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.
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? 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.
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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.
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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 stations sold is predicated on the mix of types of charging
stations and parts sold during the period;
? network costs are fixed in nature based on the number of chargers connected to
the telco network regardless of whether the charger generates revenue;
? provisions for excess and obsolete inventory; and
? warranty and repairs and maintenance expenses are based on both the number of
service cases completed during the period.
Cost of charging services-company-owned charging stations (electricity
reimbursements) 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.
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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.
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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.
Ride-sharing services revenues were $504 during the nine 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.
Other revenue decreased by $102 to $228 for the nine months ended September 30,
2021 as compared to $330 for the nine months ended September 30, 2020. The
decrease was primarily attributable to lower Low Carbon Fuel Standard (LCFS)
credits generated during the nine 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 networks, warranty, repairs and
maintenance services, and depreciation of our installed charging stations. Cost
of revenues for the nine months ended September 30, 2021 were $11,527 as
compared to $2,688 for the nine months ended September 30, 2020, an increase of
$8,839, or 329%. There is a degree of variability in our costs in relationship
to our revenues from period to period, primarily due to:
? electricity reimbursements that are unique to those Property Partner host
agreements which provide for such reimbursements;
? revenue share payments are predicated on the contractual obligation under the
property partner agreement and the revenue generated by the applicable
chargers;
? cost of charging stations sold is predicated on the mix of types of charging
stations and parts sold during the period;
? network costs are fixed in nature based on the number of chargers connected to
the telco network regardless of whether the charger generates revenue;
? provisions for excess and obsolete inventory; and
? warranty and repairs and maintenance expenses are based on both the number of
service cases completed during the period.
Cost of charging services-company-owned charging stations (electricity
reimbursements) increased by $124 to $310 for the nine months ended September
30, 2021 as compared to $186 for the nine 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 $692, or 461%, to $842 during the nine
months ended September 30, 2021 as compared to $150 during the nine 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.
Cost of product sales increased by $5,688, or 399%, from $1,427 for the nine
months ended September 30, 2020 as compared to $7,115 for the nine 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
nine months ended September 30, 2021 compared to the same period in 2020 as well
as product sales from Blue Corner which we acquired in May 2021. Furthermore,
the nine months ended September 30, 2021 included a reduction in the provision
for excess and obsolete inventory of $29 relating to the increased sales of
residential home charger units. The nine months ended September 30, 2020
included a decrease in the provision for excess and obsolete inventory of $283.
Network costs decreased by $157, or 34%, to $307 during the nine months ended
September 30, 2021 as compared to $464 during the nine months ended September
30, 2020. The decrease was primarily a result of non-capitalizable costs
incurred during the 2020 period related to upgrades of our network systems.
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Warranty and repairs and maintenance costs increased by $506, or 214%, to $743
during the nine months ended September 30, 2021 from $237 during the nine months
ended September 30, 2020. The increase was attributable to significant efforts
expended in previous periods to reduce the backlog in warranty 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 $1,092 during the nine 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 $894, or 399%, to $1,118 for
the nine months ended September 30, 2021 as compared to $224 for the nine 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 $18,699, or 269%, to $25,663 (consisting of
approximately $15,355 of cash compensation and benefits and approximately
$10,308 of non-cash compensation) for the nine months ended September 30, 2021.
Compensation expense was $6,964 (consisting of approximately $6,484 of cash
compensation and approximately $480 of non-cash compensation) for the nine
months ended September 30, 2020. The increase in compensation expense for the
nine 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 nine 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 nine months ended September 30, 2021 is the new
employment agreement with our CEO which included increases in cash and equity
compensation as well as one-time awards and payments in satisfaction of his 2020
bonuses of $1,280, restricted stock grant of 19,504 shares of common stock,
grant of 23,862 in stock options, and a salary catch-up since the expiration of
his prior agreement in June 2020 of $295. Included in non-cash share-based
compensation for the nine months ended September 30, 2021 was $7,241 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 $4,650, or 189%, to $7,110 for
the nine months ended September 30, 2021. General and administrative expenses
were $2,460 for the nine 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 $2,895.
Furthermore, general and administrative expenses increased due to increases in
amortization expense and acquisition related expenses of $598 and $320,
respectively, related 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 $2,627, or 162%, to $4,246 for the nine
months ended September 30, 2021 from $1,619 for the nine months ended September
30, 2020. The increase was primarily attributable to increases in insurance,
software licensing, hardware and software development costs, rent, annual
shareholder meeting and property/use tax expenditures of $1,944. Furthermore,
increases in travel and vehicle expenses of $174 and $199, respectively,
contributed to the increase in other operating expenses for the nine 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 expenses increased by $638 from other income of $49 for the nine months
ended September 30, 2020 to $589 for the nine months ended September 30, 2021.
The increase was primarily related settlement and payment of $1,000 by the
Company to our CEO regarding the transfer of 260,000 shares of the Company's
common stock to a prior institutional investor partially offset by a gain of
$379 related to the forgiveness of a PPP Loan.
Net Loss
Our net loss for the nine months ended September 30, 2021 increased by $26,240,
or 265%, to $36,145 as compared to $9,905 for the nine 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.
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Liquidity and Capital Resources
We measure our liquidity in a number of ways, including the following:
September 30, 2021 December 31, 2020
(unaudited)
Cash $ 133,153 $ 22,341
Working Capital $ 187,169 $ 19,580
Notes Payable (Gross) 493 $ 871
During the nine months ended September 30, 2021, we financed our activities from
proceeds derived from debt and 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 nine months ended September 30, 2021 and 2020, we used cash of $29,953
and $10,157, respectively, in operations. Our cash use for the nine months ended
September 30, 2021 was primarily attributable to our net loss of $36,145,
adjusted for net non-cash expenses in the aggregate amount of $13,082, and
$6,890 of net cash used in changes in the levels of operating assets and
liabilities. Our cash use for the nine months ended September 30, 2020 was
primarily attributable to our net loss of $9,905, adjusted for net non-cash
expenses in the aggregate amount of $750, and $1,002 of net cash used in changes
in the levels of operating assets and liabilities.
During the nine months ended September 30, 2021, net cash used in investing
activities was $81,982, of which, $60,267 was used in connection with the
purchase of marketable securities, $6,804 was provided by the sale of marketable
securities, $22,985 was used as cash consideration for the acquisition of Blue
Corner, $243 was provided by the net cash acquired from Blue Corner and $5,540
was used to purchase charging stations and other fixed assets. $237 was related
to the payment of engineering costs that were capitalized. During the nine
months ended September 30, 2020, net cash provided by investing activities was
$2,097, of which, $2,774 was provided in connection with the sale of marketable
securities and $681 was used to purchase charging stations and other fixed
assets.
During the nine months ended September 30, 2021, cash provided in financing
activities was $222,913 of which, $221,333 was provided by the sale of common
stock in a public offering and $1,619 was provided upon the exercise of
warrants, this was offset by $39 used to pay down our liability in connection
with internal use software. During the nine months ended September 30, 2020, net
cash provided financing activities was $18,783, of which $856 was attributable
to proceeds from our PPP loan, $17,836 was attributable to the net proceeds from
the sale of common stock under the ATM, partially offset by $53 used to pay down
our liability in connection with internal use software.
As of September 30, 2021, we had cash, working capital and an accumulated
deficit of $133,153, $187,169 and $223,496, respectively. During the three and
nine months ended September 30, 2021, we had a net loss of $15,321 and $36,145,
respectively.
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 $221,400 in net proceeds after deducting the
underwriting discount and offering expenses paid by us. The public offering was
made pursuant to our automatic shelf registration statement on Form S-3 filed
with the SEC on January 6, 2021 and prospectus supplement dated January 7, 2021.
We are using the net proceeds from the public offering to supplement our
operating cash flows to fund EV charging station deployment and finance the
costs of acquiring competitive and complementary businesses, products and
technologies as a part of our growth strategy, and for working capital and
general corporate purposes.
We have not yet achieved profitability and expect to continue to incur cash
outflows from operations. It is expected that our operating expenses will
continue to increase and, as a result, we will eventually need to generate
significant product revenues to achieve profitability. Historically, we have
been able to raise funds to support our business operations, although there can
be no assurance that we will be successful in raising significant additional
funds in the future. We expect that our cash on hand will fund our operations
for at least 12 months from the issuance date of the financial statements
included in this Quarterly Report.
30
Since inception, our operations have primarily been funded through proceeds
received in equity and debt financings. We believe we have access to capital
resources and continue to evaluate additional financing opportunities. There is
no assurance that we will be able to obtain funds on commercially acceptable
terms, if at all. There is also no assurance that the amount of funds we might
raise will enable us to complete our development initiatives or attain
profitable operations.
Our operating needs include the planned costs to operate our business, including
amounts required to fund working capital and capital expenditures. Our future
capital requirements and the adequacy of our available funds will depend on many
factors, including our ability to successfully commercialize our products and
services, competing technological and market developments, and the need to enter
into collaborations with other companies or acquire other companies or
technologies to enhance or complement our product and service offerings.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures must be in
conformity with U.S. GAAP. These accounting principles require us to make
estimates and judgments that can affect the reported amounts of assets and
liabilities as of the date of the financial statements as well as the reported
amounts of revenue and expense during the periods presented. We believe that the
estimates and judgments upon which it relies are reasonably based upon
information available to us at the time that it makes these estimates and
judgments. To the extent that there are material differences between these
estimates and actual results, our financial results will be affected. The
accounting policies that reflect our more significant estimates and judgments
and which we believe are the most critical to aid in fully understanding and
evaluating our reported financial results are described below.
The following is not intended to be a comprehensive list of all of our
accounting policies or estimates. Our accounting policies are more fully
described in Note 2 - Summary of Significant Accounting Policies, in our
financial statements included elsewhere in this Quarterly Report.
Revenue Recognition
We recognize revenue primarily from five different types of contracts:
? Charging service revenue - company-owned charging stations - Revenue is
recognized at the point when a particular charging session is completed.
? Product sales - Revenue is recognized at the point where the customer obtains
control of the goods and the Company satisfies its performance obligation,
which generally is at the time it ships the product to the customer.
? Network fees and other - Represents a stand-ready obligation whereby the
Company is obligated to perform over a period of time and, as a result, revenue
is recognized on a straight-line basis over the contract term. Network fees are
billed annually.
? Ride-sharing services - Primarily related to a ride-sharing services agreement
with the City of Los Angeles, which allows customers the ability to rent
electric vehicles through a subscription service. The Company recognizes
revenue over the contractual period of performance of the subscription.
? Other - Primarily related to charging service revenue from non-company-owned
charging stations. Revenue is recognized from non-company-owned charging
stations at the point when a particular charging session is completed in
accordance with a contractual relationship between the Company and the owner of
the station. Other revenues also comprise of revenues generated from
alternative fuel credits.
The timing of the Company's revenue recognition may differ from the timing of
payment by its customers. A receivable is recorded when revenue is recognized
prior to payment and the Company has an unconditional right to payment.
Alternatively, when payment precedes the provision of the related services, the
Company records deferred revenue until the performance obligations are
satisfied.
Grants, rebates and alternative fuel credits, which are not within the scope of
ASC 606, pertaining to revenues and periodic expenses are recognized as income
when the related revenue and/or periodic expense are recorded. Grants and
rebates related to EV charging stations and their installation are deferred and
amortized in a manner consistent with the related depreciation expense of the
related asset over their useful lives over the useful life of the charging
station.
Stock-Based Compensation
We measure the cost of services received in exchange for an award of equity
instruments based on the fair value of the award on the date of grant. The fair
value amount of the shares expected to ultimately vest is then recognized over
the period for which services are required to be provided in exchange for the
award, usually the vesting period. The estimation of stock-based awards that
will ultimately vest requires judgment, and to the extent actual results or
updated estimates differ from original estimates, such amounts are recorded as a
cumulative adjustment in the period that the estimates are revised. We account
for forfeitures as they occur.
31
Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. We assess the recoverability of our long-lived assets by monitoring
current selling prices of car charging units in the open market, the adoption
rate of various auto manufacturers in the EV market and projected car charging
utilization at various public car charging stations throughout our network in
determining fair value. An impairment loss would be recognized when estimated
future cash flows expected to result from the use of the asset and its eventual
disposition are less than its carrying amount.
Income Taxes
We account for income taxes pursuant to the asset and liability method of
accounting for income taxes pursuant to FASB ASC 740, "Income Taxes." Deferred
tax assets and liabilities are recognized for taxable temporary differences and
operating loss carry forwards. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.
Operating Leases
We determine if an arrangement is a lease at inception. Operating leases are
included in operating lease right-of-use ("ROU") assets and operating lease
liabilities in our consolidated balance sheets.
ROU assets represent our right to use an underlying asset for the lease term and
lease liabilities represent our obligation to make lease payments arising from
the lease. Operating lease ROU assets and liabilities are recognized at
commencement date based on the present value of lease payments over the lease
term. As most of our leases do not provide an implicit rate, we use an
incremental borrowing rate based on the estimated rate of interest for
collateralized borrowing over a similar term of the lease payments at
commencement date. The operating lease ROU asset also includes any lease
payments made and excludes lease incentives. Our lease terms may include options
to extend or terminate the lease when it is reasonably certain that we will
exercise that option. Lease expense for lease payments is recognized on a
straight-line basis over the lease term.
Goodwill
Goodwill is the excess of consideration paid for an acquired entity over the
amounts assigned to assets acquired, including other identifiable intangible
assets, and liabilities assumed in a business combination. To determine the
amount of goodwill resulting from a business combination, the Company performs
an assessment to determine the acquisition date fair value of the acquired
company's tangible and identifiable intangible assets and liabilities.
Goodwill is required to be evaluated for impairment on an annual basis or
whenever events or changes in circumstances indicate the asset may be impaired.
An entity has the option to first assess qualitative factors to determine
whether the existence of events or circumstances leads to a determination that
it is more likely than not that the fair value of a reporting unit is less than
its carrying amount. These qualitative factors include: macroeconomic and
industry conditions, cost factors, overall financial performance and other
relevant entity-specific events. If the entity determines that this threshold is
met, then the Company may apply a one-step quantitative test and record the
amount of goodwill impairment as the excess of a reporting unit's carrying
amount over its fair value, not to exceed the total amount of goodwill allocated
to the reporting unit. The Company determines fair value through multiple
valuation techniques and weights the results accordingly. The Company is
required to make certain subjective and complex judgments in assessing whether
an event of impairment of goodwill has occurred, including assumptions and
estimates used to determine the fair value of its reporting units. The Company
has elected to perform its annual goodwill impairment review on November 1 of
each year.
Recently Issued Accounting Standards
For a description of our recently issued accounting standards, see Note 2 -
Summary of Significant Accounting Policies in Part 1, Item 1 of this Quarterly
Report.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, financings, or other
relationships with unconsolidated entities or other persons, also known as
"special purpose entities" (SPEs).
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