Blink Charging Co. 10-Q

ITEM 1. FINANCIAL STATEMENTS. BLINK CHARGING CO. Condensed Consolidated Balance Sheets (in thousands except for share amounts) June 30, 2023 December 31, 2022 (unaudited) Assets Current Assets: Cash and cash equivalents $ 74,464 $ 36,562 Accounts receivable, net 43,443 23,581 Inventory, net 45,361 34,740 Prepaid expenses and other current assets 5,759 4,399 Total Current Assets 169,027 99,282 Restricted cash 76 71 Property and equipment, net 31,236 25,862 Operating lease right-of-use asset 8,163 4,174 Intangible assets, net 27,033 26,582 Goodwill 232,220 203,710 Other assets 686 2,861 Total Assets $ 468,441 $ 362,542 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable $ 30,066 $ 24,585 Accrued expenses and other current liabilities 17,809 13,109 Notes payable 4,795 10 Current portion of operating lease liabilities 2,015 1,738 Current portion of financing lease liabilities 1,180 306 Current portion of deferred revenue 12,678 10,572 Total Current Liabilities 68,543 50,320 Contingent consideration 1,357 1,316 Consideration payable 60,749 40,608 Operating lease liabilities, non-current portion 7,035 3,030 Financing lease liabilities, non-current portion 889 408 Other liabilities 386 645 Deferred revenue, non-current portion 8,924 5,258 Total Liabilities 147,883 101,585 Commitments and contingencies (Note 7) - - Stockholders’ Equity: Common stock, $ 0.001 par value, 500,000,000 shares authorized, 63,994,317 and 51,476,445 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively 64 51 Additional paid-in capital 728,558 597,982 Accumulated other comprehensive loss ( 2,751 ) ( 3,046 ) Accumulated deficit ( 405,313 ) ( 334,030 ) Total Stockholders’ Equity 320,558 260,957 Total Liabilities and Stockholders’ Equity $ 468,441 $ 362,542 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 BLINK CHARGING CO. Condensed Consolidated Statements of Operations (in thousands except for share and per share amounts) 2023 2022 2023 2022 For The Three Months Ended June 30, For The Six Months Ended June 30, 2023 2022 2023 2022 Revenues: Product sales $ 24,587 $ 8,828 $ 40,976 $ 16,880 Charging service revenue - company-owned charging stations 4,367 1,494 7,252 2,601 Network fees 1,667 472 3,295 633 Warranty 921 99 1,314 166 Grant and rebate 188 125 237 200 Car-sharing services 957 279 1,209 518 Other 155 189 227 288 Total Revenues 32,842 11,486 54,510 21,286 Cost of Revenues: Cost of product sales 13,159 6,369 24,890 12,471 Cost of charging services - company-owned charging stations 743 351 1,630 534 Host provider fees 2,239 821 3,886 1,372 Network costs 495 182 932 416 Warranty and repairs and maintenance 1,415 523 2,363 634 Car-sharing services 1,594 659 2,231 1,085 Depreciation and amortization 906 624 1,744 1,231 Total Cost of Revenues 20,551 9,529 37,676 17,743 Gross Profit 12,291 1,957 16,834 3,543 Operating Expenses: Compensation 37,990 10,779 60,699 20,038 General and administrative expenses 9,449 9,002 17,927 13,429 Other operating expenses 4,916 4,138 9,111 7,080 Total Operating Expenses 52,355 23,919 87,737 40,547 Loss From Operations ( 40,064 ) ( 21,962 ) ( 70,903 ) ( 37,004 ) Other Income (Expense): Interest expense ( 786 ) ( 139 ) ( 1,403 ) ( 139 ) (Loss) gain on foreign exchange ( 1,026 ) ( 244 ) 781 ( 241 ) Change in fair value of derivative and other accrued liabilities - ( 73 ) 10 ( 73 ) Other income (expense), net 600 ( 203 ) 650 ( 307 ) Total Other Income (Expense) ( 1,212 ) ( 659 ) 38 ( 760 ) Loss Before Income Taxes $ ( 41,276 ) $ ( 22,621 ) $ ( 70,865 ) $ ( 37,764 ) Provision for income taxes ( 206 ) - ( 418 ) - Net Loss $ ( 41,482 ) $ ( 22,621 ) $ ( 71,283 ) $ ( 37,764 ) Net Loss Per Share: Basic $ ( 0.67 ) $ ( 0.52 ) $ ( 1.20 ) $ ( 0.88 ) Diluted $ ( 0.67 ) $ ( 0.52 ) $ ( 1.20 ) $ ( 0.88 ) Weighted Average Number of Common Shares Outstanding: Weighted Average Number of Common Shares Outstanding: Basic 61,882,330 43,509,693 59,176,129 42,973,758 Diluted 61,882,330 43,509,693 59,176,129 42,973,758 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 BLINK CHARGING CO. Condensed Consolidated Statements of Comprehensive Loss (in thousands) 2023 2022 2023 2022 For the Three Months Ended June 30, For the Six Months Ended June 30, 2023 2022 2023 2022 Net Loss $ ( 41,482 ) $ ( 22,621 ) $ ( 71,283 ) $ ( 37,764 ) Other Comprehensive Income (Loss): Cumulative translation adjustments 1,145 ( 2,272 ) 295 ( 2,878 ) Total Comprehensive Loss $ ( 40,337 ) $ ( 24,893 ) $ ( 70,988 ) $ ( 40,642 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 BLINK CHARGING CO. Condensed Consolidated Statement of Changes in Stockholders’ Equity For the Three and Six Months Ended June 30, 2023 (in thousands except for share amounts) (unaudited) Accumulated Additional Other Total Common Stock Paid-In Comprehensive Accumulated Stockholders’ Shares Amount Capital Loss Deficit Equity Balance - January 1, 2023 51,476,445 $ 51 $ 597,982 $ ( 3,046 ) $ ( 334,030 ) $ 260,957 Common stock issued in public offering, net of issuance costs [1] 8,333,333 8 94,758 - - 94,766 Common stock issued in public offering, net of issuance costs 8,333,333 8 94,758 - - 94,766 Common stock issued upon exercises of warrants 557,733 1 834 - - 835 Stock-based compensation 5,866 - 7,757 - - 7,757 Other comprehensive loss - - - ( 850 ) - ( 850 ) Net loss - - - - ( 29,801 ) ( 29,801 ) Balance - March 31, 2023 60,373,377 $ 60 $ 701,331 $ ( 3,896 ) $ ( 363,831 ) $ 333,664 Stock-based compensation 376,778 - 8,708 - - 8,708 Common stock issued in public offering, net of issuance costs [2] 2,842,687 4 18,484 - - 18,488 Common stock issued in public offering, net of issuance costs 2,842,687 4 18,484 - - 18,488 Reclassification of common stock liability to equity 8,235 - 35 - - 35 Common stock issued upon cashless exercise of options and warrants 393,240 - - - - - Other comprehensive income - - - 1,145 - 1,145 Net loss - - - - ( 41,482 ) ( 41,482 ) Balance - June 30, 2023 63,994,317 $ 64 $ 728,558 $ ( 2,751 ) $ ( 405,313 ) $ 320,558 [1] Includes gross proceeds of $ 100,000 , less issuance costs of $ 5,234 . [2] Includes gross proceeds of $ 18,868 , less issuance costs of $ 380 . The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 BLINK CHARGING CO. Condensed Consolidated Statement of Changes in Stockholders’ Equity For the Three and Six Months Ended June 30, 2022 (in thousands except for share amounts) (unaudited) 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 upon exercises of warrants 16,811 - 69 - - 69 Stock-based compensation 144,497 1 1,932 - - 1,933 Other comprehensive loss - - - ( 606 ) - ( 606 ) Net loss - - - - ( 15,143 ) ( 15,143 ) Balance - March 31, 2022 42,584,822 43 460,047 ( 2,390 ) ( 257,613 ) 200,087 Balance 42,584,822 43 460,047 ( 2,390 ) ( 257,613 ) 200,087 Stock-based compensation - - 686 - - 686 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 exercise of warrants 3,131 - 13 - - 13 Common stock issued upon exercise of options 5,955 - 10 - - 10 Other comprehensive loss - - - ( 2,272 ) - ( 2,272 ) Net loss - - - - ( 22,621 ) ( 22,621 ) Balance - June 30, 2022 50,201,686 $ 50 $ 577,438 $ ( 4,662 ) $ ( 280,234 ) $ 292,592 Balance 50,201,686 $ 50 $ 577,438 $ ( 4,662 ) $ ( 280,234 ) $ 292,592 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 BLINK CHARGING CO. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) 2023 2022 For The Six Months Ended June 30, 2023 2022 Cash Flows From Operating Activities: Net loss $ ( 71,283 ) $ ( 37,764 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 6,825 3,393 Non-cash lease expense 833 215 Change in fair value of contingent consideration 41 73 Loss on disposal of fixed assets 33 - Change in fair value of derivative and other accrued liabilities 10 - Provision for bad debt 1,318 798 Provision for slow moving and obsolete inventory 65 161 Stock-based compensation: Common stock 10,500 962 Options 3,857 2,027 Warrants 5,082 - Changes in operating assets and liabilities: Accounts receivable and other receivables ( 20,630 ) ( 2,728 ) Inventory ( 11,855 ) ( 8,105 ) Prepaid expenses and other current assets ( 1,073 ) 4,270 Other assets 898 ( 1,339 ) Accounts payable and accrued expenses 7,379 4,491 Other liabilities ( 258 ) 50 Lease liabilities ( 2,232 ) ( 146 ) Deferred revenue 5,450 2,656 Total Adjustments 6,243 6,778 Net Cash Used In Operating Activities ( 65,040 ) ( 30,986 ) Cash Flows From Investing Activities: Purchase consideration of Envoy, net of cash acquired ( 4,660 ) - Purchase consideration of SemaConnect, net of cash acquired - ( 38,338 ) Purchase consideration of Electric Blue, net of cash acquired - ( 11,360 ) Capitalization of engineering costs ( 526 ) ( 288 ) Purchases of property and equipment ( 5,647 ) ( 2,247 ) Net Cash Used In Investing Activities ( 10,833 ) ( 52,233 ) Cash Flows From Financing Activities: Proceeds from sale of common stock in public offering, net [1] 113,254 - Proceeds from exercise of options and warrants 835 92 Repayment of financing liability in connection with finance lease ( 1,443 ) ( 71 ) Payment of financing liability in connection with internal use software ( 220 ) ( 235 ) Net Cash Provided By (Used In) Financing Activities 112,426 ( 214 ) Effect of Exchange Rate Changes on Cash and Cash Equivalents 1,354 ( 2,350 ) Net Increase (Decrease) In Cash and Cash Equivalents and Restricted Cash 37,907 ( 85,783 ) Cash and Cash Equivalents and Restricted Cash - Beginning of Period 36,633 175,049 Cash and Cash Equivalents and Restricted Cash - End of Period $ 74,540 $ 89,266 Cash and cash equivalents and restricted cash consisted of the following: Cash and cash equivalents $ 74,464 $ 85,136 Restricted cash 76 4,130 Total Cash and cash equivalents and restricted cash $ 74,540 $ 89,266 [1] Includes gross proceeds of $ 118,868 , less issuance costs of $ 5,614 . The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 BLINK CHARGING CO. Condensed Consolidated Statements of Cash Flows — Continued (in thousands) (unaudited) 2023 2022 For The Six Months Ended June 30, 2023 2022 Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $ - $ - Income taxes $ - $ 20 Non-cash investing and financing activities: Common stock issued as purchase consideration of SemaConnect $ - $ 113,837 Common stock issued as purchase consideration of Electric Blue $ - $ 2,852 Right-of-use assets obtained in exchange for lease obligations $ 4,765 $ 258 Property and equipment obtained in exchange for finance lease obligations $ 2,798 $ 931 Intangible assets obtained in exchange for financing liability $ 122 $ 660 Transfer of inventory to property and equipment $ ( 1,241 ) $ ( 2,024 ) Note receivable applied to purchase consideration of Envoy $ ( 1,321 ) $ - The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 BLINK CHARGING CO. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except for share and per share amounts) 1. BUSINESS ORGANIZATION, NATURE OF OPERATIONS, AND BASIS OF PRESENTATION 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 car-sharing program through Blink’s wholly owned subsidiary, Blink Mobility, LLC which allows customers the ability to rent electric vehicles through a subscription service. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of June 30, 2023 and for the six months then ended. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the operating results for the full year ending December 31, 2023 or any other period. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related disclosures of the Company as of December 31, 2022 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) on March 14, 2023 as part of the Company’s Annual Report on Form 10-K. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Since the Annual Report for the year ended December 31, 2022, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note. FOREIGN CURRENCY TRANSLATION The Company’s reporting currency is the United States dollar. The functional currency of certain subsidiaries is the Euro, Indian Rupee, and Pound Sterling. Assets and liabilities are translated based on the exchange rates at the balance sheet date ( 1.0846 for the Euro, 0.1219 for the Indian Rupee, and 1.2634 for the Pound Sterling as of June 30, 2023), while expense accounts are translated at the weighted average exchange rate for the period ( 1.0763 for the Euro, 0.0122 for the Indian Rupee, and 1.2538 for the Pound Sterling for the six months ended June 30, 2023). During the six months ended June 30, 2022, expense accounts are translated at the weighted average exchange rate for the period ( 1.0554 for the Euro, 0.0127 for the Indian Rupee, and 1.2281 for the Pound Sterling) . 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 gains and losses are charged to the statement of operations as incurred. Transaction (losses) gains attributable to foreign exchange were $ ( 1,026 ) and $ 781 during the three and six months ended June 30, 2023, respectively. Transaction losses attributable to foreign exchange were $ 244 and $ 241 during the three and six months ended June 30, 2022, respectively. REVENUE RECOGNITION The Company recognizes revenue primarily from four different types of contracts: ● Product sales – Revenue is recognized at the point where the customer obtains control of the goods and the Company satisfies its performance obligation, which generally is at the time it ships the product to the customer. ● Charging service revenue – company-owned charging stations - Revenue is recognized at the point when a particular charging session is completed. ● Network fees and other – Represents a stand-ready obligation whereby the Company is obligated to perform over a period of time and, as a result, revenue is recognized on a straight-line basis over the contract term. Network fees are billed annually. ● Other – Other revenues primarily comprises of revenues generated from alternative fuel credits. 8 BLINK CHARGING CO. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except for share and per share amounts) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED REVENUE RECOGNITION - CONTINUED The following table summarizes revenue recognized in the condensed consolidated statements of operations: SCHEDULE OF REVENUE RECOGNITION BY CONTRACT 2023 2022 2023 2022 For The Three Months Ended For The Six Months Ended June 30, June 30, 2023 2022 2023 2022 Revenues - Recognized at a Point in Time Product sales $ 24,587 $ 8,828 $ 40,976 $ 16,880 Charging service revenue - company-owned charging stations 4,367 1,494 7,252 2,601 Other 155 189 227 288 Total Revenues - Recognized at a Point in Time 29,109 10,511 48,455 19,769 Revenues - Recognized Over a Period of Time: Network and other fees 2,588 571 4,609 799 Total Revenues - Recognized Over a Period of Time 2,588 571 4,609 799 Revenues- Other Car-sharing services 957 279 1,209 518 Grant and rebate 188 125 237 200 Total Revenues - Other 1,145 404 1,446 718 Total Revenue $ 32,842 $ 11,486 $ 54,510 $ 21,286 The following table summarizes our revenue recognized in the condensed consolidated statements of operations by geographical area: SCHEDULE OF REVENUE RECOGNITION BY GEOGRAPHICAL AREA 2023 2022 2023 2022 For The Three Months Ended For The Six Months Ended June 30, June 30, 2023 2022 2023 2022 Revenues by Geographical Area U.S.A $ 24,435 $ 7,323 $ 37,610 $ 13,179 International 8,407 4,163 16,900 8,107 Total Revenue $ 32,842 $ 11,486 $ 54,510 $ 21,286 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 goods or services, the Company records deferred revenue until the performance obligations are satisfied. As of June 30, 2023, the Company had $ 21,602 related to contract liabilities where performance obligations have not yet been satisfied, which has been included within deferred revenue on the condensed consolidated balance sheet as of June 30, 2023. The Company expects to satisfy $ 12,678 of its remaining performance obligations for network fees, charging services, warranty revenue, product sales, and other and recognize the revenue within the next twelve months. During the three and six months ended June 30, 2023, the Company recognized $ 572 and $ 1,007 of revenues, respectively, related to network fees and warranty contracts, which were included in deferred revenues as of December 31, 2022. During the six months ended June 30, 2023, 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 their useful lives over the useful life of the charging station. During the three months ended June 30, 2023 and 2022, the Company recorded $ 188 and $ 125 , respectively, related to grant and rebate revenue. During the six months ended June 30, 2023 and 2022, the Company recorded $ 237 and $ 200 , respectively, related to grant and rebate revenue. During the three months ended June 30, 2023 and 2022, the Company recognized $ 52 and $ 51 respectively, of revenue related to alternative fuel credits. During the six months ended June 30, 2023 and 2022, the Company recognized $ 103 and $ 117 , respectively, of revenue related to alternative fuel credits. Furthermore, car-sharing services, which are not within scope of ASC 606, pertain to revenues and expenses related to a car-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 three months ended June 30, 2023 and 2022, the Company recognized $ 957 and $ 279 , respectively, related to car-sharing services revenue. During the six months ended June 30, 2023 and 2022, the Company recognized $ 1,209 and $ 518 , respectively, related to car-sharing services revenue. 9 BLINK CHARGING CO. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except for share and per share amounts) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED CONCENTRATIONS During the three months ended June 30, 2023 and 2022, sales to a significant customer represented 0 % and 10 % of total revenue, respectively. During the three months ended June 30, 2023, the Company made purchases from a significant supplier that represented 14 % of total purchases. During the six months ended June 30, 2023 and 2022, the Company made purchases from a significant supplier that represented 13 % of total purchases, respectively. As of June 30, 2023, accounts receivable from a significant customer represented 19 % of total accounts receivable. As of June 30, 2023, accounts payable to a significant vendor represented 16 % of total accounts payable. 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 2023 2022 For the Three and Six Months Ended June 30, 2023 2022 Warrants 1,150,152 3,255,114 Options 946,685 1,015,787 Total potentially dilutive shares 2,096,837 4,270,901 RECENTLY ADOPTED ACCOUNTING STANDARDS In July 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-03, “Presentation of Financial Statements (Topic 205), Income Statement—Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation—Stock Compensation (Topic 718): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280—General Revision of Regulation S-X: Income or Loss Applicable to Common Stock.” ASU 2023-03 amends the ASC for SEC updates pursuant to SEC Staff Accounting Bulletin No. 120; SEC Staff Announcement at the March 24, 2022 Emerging Issues Task Force (“EITF”) Meeting; and Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X: Income or Loss Applicable to Common Stock. These updates were immediately effective and did not have a significant impact on the Company’s condensed consolidated financial statements. 10 BLINK CHARGING CO. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except for share and per share amounts) 3. BUSINESS COMBINATION On April 18, 2023, the Company, Blink Mobility, LLC, a California limited liability company and wholly-owned subsidiary of the Company (“Mobility”), and Mobility Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Mobility (“Merger Sub”), entered into and, after all parties met the closing conditions, consummated the transactions contemplated under an Agreement and Plan of Merger, dated as of April 18, 2023 (the “Acquisition Agreement”), with Envoy Technologies, Inc., a Delaware corporation (“Envoy”). Pursuant to the Acquisition Agreement, Merger Sub merged with and into Envoy, whereupon the separate corporate existence of Merger Sub ceased, and Envoy was the surviving corporation of the merger and a wholly-owned subsidiary of Mobility (the “Acquisition”). Under the terms of the Acquisition Agreement, the acquisition consideration was up to $ 35,500 , paid as follows: (i) $ 6,000 in cash paid upon the closing of the Acquisition Agreement (the “Closing”); (ii) a promissory note of Mobility in the principal amount of $ 5,000 which bears interest at a rate of 6 % per annum and becomes due 12 months from Closing; (iii) a promissory note of Mobility in the principal amount of $ 2,000 which bears interest at a rate of 6 % per annum and becomes due 18 months from Closing; and (iv) (a) in the event of an initial public offering or direct listing of Mobility or Mobility’s successor within 24 months after the Closing (and shares of common stock of the Company are not issued in lieu thereof), $18,500, $21,000 or $22,500 worth of shares of common stock of Mobility or Mobility’s successor, depending on the timing of such offering or listing, (b) in the event there is no initial public offering or direct listing of Mobility or Mobility’s successor within 24 months after the Closing, $21,000 worth of shares of common stock of the Company, or (c) at the Company’s option, a combination of cash and common stock of the Company with an aggregate value of $21,000. The aggregate purchase price was $ 30,900 , which included a working capital deficit of $ 1,767 and closing date cash of $ 19 . The fair value of the consideration paid in the acquisition consisted of: (a) $6,000 in cash ($4,679 was paid at Closing and $1,321 was paid prior to Closing in the form of a note receivable); (b) $6,782 in aggregate promissory notes; and (c) $18,118 in common stock of Mobility subject to the conditions described above. The payment of shares of common stock of Mobility or Mobility’s successor, if any, will be based on the public offering price per share of such stock in the initial public offering. The payment of shares of common stock of the Company, if any, will be based on the average of the daily-weighted average prices for such stock on each of the 60 days ending on the day prior to issuance thereof. The common stock consideration payable in the amount of $ 18,118 is included within consideration payable on the condensed consolidated balance sheet as of June 30, 2023. The Company engaged a third-party independent valuation specialist to assist in the determination of fair values of tangible and intangible assets acquired and liabilities assumed for Envoy. The final determination of the fair value of assets and liabilities will be completed within the one-year measurement period as required by ASC Topic 805. The Envoy acquisition will necessitate the use of this measurement period to adequately analyze and assess the factors used in establishing the asset and liability fair values as of the acquisition date, including intangible assets, accounts receivable and certain fixed assets. 11 BLINK CHARGING CO. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except for share and per share amounts) 3. BUSINESS COMBINATIONS – CONTINUED The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the acquisition date of Envoy: SCHEDULE OF ASSETS ACQUIRED AND LIABILITIES ASSUMED Purchase Price Allocation Purchase Consideration: Cash $ 6,000 Deferred cash consideration 6,782 Common stock 18,118 Total Purchase Consideration $ 30,900 Less: Trade name $ 291 Customer relationships 4,170 Internally developed technology 334 Property and equipment 1,802 Other assets 52 Notes payable- non current portion ( 24 ) Lease liability- non current portion ( 1,730 ) Net working capital deficit ( 1,792 ) Fair Value of Identified Net Assets $ 3,103 Remaining Unidentified Goodwill Value $ 27,797 In connection with the acquisition of Envoy, the Company acquired intangible assets in the form of a trade name, customer relationships and internally developed technology. 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 30 % , 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 15 year useful life. 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. As of June 30, 2023, the estimated fair value of the common stock consideration payable was $ 18,118 . The Company uses a probability-weighted discounted cash flow approach as a valuation technique to determine the fair value of the common stock consideration payable on the acquisition date and at each reporting period. The significant unobservable inputs used in the fair value measurements are 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 common stock consideration liability. 12 BLINK CHARGING CO. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except for share and per share amounts) 3. BUSINESS COMBINATIONS – CONTINUED The components of net working capital deficit are as follows: Current assets: Cash $ 19 Accounts receivable 391 Prepaid expenses and other current assets 254 Total current assets $ 664 Less current liabilities: Accounts payable $ 853 Current portion of lease liability 591 Current portion of notes payable 7 Deferred revenue 229 Accrued expenses and other current liabilities 776 Total current liabilities $ 2,456 Net working capital deficit $ ( 1,792 ) 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 $ 27,797 from the acquisition of Envoy is not expected to be deductible for income tax purposes. The condensed consolidated financial statements of the Company include the results of operations of Envoy from April 18, 2023 to June 30, 2023 and do not include results of operations for periods prior to April 18, 2023. The results of operations of Envoy from April 18, 2023 to June 30, 2023 included revenues of $ 654 and a net loss of $ 851 . The following table presents the unaudited pro forma condensed consolidated results of operations for the three and six months ended June 30, 2023 and 2022 as if the acquisition of Envoy occurred at the beginning of fiscal year 2022. The pro forma information provided below is compiled from the preacquisition financial information of Envoy and includes pro forma adjustments to give effect to (i) interest expense related to notes issued as consideration and (ii) amortization expense associated with the acquired intangible assets. 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 2022 or (ii) future results of operations. SCHEDULE OF PROFORMA INFORMATION OF OPERATIONS 2023 2022 2023 2022 For the Three Months Ended June 30, For the Six Months Ended June 30, 2023 2022 2023 2022 Revenues $ 33,009 $ 12,275 $ 55,380 $ 22,760 Net loss $ ( 42,765 ) $ ( 23,780 ) $ ( 73,314 ) $ ( 39,758 ) 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 of $ 289 expensed as incurred and are recorded within general and administrative expenses on the condensed consolidated statements of operations. 13 BLINK CHARGING CO. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except for share and per share amounts) 4. STOCKHOLDERS’ EQUITY PUBLIC OFFERINGS 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 $ 94,766 in net proceeds after deducting the underwriting discount and offering expenses paid by the Company. 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. The underwriters did not exercise the over-allotment granted to them in connection with the 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 “ATM” equity offering program pursuant to which the Company may issue and sell from time to time shares of our common stock, having an aggregate offering price of up to $ 250,000 through the Agents, as the Company’s sales agents. The Company currently anticipate using the net proceeds from the sale of its shares of common stock under the ATM program to supplement our operating cash flows to fund EV charging station deployment and growth plans. The Company also plans to use any remaining proceeds it receives for working capital and other corporate purposes. The amounts and timing of our use of the net proceeds will depend on a number of factors, such as the timing and progress of our EV charging station deployment efforts, the timing and progress of any partnering and collaboration efforts and technological advances. During the six months ended June 30, 2023, the Company sold 2,757,168 shares of its common stock for gross proceeds of approximately $ 18,868 pursuant to the ATM program. As of June 30, 2023, 3,315,889 shares have been sold pursuant to the ATM program representing gross proceeds of approximately $ 26,565 . COMMON STOCK During the six months ended June 30, 2023, the Company issued an aggregate of 557,733 shares of common stock pursuant to exercises of warrants to purchase an aggregate of 557,733 shares of common stock for aggregate net proceeds of $ 835 . During the six months ended June 30, 2023, the Company issued an aggregate of 5,866 shares of common stock for services to a board member with an issuance date fair value of $ 132 . During the six months ended June 30, 2023, the Company issued an aggregate of 8,235 shares of common stock with an issuance date fair value of $ 35 in satisfaction of a common stock liability. During the six months ended June 30, 2023, the Company issued an aggregate of 393,240 shares of the Company’s common stock pursuant to the cashless exercise of 796,940 options and warrants. The options had a weighted average exercise price of $ 3.35 per share and the warrants had a weighted average exercise price of $ 4.25 per share. STOCK-BASED COMPENSATION The Company recognized stock-based compensation expense related to common stock, stock options and warrants for the three and six months ended June 30, 2023 of $ 7,775 and $ 19,439 , respectively, which is included within compensation expense on the condensed consolidated statements of operations. The Company recognized stock-based compensation expense related to common stock, stock options and warrants for the three and six months ended June 30, 2022 of $ 1,027 and $ 2,989 , respectively, which is included within compensation expense on the condensed consolidated statements of operations. As of June 30, 2023, there was $ 5,910 of unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period of 1.74 years. 5. RELATED PARTY TRANSACTIONS See Note 7 – Commitments and Contingencies – Purchase Commitments for disclosure of a commitment made to a related party. 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 the other three entities own 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. The Company did not record sales to Hellas during the three and six months June 30, 2023. During the three and six months ended June 30, 2022, the Company recognized sales of $ 0 and $ 68 , respectively, As of June 30, 2023 and December 31, 2022 the Company had a payable of approximately $ 85 and $ 84 , respectively, to Hellas. 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 June 30, 2023, 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 six months ended June 30, 2023 and 2022. BLINK CHARGING UK LIMITED As of June 30, 2023, several close family members of a senior management employee are providing services to Electric Blue Limited. For the three and six months ended June 30, 2023, these related parties have collectively provided services worth $ 39 and $ 125 , respectively, to Electric Blue Limited. Furthermore, as of June 30, 2023, there were purchase commitments of $ 23 to the same related parties. 14 BLINK CHARGING CO. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except for share and per share amounts) 6. LEASES OPERATING LEASES Total operating lease expenses for the three and six months ended June 30, 2023 were $ 655 and $ 1,149 , respectively, and for the three and six months ended June 30, 2022 were $ 175 and $ 343 , respectively, which were recorded in other operating expenses on the condensed consolidated statements of operations. Operating lease expenses consist of rent expense, common area maintenance adjustments and other expenses. As of June 30, 2023, the Company had $ 2,068 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 condensed consolidated balance sheet as of June 30, 2023. As of June 30, 2023, the Company did not have additional operating and financing leases that have not yet commenced. During the three and six months ended June 30, 2023, the Company recorded $ 106 and $ 116 , respectively, of interest expense related to finance leases, which were recorded within interest expense on the condensed consolidated statements of operations. During the three and six months ended June 30, 2023, the Company recorded amortization expense of $ 353 and $ 522 related to finance leases. There were no expenses incurred related to finance leases during the six months ended June 30, 2022. Supplemental cash flows information related to leases was as follows: SCHEDULE OF SUPPLEMENTAL CASH FLOWS INFORMATION RELATED TO LEASES 2023 2022 For The Six Months Ended June 30, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 2,232 $ 146 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 2,232 $ 146 Financing cash flows from finance leases $ 1,443 $ 71 Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases $ 1,443 $ 71 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 4,765 $ 258 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 4,765 $ 258 Finance leases $ 2,798 $ 931 Right-of-use assets obtained in exchange for lease obligations: Finance leases $ 2,798 $ 931 Weighted Average Remaining Lease Term Operating leases 3.21 3.53 Finance leases 1.99 2.75 Weighted Average Discount Rate Operating leases 7.1 % 3.8 % Finance leases 6.7 % 6.2 % Future minimum payments under non-cancellable leases as of June 30, 2023 were as follows: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS For the Years Ending December 31, Operating Lease Finance Lease 2023 $ 2,779 $ 1,283 2024 2,332 718 2025 1,854 164 2026 1,245 30 2027 902 11 Thereafter 1,593 - Total future minimum lease payments 10,705 2,206 Less: imputed interest ( 1,655 ) ( 137 ) Total $ 9,050 $ 2,069 15 BLINK CHARGING CO. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except for share and per share amounts) 7. COMMITMENTS AND CONTINGENCIES PURCHASE COMMITMENTS As of June 30, 2023, the Company had purchase commitments of approximately $ 33,000 , of which, approximately $ 23 is with a related party, 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. LITIGATION AND DISPUTES 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 June 30, 2023 as it determined that any such loss contingency was either not probable or estimable. 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 June 30, 2023 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 June 30, 2023 as it determined that any such loss contingency was either not probable or estimable. 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 June 30, 2023 as it determined that any such loss contingency was either not probable or estimable. WARRANTY The Company estimates an approximate cost of $ 390 to repair deployed chargers, which the Company owns as of June 30, 2023. 16 BLINK CHARGING CO. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except for share and per share amounts) 7. COMMITMENTS AND CONTINGENCIES – CONTINUED SEPARATION AGREEMENT On June 21, 2023, the Company and its former Chief Executive Officer Michael D. Farkas entered into a separation and general release agreement, dated as of June 20, 2023 (the “Separation Agreement”) pursuant to Mr. Farkas’ May 1, 2023 termination of employment and the terms of Mr. Farkas’ employment agreement, effective as of January 1, 2021 (the “Employment Agreement”). The Separation Agreement became effective on June 28, 2023, following a statutory revocation period. Under the terms of the Separation Agreement, the Company agreed to provide Mr. Farkas with (i) $ 6,028 in cash compensation, (ii) 383,738 shares of the Company’s common stock (approximately $ 2,600 was included in accrued expenses and other current liabilities as of June 30, 2023 related to the common stock since the shares had not been issued by the Company as of such date; as of the date of filing, the shares have not been issued), and (iii) reimbursement for medical benefits under COBRA for 24 months or until Mr. Farkas becomes eligible for coverage under another employer’s group plan. In addition, Mr. Farkas’ outstanding issued and unvested equity awards vested (as a result, the Company recognized approximately $ 2,900 of stock-based compensation expense during the three months ended June 30, 2023 related to the accelerated awards). In return, Mr. Farkas agreed that he has received all compensation to which he is entitled with respect to his employment or termination thereof (except for any obligations under the parties’ Commission Agreement, dated as of November 17, 2009) and Mr. Farkas released the Company from all claims that he might have related to his employment. Further, Mr. Farkas acknowledged that the terms of his non-competition and non-solicitation covenants under his Employment Agreement remain in effect, except that Mr. Farkas will be permitted to continue to work with certain individuals with whom he has a current relationship outside of the Company. 8. SUBSEQUENT EVENTS AMENDMENT TO MERGER AGREEMENT - SEMACONNECT On August 4, 2023, the Company, SemaConnect LLC, its wholly-owned subsidiary, and Shareholder Representative Services LLC, on behalf of the former stockholders of SemaConnect, Inc. (the “Stockholders’ Representative”), entered into an amendment (the “Amendment”) to the original Agreement and Plan of Merger, dated as of June 13, 2022 (the “Merger Agreement”), pursuant to which the Company acquired SemaConnect. Under the terms of the Amendment, the parties modified the manner by which the “Deferred Merger Consideration” (which remains $ 40,600 , plus accrued interest) will be paid by the Company. As amended, the Company agreed to pay: (a) within 15 days following our consummation of a financing transaction or series of related transactions in excess of $150,000 since the June 2022 closing of the Merger Agreement, $12,500 of the outstanding Deferred Merger Consideration in cash to the former stockholders of SemaConnect (the “Stockholders”), and (b) within 15 days following our consummation of any financing transaction or series of related transactions in excess of $250,000 since the closing of the Merger Agreement, fifty cents of every dollar of proceeds received by the Company in excess of $250,000 to repay the Deferred Merger Consideration until all Deferred Merger Consideration is paid in full to the Stockholders . The Company agreed that its payment obligations will be guaranteed by all of the Company’s United States subsidiaries and secured by a security interest on all assets of the Company and its United States subsidiaries. The Company also agreed that such obligations will be due and payable by April 1, 2025, shortening the original due date from June 13, 2025. Each Stockholder will have the right to convert its outstanding Deferred Merger Consideration (after the initial payment of $12,500, plus accrued interest) into shares of the Company’s common stock at a conversion price equal to 126% of the seven-day average prior to the date of the Amendment; provided that under no circumstance will the Company be obligated to issue such number of shares equal to or in excess of 20% of the Company’s common stock to the Stockholders, taking into account all common stock previously issued to such holders in the transaction. Under the Amendment, interest on the Deferred Merger Consideration was increased from 7% to 9.5% per annum following the date of the Amendment until full repayment of Deferred Merger Consideration . One half of the accrued interest may be paid in cash and the other half may be paid in kind. In consideration of the agreement by the Stockholders to enter into the Amendment, the Company agreed to issue shares of its common stock with a value of $ 1,000 (based on the average closing price on and over the three days before and after the date of the Amendment) to the Stockholders’ Representative. The Company also agreed to reimburse up to $50 of the Stockholders’ Representative’s out-of-pocket expenses. On June 30, 2023, the parties to the Amendment entered into an interim amendment to the Merger Agreement for administrative purposes, modifying the transaction amount threshold related to Deferred Cash Consideration in the Merger Agreement from $ 125,000 to $ 127,000 . 17