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Nov. 12, 2021, 4:20 p.m. EST

10-Q: BLINK CHARGING CO.

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(EDGAR Online via COMTEX) -- 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" and the "Company") as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020 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, 2020, 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.

Dollars are reported in thousands.

Overview

We are a leading 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 network (the "Blink Network") and Blink EV charging equipment, also known as electric vehicle supply equipment ("EVSE") and other EV-related services. The Blink Network is a proprietary, cloud-based system that operates, maintains, and manages Blink charging stations and handles the associated charging data, back-end operations, and payment processing. The Blink Network provides property owners, managers, parking companies, and state and municipal entities ("Property Partners"), among other types of commercial customers, with cloud-based services that enable the remote monitoring and management of EV charging stations. The Blink Network also provides 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, maintenance, and the percentage of revenue shared.

? In our Blink-owned turnkey business model, Blink incurs 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 Network. In this model, which favors recurring revenues, Blink incurs most costs associated with the EV charging stations; thus, Blink retains substantially all EV charging revenues after deducting network connectivity and processing fees.

? In our Blink-owned hybrid business model, Blink incurs 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 of the charging station to the Blink Network. In this model, the Property Partner incurs the installation costs associated with the EV station; thus, Blink shares a more generous portion of the EV charging revenues with the Property Partner generated from the EV charging station after deducting network connectivity and processing fees.

? In our host-owned business model, the Property Partner purchases, owns and operates the Blink EV charging station and incurs the installation costs. Blink works with the Property Partner, providing site recommendations, connectivity to the Blink Network, 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, Blink owns and operates the EV charging station, while the Property Partner incurs the installation costs. The Property Partner pays to Blink a fixed monthly fee and keeps all the EV charging revenues after deducting network connectivity and processing fees.

As part of Blink's mission to facilitate the adoption of EVs through the deployment and operation of EV charging infrastructure globally, we are dedicated to slowing climate change by reducing greenhouse gas emissions caused by road vehicles. With the goal of leading the build out of EV charging infrastructure and of maximizing Blink's share of the EV charging market, we have established strategic commercial, municipal and retail partnerships across industry verticals and encompassing numerous transit/destination locations, including airports, auto dealers, healthcare/medical, hotels, mixed-use, municipal 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 September 30, 2021, since our inception and excluding Blue Corner, we sold, deployed or acquired through acquisitions 18,730 chargers, of which, 7,243 were on the Blink Network (4,430 Level 2 publicly accessible commercial chargers, 1,594 Level 2 private commercial chargers, 103 DC Fast Charging EV publicly accessible chargers, 21 DC Fast Charging EV private chargers, and 1,095 residential Level 2 Blink EV chargers), and the remainder were non-networked, on other networks or international sales or deployments (164 Level 2 commercial chargers, 6 DC Fast Charging chargers, 9,993 residential Level 2 Blink EV chargers, 305 sold to other US networks, 955 sold internationally and 64 deployed internationally). The charger units herein are net of swap-out or replacement units.

In addition, as of September 30, 2021, since its inception, our recently acquired Blue Corner sold or deployed 9,561independent charge points which all were on Blue Corner's network which comprised of 4,060 Level 2 publicly accessible commercial independent charge points, 25 DC Fast Charging publicly assessable commercial independent charge points and 5,476 private L2, private DC Fast Charging and private residential independent charge points.

As reflected in our unaudited condensed consolidated financial statements as of September 30, 2021, we had a cash balance of $133,153, working capital of $187,169 and an accumulated deficit of $223,496. During the three and nine months ended September 30, 2021, we incurred net losses of $15,321 and $36,145, respectively. We have not yet achieved profitability.

Recent Developments

May 2021 Acquisition of Blue Corner

On May 10, 2021, pursuant to a Share Purchase Agreement dated April 21, 2021, the Company through its wholly owned subsidiary in the Netherlands, Blink Holdings, B.V. closed on the acquisition from the shareholders of Blue Corner NV, a Belgian company ("Blue Corner"), of all of the outstanding capital stock of Blue Corner. Headquartered in Belgium, with sales representative offices in several other European cities, Blue Corner owns and operates an EV charging network across Europe. The acquisition of Blue Corner was made to enter the European market and provide an opportunity to expand the Company's footprint in this region. The purchase price for the acquisition of all of Blue Corner's outstanding capital stock was approximately $23,775 (or ?20,000), consisting of approximately $22,985 (or ?19,000) in cash and approximately $790 (?700) represented by 32,382 shares of the Company's common stock (the "Consideration Shares"). The fair value of the Consideration Shares was calculated based on the average price of the Company's common stock during the 30 consecutive trading days immediately preceding the closing date of the Share Purchase Agreement, which equaled $37.66 (or ?30.88) per share, reduced by a discount for illiquidity due to the 12 month lockup that exists on any sales or transfers. The Company executed management agreements with key Blue Corner personnel, including equity incentive packages consisting of additional shares of the Company's common stock which is compensatory and not included in the purchase price for this acquisition. The Company entered into an escrow agreement pursuant to the Share Purchase Agreement, under which the Company paid approximately $2,100 (?1,725) of the purchase price into an escrow account for a period of up to 18 months following the closing to cover any losses or damages the Company may incur by reason of any misrepresentation or breach of warranty by Blue Corner under the Share Purchase Agreement.

January 2021 Underwritten Public Offering

In January 2021, we completed an underwritten registered public offering of 5,660,000 shares of our common stock at a public offering price of $41.00 per share. We received approximately $232,100 in gross proceeds from the public offering, and approximately $221,4000 in net proceeds after deducting the underwriting discount and offering expenses paid by us. We are using the net proceeds to supplement our operating cash flows to fund EV charging station deployment and to finance the costs of acquiring or investing in competitive and complementary businesses, products and technologies as a part of our growth strategy. We are also using proceeds for working capital and other corporate purposes. Our Chief Executive Officer and one other officer participated in the offering by selling a total of 550,000 shares of our common stock from the exercise of the underwriter's option to purchase additional shares. The public offering was made pursuant to our automatic shelf registration statement on Form S-3 filed with the SEC on January 6, 2021 and prospectus supplement dated January 7, 2021. Barclays Capital Inc. served as the lead book-running manager of the offering.

Government Grants

Blink has established a full-time dedicated team to identify and process federal and state funding opportunities for EV charging infrastructure development. Blink is committed to pursuing EV charging development grant opportunities in all 50 states. Sources of funding include funding from the United States Department of Energy, the United States Department of Transportation, the VW mitigation settlement trust fund, and funding initiatives from utility service providers. During the nine months ended September 30, 2021, we have been awarded approximately $24,000 in grants from federal and state agencies. Such awards are expected to be recognized as revenue in future periods based on the grant contract or service life of the chargers.

Note on Covid-19

The Covid-19 pandemic has impacted global stock markets and economies. We closely monitor the impact of the continuing presence of Covid-19 and multiple Covid-19 variants We have taken and continue to take precautions to ensure the safety of our employees, customers and business partners, while assuring business continuity and reliable service and support to our customers. We continue to receive orders for our products, although some shipments of equipment have been temporarily delayed. The global chip shortage and supply chain disruption has caused some delays in equipment orders from our contract manufacturer. As federal, state and local economies begin to return to pre-pandemic levels and with a vaccine underway the Company expects demand for charging station usage to increase, however the Company is unable to predict the extent of such recovery due to the uncertainty of Covid-19. As a result we are unable to predict the ultimate impact equipment order delays, chip shortage and continuous presence of Covid-19 will have on our business, future results of operations, financial position, or cash flows. The extent to which our operations may be impacted by the Covid-19 pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning the severity of the outbreak and actions by government authorities to contain the outbreak or treat its impact. We intend to continue to monitor the impact of the Covid-19 pandemic on our business closely.

Consolidated Results of Operations

Three Months Ended September 30, 2021 Compared With Three Months Ended September 30, 2020

Revenues

Total revenue for the three months ended September 30, 2021 increased by $5,496, or 607%, to $6,402 compared to $906 during the three months ended September 30, 2020.

Charging service revenue from Company-owned charging stations was $908 for the three months ended September 30, 2021 as compared to $163 for the three months ended September 30, 2020, an increase of $745, or 457%. The increase is due to the increase in utilization of chargers, an increased number of chargers on the Blink network as well as charging service revenues of $591 from Blue Corner which we acquired in May 2021.

Revenue from product sales was $4,824 for the three months ended September 30, 2021 compared to $557 during the three months ended September 30, 2020, an increase of $4,267, or 766%. This increase was attributable to increased sales of commercial chargers, DC fast chargers and residential chargers when compared to the same period in 2020 as well as product sales of $1,698 from Blue Corner which we acquired in May 2021.

Network fee revenues were $205 for the three months ended September 30, 2021 compared to $100 for the three months ended September 30, 2020, an increase of $105, or 105%. The increase was attributable to increases in host owned units as well as billings and invoicing to Property Partners during the three months ended September 30, 2021 compared to the three months ended September 30, 2020.

Warranty revenues were $87 for the three months ended September 30, 2021 compared to $14 for the three months ended September 30, 2020, an increase of $73, or 521%. The increase was primarily attributable to an increase in warranty contracts sold for the three months ended September 30, 2021 compared to the three months ended September 30, 2021.

Grant and rebate revenues were $56 during the three months ended September 30, 2021, compared to $3 during the three months ended September 30, 2020, an increase of $53. 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 2021 revenue was related to the recognition of grants/rebates of $56 from Blue Corner which we acquired in May 2021.

Ride-sharing services revenues were $269 during the three months ended September 30, 2021 derived from ride-sharing subscription services through a program with the City of Los Angeles, which was associated with the acquisition of BlueLA in September 2020.

Other revenue decreased by $16 to $53 for the three months ended September 30, 2021 as compared to $69 for the three months ended September 30, 2020. The increase was primarily attributable to lower Low Carbon Fuel Standard (LCFS) credits generated during the three months ended September 30, 2021 compared to the same period in 2020. We generate these credits from the electricity utilized by our electric car charging stations as a byproduct from our charging services in the states of California and Oregon.

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 network providers, warranty, repairs and maintenance services, and depreciation of our installed charging stations. Cost of revenues for the three months ended September 30, 2021 were $5,510 as compared to $539 for the three months ended September 30, 2020, an increase of $4,971, or 922%, of which, $2,113 is from Blue Corner which we acquired in May 2021.

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 services-company-owned charging stations (electricity reimbursements) increased by $80 to $200 for the three months ended September 30, 2021 as compared to $120 for the three months ended September 30, 2020. The increase in 2021 was attributable to the mix of charging stations generating charging service revenues subject to electricity reimbursement.

Property Partner host fees increased by $426, or 1,151%, to $463 during the three months ended September 30, 2021 as compared to $37 during the three months ended September 30, 2020. This increase was a result of the mix of chargers generating revenue and their corresponding revenue share percentage payments to Property Partner hosts per their agreements as well as an increase in the usage of charging stations as a result of the reopening of the economy from the COVID-19 pandemic.

Cost of product sales increased by $3,597 from $35 for the three months ended September 30, 2020 as compared to $3,632 for the three months ended September 30, 2021. The increase was primarily due to the increase in product sales of Generation 2, DC fast chargers and home residential chargers during the three months ended September 30, 2021 compared to the same period in 2020 as well as product sales of $1,441 from Blue Corner which we acquired in May 2021. Furthermore, the three months ended September 30, 2021 included a reduction in the provision for excess and obsolete inventory of $220 relating to the increased sales of residential home charger units. The three months ended September 30, 2020 included an decrease in the provision for excess and obsolete inventory of $291.

Network costs increased by $9, or 8%, to $115 during the three months ended September 30, 2021 as compared to $106 during the three months ended September 30, 2020. The increase was primarily a result of increased connectivity costs of members on the network.

Warranty and repairs and maintenance costs increased by $153, or 146%, to $258 during the three months ended September 30, 2021 from $105 during the three months ended September 30, 2020. The increase in 2021 was attributable to significant efforts expended to reduce the backlog in warranty and repairs and maintenance cases. As of September 30, 2021, we recorded a liability of $12 which represents the estimated cost of existing backlog of known warranty cases.

Cost of ride-sharing services was $422 during the three months ended September 30, 2021 derived from ride-sharing subscription services program with the City of Los Angeles which was associated with the acquisition of BlueLA in September 2020.

Depreciation and amortization expense increased by $284 to $420 for the three months ended September 30, 2021 as compared to $136 for the three months ended September 30, 2020. The increase in depreciation expense was attributable to an increase in the number of EV charging stations including those from the Blue Corner acquisition which we acquired in May 2021 and vehicles purchased in December 2020 for the acquired BlueLA operations.

Operating Expenses

Compensation expense increased by $9,201, or 362%, to $11,745 (consisting of approximately $5,448 of cash compensation and benefits and approximately $6,297 of non-cash compensation) for the three months ended September 30, 2021. Compensation expense was $2,544 (consisting of approximately $2,400 of cash compensation and benefits and approximately $144 of non-cash compensation) for the three months ended September 30, 2020. The increase in compensation expense for the three months ended September 30, 2021 compared to the same period in 2020 was primarily associated with the investment in new personnel and compensation in executive, marketing, sales and operations departments as a result of the anticipated domestic and global growth of the Company. In addition, compensation expense during the three months ended September 30, 2021 compared the same period in 2020 increased due to additional personnel in conjunction with the acquisitions of BlueLA and U-Go made during 2020 and the acquisition of Blue Corner which occurred in May 2021. Also contributing to the increase in compensation expense for the three months ended September 30, 2021 is the new employment agreement with our CEO which included increases in cash and equity compensation. Included in non-cash share-based compensation for the three months ended September 30, 2021 was $5,329 related to the special four-year performance stock option for the CEO of the Company which is expected to be fully expensed by January 2022.

General and administrative expenses increased by $1,923, or 168%, to $3,067 for the three months ended September 30, 2021. General and administrative expenses were $1,144 for the three months ended September 30, 2020. The increase was primarily attributable to increases in accounting, legal, investor relations, marketing, consulting and other professional service expenditures of $1,210. Furthermore, general and administrative expenses increased due to increase in amortization expense of $439 related primarily to the Blue Corner acquisition. Also contributing to the increase in general and administrative expenses were operating expenditures related to the 2020 acquisitions of BlueLA and U-Go and the acquisition of Blue Corner which occurred in May 2021.

Other operating expenses increased by $1,311, or 221%, to $1,903 for the three months ended September 30, 2021 from $592 for the three months ended September 30, 2020. The increase was primarily attributable to increases in insurance, software licensing, annual shareholder meeting, rent and property/use tax expenditures of $889. Furthermore, increases in travel and vehicle expenses of $178 and $227, respectively, contributed to the increase in other operating expenses for the three months ended September 30, 2021 compared to the same period in 2020. Also contributing to the increase in other operating expenses were operating expenditures related to the 2020 acquisitions of BlueLA and U-Go and the acquisition of Blue Corner which occurred in May 2021.

Other Income (Expense)

Other income for the three months ended September 30, 2021 was $502 compared to other expense of $1 for the three months ended September 30, 2020. Other income for the three months ended September 30, 2021 was primarily related to the gain from the forgiveness of the PPP Loan.

Net Loss

Our net loss for the three months ended September 30, 2021 increased by $11,407, or 291%, to $15,321 as compared to $3,914 for the three months ended September 30, 2020. The increase was primarily attributable to an increase in compensation expense and general and administrative expenses in conjunction with current and anticipated growth of the Company.

Nine Months Ended September 30, 2021 Compared With Nine Months Ended September 30, 2020

Revenues

Total revenue for the nine months ended September 30, 2021 increased by $9,213, or 244%, to $12,990 compared to $3,777 during the nine months ended September 30, 2020.

Charging service revenue from Company-owned charging stations was $1,676 for the nine months ended September 30, 2021 as compared to $570 for the nine months ended September 30, 2020, an increase of $1,106, or 194%. The increase is due to the increase in utilization of chargers, an increased number of chargers on the Blink network as well as charging service revenues of $806 from Blue Corner which we acquired in May 2021.

Revenue from product sales was $9,762 for the nine months ended September 30, 2021 compared to $2,609 during the nine months ended September 30, 2020, an increase of $7,153, or 274%. This increase was attributable to increased sales of commercial chargers, DC fast chargers and residential chargers when compared to the same period in 2020 as well as product sales of $3,180 from Blue Corner which we acquired in May 2021.

Network fee revenues were $421 for the nine months ended September 30, 2021 compared to $227 for the nine months ended September 30, 2020, an increase of $194, or 85%. The increase was attributable to increase in host owned units as well as billings and invoicing to Property Partners during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

Warranty revenues were $119 for the nine months ended September 30, 2021 compared to $30 for the nine months ended September 30, 2020, an increase of $89, or 297%. The increase was primarily attributable to an increase in warranty contracts sold for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. As of September 30, 2021, we recorded a liability of $12 which represents the estimated cost of existing backlog of known warranty cases.

Grant and rebate revenues were $280 during the nine months ended September 30, 2020, compared to $11 during the nine months ended September 30, 2020, an increase of $269. 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 2021 revenue was primarily related recognition of $167 in various state grants associated with the installation of chargers during the nine months ended September 30, 2021, the amortization of previous years' grants and grants/rebates of $100 from Blue Corner which we acquired in May 2021.

. . .

Nov 12, 2021

COMTEX_396805698/2041/2021-11-12T16:20:17

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