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)

3 Months Ended

Mar. 31, 2018

LIQUIDITY AND FINANCIAL CONDITION

As of March 31, 2018, the Company had cash, working capital and an accumulated deficit of $9,946,654, $2,212,757 and $154,231,190, respectively. During the three months ended March 31,2018, the Company generated net income of $2,204,088, but a loss from operations of $3,801,939. The Company has not yet achieved profitability from operations.

Subsequent to March 31, 2018, the Company issued an aggregate of 957,619 shares of the Company’s common stock pursuant to the exercise of warrants at an exercise price of $4.25 per share for aggregate gross proceeds of $4,069,881.

The Company believes its current cash on hand, is sufficient to meet its operating and capital requirements for at least twelve months from the issuance date of these financial statements. Thereafter, the Company will need to raise further capital through the sale of additional equity or debt securities or other debt instruments to support its future 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.

There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations. If the Company is unable to obtain additional financing on a timely basis, it may have to curtail its development, marketing and promotional activities, which would have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately, the Company could be forced to discontinue its operations and liquidate.

Cash and Cash Equivalents

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents in the 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 March 31, 2018 and December 31, 2017, the Company had cash balances in excess of FDIC insurance limits of $9,679,329 and $0, respectively.

Unaudited Pro Forma Information

UNAUDITED PRO FORMA INFORMATION

The unaudited pro forma information gives effect to the following transactions that occurred subsequent to March 31, 2018:

	●	The issuance of 25,669 shares of common stock and warrants to purchase an aggregate of 1,703,429 shares of common stock. The aggregate fair value of $2,205,430 of the common stock and warrants was included within accrued issuable equity as of March 31, 2018.
	●	The issuance of 957,619 shares of common stock pursuant to the exercise of warrants at an exercise price of $4.25 per share for aggregate gross proceeds of $4,069,881.
	●	The conversion of 4,368 shares of Series D Convertible Preferred Stock into 1,400,000 shares of common stock.
	●	The repayment of $483,620 related to delinquent payroll taxes which were included within accrued expenses as of March 31, 2018.
	●	The return to the Company and subsequent retirement of 2,942,099 shares of common stock.

See Note 10 – Subsequent Events for additional details.

Reclassifications

RECLASSIFICATIONS

Certain prior period balances have been reclassified in order to conform to current period presentation. These reclassifications have no effect on previously reported results of operations or loss per share.

Revenue Recognition

REVENUE RECOGNITION

On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing accounting principles generally accepted in the United States of America (“U.S. GAAP”) including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation.

The Company adopted ASC 606 for all applicable contracts using the modified retrospective method, which would have required a cumulative-effect adjustment, if any, as of the date of adoption. The adoption of ASC 606 did not have a material impact on the Company’s condensed consolidated financial statements as of the date of adoption. As a result, a cumulative-effect adjustment was not required.

The Company recognizes revenue primarily from five 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 – The transaction price is allocated to two performance obligations: (i) shipment of charging station unit to customer and (ii) satisfaction of the standard one-year warranty. Revenue related to the charging station unit 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. The portion of the transaction price allocated to the warranty is based upon the stand- alone price of the warranty as sold separately. The warranty represents a stand-ready obligation whereby the Company is obligated to perform over a period of time and, as a result, revenue is recognized using the time-based method, on a straight-line basis over the contract term since the Company believes that the performance obligation is satisfied evenly over the contract term.
	●	Grant and rebate revenue – Grants and rebates 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.
	●	Warranty revenue – 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 – 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.

The following table summarizes our revenue recognized in our condensed consolidated statements of operations:

	For The Three Months Ended
	March 31,
	2018		2017
Charging service revenue - company-owned charging stations	$	305,747	$	267,874
Product sales		135,760		153,587
Grant and rebate revenue		16,231		32,810
Warranty revenue		30,402		34,849
Network fees		57,251		49,238
Other		50,529		57,262
Total revenues, net	$	595,920	$	595,620

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 services, the Company records deferred revenue until the performance obligations are satisfied.

As of March 31, 2018, the Company had $224,434 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 March 31, 2018. 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 months ended March 31, 2018 the Company recognized approximately $95,000 of revenues related to network fees, warranty contracts, and product sales, which was included in deferred revenues as of December 31, 2017.

During the three months ended March 31, 2018, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. The Company has elected not to disclose information about remaining performance obligations pertaining to contracts with an original expected length of one year or less, as permitted under the guidance.

Concentrations

CONCENTRATIONS

There were no revenue concentrations during the three months ended March 31, 2018. During the three months ended March 31, 2017, revenues generated from Entity A represented 10% of the Company’s total revenue. As of March 31, 2018 and December 31, 2017, accounts receivable from Entity A were less than 10% of total accounts receivable. As of March 31, 2018 and December 31, 2017, accounts receivable from Entity B was approximately 39% and 32%, respectively, of total accounts receivable.

Net Loss Per Common Share

NET LOSS PER COMMON SHARE

Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss 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 Months Ended
	March 31
	2018		2017
Convertible preferred stock		3,847,756		1,065,289
Warrants		10,913,658		1,118,018
Options		106,808		148,233
Convertible notes		-		17,002
Total potentially dilutive shares		14,868,222		2,348,542