Quarterly report pursuant to Section 13 or 15(d)

BUSINESS COMBINATION

v3.21.2
BUSINESS COMBINATION
6 Months Ended
Jun. 30, 2021
Business Combination and Asset Acquisition [Abstract]  
BUSINESS COMBINATION

3. BUSINESS COMBINATION

 

On May 10, 2021, pursuant to a Share Purchase Agreement dated April 21, 2021, the Company closed on the acquisition from the shareholders of Blue Corner NV, a Belgian company (“Blue Corner”), of all of the outstanding capital stock of Blue Corner. Headquartered in Belgium, with sales representative offices in several other European cities, Blue Corner owns and operates an EV charging network across Europe. The acquisition of Blue Corner was made to enter the European market and provide an opportunity to expand the Company’s footprint in this region. The purchase price for the acquisition of all of Blue Corner’s outstanding capital stock was approximately $23.8 million (or €20 million), consisting of approximately $23 million (or €19 million) in cash and approximately $0.8 million (€0.7 million) represented by 32,382 shares of the Company’s common stock (the “Consideration Shares”). The fair value of Consideration Shares was calculated based on the average price of the Company’s common stock during the 30 consecutive trading days immediately preceding the closing date of the Share Purchase Agreement, which equaled $37.66 (or €30.88) per share, reduced by a discount for illiquidity due to the 12 month lockup that exists on any sales or transfers. The Company also agreed to execute management agreements with key Blue Corner personnel, including equity incentive packages consisting of additional shares of our common stock which is compensatory and not included in the purchase price for this acquisition. The Company entered an escrow agreement pursuant to the Share Purchase Agreement, under which the Company paid approximately $2.1 million (€1.725 million) of the purchase price into an escrow account for a period of up to 18 months following the closing to cover any losses or damages the Company may incur by reason of any misrepresentation or breach of warranty by Blue Corner under the Share Purchase Agreement.

 

In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for Blue Corner, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. The final determination of the fair value of assets and liabilities will be completed within the one-year measurement period as required by ASC Topic 805, Business Combinations (“ASC 805”). The Blue Corner acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, accounts receivable, and certain fixed assets.

 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

3. BUSINESS COMBINATION – CONTINUED

 

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

 

Purchase price allocation        
         
Purchase Consideration:        
Cash   $

22,985,041

 
Common stock     790,292  
         
Total Purchase Consideration   $

23,775,333

 
         
Less:        
         
Fixed assets     1,229,291  
Trade name     342,744  
Customer relationships     1,800,013  
Favorable leases     291,697  
Internally developed technology     1,232,420  
Non-compete agreements     148,279  
Other liabilities     135,234  
Other assets     241,087  
Debt-free net working capital     590,471  
         
Fair Value of Identified Net Assets     6,011,236  
         
Remaining Unidentified Goodwill Value   $ 17,764,097  

 

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.

 

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

 

Current assets:      
Cash   $ 244,006  
Accounts receivable     2,594,894  
Prepaid expenses and other current assets     373,588  
Inventory     1,418,784  
         
Total current assets     4,631,272  
         
Less current liabilities:        
Accounts payable and accrued expenses     3,569,320  
Deferred revenue     471,481  
         
Total current liabilities     4,040,801  
         
Debt free net working capital   $ 590,471  

 

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 $17,764,097 from the acquisition of Blue Corner is not expected to be deductible for income tax purposes.

 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

3. BUSINESS COMBINATION – CONTINUED

 

The condensed consolidated financial statements of the Company include the results of operations from Blue Corner as of May 10, 2021 to June 30, 2021 and does not include results of operations for the three and six months ended June 30, 2020. The results of operations of Blue Corner from May 10, 2021 to June 30, 2021 included revenues of $1,915,144 and a net loss of $301,030.

 

The following table presents the unaudited, pro forma consolidated results of operations for the three and six months ended June 30, 2021 as if the acquisition of Blue Corner had occurred at the beginning of fiscal year 2020. The pro forma information provided below is compiled from the pre-acquisition financial information of Blue Corner and includes pro forma adjustments for interest expense and 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 2020 or (ii) future results of operations:

 

    2021     2020     2021     2020  
   

For the Three Months Ended

June 30,

   

For the Six Months Ended

June 30,

 
    2021     2020     2021     2020  
    (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  
Revenues   $ 7,767,537     $ 2,806,588     $ 11,551,160     $ 4,643,681  
Net loss   $ (13,803,519 )   $ (3,495,978 )   $ (22,027,649 )   $ (7,183,939 )

 

The above pro forma information includes pro forma adjustments to remove the effect of interest expense recognized in the results of operations of Blue Corner during the three and six months ended June 30, 2021 of $90,008 and $286,574, respectively, and three and six months ended June 30, 2020 of $220,202.