Blink Charging Co. 10-K

ITEM 9A. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost- benefit relationship of possible controls and procedures. Management has designed disclosure controls and procedures that reasonably enable the management to deliberate and take timely decisions regarding required disclosure. As required by the SEC Rules 13a-15(b) and 15d-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded the Company’s disclosure controls and procedures were not effective as of December 31, 2022 due to the material weaknesses in internal control over financial reporting described below. 36 However, after giving full consideration to the material weaknesses described below, and the additional analyses and other procedures the Company performed to ensure that its consolidated financial statements included in this Annual Report on Form 10-K were prepared in accordance with U.S. GAAP, Blink’s management has concluded that its consolidated financial statements present fairly, in all material respects, its financial position, results of operations and cash flows for the periods disclosed in conformity with U.S. GAAP. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system was designed to, in general, provide reasonable assurance to our company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. As permitted by SEC guidance for newly acquired businesses, because it was not possible to complete an effective assessment of the acquired companies’ controls by year-end, management has excluded both SemaConnect and Electric Blue Limited (“EB”) from its evaluation of disclosure controls and procedures and internal controls over financial reporting and changes therein from the date of such acquisition through December 31, 2022. SemaConnect’s total assets and total revenues represent approximately 7% and 30%, respectively, and EB’s total assets and total revenues represent approximately 3% and 8% respectively, of the related consolidated financial statement amounts of Blink Charging Co. as of and for the year ended December 31, 2022. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. The framework used by management in making that assessment was the criteria set forth in the document entitled “2013 Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, during the period covered by this report, such internal controls and procedures were not effective as of December 31, 2022 because of material weaknesses reported below. ● During the fourth quarter of 2022, management identified IT deficiencies relating to change management and the restriction of access to a sub-system at a subsidiary. Fiscal 2022 was the initial year that this subsidiary was subjected to testing its internal controls over financial reporting. Once these deficiencies were identified, management remediated the design of these controls. As this remediation occurred late in the fourth quarter of 2022, it was deemed too late to sufficiently test the remediated controls’ operational effectiveness. Accordingly, management has considered it to be a material weakness in internal controls over financial reporting as of December 31, 2022. Management expects to remediate this control during 2023. ● The Company’s internal controls over financial reporting did not detect a miscalculation of a certain non-cash share-based compensation transaction on a timely basis. Management views this miscalculation as an isolated occurrence but considers this control deficiency a material weakness in internal controls over financial reporting as of December 31, 2022. Management expects to remediate this control during 2023. Changes in Internal Control Over Financial Reporting During 2022, management continued to implement improvements to the Company’s internal control system. Throughout the year, from executive management on down, a strong commitment was made to the importance of internal control and to create and maintain an infrastructure to support the Company’s compliance program. The Audit Committee was actively engaged and exercised continuous oversight throughout the process. Further, management and the Audit Committee fostered open and regular dialogue with the Company’s external auditors. Internal control, particularly those relating to subjective judgements, were strengthened and, when possible automated and centralized. Further, improvements included: ● All financially significant business processes and entity-level assessments were documented, evaluated, tested for their adequacy of design. ● The Company’s information technology security and general controls were likewise documented, evaluated and tested for their adequacy of design. ● The Company successfully tested for operational effectiveness its business process and entity level internal controls and information technology general and security controls. In 2021, the Company had identified certain design deficiencies in its management and analytical review controls associated with the financial close, revenue and inventory processes. As a result of the internal controls initiatives referenced above, the 2021 reported material weakness has been remediated and is operating effectively. Except as described above, there were no changes in the Company’s internal control over the financial reporting during the fourth quarter of 2022 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 37 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING To the Shareholders and Board of Directors of Blink Charging Co. Adverse Opinion on Internal Control over Financial Reporting We have audited Blink Charging Co. and Subsidiaries (the “Company”) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weaknesses described in the following paragraph on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in Management’s Annual Report on Internal Control Over Financial Reporting: ● One of the Company’s subsidiaries did not implement program change management and user access controls to ensure that a) IT program and data changes affecting the Company’s financial IT applications & underlying accounting records, are identified, tested, authorized and implemented appropriately b) appropriate segregation of duties that would adequately restrict user and privileged access to validate that data produced by its relevant IT system were complete and accurate. ● Certain of the Company’s controls associated with the calculation of stock-based compensation awards were not operating effectively. These deficiencies, combined with inadequate compensating review controls, created a reasonable possibility that a material misstatement, individually or in the aggregate, to the consolidated financial statements might not be prevented or detected on a timely basis and represents a material weakness in the Company’s internal control over financial reporting. These material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the fiscal 2022 consolidated financial statements, and this report does not affect our report dated March 14, 2023 on those financial statements. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December 31, 2022 and 2021 and the related consolidated statements of operations, comprehensive loss, changes in shareholders’ equity, and cash flows for the three years ended December 31, 2022 of the Company and our report dated March 14, 2023 expressed an unqualified opinion on those financial statements. Explanatory Paragraph – Excluded Subsidiaries As described in “Management Annual Report on Internal Control Over Financial Reporting”, management has excluded its wholly-owned subsidiaries, SemaConnect, Inc. and Electric Blue Limited, from its assessment of internal control over financial reporting as of December 31, 2022 because these entities were acquired by the Company in purchase business combinations during 2022. We have also excluded SemaConnect, Inc. and Electric Blue Limited from our audit of internal control over financial reporting. These subsidiaries’ combined total assets and total revenues represent approximately 10% and 38.0%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2022. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management Annual Report on Internal Control Over Financial Reporting”. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate. Marcum LLP New York, NY March 14, 2023 38 ITEM 9B. OTHER INFORMATION. None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. Information required by this item is incorporated by reference from our definitive proxy statement for the 2023 Annual Meeting of Stockholders to be filed within 120 days of our fiscal 2022 year-end. ITEM 11. EXECUTIVE COMPENSATION. Information required by this item is incorporated by reference from our definitive proxy statement for the 2023 Annual Meeting of Stockholders to be filed within 120 days of our fiscal 2022 year-end. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Information required by this item is incorporated by reference from our definitive proxy statement for the 2023 Annual Meeting of Stockholders to be filed within 120 days of our fiscal 2022 year-end. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Information required by this item is incorporated by reference from our definitive proxy statement for the 2023 Annual Meeting of Stockholders to be filed within 120 days of our fiscal 2022 year-end. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. Information required by this item is incorporated by reference from our definitive proxy statement for the 2023 Annual Meeting of Stockholders to be filed within 120 days of our fiscal 2022 year-end. 39 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a)(3) EXHIBITS Exhibit Incorporated by Reference Filed or Furnished Number Exhibit Description Form Exhibit Filing Date Herewith 2.1 Share Purchase Agreement, dated April 21, 2021, between the Shareholders of Blue Corner NV and Blink Holdings B.V. 8-K 2.1 05/13/2021 2.2 Sale and Purchase Agreement, dated April 22, 2022, between the shareholders of Electric Blue Limited, and Blink Holdings B.V. and Blink Charging Co. 8-K 2.1 04/26/2022 2.3 Agreement and Plan of Merger, dated as of June 13, 2022, by and among Blink Charging Co., Blink Sub I Corp., Blink Sub II LLC, SemaConnect, Inc. and Shareholder Representative Services LLC (solely in its capacity as the stockholders’ representative) 8-K 2.1 06/14/2022 3.1 Articles of Incorporation, as amended most recently on August 17, 2017 10-K 3.1 04/17/2018 3.2 Bylaws, as amended most recently on January 29, 2018 10-K 3.2 04/17/2018 3.4 Certificate of Withdrawal for Series A Convertible Preferred Stock 3.1 04/07/2022 3.5 Certificate of Withdrawal for Series B Preferred Stock 3.2 04/07/2022 3.6 Certificate of Withdrawal for Series C Convertible Preferred Stock 3.3 04/07/2022 3.7 Certificate of Withdrawal for Series D Convertible Preferred Stock 3.4 04/07/2022 4.2 Form of Common Stock Purchase Warrant dated April 9, 2018 8-K 4.1 04/19/2018 4.3 Description of the Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 10-K 4.3 04/02/2020 10.1* Executive Employment Agreement by and between the Company and Michael D. Farkas dated October 29, 2010 10-K 10.17 04/16/2013 10.2* First Amendment to Executive Employment Agreement by and between the Company and Michael D. Farkas dated December 23, 2014 8-K 10.4 12/29/2014 10.3 * Second Amendment to Executive Employment Agreement by and between the Company and Michael D. Farkas dated July 24, 2015 10-K 10.4 07/29/2016 10.4 * Third Amendment to Executive Employment Agreement by and between the Company and Michael D. Farkas dated June 15, 2017 S-1/A 10.7 07/06/2017 10.10 Patent License Agreement, dated March 29, 2012, by and among Car Charging Group, Inc., Balance Holdings, LLC and Michael Farkas 10-K 10.21 04/16/2013 10.11 Patent License Agreement, dated March 11, 2016, by and among Car Charging Group, Inc., Balance Holdings, LLC and Michael Farkas 10-Q 10.3 08/04/2016 10.12 Revenue Sharing Agreement, dated April 3, 2013, by and among Car Charging Group, Inc., EV Pass Holdings, LLC, and Synapse Sustainability Trust, Inc. 8-K 10.2 04/26/2013 10.13 Office Lease Agreement, dated April 20, 2018, between Euro American Group, Inc. and Car Charging Inc. 8-K 10.1 05/15/2018 10.14* 2018 Incentive Compensation Plan Proxy - 08/14/2018 10.17* Employment Agreement, dated January 9, 2020, between Blink Charging Co. and Donald Engel 8-K 10.1 01/10/2020 10.18* Employment Offer Letter, dated February 7, 2020, between Blink Charging Co. and Michael P. Rama 8-K 10.1 02/11/2020 10.20* Employment Offer Letter, dated as of March 29, 2020, between Blink Charging Co. and Brendan S. Jones 8-K 10.1 04/20/2020 10.21* Executive Chairman and CEO Employment Agreement, dated May 28, 2021, between Blink Charging Co. and Michael D. Farkas 8-K 10.1 06/04/2021 10.22* Employment Agreement, dated December 27, 2021, between Blink Charging Co. and Brendan S. Jones 8-K 10.1 12/29/2021 10.23* Employment Agreement, dated April 20, 2021, between Blink Charging Co. and Harjinder Bhade 10-K/A 10.20 04/29/2022 10.24* Employment Agreement, dated May 19, 2022, between Blink Charging Co. and Michael P. Rama 8-K 10.1 05/24/2022 10.25* Employment Agreement, dated May 19, 2022, between Blink Charging Co. and Aviv Hillo 8-K 10.2 05/24/2022 10.26 Form of Registration Rights Agreement, dated as of June 15, 2022, by and among Blink Charging Co., the equityholders of SemaConnect, Inc. and each equityholder of SemaConnect, Inc. to which Blink shares were issued 8-K 10.1 06/21/2022 10.27* Employment Offer Letter, dated June 15, 2022, between SemaConnect, LLC, a Blink Charging company, and Mahi Reddy 8-K 10.2 06/21/2022 10.29 Sales Agreement, dated September 2, 2022, between Blink Charging Co. and the Sales Agents 8-K 10.1 09/02/2022 10.30* Employment Offer Letter, dated June 15, 2022, between SemaConnect LLC and Mark Pastrone, as assumed by Blink Charging Co. on November 29, 2022 8-K 10.1 12/05/2022 21.1 Subsidiaries of the Registrant X 23.1 Consent of Marcum LLP X 31.1 Rule 13a-14(a) Certification of Principal Executive Officer X 31.2 Rule 13a-14(a) Certification of Principal Financial Officer X 32.1** Section 1350 Certification of Principal Executive Officer X 32.2** Section 1350 Certification of Principal Financial Officer X 101.INS XBRL Instance. X 101.XSD XBRL Schema. X 101.PRE XBRL Presentation. X 101.CAL XBRL Calculation. X 101.DEF XBRL Definition. X 101.LAB XBRL Label. X   * Indicates a management contract or compensatory plan or arrangement. ** In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not deemed filed for purposes of Section 18 of the Exchange Act. ITEM 16. FORM 10-K SUMMARY. None. 40 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BLINK CHARGING CO. Date: March 14, 2023 By: /s/ Michael D. Farkas Michael D. Farkas Chairman of the Board and Chief Executive Officer (Principal Executive Officer) Date: March 14, 2023 By: /s/ Michael P. Rama Michael P. Rama Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Michael D. Farkas Chairman of the Board and Chief Executive Officer March 14, 2023 Michael D. Farkas (Principal Executive Officer) /s/ Michael P. Rama Chief Financial Officer (Principal Financial and Accounting Officer) March 14, 2023 Michael P. Rama /s/ Brendan S. Jones President and Director March 14, 2023 Brendan S. Jones /s/ Mahidhar Reddy Chief Executive Officer of SemaConnect and Director March 14, 2023 Mahidhar Reddy /s/ Louis R. Buffalino Director March 14, 2023 Louis R. Buffalino /s/ Jack Levine Director March 14, 2023 Jack Levine /s/ Kenneth R. Marks Director March 14, 2023 Kenneth R. Marks /s/ Ritsaart J.M. van Montfrans Director March 14, 2023 Ritsaart J.M. van Montfrans /s/ Cedric L. Richmond Director March 14, 2023 Cedric L. Richmond 41 BLINK CHARGING CO. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 688 ) F-2 Consolidated Balance Sheets as of December 31, 2022 and 2021 F-4 Consolidated Statements of Operations for the Years Ended December 31, 2022, 2021 and 2020 F-5 Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2022, 2021 and 2020 F-6 Consolidated Statement of Changes in Stockholders’ Equity for the Year Ended December 31, 2022 F-7 Consolidated Statement of Changes in Stockholders’ Equity for the Year Ended December 31, 2021 F-8 Consolidated Statement of Changes in Stockholders’ Equity for the Year Ended December 31, 2020 F-9 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020 F-10 Notes to Consolidated Financial Statements F-12 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Blink Charging Co. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Blink Charging Co. and Subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2022, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated March 14, 2023 , expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of the existence of material weaknesses. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit s . We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit s also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. F- 2 Business Combinations Critical Audit Matter Description As described in Note 3 to the consolidated financial statements, the Company acquired SemaConnect, Inc. and Electric Blue Limited in June 2022 and April 2022, respectively. These acquisitions were accounted for as business combinations. We identified the evaluation of the acquisition date fair value of the intangible assets acquired as a critical audit matter. The principal consideration for our determination that the evaluation of the acquisition date fair values of the intangible assets acquired was a critical audit matter is the high degree of subjective auditor judgment associated with evaluating management’s determination of the fair values of the acquired intangible assets, which is primarily due to the complexity of the valuation models used and the sensitivity of the underlying significant assumptions. The key assumptions used within the valuation models included prospective financial information, including future revenue growth and an applied discount rate. The calculated fair values are sensitive to changes in these key assumptions. How the Critical Audit Matter was addressed in the Audit Our audit procedures related to the evaluation of acquisition date fair values of intangible assets acquired included the following, among others: ● We evaluated the design effectiveness of certain controls over the acquisition-date valuation process, including controls over the development of the key assumptions such as the revenue growth and the applied discount rate. ● We obtained the purchase price allocation analyses from management and the third-party specialist engaged by management. - We assessed the qualifications and competence of management and the third-party specialist; and - We evaluated the methodologies used to determine the fair values of the intangible assets. ● We tested the assumptions used within the discounted cash flow models to estimate the fair values of the intangible assets, which included key assumptions such as the future revenue growth and the applied discount rate. ● We assessed the reasonableness of management’s forecast by inquiring with management to understand how the forecast was developed and comparing the projections to historical results and external sources including industry trends and peer companies’ historical data. ● We involved an internal valuation specialist who assisted in the evaluation and testing performed of the reasonableness of significant assumptions to the models, including the applied discount rate. /s/ Marcum LLP Marcum LLP We have served as the Company’s auditor since 2014. New York, NY March 14, 2023 F- 3 BLINK CHARGING CO. Consolidated Balance Sheets (in thousands except for share amounts) December 31, 2022 2021 Assets Current Assets: Cash and cash equivalents $ 36,562 $ 174,795 Accounts receivable, net 23,581 6,346 Inventory, net 34,740 10,369 Prepaid expenses and other current assets 4,399 1,020 Total Current Assets 99,282 192,530 Restricted cash 71 81 Property and equipment, net 25,862 14,563 Operating lease right-of-use asset 4,174 1,664 Intangible assets, net 26,582 3,455 Goodwill 203,710 19,390 Other assets 2,861 230 Total Assets $ 362,542 $ 231,913 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable $ 24,585 $ 7,134 Accrued expenses and other current liabilities 13,109 5,678 Notes payable 10 10 Current portion of operating lease liabilities 1,738 547 Current portion of financing lease liabilities 306 - Current portion of deferred revenue 10,572 2,858 Total Current Liabilities 50,320 16,227 Contingent consideration 1,316 - Consideration payable 40,608 - Operating lease liabilities, non-current portion 3,030 1,531 Financing lease liabilities, non-current portion 408 - Other liabilities 645 193 Deferred revenue, non-current portion 5,258 128 Total Liabilities 101,585 18,079 Commitments and contingencies (Note 16) - Stockholders’ Equity: Common stock, $ 0.001 par value, 500,000,000 shares authorized, 51,476,445 and 42,423,514 shares issued and outstanding as of December 31, 2022 and 2021, respectively 51 42 Additional paid-in capital 597,982 458,046 Accumulated other comprehensive loss ( 3,046 ) ( 1,784 ) Accumulated deficit ( 334,030 ) ( 242,470 ) Total Stockholders’ Equity 260,957 213,834 Total Liabilities and Stockholders’ Equity $ 362,542 $ 231,913 The accompanying notes are an integral part of these consolidated financial statements. F- 4 BLINK CHARGING CO. Consolidated Statements of Operations (in thousands except for share and per share amounts) For the Years Ended December 31, 2022 2021 2020 Revenues: Product sales $ 46,018 $ 15,480 $ 4,432 Charging service revenue - company-owned charging stations 6,866 2,978 773 Network fees 4,370 667 345 Warranty 928 220 129 Grant and rebate 296 400 22 Ride-sharing services 1,268 769 168 Other 1,393 426 362 Total Revenues 61,139 20,940 6,231 Cost of Revenues: Cost of product sales 31,428 11,670 2,860 Cost of charging services - company-owned charging stations 1,466 707 171 Host provider fees 3,935 1,386 265 Network costs 1,463 454 516 Warranty and repairs and maintenance 2,795 892 331 Ride-sharing services 2,137 1,458 226 Depreciation and amortization 3,113 1,531 345 Total Cost of Revenues 46,337 18,098 4,714 Gross Profit 14,802 2,842 1,517 Operating Expenses: Compensation 60,602 38,389 12,718 General and administrative expenses 27,826 10,516 4,047 Other operating expenses 15,645 9,606 2,566 Total Operating Expenses 104,073 58,511 19,331 Loss From Operations ( 89,271 ) ( 55,669 ) ( 17,814 ) Other Income (Expense): Interest (expense) income ( 1,529 ) 9 16 Dividend and interest income 454 294 - Foreign transaction loss ( 600 ) ( 124 ) - Gain on forgiveness of PPP loan - 856 - Gain on settlement of accounts payable, net - - 22 Change in fair value of derivative and other accrued liabilities 66 69 ( 173 ) Other (expense) income, net ( 372 ) ( 554 ) 103 Total Other (Expense) Income ( 1,981 ) 550 ( 32 ) Loss Before Income Taxes ( 91,252 ) ( 55,119 ) ( 17,846 ) Provision for income taxes ( 308 ) - - Net Loss $ ( 91,560 ) $ ( 55,119 ) $ ( 17,846 ) Net Loss Per Share: Basic $ ( 1.95 ) $ ( 1.32 ) $ ( 0.59 ) Diluted $ ( 1.95 ) $ ( 1.32 ) $ ( 0.59 ) Weighted Average Number of Common Shares Outstanding: Weighted Average Number of Common Shares Outstanding: Basic 46,922,434 41,905,340 30,045,095 Diluted 46,922,434 41,905,340 30,045,095 The accompanying notes are an integral part of these consolidated financial statements. F- 5 BLINK CHARGING CO. Consolidated Statements of Comprehensive Loss (in thousands) For the Years Ended December 31, 2022 2021 2020 Net Loss $ ( 91,560 ) $ ( 55,119 ) $ ( 17,846 ) Other Comprehensive Income (Loss): Reclassification adjustments of gain on sale of marketable securities included in net loss - 438 ( 183 ) Cumulative translation adjustments ( 1,262 ) ( 1,784 ) - Total Comprehensive Loss $ ( 92,822 ) $ ( 56,465 ) $ ( 18,029 ) The accompanying notes are an integral part of these consolidated financial statements. F- 6 BLINK CHARGING CO. Consolidated Statement of Changes in Stockholders’ Equity For the Year Ended December 31, 2022 (in thousands, except for share amounts) Accumulated Additional Other Total Common Stock Paid-In Comprehensive Accumulated Stockholders’ Shares Amount Capital Loss Deficit Equity Balance - January 1, 2022 42,423,514 $ 42 $ 458,046 $ ( 1,784 ) $ ( 242,470 ) $ 213,834 Common stock issued in public offering, net of issuance costs [1] 558,721 - 7,386 - - 7,386 Common stock issued in public offering, net of issuance costs 558,721 - 7,386 - - 7,386 Common stock issued as purchase consideration of SemaConnect 7,454,975 7 113,830 - - 113,837 Common stock issued as purchase consideration of Electric Blue 152,803 - 2,852 - - 2,852 Common stock issued upon exercises of warrants 73,336 - 210 - - 210 Common stock issued upon cashless exercise of warrants 8,093 - - - - - Common stock issued upon exercise of options 5,955 - 10 - - 10 Stock-based compensation 799,048 2 15,648 - - 15,650 Other comprehensive loss - - - ( 1,262 ) - ( 1,262 ) Net loss - - - - ( 91,560 ) ( 91,560 ) Balance - December 31, 2022 51,476,445 $ 51 $ 597,982 $ ( 3,046 ) $ ( 334,030 ) $ 260,957 [1] Includes gross proceeds of $ 7,697 , less issuance costs of $ 311 . The accompanying notes are an integral part of these consolidated financial statements. F- 7 BLINK CHARGING CO. Consolidated Statement of Changes in Stockholders’ Equity For the Year Ended December 31, 2021 (in thousands except for share amounts) Accumulated Additional Other Total Common Stock Paid-In Comprehensive Accumulated Stockholders’ Shares Amount Capital Loss Deficit Equity Balance - January 1, 2021 35,951,097 $ 36 $ 214,479 $ - $ ( 187,351 ) $ 27,164 Common stock issued in public offering, net of issuance costs [1] 5,660,000 6 221,327 - - 221,333 Common stock issued in public offering, net of issuance costs 5,660,000 6 221,327 - - 221,333 Common stock issued upon exercises of options and warrants 534,575 - 2,000 - - 2,000 Common stock issued upon cashless exercises of options and warrants 104,496 - - - - - Common stock issued as consideration for property and equipment 13,123 - 600 - - 600 Common stock issued as purchase consideration of Blue Corner 32,382 - 790 - - 790 Stock-based compensation 127,841 - 18,850 - - 18,850 Other comprehensive loss - - - ( 1,784 ) - ( 1,784 ) Net loss - - - - ( 55,119 ) ( 55,119 ) Balance - December 31, 2021 42,423,514 $ 42 $ 458,046 $ ( 1,784 ) $ ( 242,470 ) $ 213,834 [1] Includes gross proceeds of $ 232,060 , less issuance costs of $ 10,727 . The accompanying notes are an integral part of these consolidated financial statements. F- 8 BLINK CHARGING CO. Consolidated Statement of Changes in Stockholders’ Equity For the Year Ended December 31, 2020 (in thousands except for share amounts) Convertible Preferred Stock Additional Accumulated Total Series D Common Stock Paid-In Other Comprehensive Accumulated Stockholders’ Shares Amount Shares Amount Capital Income Deficit Equity Balance - January 1, 2020 5,125 $ - 26,322,583 $ 26 $ 176,730 $ 183 $ ( 169,505 ) $ 7,434 Balance, value 5,125 $ - 26,322,583 $ 26 $ 176,730 $ 183 $ ( 169,505 ) $ 7,434 Stock-based compensation - - 130,722 - 883 - - 883 - Common stock issued in public offering [1] - - 3,597,833 4 19,172 - - 19,176 Common stock issued in public offering - - 3,597,833 4 19,172 - - 19,176 - Common stock issued upon conversion of Series D convertible preferred stock ( 5,125 ) - 1,642,628 2 ( 2 ) - - - - Common stock issued upon exercise of warrants - - 3,827,181 4 16,261 - - 16,265 - Common stock issued in satisfaction of accrued issuable equity - - 102,402 - 200 - - 200 - Common stock issued as consideration for acquisition - - 66,454 - 1,219 - - 1,219 - Options issued in satisfaction of accrued issuable equity - - - - 16 - - 16 - Common stock issued upon cashless warrant exercise - - 253,038 - - - - - - Common stock issued upon cashless option exercise - - 8,256 - - - - - - Other comprehensive income - - - - - ( 183 ) - ( 183 ) - Net loss - - - - - - ( 17,846 ) ( 17,846 ) Balance - December 31, 2020 - $ - 35,951,097 $ 36 $ 214,479 $ - $ ( 187,351 ) $ 27,164 Balance, value - $ - 35,951,097 $ 36 $ 214,479 $ - $ ( 187,351 ) $ 27,164 [1] Includes gross proceeds of $ 20,000 , less issuance costs of $ 819 . The accompanying notes are an integral part of these consolidated financial statements. F- 9 BLINK CHARGING CO. Consolidated Statements of Cash Flows (in thousands) For the Years Ended December 31, 2022 2021 2020 Cash Flows From Operating Activities: Net loss $ ( 91,560 ) $ ( 55,119 ) $ ( 17,846 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 9,547 2,731 680 Non-cash lease expense 997 1,246 - Dividend and interest income - ( 62 ) - Change in fair value of contingent consideration ( 1,499 ) - - Change in fair value of derivative and other accrued liabilities 66 69 ( 173 ) Provision for bad debt 1,336 908 270 Loss on disposal of fixed assets 113 156 279 Provision for slow moving and obsolete inventory 78 ( 187 ) ( 392 ) Gain on forgiveness of PPP loan - ( 856 ) - Gain on settlement of accounts payable, net - - ( 22 ) Stock-based compensation: Common stock 11,224 4,391 233 Options 4,689 14,717 715 Changes in operating assets and liabilities: Accounts receivable and other receivables ( 11,869 ) ( 5,212 ) ( 336 ) Inventory ( 24,283 ) ( 9,227 ) ( 1,247 ) Prepaid expenses and other current assets ( 1,782 ) 710 ( 581 ) Other assets 2 262 ( 226 ) Accounts payable and accrued expenses 16,243 3,723 842 Other liabilities 18 103 - Lease liabilities ( 825 ) ( 1,021 ) ( 184 ) Deferred revenue 5,140 2,098 ( 82 ) Total Adjustments 9,195 14,549 ( 224 ) Net Cash Used In Operating Activities ( 82,365 ) ( 40,570 ) ( 18,070 ) Cash Flows From Investing Activities: Proceeds from sale of marketable securities - 6,804 2,774 Note receivable ( 2,200 ) - - Purchase consideration of SemaConnect, net of cash acquired ( 38,338 ) - - Purchase of marketable securities - ( 7,209 ) - Capitalization of engineering costs ( 294 ) ( 237 ) - Purchase consideration of Blue Corner, net of cash acquired - ( 22,742 ) - Cash acquired in the purchase of BlueLA Carsharing, LLC - - 3 Purchase consideration of Electric Blue, net of cash acquired ( 11,360 ) - - Cash acquired in the purchase of U-Go Stations, Inc. - - 30 Purchases of property and equipment ( 5,249 ) ( 7,065 ) ( 2,547 ) Net Cash (Used In) Provided By Investing Activities ( 57,441 ) ( 30,449 ) 260 Cash Flows From Financing Activities: Proceeds from sale of common stock in public offering [1] 7,386 221,333 19,175 Proceeds from exercise of options and warrants 220 2,000 16,265 Proceeds from issuance of notes payable - - 856 Repayment of financing liability in connection with finance lease ( 217 ) - - Repayment of notes payable ( 681 ) - ( 165 ) Payment of financing liability in connection with internal use software ( 315 ) ( 62 ) ( 72 ) Net Cash Provided By Financing Activities 6,393 223,271 36,059 Effect of Exchange Rate Changes on Cash and Cash Equivalents ( 4,830 ) 206 - Net (Decrease) Increase In Cash and Cash Equivalents and Restricted Cash ( 138,243 ) 152,458 18,249 Cash and Cash Equivalents and Restricted Cash - Beginning of Year 174,876 22,418 4,169 Cash and Cash Equivalents and Restricted Cash - End of Year $ 36,633 $ 174,876 $ 22,418 Cash and cash equivalents and restricted cash consisted of the following: Cash and cash equivalents $ 36,562 $ 174,795 $ 22,342 Restricted cash 71 81 76 Total Cash and cash equivalents and restricted cash $ 36,633 $ 174,876 $ 22,418 [1] For the year ended December 31, 2022, includes gross proceeds of $ 7,697 , less issuance costs of $ 311 deducted directly from the offering proceeds. For the year ended December 31, 2021, includes gross proceeds of $ 232,060 , less issuance costs of $ 10,727 deducted directly from the offering proceeds. For the year ended December 31, 2020, includes gross proceeds of $ 20,000 , less issuance costs of $ 825 deducted directly from the offering proceeds. The accompanying notes are an integral part of these consolidated financial statements. F- 10 BLINK CHARGING CO. Consolidated Statements of Cash Flows — Continued (in thousands) For the Years Ended December 31, 2022 2021 2020 Supplemental Disclosures of Cash Flow Information: Cash paid during the year for: Interest $ - $ - $ - Income taxes $ 73 $ - $ - Non-cash investing and financing activities: Reduction of additional pain-in capital for public offering issuance costs for public offering issuance costs that were previously paid $ - $ - $ ( 39 ) Common stock issued as consideration for property and equipment $ - $ 600 $ - Common stock issued as purchase consideration of Blue Corner $ - $ 790 $ - Options issued in satisfaction of accrued issuable equity $ - $ - $ 16 Net assets (excluding cash) acquired in the acquisition of BlueLA Carsharing, LLC $ - $ - $ 84 Internal use software obtained in exchange for financing liability $ - $ 416 $ - Right-of-use assets obtained in exchange for lease obligations $ 1,787 $ 2,129 $ 598 Property and equipment obtained in exchange for finance lease obligations $ 931 $ - $ - Transfer of inventory to property and equipment $ ( 5,283 ) $ ( 2,189 ) $ ( 1,980 ) Common stock issued as purchase consideration for the acquisition of U-Go Stations, Inc. $ - $ - $ 1,219 Net assets (excluding cash) acquired in the acquisition of U-Go Stations, Inc. $ - $ - $ 1,216 Accrued interest converted to notes payable $ - $ 5 $ 5 Common stock issued in satisfaction of accrued issuable equity $ - $ - $ 201 Accrual of additional stock consideration for U-Go Stations, Inc. $ - $ 60 $ - Common stock issued as purchase consideration of SemaConnect $ 113,837 $ - $ - Common stock issued as purchase consideration of Electric Blue $ 2,852 $ - $ - Intangible assets obtained in exchange for financing liability $ 660 $ - $ - The accompanying notes are an integral part of these consolidated financial statements. F- 11 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 1. BUSINESS ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTAINTIES Organization and Operations Blink Charging Co., through its wholly-owned subsidiaries (collectively, the “Company” or “Blink”), is a leading owner, operator, and provider of electric vehicle (“EV”) charging equipment and networked EV charging services. Blink offers residential and commercial EV charging equipment, enabling EV drivers to recharge at various location types. Blink’s principal line of products and services is its 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 provide property owners, managers, parking companies, and state and municipal entities (“Property Partners”) 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. Blink also operates a ride-sharing program through the Company’s wholly owned subsidiary, BlueLA Rideshare, LLC and the City of Los Angeles which allows customers the ability to rent electric vehicles through a subscription service. Risks and Uncertainties The Covid-19 pandemic has impacted global stock markets and economies. The Company closely monitors the impact of the continuing presence of Covid-19 and multiple Covid-19 variants. The Company has taken and continues to take precautions to ensure the safety of its employees, customers and business partners, while assuring business continuity and reliable service and support to its customers. The Company continues to receive orders for its 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 its contract manufacturer. As federal, state and local economies have reopened and returns to pre-pandemic levels, the Company expects demand for charging station usage to increase, however, the Company is unable to predict the extent of such recovery due to the uncertainty of Covid-19. 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, the Company is unable to predict the ultimate impact of continuing equipment order delays, chip shortages, the impact of other economic conditions and continuous presence of Covid-19 will have on its business, future results of operations, financial position, or cash flows. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of Blink Charging Co. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. The results of operations for the years ended December 31, 2022, 2021 and 2020 include the results of operations of BlueLA Carsharing LLC, U-Go Stations Inc., Blue Corner NV, Electric Blue and SemaConnect, Inc. of their respective dates of acquisition. USE OF ESTIMATES Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant estimates used in these financial statements include, but are not limited to, stock-based compensation, accounts receivable reserves, inventory valuations, goodwill, the valuation allowance related to the Company’s deferred tax assets, the carrying amount of intangible assets, right of use assets and related leases payable estimates of future EV sales and the effects thereon, derivative liabilities and the recoverability and useful lives of long-lived assets. Certain of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could cause actual results to differ from those estimates. F- 12 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED LIQUIDITY As of December 31, 2022, the Company had cash and working capital of $ 36,562 and $ 48,962 , respectively. During the year ended December 31, 2022, 2021, and 2020, the Company incurred a net loss of $ 91,560 , $ 55,119 , $ 17,846 and respectively. During the year ended December 31, 2022, 2021, and 2020 the Company used cash in operating activities of $ 82,365 , $ 40,570 , and $ 18,070 , respectively. During the year ended December 31, 2022, the Company sold an aggregate of 558,721 shares of common stock under an “at-the-market” equity offering program for aggregate gross proceeds of $ 7,697 , less issuance costs of $ 311 which were recorded as a reduction to additional paid-in capital. See Note 12 – Stockholders’ Equity. In February 2023, the Company completed an underwritten registered public offering of 8,333,333 shares of its common stock at a public offering price of $ 12.00 per share. The Company received approximately $ 100,000 in gross proceeds from the public offering and approximately $ 95,000 in net proceeds after deducting the underwriting discount and offering expenses paid by the Company. In addition, the underwriters have a 30-day option to purchase up to an additional 1,249,999 shares of common stock from the Company at the public offering price, less the underwriting discounts and commissions. See Note 17 – Subsequent Events. The Company expects that Its cash on hand will fund its operations for at least 12 months after the issuance date of these financial statements. Since inception, the Company’s operations have primarily been funded through proceeds received in equity and debt financings. The Company believes it has access to capital resources and continues to evaluate additional financing opportunities. There is no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable operations. The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully commercialize its 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 its product and service offerings. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured using inputs in one of the following three categories: Level 1 measurements are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment. Level 2 measurements are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or market data other than quoted prices that are observable for the assets or liabilities. Level 3 measurements are based on unobservable data that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. The Company considers cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities to meet the definition of financial instruments. As of December 31, 2022 and 2021, the carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the relatively short period of time between their origination and their expected realization or payment. The carrying amount of consideration payable approximate its fair value as the terms are comparable to terms currently offered by local lending institutions for arrangements with similar terms to industry peers with comparable credit characteristics. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents in the consolidated financial statements. The Company has cash on deposits in several financial institutions which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions. The Company reduces its credit risk by placing its cash and cash equivalents with major financial institutions. ACCOUNTS AND OTHER RECEIVABLES Accounts and other receivables are carried at their contractual amounts, less a provision for current expected credit losses. The reserve represents the Company’s best estimate of expected credit losses it may experience in the Company’s receivable portfolio. As of December 31, 2022 and 2021, there was an allowance for expected credit losses of $ 2,548 and $ 1,262 , respectively. Management estimates the allowance for credit losses based on an ongoing review of existing economic conditions, the financial conditions of the customers, historical trends in credit losses, and the amount and age of past due accounts. F- 13 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED INVENTORY Inventory is comprised of electric charging stations, related parts and components, sub-components, sub-assemblies and finished products. Inventory is stated at the lower of cost and net realizable value. Cost is determined by the first-in, first-out method. Inventory that is sold to third parties is included within cost of sales and inventory that is installed on the premises of participating owner/operator properties, where the Company retains ownership, is transferred to property and equipment at the carrying value of the inventory. Cost of parts and components include the purchase and related costs incurred in bringing the products to their present location and condition. The Company periodically reviews for slow-moving, excess or obsolete inventories. Products that are determined to be obsolete, if any, are written down to net realizable value. Based on the aforementioned periodic reviews, the Company recorded an inventory reserve for slow-moving or excess inventory of $298 and $162 as of December 31, 2022 and 2021, respectively. As of December 31, 2022, the Company’s inventory was comprised $25,754 of finished goods that were available for sale and $8,986 of raw material and work in process. As of December 31, 2021, the Company’s inventory was comprised of finished goods inventory that were available for sale. Changes in the balance of inventory reflected on the balance sheet are the result of the impact of the change in foreign currency exchange rates. PROPERTY AND EQUIPMENT Property and equipment is stated at cost, net of accumulated depreciation and amortization which is recorded commencing at the in-service date using the straight-line method over the estimated useful lives of the assets. SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY AND EQUIPMENT Useful Lives Asset (In Years) Computer software and office and computer equipment 3 - 5 Machinery and equipment, automobiles, furniture and fixtures 3 - 10 Installed Level 2 electric vehicle charging stations 3 - 7 Installed Level 3 (DC Fast Chargers (“DCFC”)) electric vehicle charging stations 5 Building 39 When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the statements of operations for the respective period. Minor additions and repairs are expensed in the period incurred. Major additions and repairs which extend the useful life of existing assets are capitalized and depreciated using the straight-line method over their remaining estimated useful lives. EV charging stations represents the cost, net of accumulated depreciation, of charging equipment and installation of the charging equipment that have been installed on the premises of participating owner/operator properties or are earmarked to be installed. The Company’s 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. The Company assesses 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. 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”). During the year ended December 31, 2022, the Company incurred $3,809 related to these upgrades. As of December 31, 2022, the charger upgrades were substantially complete. See Note 4 – Property and Equipment for additional details. F- 14 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED 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 utilizing a qualitative assessment to determine if it was more likely than not that the fair value of each of its reporting units was less than their respective carrying values and concluded that no impairment existed. During the years ended December 31, 2022, 2021 and 2020, no impairment charge relating to goodwill was recognized. See Note 7 - Goodwill for further information. INTANGIBLE ASSETS Identifiable intangible assets primarily include trade name, customer relationships, favorable leases, internally developed technology, capitalized engineering costs and non-compete agreements. Amortizable intangible assets are amortized on a straight-line basis over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the assets may be impaired. If an indicator of impairment exists, the Company will compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then impairment, if any, is measured as the difference between fair value and carrying value, with fair value typically based on a discounted cash flow model. There were no indicators, events or changes in circumstances that would indicate intangible assets were impaired during the years ended December 31, 2022, 2021 or 2020. SEGMENTS The Company operates a single segment business. The Company’s Chief Executive Officer and Chief Operating Officer, who is the chief operating decision maker, views the Company’s operating performance on a consolidated basis as Blink’s only business is the sale and distribution of electric vehicle charging equipment and its associated revenues earned from customers and/or Property Partners who use equipment connected to its network. FOREIGN CURRENCY TRANSLATION The Company’s reporting currency is the United States dollar. The functional currency of certain subsidiaries is the Euro and the Indian Rupee. Assets and liabilities are translated based on the exchange rates at the balance sheet date ( 1.0701 for the Euro, and 0.0121 for the Indian Rupee, as of December 31, 2022 and 1.1325 for the Euro as of December 31, 2021), while expense accounts are translated at the weighted average exchange rate for the period ( 1.0527 for the Euro and 0.0121 for the Indian Rupee, for the year ended December 31, 2022 and 1.1722 for the Euro during the year ended December 31, 2021). Equity accounts are translated at historical exchange rates. The resulting translation adjustments are recognized in stockholders’ equity as a component of accumulated other comprehensive income. Comprehensive income (loss) is defined as the change in equity of an entity from all sources other than investments by owners or distributions to owners and includes foreign currency translation adjustments as described above. Transaction losses attributable to foreign exchange were $ 600 and $ 124 during the years ended December 31, 2022 and 2021, respectively. F- 15 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED REVENUE RECOGNITION The Company recognizes revenue primarily from four different types of contracts with customers: ● 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 installation of the product. ● 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. ● Other – Other revenues primarily comprises of revenues generated from alternative fuel credits. The following table summarizes our revenue recognized in the consolidated statements of operations: SCHEDULE OF REVENUE RECOGNITION BY CONTRACT For The Years Ended December 31, 2022 2021 2020 Revenues - Recognized at a Point in Time Product sales $ 46,018 $ 15,480 $ 4,432 Charging service revenue - company-owned charging stations 6,866 2,978 773 Other 1,393 426 362 Total Revenues - Recognized at a Point in Time 54,277 18,884 5,567 Revenues - Recognized Over a Period of Time: Network and other fees 5,298 887 474 Total Revenues - Recognized Over a Period of Time 5,298 887 474 Revenues - Other: Ride-sharing services 1,268 769 168 Grant and rebate 296 400 22 Total Revenues - Other 1,564 1,169 190 Total Revenues $ 61,139 $ 20,940 $ 6,231 The following table summarizes our revenue recognized in the consolidated statements of operations by geographical area: SCHEDULE OF REVENUE RECOGNITION BY GEOGRAPHICAL AREA For The Years Ended December 31, 2022 2021 2020 Revenues by Geographical Area U.S.A $ 40,828 $ 10,978 $ 3,543 International 20,311 9,962 2,688 Total Revenues $ 61,139 $ 20,940 $ 6,231 F- 16 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED REVENUE RECOGNITION – CONTINUED 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. As of December 31, 2022, the Company had $ 15,830 related to contract liabilities where performance obligations have not yet been satisfied, which has been included within deferred revenue on the consolidated balance sheets as of December 31, 2022. The Company expects to satisfy $ 10,572 of its remaining performance obligations for network fees, warranty revenue, product sales, and other and recognize the revenue within the next twelve months. The Company has elected to apply the practical expedient to expense costs to obtain contracts at the time the liability is incurred when the expected amortization periods is one year or less. During the year ended December 31, 2022, the Company recognized $ 1,136 of revenues related to network fees and warranty contracts that were included in deferred revenues as of December 31, 2021. During the year ended December 31, 2021, the Company recognized $ 514 of revenues related to network fees and warranty contracts that were included in deferred revenues as of December 31, 2020. During the year ended December 31, 2020, the Company recognized $ 466 of revenues related to network fees and warranty contracts that were included in deferred revenues as of December 31, 2019. During the years ended December 31, 2022, 2021, and 2020, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. 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 the useful life of the charging station. During the years ended December 31, 2022, 2021 and 2020, the Company recorded $ 296 , $ 400 and $ 22 , respectively, related to grant and rebate revenue. During the years ended December 31, 2022, 2021 and 2020, the Company recognized $ 296 , $ 207 and $ 225 , respectively, of revenue related to alternative fuel credits, which is included within other revenue on the consolidated statements of operations. Furthermore, ride-sharing services, which are not within scope of ASC 606, pertain to revenues and expenses 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 which are short term in nature. During the years ended December 31, 2022, 2021 and 2020, the Company recognized $ 1,268 , $ 769 and $ 168 , respectively, related to ride-sharing services revenue. ADVERTISING COSTS The Company participates in various advertising programs. All costs related to advertising of the Company’s products and services are expensed in the period incurred. Advertising costs charged to operations for the years ended December 31, 2022, 2021 and 2020 were $ 2,618 , $ 84 and $ 15 , respectively, and are included in selling and marketing on the consolidated statements of operations. CONCENTRATIONS As of December 31, 2022, accounts payable to a significant vendor were approximately 15 % of total accounts payable. During the year ended December 31, 2021, sales to a significant customer represented 12 % of total revenue. During the year ended December 31, 2020, sales to a significant customer represented 25 % of total revenue. During the year ended December 31, 2020, sales to another significant customer represented 11 % of total revenue. During the year ended December 31, 2022 and 2021, the Company made purchases from a significant supplier that represented 19 % and 23 % respectively, of total purchases. STOCK-BASED COMPENSATION The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. The fair value of the award is measured on the grant date and then is recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. The Company computes the fair value of equity-classified warrants and options granted using the Black-Scholes option pricing model. F- 17 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED LEASES The Company determines 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. Finance leases are included in property and equipment and finance lease liabilities on the 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. 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, the Company uses its 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. The Company provides charging services at designated locations on the hosts property at which the charging station is situated. In consideration thereof, the host shares in the monthly revenue generated by the charging station on a percentage basis. As the charging station monthly revenue generated is variable, the host’s monthly revenue derived there from is similarly variable. In accordance with ASC 842 the hosts’ portion of revenue is variable and not predicated on an index or rate, as defined, these payments are not within the scope ASC 842. INCOME TAXES The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date. As of December 31, 2022 and 2021, the Company maintained a full valuation allowance against its deferred tax assets, since it is more likely than not that the future tax benefit on such temporary differences will not be realized. The Company recognizes the tax benefit from an uncertain income tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement by examining taxing authorities. The Company has open tax years going back to 2019 (or the tax year ended December 31, 2009 if the Company were to utilize its NOLs) which will be subject to audit by federal and state authorities upon filing. The Company’s policy is to recognize interest and penalties accrued on uncertain income tax positions in interest expense in the Company’s consolidated statements of operations. Prior to acquiring SemaConnect, Inc., the Company had no material unrecognized tax benefits and no adjustments to its financial position. However, the acquisition of SemaConnect, Inc. brought with it certain unrecognized tax benefits. As of December 31, 2022 the Company had gross unrecognized tax benefits of $ 1,436 . The Company does not expect the unrecognized tax benefits to change significantly over the next 12 months. F- 18 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED NET LOSS PER COMMON SHARE Basic net loss per common share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding if the common share equivalents had been issued (computed using the treasury stock or if converted method), if dilutive. The following common share equivalents are excluded from the calculation of weighted average common shares outstanding because their inclusion would have been anti-dilutive: SCHEDULE OF OUTSTANDING DILUTED SHARES EXCLUDED FROM DILUTED LOSS PER SHARE COMPUTATION For the Years Ended December 31, 2022 2021 2020 Warrants 1,592,203 3,274,800 3,897 Options 1,060,535 983,505 573 Unvested restricted common stock - 50,831 - Total potentially dilutive shares 2,652,738 4,309,136 4,470 COMMITMENTS AND CONTINGENCIES Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. RECENTLY ISSUED ACCOUNTING STANDARDS In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805)” (“ASU 2021-08”). The ASU improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. The update is effective for annual and interim periods within the fiscal year beginning after December 15, 2022, and early adoption is permitted, including adoption in an interim period. The Company adopted ASU 2021-08 effective January 1, 2023 and its adoption did not have a material impact on its consolidated financial statements and disclosures. In March 2022, the FASB issued ASU 2022-02, “Financial Instruments—Credit Losses (Topic 326), Troubled Debt Restructurings (TDRs) and Vintage Disclosures” that eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables—Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. Rather than applying the recognition and measurement guidance for TDRs, an entity must apply the loan refinancing and restructuring guidance to determine whether a modification results in a new loan or a continuation of an existing loan. The amendment also requires an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326. The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Entities should apply the amendments prospectively except for the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. Early adoption of the amendments are permitted, including adoption in an interim period. If an entity elects to early adopt the amendments in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes the interim period. An entity may elect to early adopt the amendments about TDRs and related disclosure enhancements separately from the amendments related to vintage disclosures. The Company adopted ASU 2022-02 effective January 1, 2023 and its adoption did not have a material impact on its consolidated financial statements and disclosures. F- 19 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED RECENTLY ISSUED ACCOUNTING STANDARDS - CONTINUED In June 2022, the FASB issued ASU 2022-03, “ Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ” which amends guidance in Topic 820, Fair Value Measurement. The guidance clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring the fair value. The guidance also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendment requires the following disclosures for equity securities subject to contractual sale restrictions: the fair value of equity securities subject to contractual sale restrictions; the nature and remaining duration of the restriction(s); and the circumstances that could cause a lapse in the restriction(s). The amended guidance is effective January 1, 2024 on a prospective basis. Early adoption is permitted. The Company is currently assessing the impact of adopting this new accounting standard on its consolidated financial statements and related disclosures. In September 2022, the FASB issued ASU 2022-04, “ Liabilities - Supplier Finance Programs (Subtopic 405-50) Disclosure of Supplier Finance Program Obligations ” to require entities that use supplier finance programs in connection with purchase of goods and services to disclose the key terms of such programs and information about obligations outstanding at the end of the reporting period, including a rollfo r ward of those obligations of where in the financial statements outstanding amounts are present. The guidance does not affect the recognition, measurement, or financial statement presentation of supplier finance program obligations. The Company adopted ASU 2022-04 effective January 1, 2023 and its adoption did not have a material impact on its consolidated financial statements and related disclosures. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848), Deferral of the Sunset Date of Topic 848” that extends the period of time preparers can utilize the reference rate reform relief guidance provided by ASU 2020-04 and ASU 2021-01, which are discussed above. ASU 2022-06, which was effective upon issuance, defers the sunset date of this prior guidance from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief guidance in Topic 848. The Company adopted ASU 2022-06 effective January 1, 2023 and its adoption did not have a material impact on its consolidated financial statements and disclosures. 3. BUSINESS COMBINATIONS SEMACONNECT, INC. 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. The fair value of the common stock consideration was determined by the closing price of the Company’s common stock on the acquisition date. 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. Goodwill was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is attributable to the reputation of the business acquired, the workforce in place and the synergies to be achieved from this acquisition. Goodwill of $ 174,439 from the acquisition of SemaConnect is not expected to be deductible for income tax purposes. The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date of SemaConnect: SCHEDULE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED Purchase Consideration: Cash $ 46,136 Deferred cash consideration 40,600 Common stock 113,837 Total Purchase Consideration $ 200,573 Less: Trade name $ 1,831 Customer relationships 15,055 Internally developed technology 3,607 Non-compete agreements 241 Property and equipment 614 Right of use asset 1,092 Other assets 449 Deferred revenue- non current portion ( 702 ) Lease liability- non current portion ( 611 ) Debt-free net working capital 4,558 Fair Value of Identified Net Assets $ 26,134 Remaining Unidentified Goodwill Value $ 174,439 F- 20 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 3. BUSINESS COMBINATIONS – CONTINUED SEMACONNECT, INC. - CONTINUED In connection with the acquisition of SemaConnect, the Company acquired tradename, customer relationships, internally developed technology and non-compete agreements. The Company used the relief from royalty method when determining the fair value of the acquired trademark and internally developed technology. The fair value was determined by applying an estimated royalty rate to revenues, measuring the value the Company would pay in royalties to a market participant if it did not own the trademark and internally developed technology and had to license it from a third party. The trademark was assigned a useful life of two years and the internally developed technology was assigned a useful life of three years. When determining fair value of customer relationships, a form of income approach, known as the multi period excess earnings method was used. The fair value was determined by calculating the present value of estimated future operating cash flows generated from the existing customers less costs to realize the revenue. The Company applied a discount rate of 20 % , which reflected the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows. Other significant assumptions used to estimate the fair value of the customer contracts include an assumed income tax rate of 26 % . The customer relationships were assigned a 5 year useful life. The Company used a discounted cash flow model when determining the fair value of the non-compete agreements, significant assumptions include a discount rate of 20 % and an assumed income tax rate of 26 % . The non-compete agreements were assigned a useful life of two years . The fair value of working capital accounts were determined to be the carrying values due to the short-term nature of the assets and liabilities. The fair value of property and equipment was estimated by applying the cost approach. The cost approach uses the replacement or reproduction cost as an indicator of fair value. The assumptions of the cost approach include replacement cost new, projected capital expenditures, and physical deterioration factors including economic useful life, remaining useful life, age, and effective age. The components of debt free net working capital are as follows: Current assets: Cash $ 3,753 Restricted cash 8,103 Accounts receivable 5,515 Inventory 5,472 Prepaid expenses and other current assets 1,309 Total current assets $ 24,152 Less current liabilities: Accounts payable $ 2,305 Merger consideration payable 8,103 Current portion of lease liability 481 Current portion of notes payable 186 Deferred revenue 2,677 Accrued expenses and other current liabilities 5,842 Total current liabilities $ 19,594 Debt free net working capital $ 4,558 The consolidated financial statements of the Company include the results of operations of SemaConnect from June 15, 2022 to December 31, 2022 and do not include results of operations for periods prior to June 15, 2022. The results of operations of SemaConnect from June 15, 2022 to December 31,2022 included revenues of $ 18,411 and a net loss of $ 3,295 . The following table presents the unaudited pro forma consolidated results of operations for the years ended December 31, 2022 and 2021 as if the acquisition of SemaConnect had occurred at the beginning of fiscal year 2021. The pro forma information provided below is compiled from the pre-acquisition financial information of SemaConnect and includes pro forma adjustments for adjustments to certain expenses. The pro forma results are not necessarily indicative of (i) the results of operations that would have occurred had the operations of this acquisition actually been acquired at the beginning of fiscal year 2021 or (ii) future results of operations: SCHEDULE OF PROFORMA INFORMATION OF OPERATIONS For the Years Ended December 31, 2022 2021 (Unaudited) (Unaudited) Revenues $ 70,078 $ 33,390 Net loss $ ( 102,444 ) $ ( 69,012 ) The above pro forma information includes pro forma adjustments to give effect to the amortization of the acquired intangible assets to the 2021 historical period. As of the date of the acquisition, the Company expected to collect all contractual cash flows related to receivables acquired in the acquisition. Acquisition-related costs are expensed as incurred and are recorded within general and administrative expenses on the consolidated statements of operations. Acquisition-related costs were $ 3,407 during the year ended December 31, 2022. F- 21 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 3. BUSINESS COMBINATIONS – CONTINUED 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 (“EB”), a private company limited by shares and registered in England and Wales, 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. The fair value of the common stock consideration was determined by the closing price of the Company’s common stock on the acquisition date. 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 December 31, 2022, the estimated fair value of the Contingent Consideration was $ 1,316 . The Company uses a probability-weighted discounted cash flow approach as a valuation technique to determine the fair value of the contingent consideration liabilities on the acquisition date and at each reporting period. The significant unobservable inputs used in the fair value measurements are projections over the earn-out period, and the probability outcome percentages that are assigned to each scenario. Significant increases or decreases to either of these inputs in isolation could result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent consideration liabilities. 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. Goodwill was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is attributable to the reputation of the business acquired, the workforce in place and the synergies to be achieved from this acquisition. Goodwill of $ 10,443 from the acquisition of EB is expected to be deductible for income tax purposes. The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date of EB: SCHEDULE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED Purchase Consideration: Cash $ 12,651 Common stock 2,852 Contingent consideration 3,814 Total Purchase Consideration $ 19,317 Less: Trade name $ 500 Customer relationships 4,856 Internally developed technology 515 Non-compete agreements 1,992 Property and equipment 4,325 Deferred revenue- non current portion ( 2,689 ) Debt-free net working capital deficit ( 625 ) Fair Value of Identified Net Assets $ 8,874 Remaining Unidentified Goodwill Value $ 10,443 F- 22 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 3. BUSINESS COMBINATIONS – CONTINUED ELECTRIC BLUE LIMITED – CONTINUED The components of debt free net working capital deficit are as follows: Current assets: Cash $ 1,291 Accounts receivable 1,618 Prepaid expenses and other current assets 508 Total current assets $ 3,417 Less current liabilities: Accounts payable $ 647 Current portion of lease liabilities 22 Current portion of notes payable 611 Accrued expenses and other current liabilities 2,762 Total current liabilities $ 4,042 Debt free net working capital deficit $ (625 ) The Company used the relief from royalty method when determining the fair value of the acquired trademark and internally developed technology. The fair value was determined by applying an estimated royalty rate to revenues, measuring the value the Company would pay in royalties to a market participant if it did not own the trademark and internally developed technology and had to license it from a third party. The trademark was assigned a useful life of one and half years and the internally developed technology was assigned a useful life of one year. When determining fair value of customer relationships, a form of income approach, known as the multi period excess earnings method was used. The fair value was determined by calculating the present value of estimated future operating cash flows generated from the existing customers less costs to realize the revenue. The Company applied a discount rate of 23 % , which reflected the nature of the assets as they relate to the risk and uncertainty of the estimated future operating cash flows. Other significant assumptions used to estimate the fair value of the customer contracts include an assumed income tax rate of 25 % . The assigned useful life for customer relationships was approximately six years . The Company used a discounted cash flow model when determining the fair value of the non-compete agreements, significant assumptions include a discount rate of 23 % and an assumed income tax rate of 25 % . The non-compete agreements were assigned a useful life of two years . The Company used a Monte-Carlo based simulation model when determining the fair value of the contingent consideration. The model takes into account the Company’s projections as well as an assumed discount rate of 12 % . The fair value of working capital accounts were determined to be the carrying values due to the short-term nature of the assets and liabilities. The fair value of property and equipment was estimated by applying the cost approach. The cost approach uses the replacement or reproduction cost as an indicator of fair value. The assumptions of the cost approach include replacement cost new, projected capital expenditures, and physical deterioration factors including economic useful life, remaining useful life, age, and effective age. Changes in the balance of identified intangible assets and goodwill reflected on the balance sheet are the result of the impact of the change in foreign currency exchange rates. The consolidated financial statements of the Company include the results of operations of EB from April 22, 2022 to December 31, 2022 and do not include results of operations for periods prior to April 22, 2022. The results of operations of EB from April 22, 2022 to December 31, 2022 included revenues of $ 4,601 and a net loss of $ 4,355 . The following table presents the unaudited pro forma consolidated results of operations for the years ended December 31, 2022 and 2021 as if the acquisition of EB had occurred at the beginning of fiscal year 2021. The pro forma information provided below is compiled from the pre-acquisition financial information of EB and includes pro forma adjustments for adjustments to certain expenses. The pro forma results are not necessarily indicative of (i) the results of operations that would have occurred had the operations of this acquisition actually been acquired at the beginning of fiscal year 2021 or (ii) future results of operations: SCHEDULE OF PROFORMA INFORMATION OF OPERATIONS For the Years Ended December 31, 2022 2021 (Unaudited) (Unaudited) Revenues $ 62,002 $ 25,076 Net loss $ ( 92,705 ) $ ( 60,076 ) The above pro forma information includes pro forma adjustments to give effect to the amortization of the acquired intangible assets to the 2021 historical period. As of the date of the acquisition, the Company expected to collect all contractual cash flows related to receivables acquired in the acquisition. Acquisition-related costs are expensed as incurred and are recorded within general and administrative expenses on the consolidated statements of operations. Acquisition-related costs were $ 376 during the year ended December 31, 2022. See Note 11 – Fair Value Measurement for additional information. F- 23 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 3. BUSINESS COMBINATIONS – CONTINUED BLUE CORNER NV On May 10, 2021, pursuant to a Share Purchase Agreement dated April 21, 2021, the Company through its wholly-owned subsidiary in the Netherlands, Blink Holdings, B.V. closed on the acquisition from the shareholders of Blue Corner NV, a Belgian company (“Blue Corner”), of all of the outstanding capital stock of Blue Corner. Headquartered in Belgium, with sales representative offices in several other European cities, Blue Corner owns and operates an EV charging network across Europe. The acquisition of Blue Corner was made to enter the European market and provide an opportunity to expand the Company’s footprint in this region. The purchase price for the acquisition of all of Blue Corner’s outstanding capital stock was approximately $ 23,775 (or € 20,000 ), consisting of approximately $ 22,985 (or € 19,000 ) in cash and approximately $ 790 ( € 700 ) represented by 32,382 shares of the Company’s common stock (the “Consideration Shares”). The fair value of the Consideration Shares was calculated based on the average price of the Company’s common stock during the 30 consecutive trading days immediately preceding the closing date of the Share Purchase Agreement, which equaled $ 37.66 (or € 30.88 ) per share, reduced by a discount for illiquidity due to the 12-month lockup that exists on any sales or transfers. The Company executed management agreements with key Blue Corner personnel, including equity incentive packages consisting of additional shares of the Company’s common stock which is compensatory and not included in the purchase price for this acquisition. The Company entered into an escrow agreement pursuant to the Share Purchase Agreement, under which the Company paid approximately $ 2,100 ( € 1,725 ) of the purchase price into an escrow account for a period of up to 18 months following the closing to cover any losses or damages the Company may incur by reason of any misrepresentation or breach of warranty by Blue Corner under the Share Purchase Agreement. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for Blue Corner, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. The price purchase price allocation was finalized during fiscal 2022 within the one-year measurement period. The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date of Blue Corner: SCHEDULE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED Purchase Consideration: Cash $ 22,985 Common stock 790 Total Purchase Consideration $ 23,775 Less: Fixed assets 1,322 Trade name 343 Customer relationships 1,800 Favorable leases 292 Internally developed technology 1,233 Non-compete agreements 148 Other liabilities ( 144 ) Other assets 283 Debt-free net working capital deficit ( 529 ) Fair Value of Identified Net Assets 4,748 Remaining Unidentified Goodwill Value $ 19,027 F- 24 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 3. BUSINESS COMBINATIONS – CONTINUED BLUE CORNER NV - CONTINUED Changes in the balance of identified intangible assets and goodwill reflected on the balance sheet are the result of the impact of the change in foreign currency exchange rates. The components of debt free net working capital are as follows: Current assets: Cash $ 245 Accounts receivable 1,927 Prepaid expenses and other current assets 372 Inventory 1,359 Total current assets 3,903 Less current liabilities: Accounts payable and accrued expenses 4,131 Deferred revenue 301 Total current liabilities 4,432 Debt free net working capital deficit $ ( 529 ) Goodwill was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is attributable to the reputation of the business acquired, the workforce in place and the synergies to be achieved from this acquisition. Goodwill of $ 19,027 from the acquisition of Blue Corner is expected to be deductible for income tax purposes. The consolidated financial statements of the Company include the results of operations from Blue Corner as of May 10, 2021 to December 31, 2021 and do not include results of operations for the year ended December 31, 2020. The results of operations of Blue Corner from May 10, 2021 to December 31, 2021 included revenues of $ 7,553 and a net loss of $ 2,567 . The following table presents the unaudited pro forma consolidated results of operations for the year ended December 31, 2021 as if the acquisition of Blue Corner had occurred at the beginning of fiscal year 2020. The pro forma information provided below is compiled from the pre-acquisition financial information of Blue Corner and includes pro forma adjustments for interest expense and adjustments to certain expenses. The pro forma results are not necessarily indicative of (i) the results of operations that would have occurred had the operations of this acquisition actually been acquired at the beginning of fiscal year 2020 or (ii) future results of operations: SCHEDULE OF PROFORMA INFORMATION OF OPERATIONS For the Years Ended December 31, 2021 2020 Revenues $ 23,882 $ 10,771 Net loss $ ( 55,942 ) $ ( 20,255 ) The above pro forma information includes pro forma adjustments to remove the effect of interest expense recognized in the results of operations of Blue Corner during the years ended December 31, 2021 and 2020 of $ 276 and $ 579 , respectively. F- 25 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 3. BUSINESS COMBINATIONS – CONTINUED U-GO STATIONS, INC. On November 19, 2020 (“Closing Date”), the Company (the “Buyer”), entered into a Stock Purchase Agreement (the “SPA Agreement”) with U-Go Stations, Inc. (the “Target”), and pursuant thereto acquired from the Seller all of the ownership interests of U-Go Stations, Inc. (“U-Go”). The consideration by the Buyer for the acquisition of U-Go included: (a) 66,454 shares of the Company’s common stock and (b) $ 60 cash payment on the later of (i) the first anniversary of the closing date; or (ii) the date on which the final project of the Additional Projects is awarded to U-Go and paid in full, the funds shall be held in escrow by the escrow agent until the second anniversary of the closing date. At the expiration of the escrow agreement, the balance of the $ 60 , if any, shall be converted to the Company’s common stock determined by a formula outlined in the agreement. The SPA Agreement contains customary representations, warranties and covenants for a transaction of this type and nature. Pursuant to the terms of the SPA Agreement, the Seller indemnified the Company, the Purchaser and their respective affiliates and representatives for breaches of the Seller’s representations and warranties, breaches of covenants and losses. The Purchaser agreed to indemnify the Seller and its affiliates and representatives for any breaches of the Purchaser’s representations and warranties, breaches of covenants and losses. The Company has accounted for this transaction as a business combination under ASC 805. Accordingly, the assets acquired and the liabilities assumed were recorded at their estimated fair value based on the date of acquisition. Goodwill from the acquisition principally relates to the fair value of the common stock consideration as well as the excess value of assumed liabilities over the fair value of identified net assets. Since this transaction was a stock acquisition, goodwill is not tax deductible. At the date of acquisition, the purchase consideration consisted of the Company’s common stock. The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows: SCHEDULE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED Purchase Consideration: Share consideration $ 1,279 Total Purchase Consideration $ 1,279 Less: Fixed assets 418 Notes payable ( 165 ) Debt-free net working capital deficit ( 388 ) Fair Value of Identified Net Assets ( 135 ) Remaining Unidentified Goodwill Value $ 1,414 F- 26 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 3. BUSINESS COMBINATIONS – CONTINUED U-GO STATIONS, INC. – CONTINUED The components of debt free net working capital deficit are as follows: Current assets: Cash $ 30 Accounts receivable 3 Prepaid expenses and other current assets 7 Total current assets $ 40 Less current liabilities: Accounts payable and accrued expenses 428 Total current liabilities $ 428 Debt free net working capital deficit $ ( 388 ) The below table provides select unaudited, pro forma consolidated results of operations as if the acquisition of U-Go had occurred on January 1, 2020. The pro forma results are not indicative of (i) the results of operations that would have occurred had the operations of this acquisition actually occurred at the beginning of fiscal year 2020 or (ii) future results of operations. SCHEDULE OF PROFORMA INFORMATION OF OPERATIONS For the Years Ended December 31, 2020 Revenues $ 6,468 Net loss $ ( 18,022 ) The above pro forma information includes pro forma adjustments to remove the effect of the following non-recurring transactions: 1) Nonrecurring merger expenses of $ 6 recognized in the Company’s results of operations during the year ended December 31, 2020. As of the date of the acquisition, the Company expects to collect all contractual cash flows related to receivables acquired in the acquisition. Acquisition related costs are expensed as incurred and are recorded within general and administrative expenses on the consolidated statements of operations. Acquisition-related costs were $ 6 during the year ended December 31, 2020. F- 27 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 3. BUSINESS COMBINATIONS – CONTINUED BLUELA CARSHARING, LLC On September 11, 2020 (“Closing Date”), the Company’s wholly-owned subsidiary, Blink Mobility, LLC (the “Purchaser”), entered into an Ownership Interest Purchase Agreement (the “Agreement”) with Blue Systems USA, Inc. (the “Seller”), and pursuant thereto acquired from the Seller all of the ownership interests of BlueLA Carsharing, LLC (“BlueLA”). The consideration by the Purchaser for the acquisition of BlueLA included: (a) a cash payment of $1.00, which was paid to the Seller at closing, and (b) in the event BlueLA timely amends its carsharing services agreement with the City of Los Angeles, California, a cash payment to the Seller of $ 1,000 , payable within three business days after such amendment (“Contingent Consideration”). Under the Agreement, the amendment to the carsharing services agreement with the City of Los Angeles was to be obtained by BlueLA no later than December 31, 2020, subject to an extension to March 31, 2021 if a representative of the City of Los Angeles indicates to the Purchaser by the December 31, 2020 deadline its approval of the modifications to the carsharing services agreement, as more particularly outlined in the Agreement. As of December 31, 2021 and 2020, the Company did not receive an amendment nor indication to amend the carsharing service agreement thus the Company is not obligated to the Contingent Consideration. The Agreement contains customary representations, warranties and covenants for a transaction of this type and nature. Pursuant to the terms of the Agreement, the Seller will indemnify the Company, the Purchaser and their respective affiliates and representatives for breaches of the Seller’s representations and warranties, breaches of covenants and losses related to pre-closing taxes of BlueLA. The Purchaser has agreed to indemnify the Seller and its affiliates and representatives for any breaches of the Purchaser’s representations and warranties, breaches of covenants and losses related to post-closing taxes of BlueLA. The representations and warranties under the Agreement survived until December 10, 2021 . Pursuant to the Agreement, the Seller and BlueLA entered into a Transition Service Agreement pursuant to which the Seller and its affiliate, Bluecarsharing, S.A.S., provided certain transition and support services to BlueLA and the Purchaser following the closing and until December 31, 2020. The Seller also guaranteed the payment of up to $ 175 in parking fees payable by BlueLA to the City of Los Angeles, and BlueLA agreed to pay the Seller for any as-yet uncollected grants and rebates that BlueLA is entitled to obtain under its carsharing services agreement with the City of Los Angeles. In addition, the Seller agreed that, until September 10, 2023, the Seller will not and will cause its subsidiaries or affiliates not to directly or indirectly, (i) own, operate, acquire, or establish a business, or in any other manner engage alone or with others in carsharing and/or electric vehicle charging operation, or activity in the State of California (whether as an operator, manager, employee, officer, director, consultant, advisor, representative or otherwise) excluding any de minimis ownership interest in any business); or (ii) intentionally induce or attempt to induce any customer, supplier or other business relation of BlueLA to cease or refrain from working with BlueLA, or in any way adversely interfere with the relationship between any such customer, supplier or other business relation and BlueLA. The Company had acquired BlueLA in order to expand its presence in the State of California. Under the terms of the City of Los Angeles Agreement, amongst other obligations, during the initial term of the City of Los Angeles Agreement (defined as approximately six years from the effective date of the City of Los Angeles Agreement), BlueLA shall provide, manage, operate and maintain (i) usage agreements for electric vehicles in a quantity of no less than one hundred (100) (see payment terms of Car Lease Agreement) and (ii) charging stations in a quantity of no less than two hundred (200) at approximately forty (40) locations for an aggregate cost of approximately $20 per month. Following the initial term, the City of Los Angeles shall have the right to renew the City of Los Angeles Agreement for renewal terms of two (2) years each, with prior notice required, for a maximum of three renewal terms. The Company has accounted for this transaction as a business combination under ASC 805. Accordingly, the assets acquired and the liabilities assumed were recorded at their estimated fair value based on the date of acquisition. Goodwill from the acquisition principally relates to the Contingent Consideration as well as the excess value of assumed liabilities over the fair value of identified net assets. Since this transaction was a stock acquisition, goodwill is not tax deductible. At the date of acquisition, the purchase consideration consisted of cash, assumed liabilities and Contingent Consideration. The Contingent Consideration of $ 1,000 is non-interest bearing and was recorded at its estimated fair value of $ 245 based on a probability-weighted valuation technique used to determine the fair value of the Contingent Consideration on the acquisition date. See Note 11 – Fair Value Measurement for assumptions utilized in the estimate of fair value of the Contingent Consideration. During the fourth quarter of 2020, the Company recorded a measurement period adjustment in order reduce the Contingent Consideration to $0 as of December 31, 2020 with a corresponding decrease to goodwill . F- 28 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 3. BUSINESS COMBINATIONS – CONTINUED BLUELA CARSHARING, LLC – CONTINUED The aggregate purchase price was allocated to the assets acquired and liabilities assumed as follows: SCHEDULE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED Purchase Consideration: Cash $ - Assumed liabilities 88 Total Purchase Consideration $ 88 Less: Right of use assets 598 Debt-free net working capital deficit ( 286 ) Non-current portion of lease liabilities ( 371 ) Fair Value of Identified Net Liabilities ( 59 ) Remaining Unidentified Goodwill Value $ 147 The components of debt free net working capital deficit are as follows: Current assets: Cash $ 3 Accounts receivable 73 Prepaid expenses and other current assets 88 Total current assets $ 164 Less current liabilities: Accounts payable 163 Current portion of lease liabilities 227 Accrued expenses and other current liabilities 60 Total current liabilities $ 450 Debt free net working capital deficit $ ( 286 ) F- 29 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 3. BUSINESS COMBINATIONS – CONTINUED BLUELA CARSHARING, LLC – CONTINUED The below table provides select unaudited, pro forma consolidated results of operations as if the acquisition of BlueLA had occurred on January 1, 2020. The pro forma results are not indicative of (i) the results of operations that would have occurred had the operations of this acquisition actually occurred at the beginning of fiscal year 2020 or (ii) future results of operations. SCHEDULE OF PROFORMA INFORMATION OF OPERATIONS For the Year Ended December 31, 2020 (Unaudited) Revenues $ 6,699 Net loss $ ( 20,511 ) The above pro forma information includes pro forma adjustments to remove the effect of the following non-recurring transactions: 1) Gain of $ 15,550 recognized in the Seller’s results of operations during the year ended December 31, 2020 related to the forgiveness of debt associated with liabilities to the Seller’s parent; 2) Interest expense of $ 165 and $ 322 recognized in the Seller’s results of operations during the year ended December 31, 2020 and 2019, respectively, associated with the debt due to the Seller’s parent that was subsequently forgiven; and 3) Nonrecurring merger expenses of $ 18 recognized in the Company’s results of operations during the year ended December 31, 2020. As of the date of the acquisition, the Company expected to collect all contractual cash flows related to receivables acquired in the acquisition. Acquisition related costs are expensed as incurred and are recorded within general and administrative expenses on the consolidated statements of operations. Acquisition-related costs were $ 18 during the year ended December 31, 2020. F- 30 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 4. PROPERTY AND EQUIPMENT Property and equipment consisted of the following: SCHEDULE OF PROPERTY AND EQUIPMENT December 31, 2022 2021 EV charging stations $ 22,718 $ 10,906 Building 4,718 4,000 Software 2,137 1,700 Automobiles 2,993 2,009 Office and computer equipment 1,371 844 Leasehold improvements 536 202 Machinery and equipment 712 139 Property and equipment, gross 35,185 19,800 Less: accumulated depreciation ( 9,323 ) ( 5,237 ) Property and equipment, net $ 25,862 $ 14,563 Depreciation and amortization expense related to property and equipment was $ 5,432 , $ 1,904 , and $ 378 for the years ended December 31, 2022, 2021 and 2020, respectively, of which, $ 3,113 , $ 1,533 and $ 345 , respectively, was recorded within cost of sales in the accompanying consolidated statements of operations. During the years ended December 31, 2022, 2021 and 2020, the Company disposed of property and equipment with a net book value of $ 463 , $ 798 and $ 368 which resulted in a loss on disposal of $ 113 , $ 156 and $ 279 , respectively, which was included within general and administrative expenses in the consolidated statements of operations. During the years ended December 31, 2022, 2021, and 2020, the Company transferred charging stations of $ 5,283 , $ 2,189 and $ 1,980 from inventory into property and equipment. On January 22, 2021, the Company completed its purchase of approximately 10,000 square feet of office condominium space which became the Company’s corporate headquarters. The purchase price was $ 4,000 , of which, $ 600 was paid in the form of the Company’s common stock ( 13,123 shares) and $ 3,400 in cash. See Note 3 - Business Combination for additional details of the acquisition of property and equipment. Changes in the balance of property and equipment reflected on the balance sheet are the result of the impact of the change in foreign currency exchange rates. F- 31 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 5. INTANGIBLE ASSETS Intangible assets consisted of the following: SCHEDULE OF INTANGIBLE ASSETS December 31, 2022 2021 Useful Lives Internal use software $ 1,123 $ 600 3 years Capitalized engineering costs 237 237 Indefinite Trade name and patents 2,759 340 1.5 years Customer relationships 21,398 1,677 5.6 years Favorable leases 257 272 1.6 years Internally developed technology 5,031 1,148 3 years Non-compete agreements 2,253 139 2 years 33,058 4,413 Less: accumulated amortization ( 6,476 ) ( 958 ) Intangible assets, net $ 26,582 $ 3,455 Amortization expense during the years ended December 31, 2022, 2021, and 2020 were $ 5,954 , $ 938 , and $ 61 , respectively. Changes in the balance of intangible assets and goodwill reflected on the balance sheet are the result of the impact of the change in foreign currency exchange rates. See Note 3 - Business Combination and Note 6 - Goodwill for additional details. SCHEDULE OF CHANGES IN BALANCE OF INTANGIBLE ASSETS AND GOODWILL Internal Use Software Capitalized Engineering Costs Trade Name and Patents Customer Relationships Favorable Leases Internally Developed Technology Non-Compete Agreements Accumulated Amortization Total Balance as of January 1, 2021 $ 184 $ - $ - $ - $ - $ - $ - $ ( 138 ) $ 46 Additions 416 237 340 1,677 272 1,148 139 - 4,229 Amortization expense - - - - - - - ( 820 ) ( 820 ) Balance as of December 31, 2021 600 237 340 1,677 272 1,148 139 ( 958 ) 3,455 Intangible assets beginning balance 600 237 340 1,677 272 1,148 139 ( 958 ) 3,455 Additions 523 - 2,331 19,911 - 4,122 2,233 - 29,120 Foreign currency translation - - 88 ( 190 ) ( 15 ) ( 239 ) ( 119 ) - ( 475 ) Amortization expense - - - - - - - ( 5,518 ) ( 5,518 ) Balance as of December 31, 2022 $ 1,123 $ 237 $ 2,759 $ 21,398 $ 257 $ 5,031 $ 2,253 $ ( 6,476 ) $ 26,582 Intangible assets ending balance $ 1,123 $ 237 $ 2,759 $ 21,398 $ 257 $ 5,031 $ 2,253 $ ( 6,476 ) $ 26,582 Weighted average remaining amortization period at December 31, 2022 (in years) 1.6 0.0 1.3 4.6 0.0 2.3 1.4 SCHEDULE OF CHANGES IN ACCUMULATED AMORTIZATION Internal Use Software Capitalized Engineering Costs Trade Name and Patents Customer Relationships Favorable Leases Internally Developed Technology Non-Compete Agreements Accumulated Amortization Balance as of January 1, 2021 $ 138 $ - $ - $ - $ - $ - $ - $ 138 Amortization expense 69 - 155 198 109 245 44 820 Balance as of December 31, 2021 207 - 155 198 109 245 44 958 Intangible assets excluding goodwill beginning balance 207 - 155 198 109 245 44 958 Amortization expense 294 - 896 2,547 154 1,254 809 5,954 Foreign currency translation - - ( 65 ) ( 250 ) ( 6 ) ( 100 ) ( 15 ) ( 436 ) Balance as of December 31, 2022 $ 501 $ - $ 986 $ 2,495 $ 257 $ 1,399 $ 838 $ 6,476 Intangible assets excluding goodwill ending balance $ 501 $ - $ 986 $ 2,495 $ 257 $ 1,399 $ 838 $ 6,476 The estimated future amortization expense is as follows: SCHEDULE OF ESTIMATED FUTURE AMORTIZATION EXPENSE For the Years Ending December 31, Total 2023 $ 8,081 2024 6,422 2025 4,652 2026 4,036 2027 2,050 Thereafter 1,341 Finite-lived intangible assets, net $ 26,582 F- 32 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 6. GOODWILL Changes in goodwill during the years ended December 31, 2022 and 2021 were as follows: SCHEDULE OF GOODWILL 2022 2021 Beginning balance - January 1, $ 19,390 $ 1,501 Goodwil - beginning balance $ 19,390 $ 1,501 Acquisition of Electric Blue 10,443 - Acquisition of SemaConnect 174,439 - Accrual of additional consideration for U-Go Stations, Inc. - 60 Acquisition of Blue Corner - 19,027 Acquisition of Goodwill Effect of translation adjustments ( 562 ) ( 1,198 ) Ending balance - December 31, $ 203,710 $ 19,390 Goodwill - ending balance $ 203,710 $ 19,390 7. OTHER ASSETS 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 Company extended to the Target additional funding of $ 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. The total amount of the loans is $ 950 (the “Development Loan”), which had been loaned to the Target as of December 31, 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. As of December 31, 2022, a total of $ 2,200 of loans made by the Company to the Target were included in other assets on the consolidated balance sheet. F- 33 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following: SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES 2022 2021 December 31, 2022 2021 Accrued wages $ 5,456 $ 2,678 Other accrued expenses 2,473 757 Accrued host fees 130 130 Accrued professional, board and other fees 451 543 Accrued commissions 827 144 Warranty payable 176 10 Accrued income, property and sales taxes payable 371 462 Accrued issuable equity 433 454 Accrued purchases 549 117 Internal use software liability 372 383 Accrued interest 1,871 - Total accrued expenses $ 13,109 $ 5,678 See Note 16 – Commitments and Contingencies – Taxes. 9. NOTES PAYABLE PAYCHECK PROTECTION PROGRAM On May 7, 2020, the Company received $ 856 in connection with a loan (the “PPP Loan”) under the CARES Act Paycheck Protection Program (the “PPP”). The PPP provides for loans to qualifying businesses for amounts of up to 2.5 times their average monthly payroll expenses. The loan principal and accrued interest are forgivable, as long as the borrower uses loan proceeds for eligible purposes during the covered period following disbursement, such as payroll, benefits, rent, and utilities, and maintains its payroll levels. The amount of loan forgiveness is reduced if the borrower terminates employees or reduces salaries during the covered period, subject to certain qualifications and exclusions. As of December 31, 2020, the Company had utilized all $ 856 of the proceeds of the PPP Loan. During the year ended December 31, 2021, the Company obtained forgiveness for its PPP Loans in the amount of $ 856 and recorded a gain on settlement of debt on the consolidated statement of operations for the year ended December 31, 2021. OTHER NOTES PAYABLE In connection with the U-Go acquisition, the Company had also assumed $ 165 in notes payable, however, these notes were subsequently repaid during the year ended December 31, 2020. See Note 3 – Business Combination – U-GO Stations, Inc. Acquisition for details. In connection with the SemaConnect and EB acquisitions, the Company had also assumed certain notes payable, however, $ 681 of principal were subsequently repaid during the year ended December 31, 2022. See Note 3 – Business Combination for details. As of December 31, 2022 and 2021, the Company had an outstanding note payable in the principal amount of $ 10 . F- 34 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 10. DEFERRED REVENUE The Company is the recipient of various private and governmental grants, rebates and marketing incentives. Reimbursements of periodic expenses are recognized as income when the related expense is incurred. Private and government grants and rebates related to EV charging stations and their installation are deferred and amortized in a manner consistent with the recognition of the related depreciation expense of the related asset over their useful lives. Deferred revenue consisted of the following: SCHEDULE OF DEFERRED REVENUE December 31, 2022 2021 Grant and other $ 6,516 $ 339 Prepaid network, charging and maintenance fees 9,314 2,647 Total deferred revenue 15,830 2,986 Deferred revenue, non-current portion ( 5,258 ) ( 128 ) Current portion of deferred revenue $ 10,572 $ 2,858 It is anticipated that deferred revenue as of December 31, 2022 will be recognized as follows: SCHEDULE OF DEFERRED REVENUE RECOGNIZED For the Year Ending December 31, Revenue 2023 $ 10,572 2024 1,228 2025 220 2026 449 2027 393 Thereafter 2,968 Total $ 15,830 F- 35 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 11. FAIR VALUE MEASUREMENT Assumptions utilized in the valuation of Level 3 liabilities are described as follows: SUMMARY OF ASSUMPTIONS USED FOR VALUATION OF FAIR VALUE LIABILITIES For the Years Ended December 31, 2022 2021 2020 Risk-free interest rate 1.63%- 4.73 % 0.07 %- 0.39 % 0.16 %- 1.69 % Contractual term (years) 1.00 1.00 1.00 - 8.00 Expected volatility 74%- 85 % 90 %- 148 % 78 %- 143.8 % Expected dividend yield 0.00 % 0.00 % 0.00 % The following table sets forth a summary of the changes in the fair value of Level 3 warrant liabilities that are measured at fair value on a recurring basis: SUMMARY OF CHANGES IN FAIR VALUE OF LEVEL 3 WARRANT LIABILITIES MEASURED AT RECURRING BASIS 2022 2021 Contingent Consideration Beginning balance - January 1, $ - $ - Contingent consideration assumed in BlueLA acquisition 3,814 - Change in fair value of contingent consideration ( 2,498 ) - Ending balance - December 31, $ 1,316 $ - Warrant Liability Beginning balance - January 1 $ 90 $ 159 Change in fair value of warrant liability ( 66 ) ( 69 ) Ending balance - December 31, $ 24 $ 90 Assets and liabilities measured at fair value on a recurring basis are as follows: SUMMARY OF ASSETS AND LIABILITIES MEASURED AT FAIR VALUE RECURRING AND NONRECURRING BASIS December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Alternative fuel credits $ - $ 32 $ - $ 32 Total assets $ - $ 32 $ - $ 32 Liabilities: Option liability $ 409 $ - $ - $ 409 Contingent consideration - - 1,316 1,316 Warrant liability - - 24 24 Total liabilities $ 409 $ - $ 1,340 $ 1,749 December 31, 2021 Level 1 Level 2 Level 3 Total Assets: Alternative fuel credits $ - $ 58 $ - $ 58 Total assets $ - $ 58 $ - $ 58 Liabilities: Common stock liability $ 364 $ - $ - $ 364 Warrant liability - - 90 90 Total liabilities $ 364 $ - $ 90 $ 454 See Note 3 - Business Combinations for additional details. In addition to assets and liabilities that are measured at fair value on a recurring basis, we also measure certain assets and liabilities at fair value on a nonrecurring basis. Our non-financial assets, including goodwill, intangible assets, operating lease right of use assets, and property, plant and equipment, are measured at fair value when there is an indication of impairment and the carrying amount exceeds the asset’s projected undiscounted cash flows. These assets are recorded at fair value only when an impairment charge is recognized. F- 36 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 12. STOCKHOLDERS’ EQUITY AUTHORIZED CAPITAL The Company is authorized to issue 500,000,000 shares of common stock, $ 0.001 par value, and 40,000,000 shares of preferred stock, $ 0.001 par value. The holders of the Company’s common stock are entitled to one vote per share. The preferred stock is designated as follows: 20,000,000 shares to Series A Convertible Preferred Stock; 10,000 shares to Series B Convertible Preferred Stock; 250,000 shares to Series C Convertible Preferred Stock; 13 shares to Series D Convertible Preferred Stock; and 19,727 shares undesignated. OMNIBUS INCENTIVE PLANS On September 7, 2018, the Board of the Company, as well as a majority of the Company’s shareholders approved the Company’s 2018 Incentive Compensation Plan (the “2018 Plan”), which enables the Company to grant stock options, restricted stock, dividend equivalents, stock payments, deferred stock, restricted stock units, stock appreciation rights, performance share awards, and other incentive awards to associates, directors, consultants, and advisors of the Company and its affiliates, and to improve the ability of the Company to attract, retain, and motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company. Stock options granted under the 2018 Plan may be non-qualified stock options or incentive stock options, within the meaning of Section 422(b) of the Internal Revenue Code of 1986, except that stock options granted to outside directors and any consultants or advisers providing services to the Company or an affiliate shall in all cases be non-qualified stock options. The option price must be at least 100 % of the fair market value on the date of grant and if issued to a 10 % or greater shareholder must be at least 110 % of the fair market value on the date of the grant. The 2018 Plan is to be administered by the Compensation Committee of the Board, which shall have discretion over the awards and grants thereunder. The aggregate maximum number of shares of common stock for which stock options or awards may be granted pursuant to the 2018 Plan is 5,000,000 , adjusted as provided in Section 4 of the 2018 Plan. No awards may be issued on or after September 7, 2028. As of December 31, 2022 and 2021, options to purchase 1,060,535 and 983,505 shares of options were outstanding, respectively. As of December 31, 2022 and 2021, 2,230,755 and 1,244,232 shares of common stock, respectively, were outstanding to employees and members of the Board of Directors of the Company. As of December 31, 2022 and 2021, there were 2,769,245 and 2,772,263 securities available for future issuance under the 2018 Plan, respectively. PUBLIC OFFERING In January 2021, the Company completed an underwritten registered public offering of 5,660,000 shares of common stock at a public offering price of $ 41.00 per share. The Company received $ 232,060 in gross proceeds from the public offering, and $ 221,406 in net proceeds after deducting the underwriting discount and offering expenses paid by the Company. The Company’s Chief Executive Officer and one other officer participated in the offering by selling a total of 550,000 shares of the Company’s common stock from the exercise of the underwriter’s option to purchase additional shares. The public offering was made pursuant to the Company’s automatic shelf registration statement on Form S-3 filed with the SEC on January 6, 2021 and prospectus supplement dated January 7, 2021. See Note 17 – Subsequent Events – Public Offering for details of an offering the Company closed subsequent to December 31, 2022. 2022 AT-THE-MARKET OFFERING On September 2, 2022, the Company 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” equity offering program (the “2022 ATM”) pursuant to which the Company may issue and sell from time to time shares of its common stock, having an aggregate offering price of up to $ 250,000 through the Agents, as the Company’s sales agents. The shares are being offered pursuant to the Sales Agreement under the Company’s automatic shelf registration statement on Form S-3ASR and a prospectus supplement thereto filed with the SEC on January 6, 2021 and September 2, 2022, respectively. During 2022 and through December 31, 2022, the Company sold an aggregate of 558,721 shares of common stock under the ATM program for aggregate gross proceeds of $ 7,697 , less issuance costs of $ 311 which were recorded as a reduction to additional paid-in capital. F- 37 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 12. STOCKHOLDERS’ EQUITY – CONTINUED 2020 AT-THE-MARKET OFFERING On April 17, 2020, the Company entered into a sales agreement (“Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”) to conduct an “at-the-market” equity offering program (the “ATM”), pursuant to which the Company may issue and sell from time-to-time shares of its common stock having an aggregate offering price of up to $ 20,000 (the “Shares”) through the Agent. Sales of the Shares under the Sales Agreement were made in transactions that were deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made by means of ordinary brokers’ transactions, including on the Nasdaq Capital Market, at market prices or as otherwise agreed to with the Agent. A “shelf” registration statement on Form S-3 for the Shares was filed with the SEC, which became effective on September 16, 2019, and a prospectus supplement thereto was filed with the SEC on April 17, 2020. During 2020 and through December 31, 2020, the Company sold an aggregate of 3,597,833 shares of common stock under the ATM program for aggregate gross proceeds of $ 20,000 , less issuance costs of $ 819 which were recorded as a reduction to additional paid-in capital. PREFERRED STOCK SERIES D CONVERTIBLE PREFERRED STOCK During the year ended December 31, 2020, a holder elected to convert 5,125 shares of Series D Convertible Preferred Stock into 1,642,628 shares of the Company’s common stock at a conversion price of $ 3.12 per share. The Company determined that the Series D Convertible Preferred Stock did not include a beneficial conversion feature. There are no longer any currently outstanding shares of Series D Convertible Preferred Stock. COMMON STOCK 2020 During the year ended December 31, 2020, the Company issued an aggregate of 233,124 shares of common stock to employees of the Company and consultants with an aggregate issuance date fair value of $ 525,769 . See Note 12 – Stockholder’s Equity - Preferred Stock for details associated with the issuance of common stock in connection with the conversion of Series D Convertible Preferred Stock. 2021 During the year ended December 31, 2021, the Company issued 32,382 shares as partial consideration for its acquisition of Blue Corner. During the year ended December 31, 2021, the Company issued an aggregate of 127,841 shares as compensation for services. The shares had an issuance date fair value of $ 3,950 . During the year ended December 31, 2021, the Company issued 13,123 shares as partial consideration for the purchase of property and equipment. See Note 4 – Property and Equipment for additional details. During the year ended December 31, 2021, the Company issued an aggregate of 104,496 shares of common stock pursuant to cashless warrant and options exercises. 2022 During the year ended December 31, 2022, the Company issued an aggregate of 799,048 shares as compensation for services. The shares had an issuance date fair value of $ 6,087 . See elsewhere within this Note, Note 3 - Business Combinations and Note 14 – Related Parties for additional details related to the issuance of common stock. F- 38 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 12. STOCKHOLDERS’ EQUITY – CONTINUED STOCK-BASED COMPENSATION The Company recognized stock-based compensation expense related to common stock, stock options and warrants for the years ended December 31, 2022, 2021, and 2020 of $ 15,913 , $ 19,108 , and $ 948 , respectively, which is included within compensation expense on the consolidated statement of operations. As December 31, 2022, there was $ 13,239 of unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period of 3.53 years. On July 29, 2022, Michael D. Farkas, the Company’s Chairman and Chief Executive Officer, and other senior executives of the Company who are responsible for the acquisition and integration of SemaConnect were granted one-time performance-based restricted stock awards under the Company’s 2018 Incentive Compensation Plan. A total number of 590,458 shares of common stock, with a market value on the grant date of $ 12,000 , were awarded to the executives. The agreements provide that Messrs. Farkas, Brendan S. Jones, President, Michael P. Rama, Chief Financial Officer, Aviv Hillo, General Counsel, and Harjinder Bhade, Chief Technology Officer, will each receive 472,367 , 47,237 , 23,618 , 23,618 and 23,618 shares of common stock, respectively. The awards of performance-based restricted stock are intended to provide an appropriate incentive structure for the executive management team of the Company to integrate and commercialize the SemaConnect acquisition given the transformational nature of the acquisition in a way that is aligned with stockholder interests. The awards of these performance-based restricted stock become vested based on a series of six performance hurdles that must be achieved before the third anniversary of the grants, as described in greater detail below. In addition to the closing of the SemaConnect acquisition with certain cost savings as the initial 20% vesting event, the vesting of the remaining 80% of the restricted stock is generally determined based on the (i) integration of SemaConnect’ s hardware and software platforms, (ii) integration of its business processes, (iii) integration of its human capital processes, (iv) delivery and execution of a product rationalization roadmap and new production ready units for UL certification, and (v) our common stock’s closing price reaching on average for a period of ten consecutive trading days a price of $ 23.78 , which is 50 % over the price paid by us to SemaConnect shareholders in the acquisition, in each case without regard to the order of achieving the foregoing hurdles. The Board has discretion to determine when each performance hurdle has been achieved and to accelerate awards pursuant to the program. As of December 31, 2022, the vesting performance hurdles related to the closing of the SemaConnect acquisition and clause (v) outlined above was met. WARRANT AND OPTION VALUATION The Company has computed the fair value of certain warrants and options granted using the Black-Scholes option pricing model. Option forfeitures are reduction of previous expensed amount at the time of occurrence. The expected term used for options issued is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The Company is utilizing an expected volatility figure based on a review of the historical volatility of the Company over a period equivalent to the expected life of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued. F- 39 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 12. STOCKHOLDERS’ EQUITY – CONTINUED STOCK OPTIONS In applying the Black-Scholes option pricing model to options granted, the Company used the following assumptions: SUMMARY OF BLACK-SCHOLES OPTION PRICING MODEL TO STOCK OPTIONS GRANTED ASSUMPTION For the Years Ended December 31, 2022 2021 2020 Risk free interest rate 2.47 %- 3.25 % 0.09 %- 1.539 % 0.33 %- 1.44 % Expected term (years) 1.00 - 8.00 1.00 - 8.00 5.00 - 8.00 Expected volatility 115 %- 133.4 % 115.3 %- 140.7 % 121.8 %- 139.9 % Expected dividends 0.00 % 0.00 % 0.00 % During the year ended December 31, 2020, the Company issued an aggregate of 8,256 shares of the Company’s common stock pursuant to the cashless exercise of options. During the year ended December 31, 2021, the Company issued an aggregate of 38,496 shares of the Company’s common stock pursuant to the cashless exercise of options. During the year ended December 31, 2021, the Company issued an aggregate of 136,500 shares of the Company’s common stock pursuant to an option exercise for aggregate net proceeds of $ 307 . During the year ended December 31, 2022, the Company issued an aggregate of 5,955 shares of common stock pursuant to warrant exercises for aggregate net proceeds of $ 10 . See Note 16 – Commitments and Contingencies – CEO Employment Agreement for details associated with options granted to the Company’s CEO. A summary of the option activity during the year ended December 31, 2022 is presented below: SUMMARY OF OPTIONS ACTIVITY Weighted Weighted Average Average Remaining Aggregate Number of Exercise Life Intrinsic Shares Price In Years Value Outstanding, January 1, 2022 983,505 $ 25.25 Granted 84,052 16.35 Exercised ( 6,032 ) 1.73 Cancelled/forfeited/expired ( 990 ) 15.70 Outstanding, December 31, 2022 1,060,535 $ 24.68 3.5 $ 3,015,160 Exercisable, December 31, 2022 778,065 $ 27.14 2.8 $ 2,015,805 F- 40 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 12. STOCKHOLDERS’ EQUITY – CONTINUED STOCK OPTIONS – CONTINUED The following table presents information related to stock options at December 31, 2022: SCHEDULE OF STOCK OPTIONS Options Outstanding Options Exercisable Weighted Weighted Range of Average Outstanding Average Exercisable Exercise Exercise Number of Remaining Life Number of Price Price Options In Years Options $ 1.73 -$ 9.14 2.25 345,621 1.0 233,644 $ 15.70 -$ 38.45 34.87 674,382 1.7 524,889 $ 40.82 -$ 59.22 46.50 40,532 0.1 19,532 1,060,535 2.8 778,065 STOCK WARRANTS Note 11– Fair Value Measurement and elsewhere within this note for additional details. During the year ended December 31, 2021, the Company issued an aggregate of 388,101 shares of the Company’s common stock pursuant to the exercise of warrants at an exercise price of $ 4.25 per share for aggregate gross proceeds of $ 1,619 . During the year ended December 31, 2021, the Company issued 66,000 shares of the Company’s common stock representing a modification of the initial warrant exercise pursuant to a legal settlement. See Note 16 – Commitments and Contingencies – Litigation and Disputes for details. During the year ended December 31, 2022, the Company issued an aggregate of 8,093 shares of common stock pursuant to cashless warrant exercises (of which, warrants to purchase 9,600 shares of common stock with a weighted average exercise price of $ 3.40 per share were exercised) and an aggregate of 73,336 shares of common stock pursuant to warrant exercises for aggregate net proceeds of $ 210 . The following table accounts for the Company’s warrant activity for the year ended December 31, 2022: SCHEDULE OF WARRANT ACTIVITY Weighted Weighted Average Average Remaining Aggregate Number of Exercise Life Intrinsic Shares Price In Years Value Outstanding, January 1, 2022 3,270,562 $ 5.06 Issued - - Exercised ( 82,936 ) 13.64 Cancelled/forfeited/expired ( 1,599,661 ) 5.41 Outstanding, December 31, 2022 1,587,965 $ 4.25 0.2 $ 10,671,125 Exercisable, December 31, 2022 1,587,965 $ 4.25 0.2 $ 10,671,125 F- 41 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 12. STOCKHOLDERS’ EQUITY – CONTINUED STOCK WARRANTS – CONTINUED The following table presents information related to stock warrants at December 31, 2022: SCHEDULE OF STOCK WARRANTS Warrants Outstanding Warrants Exercisable Weighted Weighted Range of Average Outstanding Average Exercisable Exercise Exercise Number of Remaining Life Number of Price Price Warrants In Years Warrants $ 4.25 $ 4.25 1,587,965 0.2 1,587,965 1,587,965 0.2 1,587,965 13. INCOME TAXES The Company is subject to U.S. federal and various state income taxes. The income tax provision (benefit) for the years ended December 31, 2022, 2021 and 2020 consisted of the following: SCHEDULE OF INCOME TAX PROVISION (BENEFIT) For the Years Ended December 31, 2022 2021 2020 Federal: Current $ - $ - $ - Deferred ( 22,605 ) ( 5,691 ) ( 4,452 ) State: Current - - - Deferred ( 1,430 ) ( 1,348 ) ( 1,060 ) Foreign: Current 317 - - Deferred ( 4,120 ) - - ( 27,837 ) ( 7,039 ) ( 5,512 ) Change in valuation allowance 28,145 7,039 5,512 Provision for income taxes $ 308 $ - $ - No federal or state current tax provision has been recorded for the years ended December 31, 2022, 2021, and 2020 because the Company had net operating losses for federal and state tax purposes. However, due to the merger with SemaConnect, for the year ended December 31, 2022, a current foreign tax provision was recorded related to the Company’s operations in India. The net operating loss carryovers may be subject to annual limitations under Internal Revenue Code Section 382, and similar state provisions, should there be a greater than 50% ownership change as determined under the applicable income tax regulations. The amount of the limitation would be determined based on the value of the company immediately prior to the ownership change and subsequent ownership changes could further impact the amount of the annual limitation. An ownership change pursuant to Section 382 may have occurred in the past or could happen in the future, such that the NOLs available for utilization could be significantly limited. The Company will perform a Section 382 analysis in the future. The related decrease in the deferred tax asset will be offset by the decrease in valuation allowance. F- 42 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 13. INCOME TAXES – CONTINUED A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows: SUMMARY OF RECONCILIATION OF STATUTORY FEDERAL INCOME TAX RATE AND EFFECTIVE INCOME TAX RATE For the Years Ended December 31, 2022 2021 2020 Tax benefit at federal statutory rate ( 21.0 )% ( 21.0 )% ( 21.0 )% State income taxes, net of federal benefit ( 1.3 )% ( 2.4 )% ( 5.0 )% Permanent differences: Stock-based compensation 0.6 % 0.2 % ( 5.0 )% Other 2.3 % 7.9 % 1.0 % Tax credits 0.0 % ( 0.1 )% 0.0 % Income from non-includable foreign entities 4.3 % 1.6 % 0.0 % Prior year differences ( 11.2 )% 1.0 % ( 1.0 )% Change in valuation allowance 30.8 % 12.8 % 31.0 % Foreign tax ( 4.2 )% 0.0 % 0.0 % Effective income tax rate 0.3 % 0.0 % 0.0 % The Company has determined that a valuation allowance for the entire net deferred tax asset is required. A valuation allowance is required if, based on the weight of evidence, it is more likely than not that some or the entire portion of the deferred tax asset will not be realized. After consideration of all the evidence, both positive and negative, management has determined that a full valuation allowance is necessary to reduce the deferred tax asset to zero, the amount that will more likely not be realized. The disaggregation of the Company’s domestic and foreign pre-tax loss for the years ended December 31, 2022, 2021, and 2020 is as follows: SCHEDULE OF DISAGGREGATION OF DOMESTIC AND FOREIGN PRE-TAX LOSS For the Year Ended December 31 2022 2021 2020 U.S. $ ( 76,528 ) $ ( 50,803 ) $ ( 17,635 ) Foreign ( 14,724 ) ( 4,316 ) ( 211 ) Total $ ( 91,252 ) $ ( 55,119 ) $ ( 17,846 ) F- 43 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 13. INCOME TAXES – CONTINUED The tax effects of temporary differences that give rise to deferred tax assets and liabilities are presented below: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES December 31, 2022 2021 Deferred Tax Assets: Net operating loss carryforwards - federal $ 51,722 $ 32,351 Net operating loss carryforwards - states 8,392 - Net operating loss carryforwards - UK 2,584 - Net operating loss carryforwards - Belgium 3,022 - Tax credits 626 593 Stock-based compensation 5,137 1,210 Accruals 1,425 663 Deferred revenue 441 - Allowance for doubtful accounts 441 216 Goodwill 712 728 Capitalized Sec. 174 R&E 297 - Intangible assets - 183 Other 522 115 Deferred tax assets, gross 75,321 36,059 Deferred Tax Liabilities: Intangibles ( 5,791 ) - Fixed assets ( 488 ) ( 793 ) Unrealized gain/loss ( 134 ) - Deferred tax asset reserve ( 370 ) - Other ( 123 ) 2 Deferred tax Liabilities, gross ( 6,905 ) ( 791 ) Net deferred tax assets 68,417 35,268 Valuation allowance ( 68,390 ) ( 35,268 ) Deferred tax assets, net of valuation allowance 27 - Change in valuation allowance $ 33,122 $ 7,039 As of December 31, 2022, the Company had net operating loss carry forwards for federal income tax purposes of approximately $ 246,296 of which, $ 84,934 may be used to offset future taxable income through 2037 and the remaining $ 161,361 of net operating loss carry forwards incurred after 2017, do not have an expiration date. In addition, state NOLs carryforwards available are approximately $ 165,872 , as of December 31, 2022.The Company also has approximately $ 623 in business credits expiring between 2030 and 2042 . F- 44 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 14. RELATED PARTIES JOINT VENTURE The Company and a group of three Cyprus entities entered into a shareholders’ agreement on February 11, 2019, pertaining to the parties’ respective shareholdings in a new joint venture entity, Blink Charging Europe Ltd. (the “Entity”), that was formed under the laws of Cyprus on the same date. Pursuant to the agreement, the Company is not required to fund operating losses. The Company owns 40 % of the Entity while another entity owns 60 % of the Entity. The Entity currently owns 100 % of a Greek subsidiary, Blink Charging Hellas SA (“Hellas”), which started operations in the Greek EV market. There are currently no plans for the Company to make any capital contributions or investments. During year ended December 31, 2022, 2021, 2020, the Company recognized sales of $ 0 , $ 811 and $ 273 , respectively, to Hellas. As of December 31, 2022 and 2021 the Company had a receivable from Hellas of approximately $ 0 and $ 6 , respectively, and payable of $ 84 and $ 0 , respectively. The Company determined that the Entity is a variable interest entity, however, the Company does not have a controlling financial interest and, as a result, the Company is not required to consolidate the Entity and instead has applied equity method accounting to its investment in the Entity. From inception through December 31, 2022, the Entity has not generated net income and, as a result, pursuant to ASC 323, the Company has not recorded a gain or loss on its equity method investment in the Entity during the years ended December 31, 2022, 2021, and 2020. BLUE CORNER As of December 31, 2021, three senior management employees in Blue Corner had an ownership interest in a major supplier of charging equipment for Blue Corner. As of December 31, 2021, the Company owed approximately $ 800 to this supplier. As of December 31, 2022, this related party relationship does not exist since, as of December 31, 2022, those senior management employees are no longer with Blue Corner. During the year ended December 31, 2022, the Company made purchases of $ 1,444 with these related parties. ELECTRIC BLUE LIMITED As of December 31, 2022, several close family members of a senior management employee are providing services to Electric Blue Limited. For the year ended December 31, 2022, these related parties have collectively provided services worth $ 95 to Electric Blue Limited. Furthermore, as of December 31, 2022, there were purchase commitments of $ 112 to the same related parties. 15. LEASES OPERATING LEASES See Note 3 – Business Combination regarding details associated with lease agreements for (i) certain parking locations in connection with the City of Los Angeles Agreement. During the year ended December 31, 2021, the Company entered into a lease agreement for approximately 27,540 square feet of space in Arizona. The lease commenced on January 1, 2021 and will terminate on May 31, 2028. The lease includes a build-out allowance of $ 137 . Monthly payments under the lease are $ 18 per month. The lease also includes a security deposit of $ 22 . Total operating lease expenses for the year ended December 31, 2022, 2021, and 2020 was $ 789 , $ 566 , and $ 220 , respectively, and is recorded in other operating expenses on the consolidated statements of operations. Operating lease expenses consist of rent expense, CAM adjustments and other expenses. As of December 31, 2022, the Company had $ 931 of right-of-use assets that were classified as financing leases for vehicles associated with the operations of Blink Mobility are included as a component of property and equipment on the consolidated balance sheet as of December 31, 2022. The duration of the leases are three years and the Company is expected to pay approximately $ 1,020 throughout the term. As of December 31, 2022, the Company did not have additional operating and financing leases that have not yet commenced. During the year ended December 31, 2022, the Company recorded $ 38 of interest expense related to finance leases, which were recorded within interest expense on the consolidated statements of operations. During the year ended December 31, 2022, the Company recorded amortization expense of $ 659 related to finance leases. There were no finance leases as of December 31, 2021 and 2020. F- 45 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 15. LEASES – CONTINUED OPERATING LEASES – CONTINUED Supplemental cash flows information related to leases was as follows: SCHEDULE OF SUPPLEMENTAL CASH FLOWS INFORMATION RELATED TO LEASES For The Years Ended December 31, 2022 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 825 $ 1,019 $ 207 Financing cash flows from finance leases $ 217 $ - $ - Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 1,787 $ 2,129 $ 598 Finance leases $ 931 $ - $ - Weighted Average Remaining Lease Term Operating leases 3.66 4.77 2.10 Finance leases 2.50 - - Weighted Average Discount Rate Operating leases 4.9 % 4.7 % 6.0 % Finance leases 6.2 % 0.0 % 0.0 % Future minimum payments under non-cancellable leases as of December 31, 2022 were as follows: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS For the Years Ending December 31, Operating Lease Finance Lease 2023 $ 1,835 $ 340 2024 1,163 340 2025 955 85 2026 760 - 2027 501 - Total future minimum lease payments 5,214 765 Less: imputed interest ( 446 ) ( 51 ) Total $ 4,768 $ 714 F- 46 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 16. COMMITMENTS AND CONTINGENCIES PURCHASE COMMITMENTS As of December 31, 2022, the Company had purchase commitments of approximately $ 60,532 which will become payable upon the suppliers’ delivery of the charging stations 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. PATENT LICENSE AGREEMENT On March 29, 2012, the Company, as licensee (the “Licensee”) entered into an exclusive patent license agreement with the Executive Chairman of the Board and Balance Holdings, LLC (an entity controlled by the Executive Chairman) (collectively, the “Licensor”), whereby the Company agreed to pay a royalty of 10 % of the gross profits received by the Company from commercial sales and/or use of two provisional patent applications, one relating to an inductive charging parking bumper and one relating to a process which allows multiple EVs to plug into an EV charging station simultaneously and charge as the current becomes available. On March 11, 2016, the Licensee and the Licensor entered into an agreement related to the March 29, 2012 patent license agreement. The parties acknowledged that the Licensee has paid a total of $ 9 in registration and legal fees for the U.S. Provisional Patent Application No. 61529016 (the “Patent Application”) (related to the inductive charging parking bumper) to date. Effective March 11, 2016, the patent license agreement, solely with respect to the Patent Application and the parties’ rights and obligations thereto, was terminated. The Executive Chairman of the Board agreed to be solely responsible for all future costs and fees associated with the prosecution of the patent application. In the event the Patent Application is successful, the Executive Chairman of the Board shall grant a credit to the Licensee in the amount of $9 to be applied against any outstanding amount(s) owed to him. If the Licensee does not have any outstanding payment obligations to the Executive Chairman of the Board at the time the Patent Application is approved, the Executive Chairman of the Board shall remit the $9 to the Licensee within twenty (20) days of the approval. The parties agreed to a mutual release of any claims associated with the patent license agreement. As of December 31, 2022, the Company has not paid nor incurred any royalty fees related to this patent license agreement. LITIGATION, DISPUTES AND SETTLEMENTS On August 24, 2020, a purported securities class action lawsuit, captioned Bush v. Blink Charging Co. et al., Case No. 20-cv-23527, was filed in the United States District Court for the Southern District of Florida against the Company, Michael Farkas (Blink’s Chairman of the Board and Chief Executive Officer), and Michael Rama (Blink’s Chief Financial Officer) (the “Bush Lawsuit”). On September 1, 2020, another purported securities class action lawsuit, captioned Vittoria v. Blink Charging Co. et al., Case No. 20-cv-23643, was filed in the United States District Court for the Southern District of Florida against the same defendants and seeking to recover the same alleged damages (the “Vittoria Lawsuit”). On October 1, 2020, the court consolidated the Vittoria Lawsuit with the Bush Lawsuit and on December 21, 2020 the court appointed Tianyou Wu, Alexander Yu and H. Marc Joseph to serve as the Co-Lead Plaintiffs. The Co-Lead Plaintiffs filed an Amended Complaint on February 19, 2021. The Amended Complaint alleges, among other things, that the defendants made false or misleading statements about the size and functionality of the Blink Network and asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The Amended Complaint does not quantify damages but seeks to recover damages on behalf of investors who purchased or otherwise acquired Blink’s common stock between March 6, 2020 and August 19, 2020. On April 20, 2021, Blink and the other defendants filed a motion to dismiss the Amended Complaint, which has now been fully briefed and is ready for review. On April 7, 2022, the court held oral argument on the motion to dismiss but did not issue a decision. The Company wholly and completely disputes the allegations therein. The Company has retained legal counsel in order to defend the action vigorously. The Company has not recorded an accrual related to this matter as of December 31, 2022 as it determined that any such loss contingency was either not probable or estimable. F- 47 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 16. COMMITMENTS AND CONTINGENCIES – CONTINUED LITIGATION, DISPUTES AND SETTLEMENTS – CONTINUED On September 15, 2020, a shareholder derivative lawsuit, captioned Klein (derivatively on behalf of Blink Charging Co.) v. Farkas et al., Case No. 20- 19815CA01, was filed in Miami-Dade County Circuit Court seeking to pursue claims belonging to the Company against Blink’s Board of Directors and Michael Rama (the “Klein Lawsuit”). Blink is named as a nominal defendant. The Klein Lawsuit asserts that the Director defendants caused Blink to make the statements that are at issue in the securities class action and, as a result, the Company will incur costs defending against the consolidated Bush Lawsuit and other unidentified investigations. The Klein Lawsuit asserts claims against the Director defendants for breach of fiduciary duties and corporate waste and against all of the defendants for unjust enrichment. Klein did not quantify the alleged damages in his complaint, but he seeks damages sustained by the Company as a result of the defendants’ breaches of fiduciary duties, corporate governance changes, restitution, and disgorgement of profits from the defendants and attorneys’ fees and other litigation expenses. The parties agreed to temporarily stay the Klein Lawsuit until there is a ruling on the motion to dismiss filed in the consolidated Bush Lawsuit. On June 17, 2022, the court substituted the executrix of Klein’s estate as the plaintiff. The Company has not recorded an accrual related to this matter as of December 31, 2022 as it determined that any such loss contingency was either not probable or estimable. On December 23, 2020, another shareholder derivative action, captioned Bhatia (derivatively on behalf of Blink Charging Co.) v. Farkas et al., Case No. 20-27632CA01, was filed in Miami-Dade County Circuit Court against the same defendants sued in the Klein Lawsuit and asserting similar claims, as well as additional claims relating to the Company’s nomination, appointment and hiring of minorities and women and the Company’s decision to retain its outside auditor (the “Bhatia Lawsuit”). On February 17, 2021, the parties agreed to consolidate the Klein and Bhatia actions, which the court consolidated under the caption In re Blink Charging Company Stockholder Derivative Litigation, Lead Case No. 2020-019815-CA-01. The parties also agreed to keep in place the temporary stay. The court subsequently vacated the consolidation order and explained the parties should first file a motion to transfer, which the parties have done. On June 22, 2022, the court re-consolidated the Klein and Bhatia actions and reinstated the temporary stay. The Company wholly and completely disputes the allegations therein. The Company has retained legal counsel in order to defend the action vigorously. The Company has not recorded an accrual related to this matter as of December 31, 2022 as it determined that any such loss contingency was either not probable or estimable. On February 12, 2021, another shareholder derivative lawsuit, captioned Wolery (derivatively on behalf of Blink Charging Co.) v. Buffalino et al., Case No. A-21-829395-C, was filed in the Eighth Judicial District Court in Clark County, Nevada seeking to pursue claims belonging to the Company against Blink’s Board of Directors (the “Wolery Lawsuit”). Blink is named as a nominal defendant. The Wolery complaint alleges that the amount of restricted stock awarded to Blink’s outside directors in December 2020 exceeded the amounts permitted by Blink’s incentive compensation plan. The complaint asks the court to rescind the excess restricted stock awards, as well as other relief. On September 15, 2021, the parties entered into a term sheet in which they agreed to settle the claims subject to the court’s approval. On April 18, 2022, the court signed a final judgment approving the settlement and dismissing the lawsuit with prejudice. As a result of the settlement, the Company has agreed to make certain changes to its compensation practices for its directors and officers, including, among other things, eliminating the practice of making cash payments to directors to cover expected income taxes on stock grants and placing a $ 200 annual limit for two years on the combined stock and cash awards to outside directors. The defendants did not admit any liability or wrongdoing in the settlement and will not make any cash payment as part of the settlement, but the Company will be responsible for paying the costs to give notice of the settlement to the Company’s shareholders and to pay $ 190 in attorney’s fees to the plaintiff’s counsel which was paid in April 2022. On February 7, 2022, another shareholder derivative lawsuit, captioned McCauley (derivatively on behalf of Blink Charging Co.) v. Farkas et al., Case No. A-22-847894-C, was filed in the Eighth Judicial District Court in Clark County, Nevada, seeking to pursue claims belonging to the Company against six of Blink’s directors and Michael Rama (the “McCauley Lawsuit”). Blink is named as a nominal defendant. The complaint filed in the McCauley Lawsuit asserts similar allegations to the Klein Lawsuit relating to the statements at issue in the securities class action and asserts claims for breach of fiduciary duty and unjust enrichment. The McCauley Lawsuit seeks both injunctive and monetary relief from the individual defendants, as well as an award of attorneys’ fees and costs. On March 29, 2022, the Nevada court approved the parties’ stipulation to temporarily stay the McCauley Lawsuit until there is a ruling on the motion to dismiss filed in the consolidated Bush Lawsuit. The Company has not recorded an accrual related to this matter as of December 31, 2022 as it determined that any such loss contingency was either not probable or estimable. F- 48 BLINK CHARGING CO. Notes to Consolidated Financial Statements (in thousands except for share and per share amounts) 16. COMMITMENTS AND CONTINGENCIES – CONTINUED WARRANTY The Company estimates an approximate cost of $ 250 to repair deployed chargers, which the Company owns as of December 31, 2022. CHARGING NETWORK UPGRADES 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”). During the year ended December 31, 2022, we incurred $ 3,809 related to these upgrades. As of December 31, 2022, the charger upgrades were substantially complete. EMPLOYMENT AGREEMENTS MICHAEL D. FARKAS EMPLOYMENT AGREEMENT On May 28, 2021, the Company entered into a new employment agreement (the “Employment Agreement”) with the Company’s Executive Chairman and Chief Executive Officer (the “CEO”). The term of the Employment Agreement is January 1, 2021 through December 31, 2023 (the “Term”). Under the Employment Agreement, the CEO will receive a base salary of $ 800 for 2021 and $ 850 and $ 900 for 2022 and 2023, respectively. The CEO will be eligible to receive an annual performance bonus (payable in cash and securities), with a target bonus of 100 % of the base salary, with the CEO eligible to receive up to 200 % of the base salary based on the achievement of key performance indicators established by the Board of Directors and the CEO (“KPIs”). The CEO will receive equity awards (one-half in restricted stock and one-half in stock options) with a target aggregate value of $ 1,000 , the CEO is eligible to receive up to 200% of the target aggregate value based on the achievement of KPIs during each year of the Term. The CEO also received a special four-year performance option to purchase 475,285 shares of common stock at an exercise price of $ 37.40 per share, which will vest if the Company’s stock price on the NASDAQ exchange reaches and remains on average for a period of 20 consecutive market days at a closing price of $ 90 per share during the four-year term of the option. The performance option had a grant date fair value of approximately $ 13,500 , which was estimated using a third-party specialist who utilized a Monte Carlo simulation model. The assumptions used in the Monte Carlo simulation model were as follows: the closing stock price on the valuation date of $ 34.00 , exercise price of $ 37.40 , the contractual term of four years , expected volatility of the Company’s stock of 143.98 %, and the risk free rate of interest of 0.54 %. The Company is recognizing the fair value over the derived service period of the award, which was determined to be 0.64 years. Additionally, the CEO received one-time awards and payments in satisfaction of his 2020 bonuses, equity awards, and a salary catch-up since the expiration of his prior agreement in September 2020. The Employment Agreement provides that, if the CEO is terminated without cause, resigns for good reason, dies or becomes disabled during the Term, he will receive his base salary for the remainder of the Term and payment of 2.6 times his target performance bonus/equity awards and base salary. In the event of a termination without cause or resignation for good reason within nine months prior to or 18 months following a change in control, the multiple in the previous sentence will be 3.5 times. The Employment Agreement also contains covenants (a) restricting Mr. Farkas from engaging in any activities competitive with the Company’s business during the Term and one year thereafter, (b) prohibiting Mr. Farkas from disclosure of confidential information regarding the Company at any time and (c) confirming that all intellectual property developed by Mr. Farkas during the term of the employment agreement which specifically relates to the EV charging business constitutes the Company’s sole and exclusive property. Mr. Farkas may be entitled to additional bonuses should his developments be commercialized by the Company. The Employment Agreement provides that a commission sales agreement entered into on November 17, 2009 between an entity controlled by the CEO and a predecessor to the Company will remain suspended and no payments will be due thereunder for as long as the CEO is a full-time employee of the Company and is paid a monthly salary of at least $ 30 . Finally, the Company and the CEO agreed to resolve a dispute over the CEO’s transfer of 260,000 shares of the Company’s common stock to a prior institutional investor through a settlement agreement and payment of $ 1,000 from the Company to the CEO. The payment of $ 1,000 was recognized as a part of other operating expenses in the statements of operations during the year ended December 31, 2021. MATERIAL AGREEMENT In October 2021, the Company negotiated and executed an amendment and extension to its agreement with a contract manufacturer of the Company. The amendment extends the term of the agreement for an additional five (5) years. Accordingly, the Company could potentially incur additional costs related to units ordered that were subsequently canceled or otherwise not fulfilled. 17. SUBSEQUENT EVENTS PUBLIC OFFERING In February 2023, the Company completed an underwritten registered public offering of 8,333,333 shares of its common stock at a public offering price of $ 12.00 per share. The Company received approximately $ 100,000 in gross proceeds from the public offering and approximately $ 95,000 in net proceeds after deducting the underwriting discount and offering expenses paid by the Company. In addition, the underwriters have a 30-day option to purchase up to an additional 1,249,999 shares of common stock from the Company at the public offering price, less the underwriting discounts and commissions. The public offering was made pursuant to our automatic shelf registration statement on Form S-3 filed with the SEC on January 6, 2021, and prospectus supplement dated February 8, 2023. Barclays acted as the sole book-running manager for the offering. H.C. Wainwright & Co., Roth Capital Partners and ThinkEquity acted as co-managers for the offering. F- 49