on May 13, 2014. The Company has accrued a liability for the maximum liability as it can not determine when the registration statement will become effective but does not believe at this time that it is probable that it will be effective before the maximum penalty is reached. The Company has also accrued interest in the amount of $17,600 through April 30, 2014 at the rate of 18% per annum simple interest in accordance with the terms of the registration rights agreement.

Consulting Fees

Accrued consulting fees represent contractual obligations to issue either shares of the Company’s common stock and or cash to consultants for services rendered. The Company is currently contesting whether the consultants performed in accordance with terms of their respective contracts and therefore has not issued the shares nor paid for the services.

Warranty

The Company provides a limited product warranty against defects in materials and workmanship for its Blink residential and commercial chargers, ranging in length from one to two years. The Company accrues for estimated warranty costs at the time of revenue recognition and records the expense of such accrued liabilities as a component of cost of sales. Estimated warranty costs are based on historical product data and anticipated future costs. Should actual failure rates differ significantly from estimates, the impact of these unforeseen costs would be recorded as a change in estimate in the period identified. The changes in the carrying amount of accrued warranty reserves, for the three months ended March 31, 2014 is as follows:

Balance as of December 31, 2013	$	514,000
Additional warranty liability accrued		--
Warranty costs incurred		(146,822	)
Balance at March 31, 2014	$	367,178

No warranty costs were incurred during the quarter ended March 31, 2013.

Fees

Accrued fees consist of professional, board of director and network fees.