Blink Charging Co. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Special Note Regarding Forward-Looking Information The following discussion and analysis of the results of operations and financial condition of Blink Charging Co. (together with its subsidiaries, “Blink” or the “Company”) as of September 30, 2024 and for the three and nine months ended September 30, 2024 and 2023 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this Quarterly Report on Form 10-Q. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us,” “we,” “our” and similar terms refer to Blink. This Quarterly Report contains forward-looking statements as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this Quarterly Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions, are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements. Factors that may affect our results include, but are not limited to, the risks and uncertainties set forth under Part 1, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and under a similar item in subsequent periodic reports, as discussed elsewhere in this Quarterly Report, particularly in Part II, Item IA - Risk Factors. Any one or more of these uncertainties, risks and other influences, could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. Except as required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise. U.S. dollars are reported in thousands, except for share and per share amounts. Overview We are a leading manufacturer, owner, operator and provider of electric vehicle (“EV”) charging equipment and networked EV charging services in the continuously 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 Blink EV charging network (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. To capture more revenues derived from providing EV charging equipment to commercial customers and to help differentiate Blink in the EV infrastructure market, Blink offers Property Partners a comprehensive range of solutions for EV charging equipment and services that generally fall into one of the business models below, differentiated by who own the equipment and who bears the costs of installation, equipment, and maintenance, and the percentage of revenue shared. ● In our Blink-owned turnkey business model, we incur the charging equipment and installation costs. We own and operate the EV charging station and provide connectivity of the charging station to the Blink Networks. In this model, which favors recurring revenues, we incur most costs associated with the EV charging stations; thus, we retain substantially all EV charging revenues after deducting network connectivity and processing fees. Our agreement with the Property Partner typically lasts seven years with extensions that can bring the term to 21 years. ● In our Blink-owned hybrid business model, we incur the charging equipment costs while the Property Partner incurs the installation costs. We own and operate the EV charging station and provide connectivity to the Blink Networks. In this model, since the Property Partner incurs the installation, we share a more generous portion of the EV charging revenues with the Property Partner after deducting Blink Network connectivity and processing fees. Our agreement with the Property Partner lasts five years with extensions that can bring the term to 15 years. ● In our host-owned business model, the Property Partner purchases, owns and operates the Blink EV charging station and incurs the installation costs. We work with the Property Partner by providing site recommendations, connectivity to the Blink Networks, payment processing, and optional maintenance services. In this model, the Property Partner retains and keeps all the EV charging revenues after deducting Blink Network connectivity and processing fees. ● In our Blink-as-a-Service model, we own and operate the EV charging station, while the Property Partner incurs the installation costs. The Property Partner pays us a fixed monthly fee for the service and keeps all the EV charging revenues after deducting Blink network connectivity and processing fees. Typically, our agreement with the Property owner typically lasts five years. We also own and operate an EV car-sharing program through our wholly owned subsidiary, Envoy Mobility, Inc. This program allows customers to share electric vehicles through subscription services and charge those cars through our charging stations. In pursuit of our commitment to fostering the widespread adoption of EVs through the establishment and management of EV charging infrastructure on a global scale, we remain steadfast in our dedication to mitigating climate change. This dedication is evidenced by our efforts to diminish greenhouse gas emissions stemming from gasoline-powered vehicles With the goal of being a leader in the build-out of EV charging infrastructure and maximizing our share of the EV charging market, we have established strategic commercial, municipal, and retail partnerships across industry verticals and encompassing numerous transit/destination locations, including airports, auto dealers, healthcare/medical, hotels, mixed-use, municipal sites, multifamily residential and condos, parks and recreation areas, parking lots, religious institutions, restaurants, retailers, schools and universities, stadiums, supermarkets, transportation hubs, and workplace locations. 17 We have agreements with significant customers, including the United States Postal Service (USPS), Mack Trucks, McArthurGlen, BluePoint, Mike Albert Fleet Solutions, Royal Farms, John Henry General Store, Moberly Motor Company, Arcos Dorados (McDonald’s Puerto Rico), AAA, Allegiant Stadium (Las Vegas), Village of Tuckahoe (NY), Miami Beach (FL), Metropolitan Government of Nashville-Davidson County, and Salt Lake City International Airport, Mitsubishi, Cushman & Wakefield, Triple J, Q-Park, Best Buy, UBS, Bosch Mexico, Porsche Puerto Rico and Guatemala, Veris Residential, Greystar, Cambium, and the cities of Atlanta (GA), Rockford (IL), Newton (IA), and Winslow (NJ), Leeds (UK) that expand our potential for unit sales and deployments. As of September 30, 2024, we contracted, sold or deployed 105,239 chargers, of which 84,696 were on Blink Networks (comprised of 60,164 Level 2 commercial chargers, 1,278 DCFC commercial chargers, 682 residential chargers, and 22,572 chargers pending to be commissioned). Included on Blink Networks are 6,442 chargers owned by us. The remaining 20,543 were non-networked, on other networks, international sales, or deployments (comprised of 4,012 Level 2 commercial chargers, 72 DC Fast Charging chargers, 12,267 residential Level 2 Blink EV chargers, 2,467 sold to other U.S. networks and, 1,725 sold internationally). Blink networked chargers include public and private chargers, as designated by stations owners, and are net of swap-outs, replacement units, and decommissioned units. Certain commercial chargers include chargers installed in residential settings for commercial purposes. All chargers, including at all international Blink locations, are categorized based on US Department of Energy guidelines. As reflected in our condensed consolidated financial statements as of September 30, 2024, we had cash and cash equivalents of $ 64,584 , working capital of $ 96,596 and an accumulated deficit of $ 662,344 . During the three and nine months ended September 30, 2024, we incurred net losses of $ 87,389 and $ 124,621 , respectively. During the nine months ended September 30, 2024, we used cash in operations of 34,830. We have not yet achieved profitability. Recent Developments At-the-Market Offering On September 2, 2022, we entered into a Sales Agreement (the “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, as our sales agents (collectively, the “Agents”) to conduct an at-the-market (“ATM”) equity offering program, pursuant to which we may publicly 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. We are using the net proceeds from the sale of our shares of common stock under the ATM equity offering program to supplement our operating cash flows in order to fund our EV charging station deployments and other growth plans. We are also using a portion of the net proceeds we receive for working capital and other corporate purposes. The amounts and timing of our use of the net proceeds will depend on a number of factors, such as the timing and progress of our EV charging station deployment efforts, the timing and progress of any partnering and collaboration efforts, and technological advances. Under the Sales Agreement, the Agents are entitled to an aggregate fixed commission of up to 3% of the gross proceeds from shares sold and we have provided the Agents with customary indemnification rights. On November 16, 2023, we entered into an Amendment to the Sales Agreement, effective as of November 2, 2023 (the “Amendment”), with the Agents. The Amendment revised the term “Registration Statement,” as used in the Sales Agreement, to our new shelf registration statement on Form S-3, as amended (File No. 333-275123), and revised the term “Prospectus Supplement,” as used in the Sales Agreement, to our prospectus supplement dated November 2, 2023, relating to the ATM equity offering program contemplated by the Sales Agreement. During the year ended December 31, 2023, the Company sold 30,914,695 shares of its common stock pursuant to the ATM program for gross proceeds of approximately $116,651 and net proceeds of approximately $114,317 after deducting offering expenses. During the nine months ended September 30, 2024, the Company sold 8,177,472 shares of its common stock pursuant to the ATM program for gross proceeds of approximately $25,651 and net proceeds of approximately $25,070 after deducting offering expenses. As of September 30, 2024, 39,650,888 shares have been sold pursuant to the ATM program, representing gross proceeds of approximately $149,999. Product and Service Offerings We offer a variety of EV charging products and services to Property Partners and EV drivers. EV Charging Solutions ● Level 2. We offer a wide range of Level 2 (AC) EV charging equipment, ideal for commercial and residential use, with the North American standard J1772 connector, the North American Charging Standard (NACS) connector, and the Type 2 connector compatible with electric vehicles in Europe and across Latin America. ● Our commercial Level 2 chargers consist of the EQ, HQ, MQ, and IQ 200 families and the Series 4, 6, 7, and 8 families, which are available in pedestal, wall mount, and pole mount configurations. The MQ and IQ 200, along with the Series 6, 7, and 8 chargers offer an optional cable management system. Additionally, we offer three residential Level 2 chargers for the Americas: the wall-mounted HQ 200, Series 4, and a smart charging cable, the PQ 150, designed for European markets. Our commercial and residential chargers (except the non-networked HQ 150) can connect to the Blink Networks or a local network. Level 2 charging stations typically provide a full charge in two to eight hours. Level 2 chargers are ideally suited for low-cost installations and frequently used parking locations, such as workplaces, multifamily residential, retail, hospitality, and mixed-use, parking garages, municipalities, colleges/schools, hospitals and airports. ● International Products. We offer Level 2 AC and DC products for the rapidly expanding international markets targeted at the residential, workplace, retail, parking garages, leasing companies, hospitality, and other locations. These products are available with the Type 2, GBT, and CCS 2 connectors and include the PQ 150, Series 3 (an ideal product for the 2/3-wheeled vehicles), and the EQ 200. ● Mobile Charger . We offer the HQ 200-M Level 2 charger for the mobile/emergency charging market which requires a portable charger to be used for roadside or other use cases where a connection to the electricity grid is not available. 18 ● DCFC. We offer a complete line of DC Fast Charging equipment (“DCFC”) that ranges from 30kW to 360kW, supports the ‘CHAdeMo’ , CCS1, and NACS connectors, and typically provide an 80% charge in less than 30 minutes. Installation of DCFC stations and grid requirements are typically greater than Level 2 charging stations and are ideally suited for transportation hubs and locations between travel destinations. These include the Series 9 30kW DC Fast Charger that works ideally for the fleet and auto dealership segments and is available in wall and pedestal mount configurations, the Blink 30kW DC Fast Charger that boasts a small footprint providing up to 100 amps of output, and the Blink 60kW – 360kW DC Fast Charger that provides from 140 to 500 amps of power. ● Blink Network. The Blink Network is a cloud-based platform that manages our network of EV chargers around the world for remote monitoring, management, payment processing, customer support, and other features required for operating the Blink Networks of EV charging locations. ● Blink Charging Mobile App. We offer Blink Charging Mobile Apps (iOS and Android) that provide EV drivers control by giving them improved search capabilities which allows them to search for nearby amenities, as well as chargers by zip-codes, city, business, category, or address, and expanded keyword search. The app also includes payment functionality, eliminating the need for a credit card. ● Fleet Management . We offer Fleet Management applications, targeted at commercial, municipal, and federal fleets for planning, managing, and optimizing their departure schedules and energy costs. Our Fleet Management applications can be used as standalone tools or integrated into existing fleet management solutions, which allows Blink to be a flexible and value-added solution within existing software stacks. Key Factors Affecting Operating Results We believe our performance and future success depend on several factors, including those discussed below: Competition - The EV charging equipment and service market is highly competitive, and we expect the market to become increasingly competitive as new entrants enter this growing market. Our products and services compete on product performance and features, the total cost of ownership, origin of manufacturing, sales capabilities, financial stability, brand recognition, product reliability, and the installed base’s size. Existing competitors may expand their product offerings and sales strategies, and new competitors may enter the market. If our market share decreases due to increased competition, its revenue and ability to generate profits in the future may be negatively impacted. Growth - Our growth is highly dependent upon the adoption by consumers of EVs, and we are subject to a risk of any reduced demand for EVs. The market for alternative fuel vehicles is still relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements, long development cycles for EV original equipment manufacturers, and changing consumer demands and behaviors. Factors that may influence the purchase and use of alternative fuel vehicles, and specifically EVs, include perceptions about EV quality, safety (in particular with respect to battery chemistries), design, performance and cost; the limited range over which EVs may be driven on a single battery charge and concerns about running out of power while in use; improvements in the fuel economy of the internal combustion engine; consumers’ desire and ability to purchase a luxury automobile or one that is perceived as exclusive; the environmental consciousness of consumers; volatility in the cost of oil and gasoline; consumers’ perceptions of the dependency of the United States on oil from unstable or hostile countries and the impact of international conflicts; government regulations and economic incentives promoting fuel efficiency and alternate forms of energy; access to charging stations, standardization of EV charging systems and consumers’ perceptions about convenience and cost to charge an EV; and the availability of tax and other governmental incentives to purchase and operate EVs or future regulation requiring increased use of nonpolluting vehicles. If the market for EVs does not gain broad market acceptance or develops slower than we expect, our business, prospects, financial condition and operating results may be adversely affected. Regulations - Our business is subject to a variety of federal, state and international laws and regulations, including those with respect to government incentives promoting fuel efficiency and alternate forms of energy, electric vehicles and others. These laws and regulations, and the interpretation or application of these laws and regulations, could change. Any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes, fiscal tightening or other reasons may result in diminished revenues from government sources and diminished demand for our products. In addition, new laws or regulations affecting our business could be enacted. These laws and regulations are frequently costly to comply with and may divert a significant portion of management’s attention. Changes to these applicable laws or regulations could affect business and/or harm our customers, adversely affecting our business, financial condition and results of operations. Expansion through Acquisitions - We may pursue strategic domestic and international acquisitions to expand our operations. Risks in acquisition transactions include difficulties in the integration of acquired businesses into our operations and control environment, difficulties in assimilating and retaining employees and intermediaries, difficulties in retaining the existing clients of the acquired entities, assumed or unforeseen liabilities that arise in connection with the acquired businesses, the failure of counterparties to satisfy any obligations to indemnify us against liabilities arising from the acquired businesses, and unfavorable market conditions that could negatively impact our growth expectations for the acquired businesses. Fully integrating an acquired company or business into our operations may take a significant amount of time. If we are unable to integrate or pursue strategic acquisitions, our financial condition and results of operations would be negatively impacted. 19 Results of Operations Three and Nine Months Ended September 30, 2024 Compared With Three and Nine Months Ended September 30, 2023 For The Three Months Ended For The Nine Months Ended September 30, September 30, 3 Months 9 Months 2024 2023 2024 2023 Difference $ Difference % Difference $ Difference % Revenues: Product sales $ 13,448 $ 35,059 $ 64,538 $ 76,035 $ (21,611 ) -62 % $ (11,497 ) -15 % Charging service revenue - company-owned charging stations 5,254 3,859 15,217 11,111 1,395 36 % 4,106 37 % Network fees 2,332 1,973 6,304 5,268 359 18 % 1,036 20 % Warranty 1,405 849 3,698 2,163 556 65 % 1,535 71 % Grant and rebate 982 47 1,617 284 935 1989 % 1,333 469 % Car-sharing services 1,168 903 3,467 2,112 265 29 % 1,355 64 % Other 598 687 1,176 914 (89 ) -13 % 262 29 % Total Revenues 25,187 43,377 96,017 97,887 (18,190 ) -42 % (1,870 ) -2 % Cost of Revenues: Cost of product sales 9,122 24,619 39,965 49,509 (15,497 ) -63 % (9,544 ) -19 % Cost of charging services - company-owned charging stations 724 566 1,924 2,196 158 28 % (272 ) -12 % Host provider fees 2,982 2,399 9,306 6,285 583 24 % 3,021 48 % Network costs 577 407 1,816 1,339 170 42 % 477 36 % Warranty and repairs and maintenance 294 561 1,880 2,924 (267 ) -48 % (1,044 ) -36 % Car-sharing services 1,156 931 3,302 3,162 225 24 % 140 4 % Depreciation and amortization 1,213 1,109 4,573 2,853 104 9 % 1,720 60 % Total Cost of Revenues 16,068 30,592 62,766 68,268 (14,524 ) -47 % (5,502 ) -8 % Gross Profit 9,119 12,785 33,251 29,619 (3,666 ) -29 % 3,632 12 % Operating Expenses: Compensation 15,159 15,268 47,770 75,967 (109 ) -1 % (28,197 ) -37 % General and administrative expenses 7,972 8,539 23,782 26,466 (567 ) -7 % (2,684 ) -10 % Other operating expenses 4,739 5,300 16,135 13,630 (561 ) -11 % 2,505 18 % Change in fair value of consideration payable 364 - 2,811 - 364 0 % 2,811 0 % Impairment of intangible assets - 5,143 - 5,143 (5,143 ) -100 % (5,143 ) -100 % Impairment of goodwill 69,111 89,087 69,111 89,087 (19,976 ) -22 % (19,976 ) -22 % Total Operating Expenses 97,345 123,337 159,609 210,293 (25,992 ) -21 % (50,684 ) -24 % Loss From Operations (88,226 ) (110,552 ) (126,358 ) (180,674 ) 22,326 -20 % 54,316 -30 % Other Income (Expense): Interest expense (2 ) (970 ) (475 ) (2,373 ) 968 -100 % 1,898 -80 % Gain (loss) on extinguishment of notes payable 36 (1,000 ) 36 (1,000 ) 1,036 -104 % 1,036 -104 % Change in fair value of derivative and other accrued liabilities 4 - (11 ) 10 4 0 % (21 ) -210 % Other expense (2 ) (112 ) (2 ) (62 ) 110 -98 % 60 -97 % Dividend and interest income 783 720 2,363 1,320 63 9 % 1,043 79 % Total Other Income (Expense) 819 (1,362 ) 1,911 (2,105 ) 2,181 -160 % 4,016 -191 % Loss Before Income Taxes $ (87,407 ) $ (111,914 ) $ (124,447 ) $ (182,779 ) $ 24,507 -22 % $ 58,332 -32 % Benefit (provision) for income taxes 18 (807 ) (174 ) (1,225 ) 825 -102 % 1,051 -86 % Net Loss $ (87,389 ) $ (112,721 ) $ (124,621 ) $ (184,004 ) $ 25,332 -22 % $ 59,383 -32 % 20 Three Months Ended September 30, 2024 Compared With Three Months Ended September 30, 2023 Revenues Total revenue for the three months ended September 30, 2024 decreased by $ 18,190 , or 42%, to $ 25,187 compared to $43,377 during the three months ended September 30, 2023. Revenue from product sales was $13,448 for the three months ended September 30, 2024 as compared to $35,059 during the three months ended September 30, 2023, a decrease of $21,611, or 62%. This decrease was attributable to decreased sales of commercial chargers, DC fast chargers and residential chargers when compared to the same period in 2023. Charging service revenue from Company-owned charging stations was $5,254 for the three months ended September 30, 2024 as compared to $3,859 for the three months ended September 30, 2023, an increase of $1,395, or 36%. The increase is due to the increase in utilization of chargers and an increased number of chargers on the Blink Networks. Network fee revenues were $2,332 for the three months ended September 30, 2024 as compared to $1,973 for the three months ended September 30, 2023, an increase of $359, or 18%. The increase was attributable to increases in host owned units during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. Warranty revenues were $ 1,405 for the three months ended September 30, 2024 as compared to $849 for the three months ended September 30, 2023, an increase of $ 556 , or 65 %. The increase was primarily attributable to an increase in warranty contracts sold for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023. As of September 30, 2024, we recorded a liability of $3,112 which represents the estimated cost of existing backlog of known warranty cases. Grant and rebate revenues were $982 during the three months ended September 30, 2024 as compared to $47 during the three months ended September 30, 2023, an increase of $935, or 1,989%. Grant and rebates relating to equipment and the related installation are deferred and amortized in a manner consistent with the depreciation expense of the related assets over their useful lives. The decrease in revenue was primarily related to the timing of the amortization of previous years’ state grants/rebates associated with the installation of chargers during the three months ended September 30, 2024 and 2023. Car-sharing services revenues were $1,168 during the three months ended September 30, 2024 as compared to $903 during the three months ended September 30, 2023, an increase of $265, or 29%. The increase in revenues is due to the increase in properties and participants subscribing to the car-sharing services. Other revenue decreased by $89 or 13% to $598 for the three months ended September 30, 2024 as compared to $687 for the three months ended September 30, 2023. The increase was primarily attributable to higher Low Carbon Fuel Standard (LCFS) credits generated during the three months ended September 30, 2024 compared to the same period in 2023. We generate these credits from the electricity utilized by our electric car charging stations as a byproduct from our charging services in the states of California and Oregon. Cost of Revenues Cost of revenues primarily consists of electricity reimbursements, revenue share payments to our Property Partner hosts, the cost of charging stations sold, connectivity charges provided by telco and other networks, warranty, repairs and maintenance services, and depreciation of our installed charging stations. Cost of revenues for the three months ended September 30, 2024 were $ 16,068 as compared to $30,592 for the three months ended September 30, 2023, a decrease of $ 14,524 or 47 %. There is a degree of variability in our costs in relationship to our revenues from period to period, primarily due to: ● electricity reimbursements that are unique to those Property Partner host agreements which provide for such reimbursements; ● revenue share payments are predicated on the contractual obligation under the property partner agreement and the revenue generated by the applicable chargers; ● cost of charging stations sold is predicated on the mix of types of charging stations and parts sold during the period; ● network costs are fixed in nature based on the number of chargers connected to the telco network regardless of whether the charger generates revenue; ● provisions for excess and obsolete inventory; and ● warranty and repairs and maintenance expenses are based on both the number of service cases completed during the period. Cost of product sales decreased by $15,497, or 63%, from $24,619 for the three months ended September 30, 2023 as compared to $9,122 for the three months ended September 30, 2024. The decrease was primarily due to the reduction of the volume of product sold during the three months ended September 30, 2024 compared to the same period in 2023. Cost of charging services-company-owned charging stations (electricity reimbursements) increased by $158, or 28%, to $724 for the three months ended September 30, 2024 as compared to $566 for the three months ended September 30, 2023. The decrease in 2024 was attributable to the mix of charging stations generating charging service revenues subject to electricity reimbursement. Host provider fees increased by $583, or 24%, to $2,982 during the three months ended September 30, 2024 as compared to $2,399 during the three months ended September 30, 2023. This increase was a result of the mix of chargers generating revenue and their corresponding revenue share percentage payments to Property Partner hosts pursuant to their agreements. Network costs increased by $170 or 42%, to $577 during the three months ended September 30, 2024 as compared to $407 during the three months ended September 30, 2023. The increase was a result of the increase in charging stations on our network and costs incurred related to the upgrading of our network system compared to the same period in 2023. Warranty and repairs and maintenance costs decreased by $ 267 or 48 %, to $ 294 during the three months ended September 30, 2024 from $561 during the three months ended September 30, 2023. The decrease in 2024 was attributable to significant efforts expended to reduce the backlog in warranty and repairs and maintenance cases in the prior year. Cost of car-sharing services was $1,156 during the three months ended September 30, 2024 as compared to $931 during the 2023 period. The increase was due to a reduction in costs related to vehicles used in this operation during the period. Depreciation and amortization expense increased by $104, or 9%, to $1,213 for the three months ended September 30, 2024 as compared to $1,109 for the three months ended September 30, 2023. The increase in depreciation expense was attributable to an increase in the number of EV charging stations and vehicles associated with the ride-share services. Operating Expenses Compensation expense decreased by $ 109 , or 1 %, to $ 15,159 (consisting of approximately $ 14 ,300 of cash compensation and benefits and approximately $ 900 of non-cash compensation) for the three months ended September 30, 2024. Compensation expense was $15,268 (consisting of approximately $14,100 of cash compensation and benefits and approximately $1,100 of non-cash compensation) for the three months ended September 30, 2023. The decrease in compensation expense for the three months ended September 30, 2024 compared to the same period in 2023 was primarily related to decreases in personnel and compensation in executive, marketing, sales and operations departments as a result of cost savings and synergies realized. The decrease in compensation expense was partially offset by severance expense of $0.6 million recorded during the three months ended September 30, 2024 associated with the cost reduction plans we initiated during this period. 21 General and administrative expenses decreased by $567, or 7%, to $7,972 for the three months ended September 30, 2024 as compared to $8,539 for the three months ended September 30, 2023. The decrease was primarily attributable to decreases in legal, marketing, recruiting, software licensing, investor/public relations and external consulting/other professional service expenditures of $1,827 partially offset by increases in accounting/auditing and bad debt expenses of $735. Other operating expenses decreased by $561, or 11%, to $4,739 for the three months ended September 30, 2024 from $5,300 for the three months ended September 30, 2023. The decrease was primarily attributable to decreases in website, rent, vehicle, travel, annual meeting, hardware and software development costs of $1,981. The decrease was primarily offset by increases in software licensing expenses, property/use tax expenditures and insurance expense of $963. The Company recorded a loss on change in fair value of consideration payable related to the Envoy acquisition of $364 in the 2024 period due to the change in the inputs to the probability-weighted discounted cash flow model. There was no such amount recognized in the 2023 period. During the three months ended September 30, 2024, we observed certain triggering events, including a decline in our stock price and, as a result, we conducted a quantitative impairment analysis of our goodwill and intangible assets and determined that the fair value of certain reporting units were less than the carrying amount and, as a result, recorded an impairment charge of $69,111 related to goodwill during the 2024 period. During the three months ended September 30, 2023, we observed certain triggering events, including a decline in our stock price and, as a result, we conducted a quantitative impairment analysis of our goodwill and intangible assets and determined that the fair value of our reporting units were less than the carrying amount and, as a result, recorded an impairment charge of $89,087 related to goodwill and $5,143 related to intangible assets during the 2023 period. Other Income (Expense) We recorded other income of $ 819 during the three months ended September 30, 2024 as compared to other expense of $(1,362) for the three months ended September 30, 2023. The increase in other income was primarily due to an increase of $63 related to dividend and interest income, partially offset by a decrease in interest expense of $968 compared to the 2023 period and a decrease in loss on extinguishment on notes payable. Net Loss Our net loss for the three months ended September 30, 2024 decreased by $25,332, or 22%, to $87,389 as compared to $112,721 for the three months ended September 30, 2023. The decrease was primarily attributable to a decrease in operating expenses, partially offset by an increase in gross profit. Total Comprehensive Loss Our total comprehensive loss for the three months ended September 30, 2024 was $84,790 whereas our total comprehensive loss for the three months ended September 30, 2023 was $114,399. Nine Months Ended September 30, 2024 Compared With Nine Months Ended September 30, 2023 Revenues Total revenue for the nine months ended September 30, 2024 increased by $ 1,870 , or 2 %, to $ 96,017 compared to $97,887 during the nine months ended September 30, 2023. Revenue from product sales was $ 64,538 for the nine months ended September 30, 2024 as compared to $76,035 during the nine months ended September 30, 2023, a decrease of $ 11,497 , or 15 %. This decrease was attributable to decreased sales of commercial chargers, DC fast chargers and residential chargers when compared to the same period in 2023. Charging service revenue from Company-owned charging stations was $ 15,217 for the nine months ended September 30, 2024 as compared to $11,111 for the nine months ended September 30, 2023, an increase of $ 4,106 , or 37 %. The increase is due to the increase in utilization of chargers and an increased number of chargers on the Blink Networks. Network fee revenues were $ 6,304 for the nine months ended September 30, 2024 as compared to $5,268 for the nine months ended September 30, 2023, an increase of $ 1,036 , or 20 %. The increase was attributable to increases in host owned units during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. Warranty revenues were $ 3,698 for the nine months ended September 30, 2024 as compared to $2,163 for the nine months ended September 30, 2023, an increase of $ 1,535 , or 71 %. The increase was primarily attributable to an increase in warranty contracts sold for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023. As of September 30, 2024, we recorded a liability of $782 which represents the estimated cost of existing backlog of known warranty cases. Grant and rebate revenues were $ 1,617 during the nine months ended September 30, 2024 as compared to $284 during the nine months ended September 30, 2023, an increase of $ 1,333 , or 469 %. Grant and rebates relating to equipment and the related installation are deferred and amortized in a manner consistent with the depreciation expense of the related assets over their useful lives. The increase in revenue was primarily related to the timing of the amortization of previous years’ state grants/rebates associated with the installation of chargers during the nine months ended September 30, 2024 and 2023. Car-sharing services revenues were $ 3,467 during the nine months ended September 30, 2024 as compared to $2,112 during the nine months ended September 30, 2023, an increase of $ 1,355 , or 64 %. The increase in revenues is due to the increase in properties and participants subscribing to are derived from car-sharing subscription services. Other revenue increased by $ 262 or 29 % to $ 1,176 for the nine months ended September 30, 2024 as compared to $914 for the nine months ended September 30, 2023. The increase was primarily attributable to higher Low Carbon Fuel Standard (LCFS) credits generated during the nine months ended September 30, 2024 compared to the same period in 2023. We generate these credits from the electricity utilized by our electric car charging stations as a byproduct from our charging services in the states of California and Oregon. 22 Cost of Revenues Cost of revenues primarily consists of electricity reimbursements, revenue share payments to our Property Partner hosts, the cost of charging stations sold, connectivity charges provided by telco and other networks, warranty, repairs and maintenance services, and depreciation of our installed charging stations. Cost of revenues for the nine months ended September 30, 2024 were $ 62,766 as compared to $68,268 for the nine months ended September 30, 2023, a decrease of $ 5,502 or 8 %. There is a degree of variability in our costs in relationship to our revenues from period to period, primarily due to: ● electricity reimbursements that are unique to those Property Partner host agreements which provide for such reimbursements; ● revenue share payments are predicated on the contractual obligation under the property partner agreement and the revenue generated by the applicable chargers; ● cost of charging stations sold is predicated on the mix of types of charging stations and parts sold during the period; ● network costs are fixed in nature based on the number of chargers connected to the telco network regardless of whether the charger generates revenue; ● provisions for excess and obsolete inventory; and ● warranty and repairs and maintenance expenses are based on both the number of service cases completed during the period. Cost of product sales decreased by $ 9,544 , or 19 %, from $49,509 for the nine months ended September 30, 2023 as compared to $ 39,965 for the nine months ended September 30, 2024. The decrease was primarily due to the decrease in product sales of commercial chargers, DC fast chargers and home residential chargers during the nine months ended September 30, 2024 compared to the same period in 2023. Cost of charging services-company-owned charging stations (electricity reimbursements) decreased by $ 272 , or 12 %, to $ 1,924 for the nine months ended September 30, 2024 as compared to $2,196 for the nine months ended September 30, 2023. The decrease in 2024 was attributable to the mix of charging stations generating charging service revenues subject to electricity reimbursement. Host provider fees increased by $ 3,021 , or 48 %, to $ 9,306 during the nine months ended September 30, 2024 as compared to $6,285 during the nine months ended September 30, 2023. This increase was a result of the mix of chargers generating revenue and their corresponding revenue share percentage payments to Property Partner hosts pursuant to their agreements. Network costs increased by $ 477 or 36 %, to $ 1,816 during the nine months ended September 30, 2024 as compared to $1,339 during the nine months ended September 30, 2023. The increase was a result of the increase in charging stations on our network and costs incurred related to the upgrading of our network system compared to the same period in 2023. Warranty and repairs and maintenance costs decreased by $ 1,044 , or 36 %, to $ 1,880 during the nine months ended September 30, 2024 from $2,924 during the nine months ended September 30, 2023. The decrease in 2024 was attributable to significant efforts expended to reduce the backlog in warranty and repairs and maintenance cases in the prior year. Cost of car-sharing services was $ 3,302 during the nine months ended September 30, 2024 as compared to $3,162 during the nine months ended September 30, 2023. The decrease was due to a reduction in costs related to vehicles used in this operation during the period. Depreciation and amortization expense increased by $ 1,720 , or 60 %, to $ 4,573 for the nine months ended September 30, 2024 as compared to $2,853 for the nine months ended September 30, 2023. The increase in depreciation expense was attributable to an increase in the number of EV charging stations and vehicles associated with the ride-share services. Operating Expenses Compensation expense decreased by $28,197, or 37%, to $47,770 (consisting of approximately $44,900 of cash compensation and benefits and approximately $2,900 of non-cash compensation) for the nine months ended September 30, 2024. Compensation expense was $75,967 (consisting of approximately $55,400 of cash compensation and benefits and approximately $20,500 of non-cash compensation) for the nine months ended September 30, 2023. The decrease in compensation expense for the nine months ended September 30, 2024 compared to the same period in 2023 was primarily related to decreases in personnel and compensation in executive, marketing, sales and operations departments as a result of cost savings and synergies realized. Also contributing to the decrease was the recording during the nine months ended September 30, 2023 of compensation expense for (1) non-cash stock-based compensation of approximately $5,500 related to the accelerated vesting of equity award grants and additional stock-based compensation associated with the resignation of our former Chief Executive Officer pursuant to the terms of his Executive Chairman and CEO Employment Agreement, dated May 28, 2021 (the “Former CEO Employment Agreement”), as set forth in the Separation and General Release Agreement, dated as of September 20, 2023, between our Company and the former Chief Executive Officer; and (2) non-recurring expenses of approximately $11,500, consisting of the non-recurring payment of approximately $6,100 to our former Chief Executive Officer pursuant to the Former CEO Employment Agreement and non-recurring bonus expense of $6,000 related to the achievement of key performance milestones by our Chief Technology Officer under his employment agreement, dated April 12, 2021. Furthermore, the decrease in compensation expense was partially offset by severance expense of $1,200 recorded during the nine months ended September 30, 2024 associated with the cost reduction plans we initiated during 2024. General and administrative expenses decreased by $ 2,684 , or 10 %, to $ 23,782 for the nine months ended September 30, 2024 as compared to $26,466 for the nine months ended September 30, 2023. The decrease was primarily attributable to decreases in consulting/other professional services, marketing, software licensing, recruiting and investor/public relations of $2,888 partially offset by increases in accounting/auditing, legal expenditures and bad debt expenses of $1,173. Further, general and administrative expenses decreased due to a decrease in amortization expense of $1,754. Other operating expenses increased by $ 2,505 , or 18 %, to $ 16,135 for the nine months ended September 30, 2024 from $14,555 for the nine months ended September 30, 2023. The increase was primarily attributable to increases in loss on sale of assets, software licensing and property/use taxes expenses of $3,073 partially offset by decreases in insurance, website, rent, annual meeting, hardware and software development expenditures, travel and vehicle expenditures of $2,318 for nine months ended September 30, 2024 compared to the same period in 2023. 23 The Company recorded a loss on change in fair value of consideration payable related to the Envoy acquisition of $2,811 in the 2024 period due to the change in the inputs to the probability-weighted discounted cash flow model. There was no such amount recognized in the 2023 period. During the nine months ended September 30, 2024, we observed certain triggering events, including a decline in our stock price and, as a result, we conducted a quantitative impairment analysis of our goodwill and intangible assets and determined that the fair value of certain reporting units were less than the carrying amount and, as a result, recorded an impairment charge of $69,111 related to goodwill during the 2024 period. During the nine months ended September 30, 2023, we observed certain triggering events, including a decline in our stock price and, as a result, we conducted a quantitative impairment analysis of our goodwill and intangible assets and determined that the fair value of our reporting units were less than the carrying amount and, as a result, recorded an impairment charge of $89,087 related to goodwill and $5,143 related to intangible assets during the 2023 period. Other Income (Expense) We recorded other income of $ 1,911 during the nine months ended September 30, 2024 as compared to other expense of ($2,105) for the nine months ended September 30, 2023. The increase was primarily due to an increase of $1,043 related to dividend and interest income, and by a decrease in interest expense of $1,898 compared to the 2023 period and a decrease on loss on extinguishment of notes payable of $1,036. Net Loss Our net loss for the nine months ended September 30, 2024 decreased by $ 59,383 or 32 %, to $ 124,621 as compared to $184,004 for the nine months ended September 30, 2023. The decrease was primarily attributable to a decrease in operating expenses, partially offset by an increase in gross profit. Total Comprehensive Loss Our total comprehensive loss for the nine months ended September 30, 2024 was $ 123,659 whereas our total comprehensive loss for the nine months ended September 30, 2023 was $185,387. Liquidity and Capital Resources We measure our liquidity in a number of ways, including the following: September 30, 2024 December 31, 2023 (unaudited) Cash and Cash Equivalents $ 64,584 $ 121,691 Working Capital $ 96,596 $ 152,033 Debt $ 265 $ 38,108 During the nine months ended September 30, 2024, we financed our activities from proceeds derived from equity financings occurring in prior periods. A significant portion of the funds raised from the sale of capital stock has been used to cover working capital needs and personnel, office expenses and various consulting and professional fees. For the nine months ended September 30, 2024 and 2023, we used cash of $ 34,830 and $77,162, respectively, in operations. Our cash use for the nine months ended September 30, 2024 was primarily attributable to our net loss of $124,621, adjusted for net non-cash expenses in the aggregate amount of $ 89,612 , partially offset by $ 179 of net cash provided by changes in the levels of operating assets and liabilities. Our cash use for the nine months ended September 30, 2023 was primarily attributable to our net loss of $184,004, adjusted for net non-cash expenses in the aggregate amount of $129,253, partially offset by $22,411 of net cash used in changes in the levels of operating assets and liabilities. During the nine months ended September 30, 2024, net cash used in investing activities was $ 9,738 , of which, $ 9,577 was used to purchase charging stations and other fixed assets and $ 161 related to the capitalization of certain engineering costs. During the nine months ended September 30, 2023, net cash used in investing activities was $12,451, of which $7,265 was used to purchase charging stations and other fixed assets, $4,660 was used as cash consideration for Envoy (net of cash acquired) and $526 related to the capitalization of certain engineering costs. During the nine months ended September 30, 2024, cash used in financing activities was $ 13,731 , of which, $ 37,881 was used to pay down notes payable, $ 582 was used to pay down our liability in connection with a finance lease and $ 338 was used to pay down our liability in connection with internal use software, partially offset by $ 25,070 provided by offering proceeds related to the sale of common stock. During the nine months ended September 30, 2023, cash provided by financing activities was $120,891, of which, $122,379 was provided by offering proceeds related to the sale of common stock, $835 was provided by the exercise of options and warrants, offset by $2,103 used to pay down our liability in connection with a finance lease and $220 used to pay down our liability in connection with internal use software. As of September 30, 2024, we had cash and cash equivalents, working capital and an accumulated deficit of $ 64,584 , $ 96,596 and $ 662,344 , respectively. During the three and nine months ended September 30, 2024, we had a net loss of $ 87,389 and $ 124,621 respectively. 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. 24 We have not yet achieved profitability and expect to continue to incur cash outflows from operations Historically, we have been able to raise funds to support our business operations, although there can be no assurance that we will be successful in raising significant additional funds in the future. We expect that our cash on hand will fund our operations for at least 12 months after the issuance date of the financial statements included in this Quarterly Report on Form 10-Q. Since inception, our operations have primarily been funded through proceeds received in equity and debt financings. We believe we have access to capital resources and continue to evaluate additional financing opportunities. There is no assurance that we will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds we might raise will enable us to complete our EV development initiatives or attain profitable operations. Contractual Obligations and Commitments We have operating and finance lease obligations over the next five years of approximately $10,385. These operating lease obligations are primarily related to corporate office space, warehousing, and parking spaces related to our car-sharing services. As of September 30, 2024, the Company had purchase commitments of approximately $2,300 which will become payable upon the suppliers’ service of warranty contracts. Critical Accounting Estimates The preparation of financial statements and related disclosures are in conformity with U.S. GAAP. These accounting principles require us to make estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenue and expense during the periods presented. We believe that the estimates and judgments upon which we rely are reasonable based upon information available to us at the time that we make these estimates and judgments. To the extent that there are material differences between these estimates and actual results, our financial results will be affected. The accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below. We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. Management has identified certain critical accounting estimates which are outlined below. In addition, there are other items within our financial statements that require estimation but are not deemed critical, as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements. Business Combination We follow the acquisition method of accounting to record identifiable assets acquired and liabilities assumed recognized in connection with acquired businesses at their estimated fair value as of the date of acquisition. Identifiable intangible assets from business combinations are recognized at their estimated fair values as of the date of acquisition and consist of customer relationships, developed technology and trade names. Determination of the estimated fair value of identifiable intangible assets requires judgment. The fair value of intangible assets is estimated using the relief from royalty method for the acquired developed technology and trade names and the multi-period excess earnings method for the acquired customer relationships. The fair value of non-compete agreements is estimated using the discounted cash flow approach. All of these fair value methods are income-based valuation approaches, which require judgment to estimate appropriate discount rates, royalty rates related to the developed technology and trade name intangible assets, revenue growth attributable to the intangible assets and remaining useful lives. Consideration payable liability is estimated using a Monte Carlo simulation model to determine the probability of achieving certain milestones. In order to perform the fair value calculations the following estimates are considered: probability of a public offering and discount rates . The fair value for consideration payable is reviewed each quarter after the original valuation to determine if revised estimates are necessary. Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. We assess the recoverability of its long-lived assets by monitoring current selling prices of car charging units in the open market, the adoption rate of various auto manufacturers in the EV market and projected car charging utilization at various public car charging stations throughout its network in determining fair value. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount. Fair value is determined using various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as necessary. Goodwill and Intangible Asset Impairment Goodwill is the excess of consideration paid for an acquired entity over the fair value of the amounts assigned to assets acquired, including other identifiable intangible assets, and liabilities assumed in a business combination. To determine the amount of goodwill resulting from a business combination, the Company performs an assessment to determine the acquisition date fair value of the acquired company’s tangible and identifiable intangible assets and liabilities. Goodwill is evaluated for impairment on November 1 of each year or whenever events or changes in circumstances indicate the asset may be impaired. An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. These qualitative factors include: macroeconomic and industry conditions, cost factors, overall financial performance and other relevant entity-specific events. If the entity determines that this threshold is met, then the Company may apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. During the three months ended September 30, 2024, 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. The Company tests goodwill for impairment at the reporting unit level. The Company identifies the Company’s reporting units by assessing whether the components of the Company constitute businesses for which discrete financial information is available and segment management regularly reviews the operating results of those components. The Company’s goodwill is contained in the Legacy Blink reporting unit resulting from the acquisition of SemaConnect and the Mobility reporting unit resulting from the acquisition of Envoy Technologies. 25 The Company determines fair value through multiple valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals and weighs the results accordingly. The Company is required to make certain subjective and complex judgments in assessing whether an event of impairment of goodwill has occurred, including assumptions and estimates used to determine the fair value of its reporting units. Reporting unit fair value estimates include significant assumptions such as: revenue growth rates, operating margins, estimated royalty rates, company-specific risk premiums used in the weighted-average cost of capital, and certain multiples, which are affected by expectations about future market or economic conditions. The Company performs sensitivity analyses on significant assumptions to evaluate how changes in the estimated fair values of reporting units respond to changes in assumptions, specifically the revenue growth rates and the weighted-average cost of capital. Based on its analysis, the Company determined that the Legacy Blink reporting unit’s carrying value exceeded the estimated fair value as of September 30, 2024. Consequently, the Company recognized a goodwill impairment charge of $69,111 during the three and nine months ended September 30, 2024 in the condensed consolidated statements of operations. As a result of the impairment analysis it was determined that the Mobility reporting unit qualifies as “at risk” for impairment. The Company quantitatively defines “at risk” as a percentage of the excess of the reporting unit’s fair value over its carrying amount that is less than 10%. An “at risk” reporting unit qualitatively represents a reporting unit with a higher degree of uncertainty of the reporting unit’s ability to meet its forecasted cash flows based upon revenue growth rate and operating margin assumptions relied upon in the estimation of its fair value. As of September 2024, the Mobility reporting unit’s carrying value exceeded its fair value by approximately 4%. The goodwill attributable to the Mobility reporting unit as of September 30, 2024 was $27,536.