Blink Charging Co

1. BUSINESS ORGANIZATION, NATURE OF OPERATIONS, BASIS OF PRESENTATION AND RISKS AND UNCERTAINTIES

Organization and Operations

Blink Charging Co., through its wholly-owned subsidiaries (collectively, the “Company” or “Blink”), is a leading manufacturer, owner, operator and provider of electric vehicle (“EV”) charging equipment and networked EV charging services in the rapidly growing U.S. and international markets for EVs. Blink offers residential and commercial EV charging equipment and services, enabling EV drivers to recharge at various location types. Blink’s principal line of products and services is its nationwide Blink EV charging networks (the “Blink Networks”) and Blink EV charging equipment, also known as electric vehicle supply equipment (“EVSE”), and other EV-related services. The Blink Networks is a proprietary, cloud-based system that operates, maintains and manages Blink charging stations and handles the associated charging data, back-end operations and payment processing. The Blink Networks provide property owners, managers, parking companies, state and municipal entities, and other types of commercial customers (“Property Partners”) with cloud-based services that enable the remote monitoring and management of EV charging stations. The Blink Networks also provide EV drivers with vital station information, including station location, availability and fees. Blink also operates an EV based ride-sharing business through its wholly-owned subsidiary, Envoy Mobility, Inc.

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, 2024 and for the three and six months then ended. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the operating results for the full year ending December 31, 2024 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, 2023 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on March 18, 2024 as part of the Company’s Annual Report on Form 10-K (the “Annual Report”).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Since the Annual Report for the year ended December 31, 2023, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note.

LIQUIDITY

As of June 30, 2024, the Company had cash and cash equivalents of $73,885 and working capital of $111,801. During the three and six months ended June 30, 2024, the Company incurred a net loss of $20,059 and $37,232, respectively. During the six months ended June 30, 2024, the Company used cash in operating activities of $25,735.

During the six months ended June 30, 2024, the Company sold an aggregate of 8,177,472 shares of common stock under an “at-the-market” equity offering program for aggregate gross proceeds of $25,651, less issuance costs of $581. See Note 10 – Stockholders’ Equity.

The Company has not yet achieved profitability and expects to continue to incur cash outflows from operations. Historically, the Company has been able to raise funds to support its business operations, although there can be no assurance that it will be successful in raising significant additional funds in the future. The Company expects that its cash on hand will fund its operations for at least 12 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 financing. 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. The Company is executing its plan designed to improve the Company’s liquidity by enhancing revenue economics, increasing gross profit through product optimization, integration of acquisitions and reduction of operating expenses through cost avoidance and cost cutting strategies. There can be no assurances that these strategies will be achieved.

INVENTORY

As of June 30, 2024, the Company’s inventory was comprised $31,932 of finished goods that were available for sale and $12,522 of raw material and work in process. As of December 31, 2023, the Company’s inventory was comprised of $33,902 of finished goods that were available for sale and $14,040 of raw material and work in process.

FOREIGN CURRENCY TRANSLATION

Transaction (losses) gains attributable to foreign exchange were $(15) and $(45) during the three and six months ended June 30, 2024, respectively. Transaction (losses) gains attributable to foreign exchange were $(1,026) and $781 during the three and six months ended June 30, 2023, respectively. Transaction gains and losses attributable to foreign exchange are included within general and administrative expenses on the condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023.

ASSETS HELD FOR SALE

The Company initially measures an asset that is classified as held for sale at the lower of its carrying amount or fair value less costs to sell. The Company assesses the fair value of an asset less costs to sell each reporting period that it remains classified as held for sale, and reports any subsequent changes as an adjustment to the carrying amount of the asset. Assets are not depreciated or amortized while they are classified as held for sale.

Office Space

During the first quarter of 2024, the Company commenced plans to sell its approximately 10,000 square feet of office space in Miami Beach, Florida. The asset is included within property and equipment on the condensed consolidated balance sheet as of June 30, 2024. The asset’s carrying value was $3,675 and $3,692 as of June 30, 2024, and December 31, 2023, respectively.

Underperforming Subsidiary

During the first quarter of 2024, the Company’s Board of Directors approved a plan to sell a subsidiary’s underperforming assets. On April 30, 2024, the Company entered into an agreement to sell the subsidiary’s installed and inventory charging units and the associated agreements with existing customers, hosts, and drivers. This transaction was completed and funded on July 3, 2024. As a result, the Company recorded an estimated loss of $119 and $683 for the three and six months ended June 30, 2024, respectively, which is included in operating expenses on the accompanying condensed consolidated statements of operations. The Company elected not to present this underperforming subsidiary as discontinued operations because it is immaterial to the Company’s condensed consolidated financial statements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

REVENUE RECOGNITION

The Company recognizes revenue primarily from the following:

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

The following table summarizes our revenue recognized in the condensed consolidated statements of operations by geographical area:

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

As of June 30, 2024, the Company had $28,707 related to contract liabilities where performance obligations have not yet been satisfied, which has been included within deferred revenue on the condensed consolidated balance sheets as of June 30, 2024. The Company expects to satisfy $15,192 of its remaining performance obligations for network fees, warranty revenue, product sales, and other and recognize the revenue within the next twelve months.

The Company has elected to apply the practical expedient to expense costs to obtain contracts at the time the liability is incurred when the expected amortization period is one year or less.

During the three and six months ended June 30, 2024, the Company recognized $2,624 and $5,072 of revenues, respectively, related to network fees and warranty contracts, which were included in deferred revenues as of December 31, 2023. During the three and six months ended June 30, 2024, there wasno revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods as specified by ASC 606-10-50-12A.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

REVENUE RECOGNITION – CONTINUED

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. During the three months ended June 30, 2024 and 2023, the Company recorded $52 and $188, respectively, related to grant and rebate revenue. During the six months ended June 30, 2024 and 2023, the Company recorded $635 and $237, respectively, related to grant and rebate revenue. During the three months ended June 30, 2024 and 2023, the Company recognized $31 and $52 respectively, of revenue related to alternative fuel credits. During the six months ended June 30, 2024 and 2023, the Company recognized $75 and $103, respectively, of revenue related to alternative fuel credits.

Car-sharing services is accounted for under ASC Topic 842,Leases, and pertains to revenues and expenses related to a car-sharing services agreement with the City of Los Angeles which allows customers the ability to rent electric vehicles through a subscription service. The Company accounts for such rentals as operating leases. The lease terms are included in the Company’s contracts, and the determination of whether the Company’s contracts contain leases generally does not require significant assumptions or judgments. The Company’s lease revenues do not include material amounts of variable payments. The Company does not provide an option for the lessee to purchase the rented equipment at the end of the lease.

The Company is unsure of when the customer will return rented equipment. As such, the Company does not know how much the customer will owe it upon return of the equipment and, therefore, cannot provide a maturity analysis of future lease payments. The Company’s equipment is generally rented for short periods of time (generally a few minutes to a few hours). Lessees do not provide residual value guarantees on rented equipment.

The Company expects to derive significant future benefits from its equipment following the end of the rental term. The Company’s equipment is typically rented for the majority of the time that the Company owns it. The Company recognizes revenue over the contractual period of performance of the subscription which are short term in nature. During the three months ended June 30, 2024 and 2023, the Company recognized$1,202 and $957, respectively, related to car-sharing services revenue. During the six months ended June 30, 2024 and 2023, the Company recognized$2,299 and $1,209, respectively, related to car-sharing services revenue.

CONCENTRATIONS

During the three months ended June 30, 2024 and 2023, sales to a significant customer represented 16% and less than 10% of total revenue, respectively. During the three months ended June 30, 2024 and 2023, sales to another significant customer represented 12% and 0% of total revenue, respectively. During the three months ended June 30, 2024 and 2023, the Company made purchases from a significant supplier that represented 21% and 14% of total purchases, respectively.

During the six months ended June 30, 2024 and 2023, the Company made purchases from a significant supplier that represented 18% and 13% of total purchases, respectively. As of June 30, 2024, accounts receivable from a significant customer represented 10% of total accounts receivable. As of June 30, 2024, accounts payable to two significant vendors represented 19% and 12% of total accounts payable. As of December 31, 2023, accounts payable to two significant vendors were approximately 16% and 10% of total accounts payable.

RECLASSIFICATIONS

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

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:

3. NOTES PAYABLE

SEMACONNECT - NOTES PAYABLE

During the six months ended June 30, 2024, the Company repaid the remaining principal balance of $31,354 due under its SemaConnect acquisition promissory note, together with an additional $1,139 of accrued interest.

ENVOY - NOTES PAYABLE

During the six months ended June 30, 2024, the Company repaid the remaining principal balance of $6,527 due under this note as well as paid $297 of accrued interest.

4. STOCKHOLDERS’ EQUITY

AT-THE-MARKET OFFERING

During the six months ended June 30, 2024, the Company sold an aggregate of 8,177,472 shares of common stock aggregate gross proceeds of $25,651, less issuance costs of $581, for net proceeds of $25,070.

COMMON STOCK

During the six months ended June 30, 2024, the Company issued an aggregate of 837 shares of common stock for services to an employee with an issuance date fair value of $2 and will be recognized ratably over the vesting term. On the grant date 279 shares vested immediately,279 shares vested on April 1, 2024, and the remaining 279 shares will vest on April 1, 2025. Expenses related to this award are included within compensation expense on the condensed consolidated statements of operations.

During the six months ended June 30, 2024, the Company issued an aggregate of 70,665 shares of common stock upon vesting of restricted stock units to employees for services with an aggregate grant date fair value of $825. Expenses related to this award were included within compensation expense on the condensed consolidated statements of operations.

STOCK-BASED COMPENSATION

The Company recognized stock-based compensation expense related to common stock, stock options and warrants for the three months and six months ended June 30, 2024, $1,033 and $1,950 respectively, which is included within compensation expense on the condensed consolidated statements of operations. The Company recognized stock-based compensation expense related to common stock, stock options and warrants for the three and six months ended June 30, 2023 of $7,775 and $19,439, respectively, which is included within compensation expense on the condensed consolidated statements of operations. As of June 30, 2024, there was $3,542 of unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period of 1.2 years.

During the six months ended June 30, 2024, the Company granted an aggregate of 758,549 shares of restricted stock with an aggregate grant date fair value of $2,133 which will be recognized ratably over the vesting terms. The restricted stock has vesting dates ranging from April 15, 2024 to June 30, 2027. Expenses related to this award are included within compensation expense on the condensed consolidated statements of operations.

5. RELATED PARTY TRANSACTIONS

JOINT VENTURE

The Company and a group ofthree Cyprus entities entered into a shareholders’ agreement on February 11, 2019, pertaining to the parties’ respective shareholdings in a new joint venture entity, Blink Charging Europe Ltd. (the “Entity”), that was formed under the laws of Cyprus on the same date. The Company owns 40% of the Entity, while the other three parties own 60%. Subsequently, two of the three other parties exited the joint venture, and the remaining other party acquired the ownership of the exiting parties. The Entity currently owns 100% of a Greek subsidiary, Blink Charging Hellas SA (“Hellas”), which operates in the electric vehicle market in Greece. The obligation to fund the Entity’s future operations is limited to the Company’s 40% ownership. During the three and six months ended June 30, 2024, the Company recognized sales of $182 to Hellas. No sales to Hellas were recognized during the three and six months ended June 30, 2023. In addition, the Company had accounts receivable of $183 and $0 as of June 30, 2024, and December 31, 2023. In addition, as of June 30, 2024, and December 31, 2023, the Company had a payable of approximately $164 and $114, respectively, to Hellas. Furthermore, the Company has provided working capital of $148 and $0 for the six months ended June 30, 2024 and 2023, respectively, to Hellas. The Company has written off this working capital contribution, since the Company’s proportion of Hellas’s net losses exceeds the working capital contribution.

The Company determined that the Entity is a variable interest entity; however, the Company does not have a controlling financial interest and, 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 June 30, 2024, 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 and six months ended June 30, 2024 and 2023.

BLINK CHARGING UK LIMITED

As of June 30, 2024, several close family members of a senior management employee are providing services to Blink Charging UK Limited. For the three and six months ended June 30, 2024, these related parties collectively provided services worth $35 and $117, respectively, to Blink Charging UK Limited. For the three and six months ended June 30, 2023, these related parties have collectively provided services worth $39 and $125, respectively, to Blink Charging UK Limited. These expenses are included within general and administrative expenses on the condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023.

6. LEASES

OPERATING LEASES

Total operating lease expenses for the three and six months ended June 30, 2024 were $347 and $1,135, respectively, and for the three and six months ended June 30, 2023 were $655 and $1,149, respectively, which were recorded in other operating expenses on the condensed consolidated statements of operations. Operating lease expenses consist of rent expense, common area maintenance adjustments and other expenses.

As of June 30, 2024, the Company did not have additional operating and financing leases that have not yet commenced. As of June 30, 2024, the Company had $168 of right-of-use assets that were classified as financing leases for vehicles associated with the operations of Blink Mobility and are included as a component of property and equipment on the condensed consolidated balance sheet as of June 30, 2024. As of December 31, 2023, the Company had $697 of right-of-use assets that were classified as financing leases for vehicles associated with Blink Mobility’s operations and are included as a property and equipment component on the consolidated balance sheet as of December 31, 2023.

During the three and six months ended June 30, 2024, the Company recorded $13 and $23, respectively, of interest expense related to finance leases, which were recorded within interest expense on the condensed consolidated statements of operations. During the three and six months ended June 30, 2023, the Company recorded $106 and $116, respectively, of interest expense related to finance leases.

During the three and six months ended June 30, 2024 the Company recorded amortization expense of $489 and $536 respectively, related to finance leases. During the three and six months ended June 30, 2023, the Company recorded amortization expense of $353 and $522 related to finance leases. These expenses were included within depreciation and amortization expense on the condensed consolidated statements of operations for the three and six months June 30, 2024 and 2023.

Supplemental cash flows information related to leases was as follows:

Future minimum payments under non-cancellable leases as of June 30, 2024 were as follows:

7. FAIR VALUE MEASUREMENT

Assumptions utilized in the valuation of Level 3 liabilities are described as follows:

The following table sets forth a summary of the changes in the fair value of Level 3 warrant and consideration payable liabilities that are measured at fair value on a recurring basis:

The common stock consideration payable is recorded at fair value of $20,565 and $18,118 as of June 30, 2024 and December 31, 2023, respectively, and is included within consideration payable on the condensed consolidated balance sheets. The Company uses a probability-weighted discounted cash flow approach as a valuation technique to determine the fair value of the common stock consideration payable on the acquisition date and at each reporting period. The significant unobservable inputs used in the fair value measurements are the probability outcome percentages that are assigned to each scenario. Significant increases or decreases to either of these inputs in isolation could result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the common stock consideration liability.

Assets and liabilities measured at fair value on a recurring basis are as follows:

**8. COMMITMENTS AND CONTINGENCIES **

LITIGATION, DISPUTES AND SETTLEMENTS

The Company may be subject to lawsuits, investigations, intellectual property matters, claims and proceedings, including, but not limited to, contractual disputes with vendors and customers and liabilities related to employment, health and safety matters that may arise in the ordinary course of business. The Company accrues for losses that are both probable and reasonably estimable. Loss contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex and subject to change.

The Company believes it has recorded adequate provisions for any such lawsuits, investigations, claims, and proceedings as of June 30, 2024, and the Company believes it was not reasonably possible that a material loss had been incurred in excess of the amounts recognized in the condensed consolidated financial statements. Given the inherent uncertainties of litigation, the ultimate outcome of the ongoing matters described herein cannot be predicted with certainty. While litigation is inherently unpredictable, the Company believes it has valid defenses with respect to the legal matters pending against it. However, future events or circumstances, currently unknown to management, may potentially have a material effect on the Company’s financial position, liquidity or results of operations in any future reporting period.

In August 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 former Chairman of the Board and Chief Executive Officer), and Michael Rama (Blink’s Chief Financial Officer) (the “Bush Lawsuit”). In September 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. Following consolidation of the two actions and the court appointing Tianyou Wu, Alexander Yu and H. Marc Joseph to serve as the Co-Lead Plaintiffs, the Co-Lead Plaintiffs filed an Amended Complaint in February 2021. The Amended Complaint alleged, among other things, that the defendants made false or misleading statements about the size and functionality of the Blink Network and asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. In April 2021, Blink and the other defendants filed a motion to dismiss the Amended Complaint. In November 2023, the court dismissed Co-Lead Plaintiffs’ claims relating to the size of Blink’s charging network and denied the remainder of the motion to dismiss. Following a mediation in April 2024, the parties agreed to the terms of a settlement, which is subject to final court approval. As part of the settlement, the Defendants agreed to pay $3,750 (inclusive of attorneys’ fees and administrative costs) in exchange for the dismissal with prejudice of all claims. On July 2, 2024, Co-Lead Plaintiffs filed an unopposed motion for preliminary approval of the settlement. On July 9, 2024, the court (i) granted the motion, (ii) certified a settlement class, for settlement purposes only, of investors who purchased or otherwise acquired Blink’s common stock between March 6, 2020 and August 19, 2020, (iii) preliminarily approved the settlement, and (iv) set a final settlement hearing for October 23, 2024. The full settlement amount has been paid by the Company’s Directors’ and Officers’ insurance policies.

In September 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 asserted that the Director defendants caused Blink to make the statements at issue in the securities class action and, as a result, the Company incurred costs defending against the Bush Lawsuit and other unidentified investigations. The Klein Lawsuit asserted 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 sought damages sustained by the Company as a result of the defendants’ alleged breaches of fiduciary duties, corporate governance changes, restitution, and disgorgement of profits from the defendants and attorneys’ fees and other litigation expenses. In December 2020, another shareholder derivative action, captioned Bhatia (derivatively on behalf of Blink Charging Co.) v. Farkas et al., Case No. 20-27632CA01, was filed in Miami-Dade County Circuit Court against the same defendants in the Klein Lawsuit and asserted similar claims, as well as additional claims relating to the Company’s nomination, appointment and hiring of minorities and women and the Company’s decision to retain its outside auditor (the “Bhatia Lawsuit”). In June 2022, the court consolidated the Klein and Bhatia actions under the caption In re Blink Charging Company Stockholder Derivative Litigation, Lead Case No. 2020-019815-CA-01. The action remains stayed pending the final approval of the settlement in the Bush Lawsuit. The Company wholly and completely disputes the allegations. The Company has retained legal counsel to defend the action vigorously. The Company has not recorded an accrual related to this matter as of June 30, 2024, as it determined that any such loss contingency was either not probable or estimable.

In February 2022, a shareholder derivative lawsuit, captioned McCauley (derivatively on behalf of Blink Charging Co.) v. Farkas et al., Case No. A-22-847894-C, was filed in Clark County, Nevada seeking to pursue claims belonging to the Company against Blink’s Board of Directors and Michael Rama (the “McCauley Lawsuit”). Blink is named as a nominal defendant. The McCauley Lawsuit asserted similar claims and sought similar damages as the Klein Lawsuit. The action remains stayed pending the final approval of the settlement in the Bush Lawsuit. The Company wholly and completely disputes the allegations. The Company has retained legal counsel to defend the action vigorously. The Company has not recorded an accrual related to this matter as of June 30, 2024, as it determined that any such loss contingency was either not probable or estimable.

REPAIRS AND MAINTENANCE- COMPANY OWNED CHARGERS

The Company estimates an approximate cost of $106 and $600 to repair deployed chargers, which the Company owned as of June 30, 2024 and December 31, 2023, respectively.