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 June 30, 2022 and for the three and six months ended June 30, 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. 23 ● 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 June 30, 2022, we sold or deployed 51,073 chargers , of which 37,184 were in Blink’s networks (21,097 Level 2 publicly accessible commercial chargers, 14,485 Level 2 private commercial chargers, 303 DC Fast Charging EV publicly accessible chargers, 129 DC Fast Charging EV private chargers, and 1,170 residential Level 2 Blink EV chargers, included herein are 2,480 chargers pending to be commissioned), and the remaining 13,889 were non-networked, on other networks or international sales or deployments (826 Level 2 commercial chargers, 48 DC Fast Charging chargers, 10,206 residential Level 2 Blink EV chargers, 1,783 sold to other US Networks, 946 sold internationally and 80 deployed internationally). Charger units herein are net of swap-out or replacement units. As reflected in our unaudited condensed consolidated financial statements as of June 30, 2022, we had a cash balance of $85,136, working capital of $84,801, and an accumulated deficit of $280,234. During the three and six months ended June 30, 2022, we incurred net losses of $22,621 and $37,764, respectively. We have not yet achieved profitability. Recent Developments 2022 Acquisitions SemaConnect On June 15, 2022, we completed the acquisition of SemaConnect, Inc., a Delaware corporation (“SemaConnect”) pursuant to an Agreement and Plan of Merger, dated as of June 13, 2022 (“Acquisition Agreement”), by and among the Company, Blink Sub I Corp., Blink Sub II LLC, SemaConnect and Shareholder Representative Services LLC (solely in its capacity as the stockholders’ representative). Upon consummation of the acquisition, SemaConnect became a wholly owned subsidiary of the Company. SemaConnect is a leading provider of EV charging infrastructure solutions in North America. The aggregate fair purchase price is $200,573, which includes excess working capital of $1,229 and closing date cash of $3,639. The consideration paid in the acquisition consisted of: (a) $86,736 in cash, (i) $46,136 of which was paid at the closing of the Acquisition Agreement (“Closing”) and (ii) the remaining $40,600 is payable (bearing interest at 7%) until not earlier than nine months following the Closing and not later than three years following the Closing; and (b) 7,454,975 shares of the Company’s common stock (the “Stock Payment”) with a fair value of $113,837. Included in the cash consideration is $8,103 related to payments due to stock option holders of SemaConnect. Subsequent to the acquisition date, payments to the stock option holder were made after the stock option holder signed an option cash-out agreement. As of June 30, 2022, there was an unpaid balance of $4,058 which is classified as restricted cash on condensed consolidated balance sheet as of June 30, 2022, all of which was paid during July 2022. 24 Electric Blue Limited 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 fair values purchase price for the acquisition of all of EB’s outstanding capital stock is $18,903 , consisting of $12,651 in cash, and 152,803 of the Company’s common stock (the “Consideration Shares”) with a fair value of $2,852. In addition, provided EB reaches specified gross revenue or new EV charger installation targets over the three years post-closing, the Company also agreed to issue up to approximately $6,400 in additional shares of its common stock to EB shareholders (the “Contingent Consideration”). The Contingent Consideration was recorded at an estimated fair value of $3,400. As of June 30, 2022, the estimated fair value of the Contingent Consideration was $3,514. Of the purchase price to be issued to the EB shareholders at closing, approximately $650 in cash and 25,466 shares of common stock are being held in escrow accounts for periods of 12 months (cash escrow) and 18 months 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 $1,250 to the Target (the “Loan”), in which $1,000 was loaned by the Company during second quarter of 2022 and $250 was loaned in July 2022 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”. 25 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. 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. 26 Consolidated Results of Operations For The Three Months Ended For the Six Months Ended June 30, June 30, 3 Months 6 Months 2022 2021 2022 2021 Difference $ Difference % Difference $ Difference % Revenues: Product sales $ 8,828 $ 3,267 $ 16,880 $ 4,938 $ 5,561 170 % $ 11,942 242 % Charging service revenue - company-owned charging stations 1,494 586 2,601 768 908 155 % 1,833 239 % Network fees 472 106 633 216 366 345 % 417 193 % Warranty 99 19 166 31 80 421 % 135 435 % Grant and rebate 125 74 200 224 51 69 % (24 ) -11 % Ride-sharing services 279 189 518 235 90 48 % 283 120 % Other 189 114 288 175 75 66 % 113 65 % Total Revenues 11,486 4,355 21,286 6,587 7,131 164 % 14,699 223 % Cost of Revenues: Cost of product sales 6,369 2,365 12,471 3,483 4,004 169 % 8,988 258 % Cost of charging services - company-owned charging stations 351 60 534 110 291 485 % 424 385 % Host provider fees 821 140 1,372 267 681 486 % 1,105 414 % Network costs 182 94 416 173 88 94 % 243 140 % Warranty and repairs and maintenance 523 196 634 457 327 167 % 177 39 % Ride-sharing services 659 424 1,085 670 235 55 % 415 62 % Depreciation and amortization 624 432 1,231 687 192 44 % 544 79 % Total Cost of Revenues 9,529 3,711 17,743 5,847 5,818 157 % 11,896 203 % Gross Profit 1,957 644 3,543 740 1,313 204 % 2,803 379 % Operating Expenses: Compensation 10,779 9,170 20,038 13,918 1,609 18 % 6,120 44 % General and administrative expenses 9,002 2,532 13,429 4,117 6,470 256 % 9,312 226 % Other operating expenses 4,138 1,287 7,080 2,437 2,851 222 % 4,643 191 % Total Operating Expenses 23,919 12,989 40,547 20,472 10,930 84 % 20,075 98 % Loss From Operations (21,962 ) (12,345 ) (37,004 ) (19,732 ) (9,617 ) 78 % (17,272 ) 88 % Other (Expense) Income: Interest (expense) income (139 ) (6 ) (139 ) 9 (133 ) 2217 % (148 ) -1644 % Loss on settlement - (1,000 ) - (1,000 ) 1,000 -100 % 1,000 -100 % Loss on foreign exchange (244 ) (108 ) (241 ) (108 ) (136 ) 126 % (133 ) 123 % Change in fair value of derivative and other liabilities (73 ) (1 ) (73 ) 7 (72 ) 7200 % (80 ) -1143 % Other (expense) income (203 ) 1 (307 ) 1 (204 ) -20400 % (308 ) -30,800 % Total Other Expense (659 ) (1,114 ) (760 ) (1,091 ) 455 -41 % 331 -30 % Net Loss $ (22,621 ) $ (13,459 ) $ (37,764 ) $ (20,823 ) $ (9,162 ) 62 % $ (16,941 ) 81 % Three Months Ended June 30, 2022 Compared With Three Months Ended June 30, 2021 Revenues Total revenue for the three months ended June 30, 2022 increased by $7,131, or 164%, to $11,486 compared to $4,355 during the three months ended June 30, 2021. Revenue from product sales was $8,828 for the three months ended June 30, 2022 compared to $3,267 during the three months ended June 30, 2021, an increase of $5,561, or 170%. 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 $1,213 from EB which we acquired in April 2022 and $1,124 from SemaConnect which we acquired in June 2022. Charging service revenue from Company-owned charging stations was $1,494 for the three months ended June 30, 2022 as compared to $586 for the three months ended June 30, 2021, an increase of $908, or 155%. The increase is due to the increase in utilization of chargers, an increased number of chargers on the Blink networks. Network fee revenues were $472 for the three months ended June 30, 2022 compared to $106 for the three months ended June 30, 2021, an increase of $366, or 345%. The increase was attributable to increases in host owned units as well as billings and invoicing to Property Partners during the three months ended June 30, 2022 compared to the months ended June 30, 2021. 27 Warranty revenues were $99 for the three months ended June 30, 2022 compared to $19 for the three months ended June 30, 2021, an increase of $80 or 421%. The increase was primarily attributable to an increase in warranty contracts sold for the three months ended June 30, 2022 compared to the three months ended June 30, 2021. As of June 30 , 2022, we recorded a liability of $43 which represents the estimated cost of existing backlog of known warranty cases. Grant and rebate revenues were $125 during the three months ended June 30, 2022, compared to $74 during the three months ended June 30, 2021, an increase of $51, or 69%. The increase in revenue was primarily related to the timing of the amortization of previous years’ state grants/rebates associated with the installation of chargers during the three months ended June 30, 2022 and 2021. Ride-sharing services revenues were $279 during the three months ended June 30, 2022 compared to $189 during the three months ended June 30, 2021, an increase of $90 or 48%. 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 $75 to $189 for the three months ended June 30, 2022 as compared to $114 for the three months ended June 30, 2021. The increase was primarily attributable to higher Low Carbon Fuel Standard (LCFS) credits generated during the three months ended June 30, 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 June 30, 2022 were $9,529 as compared to $3,711 for the three months ended June 30, 2021, an increase of $5,818, or 157%. 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 product sales increased by $4,004, or 169%, from $2,365 for the three months ended June 30, 2021 as compared to $6,369 for the three months ended June 30, 2022. 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 June 30 , 2022 compared to the same period in 2021 as well as cost of product sales of $794 from EB which we acquired in April 2022 and $533 from SemaConnect which we acquired in June 2022. Furthermore, three months ended June 30 , 2022 included an increase in the provision for excess and obsolete inventory of $82 compared to $109 during the three months ended June 30 , 2021. Cost of charging services-company-owned charging stations (electricity reimbursements) increased by $291 to $351 for the three months ended June 30, 2022 as compared to $60 for the three months ended June 30, 2021. The increase in 2022 was attributable to the mix of charging stations generating charging service revenues subject to electricity reimbursement. Host provider fees increased by $681, or 486%, to $821 during the three months ended June 30, 2022 as compared to $140 during the three months ended June 30, 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 during 2021 due to COVID-19. Network costs increased by $88 or 94%, to $182 during the three months ended June 30, 2022 as compared to $94 during the three months ended June 30, 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 increased by $327, or 167%, to $523 during the three months ended June 30, 2022 from $196 during the three months ended June 30, 2021. The increase in 2022 was attributable to significant efforts expended to reduce the backlog in warranty and repairs and maintenance cases. As of June 30 , 2022, we recorded a liability of $43 which represents the estimated cost of existing backlog of known warranty cases. Cost of ride-sharing services was $659 during the three months ended June 30, 2022 compared to $424 during the 2021 period, an increase of $235, which 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 $192, or 44%, to $624 for the three months ended June 30, 2022 as compared to $432 for the three months ended June 30, 2021. The increase in depreciation expense was attributable to an increase in the number of EV charging stations and vehicles associated with the ride-share services. 28 Operating Expenses Compensation expense increased by $1,609, or 18%, to $10,779 (consisting of approximately $9,800 of cash compensation and benefits and approximately $1,000 of non-cash compensation) for the three months ended June 30, 2022. Compensation expense was $9,170 (consisting of approximately $5,600 of cash compensation and benefits and approximately $3,600 of non-cash compensation) for the three months ended June 30, 2021. The increase in compensation expense for the three months ended June 30, 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 June 30, 2022 compared to the same period in 2021 increased due to additional personnel in conjunction with the acquisitions of SemaConnect and EB during the second quarter of 2022. General and administrative expenses increased by $6,470, or 256%, to $9,002 for the three months ended June 30, 2022 as compared to $2,532 for the three months ended June 30, 2021. The increase was attributable to increases in accounting, legal, investor relations, marketing, consulting and other professional service expenditures of $2147. Furthermore, general and administrative expenses increased/ due to increases in amortization expense of $1,577 related to the new acquisitions of SemaConnect and EB during the second quarter of 2022. Also contributing to the increase in general and administrative expenses were acquisition-related expenses of $3,216 related to the 2022 acquisitions of SemaConnect and EB. Other operating expenses increased by $2,851, or 222%, to $4,138 for the three months ended June 30, 2022 from $1,287 for the three months ended June 30, 2021. The increase was attributable to increases in insurance, software licensing, annual shareholder’s meeting, hardware and software development costs and property/use tax expenditures of $1,222. Furthermore, increases in travel and vehicle expenses of $454, contributed to the increase in other operating expenses for the three months ended June 30, 2022 compared to the same period in 2021. Also contributing to the increase in other operating expenses were operating expenditures related to the 2022 acquisitions of SemaConnect and EB. During the three months ended June 30, 2022, we incurred expenses of $972 related to the network upgrade to certain of the Company’s EV charging stations. Other Expense Other expense decreased by $455 or 41%, to $659 for the three months ended June 30, 2022 as compared to $1,114 for the three months ended June 30, 2021. Net Loss Our net loss for the three months ended June 30, 2022 increased by $9,162, or 68%, to $22,621 as compared to $13,459 for the three months ended June 30, 2021. The increase was primarily attributable to an increase in compensation expense, general and administrative expenses and expenses associated with the acquisitions of SemaConnect and EB during the three months ended June 30, 2022. Total Comprehensive Loss Our total comprehensive loss for the three months ended June 30, 2022 was $24,893 whereas our total comprehensive loss for the three months ended June 30, 2021 was $13,834. Six Months Ended June 30, 2022 Compared With Six Months Ended June 30, 2021 Revenues Total revenue for the six months ended June 30, 2022 increased by $14,699, or 223%, to $21,286 compared to $6,587 during the six months ended June 30, 2021. Revenue from product sales was $16,880 for the six months ended June 30, 2022 compared to $4,938 during the six months ended June 30, 2021, an increase of $11,942, or 242%. 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 $1,211 from EB which we acquired in April 2022 and $1,124 from SemaConnect which we acquired in June 2022. Charging service revenue from Company-owned charging stations was $2,601 for the six months ended June 30, 2022 as compared to $768 for the six months ended June 30, 2021, an increase of $1,833, or 239%. The increase is due to the increase in utilization of chargers, an increased number of chargers on the Blink networks. Network fee revenues were $633 for the six months ended June 30, 2022 compared to $216 for the six months ended June 30, 2021, an increase of $417, or 193%. The increase was attributable to increases in host owned units as well as billings and invoicing to Property Partners during the six months ended June 30, 2022 compared to the months ended June 30, 2021. 29 Warranty revenues were $166 for the six months ended June 30, 2022 compared to $31 for the six months ended June 30, 2021, an increase of $135 or 435%. The increase was primarily attributable to an increase in warranty contracts sold for the six months ended June 30, 2022 compared to the six months ended June 30, 2021. As of June 30 , 2022, we recorded a liability of $43 which represents the estimated cost of existing backlog of known warranty cases. Grant and rebate revenues were $200 during the six months ended June 30, 2022, compared to $224 during the six months ended June 30, 2021, a decrease of $24, or 11%. The decrease in 2022 in revenue was primarily related to the timing of the amortization of previous years’ state grants/rebates associated with the installation of chargers during the six months ended June 30, 2022 and 2021. Ride-sharing services revenues were $518 during the six months ended June 30, 2022 compared to $235 during the six months ended June 30, 2021, an increase of $283 or 120%. 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 $113 to $288 for the six months ended June 30, 2022 as compared to $175 for the six months ended June 30, 2021. The increase was primarily attributable to higher Low Carbon Fuel Standard (LCFS) credits generated during the six months ended June 30, 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 six months ended June 30, 2022 were $17,743 as compared to $5,847 for the six months ended June 30, 2021, an increase of $11,896 or 203%. 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 product sales increased by $8,988, or 258%, from $3,483 for the six months ended June 30, 2021 as compared to $12,471 for the six months ended June 30, 2022. The increase was primarily due to the increase in product sales of commercial chargers, DC fast chargers and home residential chargers during the six months ended June 30 , 2022 compared to the same period in 2021 as well as cost of product sales of $794 from EB which we acquired in April 2022 and $533 from SemaConnect which we acquired in June 2022. Furthermore, six months ended June 30 , 2022 included an increase in the provision for excess and obsolete inventory of $203 compared to a reduction of $191 during the six months ended June 30 , 2021 . Cost of charging services-company-owned charging stations (electricity reimbursements) increased by $424 to $534 for the six months ended June 30, 2022 as compared to $110 for the six months ended June 30, 2021. The increase in 2022 was attributable to the mix of charging stations generating charging service revenues subject to electricity reimbursement. Host provider fees increased by $1,105, or 414%, to $1,372 during the six months ended June 30, 2022 as compared to $267 during the six months ended June 30, 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 during 2021 due to COVID-19. Network costs increased by $243 or 140%, to $416 during the six months ended June 30, 2022 as compared to $173 during the six months ended June 30, 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 increased by $177 or 39%, to $634 during the six months ended June 30, 2022 from $457 during the six months ended June 30, 2021. The increase in 2022 was attributable to significant efforts expended to reduce the backlog in warranty and repairs and maintenance cases. As of June 30 , 2022, we recorded a liability of $43 which represents the estimated cost of existing backlog of known warranty cases. 30 Cost of ride-sharing services was $1,085 during the six months ended June 30, 2022 compared to $670 during the 2021 period, the increase was due to an 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 $544, or 79%, to $1,231 for the six months ended June 30, 2022 as compared to $687 for the six months ended June 30, 2021. The increase in depreciation expense was attributable to an increase in the number of EV charging stations and vehicles associated with the ride-share services. Operating Expenses Compensation expense increased by $6,120, or 44%, to $20,038 (consisting of approximately $17,000 of cash compensation and benefits and approximately $3,000 of non-cash compensation) for the six months ended June 30, 2022. Compensation expense was $13,918 (consisting of approximately $9,900 of cash compensation and benefits and approximately $4,000 of non-cash compensation) for the six months ended June 30, 2021. The increase in compensation expense for the three months ended June 30, 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 June 30, 2022 compared to the same period in 2021 increased due to additional personnel in conjunction with the acquisitions of SemaConnect and EB during the second quarter of 2022. General and administrative expenses increased by $9,312, or 226%, to $13,429 for the six months ended June 30, 2022 as compared to $4,117 for the six months ended June 30, 2021. The increase was attributable to increases in accounting, legal, investor relations, marketing, consulting and other professional service expenditures of $6,131. Furthermore, general and administrative expenses increased due to increases in amortization expense of $1,910 primarily related to the new acquisitions of SemaConnect and EB during the second quarter of 2022. Also contributing to the increase in general and administrative expenses were acquisition-related expenses of $3,274 related to the 2022 acquisitions of SemaConnect and EB. Other operating expenses increased by $4,643, or 191%, to $7,080 for the six months ended June 30, 2022 from $2,437 for the six months ended June 30, 2021. The increase was attributable to increases in insurance, software licensing, annual shareholder’s meeting, hardware and software development costs and property/use tax expenditures of $3,412. Furthermore, increases in travel and vehicle expenses of $756, contributed to the increase in other operating expenses for the six months ended June 30, 2022 compared to the same period in 2021. Also contributing to the increase in other operating expenses were operating expenditures related to the 2022 acquisitions of SemaConnect and EB. During the six months ended June 30, 2022, we incurred expenses of $1,313 related to the network upgrade to certain of the Company’s EV charging stations. Other Expense Other expenses decreased by $331, or 30%, to $760 for the six months ended June 30, 2022 as compared to $1,091 for the six months ended June 30, 2021. Net Loss Our net loss for the six months ended June 30, 2022 increased by $16,941, or 81%, to $37,764 as compared to $20,823 for the six months ended June 30, 2021. The increase was primarily attributable to an increase in compensation expense, general and administrative expenses and expenses associated with the acquisitions of SemaConnect and EB during the six months ended June 30, 2022. Total Comprehensive Loss Our total comprehensive loss for the six months ended June 30, 2022 was $40,642 whereas our total comprehensive loss for the six months ended June 30, 2021 was $21,254. 31 Liquidity and Capital Resources We measure our liquidity in a number of ways, including the following: June 30, 2022 December 31, 2021 (unaudited) Cash $ 85,136 $ 174,795 Working Capital $ 84,801 $ 176,303 Notes Payable (Gross) $ 775 $ 10 During the six months ended June 30, 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 six months ended June 30, 2022 and 2021, we used cash of $30,986 and $20,945, respectively, in operations. Our cash use for the six months ended June 30, 2022 was primarily attributable to our net loss of $37,764, adjusted for net non-cash expenses in the aggregate amount of $7,629, and $851 of cash used to fund changes in the levels of operating assets and liabilities. Our cash used for the six months ended June 30, 2021 was primarily attributable to our net loss of $20,823, adjusted for net non-cash expenses in the aggregate amount of $6,227, and $6,349 of net cash used in changes in the levels of operating assets and liabilities. During the six months ended June 30, 2022, net cash used in investing activities was $52,233, of which, $38,338 was used as cash consideration for SemaConnect (net of cash acquired), $11,360 was used as cash consideration for Electric Blue (net of cash acquired) $288 was related to the payment of engineering costs that were capitalized, and $2,247 which was used to purchase charging stations and other fixed assets. During the six months ended June 30, 2021, net cash used in investing activities was $81,458, of which, $58,013 was provided in connection with the purchase of marketable securities and $ $4,553 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 $5,019 was used to purchase charging stations and other fixed assets. $237 was related to the payment of engineering costs that were capitalized. During the six months ended June 30, 2022, cash used in financing activities was $214, of which, $92 was provided by the exercise of warrants and options, offset by $235 used to pay down our liability in connection with internal use software and $71 was used to pay down our finance lease liability. During the six months ended June 30, 2021, cash provided in financing activities was $222,721, of which, $221,333 was provided by the sale of common stock in a public offering, $1,427 was provided by the exercise of warrants, which was partially offset by $39 used to pay down our liability in connection with internal use software. As of June 30, 2022, we had cash and cash equivalent, working capital and an accumulated deficit of $85,136, $84,801 and $280,234, respectively. During the three and six months ended June 30, 2022, we had a net loss of $22,621 and $37,764, respectively. 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. 32 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”). As of June 30, 2022, the remaining cost for the Upgrade is approximately $1,200 for certain of the Company’s owned and operated EV charging stations. During the six months ended June 30, 2022, the Company incurred $1,313 related to these upgrades. 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 June 30, 2022, we had purchase commitment of approximately $41,000 of which approximately $11,000 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 and finance lease obligations over the next five years of approximately $4,100. These operating and finance lease obligations are primarily related to corporate office space, warehousing, parking spaces related to our ride-sharing services and vehicles. 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: ● 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 or upon installation of chargers for which we are contracted to perform. ● Charging service revenue – company-owned charging stations - Revenue is recognized at the point when a particular charging session is completed. ● 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. 33 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. 34 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.