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 March 31, 2021 and for the three ended March 31, 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 Amendment No.1 to
the 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 Amendment No.1 to the Form 10-Q contains
forward-looking statements as that term is defined in the federal securities
laws. The events described in forward-looking statements contained in this
Amendment No.1 to the Form 10-Q 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 Amendment No.1 to
the Form 10-Q, 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. 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 Covid-19 pandemic 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, as well as
our inability to avail ourselves of the loan forgiveness provisions of the PPP
Loan, 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
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 EV's. 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
any fees (if applicable).
In order to capture more of 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 (as
applicable).
? 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
costs. 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 fee.
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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 cost. 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 March 31, 2021, we sold or deployed 17,302 chargers , of which 7,191 were
on the Blink Network (4,471 Level 2 publicly accessible commercial chargers,
1,441 Level 2 private commercial chargers, 121 DC Fast Charging EV publicly
accessible chargers, 11 DC Fast Charging EV private chargers, and 1,147
residential Level 2 Blink EV chargers), and the remainder were non-networked, on
other networks or international sales or deployments (225 Level 2 commercial
chargers, 6 DC Fast Charging chargers, 9,218 residential Level 2 Blink EV
chargers, 607 sold internationally and 55 deployed internationally).
As reflected in our unaudited condensed consolidated financial statements as of
March 31, 2021, we had a cash balance of $195,646,354, working capital of
$230,972,150 and an accumulated deficit of $194,715,923. During the three months
ended March 31, 2021 and 2020, we incurred net losses of $7,364,475 and
$2,961,100, respectively. We have not yet achieved profitability.
Recent Developments
2021 Acquisition
On May 10, 2021, pursuant to a Share Purchase Agreement dated April 21, 2021,
the Company closed on the acquisition from Blue Corner N.V., a Belgian company
("Blue Corner"), all of its outstanding capital stock. Headquartered in Belgium,
Blue Corner owns and operates an EV charging network across Europe. The purchase
price for the acquisition of all of Blue Corner's outstanding capital stock was
approximately $24 million (or 20 million Euros), consisting of approximately $23
million (or 19 million Euros) in cash and approximately $1.2 million (1 million
Euros) represented by 32,382 shares of the Company's common stock (the
"Consideration Shares"). The number of 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 Euros) per share.
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 $232.1 million in gross proceeds from the
public offering, and approximately $221.4 million in net proceeds after
deducting the underwriting discount and offering expenses paid by us. We
anticipate 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 also plan to use any remaining proceeds we
receive 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.
Note on Covid-19
The Covid-19 pandemic has impacted global stock markets and economies. We
continue to closely monitor the impact the impact of the outbreak of the
coronavirus ("Covid-19"). We have taken 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. We have experienced what we expect is a temporary reduction in the
usage of our charging stations, which has resulted in a decrease in our charging
service revenue. As federal, state and local economies begin to reopen and with
a vaccine underway we expect demand for charging station usage to return, but we
are unable to predict the ultimate impact that it may 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
Covid-19 pandemic on our business closely.
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Consolidated Results of Operations
Revenues
Total revenue for the three months ended March 31, 2021 increased by $933,198,
or 72%, to $2,232,062 compared to $1,298,864 during the three months ended March
31, 2020.
Charging service revenue from Company-owned charging stations was $181,598 for
the three months ended March 31, 2021 as compared to $319,624 for the three
months ended March 31, 2020, a decrease of $138,026, or 43%. The decrease was
primarily attributable to the decrease in usage of charging stations as a result
of COVID-19.
Revenue from product sales was $1,670,594 for the three months ended March 31,
2021 compared to $777,423 during the three months ended March 31, 2020, an
increase of $893,171, or 115%. This increase was attributable to increased sales
of Generation 2 chargers, DC fast chargers and residential chargers when
compared to the same period in 2020.
Network fee revenues were $109,856 for the three months ended March 31, 2021
compared to $55,559 for the three months ended March 31, 2010, an increase of
$54,927, or 98%. The increase was attributable to increases in host owned units
as well as billings and invoicing to Property Partners during the three months
ended 2021 compared to the months ended March 31, 2020.
Warranty revenues were $13,217 for the three months ended March 31, 2021
compared to $8,060 for the three months ended March 31, 2020, an increase of
$5,157 or 64%. The increase was primarily attributable to an increase in
warranty contracts sold for the three months ended March 31, 2021 compared to
the three months ended March 31, 2020.
Grant and rebate revenues were $150,235 during the three months ended March 31,
2021, compared to $4,579 during the three months ended March 31, 2020, an
increase of $145,656, or 3,181%. Grant and rebates relating to equipment and the
related installation are generally deferred and amortized in a manner consistent
with the depreciation expense of the related assets over their useful lives. The
2021 revenue was related recognition of $140,000 in Michigan grants associated
with the installation of six DC fast charges during the three months ended March
31, 2021 as well as the amortization of previous years' grants.
Ride-sharing services revenues were $45,512 during the three months ended March
31, 2021 which relates to ride-sharing subscription services with the City of
Los Angeles which was associated with the acquisition of BlueLA in September
2020.
Other revenue decreased by $72,569 to $61,050 for the three months ended March
31, 2021 as compared to $133,619 for the three months ended March 31, 2020. The
decrease was primarily attributable to lower Low Carbon Fuel Standard (LCFS)
credits generated during the three months ended March 31, 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 three months ended March 31, 2021 were $2,135,683 as
compared to $990,142 for the three months ended March 31, 2020, an increase of
$1,145,541 or 116%. There is a degree of variability in our costs in
relationship to our revenues from period to period, primarily due to:
? electricity reimbursements that are unique to those Property Partner host
agreements which provide for such reimbursements;
? revenue share payments are predicated on the contractual obligation under the
property partner agreement and the revenue generated by the applicable
chargers;
? cost of charging stations sold is predicated on the mix of types of charging
stations and parts sold during the period;
? network costs are fixed in nature based on the number of chargers connected to
the telco network regardless of whether the charger generates revenue;
? provisions for excess and obsolete inventory; and
? warranty and repairs and maintenance expenses are based on both the number of
service cases completed during the period.
Cost of charging services-company-owned charging stations (electricity
reimbursements) increased by $20,158 to $49,772 for the three months ended March
31, 2021 as compared to $29,614 for the three months ended March 31, 2020. The
increase in 2021 was attributable to the mix of charging stations generating
charging service revenues subject to electricity reimbursement.
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Host provider fees increased by $40,992, or 48%, to $126,421 during the three
months ended March 31, 2021 as compared to $85,429 during the three months ended
March 31, 2020. This increase was a result of the mix of chargers generating
revenue and their corresponding revenue share percentage payments to Property
Partner hosts pursuant to their agreements, as well as a reduction in
utilization due to COVID-19.
Cost of product sales increased by $513,917 or 85%, from $603,998 for the three
months ended March 31, 2020 as compared to $1,117,915 for the three months ended
March 31, 2021. The increase is primarily due to the increase in product sales
during the three months ended March 31, 2021 compared to the same period in
2020. 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 March 31, 2021 compared to the same period in 2020. Furthermore,
the three months ended March 31, 2021 included a reduction in the provision for
excess and obsolete inventory of $81,861 relating to the increased sales of
residential home charger units. The three months ended March 31, 2020 included a
reduction in the provision for excess and obsolete inventory of $10,878.
Network costs increased by $3,991 or 5%, to $79,393 during the three months
ended March 31, 2021 as compared to $75,402 during the three months ended March
31, 2020. The increase was a result of the increase in charging stations on our
network and costs incurred related to the upgrading of our network system as
compared to the same period in 2020.
Warranty and repairs and maintenance costs increased by $261,151 or 127%, to
$114,909 during the three months ended March 31, 2021 from $114,909 during the
three months ended March 31, 2020. The increase in 2021 was attributable to
significant efforts expended to reduce the backlog in warranty and repairs and
maintenance cases. As of March 31, 2021, we recorded a liability of $9,000 which
represents the estimated cost of existing backlog of known warranty cases.
Cost of ride-sharing services was $246,117 during the three months ended March
31, 2021 which relates to ride-sharing subscription services with the City of
Los Angeles which was associated with the acquisition of BlueLA in September
2020.
Depreciation and amortization expense increased by $174,124, or 216%, to
$254,914 for the three months ended March 31, 2021 as compared to $80,790 for
the three months ended March 31, 2020. The increase in depreciation expense was
attributable to an increase in the number of EV charging stations and vehicles
purchased in December 2020 for the recently acquired BlueLA operations.
Operating Expenses
Compensation expense increased by $2,633,684, or 125%, to $4,748,151 (consisting
of approximately $4.3 million of cash compensation and benefits and
approximately $0.4 million of non-cash compensation) for the three months ended
March 31, 2021. Compensation expense was $2,114,467 (consisting of approximately
$1.9 million of cash compensation and benefits and approximately $0.2 million of
non-cash compensation) for the three months ended March 31, 2020. The increase
in compensation expense for the three months ended March 31, 2021 compared to
the same period in 2020 was primarily related to increases in personnel and
compensation in executive, marketing, sales and operations departments as a
result of the anticipated growth of the Company. In addition, compensation
expense during the three months ended March 31, 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.
General and administrative expenses increased by $939,104 or 145%, to $1,584,987
for the three months ended March 31, 2021. General and administrative expenses
were $645,883 for the three months ended March 31, 2020. The increase was
primarily attributable to increases in legal, investor relations, marketing,
consulting and other professional service expenditures of $527,901. Also
contributing to the increase in general and administrative expenses were
operating expenditures related to the 2020 acquisitions of BlueLA and U-Go which
were acquired subsequent to March 31, 2020.
Other operating expenses increased by $582,506, or 103%, to $1,149,706 for the
three months ended March 31, 2021 from $567,200 for the three months ended March
31, 2020. The increase was primarily attributable to increases in insurance,
software licensing, rent, and use tax expenditures of $566,611. The increase was
partially offset by reductions in travel expenses as a result of COVID-19.
Other Income
Other income decreased by $35,738 from $57,728 for the quarter ended March 31,
2020 to $21,990 for the quarter ended March 31, 2021. During the quarter ended
March 31, 2021, other income was primarily attributable to interest income of
$14,997. During the quarter ended March 31, 2020, other income included earned
interest income and dividend income of $15,853 from our cash and marketable
securities portfolio, and changes in value of Low Carbon Fuel Standard credits
of $32,072.
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Net Loss
Our net loss for the three months ended March 31, 2021 increased by $4,403,375
or 149%, to $7,364,475 as compared to $2,961,100 for the three months ended
March 31, 2020. The increase was primarily attributable to an increase in
compensation expense and general and administrative expenses.
Total Comprehensive Loss
Our total comprehensive loss for the three months ended March 31, 2021 was
$7,420,513 whereas our total comprehensive loss for the three months ended March
31, 2020 was $3,142,568.
Liquidity and Capital Resources
We measure our liquidity in a number of ways, including the following:
March 31, 2021 December 31, 2020
(unaudited)
Cash $ 195,646,354 $ 22,341,433
Working Capital $ 230,972,150 $ 19,579,775
Notes Payable (Gross) $ 872,819 $ 870,696
During the three months ended March 31, 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 three months ended March 31, 2021 and 2020, we used cash of $8,497,978
and $3,413,141, respectively, in operations. Our cash use for the three months
ended March 31, 2021 was primarily attributable to our net loss of $7,364,475,
adjusted for net non-cash expenses in the aggregate amount of $1,054,705, and
$2,188,208 of net cash used in changes in the levels of operating assets and
liabilities. Our cash used for the three months ended March 31, 2020 was
primarily attributable to our net loss of $2,961,100, adjusted for net non-cash
expenses in the aggregate amount of $220,023, and $672,064 of net cash used in
changes in the levels of operating assets and liabilities.
During the three months ended March 31, 2021, net cash used in investing
activities was $40,582,908, of which, $36,562,212 was provided in connection
with the purchase of marketable securities and $4,020,696 was used to purchase
charging stations and other fixed assets. During the three months ended March
31, 2020, net cash provided by investing activities was $799,614, of which,
$1,100,516 was provided in connection with the sale of marketable securities and
$300,902 was used to purchase charging stations and other fixed assets.
During the three months ended March. 31, 2021, cash provided in financing
activities was $222,385,807, of which, $221,405,782 was provided by the sale of
common stock in a public offering and $999,540 was provided upon the exercise of
warrants, this was offset by $19,515 used to pay down our liability in
connection with internal use software. During the three months ended March. 31,
2020, cash used in financing activities was $17,989 which was used to pay down
our liability in connection with internal use software.
As of March 31, 2021, we had cash, working capital and an accumulated deficit of
$195,646,354, $230,972,150 and $194,715,923, respectively. During the three
months ended March 31, 2021, we had a net loss of $7,364,475.
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 $232.1 million in gross proceeds from the
public offering, and approximately $221.4 million 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.
21
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 after from the issuance date of the financial statements
included in this quarterly report.
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 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 comprises 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.
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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 its 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 its 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.
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 Amendment
No.1 to the Form 10-Q.
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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