Blink Charging Co. 10-Q

ITEM 1. FINANCIAL STATEMENTS. BLINK CHARGING CO. Condensed Consolidated Balance Sheets (in thousands, except for share amounts) September 30, December 31, 2023 2022 (unaudited) Assets Current Assets: Cash and cash equivalents $ 66,678 $ 36,562 Accounts receivable, net 41,718 23,581 Inventory, net 47,386 34,740 Prepaid expenses and other current assets 5,059 4,399 Total Current Assets 160,841 99,282 Restricted cash 74 71 Property and equipment, net 34,002 25,862 Operating lease right-of-use asset 7,867 4,174 Intangible assets, net 17,277 26,582 Goodwill 144,881 203,710 Other assets 654 2,861 Total Assets $ 365,596 $ 362,542 Liabilities and Stockholders’ Equity Current Liabilities: Accounts payable $ 30,118 $ 24,585 Accrued expenses and other current liabilities 15,450 13,109 Notes payable 4,795 10 Current portion of operating lease liabilities 2,555 1,738 Current portion of financing lease liabilities 1,235 306 Current portion of deferred revenue 12,233 10,572 Total Current Liabilities 66,386 50,320 Contingent consideration 1,345 1,316 Consideration payable 60,762 40,608 Operating lease liabilities, non-current portion 6,277 3,030 Financing lease liabilities, non-current portion 1,109 408 Deferred revenue, non-current portion 9,702 5,258 Other liabilities 350 645 Total Liabilities 145,931 101,585 Commitments and contingencies (Note 9) - - Stockholders’ Equity: Common stock, $ 0.001 par value, 500,000,000 shares authorized, 67,077,698 and 51,476,445 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively 67 51 Additional paid-in capital 742,061 597,982 Accumulated other comprehensive loss ( 4,429 ) ( 3,046 ) Accumulated deficit ( 518,034 ) ( 334,030 ) Total Stockholders’ Equity 219,665 260,957 Total Liabilities and Stockholders’ Equity $ 365,596 $ 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) (unaudited) 2023 2022 2023 2022 For The Three Months Ended For The Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues: Product sales $ 35,059 $ 13,358 $ 76,035 $ 30,238 Charging service revenue - company-owned charging stations 3,859 1,256 11,111 3,857 Network fees 1,973 1,456 5,268 2,089 Warranty 849 309 2,163 475 Grant and rebate 47 83 284 283 Car-sharing services 903 367 2,112 885 Other 687 418 914 706 Total Revenues 43,377 17,247 97,887 38,533 Cost of Revenues: Cost of product sales 24,619 8,663 49,509 21,134 Cost of charging services - company-owned charging stations 566 235 2,196 769 Host provider fees 2,399 973 6,285 2,345 Network costs 407 508 1,339 924 Warranty and repairs and maintenance 561 803 2,924 1,437 Car-sharing services 931 470 3,162 1,555 Depreciation and amortization 1,109 814 2,853 2,045 Total Cost of Revenues 30,592 12,466 68,268 30,209 Gross Profit 12,785 4,781 29,619 8,324 Operating Expenses: Compensation 15,268 17,605 75,967 37,643 General and administrative expenses 8,539 6,594 26,466 20,023 Other operating expenses 5,444 5,079 14,555 12,159 Impairment of intangible assets 5,143 - 5,143 - Impairment of goodwill 89,087 - 89,087 - Total Operating Expenses 123,481 29,278 211,218 69,825 Loss From Operations ( 110,696 ) ( 24,497 ) ( 181,599 ) ( 61,501 ) Other Income (Expense): Interest expense ( 970 ) ( 917 ) ( 2,373 ) ( 1,056 ) Gain (loss) on foreign exchange 144 ( 595 ) 925 ( 836 ) Loss on extinguishment of notes payable ( 1,000 ) - ( 1,000 ) - Change in fair value of derivative and other accrued liabilities - 108 10 35 Other income (expense), net 608 254 1,258 ( 53 ) Total Other Expense ( 1,218 ) ( 1,150 ) ( 1,180 ) ( 1,910 ) Loss Before Income Taxes $ ( 111,914 ) $ ( 25,647 ) $ ( 182,779 ) $ ( 63,411 ) Provision for income taxes ( 807 ) - ( 1,225 ) - Net Loss $ ( 112,721 ) $ ( 25,647 ) $ ( 184,004 ) $ ( 63,411 ) Net Loss Per Share: Basic $ ( 1.74 ) $ ( 0.51 ) $ ( 3.02 ) $ ( 1.39 ) Diluted $ ( 1.74 ) $ ( 0.51 ) $ ( 3.02 ) $ ( 1.39 ) Weighted Average Number of Common Shares Outstanding: Basic 64,626,681 50,627,173 61,006,242 45,543,518 Diluted 64,626,681 50,627,173 61,006,242 45,543,518 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) (unaudited) 2023 2022 2023 2022 For the Three Months Ended For the Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net Loss $ ( 112,721 ) $ ( 25,647 ) $ ( 184,004 ) $ ( 63,411 ) Other Comprehensive Loss: Cumulative translation adjustments ( 1,678 ) ( 2,436 ) ( 1,383 ) ( 5,314 ) Total Comprehensive Loss $ ( 114,399 ) $ ( 28,083 ) $ ( 185,387 ) $ ( 68,725 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 BLINK CHARGING CO. Condensed Consolidated Statements of Changes in Stockholders’ Equity For the Three and Nine Months Ended September 30, 2023 (in thousands, except for share amounts) (unaudited) Shares Amount Capital Loss Deficit Equity Common Stock Additional Paid-In Accumulate Other Comprehensive Accumulated Total 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 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 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 Common stock issued in public offering, net of issuance costs [3] 2,477,948 3 9,122 - - 9,125 Common stock issued in public offering, net of issuance costs 2,477,948 3 9,122 - - 9,125 Surrender and cancellation of common stock ( 27,681 ) - ( 197 ) - - ( 197 ) Stock-based compensation 103,843 - 978 - - 978 Common stock issued in connection with extinguishment of notes payable 158,372 - 1,000 - - 1,000 Common stock issued in satisfaction of accrued issuable equity 370,899 - 2,600 - - 2,600 Other comprehensive loss - - - ( 1,678 ) - ( 1,678 ) Net loss - - - - ( 112,721 ) ( 112,721 ) Balance - September 30, 2023 67,077,698 $ 67 $ 742,061 $ ( 4,429 ) $ ( 518,034 ) $ 219,665 [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 . [3] Includes gross proceeds of $ 9,392 , less issuance costs of $ 267 . The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 BLINK CHARGING CO. Condensed Consolidated Statements of Changes in Stockholders’ Equity For the Three and Nine Months Ended September 30, 2022 (in thousands, except for share amounts) (unaudited) Common Stock Additional Paid-In Accumulated Other Comprehensive Accumulated Total 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 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 Stock-based compensation 617,328 1 4,872 - - 4,873 Common stock issued upon cashless exercise of warrants 8,093 - - - - - Common stock issued upon exercise of warrants 40,830 - 109 - - 109 Other comprehensive loss - - - ( 2,436 ) - ( 2,436 ) Other comprehensive income (loss) - - - ( 2,436 ) - ( 2,436 ) Net loss - - - - ( 25,647 ) ( 25,647 ) Balance - September 30, 2022 50,867,937 $ 51 $ 582,419 $ ( 7,098 ) $ ( 305,881 ) $ 269,491 Balance 50,867,937 $ 51 $ 582,419 $ ( 7,098 ) $ ( 305,881 ) $ 269,491 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 Nine Months Ended September 30, 2023 2022 Cash Flows From Operating Activities: Net loss $ ( 184,004 ) $ ( 63,411 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 9,694 5,175 Non-cash lease expense 1,695 596 Change in fair value of contingent consideration 28 - Gain on disposal of fixed assets ( 99 ) - Change in fair value of derivative and other accrued liabilities 10 1,128 Provision for bad debt 1,776 1,024 Provision for slow moving and obsolete inventory 376 ( 14 ) Loss on extinguishment of notes payable 1,000 - Impairment of goodwill 89,087 - Impairment of intangible assets 5,143 - Stock-based compensation: Common stock 11,486 4,986 Options 3,975 2,835 Warrants 5,082 - Changes in operating assets and liabilities: Accounts receivable and other receivables ( 19,655 ) ( 7,289 ) Inventory ( 14,844 ) ( 15,790 ) Prepaid expenses and other current assets ( 631 ) 3,372 Other assets 947 ( 391 ) Accounts payable and accrued expenses 9,101 6,811 Other liabilities ( 295 ) 54 Lease liabilities ( 3,014 ) ( 412 ) Deferred revenue 5,980 3,550 Total Adjustments 106,842 5,635 Net Cash Used In Operating Activities ( 77,162 ) ( 57,776 ) 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 ) Note receivable - ( 1,500 ) Capitalization of engineering costs ( 526 ) ( 797 ) Purchases of property and equipment ( 7,265 ) ( 2,230 ) Net Cash Used In Investing Activities ( 12,451 ) ( 54,225 ) Cash Flows From Financing Activities: Proceeds from sale of common stock in public offering, net [1] 122,379 - Proceeds from exercise of options and warrants 835 201 Repayment of notes payable - ( 588 ) Repayment of financing liability in connection with finance lease ( 2,103 ) ( 144 ) Repayment of financing liability in connection with internal use software ( 220 ) ( 235 ) Net Cash Provided By (Used In) Financing Activities 120,891 ( 766 ) Effect of Exchange Rate Changes on Cash and Cash Equivalents ( 1,159 ) ( 5,193 ) Net Increase (Decrease) In Cash and Cash Equivalents and Restricted Cash 30,119 ( 117,960 ) Cash and Cash Equivalents and Restricted Cash - Beginning of Period 36,633 175,049 Cash and Cash Equivalents and Restricted Cash - End of Period $ 66,752 $ 57,089 Cash and cash equivalents and restricted cash consisted of the following: Cash and cash equivalents $ 66,678 $ 57,019 Restricted cash 74 70 Total Cash and cash equivalents and restricted cash $ 66,752 $ 57,089 [1] Includes gross proceeds of $ 128,260 , less issuance costs of $ 5,881 . 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 Nine Months Ended September 30, 2023 2022 Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $ - $ - Income taxes $ - $ 55 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 Common stock issued in satisfaction of accrued issuable equity $ 2,600 $ - Surrender and cancellation of common stock $ ( 197 ) $ - Right-of-use assets obtained in exchange for lease obligations $ 5,386 $ 398 Property and equipment obtained in exchange for finance lease obligations $ 3,733 $ 931 Intangible assets obtained in exchange for financing liability $ 122 $ 660 Transfer of inventory to property and equipment $ ( 1,688 ) $ ( 3,131 ) 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, BASIS OF PRESENTATION AND RISKS AND UNCERTAINTIES Organization and Operations Blink Charging Co., through its wholly-owned subsidiaries (collectively, the “Company” or “Blink”), is a leading manufacturer, owner, operator and provider of electric vehicle (“EV”) charging equipment and networked EV charging services in the rapidly growing U.S. and international markets for EVs. Blink offers residential and commercial EV charging equipment and services, enabling EV drivers to recharge at various location types. Blink’s principal line of products and services is its nationwide Blink EV charging networks (the “Blink Networks”) and Blink EV charging equipment, also known as electric vehicle supply equipment (“EVSE”), and other EV-related services. The Blink Networks is a proprietary, cloud-based system that operates, maintains and manages Blink charging stations and handles the associated charging data, back-end operations and payment processing. The Blink Networks provide property owners, managers, parking companies, state and municipal entities, and other types of commercial customers (“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 an EV based ride-sharing business through its wholly-owned subsidiary, Blink Mobility LLC. 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) that are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of September 30, 2023 and for the three and nine months then ended. The results of operations for the three and nine months ended September 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. LIQUIDITY As of September 30, 2023, the Company had cash and working capital of $ 66,678 and $ 94,455 , respectively. During the nine months ended September 30, 2023, the Company sold an aggregate of 5,320,635 shares of common stock under an “at-the-market” equity offering program for aggregate gross proceeds of $ 28,260 , less issuance costs of $ 647 which were recorded as a reduction to additional paid-in capital. See Note 6 – 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. The Company has not yet achieved profitability and expects to continue to incur cash outflows from operations. It is expected that our operating expenses will continue to increase and, as a result, we will eventually need to generate significant product revenues to achieve profitability. Historically, we have been able to raise funds to support our business operations, although there can be no assurance that we will be successful in raising significant additional funds in the future. 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. During 2023, the Company commenced a plan designed to improve the Company’s liquidity by enhancing revenue economics and reducing selling, general, and administrative expenses. The plan seeks to achieve these goals by increasing gross profit through product optimization, integration of SemaConnect, Blink UK/EB and Blue Corner acquisitions, and reduction of operating expenses through cost avoidance and cost cutting strategies. There can be no assurances these strategies will be achieved. 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 ( 1.0575 for the Euro, 0.1202 for the Indian Rupee, and 1.2202 for the Pound Sterling as of September 30, 2023), while expense amounts are translated at the weighted average exchange rate for the period ( 1.0644 for the Euro, 0.0120 for the Indian Rupee, and 1.2285 for the Pound Sterling for the nine months ended September 30, 2023). Equity accounts are translated at historical exchange rates. During the nine months ended September 30, 2022, expense amounts are translated at the weighted average exchange rate for the period ( 0.9797 for the Euro, 0.0123 for the Indian Rupee, and 1.1156 for the Pound Sterling). 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 condensed consolidated statement of operations as incurred. Transaction gains attributable to foreign exchange were $ 144 and $ 925 during the three and nine months ended September 30, 2023, respectively. Transaction losses attributable to foreign exchange were $ 595 and $ 836 during the three and nine months ended September 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 for host-owned and monthly for Blink-owned stations. ● 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 Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues - Recognized at a Point in Time Product sales $ 35,059 $ 13,358 $ 76,035 $ 30,238 Charging service revenue - company-owned charging stations 3,859 1,256 11,111 3,857 Other 687 418 914 706 Total Revenues - Recognized at a Point in Time 39,605 15,032 88,060 34,801 Revenues - Recognized Over a Period of Time: Network and other fees 2,822 1,765 7,431 2,564 Total Revenues - Recognized Over a Period of Time 2,822 1,765 7,431 2,564 Revenues- Other Car-sharing services 903 367 2,112 885 Grant and rebate 47 83 284 283 Total Revenues - Other 950 450 2,396 1,168 Total Revenue $ 43,377 $ 17,247 $ 97,887 $ 38,533 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 Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Revenues by Geographical Area U.S.A $ 34,126 $ 12,478 $ 71,736 $ 25,657 International 9,251 4,769 26,151 12,876 Total Revenue $ 43,377 $ 17,247 $ 97,887 $ 38,533 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 September 30, 2023, the Company had $ 21,935 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 September 30, 2023. The Company expects to satisfy $ 12,233 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 nine months ended September 30, 2023, the Company recognized $ 771 and $ 1,778 of revenues, respectively, related to network fees and warranty contracts, which were included in deferred revenues as of December 31, 2022. During the nine months ended September 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 September 30, 2023 and 2022, the Company recorded $ 47 and $ 83 , respectively, related to grant and rebate revenue. During the nine months ended September 30, 2023 and 2022, the Company recorded $ 284 and $ 283 , respectively, related to grant and rebate revenue. During the three months ended September 30, 2023 and 2022, the Company recognized $ 65 and $ 45 , respectively, of revenue related to alternative fuel credits. During the nine months ended September 30, 2023 and 2022, the Company recognized $ 168 and $ 162 , 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 September 30, 2023 and 2022, the Company recognized $ 903 and $ 367 , respectively, related to car-sharing services revenue. During the nine months ended September 30, 2023 and 2022, the Company recognized $ 2,112 and $ 885 , 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 September 30, 2023, the Company made purchases from a significant supplier that represented 17 % of total purchases. During the nine months ended September 30, 2023 and 2022, the Company made purchases from a significant supplier that represented 20 % and 26 % of total purchases, respectively. As of September 30, 2023, accounts payable to two significant vendors represented 19 % and 18 % of total accounts payable, respectively. NET LOSS PER COMMON SHARE Basic net loss per common share is computed by dividing the 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 the 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 Nine Months Ended September 30, 2023 2022 Warrants 1,150,152 3,156,861 Options 1,035,867 1,055,217 Total potentially dilutive shares 2,186,019 4,212,078 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. RECENTLY ISSUED ACCOUNTING STANDARDS In August 2023, the FASB issued ASU 2023-05, “Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement,” under which an entity that qualifies as either a joint venture or a corporate joint venture as defined in the FASB Accounting Standards Codification (“ASC”) master glossary is required to apply a new basis of accounting upon the formation of the joint venture. Specifically, the ASU provides that a joint venture or a corporate joint venture (collectively, “joint ventures”) must initially measure its assets and liabilities at fair value on the formation date., the amendments are effective for all joint ventures within the ASU’s scope that are formed on or after January 1, 2025. Early adoption is permitted in any annual or interim period as of the beginning of the related fiscal year. The adoption of this pronouncement is not expected to have a material impact on the Company’s condensed consolidated financial statements. In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements.” For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. The adoption of this pronouncement is not expected to have a material 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 working capital deficit of $ 1,595 and closing date cash of $ 19 . The fair value of the consideration paid in the acquisition consisted of: (a) $6,000 in cash ($3,440 was paid at Closing and $2,560 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 September 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 805. The Company recognized certain measurement period adjustments, as summarized in the fair values of assets acquired and liabilities assumed in the tables below. Measurement period adjustments are recognized in the reporting period in which the adjustments are determined and calculated as if the accounting had been completed at the acquisition date. The 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 relevant 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 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 (Preliminary) Measurement Period Adjustments Purchase Price Allocation (As Revised) Purchase Consideration: Cash $ 6,000 $ - $ 6,000 Deferred cash consideration 6,782 - 6,782 Common stock 18,118 - 18,118 Total Purchase Consideration $ 30,900 $ - $ 30,900 Less: Trade name $ 291 $ ( 125 ) $ 166 Customer relationships 4,170 ( 2,245 ) 1,925 Internally developed technology 334 ( 159 ) 175 Non-compete agreements - 11 11 Property and equipment 1,802 - 1,802 Other assets 52 - 52 Notes payable - non-current portion ( 24 ) - ( 24 ) Lease liability - non-current portion ( 1,730 ) - ( 1,730 ) Debt-free net working capital deficit ( 1,792 ) 197 ( 1,595 ) Fair Value of Identified Net Assets $ 3,103 $ ( 2,321 ) $ 782 Remaining Unidentified Goodwill Value $ 27,797 $ 2,321 $ 30,118 In connection with the acquisition of Envoy, the Company acquired intangible assets in the form of a trade name, 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 trade name 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 trade name and internally developed technology and had to license it from a third party. The trademark was assigned a useful life of 2 years and the internally developed technology was assigned a useful life of 3 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 21 %, 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 useful life of 5.3 years. The Company used a discounted cash flow model when determining the fair value of the non-compete agreements. Significant assumptions included a discount rate of 21 % and an assumed income tax rate of 26 %. The non-compete agreements were assigned a useful life of 2 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. As of September 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 debt free net working capital deficit are as follows: Purchase Price Allocation (Preliminary) Measurement Period Adjustments Purchase Price Allocation (As Revised) Current assets: Cash $ 19 $ - $ 19 Accounts receivable 391 - 391 Prepaid expenses and other current assets 254 - 254 Total current assets $ 664 $ - $ 664 Less current liabilities: Accounts payable $ 853 $ - $ 853 Current portion of lease liability 591 - 591 Current portion of notes payable 7 - 7 Deferred revenue 229 - 229 Accrued expenses and other current liabilities 776 ( 197 ) 579 Total current liabilities $ 2,456 $ ( 197 ) $ 2,259 Net working capital deficit $ ( 1,792 ) $ 197 $ ( 1,595 ) 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 $ 30,118 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 September 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 September 30, 2023 included revenues of $ 1,896 and a net loss of $ 1,451 . The following table presents the unaudited pro forma condensed consolidated results of operations for the three and nine months ended September 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 September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues $ 43,544 $ 18,138 $ 98,757 $ 40,898 Net loss $ ( 113,977 ) $ ( 27,268 ) $ ( 185,867 ) $ ( 66,730 ) 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 $ 333 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. IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS During the three months ended September 30, 2023, the Company considered the decline in its stock price to be an indicator of impairment and, accordingly, performed a quantitative impairment assessment of its goodwill and intangible assets. This assessment involved comparing the estimated fair value of each of its reporting units to the reporting unit’s carrying value, inclusive of the goodwill balance allocated to the reporting unit. Estimation of the fair value of each reporting unit involved the projection of discounted future cash flows using certain assumptions that are subjective in nature, including assumptions related to historical and market growth rates and gross margin improvements, as well as future operating expense synergies and optimization, among other factors. Based on its analysis, the Company determined that the carrying value exceeded the estimated fair value as of September 30, 2023 in all reporting units . Consequently, the Company recognized a goodwill impairment charge of $ 89,087 in the condensed consolidated statements of operations during the three and nine months ended September 30, 2023. The fair value measurements used in the evaluation described above are considered to be Level 3 valuations within the fair value hierarchy, as the measurements involve projections of discounted future cash flows, which are derived from unobservable assumptions, the most subjective of which are the discount rates for each respective reporting unit. The discount rate used in for all reporting units ranged from 20 % to 22.5 %. Changes in goodwill during the nine months ended September 30, 2023 were as follows: SCHEDULE OF GOODWILL Beginning balance January 1, 2023 $ 203,710 Impairment of goodwill ( 89,087 ) Acquisition of Envoy 30,118 Effect of translation adjustments 140 Ending balance September 30, 2023 $ 144,881 Similarly, the Company determined that the carrying value of certain intangible assets had exceeded its undiscounted cash flows and, as a result, recorded an intangible asset impairment charge of $ 5,143 in the condensed consolidated statements of operations during the three and nine months ended September 30, 2023. Changes in intangible assets during the nine months ended September 30, 2023 were as follows: SCHEDULE OF INTANGIBLE ASSETS December 31, 2022 Additions Impairment September 30, 2023 Internal use software $ 1,123 $ - $ - $ 1,123 Capitalized engineering costs 237 - - 237 Trade name and patents 2,759 166 ( 13 ) 2,912 Customer relationships 21,398 1,925 ( 4,405 ) 18,918 Favorable leases 257 - - 257 Internally developed technology 5,031 175 ( 218 ) 4,988 Non-compete agreements 2,253 11 ( 507 ) 1,757 33,058 2,277 ( 5,143 ) 30,192 Less: accumulated amortization ( 6,912 ) ( 7,194 ) - ( 14,106 ) Plus: foreign currency translation 436 755 - 1,191 Intangible assets, net $ 26,582 $ ( 4,162 ) $ ( 5,143 ) $ 17,277 5. NOTES PAYABLE 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 U.S. 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, including 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 158,372 shares of its common stock with a fair value of $ 1,000 (“Consent Fee”) (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. The Amendment was determined to be an extinguishment of debt in accordance with ASC 470. As a result, the Consent Fee of $ 1,000 was accounted for as a loss on extinguishment of notes payable on the condensed consolidated statement of operations during the three and nine months ended September 30, 2023. Furthermore, the Company will recognize up to $ 50 of reimbursable legal fees as a debt discount to the face of the note, which will be amortized through interest expense over the term of the note. 14 BLINK CHARGING CO. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except for share and per share amounts) 6. STOCKHOLDERS’ EQUITY 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 $ 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 anticipates 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 nine months ended September 30, 2023, the Company sold 5,320,635 shares of its common stock pursuant to the ATM program for gross proceeds of approximately $ 28,260 and net proceeds of approximately $ 27,613 after deducting offering expenses. As of September 30, 2023, 6,066,119 shares have been sold pursuant to the ATM program representing gross proceeds of approximately $ 36,528 . Included within the 6,066,119 shares sold pursuant to the ATM, are 186,763 shares of the Company’s common stock sold for aggregate proceeds of $ 571 subsequent to September 30, 2023. COMMON STOCK During the nine months ended September 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 nine months ended September 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 nine months ended September 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 nine months ended September 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. During the nine months ended September 30, 2023, the Company issued an aggregate of 103,843 shares of common stock with an issuance date fair value of $ 128 as compensation to employees and its former Chief Executive Officer. During the nine months ended September 30, 2023, the Company received 27,681 shares of common stock with a value of $ 197 which were surrendered by the recipients for payroll tax purposes. These shares were surrendered and cancelled as of September 30, 2023. During the nine months ended September 30, 2023, the Company issued an aggregate of 370,899 shares of common stock with an issuance date fair value of $ 2,600 in satisfaction of accrued issuable equity to its former Chief Executive Officer. See Note 9 – Commitments and Contingencies – Separation Agreement for additional details. See Note 5 – Notes Payable for details of the issuance of 158,372 shares of common stock in connection with the extinguishment of notes payable. STOCK-BASED COMPENSATION The Company recognized stock-based compensation expense related to common stock, stock options and warrants for the three and nine months ended September 30, 2023 of $ 1,104 and $ 20,543 , 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 nine months ended September 30, 2022 of $ 4,832 and $ 7,821 , respectively, which is included within compensation expense on the condensed consolidated statements of operations. As of September 30, 2023, there was $ 5,008 of unrecognized stock-based compensation expense that will be recognized over the weighted average remaining vesting period of 1.57 years. 15 BLINK CHARGING CO. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except for share and per share amounts) 7. RELATED PARTY TRANSACTIONS See Note 9 – 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. The Company owns 40% of the Entity while the other three entities own 60% of the Entity. Subsequently, two of the three other parties exited the joint venture and the remaining other party acquired the ownership of the exiting partners. The Entity currently owns 100% of a Greek subsidiary, Blink Charging Hellas SA (“Hellas”), which operates in the Greek EV market. The obligation to fund the future operations of the Entity is limited Company’s 40% ownership. The Company did not record sales to Hellas during the three and nine months ended September 30, 2023. During the three and nine months ended September 30, 2022, the Company recognized sales of $0 and $68, respectively, As of September 30, 2023 and December 31, 2022 the Company had a payable of approximately $68 and $84, respectively, to Hellas. In addition, the Company had invested $92 and $0 as of September 30, 2023 and December 31, 2022, respectively, in 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 September 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 nine months ended September 30, 2023 and 2022 BLINK CHARGING UK LIMITED As of September 30, 2023, several close family members of a senior management employee are providing services to Electric Blue Limited. For the three and nine months ended September 30, 2023, these related parties have collectively provided services worth $ 119 and $ 244 , respectively, to Electric Blue Limited. Furthermore, as of September 30, 2023, there were purchase commitments of $ 0 to the same related parties. 8. LEASES OPERATING LEASES Total operating lease expenses for the three and nine months ended September 30, 2023 were $ 578 and $ 1,727 respectively, and for the three and nine months ended September 30, 2022 were $ 185 and $ 528 , respectively, which were recorded in other operating expenses on the condensed consolidated statements of operations. Operating lease expenses consist of rent expense, CAM adjustments and other expenses. As of September 30, 2023, the Company did not have additional operating and financing leases that have not yet commenced. During the three and nine months ended September 30, 2023, the Company recorded $ ( 1 ) and $ 115 , respectively, of interest (benefit) expense related to finance leases, which were recorded within interest expense on the condensed consolidated statements of operations. During the three and nine months ended September 30, 2023, the Company recorded amortization expense of $ 394 and $ 916 related to finance leases. There were no expenses incurred related to finance leases during the nine months ended September 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 Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 3,014 $ 412 Cash paid for amounts included in the measurement of lease liabilities ; Operating cash flows from operating leases $ 3,014 $ 412 Financing cash flows from finance leases $ 2,103 $ 144 Cash paid for amounts included in the measurement of lease liabilities: Financing cash flows from finance leases $ 2,103 $ 144 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 5,386 $ 398 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 5,386 $ 398 Finance leases $ 3,733 $ 931 Right-of-use assets obtained in exchange for lease obligations: Finance leases $ 3,733 $ 931 Weighted Average Remaining Lease Term Operating leases 3.10 3.21 Finance leases 2.00 2.50 Weighted Average Discount Rate Operating leases 7.7 % 3.8 % Finance leases 6.5 % 6.2 % 16 BLINK CHARGING CO. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except for share and per share amounts) 8. LEASES – CONTINUED Future minimum payments under non-cancellable leases as of September 30, 2023 were as follows: SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS For the Years Ending December 31, Operating Lease Finance Lease 2023 $ 3,038 $ 1,378 2024 2,397 813 2025 1,775 297 2026 1,209 27 2027 777 21 Thereafter 1,448 - Total future minimum lease payments 10,644 2,536 Less: imputed interest ( 1,812 ) ( 192 ) Total $ 8,832 $ 2,344 9. COMMITMENTS AND CONTINGENCIES PURCHASE COMMITMENTS As of September 30, 2023, the Company had purchase commitments of approximately $ 49,492 , 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 The Company may be subject to lawsuits, investigations, intellectual property matters, claims and proceedings, including, but not limited to, contractual disputes with vendors and customers and liabilities related to employment, health and safety matters that may arise in the ordinary course of business. The Company accrues for losses that are both probable and reasonably estimable. Loss contingencies are subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss can be complex and subject to change. The Company believes it has recorded adequate provisions for any such lawsuits, investigations, claims, and proceedings as of September 30, 2023, and the Company believes it was not reasonably possible that a material loss had been incurred in excess of the amounts recognized in the condensed consolidated financial statements. Given the inherent uncertainties of litigation, the ultimate outcome of the ongoing matters described herein cannot be predicted with certainty. While litigation is inherently unpredictable, the Company believes it has valid defenses with respect to the legal matters pending against it. However, future events or circumstances, currently unknown to management, may potentially have a material effect on the Company’s financial position, liquidity or results of operations in any future reporting period. 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 former 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 to defend the action vigorously. The Company has not recorded an accrual related to this matter as of September 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 September 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 to defend the action vigorously. The Company has not recorded an accrual related to this matter as of September 30, 2023, as it determined that any such loss contingency was either not probable or estimable. 17 BLINK CHARGING CO. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands except for share and per share amounts) 9. COMMITMENTS AND CONTINGENCIES – CONTINUED LITIGATION AND DISPUTES – CONTINUED 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 September 30, 2023, as it determined that any such loss contingency was either not probable or estimable. WARRANTY The Company estimates an approximate cost of $ 567 to repair deployed chargers, which the Company owns as of September 30, 2023. 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 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 became vested and, as a result, the Company recognized approximately $ 2,900 of stock-based compensation expense during the nine months ended September 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. During the three months ended September 30, 2023, the Company issued 383,738 shares of common stock with an issuance date fair value of $ 2,900 to Mr. Farkas in connection with the Separation Agreement of which 370,899 shares of common stock with a fair value of $ 2,600 was previously accrued for as of June 30, 2023. 18