Blink(BLNK) - 2023 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents Blink Charging Co.'s unaudited condensed consolidated financial statements and management's analysis for Q2 2023 Item 1. Financial Statements This section presents Blink Charging Co.'s unaudited condensed consolidated financial statements for Q2 2023, with accompanying notes Condensed Consolidated Balance Sheets This section presents Blink Charging Co.'s financial position at June 30, 2023, and December 31, 2022 Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :----------------------- | :------------ | :---------------- | | Total Current Assets | $169,027 | $99,282 | | Total Assets | $468,441 | $362,542 | | Total Current Liabilities| $68,543 | $50,320 | | Total Liabilities | $147,883 | $101,585 | | Total Stockholders' Equity| $320,558 | $260,957 | - Total Assets increased by approximately $105.9 million from December 31, 2022, to June 30, 2023, primarily driven by increases in cash and cash equivalents, accounts receivable, inventory, and goodwill[8] - Total Stockholders' Equity increased by approximately $59.6 million, reflecting capital raises and other equity movements[40] Unaudited Condensed Consolidated Statements of Operations This section details Blink Charging Co.'s revenues, expenses, and net loss for Q2 2023 and prior year periods Key Financial Performance (in thousands, except per share amounts) | Metric (3 Months Ended June 30) | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------ | :-------- | :-------- | :--------- | :--------- | | Total Revenues | $32,842 | $11,486 | $21,356 | 186% | | Gross Profit | $12,291 | $1,957 | $10,334 | 528% | | Loss From Operations | $(40,064) | $(21,962) | $(18,102) | 82% | | Net Loss | $(41,482) | $(22,621) | $(18,861) | 83% | | Net Loss Per Share (Basic) | $(0.67) | $(0.52) | $(0.15) | 29% | | Metric (6 Months Ended June 30) | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------ | :-------- | :-------- | :--------- | :--------- | | Total Revenues | $54,510 | $21,286 | $33,224 | 156% | | Gross Profit | $16,834 | $3,543 | $13,291 | 375% | | Loss From Operations | $(70,903) | $(37,004) | $(33,899) | 92% | | Net Loss | $(71,283) | $(37,764) | $(33,519) | 89% | | Net Loss Per Share (Basic) | $(1.20) | $(0.88) | $(0.32) | 36% | - Product sales were the largest revenue driver, increasing 179% for the three months and 143% for the six months ended June 30, 2023, compared to the prior year periods[17][166][209] - Gross Profit significantly improved, increasing 528% for the three months and 375% for the six months ended June 30, 2023, indicating better cost management relative to revenue growth[17][196] Unaudited Condensed Consolidated Statements of Comprehensive Loss This section presents Blink Charging Co.'s net loss and other comprehensive income (loss) for Q2 2023 and prior year periods Total Comprehensive Loss (in thousands) | Metric (3 Months Ended June 30) | 2023 | 2022 | | :------------------------------ | :-------- | :-------- | | Net Loss | $(41,482) | $(22,621) | | Cumulative translation adjustments| $1,145 | $(2,272) | | Total Comprehensive Loss | $(40,337) | $(24,893) | | Metric (6 Months Ended June 30) | 2023 | 2022 | | :------------------------------ | :-------- | :-------- | | Net Loss | $(71,283) | $(37,764) | | Cumulative translation adjustments| $295 | $(2,878) | | Total Comprehensive Loss | $(70,988) | $(40,642) | - Total Comprehensive Loss increased by 62% for the three months and 75% for the six months ended June 30, 2023, primarily due to the increased net loss, partially offset by positive cumulative translation adjustments in 2023[19][219][239] Unaudited Condensed Consolidated Statement of Changes in Stockholders' Equity This section outlines changes in Blink Charging Co.'s stockholders' equity for the six months ended June 30, 2023 Changes in Stockholders' Equity (in thousands, except share amounts) | Metric | June 30, 2023 (6 Months) | | :-------------------------------------- | :----------------------- | | Balance - January 1, 2023 | $260,957 | | Common stock issued in public offering, net of issuance costs | $94,766 | | Common stock issued upon exercises of warrants | $835 | | Stock-based compensation | $16,465 | | Other comprehensive income (loss) | $(850) + $1,145 = $295 |\ | Net loss | $(71,283) | | Balance - June 30, 2023 | $320,558 | - Stockholders' equity increased from $260,957 thousand at January 1, 2023, to $320,558 thousand at June 30, 2023, primarily driven by proceeds from public offerings and stock-based compensation, despite a net loss[45] - The company issued 8,333,333 shares in a public offering, generating $94,758 thousand in additional paid-in capital, and 2,842,687 shares in another public offering, generating $18,484 thousand[45] Unaudited Condensed Consolidated Statements of Cash Flows This section summarizes Blink Charging Co.'s cash flows from operating, investing, and financing activities for Q2 2023 Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2023 | 2022 | | :----------------------------- | :--------- | :--------- | | Net Cash Used In Operating Activities | $(65,040) | $(30,986) | | Net Cash Used In Investing Activities | $(10,833) | $(52,233) | | Net Cash Provided By (Used In) Financing Activities | $112,426 | $(214) | | Effect of Exchange Rate Changes| $1,354 | $(2,350) | | Net Increase (Decrease) In Cash and Cash Equivalents and Restricted Cash | $37,907 | $(85,783) | | Cash and Cash Equivalents and Restricted Cash - End of Period | $74,540 | $89,266 | - Net cash used in operating activities increased significantly to $65.04 million in 2023, primarily due to a higher net loss[49][69] - Net cash provided by financing activities was $112.43 million in 2023, a substantial increase from 2022, mainly due to proceeds from public offerings of common stock[49][253] - Net cash used in investing activities decreased to $10.83 million in 2023, compared to $52.23 million in 2022, largely due to lower acquisition-related cash outlays[49][278] Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations of Blink Charging Co.'s significant accounting policies and other financial statement items Note 1. Business Organization, Nature of Operations, and Basis of Presentation This note describes Blink Charging Co.'s business, operations, and the basis for its financial statement presentation - Blink Charging Co. is a leading owner, operator, and provider of EV charging equipment and networked EV charging services, offering residential and commercial solutions[61] - The company also operates a car-sharing program through its wholly-owned subsidiary, Blink Mobility, LLC[61] - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and do not include all disclosures required for complete annual financial statements[31] Note 2. Summary of Significant Accounting Policies This note outlines Blink Charging Co.'s key accounting policies, including revenue recognition and foreign currency translation - No material changes to significant accounting policies since December 31, 2022, except as disclosed[54] - Revenue is primarily recognized from product sales (at shipment), charging service revenue (at session completion), and network fees (straight-line over contract term)[63][259] Revenue by Recognition Timing (in thousands) | Revenue Type | 3 Months Ended June 30, 2023 | 3 Months Ended June 30, 2022 | | :------------------------------- | :--------------------------- | :--------------------------- | | Recognized at a Point in Time | $29,109 | $10,511 | | Recognized Over a Period of Time | $2,588 | $571 | | Other (Car-sharing, Grant/Rebate)| $1,145 | $404 | | Total Revenue | $32,842 | $11,486 | | Revenue Type | 6 Months Ended June 30, 2023 | 6 Months Ended June 30, 2022 | | :------------------------------- | :--------------------------- | :--------------------------- | | Recognized at a Point in Time | $48,455 | $19,769 | | Recognized Over a Period of Time | $4,609 | $799 | | Other (Car-sharing, Grant/Rebate)| $1,446 | $718 | | Total Revenue | $54,510 | $21,286 | - Foreign currency translation adjustments are recognized in stockholders' equity as a component of accumulated other comprehensive income[62] - The company had significant customer and supplier concentrations, with one customer representing 19% of accounts receivable and one supplier representing 16% of accounts payable as of June 30, 2023[89] Note 3. Business Combination This note details Blink Mobility, LLC's acquisition of Envoy Technologies, Inc., including consideration and asset allocation - On April 18, 2023, Blink Mobility, LLC acquired Envoy Technologies, Inc. for an aggregate purchase price of $30.9 million[76][156] Envoy Acquisition Consideration and Allocation (in thousands) | Consideration Type | Amount | | :----------------- | :----- | | Cash | $6,000 | | Deferred Notes | $6,782 | | Common Stock | $18,118| | Total Consideration| $30,900| | Acquired Assets / Assumed Liabilities | Fair Value | | :------------------------------------ | :--------- | | Trade name | $291 | | Customer relationships | $4,170 | | Internally developed technology | $334 | | Property and equipment | $1,802 | | Other assets | $52 | | Net working capital deficit | $(1,792) | | Goodwill | $27,797 | - Goodwill of $27.8 million was recorded, attributable to the acquired business's reputation, workforce, and expected synergies, and is not expected to be deductible for income tax purposes[125] - Envoy contributed $0.65 million in revenues and a net loss of $0.85 million to Blink's consolidated results from April 18, 2023, to June 30, 2023[100] Note 4. Stockholders' Equity This note describes changes in Blink Charging Co.'s stockholders' equity, including public offerings and stock-based compensation - In February 2023, the company completed a public offering of 8,333,333 common shares at $12.00 per share, generating $94.77 million in net proceeds[102][188] - During the six months ended June 30, 2023, the company sold 2,757,168 shares under an ATM equity offering program for gross proceeds of approximately $18.87 million[129][281] Stock-Based Compensation Expense (in thousands) | Period | 2023 | 2022 | | :------------------------------ | :-------- | :-------- | | Three Months Ended June 30 | $7,775 | $1,027 | | Six Months Ended June 30 | $19,439 | $2,989 | - As of June 30, 2023, $5.91 million of unrecognized stock-based compensation expense remains, to be recognized over a weighted average remaining vesting period of 1.74 years[105] Note 5. Related Party Transactions This note discloses Blink Charging Co.'s transactions and relationships with related parties, including a joint venture - Blink owns 40% of Blink Charging Europe Ltd., a joint venture in Cyprus, and applies equity method accounting as it does not have a controlling financial interest[107][108][134] - Related parties (close family members of a senior management employee) provided services worth $0.125 million to Electric Blue Limited for the six months ended June 30, 2023, with $0.023 million in purchase commitments outstanding[109] Note 6. Leases This note provides information on Blink Charging Co.'s operating lease expenses and lease terms Operating Lease Expenses (in thousands) | Period | 2023 | 2022 | | :------------------------------ | :------ | :---- | | Three Months Ended June 30 | $655 | $175 | | Six Months Ended June 30 | $1,149 | $343 | - Total operating lease expenses increased significantly, reflecting growth in operations and associated property needs[111] - The weighted average remaining lease term for operating leases was 3.21 years with a weighted average discount rate of 7.1% as of June 30, 2023[138] Note 7. Commitments and Contingencies This note details Blink Charging Co.'s purchase commitments and ongoing legal proceedings - As of June 30, 2023, the company had purchase commitments of approximately $33 million, primarily for future sales and deployments of charging stations, expected within 12-24 months[140][282] - The company is involved in several legal proceedings, including securities class action lawsuits (Bush, Vittoria) and shareholder derivative actions (Klein, Bhatia, McCauley), but has not recorded accruals as losses are deemed not probable or estimable[115][141][142][169][170] - An estimated cost of $0.39 million is recorded to repair deployed chargers owned by the company as of June 30, 2023[171] Note 8. Subsequent Events This note describes significant events after June 30, 2023, including a CEO separation and merger agreement amendment - On June 21, 2023, the company entered into a separation agreement with its former CEO, Michael D. Farkas, providing $6.03 million in cash, 383,738 common shares, and medical benefits, and accelerating vesting of equity awards (resulting in $2.9 million stock-based compensation expense)[172] - On August 4, 2023, an amendment to the SemaConnect Merger Agreement modified the payment terms for the $40.6 million Deferred Merger Consideration, including an initial $12.5 million cash payment and a shortened due date to April 1, 2025[119][145][173] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Blink Charging Co.'s financial condition and operational results for Q2 2023 Special Note Regarding Forward-Looking Information This note cautions that the report contains forward-looking statements subject to risks and uncertainties - The report contains forward-looking statements subject to uncertainties, risks, and influences, many beyond the company's control, which could materially affect actual results[176][177] - The company cautions that these statements are not guarantees of future performance and undertakes no obligation to publicly update or revise them[176][177] Overview This section provides an overview of Blink Charging Co.'s business, EV charging solutions, business models, acquisitions, and new products - Blink Charging is a leading manufacturer, owner, operator, and provider of EV charging equipment and networked services in the U.S. and international markets[149] - The company offers various business models: Blink-owned turnkey, Blink-owned hybrid, Blink-as-a-Service, and host-owned, differentiated by cost bearing and revenue sharing[150][151][152][179][180][181] - As of June 30, 2023, Blink sold or deployed 78,769 chargers, with 59,797 in Blink's Networks, including 4,865 company-owned chargers[154] - Blink Mobility, LLC acquired Envoy Technologies, Inc. in April 2023, and management is planning a spin-off and IPO for Blink Mobility[155][182] - New products announced in January 2023 include the Vision, EQ 200, Series 3, PQ 150, and 30kW DC Fast Charger, targeting various global markets and EV types[158][159][160][161][189][191] - Key factors affecting operating results include EV adoption rates, government regulations and incentives, competition, and the ability to expand through acquisitions[163][193][194][195][222][223] Consolidated Results of Operations This section analyzes Blink Charging Co.'s consolidated financial performance for Q2 2023 and prior year periods Three Months Ended June 30, 2023 Compared Three Months Ended June 30, 2022 This section compares Blink Charging Co.'s financial results for the three months ended June 30, 2023, against the prior year Revenue Growth (Three Months Ended June 30, in thousands) | Revenue Stream | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------ | :------ | :----- | :--------- | :--------- | | Product sales | $24,587 | $8,828 | $15,759 | 179% | | Charging service revenue | $4,367 | $1,494 | $2,873 | 192% | | Network fees | $1,667 | $472 | $1,195 | 253% | | Warranty | $921 | $99 | $822 | 830% | | Car-sharing services | $957 | $279 | $678 | 243% | | Total Revenues | $32,842 | $11,486| $21,356 | 186% | - Cost of revenues increased by $11.02 million (116%) to $20.55 million, primarily due to increased product sales and higher host provider fees[168][196][229][230] - Compensation expense surged by $27.21 million (252%) to $37.99 million, driven by increased personnel, acquisitions, accelerated equity vesting for the former CEO, and non-recurring bonuses[196][235] - Net loss increased by $18.86 million (83%) to $41.48 million, mainly due to higher compensation and general and administrative expenses[196][238] Six Months Ended June 30, 2023 Compared Six Months Ended June 30, 2022 This section compares Blink Charging Co.'s financial results for the six months ended June 30, 2023, against the prior year Revenue Growth (Six Months Ended June 30, in thousands) | Revenue Stream | 2023 | 2022 | Change ($) | Change (%) | | :------------------------------ | :------ | :----- | :--------- | :--------- | | Product sales | $40,976 | $16,880| $24,096 | 143% | | Charging service revenue | $7,252 | $2,601 | $4,651 | 179% | | Network fees | $3,295 | $633 | $2,662 | 421% | | Warranty | $1,314 | $166 | $1,148 | 692% | | Car-sharing services | $1,209 | $518 | $691 | 133% | | Total Revenues | $54,510 | $21,286| $33,224 | 156% | - Cost of revenues increased by $19.93 million (112%) to $37.68 million, driven by higher product sales and increased costs for company-owned charging services and host provider fees[196][213][214][245][246] - Compensation expense rose by $40.66 million (203%) to $60.7 million, reflecting increased headcount, acquisition-related personnel, and significant non-recurring compensation events[196][275] - Net loss increased by $33.52 million (89%) to $71.28 million, primarily due to the substantial increase in compensation and general and administrative expenses[196][276] Liquidity and Capital Resources This section discusses Blink Charging Co.'s cash position, working capital, debt, and ability to fund future operations Liquidity Metrics (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :-------------- | :------------ | :---------------- | | Cash and Cash Equivalents | $74,464 | $36,562 | | Working Capital | $100,484 | $48,962 | | Debt | $47,426 | $40,618 | - The company had a net loss of $71.28 million and an accumulated deficit of $405.31 million for the six months ended June 30, 2023, and has not yet achieved profitability[184][279] - Cash provided by financing activities was $112.43 million for the six months ended June 30, 2023, primarily from public offerings of common stock[253] - Management expects current cash on hand to fund operations for at least 12 months and continues to evaluate additional financing opportunities[280] - Critical accounting estimates include revenue recognition, stock-based compensation, long-lived assets, income taxes, operating leases, and goodwill[257][259][261][262][263][264][283][286][287][288][289][290][291] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section addresses Blink Charging Co.'s exposure to market risks, primarily foreign currency fluctuations - Blink has foreign currency risks from revenues and operating expenses denominated in currencies other than the U.S. dollar, mainly the Euro, Indian Rupee, and Pound Sterling[62][266] - A hypothetical 1% decrease in all foreign currencies against the U.S. dollar would not result in a material foreign currency loss as of June 30, 2023[266] - The company does not currently use financial instruments to hedge foreign currency exchange risk but expects fluctuations to have a more material impact as foreign operations expand[266] Item 4. Controls and Procedures Management concluded that Blink Charging Co.'s disclosure controls were ineffective due to material weaknesses as of June 30, 2023 - As of June 30, 2023, disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting[295] - Management remediated design deficiencies related to logical access and change management during the quarter ended June 30, 2023, and is validating operational effectiveness[269] - An isolated miscalculation of non-cash share-based compensation in 2022 was identified, and remediation efforts, including new software, are expected to be completed by the end of Q4 2023[311] PART II - OTHER INFORMATION This section provides additional information on Blink Charging Co.'s legal proceedings, risk factors, and exhibits Item 1. Legal Proceedings This section details Blink Charging Co.'s ongoing legal proceedings, including shareholder lawsuits and a recent SEC subpoena - The company is involved in several legal proceedings, including securities class action lawsuits and shareholder derivative actions, as detailed in Note 7[271][313] - In July 2023, Blink received an SEC subpoena requesting documentation since January 1, 2020, concerning executive departures, related-party transactions, and EV charging stations[272][315] - The company intends to fully cooperate with the SEC investigation but cannot predict its timing, outcome, or potential consequences[272] Item 1A. Risk Factors This section highlights Blink Charging Co.'s history of net losses, the SEC subpoena, and risks to future profitability - Blink has a history of substantial net losses and expects losses to continue, with a net loss of approximately $42 million for the quarter ended June 30, 2023, and an accumulated deficit of $405 million[70][300][314] - There is no assurance that the company will achieve or sustain profitability, and its financial condition could suffer if revenue growth is slower or operating expenses are higher than anticipated[70][300] - The SEC subpoena and its potential outcomes represent additional risks that could materially affect the business, financial condition, or results of operations[271][272] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities or use of proceeds for the period - No unregistered sales of equity securities or use of proceeds to report[316] Item 3. Defaults Upon Senior Securities This section reports no defaults upon senior securities during the reporting period - No defaults upon senior securities to report[317] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable[318] Item 5. Other Information This section reports no other information to disclose for the period - No other information to disclose[319] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including merger agreements, corporate documents, and certifications - Exhibits include the Agreement and Plan of Merger for Envoy Technologies, Inc., and an Amendment to the Merger Agreement for SemaConnect LLC[306] - Corporate documents such as Articles of Incorporation and Bylaws are incorporated by reference[306] - Employment agreements, including the Separation and General Release Agreement with Michael D. Farkas, are also listed[306] - Certifications by the Principal Executive Officer and Principal Financial Officer (Rule 13a-14(a) and Section 1350) are included[304][321][322] SIGNATURES This section contains the official signatures of Blink Charging Co.'s President, CEO, and CFO - The report is signed by Brendan S. Jones, President and Chief Executive Officer, and Michael P. Rama, Chief Financial Officer, on August 9, 2023[324]