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” or the “Company”) as of September 30, 2022 and for the three and nine months ended September 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, 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 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. U.S. dollar amounts 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 networks (the “Blink Networks”) and Blink EV charging equipment, also known as electric vehicle supply equipment (“EVSE”), and other EV-related services. The Blink Networks are 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 Networks provide 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 Networks also provide 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 Networks. 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 Networks. 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. 24 ● 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 Networks, 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. A s of September 30, 2022, we sold or deployed 58,907 chargers, of which 43,926 were in Blink’s Networks (26,883 Level 2 publicly accessible commercial chargers, 15,299 Level 2 private commercial chargers, 231 DC Fast Charging EV publicly accessible chargers, 91 DC Fast Charging EV private chargers, and 1,422 residential Level 2 Blink EV chargers, included herein are 3,072 chargers pending to be commissioned). Included in Blink’s Networks are 4,354 chargers owned by Blink. The remaining 14,981 were non-networked, on other networks or international sales or deployments (925 Level 2 commercial chargers, 20 DC Fast Charging chargers, 10,661 residential Level 2 Blink EV chargers, 2,237 sold to other US Networks, 1,058 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 September 30, 2022, we had a cash balance of $57,019, working capital of $64,442, and an accumulated deficit of $305,881. During the three and nine months ended September 30, 2022, we incurred net losses of $25,647 and $63,411, respectively. We have not yet achieved profitability. Recent Developments 2022 Acquisitions SemaConnect On June 15, 2022, the Company 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). Following the closing 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 purchase price was $200,573, which included 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) of which $46,136 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 with a fair value of $113,837. Included in the cash consideration was $8,103 related to payments due to stock option holders of SemaConnect. Subsequent to the closing of the acquisition, payments to the stock option holder were made after the stock option holder signed an option cash-out agreement 25 Electric Blue Limited On April 22, 2022, pursuant to a Sale and Purchase Agreement dated April 22, 2022, the Company acquired, through its 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 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 value purchase price for the acquisition of all of EB’s outstanding capital stock was $19,317, consisting of $12,651 in cash, 152,803 shares of the Company’s common stock with a fair value of $2,852, plus the contingent consideration described in the following paragraph. 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 $3,814. As of September 30, 2022, the estimated fair value of the Contingent Consideration was $4,030. 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 (stock escrow), respectively, following the closing to cover any losses or damages we may incur by reason of, among other things, any misrepresentation or breach of warranty by EB under the Sale and Purchase Agreement. At-the-Market Offering On September 2, 2022, we entered into a Sales Agreement (“Sales Agreement”) with Barclays Capital Inc., BofA Securities, Inc., HSBC Securities (USA) Inc., ThinkEquity LLC, H.C. Wainwright & Co., LLC and Roth Capital Partners, LLC (the “Agents”) to conduct an “at-the-market” (ATM) equity offering program pursuant to which we may issue and sell from time to time shares of our common stock, having an aggregate offering price of up to $250,000 through the Agents, as the Company’s sales agents (the “ATM”). Subject to the terms and conditions of the Sales Agreement, the Agents will use their commercially reasonable efforts to sell shares of our common stock from time to time, based upon our instructions. We have no obligation to sell any of the shares and may at any time suspend sales under the Sales Agreement or terminate the Sales Agreement in accordance with its terms. We have provided the Agents with customary indemnification rights, and the Agents will be entitled to an aggregate fixed commission of up to 3% of the gross proceeds from shares sold. The shares are being offered pursuant to the Sales Agreement under our automatic shelf registration statement on Form S-3ASR and a prospectus supplement thereto filed with SEC on January 6, 2021 and September 2, 2022, respectively. As of November 3, 2022, no shares have been sold pursuant to the ATM program. We currently anticipate using the net proceeds from the sale of our shares of common stock under the ATM program to supplement our operating cash flows to fund EV charging station deployment and our acquisition growth plan. We also plan to use any remaining proceeds we receive for working capital and other corporate purposes. The amounts and timing of our use of the net proceeds will depend on a number of factors, such as the timing and progress of our EV charging station deployment efforts, the timing and progress of any partnering and collaboration efforts and technological advances. 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. Further, 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. 26 Letter of Intent and Loan 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 “Initial Loan”), of which, $1,000 was loaned by the Company during the 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 Initial Loan, if the Company proceeds with the possible stock purchase of the Target, the principal and accrued interest amount under the Initial 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 Initial Loan will continue to accrue 6% interest per annum, and mature on the earliest of (i) a “Change of Control” (as defined in such note); (ii) the closing of the next investment round by the Target; (iii) an Event of Default (as defined in such note); or (iv) May 1, 2027. On September 22, 2022, the Company signed a letter agreement concerning the extension of the development work that the Target was performing for a wholly owned subsidiary of the Company (the “Subsidiary”) under a Master Service Agreement that was executed on April 29, 2022 (the “Letter Agreement”). Under the Letter Agreement, the Company agreed to extend additional loans to the Target to enable it to expand the development work and to expedite the delivery of the development outcomes (the “Product”) to the Subsidiary. In addition, the Letter Agreement provided that the Company will extend to the Target additional funding of up to $350 for hiring additional developers and an additional $600 to support the Target’s operations until the development work is finalized and accepted by the Company, which will be no later than November 30, 2022, or such later date that the parties may agree upon. The total amount of the loans may reach up to $950 (the “Development Loan”), in each case upon the Target’s request along with appropriate back-up documentation for such loan. $250 was loaned by the Company in September 2022. The Development Loan was made pursuant to a 6% Grid Secured Convertible Promissory Note and an additional letter agreement, dated September 22, 2022, signed by the Target with terms and conditions similar to those of the Initial Loan (the “Grid Note”). The Development Loan has additional terms which provide that the Company may forfeit the Development Loan if the Target timely delivers the Product and the Company fails to close the acquisition of the Target shortly thereafter. If, however, the Target fails to complete the development work on time, the Company will not be obligated to close the acquisition of the Target and the entire Development Loan will be payable to the Company under the same terms of the Initial Loan. Note on Covid-19 and Current Economic Conditions 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 have reopened and returns 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. Additionally, other recent macroeconomic events including rising inflation, slowing economic growth, changes in U.S. and foreign government monetary policies, supply chain disruptions, fluctuations in currency exchange rates and the Russian invasion of Ukraine have led to further economic uncertainty. As a result, we are unable to predict the ultimate impact of equipment order delays, chip shortage, the impact of other economic conditions 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 and other global economic factors 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. 27 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 For the Nine Months Ended September 30, September 30, Three Months Nine Months 2022 2021 2022 2021 Difference $ Difference % Difference $ Difference % Revenues: Product sales $ 13,358 $ 4,824 $ 30,238 $ 9,762 $ 8,534 177 % $ 20,476 210 % Charging service revenue - company-owned charging stations 1,256 908 3,857 1,676 348 38 % 2,181 130 % Network fees 1,456 205 2,089 421 1,251 610 % 1,668 396 % Warranty 309 87 475 119 222 255 % 356 299 % Grant and rebate 83 55 283 280 28 51 % 3 1 % Ride-sharing services 367 270 885 504 97 36 % 381 76 % Other 418 53 706 228 365 689 % 478 210 % Total Revenues 17,247 6,402 38,533 12,990 10,845 169 % 25,543 197 % Cost of Revenues: Cost of product sales 8,663 3,632 21,134 7,115 5,031 139 % 14,019 197 % Cost of charging services - company-owned charging stations 235 200 769 310 35 18 % 459 148 % Host provider fees 973 463 2,345 842 510 110 % 1,503 179 % Network costs 508 115 924 307 393 342 % 617 201 % Warranty and repairs and maintenance 803 258 1,437 743 545 211 % 694 93 % Ride-sharing services 470 422 1,555 1,092 48 11 % 463 42 % Depreciation and amortization 814 420 2,045 1,118 394 94 % 927 83 % Total Cost of Revenues 12,466 5,510 30,209 11,527 6,956 126 % 18,682 162 % Gross Profit 4,781 892 8,324 1,463 3,889 436 % 6,861 469 % Operating Expenses: Compensation 17,605 11,745 37,643 25,663 5,860 50 % 11,980 47 % General and administrative expenses 6,594 3,067 20,023 7,110 3,527 115 % 12,913 182 % Other operating expenses 5,079 1,903 12,159 4,246 3,176 167 % 7,913 186 % Total Operating Expenses 29,278 16,715 69,825 37,019 12,563 75 % 32,806 89 % Loss From Operations (24,497 ) (15,823 ) (61,501 ) (35,556 ) (8,674 ) 55 % (25,945 ) 73 % Other (Expense) Income: Interest (expense) income (917 ) (3 ) (1,056 ) 6 (914 ) 30467 % (1,062 ) -17700 % Dividend and interest income 233 100 233 162 133 133 % 71 44 % Gain on forgiveness of PPP loan - 379 - 379 Loss on settlement - - - (1,000 ) - 0 % 1,000 -100 % Loss on foreign exchange (595 ) (16 ) (836 ) (124 ) (579 ) 3619 % (712 ) 574 % Change in fair value of derivative and other liabilities 108 53 35 60 55 104 % (25 ) -42 % Other (expense) income 21 (11 ) (286 ) (72 ) 32 -291 % (214 ) 297 % Total Other Expense (1,150 ) 502 (1,910 ) (589 ) (1,652 ) -329 % (1,321 ) 224 % Net Loss $ (25,647 ) $ (15,321 ) $ (63,411 ) $ (36,145 ) $ (10,326 ) 67 % $ (27,266 ) 75 % 28 Three Months Ended September 30, 2022 Compared With Three Months Ended September 30, 2021 Revenues Total revenue for the three months ended September 30, 2022 increased by $10,845, or 169%, to $17,247 compared to $6,402 during the three months ended September 30, 2021. Revenue from product sales was $13,358 for the three months ended September 30, 2022 compared to $4,824 during the three months ended September 30, 2021, an increase of $8,534, or 177%. This increase was attributable to increased sales of commercial chargers, DC fast chargers and residential chargers when compared to the same period in 2021. Also contributing to the increase in product sales was $886 from EB, which we acquired in April 2022, and $5,935 from SemaConnect, which we acquired in June 2022. Charging service revenue from Company-owned charging stations was $1,256 for the three months ended September 30, 2022 compared to $908 for the three months ended September 30, 2021, an increase of $348, or 38%. The increase is due to the increase in utilization of chargers, an increased number of chargers on the Blink networks. Network fee revenues were $1,456 for the three months ended September 30, 2022 compared to $205 for the three months ended September 30, 2021, an increase of $1,251, or 610%. The increase was attributable to increases in host owned units as well as billings and invoicing to Property Partners during the three months ended September 30, 2022 compared to the months ended September 30, 2021. Warranty revenues were $309 for the three months ended September 30, 2022 compared to $87 for the three months ended September 30, 2021, an increase of $222, or 255%. The increase was primarily attributable to an increase in warranty contracts sold for the three months ended September 30, 2022 compared to the three months ended September 30, 2021. Grant and rebate revenues were $83 during the three months ended September 30, 2022 compared to $55 during the three months ended September 30, 2021, an increase of $28, or 51%. 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 September 30, 2022 and 2021. Ride-sharing services revenues were $367 during the three months ended September 30, 2022 compared to $270 during the three months ended September 30, 2021, an increase of $97, or 36%. 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 $365 to $418 for the three months ended September 30, 2022 compared to $53 for the three months ended September 30, 2021. The increase was primarily attributable to higher Low Carbon Fuel Standard (LCFS) credits generated during the three months ended September 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 September 30, 2022 were $12,466 compared to $5,510 for the three months ended September 30, 2021, an increase of $6,956, or 126%. 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 $5,031, or 139%, from $3,632 for the three months ended September 30, 2021 compared to $8,663 for the three months ended September 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 September 30, 2022 compared to the same period in 2021 as well as cost of product sales of $916 from EB, which we acquired in April 2022, and $2,433 from SemaConnect, which we acquired in June 2022. 29 Cost of charging services-company-owned charging stations (electricity reimbursements) increased by $35, or 18%, to $235 for the three months ended September 30, 2022 compared to $200 for the three months ended September 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 $510, or 110%, to $973 during the three months ended September 30, 2022 compared to $463 during the three months ended September 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 $393, or 342%, to $508 during the three months ended September 30, 2022 compared to $115 during the three months ended September 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 compared to the same period in 2021. Warranty and repairs and maintenance costs increased by $545, or 211%, to $803 during the three months ended September 30, 2022 from $258 during the three months ended September 30, 2021. The increase in 2022 was attributable to significant efforts expended to reduce the backlog in warranty and repairs and maintenance cases. Cost of ride-sharing services was $470 during the three months ended September 30, 2022 compared to $422 during the 2021 period, an increase of $48, or 11%, 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 $394, or 94%, to $814 for the three months ended September 30, 2022 compared to $420 for the three months ended September 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 $5,860, or 50%, to $17,605 (consisting of $12,777 of cash compensation and benefits and $4,828 of non-cash share based compensation) for the three months ended September 30, 2022. Compensation expense was $11,745 (consisting of $5,448 of cash compensation and benefits and $6,297 of non-cash share based compensation) for the three months ended September 30, 2021. The increase in compensation expense for the three months ended September 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 September 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 $3,527, or 115%, to $6,594 for the three months ended September 30, 2022 compared to $3,067 for the three months ended September 30, 2021. The increase was primarily attributable to increases in accounting, legal, investor relations, marketing, consulting and other professional service expenditures of $1,530. Further, general and administrative expenses increased due to increases in amortization expense of $1,003 related to the 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 $509 related to the 2022 acquisitions of SemaConnect and EB. Other operating expenses increased by $3,176, or 167%, to $5,079 for the three months ended September 30, 2022 from $1,903 for the three months ended September 30, 2021. The increase was primarily attributable to increases in insurance, software licensing, hardware and software development costs and property/use tax expenditures of $1,100. Further, increases in travel and vehicle expenses of $434, contributed to the increase in other operating expenses for the three months ended September 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 September 30, 2022, we incurred expenses of $1,799 related to the network upgrade to certain of the Company’s EV charging stations. Other (Expense) Income Other expense increased by $1,652, or 329%, to $1,150 for the three months ended September 30, 2022 compared to $502 of other income for the three months ended September 30, 2021. The increase in other expenses is primarily attributable to interest expense of $917 associated with the deferred payment from the SemaConnect acquisition. Also contributing to the increase in other expenses is loss on foreign currency exchange of $595. 30 Net Loss Our net loss for the three months ended September 30, 2022 increased by $10,326, or 67%, to $25,647 compared to $15,321 for the three months ended September 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 second quarter of 2022. Total Comprehensive Loss Our total comprehensive loss for the three months ended September 30, 2022 was $28,083 whereas our total comprehensive loss for the three months ended September 30, 2021 was $15,877. Nine Months Ended September 30, 2022 Compared With Nine Months Ended September 30, 2021 Revenues Total revenue for the nine months ended September 30, 2022 increased by $25,543, or 197%, to $38,533 compared to $12,990 during the nine months ended September 30, 2021. Revenue from product sales was $30,238 for the nine months ended September 30, 2022 compared to $9,762 during the nine months ended September 30, 2021, an increase of $20,476, or 210%. This increase was attributable to increased sales of commercial chargers, DC fast chargers and residential chargers when compared to the same period in 2021. Also contributing to the increase product sales was $2,097 from EB, which we acquired in April 2022, and $7,059 from SemaConnect, which we acquired in June 2022. Charging service revenue from Company-owned charging stations was $3,857 for the nine months ended September 30, 2022 compared to $1,676 for the nine months ended September 30, 2021, an increase of $2,181, or 130%. The increase is due to the increase in utilization of chargers, an increased number of chargers on the Blink networks. Network fee revenues were $2,089 for the nine months ended September 30, 2022 compared to $421 for the nine months ended September 30, 2021, an increase of $1,668, or 396%. The increase was attributable to increases in host owned units as well as billings and invoicing to Property Partners during the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. Warranty revenues were $475 for the nine months ended September 30, 2022 compared to $119 for the nine months ended September 30, 2021, an increase of $356, or 299%. The increase was primarily attributable to an increase in warranty contracts sold for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. Grant and rebate revenues were $283 during the nine months ended September 30, 2022, compared to $280 during the nine months ended September 30, 2021, an increase of $3, or 1%. 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 nine months ended September 30, 2022 and 2021. Ride-sharing services revenues were $885 during the nine months ended September 30, 2022 compared to $504 during the nine months ended September 30, 2021, an increase of $381, or 76%. 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 $478, or 210%, to $706 for the nine months ended September 30, 2022 compared to $228 for the nine months ended September 30, 2021. The increase was primarily attributable to higher Low Carbon Fuel Standard (LCFS) credits generated during the nine months ended September 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. 31 Cost of Revenues Cost of revenues primarily consists of electricity reimbursements, revenue share payments to our Property Partner hosts, the cost of charging stations sold, connectivity charges provided by telco and other networks, warranty, repairs and maintenance services, and depreciation of our installed charging stations. Cost of revenues for the nine months ended September 30, 2022 were $30,209 compared to $11,527 for the nine months ended September 30, 2021, an increase of $18,682, or 162%. 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 $14,019, or 197%, from $7,115 for the nine months ended September 30, 2021 compared to $21,134 for the nine months ended September 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 nine months ended September 30, 2022 compared to the same period in 2021, as well as cost of product sales of $1,710 from EB, which we acquired in April 2022, and $2,966 from SemaConnect, which we acquired in June 2022. Cost of charging services-company-owned charging stations (electricity reimbursements) increased by $459, or 148%, to $769 for the nine months ended September 30, 2022 compared to $310 for the nine months ended September 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 $1,503, or 179%, to $2,345 during the nine months ended September 30, 2022 compared to $842 during the nine months ended September 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 $617, or 201%, to $924 during the nine months ended September 30, 2022 compared to $307 during the nine months ended September 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 compared to the same period in 2021. Warranty and repairs and maintenance costs increased by $694, or 93%, to $1,437 during the nine months ended September 30, 2022 from $743 during the nine months ended September 30, 2021. The increase in 2022 was attributable to significant efforts expended to reduce the backlog in warranty and repairs and maintenance cases. Cost of ride-sharing services was $1,555 during the nine months ended September 30, 2022 compared to $1,092 during the 2021 period, an increase $463, or 42%, 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 $927, or 83%, to $2,045 for the nine months ended September 30, 2022 compared to $1,118 for the nine months ended September 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 $11,980, or 47%, to $37,643 (consisting of $29,827 of cash compensation and benefits and $7,816 of non-cash share-based compensation) for the nine months ended September 30, 2022. Compensation expense was $25,663 (consisting of $15,355 of cash compensation and benefits and $10,308 of non-cash share based compensation) for the nine months ended September 30, 2021. The increase in compensation expense for the nine months ended September 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 nine months ended September 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. 32 General and administrative expenses increased by $12,913, or 182%, to $20,023 for the nine months ended September 30, 2022 compared to $7,110 for the nine months ended September 30, 2021. The increase was primarily attributable to increases in accounting, legal, investor relations, marketing, consulting and other professional service expenditures of $5,943. Further, general and administrative expenses increased due to increases in amortization expense of $2,892 related to the 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 $3,783 related to the 2022 acquisitions of SemaConnect and EB. Other operating expenses increased by $7,913, or 186%, to $12,159 for the nine months ended September 30, 2022 from $4,246 for the nine months ended September 30, 2021. The increase was primarily attributable to increases in insurance, software licensing, rent, hardware and software development costs and property/use tax expenditures of $3,064. Further, increases in travel and vehicle expenses of $1,031, contributed to the increase in other operating expenses for the nine months ended September 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 nine months ended September 30, 2022, we incurred expenses of $3,112 related to the network upgrade to certain of the Company’s EV charging stations. Other (Expense) Income Other expenses increased by $1,321, or 224%, to $1,910 for the nine months ended September 30, 2022 compared to $589 for the nine months ended September 30, 2021. The increase in other expenses is primarily attributable to interest expense of $1,056 associated with the deferred payment from the SemaConnect acquisition. Also contributing to the increase in other expenses is loss on foreign currency exchange of $836. Net Loss Our net loss for the nine months ended September 30, 2022 increased by $27,266, or 75%, to $63,411 compared to $36,145 for the nine months ended September 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 nine months ended September 30, 2022. Total Comprehensive Loss Our total comprehensive loss for the nine months ended September 30, 2022 was $68,725 whereas our total comprehensive loss for the nine months ended September 30, 2021 was $37,132. Liquidity and Capital Resources We measure our liquidity in a number of ways, including the following: September 30, 2022 December 31, 2021 (unaudited) Cash and cash equivalents $ 57,019 $ 174,795 Working Capital $ 64,442 $ 176,303 Debt $ 40,676 $ 10 During the nine months ended September 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 nine months ended September 30, 2022 and 2021, we used cash of $57,776 and $29,953, respectively, in operations. Our cash use for the nine months ended September 30, 2022 was primarily attributable to our net loss of $63,411, adjusted for net non-cash expenses in the aggregate amount of $15,730, and $10,095 of cash used to fund changes in the levels of operating assets and liabilities. Our cash used for the nine months ended September 30, 2021 was primarily attributable to our net loss of $36,145, adjusted for net non-cash expenses in the aggregate amount of $13,082, and $6,890 of net cash used in changes in the levels of operating assets and liabilities. 33 During the nine months ended September 30, 2022, net cash used in investing activities was $54,225, of which, $38,338 was used as cash consideration for SemaConnect (net of cash acquired), $11,360 was used as cash consideration for EB (net of cash acquired), $2,230 was used to purchase charging stations and other fixed assets, $1,500 was used as a note receivable to a target, and $797 was related to the payment of engineering costs that were capitalized. During the nine months ended September 30, 2021, net cash used in investing activities was $81,982, of which, $60,267 was provided in connection with the purchase of marketable securities and $6,804 was provided by the sale of marketable securities, $22,985 was used as cash consideration for the acquisition of Blue Corner, $243 was provided by the net cash acquired from Blue Corner and $5,540 was used to purchase charging stations and other fixed assets and $237 was related to the payment of engineering costs that were capitalized. During the nine months ended September 30, 2022, cash used in financing activities was $766, of which, $201 was provided by the exercise of warrants and options, offset by $235 used to pay down our liability in connection with internal use software, $144 was used to pay down our finance lease liability and $588 was used to pay down notes payable. During the nine months ended September 30, 2021, cash provided in financing activities was $222,913, of which, $221,333 was provided by the sale of common stock in a public offering, $1,619 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 September 30, 2022, we had cash and cash equivalent, working capital and an accumulated deficit of $57,019, $64,442 and $305,881, respectively. During the three and nine months ended September 30, 2022, we had a net loss of $25,647 and $63,411 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 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. On September 2, 2022, we entered into a Sales Agreement (“Sales Agreement”) with Barclays Capital Inc., BofA Securities, Inc., HSBC Securities (USA) Inc., ThinkEquity LLC, H.C. Wainwright & Co., LLC and Roth Capital Partners, LLC (the “Agents”) to conduct an “ATM” equity offering program pursuant to which we may issue and sell from time to time shares of our common stock, par value $0.001 per share, having an aggregate offering price of up to $250,000 through the Agents, as the Company’s sales agents. We currently anticipate using the net proceeds from the sale of our shares of common stock under the ATM program to supplement our operating cash flows to fund EV charging station deployment and our acquisition growth plan. We also plan to use any remaining proceeds we receive for working capital and other corporate purposes. The amounts and timing of our use of the net proceeds will depend on a number of factors, such as the timing and progress of our EV charging station deployment efforts, the timing and progress of any partnering and collaboration efforts and technological advances. As electric vehicle charging requirements and technologies change, driven by federal, state or local regulatory authorities or by electric vehicle manufacturers or other technology or services providers for the charging station industry, in particular cellular connectivity technology, the Company may need to upgrade or adapt its 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 September 30, 2022, the remaining cost for the Upgrade is approximately $870 for certain host owned and Company owned and operated EV charging stations. During the nine months ended September 30, 2022, the Company incurred $2,762 related to these upgrades. The Upgrade project is expected to be completed by December 31, 2022. 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 September 30, 2022, we had purchase commitments of approximately $55,000, 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 to 24 months. Further, the Company has operating and finance lease obligations over the next five years of approximately $3,943. These operating and finance lease obligations are primarily related to corporate office space, warehousing, parking spaces related to our ride-sharing services and vehicles. 34 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 we rely are reasonably based upon information available to us at the time that we make 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. ● 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 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 – Other revenues primarily comprises of revenues generated from alternative fuel credits. The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. Grants, rebates and alternative fuel credits, which are not within the scope of ASC 606, pertaining to revenues and periodic expenses are recognized as income when the related revenue and/or periodic expense are recorded. Grants and rebates related to EV charging stations and their installation are deferred and amortized in a manner consistent with the related depreciation expense of the related asset over their useful lives over the useful life of the charging station. Stock-Based Compensation We measure the cost of services received in exchange for an award of equity instruments based on the fair value of the award on the date of grant. The fair value amount of the shares expected to ultimately vest is then recognized over the period for which services are required to be provided in exchange for the award, usually the vesting period. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period that the estimates are revised. We account for forfeitures as they occur. 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 our network in determining fair value. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. 35 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. 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.