UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the quarterly period ended
or
For the transition period from _____________ to _____________
Commission
File No.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
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| (Address of principal executive offices) | (Zip Code) |
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telephone number, including area code:
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 | ||
| The
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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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
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was required to submit such files).
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.
| ☒ | Accelerated filer | ☐ | |
| Non-accelerated filer | ☐ | Smaller reporting company | |
| 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
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As of August 7, 2023, the registrant had shares of common stock outstanding.
BLINK CHARGING CO. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023
TABLE OF CONTENTS
PART 1 – FINANCIAL INFORMATION
| ITEM 1. | FINANCIAL STATEMENTS. |
BLINK CHARGING CO.
Condensed Consolidated Balance Sheets
(in thousands except for share amounts)
June 30, 2023 | December 31, 2022 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory, net | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Restricted cash | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use asset | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| Other assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Notes payable | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Current portion of financing lease liabilities | ||||||||
| Current portion of deferred revenue | ||||||||
| Total Current Liabilities | ||||||||
| Contingent consideration | ||||||||
| Consideration payable | ||||||||
| Operating lease liabilities, non-current portion | ||||||||
| Financing lease liabilities, non-current portion | ||||||||
| Other liabilities | ||||||||
| Deferred revenue, non-current portion | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies (Note 7) | ||||||||
| Stockholders’ Equity: | ||||||||
| Common stock, $ par value, shares authorized, and shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 1 |
BLINK CHARGING CO.
Condensed Consolidated Statements of Operations
(in thousands except for share and per share amounts)
| For
The Three Months Ended June 30, | For
The Six Months Ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues: | ||||||||||||||||
| Product sales | $ | $ | $ | $ | ||||||||||||
| Charging service revenue - company-owned charging stations | ||||||||||||||||
| Network fees | ||||||||||||||||
| Warranty | ||||||||||||||||
| Grant and rebate | ||||||||||||||||
| Car-sharing services | ||||||||||||||||
| Other | ||||||||||||||||
| Total Revenues | ||||||||||||||||
| Cost of Revenues: | ||||||||||||||||
| Cost of product sales | ||||||||||||||||
| Cost of charging services - company-owned charging stations | ||||||||||||||||
| Host provider fees | ||||||||||||||||
| Network costs | ||||||||||||||||
| Warranty and repairs and maintenance | ||||||||||||||||
| Car-sharing services | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total Cost of Revenues | ||||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses: | ||||||||||||||||
| Compensation | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Other operating expenses | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Loss From Operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| (Loss) gain on foreign exchange | ( | ) | ( | ) | ( | ) | ||||||||||
| Change in fair value of derivative and other accrued liabilities | ( | ) | ( | ) | ||||||||||||
| Other income (expense), net | ( | ) | ( | ) | ||||||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss Before Income Taxes | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Provision for income taxes | ( | ) | ( | ) | ||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net Loss Per Share: | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted Average Number of | ||||||||||||||||
| Common Shares Outstanding: | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 2 |
BLINK CHARGING CO.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Other Comprehensive Income (Loss): | ||||||||||||||||
| Cumulative translation adjustments | ( | ) | ( | ) | ||||||||||||
| Total Comprehensive Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
BLINK CHARGING CO.
Condensed Consolidated Statement of Changes in Stockholders’ Equity
For the Three and Six Months Ended June 30, 2023
(in thousands except for share amounts)
(unaudited)
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-In | Comprehensive | Accumulated | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Loss | Deficit | Equity | |||||||||||||||||||
| Balance - January 1, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Common stock issued in public offering, net of issuance costs [1] | ||||||||||||||||||||||||
| Common stock issued upon exercises of warrants | ||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance - March 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||
| Common stock issued in public offering, net of issuance costs [2] | ||||||||||||||||||||||||
| Reclassification of common stock liability to equity | ||||||||||||||||||||||||
| Common stock issued upon cashless exercise of options and warrants | ||||||||||||||||||||||||
| Other comprehensive income | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance - June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| [1] |
| [2] |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
BLINK CHARGING CO.
Condensed Consolidated Statement of Changes in Stockholders’ Equity
For the Three and Six Months Ended June 30, 2022
(in thousands except for share amounts)
(unaudited)
| Accumulated | ||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||
| Common Stock | Paid-In | Comprehensive | Accumulated | Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | Loss | Deficit | Equity | |||||||||||||||||||
| Balance - January 1, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Common stock issued upon exercises of warrants | ||||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance - March 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||
| Common stock issued as purchase consideration of SemaConnect | ||||||||||||||||||||||||
| Common stock issued as purchase consideration of Electric Blue | ||||||||||||||||||||||||
| Common stock issued upon exercise of warrants | ||||||||||||||||||||||||
| Common stock issued upon exercise of options | ||||||||||||||||||||||||
| Other comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance - June 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
BLINK CHARGING CO.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
| For The Six Months Ended | ||||||||
| June 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Non-cash lease expense | ||||||||
| Change in fair value of contingent consideration | ||||||||
| Loss on disposal of fixed assets | ||||||||
| Change in fair value of derivative and other accrued liabilities | ||||||||
| Provision for bad debt | ||||||||
| Provision for slow moving and obsolete inventory | ||||||||
| Stock-based compensation: | ||||||||
| Common stock | ||||||||
| Options | ||||||||
| Warrants | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable and other receivables | ( | ) | ( | ) | ||||
| Inventory | ( | ) | ( | ) | ||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Other assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Other liabilities | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Deferred revenue | ||||||||
| Total Adjustments | ||||||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Purchase consideration of Envoy, net of cash acquired | ( | ) | ||||||
| Purchase consideration of SemaConnect, net of cash acquired | ( | ) | ||||||
| Purchase consideration of Electric Blue, net of cash acquired | ( | ) | ||||||
| Capitalization of engineering costs | ( | ) | ( | ) | ||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Net Cash Used In Investing Activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from sale of common stock in public offering, net [1] | ||||||||
| Proceeds from exercise of options and warrants | ||||||||
| Repayment of financing liability in connection with finance lease | ( | ) | ( | ) | ||||
| Payment of financing liability in connection with internal use software | ( | ) | ( | ) | ||||
| Net Cash Provided By (Used In) Financing Activities | ( | ) | ||||||
| Effect of Exchange Rate Changes on Cash and Cash Equivalents | ( | ) | ||||||
| Net Increase (Decrease) In Cash and Cash Equivalents and Restricted Cash | ( | ) | ||||||
| Cash and Cash Equivalents and Restricted Cash - Beginning of Period | ||||||||
| Cash and Cash Equivalents and Restricted Cash - End of Period | $ | $ | ||||||
| Cash and cash equivalents and restricted cash consisted of the following: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| $ | $ | |||||||
| [1] |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
BLINK CHARGING CO.
Condensed Consolidated Statements of Cash Flows — Continued
(in thousands)
(unaudited)
For The Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Common stock issued as purchase consideration of SemaConnect | $ | $ | ||||||
| Common stock issued as purchase consideration of Electric Blue | $ | $ | ||||||
| Right-of-use assets obtained in exchange for lease obligations | $ | $ | ||||||
| Property and equipment obtained in exchange for finance lease obligations | $ | $ | ||||||
| Intangible assets obtained in exchange for financing liability | $ | $ | ||||||
| Transfer of inventory to property and equipment | $ | ( | ) | $ | ( | ) | ||
| Note receivable applied to purchase consideration of Envoy | $ | ( | ) | $ | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 7 |
BLINK CHARGING CO.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except for share and per share amounts)
1. BUSINESS ORGANIZATION, NATURE OF OPERATIONS, 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 residential and commercial EV charging equipment, enabling EV drivers to recharge at various location types. Blink’s principal line of products and services is its 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 provide property owners, managers, parking companies, and state and municipal entities (“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 a car-sharing program through Blink’s wholly owned subsidiary, Blink Mobility, LLC which allows customers the ability to rent electric vehicles through a subscription service.
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, 2023 and for the six months then ended. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the operating results for the full year ending December 31, 2023 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, 2022 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on March 14, 2023 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, 2022, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note.
FOREIGN CURRENCY TRANSLATION
The
Company’s reporting currency is the United States dollar. The functional currency of certain subsidiaries is the Euro, Indian
Rupee, and Pound Sterling. Assets and liabilities are translated based on the exchange rates at the balance sheet date (
REVENUE RECOGNITION
The Company recognizes revenue primarily from four different types of contracts:
| ● | 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. |
| ● | Charging service revenue – company-owned charging stations - Revenue is recognized at the point when a particular charging session is completed. |
| ● | Network fees and other – Represents a stand-ready obligation whereby the Company is obligated to perform over a period of time and, as a result, revenue is recognized on a straight-line basis over the contract term. Network fees are billed annually. |
| ● | Other – Other revenues primarily comprises of revenues generated from alternative fuel credits. |
| 8 |
BLINK CHARGING CO.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except for share and per share amounts)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
REVENUE RECOGNITION - CONTINUED
The following table summarizes revenue recognized in the condensed consolidated statements of operations:
| For The Three Months Ended | For The Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues - Recognized at a Point in Time | ||||||||||||||||
| Product sales | $ | $ | $ | $ | ||||||||||||
| Charging service revenue - company-owned charging stations | ||||||||||||||||
| Other | ||||||||||||||||
| Total Revenues - Recognized at a Point in Time | ||||||||||||||||
| Revenues - Recognized Over a Period of Time: | ||||||||||||||||
| Network and other fees | ||||||||||||||||
| Total Revenues - Recognized Over a Period of Time | ||||||||||||||||
| Revenues- Other | ||||||||||||||||
| Car-sharing services | ||||||||||||||||
| Grant and rebate | ||||||||||||||||
| Total Revenues - Other | ||||||||||||||||
| Total Revenue | $ | $ | $ | $ | ||||||||||||
The following table summarizes our revenue recognized in the condensed consolidated statements of operations by geographical area:
| For The Three Months Ended | For The Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues by Geographical Area | ||||||||||||||||
| U.S.A | $ | $ | $ | $ | ||||||||||||
| International | ||||||||||||||||
| Total Revenue | $ | $ | $ | $ | ||||||||||||
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, 2023, the Company had $
During
the three and six months ended June 30, 2023, the Company recognized $
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, 2023 and 2022, the Company recorded
$
Furthermore,
car-sharing services, which are not within scope of ASC 606, pertain 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
recognizes revenue over the contractual period of performance of the subscription which are short term in nature. During the three months
ended June 30, 2023 and 2022, the Company recognized $
| 9 |
BLINK CHARGING CO.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except for share and per share amounts)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
CONCENTRATIONS
During
the three months ended June 30, 2023 and 2022, sales to a significant customer represented
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.
| For the Three and Six Months Ended | ||||||||
| June 30, | ||||||||
| 2023 | 2022 | |||||||
| Warrants | ||||||||
| Options | ||||||||
| Total potentially dilutive shares | ||||||||
RECENTLY ADOPTED ACCOUNTING STANDARDS
In July 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-03, “Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock.” ASU 2023-03 amends the ASC for SEC updates pursuant to SEC Staff Accounting Bulletin No. 120; SEC Staff Announcement at the March 24, 2022 Emerging Issues Task Force (“EITF”) Meeting; and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. These updates were immediately effective and did not have a significant impact on the Company’s condensed consolidated financial statements.
| 10 |
BLINK CHARGING CO.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except for share and per share amounts)
3. BUSINESS COMBINATION
On April 18, 2023, the Company, Blink Mobility, LLC, a California limited liability company and wholly-owned subsidiary of the Company (“Mobility”), and Mobility Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Mobility (“Merger Sub”), entered into and, after all parties met the closing conditions, consummated the transactions contemplated under an Agreement and Plan of Merger, dated as of April 18, 2023 (the “Acquisition Agreement”), with Envoy Technologies, Inc., a Delaware corporation (“Envoy”). Pursuant to the Acquisition Agreement, Merger Sub merged with and into Envoy, whereupon the separate corporate existence of Merger Sub ceased, and Envoy was the surviving corporation of the merger and a wholly-owned subsidiary of Mobility (the “Acquisition”).
Under
the terms of the Acquisition Agreement, the acquisition consideration was up to $
The
aggregate purchase price was $
The Company engaged a third-party independent valuation specialist to assist in the determination of fair values of tangible and intangible assets acquired and liabilities assumed for Envoy. The final determination of the fair value of assets and liabilities will be completed within the one-year measurement period as required by ASC Topic 805. The Envoy acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, accounts receivable and certain fixed assets.
| 11 |
BLINK CHARGING CO.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except for share and per share amounts)
3. BUSINESS COMBINATIONS – CONTINUED
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date of Envoy:
Purchase Price Allocation | ||||
| Purchase Consideration: | ||||
| Cash | $ | |||
| Deferred cash consideration | ||||
| Common stock | ||||
| Total Purchase Consideration | $ | |||
| Less: | ||||
| Trade name | $ | |||
| Customer relationships | ||||
| Internally developed technology | ||||
| Property and equipment | ||||
| Other assets | ||||
| Notes payable- non current portion | ( | ) | ||
| Lease liability- non current portion | ( | ) | ||
| Net working capital deficit | ( | ) | ||
| Fair Value of Identified Net Assets | $ | |||
| Remaining Unidentified Goodwill Value | $ | |||
In connection with the acquisition of Envoy, the Company acquired intangible assets in the form of a trade name, customer relationships and internally developed technology.
The
Company used the relief from royalty method when determining the fair value of the acquired trademark and internally developed technology.
The fair value was determined by applying an estimated royalty rate to revenues, measuring the value the Company would pay in royalties
to a market participant if it did not own the trademark and internally developed technology and had to license it from a third party.
The trademark was assigned a useful life of
When
determining fair value of customer relationships, a form of income approach, known as the multi period excess earnings method was used.
The fair value was determined by calculating the present value of estimated future operating cash flows generated from the existing customers
less costs to realize the revenue. The Company applied a discount rate of
The fair value of working capital accounts were determined to be the carrying values due to the short-term nature of the assets and liabilities.
The fair value of property and equipment was estimated by applying the cost approach. The cost approach uses the replacement or reproduction cost as an indicator of fair value. The assumptions of the cost approach include replacement cost new, projected capital expenditures, and physical deterioration factors including economic useful life, remaining useful life, age, and effective age.
As
of June 30, 2023, the estimated fair value of the common stock consideration payable was $
| 12 |
BLINK CHARGING CO.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except for share and per share amounts)
3. BUSINESS COMBINATIONS – CONTINUED
| Current assets: | ||||
| Cash | $ | |||
| Accounts receivable | ||||
| Prepaid expenses and other current assets | ||||
| Total current assets | $ | |||
| Less current liabilities: | ||||
| Accounts payable | $ | |||
| Current portion of lease liability | ||||
| Current portion of notes payable | ||||
| Deferred revenue | ||||
| Accrued expenses and other current liabilities | ||||
| Total current liabilities | $ | |||
| Net working capital deficit | $ | ( | ) |
Goodwill
was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is
attributable to the reputation of the business acquired, the workforce in place and the synergies to be achieved from this
acquisition. Goodwill of $
The
condensed consolidated financial statements of the Company include the results of operations of Envoy from April 18, 2023 to June 30,
2023 and do not include results of operations for periods prior to April 18, 2023. The results of operations of Envoy from April 18,
2023 to June 30, 2023 included revenues of $
The following table presents the unaudited pro forma condensed consolidated results of operations for the three and six months ended June 30, 2023 and 2022 as if the acquisition of Envoy occurred at the beginning of fiscal year 2022. The pro forma information provided below is compiled from the preacquisition financial information of Envoy and includes pro forma adjustments to give effect to (i) interest expense related to notes issued as consideration and (ii) amortization expense associated with the acquired intangible assets. The pro forma results are not necessarily indicative of (i) the results of operations that would have occurred had the operations of this acquisition actually been acquired at the beginning of fiscal year 2022 or (ii) future results of operations.
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
As
of the date of the acquisition, the Company expected to collect all contractual cash flows related to receivables acquired in the acquisition.
Acquisition-related costs of $
| 13 |
BLINK CHARGING CO.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except for share and per share amounts)
4. STOCKHOLDERS’ EQUITY
PUBLIC OFFERINGS
In
February 2023, the Company completed an underwritten registered public offering of shares of its common stock at a public offering
price of $ per share. The Company received approximately $
On September 2, 2022, the Company entered into a Sales Agreement (“Sales Agreement”) with Barclays Capital
Inc., BofA Securities, Inc., HSBC Securities (USA) Inc., ThinkEquity LLC, H.C. Wainwright & Co., LLC and Roth Capital Partners, LLC
(the “Agents”) to conduct an “ATM” equity offering program pursuant to which the Company may issue and sell from
time to time shares of our common stock, having an aggregate offering price of up to $
COMMON STOCK
During
the six months ended June 30, 2023, the Company issued an aggregate of
During
the six months ended June 30, 2023, the Company issued an aggregate of shares of common stock for services to a board member with
an issuance date fair value of $
During
the six months ended June 30, 2023, the Company issued an aggregate of shares of common stock with an issuance date fair value
of $
During
the six months ended June 30, 2023, the Company issued an aggregate of shares of the Company’s common stock pursuant to
the cashless exercise of options and warrants. The options had a weighted average exercise price of $ per share and the warrants
had a weighted average exercise price of $
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, 2023 of $ and $, 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, 2022 of $ and $, respectively, which is included within compensation expense on the condensed consolidated statements of operations. As of June 30, 2023, there was $ of unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period of years.
5. RELATED PARTY TRANSACTIONS
See Note 7 – Commitments and Contingencies – Purchase Commitments for disclosure of a commitment made to a related party.
JOINT VENTURE
The
Company and a group of
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 %
of the Entity while the other three entities own %
of the Entity. The Entity currently owns
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, 2023, 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 six months ended June 30, 2023 and 2022.
BLINK CHARGING UK LIMITED
As
of June 30, 2023, several close family members of a senior management employee are providing services to Electric Blue Limited. For
the three and six months ended June 30, 2023, these related parties have collectively provided services worth $
| 14 |
BLINK CHARGING CO.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except for share and per share amounts)
6. LEASES
OPERATING LEASES
Total
operating lease expenses for the three and six months ended June 30, 2023 were $
As
of June 30, 2023, the Company had $
As
of June 30, 2023,
During
the three and six months ended June 30, 2023, the Company recorded $
Supplemental cash flows information related to leases was as follows:
| For The Six Months Ended | ||||||||
| June 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from operating leases | $ | $ | ||||||
| Financing cash flows from finance leases | $ | $ | ||||||
| Right-of-use assets obtained in exchange for lease obligations: | ||||||||
| Operating leases | $ | $ | ||||||
| Finance leases | $ | $ | ||||||
| Weighted Average Remaining Lease Term | ||||||||
| Operating leases | ||||||||
| Finance leases | ||||||||
| Weighted Average Discount Rate | ||||||||
| Operating leases | % | % | ||||||
| Finance leases | % | % | ||||||
Future minimum payments under non-cancellable leases as of June 30, 2023 were as follows:
| For the Years Ending December 31, | Operating Lease | Finance Lease | ||||||
| 2023 | $ | $ | ||||||
| 2024 | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 2027 | ||||||||
| Thereafter | ||||||||
| Total future minimum lease payments | ||||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
| 15 |
BLINK CHARGING CO.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except for share and per share amounts)
7. COMMITMENTS AND CONTINGENCIES
PURCHASE COMMITMENTS
As
of June 30, 2023, the Company had purchase commitments of approximately $
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, which has now been fully briefed and is ready for review. On April 7, 2022, the court held oral argument on the motion to dismiss but did not issue a decision. The Company 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 June 30, 2023 as it determined that any such loss contingency was either not probable or estimable.
On 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. On June 17, 2022, the court substituted the executrix of Klein’s estate as the plaintiff. The Company has not recorded an accrual related to this matter as of June 30, 2023 as it determined that any such loss contingency was either not probable or estimable.
On December 23, 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 sued in the Klein Lawsuit and asserting 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”). On February 17, 2021, the parties agreed to consolidate the Klein and Bhatia 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 court subsequently vacated the consolidation order and explained the parties should first file a motion to transfer, which the parties have done. On June 22, 2022, the court re-consolidated the Klein and Bhatia actions and reinstated the temporary stay. The Company 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 June 30, 2023 as it determined that any such loss contingency was either not probable or estimable.
On February 7, 2022, another 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 the Eighth Judicial District Court in Clark County, Nevada, seeking to pursue claims belonging to the Company against six of Blink’s directors and Michael Rama (the “McCauley Lawsuit”). Blink is named as a nominal defendant. The complaint filed in the McCauley Lawsuit asserts similar allegations to the Klein Lawsuit relating to the statements at issue in the securities class action and asserts claims for breach of fiduciary duty and unjust enrichment. The McCauley Lawsuit seeks both injunctive and monetary relief from the individual defendants, as well as an award of attorneys’ fees and costs. On March 29, 2022, the Nevada court approved the parties’ stipulation to temporarily stay the McCauley 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 June 30, 2023 as it determined that any such loss contingency was either not probable or estimable.
WARRANTY
The
Company estimates an approximate cost of $
| 16 |
BLINK CHARGING CO.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except for share and per share amounts)
7. COMMITMENTS AND CONTINGENCIES – CONTINUED
SEPARATION AGREEMENT
On
June 21, 2023, the Company and its former Chief Executive Officer Michael D. Farkas entered into a separation and general release agreement,
dated as of June 20, 2023 (the “Separation Agreement”) pursuant to Mr. Farkas’ May 1, 2023 termination of employment
and the terms of Mr. Farkas’ employment agreement, effective as of January 1, 2021 (the “Employment Agreement”). The
Separation Agreement became effective on June 28, 2023, following a statutory revocation period. Under the terms of the Separation Agreement,
the Company agreed to provide Mr. Farkas with (i) $
8. SUBSEQUENT EVENTS
AMENDMENT TO MERGER AGREEMENT - SEMACONNECT
On August 4, 2023, the Company, SemaConnect LLC, its wholly-owned subsidiary, and Shareholder Representative Services LLC, on behalf of the former stockholders of SemaConnect, Inc. (the “Stockholders’ Representative”), entered into an amendment (the “Amendment”) to the original Agreement and Plan of Merger, dated as of June 13, 2022 (the “Merger Agreement”), pursuant to which the Company acquired SemaConnect.
Under
the terms of the Amendment, the parties modified the manner by which the “Deferred Merger Consideration” (which remains $
Each
Stockholder will have the right to convert its outstanding Deferred Merger Consideration (after the initial payment of $12,500, plus
accrued interest) into shares of
In
consideration of the agreement by the Stockholders to enter into the Amendment, the Company agreed to issue shares of its common stock
with a value of $
On
June 30, 2023, the parties to the Amendment entered into an interim amendment to the Merger Agreement for administrative purposes, modifying
the transaction amount threshold related to Deferred Cash Consideration in the Merger Agreement from $
| 17 |
| 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 with its subsidiaries, “Blink” or the “Company”) as of June 30, 2023 and for the three and six months ended June 30, 2023 and 2022 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this Quarterly Report on Form 10-Q. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us,” “we,” “our” and similar terms refer to Blink. This Quarterly Report contains forward-looking statements as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this Quarterly Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions, are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Factors that may affect our results include, but are not limited to, the risks and uncertainties set forth under Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as discussed elsewhere in this Quarterly Report, 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 and business partners. 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 ongoing presence of Covid-19 and multiple Covid-19 variants 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, could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. Except as required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.
U.S. dollars are reported in thousands except for share and per share amounts
Overview
We are 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 are 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 among 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.
In order to capture more 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 comprehensive range of solutions for EV charging equipment and services that generally fall into one of the business models below, differentiated by who bears the costs of installation, equipment, and maintenance, and the percentage of revenue shared.
| ● | In our Blink-owned turnkey business model, we incur the costs of the charging equipment and installation. We own and operate the EV charging station and provide connectivity of the charging station to the Blink Networks. In this model, which favors recurring revenues, we incur most costs associated with the EV charging stations; thus, we retain substantially all EV charging revenues after deducting network connectivity and processing fees. Typically, our agreement with the Property Partner lasts seven years with extensions that can bring the term to a total of up to 21 years. | |
| ● | In our Blink-owned hybrid business model, we incur the costs of the charging equipment while the Property Partner incurs the costs of installation. We own and operate the EV charging station and provide connectivity to the Blink Networks. In this model, the Property Partner incurs the installation costs associated with the EV station; thus, we share 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 fees. Typically, our agreement with the Property Partner lasts five years with extensions that can bring the term up to fifteen years. |
| ● | In our host-owned business model, the Property Partner purchases, owns and operates the Blink EV charging station and incurs the installation costs. We work with the Property Partner by providing site recommendations, connectivity to the Blink Networks, payment processing, and optional maintenance services. In this model, the Property Partner retains and keeps all the EV charging revenues after deducting network connectivity and processing fees. | |
| ● | In our Blink-as-a-Service model, we own and operate the EV charging station, while the Property Partner incurs the installation costs. The Property Partner pays us a fixed monthly fee for the service and keeps all the EV charging revenues after deducting network connectivity and processing fees. Typically, our agreement with the Property owner lasts five years. |
We also operate an EV based car-sharing business through our wholly owned subsidiary, Blink Mobility, LLC (“Blink Mobility”), which allows customers the ability to rent electric vehicles through a subscription service and charge those cars through our charging stations. In April 2023, Blink Mobility acquired Envoy Technologies, Inc. (“Envoy Technologies”), a software and mobility services company offering shared EVs as an amenity for national real estate developers and owners. In connection with the acquisition of Envoy Technologies, our board of directors authorized our management to begin planning the spin-off and initial public offering of Blink Mobility. There is no guarantee the spin-off or initial public offering will occur.
| 18 |
As part of our 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 being a leader in the build out of EV charging infrastructure and increasing our 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 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, 2023, we sold or deployed 78,769 chargers, of which 59,797 were in Blink’s Networks (52,287 Level 2 publicly accessible commercial chargers, 5,428 Level 2 private commercial chargers, 1,551 DC Fast Charging EV publicly accessible chargers, 30 DC Fast Charging EV private chargers, and 500 residential Level 2 Blink EV chargers, inclusive of 7,628 chargers pending to be commissioned). Included in the Blink Networks are 4,865 chargers owned by us. The remaining were non-networked, on other networks or international sales or deployments (2,214 Level 2 commercial chargers, 115 DC Fast Charging chargers, 12,224 residential Level 2 Blink EV chargers, 2,971 sold to other U.S. networks, 1,369 sold internationally and 80 deployed internationally). The charger units noted above are net of swap-out or replacement units.
As reflected in our condensed consolidated financial statements as of June 30, 2023, we had a cash balance of $74,464, working capital of $100,484 and an accumulated deficit of $405,313. During the three and six months ended June 30, 2023, we incurred net losses of $41,482 and $71,283, respectively. We have not yet achieved profitability.
Recent Developments
Acquisition
On April 18, 2023, the Company, Blink Mobility, LLC, a California limited liability company and wholly-owned subsidiary of the Company (“Mobility”), and Mobility Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Mobility (“Merger Sub”), entered into and, after all parties met the closing conditions, consummated the transactions contemplated under an Agreement and Plan of Merger, dated as of April 18, 2023 (the “Acquisition Agreement”), with Envoy Technologies, Inc., a Delaware corporation (“Envoy”). Pursuant to the Acquisition Agreement, Merger Sub merged with and into Envoy, whereupon the separate corporate existence of Merger Sub ceased, and Envoy was the surviving corporation of the merger and a wholly-owned subsidiary of Mobility (the “Acquisition”).
Under the terms of the Acquisition Agreement, the acquisition consideration was up to $35,500, paid as follows: (i) $6,000 in cash paid upon the closing of the Acquisition Agreement (the “Closing”); (ii) a promissory note of Mobility in the principal amount of $5,000 which bears interest at a rate of 6% per annum and becomes due 12 months from Closing; (iii) a promissory note of Mobility in the principal amount of $2,000 which bears interest at a rate of 6% per annum and becomes due 18 months from Closing; and (iv)(a) in the event of an initial public offering or direct listing of Mobility or Mobility’s successor within 24 months after the Closing (and shares of common stock of the Company are not issued in lieu thereof), $18,500, $21,000 or $22,500 worth of shares of common stock of Mobility or Mobility’s successor, depending on the timing of such offering or listing, (b) in the event there is no initial public offering or direct listing of Mobility or Mobility’s successor within 24 months after the Closing, $21,000 worth of shares of common stock of the Company, or (c) at the Company’s option, a combination of cash and common stock of the Company with an aggregate value of $21,000.
The aggregate purchase price was $30,900, which included a working capital deficit of $1,791 and closing date cash of $19. The fair value of the consideration paid in the acquisition consisted of: (a) $6,000 in cash ($4,679 was paid at Closing and $1,321 was paid prior to Closing in the form of a note receivable); (b) $6,782 in aggregate promissory notes; and (c) $18,118 in common stock of Mobility subject to the conditions described above.
The payment of shares of common stock of Mobility or Mobility’s successor, if any, will be based on the public offering price per share of such stock in the initial public offering. The payment of shares of common stock of the Company, if any, will be based on the average of the daily-weighted average prices for such stock on each of the 60 days ending on the day prior to issuance thereof.
February 2023 Underwritten Public Offering
In February 2023, the Company completed an underwritten registered public offering of 8,333,333 shares of its common stock at a public offering price of $12.00 per share. The Company received approximately $100,000 in gross proceeds from the public offering and $94,766 in net proceeds after deducting the underwriting discount and offering expenses paid by the Company. 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 February 8, 2023. Barclays acted as the sole book-running manager for the offering. H.C. Wainwright & Co., Roth Capital Partners and ThinkEquity acted as co-managers for the offering. The underwriters did not exercise the over-allotment granted to them in connection with the offering.
New Product and Service Offerings
In January 2023, we announced the new products which included the Vision, EQ 200, Series 3, PQ 150, and 30kW DC Fast Charger, which are designed to serve the increasing demands of the growing EV markets across the U.S., Europe, Asia and Latin America.
The reimagined Vision is designed as a two-in-one solution to attract and captivate drivers and provide site hosts and advertisers an innovative media solution. With a newly designed 55” LCD screen capable of displaying static and dynamic advertising, the Vision is the ideal point-of-charge advertising solution with two 80 amp, 19.2kW ports that can charge simultaneously. The Vision offers easy payment via RFID, Apple Pay, Google Wallet, and all major credit cards. Additional features include cloud connectivity via built-in 4G LTE signal, retractable cable management and dual cable configurations with two universal J1772 plugs and a built-in camera for additional security. Site owners can benefit from charging and advertising revenue share models for this product.
| 19 |
The EQ 200 is an intelligent, affordable, and scalable charging solution designed for European and South American markets. Offering up to 22kW of power and an innovative modular design, this product fits any location and can be tailored to the specific needs of market segments. The EQ 200 is prepared for the future by supporting technologies like ISO-15118, OCPP 2.0, and bi-directional charging, also known as Vehicle-to-Grid (V2G). The charger also offers customization and rebranding options available to fit each user’s needs.
The Series 3 is a flexible and versatile EV charging solution designed for both two- and three-wheeler EVs. Designed for the APAC and Latin American markets, the Series 3 provides up to 15 amps of output in a compact form, making it ideal for installation at small shops and residential and commercial parking areas. Its built-in electric metering allows customers to manage electricity costs with an intuitive, smart network connection. Further, up to 45 charging points can be connected with a single communication gateway.
The PQ 150 is a smart charging cable designed for residential charging in European markets. Offering up to 22kW of power, the PQ 150 is simple and easy-to-use with no installation necessary and provides the highest safety level on the market today. With Bluetooth, Wi-Fi and optional SIM/GSM & GPS functionality, this product offers advanced technology in a simple, sleek design.
The Series 9 30kW DC Fast Charger is our latest solution for fast charging across global markets. A small footprint charging station designed for speed and flexibility, this product was designed to quickly charge tomorrow’s EVs today and offers the perfect balance of size and power, providing up to 100 amps and 1,000 volts of output. A 7-inch LCD touchscreen display provides drivers with an intuitive charging process and the charger integrates with the newly redesigned Blink Networks over a Wi-Fi, ethernet, or 4G connection, offering high-performance, compatibility, and remote monitoring.
Current Economic Conditions and Macroeconomic Environment
During the last several years, the global economy has experienced disruption and sustained volatility due to a number of factors. For example, the global outbreak of COVID-19 resulted in volatility in the global and domestic economies, changes in consumer and business behavior, market downturns and restrictions on business and individual activities, resulting in overall reduced economic activity. Additionally, other recent macroeconomic events including rising inflation, slowing economic growth, changes in U.S. and foreign government monetary policies, supply chain disruptions, fluctuations in currency exchange rates and the Russian invasion of Ukraine have led to further economic uncertainty. As a result, we are unable to predict the ultimate impact of equipment orders, chip shortage, the impact of other economic conditions and continuous presence of Covid-19 may have on our business, future results of operations, financial position, or cash flows. We intend to continue to monitor the impact of the Covid-19 pandemic and other global economic and macroeconomic factors on our business closely. For a further discussion of the risks, uncertainties and actions, see “Item 1A Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Key Factors Affecting Operating Results
We believe our performance and future success depend on several factors, including those discussed below:
Competition - The EV charging equipment and service market is highly competitive, and we expect the market to become increasingly competitive as new entrants enter this growing market. Our products and services compete on product performance and features, the total cost of ownership, sales capabilities, financial stability, brand recognition, product reliability, and the installed base’s size. Existing competitors may expand their product offerings and sales strategies, and new competitors may enter the market. If our market share decreases due to increased competition, its revenue and ability to generate profits in the future may be impacted.
Growth - Our growth is highly dependent upon the adoption by consumers of EVs, and we are subject to a risk of any reduced demand for EVs. The market for alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements, long development cycles for EV original equipment manufacturers, and changing consumer demands and behaviors. Factors that may influence the purchase and use of alternative fuel vehicles, and specifically EVs, include perceptions about EV quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost; the limited range over which EVs may be driven on a single battery charge and concerns about running out of power while in use; improvements in the fuel economy of the internal combustion engine; consumers’ desire and ability to purchase a luxury automobile or one that is perceived as exclusive; the environmental consciousness of consumers; volatility in the cost of oil and gasoline; consumers’ perceptions of the dependency of the United States on oil from unstable or hostile countries and the impact of international conflicts; government regulations and economic incentives promoting fuel efficiency and alternate forms of energy; access to charging stations, standardization of EV charging systems and consumers’ perceptions about convenience and cost to charge an EV; and the availability of tax and other governmental incentives to purchase and operate EVs or future regulation requiring increased use of nonpolluting vehicles. If the market for EVs does not gain broad market acceptance or develops slower than we expect, our business, prospects, financial condition and operating results may be adversely affected.
Regulations - Our business is subject to a variety of federal, state and international laws and regulations, including those with respect to government incentives promoting fuel efficiency and alternate forms of energy, electric vehicles and others. These laws and regulations, and the interpretation or application of these laws and regulations, could change. Any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes, fiscal tightening or other reasons may result in diminished revenues from government sources and diminished demand for our products. In addition, new laws or regulations affecting our business could be enacted. These laws and regulations are frequently costly to comply with and may divert a significant portion of management’s attention. Changes to these applicable laws or regulations could affect business and/or harm our customers, thereby adversely affect our business, financial condition and results of operations.
Expansion through Acquisitions - We may pursue strategic domestic and international acquisitions to expand our operations. Risks in acquisition transactions include difficulties in the integration of acquired businesses into our operations and control environment, difficulties in assimilating and retaining employees and intermediaries, difficulties in retaining the existing clients of the acquired entities, assumed or unforeseen liabilities that arise in connection with the acquired businesses, the failure of counterparties to satisfy any obligations to indemnify us against liabilities arising from the acquired businesses, and unfavorable market conditions that could negatively impact our growth expectations for the acquired businesses. Fully integrating an acquired company or business into our operations may take a significant amount of time. If we are unable to integrate or pursue strategic acquisitions, our financial condition and results of operations would be negatively impacted.
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Consolidated Results of Operations
For The Three Months Ended June 30, | For the Six Months Ended June 30, | 3 Months | 6 Months | |||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | Difference $ | Difference % | Difference $ | Difference % | |||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||||
| Product sales | $ | 24,587 | $ | 8,828 | $ | 40,976 | $ | 16,880 | $ | 15,759 | 179 | % | $ | 24,096 | 143 | % | ||||||||||||||||
| Charging service revenue - company-owned charging stations | 4,367 | 1,494 | 7,252 | 2,601 | 2,873 | 192 | % | 4,651 | 179 | % | ||||||||||||||||||||||
| Network fees | 1,667 | 472 | 3,295 | 633 | 1,195 | 253 | % | 2,662 | 421 | % | ||||||||||||||||||||||
| Warranty | 921 | 99 | 1,314 | 166 | 822 | 830 | % | 1,148 | 692 | % | ||||||||||||||||||||||
| Grant and rebate | 188 | 125 | 237 | 200 | 63 | 50 | % | 37 | 19 | % | ||||||||||||||||||||||
| Car-sharing services | 957 | 279 | 1,209 | 518 | 678 | 243 | % | 691 | 133 | % | ||||||||||||||||||||||
| Other | 155 | 189 | 227 | 288 | (34 | ) | -18 | % | (61 | ) | -21 | % | ||||||||||||||||||||
| Total Revenues | 32,842 | 11,486 | 54,510 | 21,286 | 21,356 | 186 | % | 33,224 | 156 | % | ||||||||||||||||||||||
| Cost of Revenues: | ||||||||||||||||||||||||||||||||
| Cost of product sales | 13,159 | 6,369 | 24,890 | 12,471 | 6,790 | 107 | % | 12,419 | 100 | % | ||||||||||||||||||||||
| Cost of charging services - company-owned charging stations | 743 | 351 | 1,630 | 534 | 392 | 112 | % | 1,096 | 205 | % | ||||||||||||||||||||||
| Host provider fees | 2,239 | 821 | 3,886 | 1,372 | 1,418 | 173 | % | 2,514 | 183 | % | ||||||||||||||||||||||
| Network costs | 495 | 182 | 932 | 416 | 313 | 172 | % | 516 | 124 | % | ||||||||||||||||||||||
| Warranty and repairs and maintenance | 1,415 | 523 | 2,363 | 634 | 892 | 171 | % | 1,729 | 273 | % | ||||||||||||||||||||||
| Car-sharing services | 1,594 | 659 | 2,231 | 1,085 | 935 | 142 | % | 1,146 | 106 | % | ||||||||||||||||||||||
| Depreciation and amortization | 906 | 624 | 1,744 | 1,231 | 282 | 45 | % | 513 | 42 | % | ||||||||||||||||||||||
| Total Cost of Revenues | 20,551 | 9,529 | 37,676 | 17,743 | 11,022 | 116 | % | 19,933 | 112 | % | ||||||||||||||||||||||
| Gross Profit | 12,291 | 1,957 | 16,834 | 3,543 | 10,334 | 528 | % | 13,291 | 375 | % | ||||||||||||||||||||||
| Operating Expenses: | ||||||||||||||||||||||||||||||||
| Compensation | 37,990 | 10,779 | 60,699 | 20,038 | 27,211 | 252 | % | 40,661 | 203 | % | ||||||||||||||||||||||
| General and administrative expenses | 9,449 | 9,002 | 17,927 | 13,429 | 447 | 5 | % | 4,498 | 33 | % | ||||||||||||||||||||||
| Other operating expenses | 4,916 | 4,138 | 9,111 | 7,080 | 778 | 19 | % | 2,031 | 29 | % | ||||||||||||||||||||||
| Total Operating Expenses | 52,355 | 23,919 | 87,737 | 40,547 | 28,436 | 119 | % | 47,190 | 116 | % | ||||||||||||||||||||||
| Loss From Operations | (40,064 | ) | (21,962 | ) | (70,903 | ) | (37,004 | ) | (18,102 | ) | 82 | % | (33,899 | ) | 92 | % | ||||||||||||||||
| Other (Expense) Income: | ||||||||||||||||||||||||||||||||
| Interest (expense) income | (786 | ) | (139 | ) | (1,403 | ) | (139 | ) | (647 | ) | 465 | % | (1,264 | ) | 909 | % | ||||||||||||||||
| (Loss) gain on foreign exchange | (1,026 | ) | (244 | ) | 781 | (241 | ) | (782 | ) | 320 | % | 1,022 | -424 | % | ||||||||||||||||||
| Change in fair value of derivative and other liabilities | - | (73 | ) | 10 | (73 | ) | 73 | -100 | % | 83 | -114 | % | ||||||||||||||||||||
| Other income (expense), net | 600 | (203 | ) | 650 | (307 | ) | 803 | -396 | % | 957 | -312 | % | ||||||||||||||||||||
| Total Other Expense | (1,212 | ) | (659 | ) | 38 | (760 | ) | (553 | ) | 84 | % | 798 | -105 | % | ||||||||||||||||||
| Loss Before Income Taxes | $ | (41,276 | ) | $ | (22,621 | ) | $ | (70,865 | ) | $ | (37,764 | ) | $ | (18,655 | ) | 82 | % | $ | (33,101 | ) | 88 | % | ||||||||||
| Provision for income taxes | (206 | ) | - | (418 | ) | - | (206 | ) | 0 | % | $ | (418 | ) | 0 | % | |||||||||||||||||
| Net Loss | $ | (41,482 | ) | $ | (22,621 | ) | $ | (71,283 | ) | $ | (37,764 | ) | $ | (18,861 | ) | 83 | % | $ | (33,519 | ) | 89 | % | ||||||||||
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Three Months Ended June 30, 2023 Compared Three Months Ended June 30, 2022
Revenues
Total revenue for the three months ended June 30, 2023 increased by $21,356, or 186%, to $32,842 compared to $11,486 during the three months ended June 30, 2022.
Charging service revenue from Company-owned charging stations was $4,367 for the three months ended June 30, 2023 as compared to $1,494 for the three months ended June 30, 2022, an increase of $2,873, or 192%. The increase is due to the increase in utilization of chargers and an increased number of chargers on the Blink Networks.
Revenue from product sales was $24,587 for the three months ended June 30, 2023 compared to $8,828 during the three months ended June 30, 2022, an increase of $15,759, or 179%. This increase was attributable to increased sales of commercial chargers, DC fast chargers and residential chargers when compared to the same period in 2022.
Network fee revenues were $1,667 for the three months ended June 30, 2023 compared to $472 for the three months ended June 30, 2022, an increase of $1,195, or 253%. The increase was attributable to increases in host owned units as well as billings and invoicing to Property Partners during the three months ended June 30, 2023, as compared to the three months ended June 30, 2022.
Warranty revenues were $921 for the three months ended June 30, 2023 compared to $99 for the three months ended June 30, 2022, an increase of $822, or 830%. The increase was primarily attributable to an increase in warranty contracts sold for the three months June 30, 2023 compared to the three months June 30, 2022. As of June 30, 2023, we recorded a liability of $221 which represents the estimated cost of existing backlog of known warranty cases.
Grant and rebate revenues were $188 during the three months ended June 30, 2023, compared to $125 during the three months ended June 30, 2022, an increase of $63 or 50%. 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 increase in revenue was primarily related to the timing of the amortization of previous years’ state grants/rebates associated with the installation of chargers during the three months June 30, 2023, and 2022.
Car-sharing services revenues were $957 during the three months ended June 30, 2023 compared to $279 during the three months ended June 30, 2022, an increase of $678 or 243%. These revenues are derived from car-sharing subscription services through a program with the City of Los Angeles, which was associated with the acquisition of BlueLA in September 2020. Also contributing to the increase in revenues is revenues of $654 from Envoy, which was acquired in April 2023.
Other revenue decreased by $34 or 18% to $155 for the three months ended June 30, 2023 as compared to $189 for the three months ended June 30, 2022. The increase was primarily attributable to higher Low Carbon Fuel Standard (LCFS) credits generated during the three months June 30, 2023 compared to the same period in 2022. 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.
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, 2023 were $20,551 as compared to $9,529 for the three months ended June 30, 2022, an increase of $11,022, or 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 product sales increased by $6,790, or 107%, from $6,369 for the three months ended June 30, 2022 as compared to $13,159 for the three months ended June 30, 2023. The increase was primarily due to the increase in product sales of commercial chargers, DC fast chargers and home residential chargers during the three months ended June 30, 2023 compared to the same period in 2022.
Cost of charging services-company-owned charging stations (electricity reimbursements) increased by $392, or 112%, to $743 for the three months ended June 30, 2023 as compared to $351 for the three months ended June 30, 2022. The increase in 2023 was attributable to the mix of charging stations generating charging service revenues subject to electricity reimbursement.
Host provider fees increased by $1,418, or 173%, to $2,239 during the three months ended June 30, 2023 as compared to $821 during the three months ended June 30, 2022. This increase was a result of the mix of chargers generating revenue and their corresponding revenue share percentage payments to Property Partner hosts pursuant to their agreements.
Network costs increased by $313 or 172%, to $495 during the three months ended June 30, 2023 as compared to $182 during the three months ended June 30, 2022. The increase was a result of the increase in charging stations on our network and costs incurred related to the upgrading of our network system compared to the same period in 2022.
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Warranty and repairs and maintenance costs increased by $892, or 171%, to $1,415 during the three months ended June 30, 2023 from $523 during the three months ended June 30, 2022. The increase in 2023 was attributable to significant efforts expended to reduce the backlog in warranty and repairs and maintenance cases. Also contributing to the increase was $20 from EB. As of June 30, 2023, we recorded a liability of $221 which represents the estimated cost of existing backlog of known warranty cases.
Cost of car-sharing services was $1,594 during the three months ended June 30, 2023 compared to $659 during the 2022 period, the increase was due to increase in operating expenses as a result of an increase in vehicles used in this operation. Also contributing to the increase in costs for these services is $625 from Envoy, which was acquired in April 2023.
Depreciation and amortization expense increased by $282, or 45%, to $906 for the three months ended June 30, 2023 as compared to $624 for the three months ended June 30, 2022. The increase in depreciation expense was attributable to an increase in the number of EV charging stations and vehicles associated with the car-share services.
Operating Expenses
Compensation expense increased by $27,211, or 252%, to $37,990 (consisting of approximately $15.5 million of cash compensation and benefits and approximately $11.7 million of non-cash compensation) for the three months ended June 30, 2023. Compensation expense was $10,779 (consisting of approximately $9.8 million of cash compensation and benefits and approximately $1.0 million of non-cash compensation) for the three months ended June 30, 2022. The increase in compensation expense for the three months ended June 30, 2023 compared to the same period in 2022 was primarily related to increases in personnel and compensation in executive, marketing, sales and operations departments as a result of the anticipated domestic and international growth of our company. In addition, compensation expense during the three months ended June 30, 2023 compared to the same period in 2022 increased due to additional personnel in conjunction with the acquisition of Envoy in April 2023. Also contributing to the increase in compensation expense is (1) non-cash stock-based compensation of approximately $5,500 related to the accelerated vesting of equity award grants and additional stock-based compensation associated with the resignation of our former Chief Executive Officer pursuant to the terms of his Executive Chairman and CEO Employment Agreement, dated May 28, 2021 (the “Former CEO Employment Agreement”), as set forth in the Separation and General Release Agreement, dated as of June 20, 2023, between our Company and the former Chief Executive Officer; and (2) non-recurring expenses of approximately $11,600, consisting of the non-recurring payment of approximately $6,100 to our former Chief Executive Officer pursuant to the Former CEO Employment Agreement and non-recurring bonus expense of $5,500 related to the achievement of key performance milestones by our Chief Technology Officer under his employment agreement, dated April 12, 2021.
General and administrative expenses increased by $447, or 5%, to $9,449 for the three months ended June 30, 2023 as compared to $9,002 for the three months ended June 30, 2022. The increase was primarily attributable to increases in accounting, consulting, software licensing and other professional service expenditures of $1,737. Further, general and administrative expenses increased due to increases in amortization expense of $893 related to the acquisitions in 2023 and 2022.
Other operating expenses increased by $778, or 19%, to $4,916 for the three months ended June 30, 2023 from $4,138 for the three months ended June 30, 2022. The increase was primarily attributable to increases in insurance, software expense, rent, hardware and software development costs and property/use tax expenditures of $2,116. Further, increases in travel and vehicle expenses of $234, contributed to the increase in other operating expenses for three months ended June 30, 2023 compared to the same period in 2022. Also contributing to the increase in other operating expenses were operating expenditures related to the 2022 and 2023 acquisitions.
Other Income (Expense)
We recorded other income (expense) of $(1,212) during the three months ended June 30, 2023 as compared to $(659) for the three months ended June 30, 2022. The increase was primarily due to an increase in foreign transaction loss of $782, in addition to an increase in interest expense of $647 recorded during the three months ended June 30, 2023 partially offset by increase in other income of $803.
Net Loss
Our net loss for the three months ended June 30, 2023 increased by $18,861, or 83%, to $41,482 as compared to $22,621 for the three months ended June 30, 2022. 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 June 30, 2023 was $40,337 whereas our total comprehensive loss for the three months ended June 30, 2022 was $24,893.
Six Months Ended June 30, 2023 Compared Six Months Ended June 30, 2022
Revenues
Total revenue for the six months ended June 30, 2023 increased by $33,224, or 156%, to $54,510 compared to $21,286 during the six months ended June 30, 2022.
Charging service revenue from Company-owned charging stations was $7,252 for the six months ended June 30, 2023 as compared to $2,601 for the six months ended June 30, 2022, an increase of $4,651, or 179%. The increase is due to the increase in utilization of chargers and an increased number of chargers on the Blink Networks.
Revenue from product sales was $40,976 for the six months ended June 30, 2023 compared to $16,880 during the six months ended June 30, 2022, an increase of $24,096, or 143%. This increase was attributable to increased sales of commercial chargers, DC fast chargers and residential chargers when compared to the same period in 2022.
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Network fee revenues were $3,295 for the six months ended June 30, 2023 compared to $633 for the six months ended June 30, 2022, an increase of $2,662, or 421%. The increase was attributable to increases in host owned units as well as billings and invoicing to Property Partners during the six months ended June 30, 2023, as compared to the six months ended June 30, 2022.
Warranty revenues were $1,314 for the six months ended June 30, 2023 compared to $166 for the six months ended June 30, 2022, an increase of $1,148, or 692%. The increase was primarily attributable to an increase in warranty contracts sold for the six months June 30, 2023 compared to the six months June 30, 2022. As of June 30, 2023, we recorded a liability of $221 which represents the estimated cost of existing backlog of known warranty cases.
Grant and rebate revenues were $237 during the six months ended June 30, 2023, compared to $200 during the six months ended June 30, 2022, an increase of $37, or 19%. 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 decrease in revenue was primarily related to the timing of the amortization of previous years’ state grants/rebates associated with the installation of chargers during the six months June 30, 2023, and 2022.
Car-sharing services revenues were $1,209 during the six months ended June 30, 2023 compared to $518 during the six months ended June 30, 2022, an increase of $691, or 133%. Also contributing to the increase in revenues is revenues of $654 from Envoy, which was acquired in April 2023.
Other revenue decreased by $61 to $227 for the six months ended June 30, 2023 as compared to $288 for the six months ended June 30, 2022. The increase was primarily attributable to higher Low Carbon Fuel Standard (LCFS) credits generated during the six months June 30, 2023 compared to the same period in 2022. We generate these credits from the electricity utilized by our electric car charging stations as a byproduct of our charging services in the states of California and Oregon.
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 six months ended June 30, 2023 were $37,676 as compared to $17,743 for the six months ended June 30, 2022, an increase of $19,933, or 112%. 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 product sales increased by $12,419, or 100%, from $12,471 for the six months ended June 30, 2022 as compared to $24,890 for the six months ended June 30, 2023. The increase was primarily due to the increase in product sales of commercial chargers, DC fast chargers and home residential chargers during the six months ended June 30, 2023 compared to the same period in 2022.
Cost of charging services-company-owned charging stations (electricity reimbursements) increased by $1,096, or 205%, to $1,630 for the six months ended June 30, 2023 as compared to $534 for the six months ended June 30, 2022. The increase in 2023 was attributable to the mix of charging stations generating charging service revenues subject to electricity reimbursement.
Host provider fees increased by $2,514, or 183%, to $3,886 during the six months ended June 30, 2023 as compared to $1,372 during the six months ended June 30, 2022. This increase was a result of the mix of chargers generating revenue and their corresponding revenue share percentage payments to Property Partner hosts pursuant to their agreements.
Network costs increased by $516 or 124% to $932 during the six months ended June 30, 2023 as compared to $416 during the six months ended June 30, 2022. The increase was a result of the increase in charging stations on our network and costs incurred related to the upgrading of our network system compared to the same period in 2022.
Warranty and repairs and maintenance costs increased by $1,729, or 273%, to $2,363 during the six months ended June 30, 2023 from $634 during the six months ended June 30, 2022. The increase in 2023 was attributable to significant efforts expended to reduce the backlog in warranty and repairs and maintenance cases. As of June 30, 2023, we recorded a liability of $221 which represents the estimated cost of existing backlog of known warranty cases.
Cost of car-sharing services was $2,231 during the six months ended June 30, 2023 compared to $1,085 during the 2022 period, the increase was due to increase in operating expenses as a result of an increase in vehicles used in this operation. These costs are from car-sharing subscription services through a program with the City of Los Angeles, which was associated with the acquisition of BlueLA in September 2020. Also contributing to the increase in costs for these services is $625 from Envoy, which was acquired in April 2023.
Depreciation and amortization expense increased by $513, or 42%, to $1,744 for the six months ended June 30, 2023 as compared to $1,231 for the six months ended June 30, 2022. The increase in depreciation expense was attributable to an increase in the number of EV charging stations and vehicles associated with the car-share services.
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Operating Expenses
Compensation expense increased by $40,661 or 203%, to $60,699 (consisting of approximately $41.3 million of cash compensation and benefits and approximately $19.4 million of non-cash compensation) for the six months ended June 30, 2023. Compensation expense was $20,038 (consisting of approximately $17,000 of cash compensation and benefits and approximately $3,000 of non-cash compensation) for the six months ended June 30, 2022. The increase in compensation expense for the six months ended June 30, 2023 compared to the same period in 2022 was primarily related to increases in personnel and compensation in executive, marketing, sales and operations departments as a result of the anticipated domestic and international growth of our company. In addition, compensation expense during the six months ended June 30, 2023 compared to the same period in 2022 increased due to additional personnel in conjunction with the acquisition of Envoy in April 2023. Also contributing to the increase in compensation expense is (1) non-cash stock-based compensation of approximately $5,500 related to the accelerated vesting of equity award grants and additional stock-based compensation associated with the resignation of our former Chief Executive Officer pursuant to the terms of the Former CEO Employment Agreement, as set forth in the Separation and General Release Agreement, dated as of June 20, 2023, between our company and the former Chief Executive Officer; and (2) non-recurring expense of approximately $11,600, consisting of the non-recurring payment of approximately $6,100 to our former Chief Executive Officer pursuant to the Former CEO Employment Agreement and a non-recurring bonus expense of $5,500 related to the achievement of key performance indicators by our Chief Technology Officer under his employment agreement, dated April 12, 2021.
General and administrative expenses increased by $4,498 or 33%, to $17,927 for the six months ended June 30, 2023 as compared to $13,429 for the six months ended June 30, 2022. The increase was primarily attributable to increases in accounting, legal, investor/public relations, consulting, software licensing and other professional service expenditures of $3,331. Further, general and administrative expenses increased due to increases in amortization expense of $2,716 related to the acquisitions in 2023 and 2022.
Other operating expenses increased by $2,301, or 29%, to $9,111 for the six months ended June 30, 2023 from $7,080 for the six months ended June 30, 2022. The increase was primarily attributable to increases in software expense, rent, hardware and software development costs and property/use tax expenditures of $2,930. Further, increases in travel and vehicle expenses of $772, contributed to the increase in other operating expenses for six months ended June 30, 2023 compared to the same period in 2022. Also contributing to the increase in other operating expenses were operating expenditures related to the 2023 and 2022 acquisitions.
Other Income (Expense)
We recorded other income (expense) of $38 during the six months ended June 30, 2023 as compared to $(760) for the six months ended June 30, 2022. The increase was primarily due to an increase in foreign transaction gains of $1,022 offset by interest expense of $(1,264), change in fair value of derivative and other liabilities of $83 and other income of $957.
Net Loss
Our net loss for the six months ended June 30, 2023 increased by $33,519 or 89%, to $71,283 as compared to $37,764 for the six months ended June 30, 2022. 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 six months ended June 30, 2023 was $70,988 whereas our total comprehensive loss for the six months ended June 30, 2022 was $40,642.
Liquidity and Capital Resources
We measure our liquidity in a number of ways, including the following:
| June 30, 2023 | December 31, 2022 | |||||||
| (unaudited) | ||||||||
| Cash and Cash Equivalents | $ | 74,464 | $ | 36,562 | ||||
| Working Capital | $ | 100,484 | $ | 48,962 | ||||
| Debt | $ | 47,426 | $ | 40,618 | ||||
During the six months ended June 30, 2023, we financed our activities from proceeds derived from equity 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 six months ended June 30, 2023 and 2022, we used cash of $65,040 and $30,986, respectively, in operations. Our cash use for the six months ended June 30, 2023 was primarily attributable to our net loss of $71,283, adjusted for net non-cash expenses in the aggregate amount of $28,564, partially offset by $22,321 of net cash provided by changes in the levels of operating assets and liabilities. Our cash use for the six months ended June 30, 2022 was primarily attributable to our net loss of $37,764, adjusted for net non-cash expenses in the aggregate amount of $7,629 and $851 of cash used to fund changes in the levels of operating assets and liabilities.
During the six months ended June 30, 2023, net cash used in investing activities was $10,833, of which $5,647 was used to purchase charging stations and other fixed assets, $4,660 was used as cash consideration for Envoy (net of cash acquired) and $526 related to the capitalization of certain engineering costs. During the six months ended June 30, 2022, net cash used in investing activities was $52,233, of which, $38,338 was used as cash consideration for SemaConnect (net of cash acquired), $11,360 was used as cash consideration for Electric Blue (net of cash acquired) $288 was related to the payment of engineering costs that were capitalized, and $2,247 which was used to purchase charging stations and other fixed assets.
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During the six months ended June 30, 2023, cash provided by financing activities was $112,426, of which, $113,254 was provided by offering proceeds related to the sale of common stock, $835 was provided by the exercise of options and warrants, offset by $1,443 used to pay down our liability in connection with a finance lease and $220 used to pay down our liability in connection with internal use software. During the six months ended June 30, 2022, cash used in financing activities was $214, of which, $92 was provided by the exercise of warrants and options, offset by $235 used to pay down our liability in connection with internal use software and $71 was used to pay down our finance lease liability.
As of June 30, 2023, we