UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q10-Q/A

(Amendment No. 1)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2020March 31, 2021

 

or

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____________ to _____________

 

Commission File No. 001-38392

 

BLINK CHARGING CO.

(Exact name of registrant as specified in its charter)

 

Nevada 03-0608147

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

407605 Lincoln Road, Suite 7045th Floor
Miami Beach, Florida 33139-3024

Miami Beach, Florida

(Address of principal executive offices)

 (Zip Code)

 

Registrant’s telephone number, including area code: (305) 521-0200

 

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered
Common Stock BLNK The NASDAQ Stock Market LLC
Common Stock Purchase Warrants BLNKW The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer[  ]Accelerated filer[  ]
Non-accelerated filer[X]Smaller reporting company[X]
  Emerging growth company[  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [  ] No [X]

 

As of August 12, 2020May 10, 2021, the registrant had 31,626,61641,984,060 shares of common stock outstanding.

 

 

 

 

 

 

EXPLANATORY NOTE

We are filing this Amendment No. 1 to Quarterly Report on Form 10-Q/A (this “Amendment”) to amend our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, as filed with the Securities and Exchange Commission on May 13, 2021 (the “10-Q”). This Amendment is being filed solely to correct an inadvertent error in the first risk factor in the 10-Q. This Amendment does not otherwise modify or update the condensed consolidated financial statements or any other disclosures presented in the 10-Q. This Amendment does not reflect events occurring after the filing of the 10-Q (i.e., those events occurring after May 13, 2021) or modify or update those disclosures that may be affected by subsequent events. Such subsequent matters are addressed in subsequent reports filed with the SEC. Accordingly, this Amendment should be read in conjunction with the 10-Q and our other filings with the SEC.

BLINK CHARGING CO. AND SUBSIDIARIES

 

FORM 10-Q10-Q/A

 

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020MARCH 31, 2021

 

TABLE OF CONTENTS

 

 Page
  
PART I - FINANCIAL INFORMATION 
  
Item 1. Financial Statements.
  
Condensed Consolidated Balance Sheets as of June 30, 2020March 31, 2021 (Unaudited) and December 31, 201920201
  
Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30,March 31, 2021 and 2020 and 20192
  
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended June 30,March 31, 2021 and 2020 and 20193
  
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2020March 31, 20214
  
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2019March 31, 20205
  
Unaudited Condensed Consolidated Statements of Cash Flows for the SixThree Months Ended June 30,March 31, 2021 and 2020 and 20196
  
Notes to Unaudited Condensed Consolidated Financial Statements8
  
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.2117
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk.2823
  
Item 4. Controls and Procedures.2823
  
PART II - OTHER INFORMATION 
  
Item 1. Legal Proceedings.3025
  
Item 1A. Risk Factors.3025
  
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.3126
  
Item 3. Exhibits.Defaults Upon Senior Securities.3226
 
Item 4. Mine Safety Disclosures.26
Item 5. Other Information.26
Item 6. Exhibits.26
  
SIGNATURES3327

 

i

 

PART 1 – FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS.

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 

  March 31, 2021  December 31, 2020 
  (unaudited)    
Assets        
         
Current Assets:        
Cash $195,646,354  $22,341,433 
Marketable securities  36,506,174   - 
Accounts receivable and other receivables, net  1,003,620   347,967 
Inventory, net  3,433,216   1,816,135 
Prepaid expenses and other current assets  1,168,273   1,219,488 
         
Total Current Assets  237,757,637   25,725,023 
Restricted cash  74,873   76,399 
Property and equipment, net  10,375,562   5,636,063 
Operating lease right-of-use asset  1,785,810   615,825 
Intangible assets, net  267,818   46,035 
Goodwill  1,500,573   1,500,573 
Other assets  175,826   387,617 
Total Assets $251,938,099  $33,987,535 
         
Liabilities and Stockholders’ Equity        
         
Current Liabilities:        
Accounts payable $3,112,090  $3,358,852 
Accrued expenses and other current liabilities  2,098,384   1,328,834 
Current portion of notes payable  439,960   574,161 
Current portion of operating lease liabilities  524,241   403,915 
Current portion of deferred revenue  610,812   479,486 
         
Total Current Liabilities  6,785,487   6,145,248 
Operating lease liabilities, non-current portion  1,448,522   285,501 
Other liabilities  90,000   90,000 
Notes payable- non-current portion  432,859   296,535 
Deferred revenue, non-current portion  14,209   6,654 
         
Total Liabilities  8,771,077   6,823,938 
         
Series B Convertible Preferred Stock, 10,000 shares designated, 0 issued and outstanding as of March 31, 2021 and December 31, 2020  -   - 
         
Commitments and contingencies (Note 8)        
         
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 March 31, 2021 and December 31, 2020  -   - 
Series C Convertible Preferred Stock, 250,000 shares designated, 0 shares issued and outstanding as of March 31, 2021 and December 31, 2020  -   - 
Series D Convertible Preferred Stock, 13,000 shares designated, 0 shares issued and outstanding as of March 31, 2021 and December 31, 2020  -   - 
Common stock, $0.001 par value, 500,000,000 shares authorized, 41,945,414 and 35,951,097 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively  41,945   35,951 
Additional paid-in capital  437,897,038   214,479,094 
Accumulated other comprehensive income  (56,038)  - 
Accumulated deficit  (194,715,923)  (187,351,448)
         
Total Stockholders’ Equity  243,167,022   27,163,597 
         
Total Liabilities and Stockholders’ Equity $251,938,099  $33,987,535 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

1

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Operations

 

(unaudited)

 

 For The Three Months Ended For The Six Months Ended  For The Three Months Ended 
 June 30,  June 30,  March 31, 
 2020  2019  2020  2019  2021  2020 
              
Revenues:                        
Product sales $1,670,594  $777,423 
Charging service revenue - company-owned charging stations $87,250  $294,985  $406,874  $619,880   181,598   319,624 
Product sales  1,274,354   282,014   2,051,777   385,218 
Network fees  71,271   76,359   126,830   150,829   109,856   55,559 
Warranty  8,419   19,284   16,479   35,792   13,217   8,060 
Grant and rebate  3,912   6,525   8,491   13,239   150,235   4,579 
Ride-sharing services  45,512   - 
Other  127,404   36,661   261,023   88,260   61,050   133,619 
                        
Total Revenues  1,572,610   715,828   2,871,474   1,293,218   2,232,062   1,298,864 
                        
Cost of Revenues:                        
Cost of product sales  1,117,915   603,998 
Cost of charging services - company-owned charging stations  35,874   37,283   65,488   67,012   49,772   29,614 
Host provider fees  28,086   81,037   113,515   163,076   126,421   85,429 
Cost of product sales  922,808   87,800   1,391,876   301,120 
Network costs  147,290   86,303   357,622   163,526   79,393   75,402 
Warranty and repairs and maintenance  17,734   83,543   132,643   172,415   261,151   114,909 
Ride-sharing services  246,117   - 
Depreciation and amortization  6,938   25,318   87,728   57,567   254,914   80,790 
Total Cost of Revenues  1,158,730   401,284   2,148,872   924,716   2,135,683   990,142 
                        
Gross Profit  413,880   314,544   722,602   368,502   96,379   308,722 
                        
Operating Expenses:                        
Compensation  2,305,738   1,674,042   4,420,205   3,277,527   4,748,151   2,114,467 
General and administrative expenses  670,653   485,055   1,316,536   742,191   1,584,987   645,883 
Other operating expenses  459,418   538,768   1,026,618   1,047,593   1,149,706   567,200 
                        
Total Operating Expenses  3,435,809   2,697,865   6,763,359   5,067,311   7,482,844   3,327,550 
                        
Loss From Operations  (3,021,929)  (2,383,321)  (6,040,757)  (4,698,809)  (7,386,465)  (3,018,828)
                        
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 
Other Income:        
Interest income  14,997   15,853 
Change in fair value of derivative and other accrued liabilities  (16,560)  (35,494)  (16,039)  (90,236)  6,993   521 
Other income  (15,367)  51,591   25,987   149,622   -   41,354 
                        
Total Other (Expense) Income  (7,584)  146,101   50,144   567,962 
Total Other Income  21,990   57,728 
                        
Net Loss $(3,029,513) $(2,237,220) $(5,990,613) $(4,130,847) $(7,364,475) $(2,961,100)
                        
Net Loss Per Share:                        
Basic $(0.11) $(0.09) $(0.22) $(0.16) $(0.18) $(0.11)
Diluted $(0.11) $(0.09) $(0.22) $(0.16) $(0.18) $(0.11)
                        
Weighted Average Number of Common Shares Outstanding:                
Weighted Average Number of        
Common Shares Outstanding:        
Basic  28,327,701   26,234,376   27,584,918   26,202,898   41,138,095   26,842,136 
Diluted  28,327,701   26,234,376   27,584,918   26,202,898   41,138,095   26,842,136 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

2

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Comprehensive Loss

 

(unaudited)

 

 For the Three Months Ended For the Six Months Ended  For the Three Months Ended 
 June 30,  June 30,  March 31, 
 2020  2019  2020  2019  2021   2020 
              
Net Loss $(3,029,513) $(2,237,220) $(5,990,613) $(4,130,847) $(7,364,475) $(2,961,100)
Other Comprehensive Income (Loss):                
Reclassification adjustments of loss (gain) on sale of marketable securities included in net loss  15,188   -   (98,337)  - 
Other Comprehensive (Loss) Income:        
Reclassification adjustments of gain on sale of marketable securities included in net loss  -   (113,526)
Change in fair value of marketable securities  47,864   40,321   (20,079)  141,007   (56,038)  (67,942)
                        
Total Comprehensive Loss $(2,966,461) $(2,196,899) $(6,109,029) $(3,989,840) $(7,420,513) $(3,142,568)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

BLINK CHARGING CO. AND SUBSIDIARIES

3

 

Condensed Consolidated Statement of Changes in Stockholders’ Equity

For the Three Months Ended March 31, 2021

 

(unaudited)

        Accumulated       
     Additional  Other     Total 
  Common Stock  Paid-In  Comprehensive  Accumulated  Stockholders’ 
  Shares  Amount  Capital  Income  Deficit  Equity 
                   
Balance - January 1, 2021  35,951,097  $35,951  $214,479,094  $-  $(187,351,448) $27,163,597 
                         
Common stock issued in public offering, net of issuance costs [1]  5,660,000   5,660   221,400,122   -   -   221,405,782 
                         
Common stock issued upon exercise of warrants  239,202   239   999,301   -   -   999,540 
                         
Common stock issued upon cashless option exercise  15,522   16   (16)  -   -   - 
                         
Common stock issued upon cashless warrant exercise  66,000   66   (66)  -   -   - 
                         
Common stock issued as consideration for property and equipment  13,123   13   599,987   -   -   600,000 
                         
Stock-based compensation  470   -   418,616   -   -   418,616 
                         
Other comprehensive loss  -   -   -   (56,038)  -   (56,038)
                         
Net loss -   -   -   -   (7,364,475)  (7,364,475)
                         
Balance - March 31, 2021  41,945,414  $41,945  $437,897,038  $(56,038) $(194,715,923) $243,167,022 

[1] Includes gross proceeds of $232,060,000, less issuance costs of $10,654,218.

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 SixThree Months Ended June 30,March 31, 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.

  Convertible Preferred Stock     Additional  Accumulated 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 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

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.

5

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

 For The Six Months Ended  For The Three Months Ended 
 June 30,  March 31, 
 2020  2019  2021 2020 
Cash Flows From Operating Activities:                
Net loss $(5,990,613) $(4,130,847) $(7,364,475) $(2,961,100)
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization  195,622   115,426   514,383   146,351 
Dividend and interest income  77,309   -   -   (84,162)
Change in fair value of derivative and other accrued liabilities  (16,039)  (90,236)  6,993   521 
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)
Provision/(benefit) for bad debt  201,130   (59,170)
Benefit for slow moving and obsolete inventory  (81,861)  (10,878)
Non-cash compensation:                
Common stock  (56,993)  267,997   28,538   (84,959)
Options  388,388   126,033   385,522   312,319 
Changes in operating assets and liabilities:                
Accounts receivable and other receivables  (195,130)  (156,659)  (856,783)  (27,685)
Inventory  (1,393,376)  (671,011)  (1,964,638)  (76,267)
Prepaid expenses and other current assets  177,427   163,775   51,215   (1,356,043)
Other assets  -   4,121   211,791   - 
Accounts payable and accrued expenses  612,840   (536,034)  304,861   618,469 
Lease liabilities  (93,225)  2,376   (75,061)  (46,079)
Deferred revenue  (287,800)  (106,244)  138,881   215,542 
                
Total Adjustments  (530,351)  (1,081,459)  (1,135,029)  (452,041)
                
Net Cash Used In Operating Activities  (6,520,964)  (5,212,306)  (8,499,504)  (3,413,141)
                
Cash Flows From Investing Activities:                
Proceeds from sale of marketable securities  2,600,516   -   -   1,100,516 
Purchase of marketable securities  (36,562,212)  - 
Purchases of property and equipment  (445,479)  (203,357)  (4,020,696)  (300,902)
                
Net Cash Provided By (Used In) Investing Activities  2,155,037   (203,357)
Net Cash (Used In) Provided By Investing Activities  (40,582,908)  799,614 
                
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   -   221,405,782   - 
Proceeds from exercise of warrants  999,540   - 
Payment of financing liability in connection with internal use software  (32,821)  -   (19,515)  (17,989)
                
Net Cash Provided By Financing Activities  4,018,813   - 
Net Cash Provided By (Used In) Financing Activities  222,385,807   (17,989)
                
Net Decrease In Cash  (347,114)  (5,415,663)
Net Increase (Decrease) In Cash  173,303,395   (2,631,516)
                
Cash - Beginning of Period  4,168,837   15,538,849 
Cash and Restricted Cash - Beginning of Period  22,417,832   3,975,494 
                
Cash - End of Period $3,821,723  $10,123,186 
Cash and Restricted Cash - End of Period $195,721,227  $1,343,978 
        
Cash and restricted cash consisted of the following:        
Cash $195,646,354  $22,341,433 
Restricted cash  74,873   - 
 $195,721,227  $22,341,433 

 

[1] Includes gross proceeds of $3,379,106,$232,060,000, less issuance costs of $183,138.$10,654,218.

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Cash Flows — Continued

 

(unaudited)

 

 For The Six Months Ended  For The Three Months Ended 
 June 30,  March 31,
 2020  2019  2021 2020 
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 
Capitalization of non-recurring engineering costs $237,127  $- 
Common stock issued upon cashless option exercise $16  $- 
Common stock issued upon cashless warrant exercise $66  $- 
Common stock issued as consideration for property and equipment $600,000  $- 
Interest expense converted into principal $2,123  $- 
Right-of-use assets obtained in exchange for lease obligations $1,358,408  $- 
Change in fair value of marketable securities $(20,079) $141,007  $56,038  $(181,468)
Subscription receivable, net of issuance costs of $18,704 $600,808  $- 
Transfer of inventory to property and equipment $(1,011,637) $(59,548) $(429,418) $(542,236)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

7

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

1.BUSINESS ORGANIZATION, NATURE OF OPERATIONS, BASIS OF PRESENTATION AND 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 Blink EV charging equipment, also known as electric vehicle supply equipment (“EVSE”) and other 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, and state and municipal entities (“Property Partners”) with cloud-based services that enable the remote monitoring and management of EV charging stations, and payment processing, andstations. The Blink Network also 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.any fees (if applicable).

●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.

8

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, 2020March 31, 2021 and for the three and six months then ended. The results of operations for the three and six months ended June 30, 2020March 31, 2021 are not necessarily indicative of the operating results for the full year ending December 31, 20202021 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, 20192020 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on April 2, 2020March 31, 2021 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.

LIQUIDITYRisks and Uncertainties

 

The Covid-19 pandemic has impacted global stock markets and economies. The Company continues to closely monitor the impact the impact of the outbreak of the coronavirus (“Covid-19”). The Company has taken precautions to ensure the safety of our employees, customers and business partners, while assuring business continuity and reliable service and support to its customers. The Company continue to receive orders for our products, although some shipments of equipment have been temporarily delayed. The Company has experienced what it expects is a temporary reduction in the usage of our charging stations, which has resulted in a decrease in charging service revenue. As of June 30, 2020,federal, state and local economies begin to reopen and with a vaccine underway 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,expects demand for charging station usage to return, but the Company incurred a net lossis unable to predict the ultimate impact that it may have on the business, future results of $3,029,513 and $5,990,613, respectively. During the six months ended June 30, 2020, the Company usedoperations, financial position, or 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.

9

flows.

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 inSince 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 evaluatesAnnual Report for 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 ofyear ended December 31, 2019,2020, there have been no material changes to the Company had cash balancesCompany’s significant accounting policies, except as disclosed in excess of FDIC insurance limits of $3,494,360.this note.

 

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, 2020March 31, 2021 and December 31, 2019:2020:

 

 June 30, 2020  December 31, 2019  March 31, 2021 December 31, 2020 
          
Short-term investments:                
Available- for-sale investments $160,748  $2,956,989  $36,506,174  $- 

 

The following is a summary of the unrealized gains, losses, and fair value by investment type as of June 30, 2020 and DecemberMarch 31, 2019:2021:

 

  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 
  March 31, 2021 
  Amortized Cost  Gross Unrealized Gains  Gross Unrealized Losses  Fair Value 
Fixed income $36,562,212  $-  $(56,038) $36,506,174 

10

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 fourfive 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.
●Ride-sharing services – Primarily related to ride-sharing services agreement with the City of Los Angeles which allows customers the ability to rent electric vehicles through a subscription service. The Company recognizes revenue over the contractual period of performance of the subscription.
●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 comprisedcomprises of sales related torevenues generated from alternative fuel credits.

On February 8, 2021, the Company was awarded a state-wide grant of approximately $1.7 million for the deployment of 11 new DC fast chargers across the state of Vermont in the next two years.

 

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 

  For The Three Months Ended 
  March 31, 
  2021  2020 
       
Revenues - Recognized at a Point in Time:        
Charging service revenue - company-owned charging stations $181,598  $319,624 
Product sales  1,670,594   777,423 
Other  61,050   133,619 
Total Revenues - Recognized at a Point in Time  1,913,242   1,230,666 
         
Revenues - Recognized Over a Period of Time:        
Ride-sharing services  45,512   - 
Network and other fees  123,073   63,619 
Total Revenues - Recognized Over a Period of Time  168,585   63,619 
         
Total Revenue Under ASC 606 $2,081,827  $1,294,285 

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

REVENUE RECOGNITION - CONTINUED

 

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,March 31, 2021, the Company had $204,142$625,021 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.March 31, 2021. 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,March 31, 2021, the Company recognized $76,039 and $139,660, respectively,$275,579 of revenues related to network fees and warranty contracts, which were included in deferred revenues as of December 31, 2019.2020. During the three and six months ended June 30, 2020,March 31, 2021, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.

11

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,March 31, 2021 and 2020, and 2019, the Company recognized $3,912recorded $150,235 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,$4,579, respectively, related to grant and rebate revenue. At June 30, 2020March 31, 2021 and December 31, 2019,2020, there was $75,179$69,792 and $83,670,$70,356, respectively, of deferred revenues attributablegrant and rebate revenue to grants and rebates.be amortized.

 

CONCENTRATIONS

 

As of June 30, 2020 and DecemberMarch 31, 2019, accounts receivable from2021, a significant customer was 10% and 11%represented 49% of total accounts receivable, respectively. receivable. Another significant customer represented 23% of total accounts receivable.

During the three and six months ended June 30, 2020, revenues from oneMarch 31, 2021, sales to a significant customer represented 43%21% of total revenue and 38%, respectively,another significant customer represented 20% of total revenues. During the three and six months ended June 30,March 31, 2020, revenues from anothersales to a significant customer represented 11% and 10%, respectively,33% 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.

12

  For the Three Months Ended 
  March 31, 
  2021  2020 
Warrants  3,510,129   6,840,049 
Options  644,987   382,844 
Unvested restricted common stock  48,819   110,160 
Total potentially dilutive shares  4,203,935   7,333,053 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

 

RECENTLY ISSUED ACCOUNTING STANDARDS

 

In AprilDecember 2019, the Financial Accounting Standards Board (‘FASB”) issued Accounting Standards Update (“ASU”) No. 2019-04, “Codification Improvements2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives740 and Hedging,clarifies and Topic 825, Financial Instruments” (“amends existing guidance to improve consistent application. ASU 2019-04”). The new ASU provides narrow-scope amendments to help apply these recent standards.2019-12 is effective for the Company beginning in fiscal 2021. The adoption of this ASU effective January 1, 2020 did not have a material impact on the Company’s condensed consolidated financial statements.

3.PREPAID EXPENSES AND OTHER CURRRENT ASSETS

As of June 30, 2020, prepaid expensesstatements and other current assets primarily consisted of alternative fuel credits of $199,069. As of December 31, 2019, alternative fuel credits were $476,992.related disclosures.

 

As of June 30, 2020 and December 31, 2019,3. PROPERTY AND EQUIPMENT

On January 22, 2021, the Company had a remainingclosed on the purchase commitment of $3,599,503 and $3,156,629, respectively,approximately 10,000 square feet of office condominium space which will become payable uponis the supplier’s delivery of the charging stations.Company’s corporate headquarters. The purchase commitments were made primarily for future salesprice was $4 million, of which, $600,000 was paid in the Company’s common stock (13,123 shares) and deployments of these charging stations.$3,400,000 in cash.

 

4.ACCRUED EXPENSES

4. ACCRUED EXPENSES

 

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.

  March 31, 2021  December 31, 2020 
  (unaudited)    
Accrued host fees $122,758  $119,906 
Accrued professional, board and other fees  80,624   109,809 
Accrued wages  1,146,535   403,024 
Accrued commissions  57,767   46,577 
Warranty payable  9,000   10,000 
Accrued income, property and sales taxes payable  337,624   357,467 
Accrued issuable equity  177,241   184,234 
Other accrued expenses  166,835   97,817 
Total accrued expenses $2,098,384  $1,328,834 

 

1312

  

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

6.NOTES PAYABLE

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 

14

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 

8.5.STOCKHOLDERS’ EQUITY

 

AT-THE-MARKETPUBLIC OFFERING

 

On April 17, 2020,In January 2021, the Company entered into a sales agreement (“Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”) to conductcompleted an “at-the-market” equityunderwritten registered public 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 1,660,8845,660,000 shares of common stock under the ATM for aggregateat a public offering price of $41.00 per share. The Company received approximately $232.1 million in 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 offrom the public offering, and approximately $221.4 million in net proceeds had not been receivedafter deducting the underwriting discount and offering expenses paid by the CompanyCompany. The Company’s Chief Executive Officer and was included asone other officer participated in the offering by selling 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 sharestotal 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 1,642,628550,000 shares of the Company’s common stock at a conversion price of $3.12 per share. The Company determined thatfrom the Series D Convertible Preferred Stock did not include a beneficial conversion feature.

15

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 officersexercise of the Company.

During June 2020,underwriter’s option to purchase additional shares. The public offering was made pursuant to the Company issued 10,000 shares of common stockCompany’s automatic shelf registration statement on Form S-3 filed with an aggregate issuance date fair value of $23,500 as compensation to a consultant.the SEC on January 6, 2021 and prospectus supplement dated January 7, 2021.

 

STOCK OPTIONS

 

During April 2020,the three months ended March 31, 2021, the Company granted five-year options to purchaseissued an aggregate of 160,41615,522 shares of the Company’s common stock pursuant to executives with anthe cashless 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.options.

STOCK WARRANTS

 

During June 2020,the three months ended March 31, 2021, the Company granted five-year options to purchaseissued an aggregate of 150,000239,202 shares of the Company’s common stock pursuant to executives withthe exercise of warrants at an exercise price of $2.20 per share. One-third$4.25 for aggregate net proceeds of $999,540.

During the three months ended March 31, 2021, the Company issued 66,000 shares of the options will vest on February 7, 2021,Company’s common stock representing a modification of the second third will vest on February 7, 2022initial warrant exercise pursuant to a legal settlement. See Note 9 – Commitments 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.Contingencies – Litigation and Disputes for details.

 

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,March 31, 2021 and 2020 of $104,034$414,060 and $331,395, respectively, and for the three and six months ended June 30, 2019 of $283,394 and $394,030,$227,361, respectively, which is included within compensation expense on the condensed consolidated statements of operations. As of June 30, 2020,March 31, 2021, there was $709,951$4,252,540 of unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period of 1.62.57 years.

 

9.6.RELATEDRELATED 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. Pursuant to the agreement, the Company is not required to fund operating losses. 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,March 31, 2021 and 2020, the Company recognized sales of approximately $174,799$477,313 and $272,964,$98,000, respectively, to Hellas. No sales were recognized during the three and six months ended June 30, 2019. As of June 30, 2020 and DecemberMarch 31, 2019,2021, the Company had a receivable from Hellas of approximately $174,000$492,000. The Company determined that the Entity is a variable interest entity, however, the Company does not have a controlling financial interest and, $42,000, respectively.

16

as a result, the Company is not required to consolidate the Entity and instead has applied equity method accounting to its investment in the Entity. From inception through March 31, 2021, the Entity has not generated net income and, as a result, pursuant to ASC 323, the Company has not recorded a gain or loss on its equity method investment in the Entity during the three months ended March 31, 2021 and 2020.

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

10.7.LEASES

 

OPERATING LEASES

 

As of June 30, 2020,March 31, 2021, the Company had no leases that were classified as a financing lease. As of June 30, 2020,March 31, 2021, 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,March 31, 2021 and 2020 were $120,460$169,678 and $234,059, respectively, and for the three and six months ended June 30, 2019 were $42,470 and $80,610,$113,599, respectively, and are recorded in other operating expenses on the condensed consolidated statements of operations.

 

During the three months ended March 31, 2021, the Company entered into a lease for approximately 27,540 square feet of space in Arizona. The lease commenced on January 1, 2021 and will terminate on May 31, 2028. The lease also includes a build-out allowance of $137,000. Monthly payments under the lease, net of buildout allowance, is $18,235 per month. The lease also includes a security deposit of $22,032.

Supplemental cash flows information related to leases was as follows:

 

 For The Six Months Ended  For The Three Months Ended 
 June 30,  March 31, 
 2020  2019  2021  2020 
Cash paid for amounts included in the measurement of lease liabilities:            
Operating cash flows from operating leases $166,963  $80,610  $169,126  $52,743 
                
Right-of-use assets obtained in exchange for lease obligations:                
Operating leases $-  $266,103  $1,358,408  $- 
                
Weighted Average Remaining Lease Term                
Operating leases  0.92   2.03   5.96   1.41 
              
Weighted Average Discount Rate                
Operating leases  6.0%  6.0%  4.9%  6.0%

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

7.LEASES – CONTINUED

 

Future minimum payments under non-cancellable leases as of June 30, 2020March 31, 2021 were as follows:

 

For the Years Ending December 31, Amount  Amount 
      
2020 $104,182 
2021  86,819  $385,831 
2022  468,138 
2023  291,546 
2024  218,818 
2025  218,818 
Thereafter  528,810 
Total future minimum lease payments  191,001   2,111,961 
Less: imputed interest  (8,565)  (139,198)
Total $182,436  $1,972,763 

 

178.COMMITMENTS AND CONTINGENCIES

 

PURCHASE COMMITMENTS

 

As of March 31, 2021, the Company had a remaining purchase commitment of approximately $10,000,000, which will become payable upon the suppliers’ delivery of the charging stations and other related items. The purchase commitments were made primarily for future sales and deployments of these charging stations and other related items.

LITIGATION AND DISPUTES

On August 24, 2020, a purported securities class action lawsuit, captioned Bush v. Blink Charging Co. et al., Case No. 20-cv-23527, was filed in the United States District Court for the Southern District of Florida against the Company, Michael Farkas (Blink’s Chairman of the Board and Chief Executive Officer), and Michael Rama (Blink’s Chief Financial Officer) (the “Bush Lawsuit”). On September 1, 2020, another purported securities class action lawsuit, captioned Vittoria v. Blink Charging Co. et al., Case No. 20-cv-23643, was filed in the United States District Court for the Southern District of Florida against the same defendants and seeking to recover the same alleged damages (the “Vittoria Lawsuit”). On October 1, 2020, the court consolidated the Vittoria Lawsuit with the Bush Lawsuit and on December 21, 2020 the court appointed Tianyou Wu, Alexander Yu and H. Marc Joseph to serve as the Co-Lead Plaintiffs. The Co-Lead Plaintiffs filed an Amended Complaint on February 19, 2021. The Amended Complaint alleges, among other things, that the defendants made false or misleading statements about the size and functionality of the Blink Network, and asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The Amended Complaint does not quantify damages but seeks to recover damages on behalf of investors who purchased or otherwise acquired Blink’s common stock between March 6, 2020 and August 19, 2020. On April 20, 2021, Blink and the other defendants filed a motion to dismiss the Amended Complaint. The deadline for the Co-Lead Plaintiffs to file an opposition brief in response to the motion to dismiss is June 21, 2021 and the deadline for Blink to file a reply in support of the motion to dismiss is July 21, 2021. The Company believes that the claim has no merit, and wholly and completely disputes the allegations therein. The Company has retained legal counsel in order to defend the action vigorously. The Company has not recorded an accrual related to this matter as of March 31, 2021 as it determined that any such loss contingency was either not probable or estimable.

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.

18

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

11.8.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.

19

BLINK CHARGING CO.LITIGATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

11.COMMITMENTS AND CONTINGENCIES– CONTINUED

EMPLOYMENT AGREEMENTSDISPUTES – CONTINUED

 

BRENDAN S. JONES EMPLOYMENT AGREEMENTOn September 15, 2020, a shareholder derivative lawsuit, captioned Klein (derivatively on behalf of Blink Charging Co.) v. Farkas et al., Case No. 20-19815CA01, was filed in Miami-Dade County Circuit Court seeking to pursue claims belonging to the Company against Blink’s Board of Directors and Michael Rama (the “Klein Lawsuit”). Blink is named as a nominal defendant. The Klein Lawsuit asserts that the Director defendants caused Blink to make the statements that are at issue in the securities class action and, as a result, the Company will incur costs defending against the consolidated Bush Lawsuit and other unidentified investigations. The Klein Lawsuit asserts claims against the Director defendants for breach of fiduciary duties and corporate waste and against all of the defendants for unjust enrichment. Klein did not quantify the alleged damages in his complaint, but he seeks damages sustained by the Company as a result of the defendants’ breaches of fiduciary duties, corporate governance changes, restitution, and disgorgement of profits from the defendants and attorneys’ fees and other litigation expenses. The parties agreed to temporarily stay the Klein Lawsuit until there is a ruling on the motion to dismiss filed in the consolidated Bush Lawsuit. The Company has not recorded an accrual related to this matter as of March 31, 2021 as it determined that any such loss contingency was either not probable or estimable.

 

On December 22, 2020, JMJ Financial v. Blink Charging Co. was filed in the United States District Court for the Southern District of New York, seeking to pursue claims for alleged breach of contract and conversion (the “JMJ Lawsuit”). The complaint alleges that JMJ Financial purchased warrants to acquire 147,057 shares of Blink common stock on or about April 9, 2018, which permitted a cashless exercise, and that on November 23, 2020, JMJ Financial delivered a notice of warrant exercise to Blink and that the Company failed to deliver the shares. The claim alleges breach of contract and conversion; the plaintiff requests damages of at least $4.2 million, attorneys’ fees, and specific enforcement requiring delivery of the shares. In April 2020,January 2021, the Company entered into an employment offer lettera settlement agreement with Mr. Jones (the “Offer Letter”JMJ under which the parties exchanged releases and the litigation was discontinued with prejudice. The Company did not make a cash payment in the settlement, but rather delivered 66,000 shares of stock, representing a modification of the initial warrant exercise but did not result in the recognition of any incremental expense.

On December 23, 2020, another shareholder derivative action, captioned Bhatia (derivatively on behalf of Blink Charging Co.). Pursuant v. Farkas et al., Case No. 20-27632CA01, was filed in Miami-Dade County Circuit Court against the same defendants sued in the Klein Lawsuit and asserting similar claims, as well as additional claims relating to the Offer Letter, Mr. JonesCompany’s nomination, appointment and hiring of minorities and women and the Company’s decision to retain its outside auditor (the “Bhatia Lawsuit”). On February 17, 2021, the parties agreed to devote his full business effortsconsolidate the Klein and timeBhatia actions, which the court consolidated under the caption In re Blink Charging Company Stockholder Derivative Litigation, Lead Case No. 2020-019815-CA-01. The parties also agreed to keep in place the temporary stay. The Company believes that the claim has no merit, and wholly and completely disputes the allegations therein. The Company has retained legal counsel in order to defend the action vigorously. The Company has not recorded an accrual related to this matter as of March 31, 2021 as it determined that any such loss contingency was either not probable or estimable.

On February 12, 2021, another shareholder derivative lawsuit, captioned Wolery (derivatively on behalf of Blink Charging Co.) v. Buffalino et al., Case No. A-21-829395-C, was filed in the Eighth Judicial District Court in Clark County, Nevada seeking to pursue claims belonging to the Company against Blink’s Board of Directors (the “Wolery Lawsuit”). Blink is named as its Chief Operating Officer.a nominal defendant. The Offer Letter extends for a two-year term expiring on April 20, 2022 and is automatically renewable forWolery complaint alleges that the amount of restricted stock awarded to Blink’s outside directors in December 2020 exceeded the amounts permitted by Blink’s incentive compensation plan. The complaint asks the court to rescind the excess restricted stock awards, as well as other relief. The parties have agreed that the defendants could have an additional one-year period unless the Company provides notice of non-renewable priorextension to respond to the initial termination date.complaint and consequently no response has been filed. The Offer Letter providesCompany has not recorded an accrual related to this matter as of March 31, 2021 as it determined 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 isany such loss contingency was either 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 salaryprobable 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.estimable.

 

12.9.SUBSEQUENT EVENTS

 

TERM SHEET


On July 17, 2020,May 10, 2021, pursuant to a Share Purchase Agreement dated April 21, 2021, the Company signedclosed on the acquisition from Blue Corner N.V., a non-binding term sheetBelgian company (“Term Sheet”Blue Corner”) to acquire certain assets, all of its outstanding capital stock. Headquartered in Belgium, Blue Corner owns and operates an EV charging operator (“Operator”network across Europe. The purchase price for the acquisition of all of Blue Corner’s outstanding capital stock was approximately $24 million (or 20 million Euros), consisting of approximately $23 million (or 19 million Euros) in cash and approximately $1.2 million (1 million Euros) represented by 32,382 shares of the Company’s common stock (the “Consideration Shares”). Concurrently with signingThe number of Consideration Shares was calculated based on the Term Sheet,average price of the Company provided a letterCompany’s common stock during the 30 consecutive trading days immediately preceding the closing date 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.Share Purchase Agreement, which equaled $37.66 (or 30.88 Euros) per share.

20

ITEM 2.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(together with its subsidiaries, “Blink” and the “Company”) as of June 30, 2020March 31, 2021 and for the three ended March 31, 2021 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 onAmendment No.1 to the 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 ReportAmendment No.1 to the Form 10-Q 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 ReportAmendment No.1 to the Form 10-Q 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, 2019,2020, as discussed elsewhere in this Quarterly Report onAmendment No.1 to the Form 10-Q, particularly in Part II, 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 exceptstatements. Except as required by federal securities laws, Wewe undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.otherwise

 

Overview

 

We are a leading owner, operator, and provider of electric vehicle (“EV”) charging equipment and networked EV charging services. We offer bothservices in the rapidly growing U.S. and international markets for EV’s. Blink offers residential and commercial EV charging equipment and services, enabling EV drivers to easily recharge at various location types.

Our Blink’s principal line of products and services is ourits nationwide Blink EV charging network (the “Blink Network”) and Blink EV charging equipment, (alsoalso known as electric vehicle supply equipment)equipment (“EVSE”) and EV relatedother EV-related services. OurThe Blink Network consists ofis a proprietary, cloud-based softwaresystem that operates, maintain,maintains, and tracks all of themanages Blink EV charging stations and handles the associated charging data.data, back-end operations, and payment processing. The Blink Network provides property owners, managers, and parking companies, who we refer to as our “Property Partners”and state and municipal entities (“Property Partners”), among other types of commercial customers, with cloud-based services that enable the remote monitoring and management of EV charging stations payment processing and providestations. The Blink Network also provides EV drivers with vital station information, including station location, availability, and applicable fees.any fees (if applicable).

 

We offer ourIn order to capture more of revenues derived from providing EV charging equipment to commercial customers and to help differentiate Blink in the EV infrastructure market.Blink offers Property Partners a comprehensiverange of business models solutions for EV charging equipment and services that generally fall into one of the three business models below.below, differentiated by who bears the costs of installation, equipment, maintenance, and the percentage of revenue shared (as applicable).

 

 ●In our comprehensiveBlink-owned turnkey business model, weBlink incurs the costs of the charging equipment and installation. 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 ofIn this model, which favors recurring revenues, Blink incurs most costs associated with the EV charging revenue with the Property Partner than under the turnkey model above.stations; thus, Blink retains substantially all EV charging revenues after deducting network connectivity and processing fees.
  
 ●In our host ownedBlink-owned hybrid business model, Blink incurs the costs of the charging equipment while the Property Partner incurs the costs of installation costs. We own and operate the EV charging station and provide connectivity of the charging station to the Blink Network. In this model, the Property Partner incurs the installation costs associated with the EV station; thus, Blink shares a more generous portion of the EV charging revenues with the Property Partner generated from the EV charging station after deducting network connectivity and processing fee.
●In our host-owned business model, the Property Partner purchases, owns and managesoperates the Blink EV charging station and incurs the installation costs ofcosts. Blink works with the equipment, while we provideProperty Partner, providing site recommendations, connectivity to the Blink Network, payment processing, and optional maintenance services, andservices. In this model, the Property Partner retains and keeps substantially all of the EV charging revenue.revenues after deducting network connectivity and processing fees.
   
 ●In our Blink-as-a-service model, we ownBlink owns and operateoperates the EV charging station, while the Property Partner incurs the installation cost. We operate and manage the EV charging station and theThe Property Partner pays to Blink a fixed monthly fee and keeps all the EV charging revenues lessafter deducting network connectivity and processing fees.

 

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WeAs part of Blink’s mission to facilitate the adoption of EVs through the deployment and operation of EV charging infrastructure globally, we are dedicated to slowing climate change by reducing greenhouse gas emissions caused by road vehicles. With the goal of leading the build out of EV charging infrastructure and of maximizing Blink’s share of the EV charging market, we have established strategic commercial, municipal and retail partnerships across industry verticals and encompassing numerous transit/destination locations, including airports, auto dealers, healthcare/medical, hotels, mixed-use, municipal locations,sites, 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,March 31, 2021, we had 15,151 charging stationssold or deployed 17,302 chargers , of which 5,3857,191 were on the Blink Network (4,471 Level 2 publicly accessible commercial charging units, 102 werechargers, 1,441 Level 2 private commercial chargers, 121 DC Fast Charging EV publicly accessible chargers, 11 DC Fast Charging EV private chargers, and 1,1931,147 residential Level 2 Blink EV chargers), and the remainder were residential charging units. Additionally, as of June 30, 2020, we had 305non-networked, on other networks or international sales or deployments (225 Level 2 commercial charging units on other networks and there were also 8,166 non-networked,chargers, 6 DC Fast Charging chargers, 9,218 residential Level 2 Blink EV charging stations.chargers, 607 sold internationally and 55 deployed internationally).

 

As reflected in our unaudited condensed consolidated financial statements as of June 30, 2020,March 31, 2021, we had a cash marketable securities,balance of $195,646,354, working capital of $230,972,150 and an accumulated deficit of $3,821,723, $160,748, $2,988,683 and $175,495,594, respectively.$194,715,923. During the three and six months ended June 30,March 31, 2021 and 2020, we incurred a net losslosses of $3,029,513$7,364,475 and $5,990,613,$2,961,100, 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

 

2021 Acquisition

On May 10, 2021, pursuant to a Share Purchase Agreement dated April 21, 2021, the Company closed on the acquisition from Blue Corner N.V., a Belgian company (“Blue Corner”), all of its outstanding capital stock. Headquartered in Belgium, Blue Corner owns and operates an EV charging network across Europe. The purchase price for the acquisition of all of Blue Corner’s outstanding capital stock was approximately $24 million (or 20 million Euros), consisting of approximately $23 million (or 19 million Euros) in cash and approximately $1.2 million (1 million Euros) represented by 32,382 shares of the Company’s common stock (the “Consideration Shares”). The number of Consideration Shares was calculated based on the average price of the Company’s common stock during the 30 consecutive trading days immediately preceding the closing date of the Share Purchase Agreement, which equaled $37.66 (or 30.88 Euros) per share.

At-the-Market

January 2021 Underwritten Public Offering

 

On April 17, 2020,In January 2021, we entered into a Sales Agreement (“Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”) to conductcompleted an “at-the-market” equityunderwritten registered public offering program (the “ATM”) pursuant to which we may issue and sell from time to timeof 5,660,000 shares of itsour common stock par value $0.001 per share, having an aggregateat a public 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.$41.00 per share. We have provided the Agent with customary indemnification rights, and the Agent will be entitled to an aggregate fixed commission of 3.0% of thereceived approximately $232.1 million in gross proceeds from Shares sold.

Sales of the Shares underpublic offering, and approximately $221.4 million in net proceeds after deducting 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 madeunderwriting discount and offering expenses paid 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.

us. 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 to finance the costs of acquiring or investing in competitive and complementary businesses, products and technologies as a part of our acquisition growth plan.strategy. 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 expensesOur Chief Executive Officer and one other corporate expenses, including overhead. The amounts and timingofficer participated in the offering by selling a total of 550,000 shares of our usecommon stock from the exercise of the net proceeds from thisunderwriter’s option to purchase additional shares. The public offering will dependwas made pursuant to our automatic shelf registration statement on a number of factors, suchForm S-3 filed with the SEC on January 6, 2021 and prospectus supplement dated January 7, 2021. Barclays Capital Inc. served 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 uselead book-running manager 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.offering.

 

COVID-19Note on Covid-19

 

The Covid-19 pandemic has impacted global stock markets and economies. We believecontinue to closely monitor the impact the impact of the outbreak of the coronavirus COVID-19 (“COVID-19”Covid-19”) global pandemic has not had a significant adverse impact on. We have taken precautions to ensure the safety of our results for the threeemployees, customers and six months ended June 30, 2020business partners, while assuring business continuity and reliable service and support to our customers. We continue to receive orders for our products, however,although some shipments of equipment have been temporarily delayed. Furthermore, weWe have experienced what it expectswe expect is a temporary reduction in the usage of our charging stations, which has 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 withAs federal, state and local health guidelines regarding safety procedures. These procedures include,economies begin to reopen and with a vaccine underway we expect demand for charging station usage to return, but we are not limitedunable to social distancing, remote working and teleconferencing.predict the ultimate impact that it may have on our business, future results of operations, financial position, or cash flows. The extent to which our operations may be impacted by the Covid-19 pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the futureoutbreak and actions by government authorities to contain the outbreak or treat its impact. We intend to continue to monitor the impact of the COVID-19Covid-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”.

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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.

closely.

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, 2020March 31, 2021 increased by $856,782,$933,198, or 120%72%, to $1,572,610$2,232,062 compared to $715,828$1,298,864 during the three months ended June 30, 2019.March 31, 2020.

 

Charging service revenue from Company-owned charging stations was $87,250$181,598 for the three months ended June 30, 2020March 31, 2021 as compared to $294,985$319,624 for the three months ended June 30, 2019,March 31, 2020, a decrease of $207,735,$138,026, or 70%43%. The decrease was primarily attributable to the decrease in utilizationusage of charging stations as a result of COVID-19.

 

Revenue from product sales was $1,274,354$1,670,594 for the three months ended June 30, 2020March 31, 2021 compared to $282,014$777,423 during the three months ended June 30, 2019,March 31, 2020, an increase of $992,340,$893,171, or 352%115%. This increase was attributable to increaseincreased sales fromof Generation 2 chargers, and increased sales of DC fast chargers and residential chargers when compared to the same period in 2019.2020.

 

Network fee revenues were $71,271$109,856 for the three months ended June 30, 2020March 31, 2021 compared to $76,359$55,559 for the three months ended June 30, 2019, a decreaseMarch 31, 2010, an increase of $5,088,$54,927, or 7%98%. The decreaseincrease was primarily attributable to a decreaseincreases in host owned units as well as billings and invoicing to Property Partners during the renewal of memberships from Property Partner host owners in the second quarter of 2020three months ended 2021 compared to the same period in 2019.months ended March 31, 2020.

 

Warranty revenues were $8,419$13,217 for the three months ended June 30, 2020March 31, 2021 compared to $19,284$8,060 for the three months ended June 30, 2019, a decreaseMarch 31, 2020, an increase of $10,865,$5,157 or 56%64%. The decreaseincrease was primarily attributable to a decreasean increase in the warranty contracts sold for the three months ended June 30, 2020March 31, 2021 compared to the same period in 2019.three months ended March 31, 2020.

 

Grant and rebate revenues were $3,912$150,235 during the three months ended June 30, 2020,March 31, 2021, compared to $6,525$4,579 during the three months ended June 30, 2019, a decreaseMarch 31, 2020, an increase of $2,613,$145,656, or 40%3,181%. Grant and rebates relating to equipment and the related installation are generally deferred and amortized in a manner consistent with the depreciation expense of the related assets over their useful lives. The 20202021 revenue was related torecognition of $140,000 in Michigan grants associated with the installation of six DC fast charges during the three months ended March 31, 2021 as well as the amortization of previous years’ grants.

 

Ride-sharing services revenues were $45,512 during the three months ended March 31, 2021 which relates to ride-sharing subscription services with the City of Los Angeles which was associated with the acquisition of BlueLA in September 2020.

Other revenue increaseddecreased by $90,743$72,569 to $127,404$61,050 for the three months ended June 30, 2020March 31, 2021 as compared to $36,661$133,619 for the three months ended June 30, 2019.March 31, 2020. The increasedecrease was primarily attributable to higherlower Low Carbon Fuel Standard (LCFS) credits generated during the three months ended June 30, 2020March 31, 2021 compared to the same period in 2019.2020. 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.

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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, 2020March 31, 2021 were $1,158,730$2,135,683 as compared to $401,284$990,142 for the three months ended June 30, 2019,March 31, 2020, an increase of $757,446,$1,145,541 or 189%116%. There is a degree of variability in our costs in relationship to our revenues from period to period, primarily due to:

 

 ●electricity reimbursements that are unique to those Property Partner host agreements which provide for such reimbursements;
 ●revenue share payments are predicated on the contractual obligation under the property partner agreement and the revenue generated by the applicable chargers;
 ●cost of charging stations sold is predicated on the mix of types of charging stations and parts sold during the period;
 ●network costs are fixed in nature based on the number of chargers connected to the telco network regardless of whether the charger generates revenue;
 ●provisions for excess and obsolete inventory; and
 ●warranty and repairs and maintenance expenses are based on both the number of service cases completed during the period.

 

Cost of charging services-company-owned charging stations (electricity reimbursements) decreasedincreased by $1,409$20,158 to $35,874$49,772 for the three months ended June 30, 2020March 31, 2021 as compared to $37,283$29,614 for the three months ended June 30, 2019.March 31, 2020. The decreaseincrease in 20202021 was attributable to the mix of charging stations generating charging service revenues subject to electricity reimbursement.

Host provider fees decreasedincreased by $52,951,$40,992, or 65%48%, to $28,086$126,421 during the three months ended June 30, 2020March 31, 2021 as compared to $81,037$85,429 during the three months ended June 30, 2019.March 31, 2020. This decreaseincrease was a result of the mix of chargers generating revenue and their corresponding revenue share percentage payments to Property Partner hosts perpursuant to their agreements, as well as a reduction in the usage of charging stations as a result ofutilization due to COVID-19.

 

Cost of product sales increased by $835,008,$513,917 or 951%85%, from $87,800$603,998 for the three months ended June 30, 2019March 31, 2020 as compared to $922,808$1,117,915 for the three months ended June 30, 2020.March 31, 2021. The increase is primarily due to the increase in product sales during the three months ended March 31, 2021 compared to the same period in 2020. The increase was primarily due to the increase in product sales of Generation 2, and DC fast chargers and home residential chargers during the three months ended June 30, 2020March 31, 2021 compared to the same period in 2019.2020. Furthermore, the three months ended March 31, 2021 included a reduction in the provision for excess and obsolete inventory of $81,861 relating to the increased sales of residential home charger units. The three months ended March 31, 2020 included a reduction in the provision for excess and obsolete inventory of $10,878.

 

Network costs increased by $60,987,$3,991 or 71%5%, to $147,290$79,393 during the three months ended June 30, 2020March 31, 2021 as compared to $86,303$75,402 during the three months ended June 30, 2019.March 31, 2020. 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 2019.2020.

 

Warranty and repairs and maintenance costs decreasedincreased by $65,809,$261,151 or 79%127%, to $17,734$114,909 during the three months ended June 30, 2020March 31, 2021 from $83,543$114,909 during the three months ended June 30, 2019.March 31, 2020. The decreaseincrease in 2021 was attributable to significant efforts expended in previous periods to reduce the backlog in warranty and repairs and maintenance cases. As of March 31, 2021, we recorded a liability of $9,000 which represents the estimated cost of existing backlog of known warranty cases.

Cost of ride-sharing services was $246,117 during the three months ended March 31, 2021 which relates to ride-sharing subscription services with the City of Los Angeles which was associated with the acquisition of BlueLA in September 2020.

 

Depreciation and amortization expense decreasedincreased by $18,380,$174,124, or 73%216%, to $6,938$254,914 for the three months ended June 30, 2020March 31, 2021 as compared to $25,318$80,790 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.March 31, 2020. The increase in depreciation expense was attributable to an increase in the number of EV charging stations and vehicles purchased in December 2020 for the recently acquired BlueLA operations.

 

Operating Expenses

 

Compensation expense increased by $631,696,$2,633,684, or 38%125%, to $2,305,738$4,748,151 (consisting of approximately $2.2$4.3 million of cash compensation and benefits and approximately $0.1$0.4 million of non-cash compensation) for the three months ended June 30, 2020.March 31, 2021. Compensation expense was $1,674,042$2,114,467 (consisting of approximately $1.4$1.9 million of cash compensation and benefits and approximately $0.3$0.2 million of non-cash compensation) for the three months ended June 30, 2019.March 31, 2020. The increase in compensation expense for the three months ended June 30, 2020March 31, 2021 compared to the same period in 2019 is2020 was 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. In addition, compensation expense during the three months ended March 31, 2021 compared the same period in 2020 increased due to additional personnel in conjunction with the acquisitions of BlueLA and U-Go made during 2020.

 

General and administrative expenses increased by $185,598,$939,104 or 38%145%, to $670,653$1,584,987 for the three months ended June 30, 2020.March 31, 2021. General and administrative expenses were $485,055$645,883 for the three months ended June 30, 2019.March 31, 2020. The increase was primarily attributable to decreases in accounting and tax fees of $139,569 partially mitigated by increases in legal, investor relations, marketing, consulting and marketingother professional service expenditures of $527,901. Also contributing to the increase in general and administrative expenses were operating expenditures related to the 2020 acquisitions of $65,708.BlueLA and U-Go which were acquired subsequent to March 31, 2020.

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Other operating expenses decreasedincreased by $79,350,$582,506, or 15%103%, to $459,418$1,149,706 for the three months ended June 30, 2020March 31, 2021 from $538,768$567,200 for the three months ended June 30, 2019.March 31, 2020. The decrease isincrease was primarily attributable to increases in insurance, software licensing, rent, expense related to our larger corporate offices in Miami Beach, increases in insurance and software expensesuse tax expenditures of $566,611. The increase was partially offset by reductionreductions in travel expenses due toas a result of COVID-19.

 

Other Income (Expense)

Other income decreased by $153,685$35,738 from $146,101$57,728 for the quarter ended June 30, 2019March 31, 2020 to ($7,584)$21,990 for the quarter ended June 30, 2020.March 31, 2021. During the three monthsquarter ended June 30,March 31, 2021, other income was primarily attributable to interest income of $14,997. During the quarter ended March 31, 2020, marketother income included earned interest income and dividend income of $15,853 from our cash and marketable securities portfolio, and changes in 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.

$32,072.

Net Loss

 

Our net loss for the three months ended June 30, 2020March 31, 2021 increased by $792,293,$4,403,375 or 35%149%, to $3,029,513$7,364,475 as compared to $2,237,220$2,961,100 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;
● revenue share payments are predicated on the contractual obligation under the property partner agreement and the revenue generated by the applicable chargers;
● cost of charging stations sold is predicated on the mix of types of charging stations and parts sold during the period;
● 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
● warranty and repairs and maintenance expenses are based on both the number of service cases completed during the period.

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,March 31, 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.

26

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.

 

Total Comprehensive Loss

Our total comprehensive loss for the three months ended March 31, 2021 was $7,420,513 whereas our total comprehensive loss for the three months ended March 31, 2020 was $3,142,568.

Liquidity and Capital Resources

We measure our liquidity in a number of ways, including the following:

 

 June 30, 2020  December 31, 2019  March 31, 2021  December 31, 2020 
 (unaudited)    (unaudited)   
            
Cash $3,821,723  $4,168,837  $195,646,354  $22,341,433 
                
Working Capital $2,988,683  $5,791,444  $230,972,150  $19,579,775 
                
Notes Payable (Gross) $865,666  $10,000  $872,819  $870,696 

 

During the sixthree months ended June 30, 2020,March 31, 2021, we financed our activities from proceeds derived from debt and equity financings.financings occurring in prior periods. 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 sixthree months ended June 30,March 31, 2021 and 2020, and 2019, we used cash of $6,520,964$8,497,978 and $5,212,306,$3,413,141, respectively, in operations. Our cash use for the sixthree months ended June 30, 2020March 31, 2021 was primarily attributable to our net loss of $5,990,613,$7,364,475, adjusted for net non-cash expenses in the aggregate amount of $648,913,$1,054,705, and $1,179,264$2,188,208 of net cash used in changes in the levels of operating assets and liabilities. Our cash used for the sixthree months ended June 30, 2019March 31, 2020 was primarily attributable to our net loss of $4,130,847,$2,961,100, adjusted for net non-cash incomeexpenses in the aggregate amount of $218,217,$220,023, and by $1,299,676$672,064 of net cash used in changes in the levels of operating assets and liabilities.

 

During the sixthree months ended June 30, 2020,March 31, 2021, net cash provided byused in investing activities was $2,155,037,$40,582,908, of which, $2,600,516$36,562,212 was provided in connection with the salepurchase of marketable securities and $445,479$4,020,696 was used to purchase charging stations and other fixed assets. During the sixthree months ended June 30, 2019,March 31, 2020, net cash used inprovided by investing activities was $203,357$799,614, of which, $1,100,516 was provided in connection with the sale of marketable securities and $300,902 was used to purchase charging stations and other fixed assets.

 

During the sixthree months ended June 30, 2020, netMarch. 31, 2021, cash provided in financing activities was $4,018,813,$222,385,807, of which, $855,666$221,405,782 was attributable to proceeds from our PPP loan, $3,195,968 was attributable to the net proceeds fromprovided by the sale of common stock underin a public offering and $999,540 was provided upon the ATM, partiallyexercise of warrants, this was offset by $32,821$19,515 used to pay down our liability in connection with internal use software. There was noDuring the three months ended March. 31, 2020, cash provided byused in financing activities for the six months ended June 30, 2019.was $17,989 which was used to pay down our liability in connection with internal use software.

 

As of June 30, 2020,March 31, 2021, we had cash, marketable securities, working capital and an accumulated deficit of $3,821,723, $160,748, $2,988,683$195,646,354, $230,972,150 and $175,495,594,$194,715,923, respectively. During the three and six months ended June 30, 2020,March 31, 2021, we incurredhad a net loss of $3,029,513$7,364,475.

In January 2021, we completed an underwritten registered public offering of 5,660,000 shares of our common stock at a public offering price of $41.00 per share. We received approximately $232.1 million in gross proceeds from the public offering, and $5,990,613, respectively. Duringapproximately $221.4 million in net proceeds after deducting the six months ended June 30, 2020, we usedunderwriting discount and offering expenses paid by us. The public offering was made pursuant to our automatic shelf registration statement on Form S-3 filed with the SEC on January 6, 2021 and prospectus supplement dated January 7, 2021.

We are using the net proceeds from the public offering to supplement our operating cash in operating activitiesflows to fund EV charging station deployment and finance the costs of $6,520,964. We estimate an approximate costacquiring competitive and complementary businesses, products and technologies as a part of $282,000 to repair deployed chargers, which we own as of June 30, 2020.

our growth strategy, and for working capital and general corporate purposes.

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 that we will be successful in raising significant additional funds in the future. The Company expectsWe expect that itsour cash on hand will fund itsour operations for at least twelve12 months after from the issuance date of the financial statements are issued.included in this quarterly report.

 

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.

 

27

Critical Accounting Policies and Estimates

 

ForThe preparation of financial statements and related disclosures in conformity with U.S. GAAP. These accounting principles require us to make estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expense during the periods presented. We believe that the estimates and judgments upon which it relies are reasonably based upon information available to us at the time that it makes these estimates and judgments. To the extent that there are material differences between these estimates and actual results, our financial results will be affected. The accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below.

The following is not intended to be a descriptioncomprehensive list of all of our critical accounting policies seeor estimates. Our accounting policies are more fully described in Note 2 – Summary of Significant Accounting Policies, in Part 1, Item 1our financial statements included elsewhere in this quarterly report.

Revenue Recognition

We recognize revenue primarily from five different types of this Quarterly Reportcontracts:

●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.
●Ride-sharing services – Primarily related to a ride-sharing services agreement with the City of Los Angeles, which allows customers the ability to rent electric vehicles through a subscription service. The Company recognizes revenue over the contractual period of performance of the subscription.
●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 also comprises of revenues generated from alternative fuel credits.

The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied.

Grants, rebates and alternative fuel credits, which are not within the scope of ASC 606, pertaining to revenues and periodic expenses are recognized as income when the related revenue and/or periodic expense are recorded. Grants and rebates related to EV charging stations and their installation are deferred and amortized in a manner consistent with the related depreciation expense of the related asset over their useful lives over the useful life of the charging station.

Stock-Based Compensation

We measure the cost of services received in exchange for an award of equity instruments based on Form 10-Q.the fair value of the award on the date of grant. The fair value amount of the shares expected to ultimately vest is then recognized over the period for which services are required to be provided in exchange for the award, usually the vesting period. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period that the estimates are revised. We account for forfeitures as they occur.

22

Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. We assess the recoverability of its long-lived assets by monitoring current selling prices of car charging units in the open market, the adoption rate of various auto manufacturers in the EV market and projected car charging utilization at various public car charging stations throughout its network in determining fair value. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount.

Income Taxes

We account for income taxes pursuant to the asset and liability method of accounting for income taxes pursuant to FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for taxable temporary differences and operating loss carry forwards. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Operating Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use an incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

 

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 onAmendment No.1 to the 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).

 

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are not required to provide the information required by this Item because we are a smaller reporting company.

 

ITEM 4.CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

As of June 30, 2020,March 31, 2021, being the end of the period covered by this Report, our management conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure.

Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of June 30, 2020,March 31, 2021, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting as discussed in Item 9A. Controls and Procedures – in the Company’s Form 10-K for the fiscal year ended December 31, 2019,2020, under the heading “Management’s Report on Internal Control Over Financial Reporting” and that continued to exist as of June 30, 2020.March 31, 2021.

 

However, as part of its ongoing remediation initiative and with the help of an outside firm, management continued to commit substantial resources to documenting and evaluating our internal controls during the quarter as reflected below:quarter:

 

Remediation in progress:

(a) Upon the establishment of a Disclosure Controls Committee, meetings are now being convened, conducted, documented with the active participation of Committee members and other members of management.

(b) Upon implementing enhanced disclosure controls and procedures across the organization, well-structured disclosure questionnaires have been formulated and circulated to a select group of financial and operating management personnel each quarter responses are received, tabulated and acted upon.

(c) Upon the preparation of the audited financial statement for the year ending December 31, 2019, the Company has since updated its scoping and financial risk assessment for 2020 SOX compliance and will continue to do so periodically.

28●Management is continuing to review the design and evaluate its internal controls over logical and administrative access to certain IT systems, resources and facilities or to administer IT applications. Management is also continuing to closely monitor progress on the remediation of the previously reported Significant Deficiencies.
●Management will shortly commence during the second quarter of 2021, the process of validating the operational effectiveness in both first and second quarters of 2021 of (a) the key internal controls forming part of the identified business processes and within the recently implemented NetSuite accounting system; and (b) the internal controls that are put in place as part of the ongoing remediation initiative.

(d) Management has improved its policies and procedures relating to the review, approval and reporting of transactions pertaining to related parties.

(e) Management has since finalized and put into effect its human resource policies, accounting policies and is preparing a set of identified Information Technology and Security related policies.

(f) Management has since finalized the design for monitoring internal controls on a continuous basis and the process owners and sub-process owners are reviewing and understanding their respective internal control environments through the business process narratives and risk and control matrices and will hold themselves accountable for any ongoing changes in the design of such controls.

(g) Management has since finalized the design and is evaluating the internal controls over: (a) review, approval and documentation of material journal entries including those involving estimates and judgments; (b) periodic reconciliation and review of significant accounts including accruals, prepayments, right of use assets and operating liabilities in order to ensure their completeness, timeliness and accuracy; and (d) analytical procedures to detect any material misstatements to the financial statements.

(h) Management has since finalized the design and is evaluating the internal controls over formal approval and review mechanism (including in its recently implemented ERP System, NetSuite), and expects to leverage the benefits of more automated controls.

(i) Management is reviewing the design and is evaluating the internal controls within various business and entity-level processes including segregation of duties among personnel, to the extent practicable, in order to separate the initiation and execution of transactions and custody of assets having due regard to its flat organization structure and its recent implementation of NetSuite.

(j) Management is reviewing the design and is evaluating internal controls relating to review of Service Organization Control reports and related user control considerations.

(k) Management is reviewing the design and is evaluating its internal controls over logical access management including providing, withdrawing and restricting access appropriately.

(l) Management is reviewing the design and is evaluating its internal controls over changes to master files/ tables relating to accounts payable, accounts receivable, indirect taxes, current assets, inventory, fixed assets and general ledger.

Additionally, during the first quarter of 2020, the Company hired a CFO who, as the key process owner for internal controls over financial reporting, has started reviewing and approving journal entries, the periodic interim financial statements and the underlying schedules and disclosures. In addition, the CFO has taken leadership of the ongoing remediation initiative by coordinating with the external consultants and other process owners and providing regular updates to the Audit Committee.

Remediation and actions that will commence soon:

Upon management’s completion of its evaluation of the design of the remediation of control weaknesses and evaluation of the related internal controls as outlined above, we will implement and monitor the remediation.

Management will also validate the operational effectiveness of (a) the key internal controls forming part of the identified business processes and within the recently implemented NetSuite accounting system; and (b) the internal controls that are put in place as part of the ongoing remediation initiative.

 

Management expects to make and report continuous progress in the effective remediation of the identified and previously reported material weaknesses.weaknesses and significant deficiencies.

 

Limitations on Effectiveness of Controls and Procedures

 

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

Changes in Internal Control over Financial Reporting

 

Except the above, there were no other changes in our internal control over financial reporting identified in management’s evaluation pursuant to RulesRule 13a-15(d) or 15d-15(d)15d15(d) of the Exchange Act during the quarter ended June 30, 2020,March 31, 2021, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.reporting

 

2924

 

PART II - OTHER INFORMATION

 

ITEM 1.ITEM 1.LEGAL PROCEEDINGS.

 

For a description of our legal proceedings, see Note 109 – Commitments and Contingencies – Litigation and Disputes in Part 1, Item 1 of this Quarterly Report onAmendment No.1 to the Form 10-Q.

ITEM 1A.ITEM 1A.RISK FACTORS.

 

In addition to the information set forth under Item 1A of Part I to our Annual Report on Form 10-K for the year ended December 31, 2019,2020, the information set forth at the beginning of Management’s Discussion and Analysis entitled “Special Note Regarding Forward-Looking Information,” and updates noted below, you should consider that there are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition or results of operation may be materially and adversely affected. In such case, the trading price of our common stock could decline and investors could lose all or part of their investment. These risk factors may not identify all risks that we face and our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations.

 

We have a history of substantial net losses and expect losses to continue in the future; if we do not achieve and sustain profitability our financial condition could suffer.

 

We have experienced substantial net losses, and we expect to continue to incur substantial losses for the foreseeable future. We incurred net losses of approximately $3.0$7.4 million for the quarter ended June 30, 2020.March 31, 2021. As of June 30, 2020,March 31, 2021, we had net working capital of approximately $3.0$231 million and an accumulated deficit of approximately $175$195 million. We have not yet achieved profitability. Historically, we have been able to raise funds to support our business operations. Since April 17, 2020 and through August 10, 2020, the Company sold 3,403,388 shares of common stock under an “at-the-market” equity offering program for aggregate gross proceeds of approximately $17.8 million. 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.

 

If our revenue grows slower than we anticipate, or if our operating expenses are higher than we expect, we may not be able to achieve profitability and our financial condition could suffer. We can give no assurance that we will ever achieve profitable operations. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Whether we can achieve cash flow levels sufficient to support our operations cannot be accurately predicted. Unless such cash flow levels are achieved, we may need to borrow additional funds or sell our debt or equity securities, or some combination of both, to provide funding for our operations. Such additional funding may not be available on commercially reasonable terms, or at all.

 

Our business and results of operations will be, and our financial condition may be, impacted by the outbreak of Covid-19 and such impact may be significant.

 

The global spread of the novel coronavirus (Covid-19) has created significant volatility, uncertainty and economic disruption. The extent to which the coronavirus pandemic will impactimpacts our business, operations and financial results is uncertain and will depend on numerous evolving factors that we may not be able to accurately predict, including:

 

 ●the duration and scope of the pandemic;
 ●governmental, business and individual actions taken in response to the pandemic and the impact of those actions on national and global economic activity;
 ●the actions taken in response to economic disruption;
 ●the impact of business disruptions and reductions in employment levels on our customers and the resulting impact on their demand for our EV charging equipment and related services;
 ●the increase in business failures among businesses that we serve and with which we collaborate;
 ●our customers’ ability to pay for our EV charging equipment and related services; and
 ●our ability to provide our EV charging equipment and related services, including as a result of our employees or our customers working remotely and/or closures of offices and facilities.

 

Any of these factors could cause or contribute to the risks and uncertainties identified in our Annual Report on Form 10-K for the year ended December 31, 20192020 and could significantlymaterially adversely affect our business, financial condition and results of operations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations- Financial Impact of COVID-19 Pandemic” regarding the current impact of Covid-19 on our Company.

30

We are a defendant in an employment-related litigation with a former officer.

The Company and certain of our officers are currently defendants in a pending employment-related litigation. On March 26, 2020, James Christodoulou, the former President and Chief Operating Officer of our 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 us, as well as Michael D. Farkas, Aviv Hilo and Yechiel Baron. Mr. Farkas is Chairman of the Board and Chief Executive Officer. Messrs. Hilo and Baron are our 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 terminated his employment without cause and in retaliation for his alleged plan to disclose that company executives had engaged in alleged “questionable business practices.” The Complaint seeks unspecified monetary damages but alleges that such damages exceed $1 million. The claims are not covered by our existing corporate insurance program. We intend to assert counterclaims against the plaintiff and defend the case vigorously; however, there can be no assurance as to the outcome of the litigation

ITEM 2.ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

During the quarterly periodthree months ended June 30, 2020, there have been no unregistered sales of equity securities that have not been previously disclosed in a Current Report on Form 8-K, except as described below:

On April 28, 2020,March 31, 2021, the Company issued 47,547an aggregate of 500 immediately vested options to the Company’s Chairman and Chief Executive Officer with an aggregate grant date fair value of $20,920. The options have exercise prices ranging from $38.45 to $53.84 and have expiration dates from February 2, 2026 to March 31, 2026.

During the three months ended March 31, 2021, the Company granted five-year options to purchase an aggregate of 8,333 shares of common stock to certain officers of the Companyan executive with an issuanceexercise price of $56.17 per share. The options vest one year from the date of grant. The options had an aggregate grant date fair value of approximately $87,000.$427,959, which will be recognized over the vesting period.

 

On June 10, 2020,During the three months ended March 31, 2021, the Company issued 10,000granted five-year options to purchase an aggregate of 100,000 shares of restricted common stock to a consultantan executive with an issuanceexercise price of $38.39 per share. One-third of the options will vest on February 25, 2022, the second third will vest on February 25, 2023 and the final third will vest on February 25, 2024. The options had an aggregate grant date fair value of approximately $23,500.$3,555,886, which will be recognized over the vesting period.

 

The issuances described in Item 2 were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. All recipients either received adequate information about the Company or had access, through employment or other relationships, to such information.

31

ITEM 3.ITEM 6.DEFAULTS UPON SENIOR SECURITIESEXHIBITS

 

Exhibit Number Exhibit Description Form Exhibit Filing Date   Herewith
           
3.1 Articles of Incorporation, as amended most recently on August 17, 2017. 10-K 3.1 04/17/2018    
           
3.2 Bylaws, as amended most recently on January 29, 2018. 10-K   3.2   04/17/2018    
           
3.3 Certificate of Designations for Series D Preferred Stock. 8-K   3.1   02/21/2018    
           
4.1 Warrant Agency Agreement by and between the Company and Worldwide Stock Transfer, LLC and Form of Warrant Certificate for Registered Offering. 8-K   4.1   02/21/2018  
           
4.2 Form of Common Stock Purchase Warrant dated April 9, 2018. 8-K 4.1 04/19/2018  
           
4.3 Description of the Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. 10-K 4.3 04//02/2020  
           
10.1 

Sales Agreement, dated April 17, 2020, between Blink Charging Co. and Roth Capital Partners, LLC.

 8-K 10.1 04/17/2020  
           
10.2 Employment Offer Letter, dated as of March 29, 2020, between Blink Charging Co. and Brendan S. Jones. 8-K 10.1 04/20/2020  
           
31.1 Rule 13a-14(a) Certification of Principal Executive Officer.       X
           
31.2 Rule 13a-14(a) Certification of Principal Financial Officer.       X
           
32.1* Section 1350 Certification of Principal Executive Officer.       X
           
32.2* Section 1350 Certification of Principal Financial Officer.       X
           
101.INS XBRL Instance.       X
101.XSD XBRL Schema.       X
101.PRE XBRL Presentation.       X
101.CAL XBRL Calculation.       X
101.DEF XBRL Definition.       X
101.LAB XBRL Label.       X

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Number Exhibit Description Form Exhibit Filing
Date		 Herewith
           
3.1 Articles of Incorporation, as amended most recently on August 17, 2017. 10-K 3.1 04/17/2018  
3.2 Bylaws, as amended most recently on January 29, 2018. 10-K 3.2 04/17/2018  
4.1 Warrant Agency Agreement by and between the Company and Worldwide Stock Transfer, LLC and Form of Warrant Certificate for Registered Offering. 8-K 4.1 02/21/2018  
4.2 Form of Common Stock Purchase Warrant dated April 9, 2018.  8-K 4.1 04/19/2018  
4.3 Description of the Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. 10-K 4.3 04/02/2020  
31.1��Rule 13a-14(a) Certification of Principal Executive Officer.       X
31.2 Rule 13a-14(a) Certification of Principal Financial Officer.       X
32.1* Section 1350 Certification of Principal Executive Officer.       X
32.2* Section 1350 Certification of Principal Financial Officer.       X
           
101.INS XBRL Instance.       X
101.XSD XBRL Schema.       X
101.PRE XBRL Presentation.       X
101.CAL XBRL Calculation.       X
101.DEF XBRL Definition.       X
101.LAB XBRL Label.       X

+ Compensatory plan or arrangement.

 

* In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not deemed filed for purposes of Section 18 of the Exchange Act.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: August 13, 2020May 14, 2021BLINK CHARGING CO.
   
 By:/s/ Michael D. Farkas
  Michael D. Farkas
  

Chairman of the Board and Chief Executive Officer

(Principal Executive Officer)

 

Date: August 13, 2020May 14, 2021By:/s/ Michael P. Rama
  Michael P. Rama
  

Chief Financial Officer

(Principal Financial and Accounting Officer)

 

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