Blink Charging Co. 10-Q

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 March 31, 2022 and for the three months ended March 31, 2022 and 2021 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, 2021, 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. Currencies 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 (if applicable). 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 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. 17 ● 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, 2022, we sold or deployed 20,569 chargers , of which 7,727 were on the Blink Network (5,067 Level 2 publicly accessible commercial chargers, 1,613 Level 2 private commercial chargers, 83 DC Fast Charging EV publicly accessible chargers, 28 DC Fast Charging EV private chargers, and 936 residential Level 2 Blink EV chargers), and the remaining 12,842 were non-networked, on other networks or international sales or deployments (159 Level 2 commercial chargers, 6 DC Fast Charging chargers, 10,134 residential Level 2 Blink EV chargers, 1,677 sold to other US Networks, 802 sold internationally and 64 deployed internationally). In addition, as of March 31, 2022, since its inception, our recently acquired subsidiary, Blue Corner, sold or deployed 15,768 independent charge points, all of which were on Blue Corner’s network, which was comprised of 7,477 Level 2 publicly accessible commercial independent charge points, 23 DC Fast Charging publicly assessable commercial independent charge points and 6,816 private L2, private DC Fast Charging and private residential independent charge points. The charger units reported herein are net of swap-out or replacement units. As reflected in our unaudited condensed consolidated financial statements as of March 31, 2022, we had a cash balance of $161,984, working capital of $161,417, and an accumulated deficit of $257,613. During the three months ended March 31, 2022 and 2021, we incurred net losses of $15,143 and $7,365, respectively. We have not yet achieved profitability. Recent Developments 2022 Acquisition On April 22, 2022, pursuant to a Sale and Purchase Agreement, dated April 22, 2022, we acquired through our Dutch subsidiary, Blink Holdings B.V., all of the outstanding capital stock of Electric Blue Limited, a private company limited by shares and registered in England and Wales (“EB”), from its shareholders. Headquartered in St. Albans, United Kingdom, EB is a leading, independently owned provider of electric vehicle charging and sustainable energy solutions and technologies. EB works with local authorities and businesses to create the infrastructure the United Kingdom needs to meet the 2050 net zero emissions target and prepare for the 2030 ban on the sale of new petrol and diesel cars and vans. The purchase price for the acquisition of all of EB’s outstanding capital stock was up to 18,000 British Pounds (“GBP”) (approximately $23,400), consisting of 10,000 GBP (approximately $13,000) in cash, and 3,000 GBP (approximately $3,900) represented by 152,803 shares of our common stock (the “Consideration Shares”). The number of Consideration Shares was calculated based on the volume weighted average price of our common stock during the 30 consecutive trading days ending on the closing date of the Sale and Purchase Agreement, which equalled $25.17 per share. We also agreed in the Sale and Purchase Agreement, provided EB reaches specified gross revenue or new EV charger installation targets over the three years post-closing, to issue up to 5,000 GBP (approximately $6,500) in additional shares of our common stock to EB shareholders (the “Earn-Out”) 18 New Product and Service Offerings In January 2022, we announced the next generation of Level 2 chargers to enhance our offering for the residential and the Fleet multifamily residential markets. The HQ 200 Basic is a non-networked residential product and the HQ 200 Smart is a networked residential product. The MQ 200 product is an ideal product for the Fleet and multifamily residential markets. Furthermore , in January 2022, Blink announced the Fleet Management Portal targeted at commercial, municipal and federal fleets that are interested in electrifying their fleets for planning, managing, optimizing their fleets for departure and energy costs. Letter of Intent On April 19, 2022, the Company signed a non-binding letter of intent with a U.S. privately-held company (the “Target”) providing for the possible purchase by the Company of all of the outstanding shares of the Target from its shareholders in consideration for cash, a note and, under certain circumstances, shares of common stock of a subsidiary of the Company or, if such subsidiary’s shares are not publicly-traded, common stock of the Company. In addition, in the letter of intent, the Company agreed to extend a loan of $1,000 to the Target (the “Loan”), which was subsequently made by the Company pursuant to a 6% Secured Convertible Promissory Note signed by the Target. Under the terms of the Loan, if the Company proceeds with the possible stock purchase of the Target, the principal and accrued interest amount under the Loan will be deducted from the cash consideration paid to the Target’s shareholders at closing. If, however, the Company determines not to proceed with the possible stock purchase of the Target, the Loan will continue to accrue 6% interest per annum, and mature on the earliest of (i) a “Change of Control” (as defined); (ii) the closing of the next investment round by the Target; (iii) an Event of Default (as defined); or (iv) May 1, 2027. 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 recently identified variants of Covid-19 which appear to be more transmissible and contagious than previous Covid-19 variants and have caused an increase in the number of Covid-19 cases globally. 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, we expect demand for charging station usage to increase, however, we are 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 of 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. We intend to continue to monitor the impact of the Covid-19 pandemic on our business closely. For a further discussion of the risks, uncertainties and actions taken in response to the COVID-19 pandemic, refer to Item 1A “Risk Factors”. Key Factors Affecting Operating Results We believe our performance and future success depend on several factors, including those discussed below: Competition - The EV charging equipment and service market is highly competitive, and we expect the market to become increasingly competitive as new entrants enter this growing market. Our products and services compete on product performance and features, the total cost of ownership, sales capabilities, financial stability, brand recognition, product reliability, and the installed base’s size. Existing competitors may expand their product offerings and sales strategies, and new competitors may enter the market. If our market share decreases due to increased competition, its revenue and ability to generate profits in the future may be impacted. Growth - Our growth is highly dependent upon the adoption by consumers of EVs, and we are subject to a risk of any reduced demand for EVs. The market for alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements, long development cycles for EV original equipment manufacturers, and changing consumer demands and behaviors. Factors that may influence the purchase and use of alternative fuel vehicles, and specifically EVs, include perceptions about EV quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost; the limited range over which EVs may be driven on a single battery charge and concerns about running out of power while in use; improvements in the fuel economy of the internal combustion engine; consumers’ desire and ability to purchase a luxury automobile or one that is perceived as exclusive; the environmental consciousness of consumers; volatility in the cost of oil and gasoline; consumers’ perceptions of the dependency of the United States on oil from unstable or hostile countries and the impact of international conflicts; government regulations and economic incentives promoting fuel efficiency and alternate forms of energy; access to charging stations, standardization of EV charging systems and consumers’ perceptions about convenience and cost to charge an EV; and the availability of tax and other governmental incentives to purchase and operate EVs or future regulation requiring increased use of nonpolluting vehicles. If the market for EVs does not gain broad market acceptance or develops slower than we expect, our business, prospects, financial condition and operating results may be adversely affected. 19 Regulations - Our business is subject to a variety of federal, state and international laws and regulations, including those with respect government incentives promoting fuel efficiency and alternate forms of energy, electric vehicles and others. These laws and regulations, and the interpretation or application of these laws and regulations, could change. Any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes, fiscal tightening or other reasons may result in diminished revenues from government sources and diminished demand for our products. In addition, new laws or regulations affecting our business could be enacted. These laws and regulations are frequently costly to comply with and may divert a significant portion of management’s attention. Changes to these applicable laws or regulations could affect business and/or harm our customers, thereby adversely affect our business, financial condition and results of operations. Expansion through Acquisitions - We may pursue strategic domestic and international acquisitions to expand our operations. Risks in acquisition transactions include difficulties in the integration of acquired businesses into our operations and control environment, difficulties in assimilating and retaining employees and intermediaries, difficulties in retaining the existing clients of the acquired entities, assumed or unforeseen liabilities that arise in connection with the acquired businesses, the failure of counterparties to satisfy any obligations to indemnify us against liabilities arising from the acquired businesses, and unfavorable market conditions that could negatively impact our growth expectations for the acquired businesses. Fully integrating an acquired company or business into our operations may take a significant amount of time. If we are unable to integrate or pursue strategic acquisitions, our financial condition and results of operations would be negatively impacted. Consolidated Results of Operations For the Three Months Ended March 31, 2022 2021 Difference $ Difference% Revenues: Product sales $ 8,052 $ 1,671 $ 6,381 382 % Charging service revenue - company-owned charging stations 1,107 182 925 508 % Network fees 161 110 51 46 % Warranty 67 13 54 415 % Grant and rebate 75 150 (75 ) -50 % Ride-sharing services 239 46 193 420 % Other 99 60 39 65 % Total Revenues 9,800 2,232 7,568 339 % Cost of Revenues: Cost of product sales 6,044 1,118 4,926 441 % Cost of charging services - company-owned charging stations 523 50 473 946 % Host provider fees 551 126 425 337 % Network costs 234 79 155 196 % Warranty and repairs and maintenance 111 262 (151 ) -58 % Ride-sharing services 426 246 180 73 % Depreciation and amortization 325 255 70 27 % Total Cost of Revenues 8,214 2,136 6,078 285 % Gross Profit 1,586 96 1,490 1552 % Operating Expenses: Compensation 9,259 4,748 4,511 95 % General and administrative expenses 4,427 1,585 2,842 179 % Other operating expenses 2,942 1,149 1,793 156 % Total Operating Expenses 16,628 7,482 9,146 122 % Loss From Operations (15,042 ) (7,386 ) (7,656 ) 104 % Other Income (Expense): Interest income - 14 (14 ) -100 % Foreign transaction gain 3 - 3 N/A Change in fair value of derivative and other accrued liabilities - 7 (7 ) -100 % Other expense, net (104 ) - (104 ) 100 % Total Other (Expense) Income (101 ) 21 (122 ) -581 % Net Loss $ (15,143 ) $ (7,365 ) $ (7,778 ) 106 % 20 Revenues Total revenue for the three months ended March 31, 2022 increased by $7,568, or 339%, to $9,800 compared to $2,232 during the three months ended March 31, 2021. Charging service revenue from Company-owned charging stations was $1,107 for the three months ended March 31, 2022 as compared to $182 for the three months ended March 31, 2021, an increase of $925, or 508%. 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 $715 from Blue Corner which we acquired in May 2021. Revenue from product sales was $8,052 for the three months ended March 31, 2022 compared to $1,671 during the three months ended March 31, 2021, an increase of $6,381, or 382%. This increase was attributable to increased sales of commercial chargers, DC fast chargers and residential chargers when compared to the same period in 2021 as well as product sales of $2,423 from Blue Corner which we acquired in May 2021. Network fee revenues were $161 for the three months ended March 31, 2021 compared to $110 for the three months ended March 31, 2021, an increase of $51, or 46%. The increase was attributable to increases in host owned units as well as billings and invoicing to Property Partners during the three months ended March 31, 2022 compared to the months ended March 31, 2021. Warranty revenues were $67 for the three months ended March 31, 2022 compared to $13 for the three months ended March 31, 2021, an increase of $54, or 415%. The increase was primarily attributable to an increase in warranty contracts sold for the three months ended March 31, 2022 compared to the three months ended March 31, 2021. As of March 31, 2022, we recorded a liability of $8 which represents the estimated cost of existing backlog of known warranty cases. Grant and rebate revenues were $75 during the three months ended March 31, 2022, compared to $150 during the three months ended March 31, 2021, a decrease of $75, or 50%. The 2022 revenue was primarily related to the amortization of previous years’ grants and grants/rebates of $75 from Blue Corner which we acquired in May 2021. The 2021 revenue was primarily related to recognition of $150 in various state grants associated with the installation of chargers during the three months ended March 31, 2021. Ride-sharing services revenues were $239 during the three months ended March 31, 2022 compared to $46 during the three months ended March 31, 2021, an increase of $193 or 420%. These revenues are 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 increased by $39 to $99 for the three months ended March 31, 2022 as compared to $60 for the three months ended March 31, 2021. The increase was primarily attributable to higher Low Carbon Fuel Standard (LCFS) credits generated during the three months ended March 31, 2022 compared to the same period in 2021. 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, 2022 were $8,214 as compared to $2,136 for the three months ended March 31, 2021, an increase of $6,078 or 285%. 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 $473, or 946%, to $523 for the three months ended March 31, 2022 as compared to $50 for the three months ended March 31, 2021. The increase in 2022 was attributable to the mix of charging stations generating charging service revenues subject to electricity reimbursement. 21 Host provider fees increased by $425, or 337%, to $551 during the three months ended March 31, 2022 as compared to $126 during the three months ended March 31, 2021. 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 $4,926, or 441%, from $1,118 for the three months ended March 31, 2021 as compared to $6,044 for the three months ended March 31, 2022. The increase is primarily due to the increase in product sales during the three months ended March 31, 2022 compared to the same period in 2021. The increase was primarily due to the increase in product sales of commercial chargers, DC fast chargers and home residential chargers during the three months ended March 31, 2022 compared to the same period in 2021 as well as cost of product sales of $2,263 from Blue Corner which we acquired in May 2021. Furthermore, three months ended March 31, 2022 included an increase in the provision for excess and obsolete inventory of $129 relating primarily to the increased sales of residential home charger units. The three months ended March 31, 2021 included a decrease in the provision for excess and obsolete inventory of $82. Network costs increased by $155 or 196%, to $234 during the three months ended March 31, 2022 as compared to $79 during the three months ended March 31, 2021. 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 2021. Warranty and repairs and maintenance costs decreased by $151, or 58%, to $111 during the three months ended March 31, 2022 from $262 during the three months ended March 31, 2021. The increase in 2022 was attributable to significant efforts expended to reduce the backlog in warranty and repairs and maintenance cases. As of March 31, 2022, we recorded a liability of $8 which represents the estimated cost of existing backlog of known warranty cases. Cost of ride-sharing services was $426 during the three months ended March 31, 2022 compared to $246 during the 2021 period, the increase was due to increase in operating expenses as a result of an increase in vehicles used in this operation. These costs are from ride-sharing subscription services through a program with the City of Los Angeles, which was associated with the acquisition of BlueLA in September 2020. Depreciation and amortization expense increased by $70, or 27%, to $325 for the three months ended March 31, 2022 as compared to $255 for the three months ended March 31, 2021. 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. Operating Expenses Compensation expense increased by $4,511, or 95%, to $9,259 (consisting of approximately $7.3 million of cash compensation and benefits and approximately $2.0 million of non-cash compensation) for the three months ended March 31, 2022. Compensation expense was $4,748 (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. The increase in compensation expense for the three months ended March 31, 2022 compared to the same period in 2021 was primarily related to increases in personnel and compensation in executive, marketing, sales and operations departments as a result of the anticipated domestic and international growth of the Company. In addition, compensation expense during the three months ended March 31, 2022, compared the same period in 2021 increased due to additional personnel in conjunction with the acquisition of Blue Corner in May 2021. General and administrative expenses increased by $2,842 or 179%, to $4,427 for the three months ended March 31, 2022 as compared to $1,585 for the three months ended March 31, 2021. The increase was primarily attributable to increases in accounting, investor relations, marketing, consulting and other professional service expenditures of $2,182. Furthermore, general and administrative expenses increased due to increases in amortization expense of $312 related to the Blue Corner acquisition. Also contributing to the increase in general and administrative expenses were operating expenditures related to the 2021 acquisitions of Blue Corner which occurred in May 2021. Other operating expenses increased by $1,793, or 156%, to $2,942 for the three months ended March 31, 2022 from $1,149 for the three months ended March 31, 2021. The increase was primarily attributable to increases in insurance, software licensing, hardware and software development costs and property/use tax expenditures of $1,092. Furthermore, increases in travel and vehicle expenses of $240, contributed to the increase in other operating expenses for the three months ended March 31, 2022 compared to the same period in 2021. Also contributing to the increase in other operating expenses were operating expenditures related to the 2021 acquisitions of Blue Corner which occurred in May 2021. During the three months ended March 31, 2022, we incurred expenses of $341 related to the network upgrade to certain of the Company’s EV charging stations. Other (Expense) Income Other (expense) income decreased by $122, or 581%, to $(101) for the three months ended March 31, 2022 as compared to $21 for the three months ended March 31, 2021. 22 Net Loss Our net loss for the three months ended March 31, 2022 increased by $7,778 or 106%, to $15,143 as compared to $7,365 for the three months ended March 31, 2021. 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, 2022 was $15,749 whereas our total comprehensive loss for the three months ended March 31, 2021 was $7,421. Liquidity and Capital Resources We measure our liquidity in a number of ways, including the following: March 31, 2022 December 31, 2021 (unaudited) Cash and cash equivalents $ 161,984 $ 174,795 Working capital $ 161,417 $ 176,303 Notes payable (gross) $ 10 $ 10 During the three months ended March 31, 2022, 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, 2022 and 2021, we used cash of $11,383 and $8,500, respectively, in operations. Our cash use for the three months ended March 31, 2022 was primarily attributable to our net loss of $15,143, adjusted for net non-cash expenses in the aggregate amount of $3,572, partially offset by $188 of net cash provided by changes in the levels of operating assets and liabilities. Our cash used for the three months ended March 31, 2021 was primarily attributable to our net loss of $7,365, adjusted for net non-cash expenses in the aggregate amount of $1,055, and $2,190 of net cash used in changes in the levels of operating assets and liabilities. During the three months ended March 31, 2022, net cash used in investing activities was $1,368 which was used to purchase charging stations and other fixed assets. During the three months ended March 31, 2021, net cash used in investing activities was $40,583, of which, $36,562 was provided in connection with the purchase of marketable securities and $4,021 was used to purchase charging stations and other fixed assets. During the three months ended March. 31, 2022, cash used in financing activities was $77, of which, $69 was provided by the exercise of warrants, offset by $146 used to pay down our liability in connection with internal use software. During the three months ended March. 31, 2021, cash provided in financing activities was $222,386, of which, $221,406 was provided by the sale of common stock in a public offering, $1,000 was provided by the exercise of warrants, which was partially offset by $20 used to pay down our liability in connection with internal use software. As of March 31, 2022, we had cash, working capital and an accumulated deficit of $161,984, $161,417 and $257,613, respectively. During the three months ended March 31, 2022, we had a net loss of $15,143. 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. 23 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. As EV charging requirements and technologies change, driven by federal, state or local regulatory authorities or by EV manufacturers or other technology or services providers for the charging station industry, in particular cellular connectivity technology, we may need to upgrade or adapt our charging station products or introduce new products in order to serve new vehicles, conform to new standards, or adapt new technologies to serve existing customers or new customers at substantial research, development, and network upgrades costs. During 2021, many cellular technology providers announced they will require the upgrade from 2G/3G connectivity to 4G LTE during 2022 (the “Upgrade”). The Upgrade is expected to cost approximately $1,785 to upgrade certain of our owned and operated EV charging stations. Contractual Obligations and Commitments We entered into purchase commitments that include purchase orders and agreements in the normal course of business with contract manufacturers, parts manufacturers, vendors for research and development services and outsourced services. As of March 31, 2022, we had purchase commitment of approximately $35,000 of which approximately $13,000 is with a related party, which will become payable upon the suppliers’ delivery of the charging stations, services and other related items. The purchase commitments were made primarily for future sales, deployments of charging stations, inventory management planning and other related items, all of which are expected to be received during the next 12-24 months. Furthermore, the Company has operating lease obligations over the next five years of approximately $2,009. These operating lease obligations are primarily related to corporate office space, warehousing, and parking spaces related to our ride-sharing services. Critical Accounting 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. For a comprehensive list of our critical accounting estimates, refer to Part II, Item 7, Critical Accounting Estimates in our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2021. 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. 24 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. 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. Goodwill Goodwill is the excess of consideration paid for an acquired entity over the fair value of 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. 25 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 on Form 10-Q. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are not required to provide the information required by this Item because we are a smaller reporting company.