ITEM
1.
|
FINANCIAL
STATEMENTS.
|
BLINK
CHARGING CO. AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets
|
|
June
30, 2020
|
|
|
December
31, 2019
|
|
|
|
(unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
3,821,723
|
|
|
$
|
4,168,837
|
|
Marketable securities
|
|
|
160,748
|
|
|
|
2,956,989
|
|
Subscription receivable
|
|
|
600,808
|
|
|
|
-
|
|
Accounts receivable
and other receivables, net
|
|
|
368,006
|
|
|
|
206,770
|
|
Inventory, net
|
|
|
2,531,389
|
|
|
|
2,157,295
|
|
Prepaid
expenses and other current assets
|
|
|
454,439
|
|
|
|
671,033
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
|
7,937,113
|
|
|
|
10,160,924
|
|
Property and equipment, net
|
|
|
2,730,604
|
|
|
|
1,347,309
|
|
Operating lease right-of-use asset
|
|
|
166,992
|
|
|
|
258,102
|
|
Intangible assets, net
|
|
|
76,725
|
|
|
|
107,415
|
|
Other assets
|
|
|
73,743
|
|
|
|
73,743
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
10,985,177
|
|
|
$
|
11,947,493
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
3,091,602
|
|
|
$
|
2,372,212
|
|
Accrued expenses
|
|
|
749,974
|
|
|
|
897,548
|
|
Accrued issuable
equity
|
|
|
194,351
|
|
|
|
257,686
|
|
Notes payable
|
|
|
370,427
|
|
|
|
10,000
|
|
Current portion
of operating lease liabilities
|
|
|
182,436
|
|
|
|
190,823
|
|
Other current liabilities
|
|
|
79,262
|
|
|
|
73,598
|
|
Current
portion of deferred revenue
|
|
|
280,378
|
|
|
|
567,613
|
|
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
|
4,948,430
|
|
|
|
4,369,480
|
|
Operating lease liabilities, non-current
portion
|
|
|
-
|
|
|
|
84,838
|
|
Notes payable, non-current portion
|
|
|
495,239
|
|
|
|
-
|
|
Other liabilities
|
|
|
109,679
|
|
|
|
58,164
|
|
Deferred revenue,
non-current portion
|
|
|
-
|
|
|
|
565
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
5,553,348
|
|
|
|
4,513,047
|
|
|
|
|
|
|
|
|
|
|
Series B Convertible Preferred
Stock, 10,000 shares designated, 0 issued and outstanding as of June 30, 2020 and December 31, 2019
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note
10)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value,
40,000,000 shares authorized;
|
|
|
|
|
|
|
|
|
Series A Convertible
Preferred Stock, 20,000,000 shares designated, 0 shares issued and outstanding as of June 30, 2020 and December 31, 2019
|
|
|
-
|
|
|
|
-
|
|
Series
C Convertible Preferred Stock, 250,000 shares designated, 0 shares issued and outstanding as
of June 30, 2020 and December 31, 2019
|
|
|
-
|
|
|
|
-
|
|
Series D Convertible
Preferred Stock, 13,000 shares designated, 0 and 5,125 shares issued and outstanding as of June 30, 2020 and December 31,
2019, respectively
|
|
|
-
|
|
|
|
5
|
|
Common stock, $0.001 par value, 500,000,000
shares authorized, 29,683,637 and 26,322,583 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively
|
|
|
29,684
|
|
|
|
26,323
|
|
Additional paid-in
capital
|
|
|
180,832,982
|
|
|
|
176,729,926
|
|
Accumulated other
comprehensive income
|
|
|
64,757
|
|
|
|
183,173
|
|
Accumulated
deficit
|
|
|
(175,495,594
|
)
|
|
|
(169,504,981
|
)
|
|
|
|
|
|
|
|
|
|
Total
Stockholders’ Equity
|
|
|
5,431,829
|
|
|
|
7,434,446
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders’ Equity
|
|
$
|
10,985,177
|
|
|
$
|
11,947,493
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BLINK
CHARGING CO. AND SUBSIDIARIES
Condensed
Consolidated Statements of Operations
(unaudited)
|
|
For
The Three Months Ended
|
|
|
For
The Six Months Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charging
service revenue - company-owned charging stations
|
|
$
|
87,250
|
|
|
$
|
294,985
|
|
|
$
|
406,874
|
|
|
$
|
619,880
|
|
Product sales
|
|
|
1,274,354
|
|
|
|
282,014
|
|
|
|
2,051,777
|
|
|
|
385,218
|
|
Network fees
|
|
|
71,271
|
|
|
|
76,359
|
|
|
|
126,830
|
|
|
|
150,829
|
|
Warranty
|
|
|
8,419
|
|
|
|
19,284
|
|
|
|
16,479
|
|
|
|
35,792
|
|
Grant and rebate
|
|
|
3,912
|
|
|
|
6,525
|
|
|
|
8,491
|
|
|
|
13,239
|
|
Other
|
|
|
127,404
|
|
|
|
36,661
|
|
|
|
261,023
|
|
|
|
88,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenues
|
|
|
1,572,610
|
|
|
|
715,828
|
|
|
|
2,871,474
|
|
|
|
1,293,218
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of charging
services - company-owned charging stations
|
|
|
35,874
|
|
|
|
37,283
|
|
|
|
65,488
|
|
|
|
67,012
|
|
Host provider fees
|
|
|
28,086
|
|
|
|
81,037
|
|
|
|
113,515
|
|
|
|
163,076
|
|
Cost of product
sales
|
|
|
922,808
|
|
|
|
87,800
|
|
|
|
1,391,876
|
|
|
|
301,120
|
|
Network costs
|
|
|
147,290
|
|
|
|
86,303
|
|
|
|
357,622
|
|
|
|
163,526
|
|
Warranty and repairs
and maintenance
|
|
|
17,734
|
|
|
|
83,543
|
|
|
|
132,643
|
|
|
|
172,415
|
|
Depreciation
and amortization
|
|
|
6,938
|
|
|
|
25,318
|
|
|
|
87,728
|
|
|
|
57,567
|
|
Total
Cost of Revenues
|
|
|
1,158,730
|
|
|
|
401,284
|
|
|
|
2,148,872
|
|
|
|
924,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
413,880
|
|
|
|
314,544
|
|
|
|
722,602
|
|
|
|
368,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
2,305,738
|
|
|
|
1,674,042
|
|
|
|
4,420,205
|
|
|
|
3,277,527
|
|
General and administrative
expenses
|
|
|
670,653
|
|
|
|
485,055
|
|
|
|
1,316,536
|
|
|
|
742,191
|
|
Other
operating expenses
|
|
|
459,418
|
|
|
|
538,768
|
|
|
|
1,026,618
|
|
|
|
1,047,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Operating Expenses
|
|
|
3,435,809
|
|
|
|
2,697,865
|
|
|
|
6,763,359
|
|
|
|
5,067,311
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
From Operations
|
|
|
(3,021,929
|
)
|
|
|
(2,383,321
|
)
|
|
|
(6,040,757
|
)
|
|
|
(4,698,809
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income,
net
|
|
|
5,257
|
|
|
|
22,081
|
|
|
|
21,110
|
|
|
|
38,153
|
|
Gain on settlement
of debt
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
310,000
|
|
Gain on settlement
of accounts payable, net
|
|
|
19,086
|
|
|
|
107,923
|
|
|
|
19,086
|
|
|
|
160,423
|
|
Change in fair value
of derivative and other accrued liabilities
|
|
|
(16,560
|
)
|
|
|
(35,494
|
)
|
|
|
(16,039
|
)
|
|
|
(90,236
|
)
|
Other
income
|
|
|
(15,367
|
)
|
|
|
51,591
|
|
|
|
25,987
|
|
|
|
149,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Other (Expense) Income
|
|
|
(7,584
|
)
|
|
|
146,101
|
|
|
|
50,144
|
|
|
|
567,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(3,029,513
|
)
|
|
$
|
(2,237,220
|
)
|
|
$
|
(5,990,613
|
)
|
|
$
|
(4,130,847
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.11
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.16
|
)
|
Diluted
|
|
$
|
(0.11
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.22
|
)
|
|
$
|
(0.16
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common
Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
28,327,701
|
|
|
|
26,234,376
|
|
|
|
27,584,918
|
|
|
|
26,202,898
|
|
Diluted
|
|
|
28,327,701
|
|
|
|
26,234,376
|
|
|
|
27,584,918
|
|
|
|
26,202,898
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BLINK
CHARGING CO. AND SUBSIDIARIES
Condensed
Consolidated Statements of Comprehensive Loss
(unaudited)
|
|
For
the Three Months Ended
|
|
|
For
the Six Months Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(3,029,513
|
)
|
|
$
|
(2,237,220
|
)
|
|
$
|
(5,990,613
|
)
|
|
$
|
(4,130,847
|
)
|
Other Comprehensive
Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclassification
adjustments of loss (gain) on sale of marketable securities included in net loss
|
|
|
15,188
|
|
|
|
-
|
|
|
|
(98,337
|
)
|
|
|
-
|
|
Change
in fair value of marketable securities
|
|
|
47,864
|
|
|
|
40,321
|
|
|
|
(20,079
|
)
|
|
|
141,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Comprehensive
Loss
|
|
$
|
(2,966,461
|
)
|
|
$
|
(2,196,899
|
)
|
|
$
|
(6,109,029
|
)
|
|
$
|
(3,989,840
|
)
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BLINK
CHARGING CO. AND SUBSIDIARIES
Condensed
Consolidated Statement of Changes in Stockholders’ Equity
For
the Six Months Ended June 30, 2020
(unaudited)
|
|
Convertible
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Preferred
Stock
|
|
|
|
|
|
Additional
|
|
|
Other
|
|
|
|
|
|
Total
|
|
|
|
Series
D
|
|
|
Common
Stock
|
|
|
Paid-In
|
|
|
Comprehensive
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Income
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- January 1, 2020
|
|
|
5,125
|
|
|
$
|
5
|
|
|
|
26,322,583
|
|
|
$
|
26,323
|
|
|
$
|
176,729,926
|
|
|
$
|
183,173
|
|
|
$
|
(169,504,981
|
)
|
|
$
|
7,434,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
276,675
|
|
|
|
-
|
|
|
|
-
|
|
|
|
276,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
upon conversion of Series D convertible preferred stock
|
|
|
(5,125
|
)
|
|
|
(5
|
)
|
|
|
1,642,628
|
|
|
|
1,642
|
|
|
|
(1,637
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(181,468
|
)
|
|
|
-
|
|
|
|
(181,468
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,961,100
|
)
|
|
|
(2,961,100
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - March 31,
2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
27,965,211
|
|
|
$
|
27,965
|
|
|
$
|
177,004,964
|
|
|
$
|
1,705
|
|
|
$
|
(172,466,081
|
)
|
|
$
|
4,568,553
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued
in public offering [1]
|
|
|
-
|
|
|
|
-
|
|
|
|
1,660,884
|
|
|
|
1,661
|
|
|
|
3,755,948
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,757,609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
57,542
|
|
|
|
58
|
|
|
|
72,070
|
|
|
|
-
|
|
|
|
-
|
|
|
|
72,128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
63,052
|
|
|
|
-
|
|
|
|
63,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,029,513
|
)
|
|
|
(3,029,513
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- June 30, 2020
|
|
|
-
|
|
|
$
|
-
|
|
|
|
29,683,637
|
|
|
$
|
29,684
|
|
|
$
|
180,832,982
|
|
|
$
|
64,757
|
|
|
$
|
(175,495,594
|
)
|
|
$
|
5,431,829
|
|
[1]
Includes gross proceeds of $3,998,618 of which, less issuance costs of $241,009. As of June 30, 2020, $600,808 of net proceeds
had not been received by the Company and was included as a subscription receivable.
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BLINK
CHARGING CO. AND SUBSIDIARIES
Condensed
Consolidated Statement of Changes in Stockholders’ Equity
For
the Six Months Ended June 30, 2019
(unaudited)
|
|
Convertible
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Preferred
Stock
|
|
|
|
|
|
Additional
|
|
|
Other
|
|
|
|
|
|
Total
|
|
|
|
Series
D
|
|
|
Common
Stock
|
|
|
Paid-In
|
|
|
Comprehensive
|
|
|
Accumulated
|
|
|
Stockholders’
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Income
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- January 1, 2019
|
|
|
5,141
|
|
|
$
|
5
|
|
|
|
26,118,075
|
|
|
$
|
26,118
|
|
|
$
|
175,924,587
|
|
|
$
|
-
|
|
|
$
|
(159,856,481
|
)
|
|
$
|
16,094,229
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
51,724
|
|
|
|
52
|
|
|
|
118,684
|
|
|
|
-
|
|
|
|
-
|
|
|
|
118,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Restricted stock issued
in satisfaction of accrued issuable equity
|
|
|
-
|
|
|
|
-
|
|
|
|
56,948
|
|
|
|
57
|
|
|
|
199,831
|
|
|
|
-
|
|
|
|
-
|
|
|
|
199,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Common stock issued
upon conversion of Series D convertible preferred stock
|
|
|
(16
|
)
|
|
|
-
|
|
|
|
5,128
|
|
|
|
5
|
|
|
|
(5
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return and retirement
of common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(8,066
|
)
|
|
|
(8
|
)
|
|
|
8
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
100,686
|
|
|
|
-
|
|
|
|
100,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,893,627
|
)
|
|
|
(1,893,627
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - March 31,
2019
|
|
|
5,125
|
|
|
$
|
5
|
|
|
|
26,223,809
|
|
|
$
|
26,224
|
|
|
$
|
176,243,105
|
|
|
$
|
100,686
|
|
|
$
|
(161,750,108
|
)
|
|
$
|
14,619,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted stock issued
in satisfaction of accrued issuable equity
|
|
|
-
|
|
|
|
-
|
|
|
|
12,995
|
|
|
|
13
|
|
|
|
40,142
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
185,632
|
|
|
|
-
|
|
|
|
-
|
|
|
|
185,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
40,321
|
|
|
|
-
|
|
|
|
40,321
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,237,220
|
)
|
|
|
(2,237,220
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
- June 30, 2019
|
|
|
5,125
|
|
|
$
|
5
|
|
|
|
26,236,804
|
|
|
$
|
26,237
|
|
|
$
|
176,468,879
|
|
|
$
|
141,007
|
|
|
$
|
(163,987,328
|
)
|
|
$
|
12,648,800
|
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BLINK
CHARGING CO. AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows
(unaudited)
|
|
For
The Six Months Ended
|
|
|
|
June
30,
|
|
|
|
2020
|
|
|
2019
|
|
Cash Flows From Operating
Activities:
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(5,990,613
|
)
|
|
$
|
(4,130,847
|
)
|
Adjustments to reconcile
net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
195,622
|
|
|
|
115,426
|
|
Dividend and interest
income
|
|
|
77,309
|
|
|
|
-
|
|
Change in fair value
of derivative and other accrued liabilities
|
|
|
(16,039
|
)
|
|
|
(90,236
|
)
|
Provision for bad
debt
|
|
|
33,894
|
|
|
|
72,180
|
|
Gain on settlement
of debt
|
|
|
-
|
|
|
|
(310,000
|
)
|
(Benefit)/provision
for slow moving and obsolete inventory
|
|
|
7,646
|
|
|
|
197,240
|
|
Gain on settlement
of accounts payable, net
|
|
|
19,086
|
|
|
|
(160,423
|
)
|
Non-cash compensation:
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
(56,993
|
)
|
|
|
267,997
|
|
Options
|
|
|
388,388
|
|
|
|
126,033
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
and other receivables
|
|
|
(195,130
|
)
|
|
|
(156,659
|
)
|
Inventory
|
|
|
(1,393,376
|
)
|
|
|
(671,011
|
)
|
Prepaid expenses
and other current assets
|
|
|
177,427
|
|
|
|
163,775
|
|
Other assets
|
|
|
-
|
|
|
|
4,121
|
|
Accounts payable
and accrued expenses
|
|
|
612,840
|
|
|
|
(536,034
|
)
|
Lease liabilities
|
|
|
(93,225
|
)
|
|
|
2,376
|
|
Deferred
revenue
|
|
|
(287,800
|
)
|
|
|
(106,244
|
)
|
|
|
|
|
|
|
|
|
|
Total
Adjustments
|
|
|
(530,351
|
)
|
|
|
(1,081,459
|
)
|
|
|
|
|
|
|
|
|
|
Net
Cash Used In Operating Activities
|
|
|
(6,520,964
|
)
|
|
|
(5,212,306
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing
Activities:
|
|
|
|
|
|
|
|
|
Proceeds from sale
of marketable securities
|
|
|
2,600,516
|
|
|
|
-
|
|
Purchases
of property and equipment
|
|
|
(445,479
|
)
|
|
|
(203,357
|
)
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided By (Used In) Investing Activities
|
|
|
2,155,037
|
|
|
|
(203,357
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing
Activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance
of notes payable
|
|
|
855,666
|
|
|
|
-
|
|
Proceeds from sale
of common stock in public offering [1]
|
|
|
3,195,968
|
|
|
|
-
|
|
Payment
of financing liability in connection with internal use software
|
|
|
(32,821
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided By Financing Activities
|
|
|
4,018,813
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net
Decrease In Cash
|
|
|
(347,114
|
)
|
|
|
(5,415,663
|
)
|
|
|
|
|
|
|
|
|
|
Cash - Beginning
of Period
|
|
|
4,168,837
|
|
|
|
15,538,849
|
|
|
|
|
|
|
|
|
|
|
Cash - End of
Period
|
|
$
|
3,821,723
|
|
|
$
|
10,123,186
|
|
[1]
Includes gross proceeds of $3,379,106, less issuance costs of $183,138.
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BLINK
CHARGING CO. AND SUBSIDIARIES
Condensed
Consolidated Statements of Cash Flows — Continued
(unaudited)
|
|
For
The Six Months Ended
|
|
|
|
June
30,
|
|
|
|
2020
|
|
|
2019
|
|
Supplemental Disclosures of Cash Flow
Information:
|
|
|
|
|
|
|
Cash paid during the periods for:
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-cash investing
and financing activities:
|
|
|
|
|
|
|
|
|
Common
stock issued upon conversion of Series D convertible preferred stock
|
|
$
|
5
|
|
|
$
|
5
|
|
Return and retirement
of common stock
|
|
$
|
-
|
|
|
$
|
(8
|
)
|
Reduction of additional
paid-in capital for public offering issuance costs for public offering issuance costs that were previously paid
|
|
$
|
(39,167
|
)
|
|
$
|
-
|
|
Restricted stock
issued in satisfaction of accrued issuable equity
|
|
$
|
-
|
|
|
$
|
240,043
|
|
Change in fair value
of marketable securities
|
|
$
|
(20,079
|
)
|
|
$
|
141,007
|
|
Subscription receivable,
net of issuance costs of $18,704
|
|
$
|
600,808
|
|
|
$
|
-
|
|
Transfer of inventory
to property and equipment
|
|
$
|
(1,011,637
|
)
|
|
$
|
(59,548
|
)
|
The
accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1.
|
BUSINESS
ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES AND BASIS OF PRESENTATION
|
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 both residential and commercial EV charging equipment, enabling EV drivers to easily recharge at various location types.
Blink’s principal line of products and services is its Blink EV charging network (the “Blink Network”) and EV
charging equipment, also known as electric vehicle supply equipment (“EVSE”) and EV-related services. The Blink Network
is a proprietary cloud-based software that operates, maintains, and tracks the Blink EV charging stations and their associated
charging data. The Blink Network provides property owners, managers, and parking companies (“Property Partners”) with
cloud-based services that enable the remote monitoring and management of EV charging stations, and payment processing, and provides
EV drivers with vital station information including station location, availability, and applicable fees. Blink offers its Property
Partners a range of business models for EV charging equipment and services that generally fall into one of the three business
models below.
|
●
|
In
the Company’s comprehensive Turnkey business model, Blink owns and operates the EV charging equipment, undertakes and
manages the installation, maintenance and related services, and Blink retains substantially all of the EV charging revenue.
|
|
|
|
|
●
|
In
the Company’s Hybrid business model, the Property Partner incurs the installation costs, while Blink provides the charging
equipment. Blink operates and manages the EV charging station and provides connectivity of the charging station to the Blink
Network. As a result, Blink shares a greater portion of the EV charging revenue with the Property Partner than under the turnkey
model above.
|
|
|
|
|
●
|
In
the Company’s Host owned business model, the Property Partner purchases, owns and manages the Blink EV charging station,
and incurs the installation costs of the equipment, while Blink provides site recommendations, connectivity to the Blink Network
and optional maintenance services, and the Property Partner retains substantially all of the EV charging revenue.
|
|
|
|
|
●
|
In the Company’s Blink-as-a-service model,
the Company owns and operate the EV charging station, while the Property Partner incurs the installation cost. The Company
operates and manages the EV charging station and the Property Partner pays Blink a fixed monthly fee and keeps all the charging
revenues less network connectivity and processing fees.
|
The
Company has strategic partnerships across numerous transit/destination locations, including airports, auto dealers, healthcare/medical,
hotels, mixed-use, municipal locations, multifamily residential and condos, parks and recreation areas, parking lots, religious
institutions, restaurants, retailers, schools and universities, stadiums, supermarkets, transportation hubs, and workplace locations.
As of June 30, 2020, the Company had 15,151 charging stations deployed, of which, 5,385 were Level 2 commercial charging units,
102 were DC Fast Charging EV chargers and 1,193 were residential charging units. Additionally, as of June 30, 2020, the Company
had 305 Level 2 commercial charging units on other networks and there were also 8,166 non-networked, residential Blink EV charging
stations.
Risks
and Uncertainties
The
Company continues to closely monitor the impact on its business of the current outbreak of a novel strain of coronavirus (“COVID-19”).
The Company has taken 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 has experienced what it expects is a temporary reduction
in the usage of its charging stations, which has resulted in a decrease in its charging service revenue. While the Company has
not seen a significant adverse impact to its overall financial results from COVID-19, if the pandemic continues to cause significant
negative impacts to economic conditions, the Company’s results of operations, financial condition and liquidity could be
adversely impacted.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1.
|
BUSINESS
ORGANIZATION, NATURE OF OPERATIONS, RISKS AND UNCERTAINTIES AND BASIS OF PRESENTATION – CONTINUED
|
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 June 30, 2020 and for the three and six months then ended. The results of operations for the three
and six months ended June 30, 2020 are not necessarily indicative of the operating results for the full year ending December 31,
2020 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, 2019 and for the year then ended,
which were filed with the Securities and Exchange Commission (“SEC”) on April 2, 2020 as part of the Company’s
Annual Report on Form 10-K.
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
Since
the Annual Report for the year ended December 31, 2019, there have been no material changes to the Company’s significant
accounting policies, except as disclosed in this note.
LIQUIDITY
As
of June 30, 2020, the Company had cash, marketable securities, working capital and an accumulated deficit of $3,821,723, $160,748,
$2,988,683 and $175,495,594, respectively. During the three and six months ended June 30, 2020, the Company incurred a net loss
of $3,029,513 and $5,990,613, respectively. During the six months ended June 30, 2020, the Company used cash in operating activities
of $6,520,964.
Since April 17, 2020 and through August 10, 2020, the Company
sold 3,403,386 shares of common stock under an “at-the-market” equity offering program for aggregate gross proceeds
of approximately $17.8 million. See Note 8 – Stockholders’ Equity.
The Company expects that its cash on
hand will fund its operations for a least twelve months after the issuance date of these financial statements.
Since inception, the Company’s
operations have primarily been funded through proceeds received in equity and debt financings. The Company believes it has access
to capital resources and continues to evaluate additional financing opportunities. There is no assurance that the Company will
be able to obtain funds on commercially acceptable terms, if at all. 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.
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.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
|
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 June 30, 2020, the Company
had cash balances in excess of FDIC insurance limits of $2,922,949. As of December 31, 2019, the Company had cash balances in
excess of FDIC insurance limits of $3,494,360.
INVESTMENTS
Available-for-sale
debt 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 the Company’s investments as of June 30, 2020 and December 31, 2019:
|
|
June
30, 2020
|
|
|
December
31, 2019
|
|
|
|
|
|
|
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
Available- for-sale
investments
|
|
$
|
160,748
|
|
|
$
|
2,956,989
|
|
The
following is a summary of the unrealized gains, losses, and fair value by investment type as of June 30, 2020 and December 31,
2019:
|
|
June
30, 2020
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair
Value
|
|
Fixed
income
|
|
$
|
180,827
|
|
|
$
|
-
|
|
|
$
|
(20,079
|
)
|
|
$
|
160,748
|
|
|
|
December
31, 2019
|
|
|
|
Amortized
Cost
|
|
|
Gross
Unrealized
Gains
|
|
|
Gross
Unrealized
Losses
|
|
|
Fair
Value
|
|
Fixed
income
|
|
$
|
2,773,816
|
|
|
$
|
183,173
|
|
|
$
|
-
|
|
|
$
|
2,956,989
|
|
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
|
SUBSCRIPTION
RECEIVABLE
The
Company records stock issuances at the effective date. If the subscription is not funded upon issuance, the Company records a
stock subscription receivable as an asset on a balance sheet. When stock subscription receivables are not received prior to the
issuance of financial statements at a reporting date in satisfaction of the requirements under FASB ASC 505-10-45-2, the stock
subscription receivable is reclassified as a contra account to stockholders’ equity on the balance sheet.
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. Other revenues are also comprised of sales
related to alternative fuel credits.
|
The
following table summarizes revenue recognized under ASC 606 in the condensed consolidated statements of operations:
|
|
For
The Three Months Ended
|
|
|
For
The Six Months Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues - Recognized
at a Point in Time:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charging
service revenue - company-owned charging stations
|
|
$
|
87,250
|
|
|
$
|
294,985
|
|
|
$
|
406,874
|
|
|
$
|
619,880
|
|
Product sales
|
|
|
1,274,354
|
|
|
|
282,014
|
|
|
|
2,051,777
|
|
|
|
385,218
|
|
Other
|
|
|
127,404
|
|
|
|
36,661
|
|
|
|
261,023
|
|
|
|
88,260
|
|
Total
Revenues - Recognized at a Point in Time
|
|
|
1,489,008
|
|
|
|
613,660
|
|
|
|
2,719,674
|
|
|
|
1,093,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues - Recognized
Over a Period of Time:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Network
and other fees
|
|
|
79,690
|
|
|
|
95,643
|
|
|
|
143,309
|
|
|
|
186,621
|
|
Total
Revenues - Recognized Over a Period of Time
|
|
|
79,690
|
|
|
|
95,643
|
|
|
|
143,309
|
|
|
|
186,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenue Under ASC 606
|
|
$
|
1,568,698
|
|
|
$
|
709,303
|
|
|
$
|
2,862,983
|
|
|
$
|
1,279,979
|
|
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 June 30, 2020, the Company had $204,142 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 June 30, 2020. 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 six months ended June 30, 2020, the Company recognized $76,039 and $139,660, respectively, of revenues related to
network fees and warranty contracts, which were included in deferred revenues as of December 31, 2019. During the three and six
months ended June 30, 2020, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in
previous periods.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
|
REVENUE
RECOGNITION – CONTINUED
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 June 30, 2020 and 2019, the Company recognized
$3,912 and $6,525, respectively, related to grant and rebate revenue. During the six months ended June 30, 2020 and 2019, the
Company recognized $8,491 and $13,239, respectively, related to grant and rebate revenue. At June 30, 2020 and December 31, 2019,
there was $75,179 and $83,670, respectively, of deferred revenues attributable to grants and rebates.
CONCENTRATIONS
As
of June 30, 2020 and December 31, 2019, accounts receivable from a significant customer was 10% and 11% of accounts receivable,
respectively. During the three and six months ended June 30, 2020, revenues from one significant customer represented
43% and 38%, respectively, of total revenues. During the three and six months ended June 30, 2020, revenues from another significant
customer represented 11% and 10%, respectively, of total revenues. There were no revenue concentrations during the three and six
months ended June 30, 2019.
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:
|
|
For
the Three and Six Months Ended
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Convertible preferred stock
|
|
|
-
|
|
|
|
1,642,628
|
|
Warrants
|
|
|
7,756,043
|
|
|
|
6,841,049
|
|
Options
|
|
|
646,715
|
|
|
|
135,741
|
|
Unvested restricted
common stock
|
|
|
109,733
|
|
|
|
-
|
|
Total potentially
dilutive shares
|
|
|
8,512,491
|
|
|
|
8,619,418
|
|
INCOME
TAXES
On
March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”).
The CARES Act, amongst other things, includes provisions relating to refundable payroll tax credits, deferment of employer side
social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net
interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Under
ASC 740, the effects of new legislation are recognized upon enactment. Accordingly, the CARES Act is effective beginning in the
quarter ended March 31, 2020. The Company does not currently believe that such provisions will have a material impact on the Company’s
condensed consolidated financial statements.
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.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
|
RECENTLY
ISSUED ACCOUNTING STANDARDS
In
April 2019, the Financial Accounting Standards Board (‘FASB”) issued Accounting Standards Update (“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 adoption of this ASU effective January 1, 2020 did not have a material impact on the
Company’s consolidated financial statements.
3.
|
PREPAID
EXPENSES AND OTHER CURRRENT ASSETS
|
As
of June 30, 2020, prepaid expenses and other current assets primarily consisted of alternative fuel credits of $199,069. As of
December 31, 2019, alternative fuel credits were $476,992.
As
of June 30, 2020 and December 31, 2019, the Company had a remaining purchase commitment of $3,599,503 and $3,156,629, respectively,
which will become payable upon the supplier’s delivery of the charging stations. The purchase commitments were made primarily
for future sales and deployments of these charging stations.
Accrued
expenses consist of the following:
|
|
June
30, 2020
|
|
|
December
31, 2019
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
Accrued host fees
|
|
$
|
114,262
|
|
|
$
|
108,683
|
|
Accrued professional, board and other
fees
|
|
|
29,500
|
|
|
|
40,518
|
|
Accrued wages
|
|
|
182,474
|
|
|
|
295,250
|
|
Warranty payable
|
|
|
14,000
|
|
|
|
12,000
|
|
Accrued income, property and sales taxes
payable
|
|
|
395,161
|
|
|
|
417,669
|
|
Other accrued
expenses
|
|
|
14,577
|
|
|
|
23,428
|
|
Total accrued
expenses
|
|
$
|
749,974
|
|
|
$
|
897,548
|
|
5.
|
ACCRUED
ISSUABLE EQUITY
|
Accrued
issuable equity consists of the following:
|
|
June
30, 2020
|
|
|
December
31, 2019
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
Common stock
|
|
$
|
155,023
|
|
|
$
|
252,584
|
|
Options
|
|
|
18,187
|
|
|
|
-
|
|
Warrants
|
|
|
21,141
|
|
|
|
5,102
|
|
Total accrued
issuable equity
|
|
$
|
194,351
|
|
|
$
|
257,686
|
|
See
Note 8 – Stockholders’ Equity for additional information.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On
May 7, 2020, the Company received $855,666 in connection with a loan (the “PPP Loan”) under the CARES Act Paycheck
Protection Program (the “PPP”). The PPP provides for loans to qualifying businesses for amounts of up to 2.5 times
their average monthly payroll expenses. The loan principal and accrued interest are forgivable, as long as the borrower uses loan
proceeds for eligible purposes during the eight weeks following disbursement, such as payroll, benefits, rent, and utilities,
and maintains its payroll levels. The amount of loan forgiveness is reduced if the borrower terminates employees or reduces salaries
during this eight-week period, subject to certain qualifications and exclusions. The unforgiven portion of the PPP loan is payable
over two years at an interest rate of 1%, with a deferral of payments for the first seven months. The Company is using PPP proceeds
it received for purposes consistent with PPP criteria. While the Company believes its use of PPP loan proceeds should meet the
conditions for forgiveness of the loan, it cannot provide assurance that it will not take actions that may cause the Company to
be ineligible for loan forgiveness in whole or in part or that PPP eligibility requirements may not change that would result in
making the Company or the Company’s use of the PPP proceeds ineligible. As of June 30, 2020, the Company had not received
any notice of forgiveness of the PPP Loan. Once an amount is forgiven under the PPP Loan, the Company intends to recognize a gain
on forgiveness of note payable in the period in which it obtained forgiveness. As of June
30, 2020, the Company utilized $764,025 of the proceeds of the PPP Loan. The remaining proceeds under the PPP Loan were utilized
subsequent to June 30, 2020.
On
June 5, 2020, the President signed into law the Payroll Protection Program Flexibility Act (“PPP Flexibility Act”)
which made several critical changes to the PPP, which was created under the CARES Act. Under the act, the deferral period was
extended to the date the lender received the forgiven amount from SBA. If the Company does not apply for loan forgiveness within
10 months following the end of the covered period, the deferral period will end on the date that is 10 months after the last day
of the covered period. Following enactment of the CARES Act, SBA issued guidance requiring
that no more than 25 percent of the forgiven amount be attributable to non-payroll costs. This meant that if payroll costs did
not account for at least 75 percent of the total costs eligible for forgiveness, then the borrower’s loan forgiveness would
be capped at the 75 percent level. The PPP Flexibility Act loosens this requirement and increases the percentage for non-payroll
costs to up to 40 percent. However, the actual language of the PPP Flexibility Act requiring a borrower to use at least 60 percent
of the loan amount for payroll costs.
7.
|
FAIR
VALUE MEASUREMENT
|
Assumptions
utilized in the valuation of Level 3 liabilities are described as follows:
|
|
For
the Three Months Ended
|
|
|
For
the Six Months Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-free interest rate
|
|
|
0.16%-1.69
|
%
|
|
|
1.88%
- 2.45
|
%
|
|
|
0.16%-1.69
|
%
|
|
|
1.88%
- 2.63
|
%
|
Contractual term (years)
|
|
|
1.00-8.00
|
|
|
|
1.00
- 10.00
|
|
|
|
1.00-8.00
|
|
|
|
1.00
- 10.00
|
|
Expected volatility
|
|
|
93%-138
|
%
|
|
|
106%
- 139
|
%
|
|
|
78%-138
|
%
|
|
|
106%
- 140
|
%
|
Expected dividend yield
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
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:
Warrants Payable
|
|
|
|
Beginning balance as of January 1, 2020
|
|
$
|
5,102
|
|
Change in fair
value of warrants payable
|
|
|
16,039
|
|
Ending balance as of June 30, 2020
|
|
$
|
21,141
|
|
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
7.
|
FAIR
VALUE MEASUREMENT – CONTINUED
|
Assets
and liabilities measured at fair value on a recurring or nonrecurring basis are as follows:
|
|
June
30, 2020
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Alternative fuel credits
|
|
$
|
-
|
|
|
$
|
199,069
|
|
|
$
|
-
|
|
|
$
|
199,069
|
|
Marketable securities
|
|
|
508,871
|
|
|
|
-
|
|
|
|
-
|
|
|
|
508,871
|
|
Total assets
|
|
$
|
508,871
|
|
|
$
|
199,069
|
|
|
$
|
-
|
|
|
$
|
707,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants payable
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
21,141
|
|
|
$
|
21,141
|
|
Total liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
21,141
|
|
|
$
|
21,141
|
|
|
|
December
31, 2019
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Total
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Alternative fuel credits
|
|
$
|
-
|
|
|
$
|
476,992
|
|
|
$
|
-
|
|
|
$
|
476,992
|
|
Marketable securities
|
|
|
3,150,332
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,150,332
|
|
Total assets
|
|
$
|
3,150,332
|
|
|
$
|
476,992
|
|
|
$
|
-
|
|
|
$
|
3,627,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants payable
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
5,102
|
|
|
$
|
5,102
|
|
Total liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
5,102
|
|
|
$
|
5,102
|
|
AT-THE-MARKET
OFFERING
On April 17, 2020, the Company entered
into a sales agreement (“Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”) to conduct an
“at-the-market” equity offering program (the “ATM”), 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 $20,000,000 (the “Shares”)
through the Agent. Subject to the terms and conditions of the Sales Agreement, the Agent will use its commercially reasonable
efforts to sell the Shares from time to time, based upon the Company’s instructions. The Company has provided the Agent
with customary indemnification rights, and the Agent will be entitled to an aggregate fixed commission of 3.0% of the gross proceeds
from Shares sold. Sales of the Shares under the Sales Agreement are made in transactions that are deemed to be “at-the-market
offerings” as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made by means of ordinary
brokers’ transactions, including on the Nasdaq Capital Market, at market prices or as otherwise agreed to with the Agent.
A “shelf” registration statement on Form S-3 for the Shares was filed with the SEC, which became effective on September
16, 2019, and a prospectus supplement thereto was filed with the SEC on April 17, 2020.
Since April 17, 2020 and through June
30, 2020, the Company sold an aggregate of 1,660,884 shares of common stock under the ATM for aggregate gross proceeds of $3,998,618,
less issuance costs of $241,009 which was recorded as a reduction to additional paid-in capital. As of June 30, 2020, $600,808
of net proceeds had not been received by the Company and was included as a subscription receivable on the accompanying balance
sheet. Subsequent to June 30, 2020, the Company collected the subscription receivable in full.
Since April 17, 2020 and through August 10, 2020, the Company
sold 3,403,386 shares of common stock under an “at-the-market” equity offering program for aggregate gross proceeds
of approximately $17.8 million.
PREFERRED
STOCK
During
the six months ended June 30, 2020, a holder elected to convert 5,125 shares of Series D Convertible Preferred Stock into 1,642,628
shares of the Company’s common stock at a conversion price of $3.12 per share. The Company determined that the Series D
Convertible Preferred Stock did not include a beneficial conversion feature.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
8.
|
STOCKHOLDERS’
EQUITY – CONTINUED
|
COMMON
STOCK
During
April 2020, the Company issued 47,542 shares of common stock with an aggregate issuance date fair value of $87,000 as compensation
to certain officers of the Company.
During
June 2020, the Company issued 10,000 shares of common stock with an aggregate issuance date fair value of $23,500 as compensation
to a consultant.
STOCK
OPTIONS
During
April 2020, the Company granted five-year options to purchase an aggregate of 160,416 shares of common stock to executives with
an exercise prices ranging from of $1.83-$2.01 per share. 54,325 options will vest one year from the date of grant, 53,433 options
will vest the second year and 52,658 will vest the third year. The options had an aggregate grant date fair value of $180,000
which will be recognized over the vesting period.
During
June 2020, the Company granted five-year options to purchase an aggregate of 150,000 shares of common stock to executives with
an exercise price of $2.20 per share. One-third of the options will vest on February 7, 2021, the second third will vest on February
7, 2022 and the final third will vest on February 7, 2023. The options had an aggregate grant date fair value of $298,911 which
will be recognized over the vesting period.
STOCK-BASED
COMPENSATION
The
Company recognized stock-based compensation expense related to common stock, stock options and warrants for the three and six
months ended June 30, 2020 of $104,034 and $331,395, respectively, and for the three and six months ended June 30, 2019 of $283,394
and $394,030, respectively, which is included within compensation expense on the condensed consolidated statements of operations.
As of June 30, 2020, there was $709,951 of unrecognized stock-based compensation expense that will be recognized over the weighted
average remaining vesting period of 1.6 years.
9.
|
RELATED
PARTY TRANSACTIONS
|
TRANSACTIONS
WITH PALISADES CAPITAL MANAGEMENT LLC
Mr.
Engel is currently a consultant to Palisades Capital Management LLC which serves as an investment advisor with regard to the Company’s
marketable securities portfolio. During the three and six months ended June 30, 2020, the Company paid Palisades Capital Management
LLC fees of $4,930 and $12,827, respectively. No fees were paid during the three and six months ended June 30, 2019.
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. The Company owns 40% of the Entity while the other three entities own
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 six months ended June 30, 2020, the Company recognized sales of approximately $174,799 and $272,964, respectively,
to Hellas. No sales were recognized during the three and six months ended June 30, 2019. As of June 30, 2020 and December 31,
2019, the Company had a receivable from Hellas of approximately $174,000 and $42,000, respectively.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
OPERATING
LEASES
As
of June 30, 2020, the Company had no leases that were classified as a financing lease. As of June 30, 2020, the Company did not
have additional operating and financing leases that have not yet commenced.
Total
operating lease expenses for the three and six months ended June 30, 2020 were $120,460 and $234,059, respectively, and for the
three and six months ended June 30, 2019 were $42,470 and $80,610, respectively, and are recorded in other operating expenses
on the condensed consolidated statements of operations.
Supplemental
cash flows information related to leases was as follows:
|
|
For
The Six Months Ended
|
|
|
|
June
30,
|
|
|
|
2020
|
|
|
2019
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
|
Operating
cash flows from operating leases
|
|
$
|
166,963
|
|
|
$
|
80,610
|
|
|
|
|
|
|
|
|
|
|
Right-of-use assets obtained in exchange
for lease obligations:
|
|
|
|
|
|
|
|
|
Operating leases
|
|
$
|
-
|
|
|
$
|
266,103
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Remaining Lease Term
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
0.92
|
|
|
|
2.03
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Discount Rate
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
6.0
|
%
|
|
|
6.0
|
%
|
Future
minimum payments under non-cancellable leases as of June 30, 2020 were as follows:
For
the Years Ending December 31,
|
|
Amount
|
|
|
|
|
|
2020
|
|
$
|
104,182
|
|
2021
|
|
|
86,819
|
|
Total future minimum
lease payments
|
|
|
191,001
|
|
Less:
imputed interest
|
|
|
(8,565
|
)
|
Total
|
|
$
|
182,436
|
|
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
11.
|
COMMITMENTS
AND CONTINGENCIES
|
JAMES
CHRISTODOULOU TERMINATION
Effective
March 13, 2020, the Company terminated the employment of the Company’s President and Chief Operating Officer, James Christodoulou.
No amounts are owed to Mr. Christodoulou pursuant to the terms of his employment letter.
LITIGATION
AND DISPUTES
In
July 2017, the Company was sued by Zwick and Banyai PLLC and Jack Zwick. The case alleges a breach of contract and unjust enrichment
for failure to pay invoices in the aggregate amount of $53,069 for services rendered, plus interest and costs. The Company is
one of six defendants in the case.
On
October 26, 2018, the Company filed amended affirmative defenses. Following that, there was no record activity in the case and
on September 20, 2019, the Court entered its Notice of Lack of Prosecution and Order to Appear for Hearing on November 19, 2019.
When Plaintiffs failed to appear for the hearing, the Court dismissed the case. A couple of weeks later, Plaintiffs filed a motion
to vacate the dismissal, asserting that they had moved offices in June of 2019, and were never provided notice of the hearing
at their new address. At the January 23, 2020 hearing on Plaintiffs’ motion to vacate, the Court vacated the dismissal over
the objections of counsel and the case is once again pending.
On January 31, 2020, the Company’s
new attorney for this matter filed a notice of appearance and took over as defense counsel. On February 11, 2020, Jack Zwick and
Zwick & Banyai PLLC each served a Request for Production of Documents on the Company, and Zwick & Banyai PLLC served a
set of 14 Interrogatories. On July 20, 2020 the Company settled this case for approximately $48,000. On July 24, 2020, the Company
was dropped as a party from the case.
On March 26, 2020, James Christodoulou,
the former President and Chief Operating Officer of the Company, filed a Complaint in the Miami-Dade County Court, State of Florida,
James Christodoulou vs. Blink Charging Co. et al. The Complaint asserts claims against the Company, as well as Michael Farkas,
Aviv Hillo and Yechiel Baron. Mr. Farkas is Chairman of the Board and Chief Executive Officer. Messrs. Hillo and Baron are the
Company’s General Counsel and Assistant General Counsel, respectively. The Complaint asserts claims for breach of contract
in connection with Mr. Christodoulou’s termination by the Company in March 2020, as well as claims under Florida state law
for alleged retaliatory termination and slander. Among other things, Mr. Christodoulou asserts that the Company erred in terminating
his employment for cause. The Complaint seeks unspecified monetary damages but alleges that such damages exceed $1 million. On
June 1, 2020, the Company filed a motion to dismiss certain claims asserted by Mr. Christodoulou, filed an answer and affirmative
defenses as to certain claims asserted by Mr. Christodoulou, and asserted counterclaims against Mr. Christodoulou for breach of
fiduciary duty and declaratory judgment. Counsel for Mr. Christodoulou subsequently advised the Court of his intention to amend
the Complaint, thus mooting the Company’s pending motion to dismiss and without prejudice to the Company’s right to
move to dismiss Mr. Christodoulou’s amended complaint. Mr. Christodoulou filed an amended complaint on July 16, 2020. The
current deadline for the Company to respond to the amended complaint is August 13, 2020. The Company intends to defend the claims
asserted by Mr. Christodoulou vigorously.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
11.
|
COMMITMENTS
AND CONTINGENCIES – CONTINUED
|
EMPLOYMENT
AGREEMENTS
DONALD
ENGEL EMPLOYMENT AGREEMENT
Effective
January 9, 2020, Donald Engel, a current member of the Company’s Board of Directors, entered into an employment agreement
with the Company. The employment agreement with Mr. Engel extends for a term expiring on January 9, 2021, subject to automatic
renewal for two additional one-year periods if not otherwise previously terminated by either party. Pursuant to the employment
agreement. The employment agreement provides that Mr. Engel will receive a base salary at an annual rate of $175,000 for services
rendered in such position. In addition, he will be eligible to earn stock options to purchase up to 700,000 shares of our common
stock, in increments of 140,000 options on each occasion that the Company executes an agreement for the sale or deployment of
electric vehicle charging stations or ancillary eco-friendly energy products with a customer he has introduced to the Company.
The stock options will have an exercise price equal to the closing market price of our common stock immediately prior to the issuance
date, expire five years after the issuance date and be subject to the terms of the Company’s 2018 Incentive Compensation
Plan. On January 20, 2020, the Company granted immediately vested options to purchase an aggregate of 140,000 shares of common
stock at an exercise price of $2.05 per share to the employee with a grant date fair value of $252,309 which was recognized during
the six months ended June 30, 2020.
The
employment agreement provides for termination by the Company for cause upon conviction of a felony, misconduct resulting in significant
economic or reputational harm to the Company, any act of fraud or a material breach of his obligations to us. Upon a change of
control of the Company, Mr. Engel’s employment will terminate and he will be entitled to all unpaid and outstanding salary
and expenses due through the termination date. The employment agreement also contains covenants restricting Mr. Engel from engaging
in any activities competitive with the Company’s business during the term of the employment agreement and two years thereafter
and prohibiting him from disclosure of confidential information regarding us at any time. Mr. Engel will continue to be a member
of the Company’s Board but will no longer qualify as an “independent director” under Nasdaq rules.
MICHAEL
P. RAMA EMPLOYMENT AGREEMENT
In
February 2020, the Company entered into an Employment Offer Letter with Mr. Rama. Pursuant to the Offer Letter, Mr. Rama agreed
to devote his full business efforts and time to the Company as its Chief Financial Officer. The Offer Letter extends for a term
expiring on February 10, 2022 and is automatically renewable for an additional one-year period. The Offer Letter provides that
Mr. Rama is entitled to receive an annual base salary of $300,000, payable in regular installments in accordance with the Company’s
general payroll practices. Mr. Rama will be eligible for an annual performance cash bonus of 25% of his base salary based on the
satisfaction of certain key performance indicators set with the Board’s Compensation Committee. Mr. Rama will be entitled
to receive equity awards under the Company’s 2018 Incentive Compensation Plan with an aggregate annual award value equal
to 50% of his base salary in the form of restricted stock and stock options. Mr. Rama has also received a $50,000 cash signing
bonus.
If
Mr. Rama’s employment is terminated by the Company other than for Cause (which includes willful material misconduct and
willful failure to materially perform his responsibilities to the Company), he is entitled to receive severance equal to up to
12 months of his base salary. If there is a buy-out or a “change of control,” Mr. Rama will also be entitled to obtain
his base salary for a period of 12 months as a severance payment. Mr. Rama is entitled to vacation and other employee benefits
in accordance with the Company’s policies.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
11.
|
COMMITMENTS
AND CONTINGENCIES– CONTINUED
|
EMPLOYMENT
AGREEMENTS – CONTINUED
BRENDAN
S. JONES EMPLOYMENT AGREEMENT
In
April 2020, the Company entered into an employment offer letter with Mr. Jones (the “Offer Letter”). Pursuant to the
Offer Letter, Mr. Jones agreed to devote his full business efforts and time to the Company as its Chief Operating Officer. The
Offer Letter extends for a two-year term expiring on April 20, 2022 and is automatically renewable for an additional one-year
period unless the Company provides notice of non-renewable prior to the initial termination date. The Offer Letter provides that
Mr. Jones is entitled to receive an annual base salary of $350,000, payable in regular installments in accordance with the Company’s
general payroll practices. Mr. Jones will be eligible for an annual performance cash bonus of 40% of his base salary based on
the satisfaction of certain key performance indicators set with the Board’s Compensation Committee. Mr. Jones will also
receive a cash signing bonus of $55,000 and an equity signing bonus of $70,000 worth of the Company’s common stock, which
shares will be granted and vested on April 20, 2021 (provided he is not terminated for Cause).
If
Mr. Jones’s employment is terminated by the Company other than for Cause (which includes willful material misconduct and
willful failure to materially perform his responsibilities to the Company), he is entitled to receive severance equal to 12 months
of his base salary or such lesser number of months actually worked. If there is a buy-out or a “change of control,”
Mr. Jones will be entitled to obtain his base salary for a period of 12 months as a severance payment. Mr. Jones is also entitled
to relocation assistance in an amount of up to $35,000, a car allowance of up to $1,000 per month, inclusive of insurance, and
other employee benefits in accordance with the Company’s policies.
TERM
SHEET
On
July 17, 2020, the Company signed a non-binding term sheet (“Term Sheet”) to acquire certain assets of an EV charging
operator (“Operator”). Concurrently with signing the Term Sheet, the Company provided a letter of financial support
for a project awarded to this Operator and the respective granting State. The Company committed to fund and invest up to $2.2
million in this state project representing the capital required to complete the development of EV charger infrastructure whereby
a grant of $1.76 million would be received at the completion of this project. In the event that the Company does not execute an
agreement with the Operator and close pursuant to the Term Sheet, the Company will be entitled to obtain the grant funds awarded
in this project and take ownership and all rights and interests in all EV chargers, assets and rights relating to or arising from
this project.
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Special
Note Regarding Forward-Looking Information
The
following discussion and analysis of the results of operations and financial condition of Blink Charging Co. together its subsidiaries,
“Blink” and the “Company”) as of June 30, 2020 and for the three and six months ended June 30, 2020 and
2019 should be read in conjunction with our financial statements and the notes to those financial statements that are included
elsewhere in this Quarterly Report on Form 10-Q. References in this Management’s Discussion and Analysis of Financial Condition
and Results of Operations to “us”, “we”, “our” and similar terms refer to Blink. This Quarterly
Report contains forward-looking statements as that term is defined in the federal securities laws. The events described in forward-looking
statements contained in this Quarterly Report may not occur. Generally, these statements relate to business plans or strategies,
projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions
to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words
“may,” “will,” “expect,” “believe,” “anticipate,” “project,”
“plan,” “intend,” “estimate,” and “continue,” and their opposites and similar
expressions, are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future
performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control,
which may influence the accuracy of the statements and the projections upon which the statements are based. Factors that may affect
our results include, but are not limited to, the risks and uncertainties set forth under Item 1A. Risk Factors in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2019, as discussed elsewhere in this Quarterly Report on Form 10-Q
particularly in Item IA - Risk Factors.
At
Blink Charging, our highest priority remains the safety, health and well-being of our employees, their families and our communities
and we remain committed to serving the needs of our customers. The Covid-19 pandemic is a highly fluid situation and it is not
currently possible for us to reasonably estimate the impact it may have on our financial and operating results. We will continue
to evaluate the impact of the Covid-19 pandemic on our business as we learn more and the impact of Covid-19 on our industry becomes
clearer.
Any
one or more of these uncertainties, risks and other influences, as well as our inability to avail ourselves of the loan forgiveness
provisions of the PPP Loan, could materially affect our results of operations and whether forward-looking statements made by us
ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed
or implied in these forward-looking statements except as required by federal securities laws, We undertake no obligation to publicly
update or revise any forward-looking statements, whether from new information, future events or otherwise.
Overview
We
are a leading owner, operator and provider of electric vehicle (“EV”) charging equipment and networked EV charging
services. We offer both residential and commercial EV charging equipment, enabling EV drivers to easily recharge at various location
types.
Our
principal line of products and services is our Blink EV charging network (the “Blink Network”) and EV charging equipment
(also known as electric vehicle supply equipment) and EV related services. Our Blink Network consists of proprietary cloud-based
software that operates, maintain, and tracks all of the Blink EV charging stations and the associated charging data. The Blink
Network provides property owners, managers and parking companies, who we refer to as our “Property Partners”, with
cloud-based services that enable the remote monitoring and management of EV charging stations payment processing and provide EV
drivers with vital station information including station location, availability and applicable fees.
We
offer our Property Partners a range of business models for EV charging equipment and services that generally fall into one of
the three business models below.
|
●
|
In
our comprehensive turnkey business model, we own and operate the EV charging equipment, undertake and manage the installation,
maintenance and related services, and we keep substantially all of the EV charging revenue.
|
|
|
|
|
●
|
In
our hybrid business model, the Property Partner incurs the installation costs, while we provide the charging equipment. We
operate and manage the EV charging station and provide connectivity of the charging station to the Blink Network. As a result,
we share a greater portion of the EV charging revenue with the Property Partner than under the turnkey model above.
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In
our host owned business model, the Property Partner purchases, owns and manages the Blink EV charging station, incurs the
installation costs of the equipment, while we provide site recommendations, connectivity to the Blink Network and optional
maintenance services, and the Property Partner keeps substantially all of the EV charging revenue.
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In our Blink-as-a-service model, we own and operate
the EV charging station, while the Property Partner incurs the installation cost. We operate and manage the EV charging station
and the Property Partner pays Blink a fixed monthly fee and keeps all the charging revenues less network connectivity and
processing fees.
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We
have strategic partnerships across numerous transit/destination locations, including airports, auto dealers, healthcare/medical,
hotels, mixed-use, municipal locations, multifamily residential and condos, parks and recreation areas, parking lots, religious
institutions, restaurants, retailers, schools and universities, stadiums, supermarkets, transportation hubs, and workplace locations.
As of June 30, 2020, we had 15,151 charging stations deployed, of which, 5,385 were Level 2 commercial charging units, 102 were
DC Fast Charging EV chargers and 1,193 were residential charging units. Additionally, as of June 30, 2020, we had 305 Level 2
commercial charging units on other networks and there were also 8,166 non-networked, residential Blink EV charging stations.
As
reflected in our unaudited condensed consolidated financial statements, as of June 30, 2020, we had cash, marketable securities,
working capital and an accumulated deficit of $3,821,723, $160,748, $2,988,683 and $175,495,594, respectively. During the three
and six months ended June 30, 2020, we incurred a net loss of $3,029,513 and $5,990,613, respectively. During the six months ended
June 30, 2020, we used cash in operating activities of $6,520,964. We have not yet achieved profitability.
Recent
Developments
At-the-Market
Offering
On
April 17, 2020, we entered into a Sales Agreement (“Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”)
to conduct an “at-the-market” equity offering program (the “ATM”) pursuant to which we may issue and sell
from time to time shares of its common stock, par value $0.001 per share, having an aggregate offering price of up to $20,000,000
(the “Shares”) through the Agent, as our sales agent.
Subject to the
terms and conditions of the Sales Agreement, the Agent will use its commercially reasonable efforts to sell the Shares from time
to time, based upon our instructions. We have provided the Agent with customary indemnification rights, and the Agent will be
entitled to an aggregate fixed commission of 3.0% of the gross proceeds from Shares sold.
Sales of the Shares
under the Sales Agreement are made in transactions that are deemed to be “at-the-market offerings” as defined in Rule
415 under the Securities Act of 1933, as amended, including sales made by means of ordinary brokers’ transactions, including
on the Nasdaq Capital Market, at market prices or as otherwise agreed to with the Agent.
A “shelf”
registration statement on Form S-3 for the Shares was filed with the SEC, which became effective on September 16, 2019, and a
prospectus supplement thereto was filed with the SEC on April 17, 2020.
We currently anticipate
using the net proceeds from the sale of our shares of common stock offered hereby to supplement our operating cash flows to fund
EV charging station deployment and our acquisition growth plan. We also plan to use any remaining proceeds we receive for working
capital and other corporate purposes. Other corporate purposes include amounts required to pay for continuing product development
expenses, salaries, professional fees, public reporting costs, office-related expenses and other corporate expenses, including
overhead. The amounts and timing of our use of the net proceeds from this offering will depend on a number of factors, such as
the timing and progress of our EV charging station deployment efforts, the timing and progress of any partnering and collaboration
efforts and technological advances. Our management has broad discretion in the timing and application of these proceeds. Pending
use of the proceeds as described above, we intend to invest the proceeds in a variety of capital preservation investments, including
short term, interest bearing, investment grade instruments and U.S. government securities.
Since April 17, 2020 and through August 10, 2020, the Company
sold 3,403,386 shares of common stock under an “at-the-market” equity offering program for aggregate gross proceeds
of approximately $17.8 million.
COVID-19
We
believe the coronavirus COVID-19 (“COVID-19”) global pandemic has not had a significant adverse impact on our results
for the three and six months ended June 30, 2020 We continue to receive orders for our products, however, some shipments of equipment
have been temporarily delayed. Furthermore, we experienced what it expects is a temporary reduction in the usage of our charging
stations, which resulted in a decrease in our charging service revenue. We are maintaining regular contact, via telephone and
other electronic means, with our customers and suppliers and do not currently expect any material change in overall demand for
our products. We are complying with federal, state and local health guidelines regarding safety procedures. These procedures include,
but are not limited to, social distancing, remote working and teleconferencing. The extent of the future impact of the COVID-19
pandemic on our business is uncertain and difficult to predict. Capital markets and the U.S. economy have also been significantly
impacted by the pandemic and it is possible that it could result in an economic recession. Adverse economic and market conditions
as a result of COVID-19 could also adversely affect the demand for our products and services and may also impact the ability of
our customers to satisfy their obligations to us. If the pandemic continues to cause significant negative impacts to economic
conditions, our results of operations, financial condition and liquidity could be adversely impacted. See Part II, Item 1A –
“Risk Factors”.
Paycheck
Protection Program Loan
On
May 7, 2020, we received $855,666 in connection with a loan (the “PPP Loan”) under the CARES Act Paycheck Protection
Program (“PPP”). The PPP provides for loans to qualifying businesses for amounts of up to 2.5 times their average
monthly payroll expenses. The PPP Loan principal and accrued interest are forgivable, as long as the borrower uses loan proceeds
for eligible purposes during the eight weeks following disbursement, such as payroll, benefits, rent, and utilities, and maintains
its payroll levels. The amount of loan forgiveness is reduced if the borrower terminates employees or reduces salaries during
this eight-week period, subject to certain qualifications and exclusions. The unforgiven portion of the PPP loan is payable over
two years at an interest rate of 1%, with a deferral of payments for the first seven months. We are using PPP proceeds we received
for purposes consistent with PPP criteria. While we believe our use of PPP Loan proceeds should meet the conditions for forgiveness
of the loan, we cannot provide assurance that we will not take actions that may cause us to be ineligible for loan forgiveness
in whole or in part or that PPP eligibility requirements may not change that would result in making use of the PPP proceeds ineligible.
As of June 30, 2020, we had not received any notice of forgiveness of the PPP Loan. As of June 30, 2020, we utilized $764,025
of the proceeds of the PPP Loan. The remaining proceeds of the PPP Loan were utilized
subsequent to June 30, 2020.
On
June 5, 2020, the President signed into law the Payroll Protection Program Flexibility Act (“PPP Flexibility Act”)
which made several critical changes to the PPP, which was created under the CARES Act. Under the act, the deferral period was
extended to the date the lender received the forgiven amount from SBA. If the Company does not apply for loan forgiveness within
10 months following the end of the covered period, the deferral period will end on the date that is 10 months after the last day
of the covered period. Following enactment of the CARES Act, SBA issued guidance requiring that no more than 25 percent of the
forgiven amount be attributable to non-payroll costs. This meant that if payroll costs did not account for at least 75 percent
of the total costs eligible for forgiveness, then the borrower’s loan forgiveness would be capped at the 75 percent level.
The PPP Flexibility Act loosens this requirement and increases the percentage for non-payroll costs to up to 40 percent. However,
the actual language of the PPP Flexibility Act requiring a borrower to use at least 60 percent of the loan amount for payroll
costs.
Consolidated
Results of Operations
Three
Months Ended June 30, 2020 Compared With Three Months Ended June 30, 2019
Revenues
Total
revenue for the three months ended June 30, 2020 increased by $856,782, or 120%, to $1,572,610 compared to $715,828 during the
three months ended June 30, 2019.
Charging
service revenue from Company-owned charging stations was $87,250 for the three months ended June 30, 2020 as compared to $294,985
for the three months ended June 30, 2019, a decrease of $207,735, or 70%. The decrease was primarily attributable to the decrease
in utilization as a result of COVID-19.
Revenue
from product sales was $1,274,354 for the three months ended June 30, 2020 compared to $282,014 during the three months ended
June 30, 2019, an increase of $992,340, or 352%. This increase was attributable to increase sales from Generation 2 chargers and
increased sales of DC fast chargers when compared to the same period in 2019.
Network
fee revenues were $71,271 for the three months ended June 30, 2020 compared to $76,359 for the three months ended June 30, 2019,
a decrease of $5,088, or 7%. The decrease was primarily attributable to a decrease in the renewal of memberships from Property
Partner host owners in the second quarter of 2020 compared to the same period in 2019.
Warranty
revenues were $8,419 for the three months ended June 30, 2020 compared to $19,284 for the three months ended June 30, 2019, a
decrease of $10,865, or 56%. The decrease was primarily attributable to a decrease in the warranty contracts sold for the three
months ended June 30, 2020 compared to the same period in 2019.
Grant
and rebate revenues were $3,912 during the three months ended June 30, 2020, compared to $6,525 during the three months ended
June 30, 2019, a decrease of $2,613, or 40%. Grant and rebates relating to equipment and the related installation are deferred
and amortized in a manner consistent with the depreciation expense of the related assets over their useful lives. The 2020 revenue
was related to the amortization of previous years’ grants.
Other
revenue increased by $90,743 to $127,404 for the three months ended June 30, 2020 as compared to $36,661 for the three months
ended June 30, 2019. The increase was primarily attributable to higher Low Carbon Fuel Standard (LCFS) credits generated during
the three months ended June 30, 2020 compared to the same period in 2019. We generate these credits from the electricity utilized
by our electric car charging stations as a byproduct from our charging services in the states of California and Oregon. The value
of the credits is subject to market conditions and our current policy is to sell the credits generated every one-to-two years
as market conditions permit.
Cost
of Revenues
Cost
of revenues primarily consists of electricity reimbursements, revenue share payments to our Property Partner hosts, the cost of
charging stations sold, connectivity charges provided by telco and other networks, warranty, repairs and maintenance services,
and depreciation of our installed charging stations. Cost of revenues for the three months ended June 30, 2020 were $1,158,730
as compared to $401,284 for the three months ended June 30, 2019, an increase of $757,446, or 189%. There is a degree of variability
in our costs in relationship to our revenues from period to period, primarily due to:
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electricity
reimbursements that are unique to those Property Partner host agreements which provide for such reimbursements;
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revenue
share payments are predicated on the contractual obligation under the property partner agreement and the revenue generated
by the applicable chargers;
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cost
of charging stations sold is predicated on the mix of types of charging stations and parts sold during the period;
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network
costs are fixed in nature based on the number of chargers connected to the telco network regardless of whether the charger
generates revenue;
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provisions
for excess and obsolete inventory; and
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warranty
and repairs and maintenance expenses are based on both the number of service cases completed during the period.
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Cost
of charging services-company-owned charging stations (electricity reimbursements) decreased by $1,409 to $35,874 for the three
months ended June 30, 2020 as compared to $37,283 for the three months ended June 30, 2019. The decrease in 2020 was attributable
to the mix of charging stations generating charging service revenues subject to electricity reimbursement.
Host
provider fees decreased by $52,951, or 65%, to $28,086 during the three months ended June 30, 2020 as compared to $81,037 during
the three months ended June 30, 2019. This decrease was a result of the mix of chargers generating revenue and their corresponding
revenue share percentage payments to Property Partner hosts per their agreements as well as a reduction in the usage of charging
stations as a result of COVID-19.
Cost
of product sales increased by $835,008, or 951%, from $87,800 for the three months ended June 30, 2019 as compared to $922,808
for the three months ended June 30, 2020. The increase is primarily due to the increase in product sales of Generation 2 and DC
fast chargers during the three months ended June 30, 2020 compared to the same period in 2019.
Network
costs increased by $60,987, or 71%, to $147,290 during the three months ended June 30, 2020 as compared to $86,303 during the
three months ended June 30, 2019. The increase was a result of the increase in charging stations on our network and costs incurred
of $27,500 related to the upgrading of our network system as compared to the same period in 2019.
Warranty
and repairs and maintenance costs decreased by $65,809, or 79%, to $17,734 during the three months ended June 30, 2020 from $83,543
during the three months ended June 30, 2019. The decrease was attributable to significant efforts expended in previous periods
to reduce the backlog in warranty cases.
Depreciation
and amortization expense decreased by $18,380, or 73%, to $6,938 for the three months ended June 30, 2020 as compared to $25,318
for the three months ended June 30, 2019, as older underlying assets became fully depreciated or were replaced with newer underlying
assets with longer lives.
Operating
Expenses
Compensation
expense increased by $631,696, or 38%, to $2,305,738 (consisting of approximately $2.2 million of cash compensation and benefits
and approximately $0.1 million of non-cash compensation) for the three months ended June 30, 2020. Compensation expense was $1,674,042
(consisting of approximately $1.4 million of cash compensation and benefits and approximately $0.3 million of non-cash compensation)
for the three months ended June 30, 2019. The increase in compensation expense for the three months ended June 30, 2020 compared
to the same period in 2019 is primarily related to increases in personnel and compensation in executive, marketing, sales and
operations departments as a result of the anticipated growth of the Company.
General
and administrative expenses increased by $185,598, or 38%, to $670,653 for the three months ended June 30, 2020.
General and administrative expenses were $485,055 for the three months ended June 30, 2019. The increase was primarily
attributable to decreases in accounting and tax fees of $139,569 partially mitigated by increases in investor relations and marketing
expenses of $65,708.
Other
operating expenses decreased by $79,350, or 15%, to $459,418 for the three months ended June 30, 2020 from $538,768 for the three
months ended June 30, 2019. The decrease is primarily attributable to increases in rent expense related to our larger corporate
offices in Miami Beach, increases in insurance and software expenses partially offset by reduction in travel expenses due to COVID-19.
Other
Income (Expense)
Other
income decreased by $153,685 from $146,101 for the quarter ended June 30, 2019 to ($7,584) for the quarter ended June 30, 2020.
During the three months ended June 30, 2020, market value of Low Carbon Fuel Standard credits decreased by $8,000. During the
quarter ended June 30, 2019, we realized net income of $63,000 from our cash and marketable securities portfolio offset by an
increase in accrued issuable equity as a result of an increase in the market price of our common stock.
Net
Loss
Our
net loss for the three months ended June 30, 2020 increased by $792,293, or 35%, to $3,029,513 as compared to $2,237,220 for the
three months ended June 30, 2019. The increase was primarily attributable to an increase in compensation expense and other operating
expenses.
Six
Months Ended June 30, 2020 Compared With Six Months Ended June 30, 2019
Revenues
Total
revenue for the six months ended June 30, 2020 was $2,871,474, compared to $1,293,218 for the six months ended June 30, 2019,
an increase of $1,578,256, or 122%.
Charging
service revenue for company-owned charging stations was $406,874 for the six months ended June 30, 2020 compared to $619,880 for
the six months ended June 30, 2019, a decrease of $213,006, or 34%. The decrease was primarily attributable to the decrease
in usage of charging stations as a result of COVID-19.
Revenue
from product sales was $2,051,777 for the six months ended June 30, 2020, compared to $385,218 for the six months ended June 30,
2019, an increase of $1,666,559, or 433%. This increase was attributable to increase sales from Generation 2 chargers and increased
sales of DC fast chargers when compared to the same period in 2019.
Network
fee revenue was $126,830 for the six months ended June 30, 2020, compared to $150,829 for the six months ended June 30, 2019,
a decrease of $23,999, or 16%. The decrease was primarily attributable to a decrease in the renewal of memberships from Property
Partner host owners in 2020 compared to 2019.
Warranty
revenue was $16,479 for the six months ended June 30, 2020, compared to $35,792 for the six months ended June 30, 2019, a decrease
of $19,313, or 54%. The decrease was primarily attributable to a decrease in the warranty contracts sold for the six months ended
June 30, 2020 compared to the same period in 2019.
Grant
and rebate revenues were $8,491 for the six months ended June 30, 2020, compared to $13,239 for the six months ended June 30,
2019, a decrease of $4,748, or 36%. Grant and rebates relating to equipment and the related installation are deferred and amortized
in a manner consistent with the depreciation expense of the related assets over their useful lives. The ability to secure grant
revenue is typically unpredictable and, therefore, uncertain. The 2020 revenue was related to the amortization of previous years’
grants.
Other
revenue increased by $172,763 to $261,023 for the six months ended June 30, 2019, compared to $88,260 for the six months ended
June 30, 2019. The increase was primarily attributable to higher Low Carbon Fuel Standard (LCFS) credits generated during the
six months ended June 30, 2020 compared to the same period in 2019. We generate these credits from the electricity utilized by
our electric car charging stations as a byproduct from our charging services in the states of California and Oregon. The value
of the credits is subject to market conditions and our current policy is to sell the credits generated every one-to-two years
as market conditions permit.
Cost
of Revenues
Cost
of revenues primarily consists of electricity reimbursements, revenue share payments to our Property Partner hosts, the cost of
charging stations sold (including commissions), connectivity charges provided by telco and other networks, warranty, repairs and
maintenance services, and depreciation of our installed charging stations.
Cost
of revenues for the six months ended June 30, 2020 was $2,148,872, compared to $924,716 for the six months ended June 30, 2019,
an increase of $1,224,156, or 132%. There is a degree of variability in our costs in relationship to our revenues from period
to period, primarily due to:
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electricity
reimbursements that are unique to those Property Partner host agreements which provide for such reimbursements;
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revenue
share payments are predicated on the contractual obligation under the property partner agreement and the revenue generated
by the applicable chargers;
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cost
of charging stations sold is predicated on the mix of types of charging stations and parts sold during the period;
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network
costs are fixed in nature based on the number of chargers connected to the telco network regardless of whether the charger
generates revenue; and
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warranty
and repairs and maintenance expenses are based on both the number of service cases completed during the period.
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Cost
of charging services for Company-owned charging stations (electricity reimbursements) decreased by $1,524 to $65,488 for the six
months ended June 30, 2020, compared to $67,012 for the six months ended June 30, 2019, or 2%. The decrease in 2020 was attributable
to the mix of charging stations generating charging service revenues subject to electricity reimbursement.
Host
provider fees decreased by $49,561, or 30%, to $113,515 during the six months ended June 30, 2020, compared to $163,076 for the
six months ended June 30, 2019. This decrease was a result of the mix of chargers generating revenue and their corresponding revenue
share percentage payments to Property Partner hosts per their agreements as well as a reduction in the utilization due to COVID-19.
Cost
of product sales increased by $1,090,756, or 362%, from $301,120 for the six months ended June 30, 2019, compared to $1,391,876
for the six months ended June 30, 2020. The increase is primarily due to the increase in product sales of Generation 2 and DC
fast chargers during the six months ended June 30, 2020 compared to the same period in 2019. Furthermore, during the six months
ended June 30, 2019 included a provision for excess and obsolete inventory of $121,234 relating to non-Generation 2 inventory
which was not being sold/utilized.
Network
costs increased by $194,096 or 119%, to $357,622 for the six months ended June 30, 2020, compared to $163,526 for the six months
ended June 30, 2019. The increase was a result of the increase in charging stations on our network and costs incurred of $162,500
related to the upgrading of our network system as compared to the same period in 2019.
Warranty
and repairs and maintenance costs decreased by $39,772, or 23%, to $132,643 for the six months ended June 30, 2020 from $172,415
for the six months ended June 30, 2019. The decrease was attributable to significant efforts expended in previous periods to reduce
the backlog in warranty cases.
Depreciation
and amortization expense increased by $30,161 or 52%, to $87,728 for the six months ended June 30, 2020, compared to $57,567 for
the six months ended June 30, 2019, as additional underlying assets became active on our network during the second half of 2019
and early 2020.
Operating
Expenses
Compensation
expense increased by $1,142,678, or 35%, from $3,277,527 (consisting of approximately $2.9 million of cash compensation and approximately
$0.4 million of non-cash compensation) for the six months ended June 30, 2019, to $4,420,205 (consisting of approximately $4.1
million of cash compensation and approximately $0.3 million of non-cash compensation) for the six months ended June 30, 2020.
The increase in compensation expense for the six months ended June 30, 2020 compared to the same period in 2019 is primarily related
to increases in personnel and compensation in executive, marketing, sales and operations departments as a result of
the anticipated growth of the Company.
General
and administrative expenses increased by $574,345, or 77%, from $742,191 for the six months ended June 30, 2019 to $1,316,536
for the six months ended June 30, 2020. The increase was primarily attributable to increases in accounting, tax, legal professional
and consulting fees of $405,371 related to the Sarbanes-Oxley Section 404 documentation and strengthening of our internal controls
as well as the completion of our federal tax filing project to bring our federal filings current and up-to-date. Also contributing
to the increase was increases in investor relations and marketing expenses of $128,230.
Other
operating expenses decreased by $20,975 or 2%, from $1,047,593 for the six months ended June 30, 2019 to $1,026,618 for the six
months ended June 30, 2020. The decrease is primarily attributable to a reduction in travel expenses as a result of COVID-19 partially
offset by increases in rent related to our larger corporate offices in Miami Beach, increases in insurance and software expenses.
Other
Income (Expense)
Other
income decreased by $517,818 from $567,962 for the six months ended June 30, 2019 to $50,144 for the six months ended June 30,
2020. During the six months ended June 30, 2020, we settled accounts payable resulting in a gain of $19,000. Additionally, we
realized net investment income from our cash and marketable securities portfolio of $21,000, and a decrease market value of Low
Carbon Fuel Standard credits of $40,000. During the six months ended June 30, 2019, we settled accounts payable resulting in a
gain of $160,000 and $360,000 of notes payable, inclusive of accrued interest to the former members of 350 Green in exchange for
the cancellation of the notes, the return of 8,066 of our common shares and the payment of $50,000, in 2018, to the former members
of 350 Green, resulting in a gain of $310,000. Additionally, we realized net investment income from our cash and marketable securities
portfolio of $73,000, and an increase market value of Low Carbon Fuel Standard credits of $26,000.
Net
(Loss) Income
Our
net loss for the six months ended June 30, 2020 increased by $1,859,766, or 45%, to $5,990,613 as compared to net income of $4,130,847
for the six months ended June 30, 2019. The increase was primarily attributable to an increase in compensation expense and general
and administrative expenses.
Liquidity
and Capital Resources
We
measure our liquidity in a number of ways, including the following:
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June
30, 2020
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December
31, 2019
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(unaudited)
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Cash
|
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$
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3,821,723
|
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$
|
4,168,837
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Working Capital
|
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$
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2,988,683
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$
|
5,791,444
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Notes Payable
(Gross)
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$
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865,666
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$
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10,000
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During
the six months ended June 30, 2020, we financed our activities from proceeds derived from debt and equity financings. A significant
portion of the funds raised from the sale of capital stock has been used to cover working capital needs and personnel, office
expenses and various consulting and professional fees.
For
the six months ended June 30, 2020 and 2019, we used cash of $6,520,964 and $5,212,306, respectively, in operations. Our cash
use for the six months ended June 30, 2020 was primarily attributable to our net loss of $5,990,613, adjusted for net non-cash
expenses in the aggregate amount of $648,913, and $1,179,264 of net cash used in changes in the levels of operating assets and
liabilities. Our cash used for the six months ended June 30, 2019 was primarily attributable to our net loss of $4,130,847, adjusted
for net non-cash income in the aggregate amount of $218,217, and by $1,299,676 of net cash used in changes in the levels of operating
assets and liabilities.
During
the six months ended June 30, 2020, net cash provided by investing activities was $2,155,037, of which, $2,600,516 was provided
in connection with the sale of marketable securities and $445,479 was used to purchase charging stations and other fixed assets.
During the six months ended June 30, 2019, cash used in investing activities was $203,357 which was used to purchase charging
stations and other fixed assets.
During
the six months ended June 30, 2020, net cash provided financing activities was $4,018,813, of which $855,666 was attributable
to proceeds from our PPP loan, $3,195,968 was attributable to the net proceeds from the sale of common stock under the ATM, partially
offset by $32,821 used to pay down our liability in connection with internal use software. There was no cash provided by financing
activities for the six months ended June 30, 2019.
As
of June 30, 2020, we had cash, marketable securities, working capital and an accumulated deficit of $3,821,723, $160,748, $2,988,683
and $175,495,594, respectively. During the three and six months ended June 30, 2020, we incurred a net loss of $3,029,513 and
$5,990,613, respectively. During the six months ended June 30, 2020, we used cash in operating activities of $6,520,964. We estimate
an approximate cost of $282,000 to repair deployed chargers, which we own as of June 30, 2020.
We
have not yet achieved profitability and expect to continue to incur cash outflows from operations. It is expected that our operating
expenses will continue to increase and, as a result, we will eventually need to generate significant product revenues to achieve
profitability. Historically, we have been able to raise funds to support our business operations, although there can be no assurance,
we will be successful in raising significant additional funds in the future. The Company expects that its cash on hand will fund
its operations for at least twelve months from the date the financial statements are issued.
Since inception,
our operations have primarily been funded through proceeds received in equity and debt financings. We believe we have access to
capital resources and continue to evaluate additional financing opportunities. There is no assurance that we will be able to obtain
funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds we might raise will enable
us to complete our development initiatives or attain profitable operations.
Our operating needs
include the planned costs to operate our business, including amounts required to fund working capital and capital expenditures.
Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to
successfully commercialize our 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 our product and service
offerings.
Critical
Accounting Policies
For
a description of our critical accounting policies, see Note 2 – Summary of Significant Accounting Policies in Part 1, Item
1 of this Quarterly Report on Form 10-Q.
Recently
Issued Accounting Standards
For
a description of our recently issued accounting standards, see Note 2 – Summary of Significant Accounting Policies in Part
1, Item 1 of this Quarterly Report on Form 10-Q.
Off-Balance
Sheet Arrangements
We
do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons,
also known as “special purpose entities” (SPEs).