UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31,September 30, 2018

 

or

 

[  ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[  ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____________ to _____________

 

Commission File No. 001-38392

 

BLINK CHARGING CO.

(Exact name of registrant as specified in its charter)

 

Nevada 03-0608147

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

incorporation or organization) Identification No.)

3284 N 29th Court407 Lincoln Road  
Hollywood,Miami Beach, Florida 33020-132033139-3024
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code:(305) 521-0200

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer[  ]Accelerated filer[  ]
    
Non-accelerated filer (Do not check if a smaller reporting company)[  ]X]Smaller reporting company[X]
    
Emerging growth company[  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [  ] No [X]

 

As of May 14,November 09, 2018, the registrant had 21,623,09025,719,585 shares of common shares issued andstock outstanding.

 

 

 

   
 

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

FORM 10-Q

 

FOR THE QUARTERLY PERIOD ENDED MARCH 31,SEPTEMBER 30, 2018

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION 
  
Item 1. Financial Statements.3
  
Condensed Consolidated Balance Sheets as of March 31,September 30, 2018 (Unaudited) ,and December 31, 2017 and Pro Forma March 31, 2018 (Unaudited)3
  
Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 31,September 30, 2018 and 20174
  
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficiency) for the Three and Nine Months Ended March 31,September 30, 20185
  
Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Deficiency for the Three and Nine Months Ended September 30, 20176
Unaudited Condensed Consolidated Statements of Cash Flows for the ThreeNine Months Ended March 31,September 30, 2018 and 201767
  
Notes to Unaudited Condensed Consolidated Financial Statements89
  
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.2226
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk.3032
  
Item 4. Controls and Procedures.3032
  
PART II - OTHER INFORMATION 
  
Item 1. Legal Proceedings.3234
  
Item 1A. Risk Factors.34
  
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.3435
  
Item 3. Defaults Upon Senior Securities.3435
  
Item 4. Mine Safety Disclosures.3435
  
Item 5. Other Information.3435
  
Item 6. Exhibits.3536
  
SIGNATURES37

 

2

 

PART 1 – FINANCIAL INFORMATION

 

ITEM 1.FINANCIAL STATEMENTS.

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Balance Sheets

 

      Pro Forma 
 March 31, 2018  December 31, 2017  March 31, 2018  September 30, 2018 December 31, 2017 
 (unaudited)     (unaudited)  (unaudited)    
            
Assets                    
                    
Current Assets:                    
Cash $9,946,654  $185,151  $13,532,915 
Cash and Cash Equivalents $21,304,407  $185,151 
Accounts receivable and other receivables, net  207,082   227,918   207,082   207,122   227,918 
Inventory, net  230,730   247,466   230,730   765,870   247,466 
Prepaid expenses and other current assets  831,003   108,352   831,003 
Current portion of operating lease right-of-use asset  95,866   - 
Prepaid expenses and other current asset  866,219   108,352 
                    
Total Current Assets  11,215,469   768,887   14,801,730   23,239,484   768,887 
Fixed assets, net  337,238   376,920   337,238 
        
Property and equipment, net  350,106   376,920 

Operating lease right-of-use asset, non-current portion

  183,746   - 
Intangible assets, net  103,588   106,167   103,588   98,430   106,167 
Deferred public offering costs  -   1,367,730   -   -   1,367,730 
Other assets  44,512   67,309   44,512   64,673   67,309 
                    
Total Assets $11,700,807  $2,687,013  $15,287,068  $23,936,439  $2,687,013 
                    
Liabilities and Stockholders’ Equity (Deficiency)                    
                    
Current Liabilities:                    
Accounts payable $1,599,798  $4,228,073  $1,599,798  $1,555,220  $4,228,073 
Accrued expenses  3,402,922   23,135,344   2,919,302   2,737,344   23,135,344 
Accrued issuable equity  3,289,334   2,939,906   1,083,904   1,131,474   2,939,906 
Derivative liabilities  21,434   3,448,390   21,434   24,240   3,448,390 
Current portion of convertible notes payable  -   50,000   -   -   50,000 
Convertible notes payable - related party  -   747,567   -   -   747,567 
Notes payable  337,966   597,966   337,966   337,966   597,966 
Current portion of operating lease liabilities  95,866   - 
Current portion of deferred revenue  351,258   383,771   351,258   401,458   383,771 
                    
Total Current Liabilities  9,002,712   35,531,017   6,313,662   6,283,568   35,531,017 
                    
Convertible notes payable, non-current portion, net of debt discount of $0, $499,435 and $0 as of March 31, 2018, December 31, 2017 and Pro Forma March 31, 2018, respectively  -   3,200,096   - 
Convertible notes payable, non-current portion, net of debt discount of $0 and $499,435 as of September 30, 2018 and December 31, 2017, respectively  -   3,200,096 
Operating lease liabilities, non-current portion  187,548   - 
Deferred revenue, non-current portion  38,867   50,283   38,867   18,456   50,283 
                    
Total Liabilities  9,041,579   38,781,396   6,352,529   6,489,572   38,781,396 
                    
Series B Convertible Preferred Stock, 10,000 shares designated, 0, 8,250 and 0 shares issued and outstanding as of March 31, 2018, December 31, 2017 and Pro Forma March 31, 2018, respectively  -   825,000   - 
Series B Convertible Preferred Stock, 10,000 shares designated, 0 and 8,250 issued and outstanding as of September 30, 2018 and December 31, 2017, respectively  -   825,000 
                    
Commitments and contingencies                    
                    
Stockholders’ Equity (Deficiency):                    
Preferred stock, $0.001 par value, 40,000,000 shares authorized;                    
Series A Convertible Preferred Stock, 20,000,000 shares designated, 0, 11,000,000 and 0 shares issued and outstanding as of March 31, 2018, December 31, 2017 and Pro Forma March 31, 2018, respectively  -   11,000   - 
Series C Convertible Preferred Stock, 250,000 shares designated, 0, 229,551 and 0 shares issued and outstanding as of March 31, 2018, December 31, 2017 and Pro Forma March 31, 2018, respectively  -   230   - 
Series D Convertible Preferred Stock, 13,000 shares designated, 12,005, 0 and 7,637 shares issued and outstanding as of March 31, 2018, December 31, 2017 and Pro Forma March 31, 2018, respectively  12   -   8 
Common stock, $0.001 par value, 500,000,000 shares authorized, 22,181,901, 5,523,673 and 21,623,090 shares issued and outstanding as of March 31, 2018, December 31, 2017 and Pro Forma March 31, 2018, respectively  22,182   5,524   21,623 
Series A Convertible Preferred Stock, 20,000,000 shares designated, 0 and 11,000,000 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively  -   11,000 
Series C Convertible Preferred Stock, 250,000 shares designated, 0 and 229,551 issued and outstanding as of September 30, 2018 and December 31, 2017, respectively  -   230 
Series D Convertible Preferred Stock, 13,000 shares designated, 5,453 and 0 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively  5   - 
Common stock, $0.001 par value, 500,000,000 shares authorized, 25,564,103 and 5,523,673 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively  25,564   5,524 
Additional paid-in capital  156,868,224   119,499,141   163,144,098   175,021,206   119,499,141 
Accumulated deficit  (154,231,190)  (156,435,278)  (154,231,190)  (157,599,908)  (156,435,278)
                    
Total Stockholders’ Equity (Deficiency)  2,659,228   (36,919,383)  8,934,539   17,446,867   (36,919,383)
                    
Total Liabilities and Stockholders’ Equity (Deficiency) $11,700,807  $2,687,013  $15,287,068  $23,936,439  $2,687,013 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

3

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Operations

 

(unaudited)

 

  For The Three Months Ended 
  March 31, 
  2018  2017 
       
Revenues:        
Charging service revenue - company-owned charging stations $305,747  $267,874 
Product sales  135,760   153,587 
Grant and rebate revenue  16,231   32,810 
Warranty revenue  30,402   34,849 
Network fees  57,251   49,238 
Other  50,529   57,262 
         
Total Revenues  595,920   595,620 
         
Cost of Revenues:        
Cost of charging services - company-owned charging stations  43,761   26,563 
Host provider fees  108,405   54,447 
Cost of product sales  63,533   78,512 
Network costs  66,928   141,584 
Warranty and repairs and maintenance  63,728   19,148 
Depreciation and amortization  77,744   112,153 
         
Total Cost of Revenues  424,099   432,407 
         
Gross Profit  171,821   163,213 
         
Operating Expenses:        
Compensation  3,688,636   997,357 
Other operating expenses  183,955   242,941 
General and administrative expenses  101,169   313,708 
Lease termination costs  -   300,000 
         
Total Operating Expenses  3,973,760   1,854,006 
         
Loss From Operations  (3,801,939)  (1,690,793)
         
Other Income (Expense)        
Interest expense  (104,983)  (140,661)
Interest expense - related party share transfer (see Note 8)  (785,200)  - 
Amortization of discount on convertible debt  (528,929)  (614,901)
Gain on settlement of accounts payable, net  920,352   23,928 
Loss on settlement reserve  (127,941)  (175,000)
Change in fair value of warrant liabilities  3,024,598   (464,289)
Loss on settlement of liabilities for equity  (2,192,045)  - 
Gain on settlement of liabilities to JMJ for equity  5,800,175   - 
Non-compliance penalty for SEC registration requirement  -   (36,016)
         
Total Other Income (Expense)  6,006,027   (1,406,939)
         
Net Income (Loss)  2,204,088   (3,097,732)
Dividend attributable to Series C shareholders  (607,800)  (754,900)
Deemed dividend  (23,458,931)  - 
Net Loss Attributable to Common Shareholders $(21,862,643) $(3,852,632)
         
Net Loss Per Share        
- Basic and Diluted $(2.58) $(2.39)
         
Weighted Average Number of Common Shares Outstanding        
- Basic and Diluted  8,472,092   1,609,530 

  For The Three Months Ended  For The Nine Months Ended 
  September 30,  September 30, 
  2018  2017  2018  2017 
             
Revenues:                
Charging service revenue - company-owned charging stations $320,388  $295,202  $927,485  $879,428 
Product sales  102,958   157,264   381,557   367,808 
Network fees  55,540   59,604   168,825   168,334 
Warranty  25,099   36,484   89,458   103,188 
Grant and rebate  6,724   14,978   68,062   93,798 
Other  36,135   43,367   131,795   122,937 
                 
Total Revenues  546,844   606,899   1,767,182   1,735,493 
                 
Cost of Revenues:                
Cost of charging services - company-owned charging stations  18,823   106,606   141,644   171,284 
Host provider fees  91,564   55,047   297,296   202,432 
Cost of product sales  63,583   4,661   166,403   245,832 
Network costs  73,858   21,781   218,083   236,675 
Warranty and repairs and maintenance  121,957   30,771   271,686   (26,325)
Depreciation and amortization  70,296   86,744   222,711   298,168 
Total Cost of Revenues  440,081   305,610   1,317,823   1,128,066 
                 
Gross Profit  106,763   301,289   449,359   607,427 
                 
Operating Expenses:                
Compensation  2,842,733   1,080,644   7,717,733   4,091,681 
General and administrative expenses  467,073   222,399   949,592   774,482 
Other operating expenses  319,537   227,927   996,529   681,630 
Lease termination costs  -   -   -   300,000 
                 
Total Operating Expenses  3,629,343   1,530,970   9,663,854   5,847,793 
                 
Loss From Operations  (3,522,580)  (1,229,681)  (9,214,495)  (5,240,366)
                 
Other Income (Expense)                
Interest expense  -   (95,215)  (113,516)  (454,164)
Interest expense - related party share transfer (see Note 9)  -   -   (785,200)  - 
Amortization of discount on convertible debt  -   (151,002)  (528,929)  (1,863,680)
(Loss) Gain on settlement of accounts payable, net  -   (1,014)  920,352   22,914 
Loss on settlement reserve  -   (12,450,000)  (127,941)  (12,975,588)
Change in fair value of derivative and other accrued liabilities  1,349,886   (72,101,423)  4,997,721   (72,882,216)
Loss on settlement of liabilities for equity  -   (7,570,581)  (2,136,860)  (7,570,581)
Loss on deconsolidation of 350 Green  -   -   -   (97,152)
Gain on settlement of liabilities to JMJ for equity  -   -   5,800,175   - 
Non-compliance penalty for SEC registration requirement  -   (21,516)  -   (73,498)
Other income  24,063   -   24,063   - 
   -             
Total Other Income (Expense)  1,373,949   (92,390,751)  8,049,865   (95,893,965)
   -             
Net Loss  (2,148,631)  (93,620,432)  (1,164,630)  (101,134,331)
Dividend attributable to Series C shareholders  -   (828,500)  (607,800)  (2,374,300)
Deemed dividend  -   -   (23,458,931)  - 
Net Loss Attributable to Common Shareholders $(2,148,631) $(94,448,932) $(25,231,361) $(103,508,631)
                 
Net Loss Per Share                
Basic $(0.09) $(34.68) $(1.33) $(52.04)
Diluted $(0.13) $(34.68) $(1.47) $(52.04)
                 
Weighted Average Number of Common Shares Outstanding                
Basic  24,867,869   2,723,437   18,916,432   1,989,022 
Diluted  25,292,550   2,723,437   19,113,426   1,989,022 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

4

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statement of Changes in Stockholders’ Equity (Deficiency)

For the Three and Nine Months Ended March 31,September 30, 2018

 

(unaudited)

 

                      Total 
 Convertible Preferred Stock        Additional     Stockholders’  Convertible Preferred Stock     Additional    

Total

Stockholders’

 
 Series A  Series C  Series D  Common Stock  Paid-In  Accumulated  (Deficiency)  Series A Series C Series D Common Stock Paid-In Accumulated (Deficiency) 
 Shares  Amount  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Equity  Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Equity 
                                              
Balance - January 1, 2018  11,000,000  $11,000   229,551  $230   -  $-   5,523,673  $5,524  $119,499,141  $(156,435,278) $(36,919,383)  11,000,000  $11,000   229,551  $230   -  $-   5,523,673  $5,524  $119,499,141  $(156,435,278) $(36,919,383)
                                                                                        
Common stock and warrants issued in public offering [1]  -   -   -   -   -   -   4,353,000   4,353   14,876,462   -   14,880,815   -   -   -   -   -   -   4,353,000   4,353   14,876,462   -   14,880,815 
                                                                                        
Common stock issued upon conversion of Series A convertible preferred stock  (11,000,000)  (11,000)  -   -   -   -   550,000   550   10,450   -   -   (11,000,000)  (11,000)  -   -   -   -   550,000   550   10,450   -   - 
                                                                                        
Common stock issued in satisfaction of Series B convertible preferred stock  -   -   -   -   -   -   223,235   223   824,777   -   825,000   -   -   -   -   -   -   223,235   223   824,777   -   825,000 
                                                                                        
Common stock issued upon conversion of Series C convertible preferred stock  -   -   (254,557)  (255)  -   -   9,111,644   9,112   (8,857)  -   -   -   -   (254,557)  (255)  -   -   9,111,644   9,112   (8,857)  -   - 
                                                                                        
Series D convertible preferred stock issued in satisfaction of liabilities  -   -   -   -   12,005   12   -   -   12,004,988   -   12,005,000   -   -   -   -   12,005   12   -   -   12,004,988   -   12,005,000 
                                                                                        
Common stock issued in partial satisfaction of debt and other liabilities  -   -   -   -   -   -   1,488,021   1,488   4,282,500   -   4,283,988   -   -   -   -   -   -   1,488,021   1,488   4,282,500   -   4,283,988 
                                                                                        
Warrants reclassified from derivative liabilities  -   -   -   -   -   -   -   -   36,445   -   36,445   -   -   -   -   -   -   -   -   36,445   -   36,445 
                                                                                        
Series C convertible preferred stock dividends:                                                                                        
Accrual of dividends earned  -   -   -   -   -   -   -   -   (607,800)      (607,800)  -   -   -   -   -   -   -   -   (607,800)      (607,800)
Payment of dividends in kind  -   -   25,006   25   -   -   -   -   2,500,575       2,500,600   -   -   25,006   25   -   -   -   -   2,500,575       2,500,600 
                                                                                       ��
Stock-based compensation  -   -   -   -   -   -   932,328   932   2,664,343   -   2,665,275   -   -   -   -   -   -   932,328   932   2,664,343   -   2,665,275 
                                                                                        
Beneficial conversion feature of Series B and C convertible preferred stock  -   -   -   -   -   -   -   -   23,458,931   -   23,458,931   -   -   -   -   -   -   -   -   23,458,931   -   23,458,931 
                                                                                        
Deemed dividend related to immediate accretion of beneficial conversion of Series B and C convertible preferred stock  -   -   -   -   -   -   -   -   (23,458,931)  -   (23,458,931)  -   -   -   -   -   -   -   -   (23,458,931)  -   (23,458,931)
                                                                                        
Contribution of capital - related party share transfer (see Note 8)  -   -   -   -   -   -   -   -   785,200   -   785,200   -   -   -   -   -   -   -   -   785,200   -   785,200 
                                                                                        
Net income  -   -   -   -   -   -   -   -   -   2,204,088   2,204,088   -   -   -   -   -   -   -   -   -   2,204,088   2,204,088 
           ��                                                                            
Balance - March 31, 2018  -  $-   -  $-   12,005  $12   22,181,901  $22,182  $156,868,224  $(154,231,190) $2,659,228   -  $-   -  $-   12,005  $12   22,181,901  $22,182  $156,868,224  $(154,231,190) $2,659,228 
                                            
Common stock issued in partial satisfaction of debt and other liabilities  -   -   -   -   -   -   25,669   25   69,975   -   70,000 
                                            
Common stock issued upon conversion of Series D convertible preferred stock  -   -   -   -   (4,368)  (4)  1,400,000   1,400   (1,396)  -   - 
                                            
Proceeds from exercise of warrants  -   -   -   -   -   -   4,033,660   4,034   17,139,022   -   17,143,056 
                                          - 
Return and retirement of common stock  -   -   -   -   -   -   (2,942,099)  (2,942)  2,942   -   - 
                                          - 
Warrants issued in satisfaction of accrued issuable equity  -   -   -   -   -   -   -   -   409,042   -   409,042 
                                          - 
Net loss  -   -   -   -   -   -   -   -   -   (1,232,785)  (1,232,785)
                                            
Balance - June 30, 2018  -  $-   -  $-   7,637  $8   24,699,131  $24,699  $174,487,809  $(155,463,975) $19,048,541 
                                            
Common stock issued upon conversion of Series D convertible preferred stock  -   -   -   -   (2,184)  (3)  700,000   700   (697)  -   - 
                                            
Stock-based compensation  -   -   -   -   -   -   188,501   189   601,128   -   601,317 
                                            
Return and retirement of common stock previously held as collateral  -   -   -   -   -   -   (23,529)  (24)  (67,034)  -   (67,058)
                                            
Net loss  -   -   -   -   -   -   -   -   -   (2,135,933)  (2,135,933)
                                            
Balance - September 30, 2018  -  $-   -  $-   5,453  $5   25,564,103  $25,564  $175,021,206  $(157,599,908) $17,446,867 

 

[1] Includes gross proceeds of $18,504,320, less issuance costs of $3,623,505.

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

5

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statement of Changes in Stockholders’ Deficiency

For the Three and Nine Months Ended September 30, 2017

(unaudited)

  Convertible Preferred Stock     Additional     

Non

Controlling

  Total 
  Series A  Series C  Common Stock  Paid-In  Accumulated  Interest  Stockholders’ 
  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Deficit  Deficiency 
                               
Balance - January 1, 2017  11,000,000  $11,000   150,426  $150   1,609,530  $1,610  $64,078,182  $(81,071,782) $(3,831,314) $(20,812,154)
                                         
Stock-based compensation  -   -   -   -   -   -   35,961   -   -   35,961 
                                         
Series C convertible preferred stock dividends:                                        
Accrual of dividends earned  -   -   -   -   -   -   (754,900)  -   -   (754,900)
                                         
Net loss  -   -   -   -   -   -   -   (3,097,732)  -   (3,097,732)
Balance - March 31, 2017  11,000,000  $11,000   150,426  $150   1,609,530  $1,610  $63,359,243  $(84,169,514) $(3,831,314) $(24,628,825)
                                         
Stock-based compensation  -   -   -   -   -   -   25,766   -   -   25,766 
                                         
Series C convertible preferred stock issued in satisfaction of public information fee  -   -   30,235   30   -   -   3,023,470   -   -   3,023,500 
                                         
Series C convertible preferred stock issued in satisfaction of registration rights penalty  -   -   12,455   13   -   -   1,245,487   -   -   1,245,500 
                                       
Series C convertible preferred stock dividends:                                        
Accrual of dividends earned  -   -   -   -   -   -   (790,900)  -   -   (790,900)
Payment of dividends in kind  -   -   19,050   19   -   -   1,904,981   -   -   1,905,000 
                                         
Common stock issued in partial satisfaction of debt  -   -   -   -   21,166   21   181,904   -   -   181,925 
                                         
Deconsolidation of 350 Green  -   -   -   -   -   -   -   -   3,831,314   3,831,314 
                                       
Net loss  -   -   -   -   -   -   -   (4,416,167)  -   (4,416,167)
                                         
Balance - June 30, 2017  11,000,000  $11,000   212,166  $212   1,630,696  $1,631  $68,949,951  $(88,585,681) $-  $(19,622,887)
                                         
Stock-based compensation  -   -   -   -   10,000   10   142,209   -   -   142,219 
                                         
Series C convertible preferred stock dividends:                                        
 Accrual of dividends earned  -   -   -   -   -   -   (828,500)  -   -   (828,500)
 Payment of dividends in kind  -   -   8,266   8   -   -   826,492   -   -   826,500 
                                         
Common stock issued in exchange for warrants  -   -   -   -   3,170,937   3,171   46,384,662   -   -   46,387,833 
                                         
Impact of share rounding as a result of reverse stock split  -   -   -   -   999   1   -   -   -   1 
                                        
Net loss  -   -   -   -   -   -   -   (93,620,432)  -   (93,620,432)
                                         
Balance - September 30, 2017  11,000,000  $11,000   220,432  $220   4,812,632  $4,813  $115,474,814  $(182,206,113) $-  $(66,715,266)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Cash Flows

 

(unaudited)

 

 For The Three Months Ended  For The Nine Months Ended 
 March 31,  September 30, 
 2018  2017  2018 2017 
Cash Flows From Operating Activities                
Net income (loss) $2,204,088  $(3,097,732)
Adjustments to reconcile net income (loss) to net cash used in operating activities:        
Net loss $(1,164,630) $(101,134,331)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization  82,216   123,131   290,181   323,186 
Accretion of interest expense  -   75,872   -   239,711 
Amortization of discount on convertible debt  528,929   614,901   528,929   1,863,680 
Change in fair value of warrant liabilities  (3,024,598)  464,289 
Change in fair value of derivative and other accrued liabilities  (4,997,721)  72,882,216 
Loss on inducement  -   7,570,581 
Provision for bad debt  38,275   19,848   80,845   38,275 
Loss on settlement reserve  127,941   -   127,941   - 
Loss on settlement of liabilities for equity  2,192,045   -   2,136,860   - 
Gain on settlement of liabilities to JMJ for equity  (5,800,175)  -   (5,800,175)  - 
Interest expense - related party share transfer (see Note 8)  785,200   - 
Interest expense - related party share transfer (see Note 9)  785,200   - 
Gain on settlement of accounts payable, net  (920,352)  (23,928)  (920,352)  (22,914)
Loss on deconsolidation of 350 Green  -   97,152 
Loss on disposal of property and equipment  12,698   - 
Non-compliance penalty for SEC registration requirement  -   36,016   -   73,498 
Non-cash compensation:                
Common stock  2,703,245   60,000   3,512,558   670,003 
Options  -   107,248   58,664   155,938 
Warrants  114,069   -   114,069   606,891 
Changes in operating assets and liabilities:                
Accounts receivable and other receivables  (17,439)  (61,719)  (60,049)  (69,354)
Inventory  37,899   82,311   (482,496)  160,829 
Prepaid expenses and other current assets  (722,651)  (10,262)  (824,925)  (27,781)
Other assets  22,797   30,440   2,636   49,536 
Accounts payable and accrued expenses  (3,122,531)  905,806   (3,970,155)  14,743,743 
Deferred revenue  (43,929)  (109,356)  (14,140)  (240,880)
                
Total Adjustments  (7,019,059)  2,314,597   (9,419,432)  99,114,310 
                
Net Cash Used in Operating Activities  (4,814,971)  (783,135)  (10,584,062)  (2,020,021)
                
Cash Flows From Investing Activities                
Purchases of fixed assets  (21,499)  (206)
Purchases of property and equipment  (37,711)  (12,681)
                
Net Cash Used In Investing Activities  (21,499)  (206)  (37,711)  (12,681)
                
Cash Flows From Financing Activities                
        
Proceeds from sale of common stock in public offering [1]  16,243,055   -   16,243,055   - 
Payment of public offering costs  (1,190,082)  -   (1,190,082)  - 
Payments of deferred offering costs  -   (24,720)  -   (38,263)
Payments of debt issuance costs  -   (39,000)  -   (72,945)
Bank overdrafts, net  -   (4,912)  -   84,144 
Proceeds from issuance of convertible note payable  -   805,100   -   1,550,100 
Proceeds from exercise of warrants  17,143,056   - 
Proceeds from issuance of notes payable to non-related party  55,000   -   55,000   260,000 
Proceeds from advance from a related party  250,000   47,567   250,000   257,645 
Repayment of notes and convertible notes payable  (760,000)  (3,604)  (760,000)  (4,815)
                
Net Cash Provided by Financing Activities  14,597,973   780,431   31,741,029   2,035,866 
                
Net Increase (Decrease) In Cash  9,761,503   (2,910)
Net Increase In Cash  21,119,256   3,164 
                
Cash - Beginning of Period  185,151   5,898   185,151   5,898 
                
Cash - End of Period $9,946,654  $2,988  $21,304,407  $9,062 

 

[1] Includes gross proceeds of $18,504,320, less issuance costs of $2,261,265 deducted directly from the offering proceeds.

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

BLINK CHARGING CO. AND SUBSIDIARIES

 

Condensed Consolidated Statements of Cash Flows — Continued

 

(unaudited)

 

 For The Three Months Ended  For The Nine Months Ended 
 March 31,  September 30, 
 2018  2017  2018 2017 
Supplemental Disclosures of Cash Flow Information:             
Cash paid during the periods for:                
Interest expense $5,072  $44  $36,132  $44 
        
Non-cash investing and financing activities:                
Common stock issued in partial satisfaction of debt and other liabilities $4,353,988  $- 
Reduction of additional paid-in capital for public offering issuance costs that were previously paid $(172,158) $-  $(172,158) $- 
Common stock issued upon conversion of Series A convertible preferred stock $11,000  $-  $11,000  $- 
Common stock issued in satisfaction of Series B convertible preferred stock $825,000  $-  $825,000  $- 
Common stock issued upon conversion of Series C convertible preferred stock $255  $-  $255  $- 
Common stock issued in partial satisfaction of debt and other liabilities $4,283,988  $- 
Common stock issued upon conversion of Series D convertible preferred stock $7  $- 
Issuance of common stock for services previously accrued $-  $181,924 
Warrants issued in satisfaction of accrued issuable equity $409,042  $- 
Return and retirement of common stock $2,942  $- 
Warrants reclassified from derivative liabilities $36,445  $-  $36,445  $- 
Accrual of contractual dividends on Series C Convertible Preferred Stock $607,800  $754,900  $607,800  $2,374,300 
Issuance of Series C Convertible Preferred Stock in satisfaction of contractual dividends $2,500,600  $-  $2,500,600  $2,731,500 
Transfer of inventory to fixed assets $(21,163) $(1,875)
Issuance of Series C Convertible Preferred Stock in satisfaction of public information fee $-  $3,023,500 
Issuance of Series C Convertible Preferred Stock in satisfaction registration rights penalty $-  $1,245,500 
Accrual of warrant obligation in connection with issuance of notes payable $-  $8,616 
Transfer of inventory to property and equipment $(35,908) $(19,029)
Accrual of deferred public offering costs $-  $257,242  $-  $407,679 
Warrants issued as debt discount in connection with issuances of notes payable $-  $4,479 
Issuance or accrual of common stock, warrants and embedded conversion options as debt discount in connection with the issuance of notes payable $-  $1,382,224 
Series D convertible preferred stock issued in satisfaction of liabilities $12,005,000  $-  $12,005,000  $- 
Issuance of common stock in exchange for warrants $-  $46,387,833 
Return and retirement of common stock previously held as collateral $67,058  $- 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

1. BUSINESS ORGANIZATION, NATURE OF OPERATIONS AND BASIS OF PRESENTATION

 

Blink Charging Co., through its wholly-owned subsidiaries (collectively, the “Company” or “Blink”), is a leading owner, operator, and provider of electric vehicle (“EV”) charging equipment and networked EV charging services. Blink offers both residential and commercial EV charging equipment, enabling EV drivers to easily recharge at various location types.

 

Blink’s principal line of products and services is its Blink EV charging network (the “Blink Network”) and EV charging equipment, (alsoalso known as electric vehicle supply equipment (“EVSE”) and EV-related services. The Blink Network is a proprietary cloud-based software that operates, maintains, and tracks all of the Blink EV charging stations and the associated charging data. The Blink Network provides property owners, managers, and parking companies (“Property Partners”) with cloud-based services that enable the remote monitoring and management of EV charging stations, payment processing, and provides EV drivers with vital station information including station location, availability, and applicable fees.

 

Blink offers its Property Partners a flexible range of business models for EV charging equipment and services. In its comprehensive and turnkey business model, Blink owns and operates the EV charging equipment, manages the installation, maintenance, and related services; and shares a portionthat generally fall into one of the EV charging revenue with the property owner. Alternatively, Property Partners may share in the equipment and installation expenses, with Blink operating and managing the EV charging stations and providing connectivity to the Blink Network. For Property Partners interested in purchasing and owning EV charging stations that they manage, Blink provides EV charging hardware, site recommendations, connectivity to the Blink Network, and service and maintenance services.three business models below.

 

●In the Company’s comprehensive turnkey business model, Blink owns and operates the EV charging equipment, undertakes and manages the installation, maintenance and related services, and Blink keeps substantially all of the EV charging revenue.
●

In the Company’s Hybrid business model, the Property Partner incurs the installation costs , while Blink provides the charging equipment. Blink operates and manages the EV charging station and provides connectivity of the charging station to the Blink Network.. As a result, Blink shares a greater portion of the EV charging revenue with the Property Partner than under the turnkey mode above.

●In the Company’s Host owned business model, the Property Partner purchases, owns and manages the Blink EV charging station, incurs the installation costs of the equipment, while Blink provides site recommendations, connectivity to the Blink Network and optional maintenance services, and the Property Partner keeps substantially all of the EV charging revenue.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of March 31,September 30, 2018 and for the three and nine months then ended. The results of operations for the three and nine months ended March 31,September 30, 2018 are not necessarily indicative of the operating results for the full year ending December 31, 2018 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, 2017 and for the year then ended, which were filed with the Securities and Exchange Commission (“SEC”) as part of the Company’s Annual Report on Form 10-K on April 17, 2018, as amended on May 10, 2018.

 

Effective August 29, 2017, pursuant to authority granted by the stockholders of the Company, the Company implemented a 1-for-50 reverse split of the Company’s issued and outstanding common stock (the “Reverse Split”). The number of authorized shares remains unchanged. All share and per share information has been retroactively adjusted to reflect the Reverse Split for all periods presented, unless otherwise indicated.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

The Company’s significant accounting policies are disclosed in Note 2 – Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. Since the date of the Annual Report, there have been no material changes to the Company’s significant accounting policies, except as disclosed below.

 

LIQUIDITY AND FINANCIAL CONDITION

 

As of March 31,September 30, 2018, the Company had cash, working capital and an accumulated deficit of $9,946,654, $2,212,757$21,304,407, $16,955,916 and $154,231,190,$157,599,908, respectively. During the three and nine months ended March 31,2018, the Company generated net income of $2,204,088, but a loss from operations of $3,801,939. The Company has not yet achieved profitability from operations.

Subsequent to March 31,September 30, 2018, the Company issued an aggregatehad a net loss of 957,619 shares of the Company’s common stock pursuant to the exercise of warrants at an exercise price of $4.25 per share for aggregate gross proceeds of $4,069,881.

8

$2,135,933 and $1,164,630, respectively.

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

 

LIQUIDITY AND FINANCIAL CONDITION - CONTINUED

 

On February 16, 2018, the Company closed its underwritten public offering of an aggregate 4,353,000 shares of the Company’s common stock and warrants to purchase an aggregate of 8,706,000 shares of common stock at a combined public offering price of $4.25 per unit comprised of one share and two warrants. The Public Offering resulted in $18,504,320 and $14,880,815 of gross and net proceeds, respectively, including underwriting discounts, commissions and other offering expenses of $3,623,505, which was recorded as a reduction of additional paid-in capital. Furthermore, during the nine months ended September 30, 2018, the Company issued an aggregate of 4,033,660 shares of the Company’s common stock pursuant to the exercise of warrants at an exercise price of $4.25 per share for aggregate gross proceeds of $17,143,056. See Note 8 – Stockholders’ Equity – Public Offering and Warrant Issuances for additional details.

The Company believes its current cash on hand is sufficient to meet its operating and capital requirements for at least twelve months from the issuance date of these financial statements. Thereafter, the Company willmay need to raise further capital through the sale of additional equity or debt securities or other debt instruments to support its future 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.

 

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. If the Company is unable to obtain additional financing on a timely basis, it may have to curtail its development, marketing and promotional activities, which would have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately, the Company could be forced to discontinue its operations and liquidate.

CASH AND CASH EQUIVALENTS

 

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents in the consolidated financial statements.The Company has cash on deposits in several financial institutions which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions. The Company reduces its credit risk by placing its cash and cash equivalents with major financial institutions. As of March 31,September 30, 2018, and December 31, 2017, the Company had cash balances in excess of FDIC insurance limits of $9,679,329 and $0, respectively.

UNAUDITED PRO FORMA INFORMATION

The unaudited pro forma information gives effect to the following transactions that occurred subsequent to March$20,667,432 of which $18,024,063 was held in a money market account at a financial institution at September 30, 2018. No funds were held in money market accounts at December 31, 2018:

●The issuance of 25,669 shares of common stock and warrants to purchase an aggregate of 1,703,429 shares of common stock. The aggregate fair value of $2,205,430 of the common stock and warrants was included within accrued issuable equity as of March 31, 2018.
●The issuance of 957,619 shares of common stock pursuant to the exercise of warrants at an exercise price of $4.25 per share for aggregate gross proceeds of $4,069,881.
●The conversion of 4,368 shares of Series D Convertible Preferred Stock into 1,400,000 shares of common stock.
●The repayment of $483,620 related to delinquent payroll taxes which were included within accrued expenses as of March 31, 2018.
●The return to the Company and subsequent retirement of 2,942,099 shares of common stock.

See Note 10 – Subsequent Events for additional details.

RECLASSIFICATIONS

Certain prior period balances have been reclassified in order to conform to current period presentation. These reclassifications have no effect on previously reported results of operations or loss per share.

9

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED2017.

 

REVENUE RECOGNITION

 

On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers” (“ASC 606”). The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing accounting principles generally accepted in the United States of America (“U.S. GAAP”) including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation.

 

The Company adopted ASC 606 for all applicable contracts using the modified retrospective method, which would have required a cumulative-effect adjustment, if any, as of the date of adoption. The adoption of ASC 606 did not have a material impact on the Company’s condensed consolidated financial statements as of the date of adoption. As a result, a cumulative-effect adjustment was not required.

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

REVENUE RECOGNITION - CONTINUED

The Company recognizes revenue primarily from five different types of contracts:

 

●Charging service revenue – company-owned charging stations - Revenue is recognized at the point when a particular charging session is completed.
●Product sales– The transaction price is allocated to two performance obligations: (i) shipment of charging station unit to customer and (ii) satisfaction of the standard one-year warranty. Revenue related to the charging station unit 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. The portion of the transaction price allocated to the warranty is based upon the stand- alone price of the warranty as sold separately. The warranty represents a stand-ready obligation whereby the Company is obligated to perform over a period of time and, as a result, revenue is recognized using the time-based method, on a straight-line basis over the contract term since the Company believes that the performance obligation is satisfied evenly over the contract term.
●Grant and rebate revenueNetwork fees – Grants and rebates 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.
●Warranty revenue– 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 feesWarranty revenue– 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.
●Other – Primarily related to charging service revenue from non-company-owned charging stations. Revenue is recognized at the point when a particular charging session is completed.

 

The following table summarizes our revenue recognized under ASC 606 in our condensed consolidated statements of operations:

 

  For The Three Months Ended 
  March 31, 
  2018  2017 
Charging service revenue - company-owned charging stations $305,747  $267,874 
Product sales  135,760   153,587 
Grant and rebate revenue  16,231   32,810 
Warranty revenue  30,402   34,849 
Network fees  57,251   49,238 
Other  50,529   57,262 
Total revenues, net $595,920  $595,620 

10

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED) 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

REVENUE RECOGNITION – CONTINUED

  For The Three Months Ended  For The Nine Months Ended 
  September 30,  September 30, 
  2018  2017  2018  2017 
             
Revenues - Recognized at a Point in Time            
Charging service revenue - company-owned charging stations $320,388  $295,202  $927,485  $879,428 
Product sales  102,958   157,264   381,557   367,808 
Other  36,135   43,367   131,795   122,937 
Total Revenues - Recognized at a Point in Time  459,481   495,833   1,440,837   1,370,173 
                 
Revenues - Recognized Over a Period of Time:                
Warranty  25,099   36,484   89,458   103,188 
Network fees  55,540   59,604   168,825   168,334 
Total Revenues - Recognized Over a Period of Time  80,639   96,088   258,283   271,522 
                 
Total Revenue Under ASC 606 $540,120  $591,921  $1,699,120  $1,641,695 

 

The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied.

 

As of March 31,September 30, 2018, the Company had $224,434$307,134 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 March 31,September 30, 2018. The Company expects to satisfy its remaining performance obligations for network fees and warranty revenue and recognize the revenue within the next twelve months.

 

During the three and nine months ended March 31,September 30, 2018, the Company recognized approximately $95,000$67,511 and $237,511, respectively, of revenues related to network fees, warranty contracts, and product sales, which was included in deferred revenues as of December 31, 2017.

 

During the three and nine months ended March 31,September 30, 2018, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods. The Company has electednot to disclose information about remaining performance obligations pertaining to contracts with an original expected length of one year or less, as permitted under the guidance.

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

REVENUE RECOGNITION - CONTINUED

Grants and rebates, 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 and nine months ended September 30, 2018, the Company recorded $6,724 and $68,062, respectively, related to grant and rebate revenue. During the three and nine months ended September 30, 2017, the Company recorded $14,978 and $93,798, respectively, related to grant and rebate revenue. At September 30, 2018 and December 31,2017, $112,780 and $181,913 of deferred grant and rebate revenue to be amortized.

 

CONCENTRATIONS

 

There were no revenue concentrations during the three months ended March 31, 2018.During the three and nine months ended March 31,September 30, 2018, one customer accounted for 11% and less than 10% of revenues respectively. During the three and nine months ended September 30, 2017, revenues generated from Entity Aone customer represented approximately 10% of the Company’s total revenue. As of March 31,September 30, 2018 and December 31, 2017, accounts receivable from Entity A werethis same customer amounted to less than 10% of total accounts receivable. As of March 31,September 30, 2018 and December 31, 2017, accounts receivable from Entity B wasanother significant customer were approximately 39%44% and 32%, respectively, of total accounts receivable.

LEASES

In February 2016, the Financial Accounting Standards Board (“FASB”) issued a new standard related to leases to increase transparency and comparability among organizations by requiring the recognition of operating lease right-of-use (“ROU”) assets and lease liabilities on the balance sheet. Most prominent among the changes in the standard is the recognition of ROU assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company is also required to recognize and measure new leases at the adoption date and recognize a cumulative-effect adjustment in the period of adoption using a modified retrospective approach, with certain practical expedients available.

The Company early adopted Accounting Standard Codification No. (“ASC”) 842 effective July 1, 2018 and elected to apply the available practical expedients and implemented internal controls and key system functionality to enable the preparation of financial information on adoption. The standard had an impact on the Company’s condensed consolidated balance sheets but did not have an impact on the Company’s condensed consolidated statements of operations or condensed consolidated statements of cash flows. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while the Company’s accounting for finance leases remained substantially unchanged. The adoption of ASC 842 did not have a material impact in prior periods of the current year and prior year comparative periods and as a result, a cumulative-effect adjustment was not required.

The Company provides charging services at designated locations on the hosts property at which the charging station is situated. In consideration thereof, the host shares in the monthly revenue generated by the charging station on percentage basis. As the charging station monthly revenue generated is variable, the host’s monthly revenue derived there from is similarly variable. In accordance with ASC 842 the hosts’ portion of revenue is variable and not predicated on an index or rate, as defined, these payments are not within the scope ASC 842.

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

STOCK-BASED COMPENSATION

The Company measures the cost of services received in exchange for an award of equity instruments based on the fair value of the award. For employees and non-employees, the fair value of the award is measured on the grant date. The fair value amount is then recognized over the period during which services are required to be provided in exchange for the award, usually the vesting period. The Company computes the fair value of equity-classified warrants and options granted using the Black-Scholes option pricing model.

 

NET LOSS PER COMMON SHARE

 

Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss 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.

For the three and nine months ended September 30, 2018 and 2017, the Company calculated the potential diluted earnings per share in accordance with ASC 260, as follows:

  For the Three Months Ended September 30,  For the Nine Months Ended September 30, 
  2018  2017  2018  2017 
Numerator:                
Net loss attributable to common shareholders (numerator for basic earnings per share) $(2,148,631) $(94,448,932) $(25,231,361) $(103,508,631)
Less: change in fair value of derivative liabilities and other accrued liabilities  (1,040,273)  -   (2,897,095)  - 
Adjusted net loss attributable to common shareholders (denominator for basic earnings per share) $(3,188,904) $(94,448,932) $(28,128,456) $(103,508,631)
                
Weighted average shares outstanding (denominator for basic earnings per share)  24,867,869   2,723,437   18,916,432   1,989,022 
Plus: incremental shares from assumed common stock issuance  424,681   -   -   - 
Plus: incremental shares from assumed conversion of debt  -   -   196,994   - 
Adjusted weighted average shares outstanding (denominator for diluted earnings per share)  25,292,550   2,723,437   19,113,426   1,989,022 
                 
Basic earnings per share $(0.09) $(34.68) $(1.33) $(52.04)
Diluted earnings per share $(0.13) $(34.68) $(1.47) $(52.04)

 

The following common share equivalents are excluded from the calculation of weighted average common shares outstanding because their inclusion would have been anti-dilutive:

 

  September 30, 
  2018  2017 
Convertible preferred stock  1,747,756   2,884,383 
Warrants  6,852,861   266,143 
Options  106,108   147,300 
Convertible notes  -   19,856 
Total potentially dilutive shares  8,706,725   3,317,682 

  For The Three Months Ended 
  March 31 
  2018  2017 
Convertible preferred stock  3,847,756   1,065,289 
Warrants  10,913,658   1,118,018 
Options  106,808  ��148,233 
Convertible notes  -   17,002 
Total potentially dilutive shares  14,868,222   2,348,542 

RECLASSIFICATIONS

Certain prior year balances have been reclassified in order to conform to current year presentation. These reclassifications have no effect on previously reported results of operations or loss per share.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-07, “Compensation — Stock Compensation (Topic 718),” (“ASU 2018-07”). ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. Currently, the accounting requirements for nonemployee and employee share-based payment transactions are significantly different. ASU 2018-07 expands the scope of Topic 718, Compensation — Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, Equity — Equity-Based Payments to Nonemployees. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within that fiscal year. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company early adopted ASU 2018-07 effective April 1, 2018. The adoption of ASU 2018-07 did not have a material impact on the Company’s condensed consolidated financial statements.

In July 2018, the FASB issued Accounting Standards Update No. 2018-10, “Codification Improvements to Topic 842, Leases,” (“ASU 2018-10”). The amendments in ASU 2018-10 are to address stakeholders’ questions about how to apply certain aspects of the new guidance in ASC 842. The clarifications address the rate implicit in the lease, impairment of the net investment in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. The amendments in ASC Topic 842 are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company early adopted ASU 2018-10, along with ASC 842, effective July 1, 2018. The adoption of ASU 2018-10 did not have a material impact on the Company’s condensed consolidated financial statements.

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS - CONTINUED

In July 2018, the FASB issued Accounting Standards Update No. 2018-11, “Leases (Topic 842): Targeted Improvements,” (“ASU 2018-11”). The amendments in ASU 2018-11 related to transition relief on comparative reporting at adoption affect all entities with lease contracts that choose the additional transition method and separating components of a contract affect only lessors whose lease contracts qualify for the practical expedient. The amendments in ASC Topic 842 are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company early adopted ASU 2018-11, along with ASC 842, effective July 1, 2018. The adoption of ASU 2018-11 did not have a material impact on the Company’s condensed consolidated financial statements.

In August 2018, the FASB issued Accounting Standards Update No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). The amendments in ASU 2018-13 modify the disclosure requirements on fair value measurements based on the concepts in the Concepts Statement, including the consideration of costs and benefits. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating ASU 2018-13 and its impact on its condensed consolidated financial statements.

3. PREPAID EXPENSES AND OTHER CURRRENT ASSETS

During the nine months ended September 30, 2018, the Company entered into purchase commitments to acquire second generation charging stations with an aggregate value of $3,156,629. The Company has an aggregate deposit of $792,204 for these charging stations, which is included within prepaid expenses and other current assets on the Company’s condensed consolidated balance sheet as of September 30, 2018. As of September 30, 2018, the Company had a remaining purchase commitment of $2,512,010, which will become payable upon the supplier’s delivery of the charging stations.The purchase commitments were made primarily for future sales of these charging stations.

4. ACCRUED EXPENSES

SUMMARY

Accrued expenses consist of the following:

  September 30, 2018  December 31, 2017 
  (unaudited)    
Accrued host fees $1,251,553  $1,657,663 
Accrued professional, board and other fees  182,581   2,683,557 
Accrued wages  373,898   1,016,563 
Accrued commissions  2,300   883,763 
Warranty payable  121,000   171,000 
Accrued taxes payable  646,841   551,190 
Accrued payroll taxes payable  -   632,078 
Accrued interest expense  32,034   347,027 
Accrued lease termination costs  -   300,000 
Accrued settlement reserve costs  -   12,980,588 
Dividend payable  -   1,892,800 
Other accrued expenses  127,137   19,115 
Total accrued expenses $2,737,344  $23,135,344 

 

1114

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

3.4. ACCRUED EXPENSES – CONTINUED

SUMMARY

Accrued expenses consist of the following:

  March 31, 2018  December 31, 2017 
  (unaudited)    
Accrued host fees $1,535,088  $1,657,663 
Accrued professional, board and other fees  404,528   2,683,557 
Accrued wages  15,142   1,016,563 
Accrued commissions  500   883,763 
Warranty payable  168,000   171,000 
Accrued taxes payable  559,060   551,190 
Accrued payroll taxes payable  528,371   632,078 
Accrued interest expense  38,367   347,027 
Accrued lease termination costs  -   300,000 
Accrued settlement reserve costs  100,000   12,980,588 
Dividend payable  -   1,892,800 
Other accrued expenses  53,866   19,115 
Total accrued expenses $3,402,922  $23,135,344 

 

ACCRUED PROFESSIONAL, BOARD AND OTHER FEES

 

Accrued professional, board and other fees consist of the following:

 

 March 31, 2018  December 31, 2017  September 30, 2018  December 31, 2017 
 (unaudited)     (unaudited)    
Investment banking fees $-  $860,183  $-  $860,183 
Legal fees related to public offering  -   436,715   -   436,715 
Professional fees  249,983   684,673   179,319   684,673 
Board fees  147,737   608,945   -   608,945 
Other  6,808   93,041   3,263   93,041 
Total accrued professional, board and other fees $404,528  $2,683,557  $182,582  $2,683,557 

 

On June 8, 2017, the Board approved aggregate compensation of $490,173, (compromisedcompromised of $344,311 to be paid in cash and $145,862 to be paid in units, consisting of shares of the Company’s common stock and warrants (with each such warrant having an exercise price equal to the price per unit of the units sold in the public offering) at a 20% discount to the price per unit sold in the public offering to be paid to members of the Board based on the accrued amounts owed to such Board members as of March 31, 2017. The compensation will be paid by the third business day following: (i) a public offering of the Company’s securities; and (ii) the listing of the Company’s shares of common stock on the NASDAQ or other national securities exchange. During the threenine months ended March 31,September 30, 2018, the Company paid $344,311 in cash and issued 80,704 shares of common stock with an issuance date fair value of $314,414. As of March 31, 2018, the warrants had not been issued and, as a result, were included within accrued issuable equity (See Note 4 - Accrued Issuable Equity) with a value of $69,658.

 

See Note 98 – Stockholders’ Equity – Warrant Issuances. See Note 11 – Commitments and Contingencies – Taxes.

5. ACCRUED ISSUABLE EQUITY

Accrued issuable equity consists of the following:

  September 30, 2018  December 31, 2017 
  (unaudited)    
Warrants $2,903  $1,154,120 
Common Stock  1,039,559   1,735,047 
Options  89,012   50,739 
Total accrued issuable equity $1,131,474  $2,939,906 

On April 3, 2018, the Company issued 25,668 shares of common stock with an issuance date fair value of $70,000 in settlement of a liability.

On April 9, 2018, the Company issued warrants to purchase 1,030,115 shares of common stock with an issuance date fair value of $247,360, which was included within additional paid- capital.

See Note 8 – Stockholder’s Equity – Warrant Issuances and Note 12- Subsequent Events for additional information.

 

1215

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

4. ACCRUED ISSUABLE EQUITY

Accrued issuable equity consists of the following:

        Pro Forma 
  March 31, 2018  December 31, 2017  March 31, 2018 
  (unaudited)     (unaudited) 
Warrants $2,138,039  $1,154,120  $2,609 
Common Stock  1,065,998   1,735,047   995,998 
Options  85,297   50,739   85,297 
Total accrued issuable equity $3,289,334  $2,939,906  $1,083,904 

As of March 31, 2018, 25,669 shares of common stock and warrants to purchase an aggregate of 1,703,429 shares of common stock with an aggregate fair value of $2,205,430 were included within accrued issuable equity. The unaudited pro forma information gives effect to the April 2018 issuance of these securities, such that the $2,205,430 fair value was reclassified from liabilities to equity.

5.6. NOTES PAYABLE

 

JMJ AGREEMENT

 

Pursuant to a Lockup, Conversion, and Additional Investment Agreement dated October 23, 2017, as amended on November 29, 2017, January 4, 2018, and February 1, 2018 (the “JMJ Agreement”) with JMJ Financial (“JMJ”) whereby the Company and JMJ agreed to settle the current defaults under the promissory note with JMJ upon the closing of the Public Offering,public offering, on February 16, 2018, the Company issued 12,005 shares of Series D Convertible Preferred Stock with an issuance date fair value of $12,005,000, which represents the fair value of securities required to be issued pursuant to the JMJ Agreement, in satisfaction of aggregate liabilities previously owed to JMJ of $17,805,175, such that the Company recorded a gain on settlement of $0 and $5,800,175 on the condensed consolidated statement of operations during the three and nine months ended March 31, 2018.September 30, 2018, respectively. The Series D Convertible Preferred Stock was determined to be permanent equity on the Company’s condensed consolidated balance sheet. See Note 8 – Stockholder’s Equity – Series D Convertible Preferred Stock for additional information.

 

JMJ ADVANCE

 

Separate from and unrelated to the JMJ Agreement, on January 22, 2018, JMJ advanced $250,000 to the Company (the “JMJ Advance”).

 

On February 1, 2018, the Company and JMJ entered into a letter agreement whereby the parties agreed that, concurrent with the closing of the public offering, the Company will convert the JMJ Advance into units, with each unit consisting of one share of restricted common stock and a warrant to purchase one share of restricted common stock at an exercise price equal to the exercise price of the warrants sold as part of the public offering, at a price equal to 80% of the per unit price in the public offering. On March 16, 2018, the Company issued 73,529 shares of common stock with an issuance date fair value of $205,881 to JMJ, pursuant to this agreement. As of March 31,On April 9, 2018, a warrantthe Company issued the 147,058 warrants to purchase 147,058 shares of common stock with aan issuance date fair value of $184,355 had not been issued and, as a result,$35,313, which was included within accrued issuable equity. The warrant was issued subsequent to March 31, 2018.additional paid-in capital.

 

See Note 89 – Related Parties – BLNK Holdings Transfers to JMJ for additional information.

 

CONVERTIBLE AND OTHER NOTES – RELATED PARTY

 

Farkas Group Inc. (“FGI”) Notes

 

On February 16, 2018 and pursuant to the closing of the Public Offering,public offering, the Company paid $688,238 (including principal repayments of $545,000) in satisfaction of the debt.

 

BLNK Holdings, LLC (“BLNK Holdings”) Notes

 

On March 16, 2018, the Company issued 74,753 shares of common stock with an issuance date fair value of $209,308 to BLNK Holdings inexchange of the principal and accrued and unpaid interest on the notes.

13

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

5. NOTES PAYABLE – CONTINUED

 

OTHER NOTES

 

On February 14, 2018, the Company issued a note payable in the principal amount of $55,000. Interest on the notes accrues at a rate of 8% annually and is payable monthly. The note was repaid during the threenine months ended March 31,September 30, 2018.

 

During the threenine months ended March 31,September 30, 2018, in addition to the repayment of the $55,000 note discussed above, the Company made principal repayments of $160,000.

 

INTEREST EXPENSE

 

Interest expense on notes payable for the three and nine months ended March 31,September 30, 2018 was $0 and $898,716 respectively. Interest expense for the three and nine months ended September 30, 2017 was $104,983$95,215 and $140,661,$454,164, respectively.

BLINK CHARGING CO. AND SUBSIDIARIES

 

6.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

7. FAIR VALUE MEASUREMENT

 

Assumptions utilized in the valuation of Level 3 liabilities are described as follows:

 

  For the Three Months Ended 
  March 31, 
  2018  2017 
       
Risk-free interest rate  1.62%-2.63%   1.47%-1.50% 
Contractual term (years)  0.53-3.25   1.53-5.00 
Expected volatility  113%-131%   149%-155% 
Expected dividend yield  0.00%  0.00%

  For the Three Months Ended  For the Nine Months Ended 
  September 30,  September 30, 
  2018  2017  2018  2017 
             
Risk-free interest rate  2.12% - 2.63%   1.55-1.62%   1.62% - 2.63%   1.47%-1.62% 
Contractual term (years)  0.03 - 2.75   1.28-3.75   0.25-3.25   1.28-4.00 
Expected volatility  171% - 217%   114%-130%   113%-217%   114%-149% 
Expected dividend yield  0.00%  0.00%  0.00%  0.00%

 

The following table sets forth a summary of the changes in the fair value of Level 3 warrant liabilities that are measured at fair value on a recurring basis:

 

Derivative Liabilities   
Beginning balance as of January 1, 2018 $3,448,390 
Exchange of derivative liability for equity  (365,913)
Reclassify derivative liability to equity  (36,445)
Issuance of warrants  - 
Change in fair value of derivative liability  (3,024,598)
Ending balance as of March 31, 2018 $21,434 
     
Warrants Payable    
Beginning balance as of January 1, 2018 $1,154,120 
Exchange of warrants payable for equity  (1,142,738)
Accrual of other warrant obligations  2,135,430 
Change in fair value of warrants payable  (8,773)
Ending balance as of March 31, 2018 $2,138,039 

Derivative Liabilities   
Beginning balance as of January 1, 2018 $3,448,390 
Exchange of derivative liability for equity  (395,175)
Reclassify derivative liability to equity  (36,445)
Issuance of warrants  - 
Change in fair value of derivative liability  (2,992,530)
Ending balance as of September 30, 2018 $24,240 
     
Warrants Payable    
Beginning balance as of January 1, 2018 $1,154,120 
Exchange of warrants payable for equity  (1,281,456)
Accrual of other warrant obligations  2,135,430 
Change in fair value of warrants payable  (2,005,191)
Ending balance as of September 30, 2018 $2,903 

 

See Note 45 - Accrued Issuable Equity for additional information.

14

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

6.7. FAIR VALUE MEASUREMENT – CONTINUED

 

Assets and liabilities measured at fair value on a recurring or nonrecurring basis are as follows:

 

 March 31, 2018  September 30, 2018 
 Level 1  Level 2  Level 3  Total  Level 1  Level 2  Level 3  Total 
Liabilities:                                
Derivative liabilities $-  $-  $21,434  $21,434  $-  $-  $24,240  $24,240 
Warrants payable  -   -   2,138,039   2,138,039   -   -   2,903   2,903 
Total liabilities $-  $-  $2,159,473  $2,159,473  $-  $-  $27,143  $27,143 

 

  December 31, 2017 
  Level 1  Level 2  Level 3  Total 
Liabilities:                
Derivative liabilities $-  $-  $3,448,390  $3,448,390 
Warrants payable  -   -   1,154,120   1,154,120 
Total liabilities $-  $-  $4,602,510  $4,602,510 

 

See Note 5 - Accrued Issuable Equity for additional information.

7.8. STOCKHOLDERS’ EQUITY

 

PUBLIC OFFERING

 

On February 16, 2018, the Company closed its underwritten public offering (the “Public Offering”) of an aggregate of 4,353,000 shares of the Company’s common stock and warrants to purchase an aggregate of 8,706,000 shares of common stock at a combined public offering price of $4.25 per unit comprised of one share and two warrants. Each warrant is exercisable for five years from the date of issuance and has an exercise price equal to $4.25 per share. The Public Offeringpublic offering resulted in $18,504,320 and $14,880,815 of gross and net proceeds, respectively, including underwriting discounts, commissions and other offering expenses of $3,623,505, which was recorded as a reduction of additional paid-in capital.

 

The Company granted the underwriters a 45-day option to purchase up to an additional 652,950 shares of common stock and/or warrants to purchase 1,305,900 shares of common stock to cover over-allotments, if any. In connection with the closing of the Public Offering,public offering, the underwriters partially exercised their over-allotment option and purchased additional warrants to purchase 406,956 shares of common stock at an exercise price of $4.25 per share for aggregate gross proceeds of $4,070, or $0.01 per warrant.

2018 INCENTIVE COMPENSATION PLAN

On September 7, 2018, the Board of the Company , as well as a majority of the Company’s shareholders approved the Company’s 2018 Incentive Compensation Plan (the “2018 Plan”), which enables the Company to grant stock options, restricted stock, dividend equivalents, stock payments, deferred stock, restricted stock units, stock appreciation rights, performance share awards, and other incentive awards to associates, directors, consultants, and advisors of the Company and its affiliates, and to improve the ability of the Company to attract, retain, and motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company. Stock options granted under the 2018 Plan may be non-qualified stock options or incentive stock options, within the meaning of Section 422(b) of the Internal Revenue Code of 1986, except that stock options granted to outside directors and any consultants or advisers providing services to the Company or an affiliate shall in all cases be non-qualified stock options. The option price must be at least 100% of the fair market value on the date of grant and if issued to a 10% or greater shareholder must be at least 110% of the fair market value on the date of the grant.

The 2018 Plan is to be administered by the Compensation Committee of the Board, which shall have discretion over the awards and grants thereunder. The aggregate maximum number of shares of common stock for which stock options or awards may be granted pursuant to the 2018 Plan is 5,000,000, adjusted as provided in Section 4 of the 2018 Plan. No awards may be issued on or after September 7, 2028. As of September 30, 2018, the Company issued 188,501 shares of restricted common stock pursuant the 2018 Plan to members of our Board of Directors and Management. As of September 30, 2018, there were 4,811,499 securities available for future issuance under the 2018 Plan.

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

8. STOCKHOLDERS’ EQUITY – CONTINUED

 

PREFERRED STOCK

 

SERIES A CONVERTIBLE PREFERRED STOCK

 

On March 22, 2018, pursuant to letter agreements dated December 6, 2017 and December 7, 2017, the Company issued 550,000 shares of common stock inupon automatic conversion of 11,000,000 shares of Series A Convertible Preferred Stock.

 

SERIES B CONVERTIBLE PREFERRED STOCK

 

On March 16, 2018,pursuant to a conversion agreement dated May 19, 2017, the Company issued 223,235 shares of common stock inupon automatic conversion of 8,250 shares of Series B Convertible Preferred Stock with a value of $825,000. The Company determined that the Series B Convertible Preferred Stock included a beneficial conversion feature since the commitment date market price of the Company’s common stock exceeded the effective conversion price and, as a result, the Company recorded a deemed dividend in the amount of $0 and $825,000 during the three and nine months ended March 31, 2018.September 30, 2018, respectively.

 

15

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

7. STOCKHOLDERS’ EQUITY – CONTINUED

PREFERRED STOCK - CONTINUED

SERIES C CONVERTIBLE PREFERRED STOCK

 

Effective January 8, 2018, the Company’s Board of Directors and its shareholders amended the Certificate of Designation of its Series C Convertible Preferred Stock to add the following provisions: (a) upon closing of a public offering of the Company’s securities and the listing of the Company’s shares of common stock on an exchange, all outstanding shares of Series C Convertible Preferred Stock will be converted into that number of shares of Common Stock determined by the number of shares of Series C Preferred multiplied by a factor of 115 divided by 80% of the per share price of common stock in the offering; and (b) until 270 days after the effective date specified within the automatic preferred conversion notice, no holder of Series C Convertible Preferred Stock may offer, pledge, sell, contract to sell, grant, lend, or otherwise transfer or dispose of any Series C Preferred Shares without the prior written consent of the underwriter of the offering.

 

During thethree nine months ended March 31,September 30, 2018, 25,006 shares of Series C Convertible Preferred Stock were issued as payment of dividends in kind.

 

On March 28, 2018,pursuant to the terms of the amended Certificate of Designation,the Company issued an aggregate of 9,111,644 shares of common stock inupon automaticconversion of 254,557 shares of Series C Convertible Preferred Stock.The Company determined that the Series C Convertible Preferred Stock included a beneficial conversion feature since the commitment date market price of the Company’s common stock exceeded the effective conversion price and, as a result, the Company recorded a deemed dividend in the amount of $0 and $22,633,931 during the three and nine months ended March 31, 2018.September 30, 2018, respectively.

19

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

8. STOCKHOLDERS’ EQUITY – CONTINUED

PREFERRED STOCK – CONTINUED

SERIES D CONVERTIBLE PREFERRED STOCK

 

On February 13, 2018, the Company’s Board of Directors approved the designation of 13,000 shares of the 40,000,000 authorized shares of preferred stock as Series D Convertible Preferred Stock, par value $0.001 per share (the “Series D Convertible Preferred Stock”). On February 15, 2018, the Company filed the Certificate of Designation with the State of Nevada related to the Series D Convertible Preferred Stock. Each share of Series D Convertible Preferred Stock will have a stated value of $1,000 per share.

 

Conversion.Each share of Series D Convertible Preferred Stock is convertible into shares of common stock (subject to adjustment as provided in the related certificate of designation of preferences, rights and limitations) at any time at the option of the holder at a conversion price equal to the price of the units in the public offering. Holders of Series D Convertible Preferred Stock are prohibited from converting Series D Convertible Preferred Stock into shares of common stock if, as a result of such conversion, the holder, together with its affiliates, would own more than 9.99% of the total number of shares of common stock then issued and outstanding.

 

Liquidation Preference. In the event of the liquidation, dissolution or winding-up of the Company, holders of Series D Convertible Preferred Stock will be entitled to receive the same amount that a holder of common stock would receive if the Series D Convertible Preferred Stock were fully converted into shares of common stock at the conversion price (disregarding for such purposes any conversion limitations) which amounts shall be paid pari passu with all holders of Common Stock.

 

Voting Rights. Shares of Series D Convertible Preferred Stock will generally have no voting rights, except as required by law and except that the affirmative vote of the holders of a majority of the then outstanding shares of Series D Convertible Preferred Stock is required to, (a) alter or change adversely the powers, preferences or rights given to the Series D Convertible Preferred Stock, (b) amend the Company’s articles of incorporation or other charter documents in any manner that materially adversely affects any rights of the holders, (c) increase the number of authorized shares of Series D Convertible Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.

Dividends. Shares of Series D Convertible Preferred Stock will not be entitled to receive any dividends, unless and until specifically declared by the Company’s board of directors. The holders of the Series D Convertible Preferred Stock will participate, on an as-if-converted-to-common stock basis, in any dividends to the holders of common stock.

16

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

7. STOCKHOLDERS’ EQUITY – CONTINUED

PREFERRED STOCK - CONTINUED

SERIES D CONVERTIBLE PREFERRED STOCK – CONTINUED

Redemption.The Company is not obligated to redeem or repurchase any shares of Series D Convertible Preferred Stock. Series D Convertible Preferred Stock are not otherwise entitled to any redemption rights or mandatory sinking fund or analogous fund provisions.

 

Exchange Listing. The Company does not plan on making an application to list the Series D Convertible Preferred Stock on any national securities exchange or other nationally recognized trading system.

 

See Note 56 – Notes Payable – JMJ Agreement for additional details.

 

On May 10, 2018 and September 12, 2018, JMJ elected to convert 4,368 and 2,184 shares of Series D Convertible Preferred Stock into 1,400,000 and 700,000 shares of the Company’s common stock, respectively, at a conversion price of $3.12 per common share. The Company determined that the Series D Convertible Preferred Stock did not include a beneficial conversion feature.

20

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

8. STOCKHOLDERS’ EQUITY – CONTINUED

COMMON STOCK

 

See Note 8 – Stockholders’ Equity – Preferred Stock – Series D Convertible Preferred Stock, Note 9 – Related Parties – Letter Agreements and Note 11 – Commitments and Contingencies for additional details.

During the threenine months ended March 31,September 30, 2018, the Company issued an aggregate of 1,488,0211,513,690 shares of common stock with an aggregate issuance date fair value of $4,283,988$4,353,988 in satisfaction of debt and other liabilities. In connection with the issuances, the Company recorded a loss on settlement of $2,192,045$0 and $2,136,860 during the three and nine months ended March 31, 2018.September 30, 2018, respectively.

 

On August 1, 2018, the Company retired 23,529 shares of common stock previously held as collateral for a certain debt obligation. See Note 8 – Related Parties – Letter Agreements and Note 911 – Commitments and Contingencies – Litigation and Disputes for additional details.

 

On September 7, 2018 the Company issued an aggregate of 188,501 immediately vested shares of restricted common stock to officers and directors of the Company for services rendered. The shares had an aggregate grant date fair value of $601,318 which was recognized immediately within the statement of operations during the three and nine months ended September 30, 2018.

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 March 31,September 30, 2018 of $737,416 and $3,685,291, respectively, and for the three and nine months ended September 30, 2017 of $2,817,314$322,426 and $167,248,$1,432,832, respectively, which is included within compensation expense on the condensed consolidated statement of operations. As of March 31,September 30, 2018, there was no$8,216 of unrecognized stock-based compensation expense.expense that will be recognized over the weighted average remaining vesting period of 0.31 years.

 

8.STOCK WARRANTS

On April 9, 2018, the Company issued five-year immediately vested warrants to purchase an aggregate of 1,703,429 shares of common stock at an exercise price of $4.25 per share in satisfaction of accrued issuable equity. The Company recorded a gain of $1,726,388 on the condensed consolidated statement of operations during the three and nine months ended September 30, 2018 related to the change in fair value of the warrant liability on the date of issuance. The warrants had an issuance date fair value of $409,042, which was charged to additional paid-in capital.

During the nine months ended September 30, 2018, the Company issued an aggregate of 4,033,660 shares of the Company’s common stock pursuant to the exercise of warrants at an exercise price of $4.25 per share for aggregate cash proceeds of $17,143,056.

The following table accounts for the Company’s warrant activity for the nine months ended September 30, 2018:

     Weighted  Weighted Average    
     Average  Remaining  Aggregate 
  Number of  Exercise  Life  Intrinsic 
  Shares  Price  In Years  Value 
Outstanding, December 31, 2017  275,332  $43.15         
Issued  10,795,848   4.25         
Exercised  (4,033,660)  4.25         
Cancelled/forfeited/expired  (184,659)  47.09         
Outstanding, September 30, 2018  6,852,861  $4.66   4.4  $18,900 
                 
Exercisable, September 30, 2018  6,852,861  $4.66   4.4  $18,900 

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

9. RELATED PARTIES

 

BLNK HOLDINGS TRANSFERS TO JMJ

 

In February 2018, prior to the closing of the Public Offering,public offering, Mr. Farkas reached an agreement with JMJ that, following the closing of the Public Offering,public offering, BLNK Holdings, an entity for which Mr. Farkas had voting power and investment power with regard to this entity’s holdings, would transfer 260,000 shares to JMJ as additional consideration for JMJ agreeing to waive its claims to $12 million as a mandatory default amount pursuant to previous agreements with the Company. This transfer took place on April 18, 2018. Prior to entering into this agreement, Mr. Farkas did not bring the matter to the entire Board for a vote. The fair value of $785,200 of the 260,000 shares of common stock that were to be transferred to JMJ by BLNK Holdings is reflected as interest expense on the Company’s condensed consolidated statements of operations during the threenine months ended March 31,September 30, 2018 with a corresponding credit to additional paid-in capital.

 

In connection with Mr. Farkas relinquishing a claim that warrants to purchase an aggregate of approximately 3,700,000 shares of common stock that were previously expired, exercised or exchanged should be replaced pursuant to his employment agreement with the Company, Mr. Farkas has requested the Board issue him 260,000 shares as reimbursement of the transfer to JMJ discussed in the previous paragraph. The Board does not believe it would be in the best interests of the Company or its shareholders to do so. As a result, the Company has not made any accrual for a settlement of this request as of March 31, 2018.

17

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

8. RELATED PARTIES – CONTINUED

LETTER AGREEMENTS

On March 22, 2018, pursuant to a letter agreement dated December 6, 2017, the Company issued 886,119 shares of common stock to Mr. Farkas as compensation with an issuance date fair value of $2,534,300. On April 16, 2018, Mr. Farkas returned 2,930,596 shares of common stock to the Company which were then retired.

 

On March 22, 2018, pursuant to a letter agreement dated December 7, 2017, the Company issued 26,500 shares of common stock to Mr. Feintuch as compensation with an issuance date fair value of $75,790.

 

9. COMMITMENTS AND CONTINGENCIES10. LEASES

 

OPERATING LEASE

 

On April 20, 2018, the Company entered into a three-year operating lease agreement for 3,425 square feet of office space in Miami Beach, Florida beginning May 1, 2018 and ending May 31, 2021. The tenant and landlord have the option to cancel the contract after the first year with a 90-day written notice. As of September 30, 2018, the lease had a remaining term of approximately three years. The lease does not contain an option to extend past the existing lease term. Over the duration of the lease, payments will escalate 5% every year.

As of September 30, 2018, the Company had no leases that were classified as a financing lease. As of September 30, 2018, the Company did not have additional operating and financing leases that have not yet commenced. 

Total rent expenseoperating lease expenses for the three and nine months ended March 31,September 30, 2018 was $68,960 and 2017 was $30,554 and $56,548,$147,113, respectively, and is recorded in other operating expenses on the condensed consolidated statements of operations. Total rent expense for the three and nine months ended September 30, 2017 was $39,976 and $117,194, respectively, and is recorded in other operating expenses on the condensed consolidated statements of operations.

Supplemental cash flows information related to leases was as follows:

  

Nine Months Ended

September 30, 2018

 
    
Cash paid for amounts included in the measurement of lease liabilities:    
Operating cash flows from operating leases $30,538 
     
Right-of-use assets obtained in exchange for lease obligations:    
Operating leases $323,301 

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

10. LEASES – CONTINUED

Weighted Average Remaining Lease Term
Operating leases2.75 years
Weighted Average Discount Rate
Operating leases6.0%

Future minimum payments under non-cancellable leases as of September 30, 2018 were as follows:

For the Years Ending December 31, Amount 
    
2018 $30,495 
2019  125,538 
2020  131,814 
2021  56,035 
Total future minimum lease payments  343,882 
Less: imputed interest  (60,468)
Total $283,414 

11. COMMITMENTS AND CONTINGENCIES

 

TAXES

 

The Company has not filed its Federal and State corporate income tax returns for the years ended December 31, 2014, 2015, 2016 and 2017. The Company has sustained losses for the years ended December 31, 2014, 2015, 2016 and 2017. The Company has determined that no tax liability, other than required minimums hasand related interest and penalties, have been incurred.

 

The Company is also delinquent in filing and, in certain instances, paying sales taxes collected from customers in specific states that impose a tax on sales of the Company’s products. The Company accrued approximately $219,000$177,000 and $178,000 as of March 31,September 30, 2018 and December 31, 2017, respectively, related to this matter.

 

TheAs of December 31, 2017, the Company is currentlywas delinquent in remitting approximately $528,000 and $632,000 as of March 31, 2018 and December 31, 2017, respectively, of federal and state payroll taxes withheld from employees. During the year ended December 31, 2017, the Company sent two letters to the Internal Revenue Service (“IRS”) notifying the IRS of its intention to resolve the delinquent taxes upon the receipt of additional working capital. Additionally, on March 27, 2018, the Company submitted its Forms 940 and 941 for the year ended December 31, 2017 to the IRS. Subsequent to March 31,As of September 30, 2018, the Company paid $483,620is no longer delinquent on federal and state payroll taxes, as the Company has remitted all the requisite federal and state payroll taxes withheld from employees to the IRS and is proactively seeking settlement with the appropriate taxing authorities regarding penalties and fees.authorities.

 

LITIGATION AND DISPUTES

 

On

On January 31, 2018, ITT Cannon, Blink Network and the Company agreed that if the Company fails to consummate a registered public offering of its common stock, list such stock on NASDAQ and issue to ITT Cannon shares of the same class of the Company’s securities by February 28, 2018, the settlement agreement will expire. The Public Offeringpublic offering closed on February 16, 2018. The Company issued 47,059 shares on March 16, 2018 to ITT Cannon. This was a partial payment of the $200,000 in stock owed to ITT Cannon. On April 3, 2018 the Company issued an additional 25,669 shares to satisfy in full its obligations to ITT. As of April 16, 2018, ITT Cannon has shipped approximately 4,600-4,900 charging cables and has agreed to ship the remaining balance.

On January 8,November 9, 2018, the Company and Douglas Stein had entered into a forbearance agreement, pursuant to which Mr. Stein has agreed to forbearreceived all charging cables due from any efforts to collect or enforce the judgment awarded to him as a result of a legally-entered award of arbitration. As a result, the Company has agreed to: (i) wire transfer $30,000 to Mr. Stein within three days of the effective date of this agreement; (ii) beginning on the first calendar day of each successive month following the effective date of this agreement, the Company has agreed to pay Mr. Stein $5,000 per month until the full amount of the judgment awarded to Mr. Stein ($223,168) has been satisfied, however, the full amount awarded to Mr. Stein must be paid in full no later than April 30, 2018; and (iii) provide Mr. Stein with certain financial information of the Company. On February 16, 2018, the Company paid the full amount owed to Mr. Stein.ITT Cannon.

 

1823

 

BLINK CHARGING CO. AND SUBSIDIARIES

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

(UNAUDITED)

 

9.11. COMMITMENTS AND CONTINGENCIES – CONTINUED

 

LITIGATION AND DISPUTES –- CONTINUED

On June 8, 2017, the Company entered into a settlement agreement with Wilson Sonsini Goodrich & Rosati to settle $475,394 in payables owed for legal services requiring: (a) $25,000 to be paid in cash at the closing of the public offering; and (b) $75,000 in the form of 17,647 shares of common stock issuable upon the closing of the public offering. On February 16, 2018, the Company paid the $25,000 in cash and on March 19, 2018, the Company issued the 17,647 shares of common stock.

See Note 7 – Stockholders’ Equity – Common Stock for additional details.

 

From time to time, the Company is a defendant or plaintiff in various legal actions that arise in the normal course of business.

 

In July 2017, the Company was served with a complaint by Zwick and Banyai PLLC and Jack Zwick for breach of a written agreement and unjust enrichment for failure to pay invoices in the aggregate amount of $53,069 for services rendered, plus interest and costs. The plaintiffs’ complaint was subsequently amended in February 2018. In June 2018, the court denied the Company’s motion to dismiss the amended complaint, although the plaintiffs voluntarily withdrew certain counts in the amended complaint. In July 2018, the Company filed its answer and affirmative defense to the amended complaint denying liability. As of October 26, 2018, Company updated its affirmative defenses in its answer and the parties are proceeding with discovery. The Company intends to continue to defend this case vigorously.

350 Green, LLC

350 Green lawsuits relate solely to alleged pre-acquisition unpaid debts of 350 Green. Also, there are other unpaid creditors, aside from those noted above, that claim to be owed certain amounts for pre-acquisition work done on behalf of 350 Green solely, that potentially could file lawsuits at some point in the future.

 

OnIn May 30, 2013, JNS Power & Control Systems, Inc. (“JNS”) filed a complaint against 350 Green, LLC, a former subsidiary of the Company, alleging claims for breach of contract, specific performance and indemnity arisingindemnity. The lawsuit arose out of an Asset Purchase Agreementasset purchase agreement from April 2013 between JNS and 350 Green, entered on April 13, 2013, wherebyunder which JNS wouldagreed to purchase car chargers and related assets from 350 Green. On September 24, 2013, the District Court entered summary judgmentFollowing court judgments in favor of JNS on its claim for specific performance. On September 9, 2015, the United States Court of Appeals for the Seventh Circuit of Chicago, Illinois affirmed the ruling of the District Court, which affirmed the sale of certain assets by 350 Green to JNS and the assumption of certain 350 Green liabilities by JNS. Onperformance, in April 7, 2016, JNS amended theits complaint to add the Company, alleging an unspecified amount of lost revenues from the car chargers, among other matters, caused by the defendants. Plaintiff also seeks indemnity for its unspecified attorney’s fees and costs in connection with enforcing the Asset Purchase Agreement in courts in New York and Chicago. On July 26, 2017, the District Court denied the Company’s motion to dismiss the Company from the suit. The Company answered the second amended complaint on August 16, 2017. The deadline for the parties to complete discovery is December 8, 2017. The next status hearing on the matter is set for December 8, 2017. As of December 31, 2017, the Company accrued a $750,000 liability in connection with its settlement offer to JNS. OnIn February 2, 2018, the parties entered into an asset purchase agreement whereby the parties agreed to settle the litigation. The Company purchased back the EV chargers it previously sold to JNS for: (a) shares of Common Stock worth $600,000 with a price per share equal to $4.25 (the price per share of the Offering); (b) $50,000 cash payment within ten days of the closing of the Offering; and (c) $100,000 cash payment within six months following the closing of the Offering. The Offering closed on February 16, 2018. The Company issued 141,176 shares on March 16, 2018. The Company made the $50,000 payment on March 16, 2018. JNS filed a motion to dismiss the lawsuit without prejudice on March 23, 2018 and the judge granted the motion on March 26, 2018. JNS will file a motion to convert the dismissal without prejudice to dismissal with prejudice within three business days of the $100,000 payment. On March 16, 2018, the Company issued 23,529 shares of Common Stock to JNS to be held in escrow as security for the $100,000 payment. AtOn August 2, 2018, the timeCompany paid the $100,000 payment is made by the Company,to JNS and the 23,529 shares currently heldof common stock were returned to the Company and were subsequently cancelled. See Note 8 – Stockholder’s Equity – Common Stock for additional details. Concomitantly, JNS filed a motion to dismiss the lawsuit with prejudice. On March 26, 2018, the Court dismissed the case without prejudice and with leave to reinstate by November 1, 2018.  In August 2018, the Company satisfied the last of its payment obligations to JNS, however, on October 29, 2018, JNS filed a motion to extend the date for reinstatement to January 11, 2019 to allow additional time to lift restrictions on the stock it received in escrow will be cancelled.the asset purchase.  On November 1, 2018, the Court granted the motion.

On March 26, 2018, final judgment has been reached relating to the Assignment for the Benefit of the Creditors, whereby all remaining assets of 350 Green are abandoned to their respective property owners where the charging stations have been installed, thus on March 26, 2018, the assignment proceeding has closed.

 

Concurrent with the closing of the Public Offering,public offering, the Company was to pay the former principals of 350 Green LLC $25,000 in installment debt and $50,000 within 60 days thereafter in settlement of a $360,000 debt (inclusive of imputed interest) and the return of 8,065 shares of the Company’s common sharesstock by the former principals of 350 Green LLC, in accordance with a Settlement Agreement between the parties dated August 21, 2015, resultingthat would have resulted in a gain of $285,000. As of the date of filing, this payment has not yet been made, northe aforementioned gain has not been recognized, and the common shares have not been returned by the former principals of 350 Green LLC.

19

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

9. COMMITMENTS AND CONTINGENCIES – CONTINUED

LIABILITY CONVERSION AGREEMENTS

 

See Note 78 – Stockholders’ Equity – Common Stock for additional details.

 

On January 31, 2018, the Company, SemaConnect Inc. (“SemaConnect”) and their legal counsel entered into an amendment to their settlement agreement dated June 23, 2017 whereby the parties agreed that, concurrent with the closing of the public offering, the Company will settle the outstanding liabilities of $153,529 by issuing shares of common stock at a price equal to 80% of the price of the shares sold in the public offering, plus an additional 1,500 shares of common stock. On March 16, 2018, the Company issued 17,595 shares of common stock with an issuance date fair value of $49,266 to SemaConnect.

 

24

On February 3, 2018, the Company and Sunrise Securities Corp. entered into a letter agreement whereby the parties agreed that, concurrent with the closing of the public offering, the Company will settle outstanding liabilities of $867,242 owed to the counterparty as follows: (i) the Company will pay $381,260 in cash out of the proceeds of the public offering; and (ii) in satisfaction of the remaining liability of $485,982, the Company will issue units, with each unit consisting of one share of restricted common stock and a warrant to purchase one share of restricted common stock at an exercise price equal to the exercise price of the warrants sold as part of the public offering, at a price equal to 80% of the per unit price in the public offering On February 16, 2018, the Company paid $375,000 in cash and on March 22, 2018, the Company issued 153,295 shares of common stock with an issuance date fair value of $438,424.

BLINK CHARGING CO. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

11. COMMITMENTS AND CONTINGENCIES – CONTINUED

LIABILITY CONVERSION AGREEMENTS - CONTINUED

 

On February 3, 2018, the Company and Schafer & Weiner, PLLC (“Schafer & Weiner”) entered into a letter agreement whereby the parties agreed that, concurrent with the closing of the public offering, the Company will settle outstanding liabilities of $813,962 owed to Schafer & Weiner as follows: (i) the Company will pay $406,981 in cash out of the proceeds of the public offering; and (ii) in satisfaction of the remaining liability of $406,981, the Company will issue units, with each unit consisting of one share of restricted common stock and a warrant to purchase one share of restricted common stock at an exercise price equal to the exercise price of the warrants sold as part of the public offering, at a price equal to 80% of the per unit price in the public offering. In consideration, Schafer & Weiner agreed to return to the Company 11,503 shares of common stock of the Company. On February 16, 2018, the Company paid $406,981 in cash. On March 19, 2018, the Company issued 119,700 shares of common stock with an issuance date fair value of $345,933 to Schafer & Weiner. On April 16, 2018, Schafer and Weiner returned and the Company then retired the 11,503 shares of common stock.

 

EMPLOYMENT AGREEMENTS

On February 13,June 17, 2018, the Company and Genweb2 entered into a lettertwo-year employment agreement wherebywith its Chief Financial Officer (“CFO”) that will be renewed automatically for an additional one-year term, unless the parties agreed that, concurrent withCompany provides a notice of non-renewal at least thirty (30) days prior to the closingend of the public offering,term. If the Company will settle outstanding liabilities of $116,999 owed to Genweb2 as follows: (i)terminates the CFO’s employment without cause (as defined in the agreement), the Company will pay $48,500 in cash outis required to continue paying a portion of the proceedsCFO’s base salary, up to $112,500. Upon shareholder approval of an omnibus incentive plan, the public offering; and (ii) in satisfaction ofCFO will be entitled to awards under the remaining liability of $48,500, the Company will issue shares of restricted common stock atplan with a price equal to 80% of the per unit price in the public offering. On February 16, 2018, the Company paid $48,500 in cash. On March 16, 2018, the Company issued 17,132 shares of common stock with an issuance date fair value of $47,970.$112,500.

 

On February 13,August 28, 2018, the Company and Dickinson Wright PLLC (“Dickinson Wright”) entered into a lettertwo-year employment agreement wherebywith its President that will be renewed automatically for an additional one-year term, unless the parties agreed that, concurrent withCompany provides a notice of non-renewal at least thirty (30) days prior to the closingend of the public offering,term. If the Company will settle outstanding liabilities of $88,845 owed to Dickinson Wright as follows: (i)terminates the President’s employment without cause (as defined in the agreement), the Company is required to continue paying a portion the President’s base salary, up to $125,000. Upon shareholder approval of an omnibus incentive plan, the President will pay $88,845 in cash outbe entitled to awards under the plan with a value of the proceeds of the public offering. On February 16,$125,000. Effective October 18, 2018, the Company paidCompany’s President assumed the full amount owed to Dickinson Wright.

20

BLINK CHARGING CO. AND SUBSIDIARIESduties and additional position of Chief Operating Officer.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

10.12. SUBSEQUENT EVENTS

 

OPERATING LEASEREPOSITIONING OF EXECUTIVE EMPLOYMENT AGREEMENT

 

On April 20,October 19, 2018, the Company entered into a three-year leasean agreement for 3,425 square feetwith its then-Chief Executive Officer (“Former CEO”), whereby the Former CEO will be repositioned as the Company’s Senior Vice President of office spaceSales (“VP of Sales”) in Miami Beach, Florida beginning June 1, 2018 and ending May 31, 2021. Monthly lease payments amountconjunction with his resignation of his position as CEO. In connection with the agreement the parties agreed to $9,500 for a total of approximately $342,000 for the total term of the lease. The tenant and landlord have the option to cancel the contract after the first year with a 90-day written notice.following:

●the VP of Sales will be entitled to receive a base salary of $10,000 per month as well as commissions on sales;
●the VP of Sales will be entitled to receive an aggregate payment of $225,000 in connection with the VP of Sales’ previous employment agreement with the Company dated July 16, 2015 payable in January 2019;
●the VP of Sales is entitled to receive restricted common stock with an aggregate value of $250,000, half of which vests in January 2019 and half vests on October 19, 2019; and
●all previously outstanding vested options may be exercised in accordance with their terms and all previously outstanding unvested options shall be forfeited;

 

WARRANT EXERCISESCOMMON STOCK ISSUANCES

 

Subsequent to March 31,September 30, 2018, the Company issued an aggregate of 957,619 shares of the Company’s common stock pursuant to the exercise of warrants at an exercise price of $4.25 per share for aggregate gross proceeds of $4,069,881.

PREFERRED STOCK CONVERSION

Subsequent to March 31, 2018, JMJ elected to convert 4,368 shares of Series D Convertible Preferred Stock into 1,400,000 shares of the Company’s common stock at a conversion price of $3.12 per share.

WARRANT ISSUANCES

Subsequent to March 31, 2018, the Company issued five-year warrants to purchase an aggregate of 1,703,42935,482 shares of common stock at an exercise price of $4.25 per share.for services rendered.

 

2125

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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. (and, including its subsidiaries, “Blink” and the “Company”) as of March 31,September 30, 2018 and for the three and nine months ended March 31,September 30, 2018 and 2017 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 Charging.Blink. This Quarterly Report contains forward-looking statements as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this Quarterly Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions, are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections upon which the statements are based. Factors that may affect our results include, but are not limited to, the risks and uncertainties set forth under Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as amended, and as discussed elsewhere in this Quarterly Report on Form 10-Q particularly in 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.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.

Overview

 

We are a leading owner, operator, and provider of electric vehicle (“EV”) charging equipment and networked EV charging services. We offer both residential and commercial EV charging equipment, enabling EV drivers to easily recharge at various location types.

 

Our principal line of products and services is our Blink EV charging network (the “Blink Network”) and EV charging equipment, (alsoalso known as electric vehicle supply equipment)equipment (“E.V.S.E.”), and EV related services. Our Blink Network is proprietary cloud-based software that operates, maintains, and tracks all of the Blink EV charging stations and the associated charging data. The Blink Network provides property owners, managers, and parking companies, who we refer to as our Property Partners, with cloud-based services that enable the remote monitoring and management of EV charging stations, payment processing, and provide EV drivers with vital station information including station location, availability, and applicable fees.

 

We offer our Property Partners a flexible range of business models for EV charging equipment and services. In our comprehensive and turnkey business model, we own and operate the EV charging equipment, manage the installation, maintenance, and related services, and share a portionthat generally fall into one of the EV charging revenue with the property owner. Alternatively, Property Partners may share in the equipment and installation expenses, with Blink operating and managing the EV charging stations and providing connectivity to the Blink Network. For Property Partners interested in purchasing and owning EV charging stations that they manage, we can also provide EV charging hardware, site recommendations, connectivity to the Blink Network, and service and maintenance services.three business models below.

 

●

In our comprehensive turnkey business model, we own and operate the EV charging equipment, undertakes and manages the installation, maintenance and related services, and we keep substantially all of the EV charging revenue.

●

In our Hybrid business model, the Property Partner incurs installation costs, while we provide the EV charging equipment. We operate and manage the EV charging station and provide connectivity of the charging station to the Blink Network. As a result, we share a greater portion of the EV charging revenue with the Property Partner than under the turnkey business model above.

●In our Host owned business model, the Property Partner purchases, owns and manages the Blink EV charging station incurs the installation costs of the equipment while we provide site recommendations, connectivity to the Blink Network and optional maintenance services, and the Property Partner keeps substantially all of the EV charging revenue.

We have strategic partnerships across numerous transit/destination locations, including airports, auto dealers, healthcare/medical, hotels, mixed-use, municipal locations, multifamily residential and condos, parks and recreation areas, parking lots, religious institutions, restaurants, retailers, schools and universities, stadiums, supermarkets, transportation hubs, and workplace locations.Asof May 11,October 24, 2018, wewhat have deployed approximately 14,16514,606 charging stations, deployed of which 4,6906,919 are operating on the Blink network: 5.090 are Level 2 commercial charging units, 113stations, 107 are DC Fast Charging EV chargersstations and 1,9761,722 are residential charging units in service onunits.  Of the Blink Network. Additionally, we currently have approximately 436remaining 7,687 charging stations, 504 are Level 2 commercial charging unitsstations operating on other networks and thereapproximately 7,183 are also approximately an additional 6,950 non-networked, residential Blink EV charging stations. The non-networked, residential Blink EVAs of October 24, 2018, we have 412 charging stations that have been sold and shipped to our Property Partners that are all partner owned.awaiting installation and activation.

 

As reflected in our unaudited condensed consolidated financial statements as of March 31,September 30, 2018, we had cash, working capital and an accumulated deficit of $9,946,654, $2,212,757$21,304,407, $16,955,916 and $154,231,190,$157,599,908, respectively. During the three and nine months ended March 31,2018, we generated net income of $2,204,088, but a loss from operations of $3,801,939. Subsequent to March 31,September 30, 2018, we issued an aggregatehad net losses of 957,619 shares of common stock pursuant to the exercise of warrants at an exercise price of $4.25 per share for aggregate gross proceeds of $4,069,881.

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$2,135,933 and $1,164,630, respectively.

Consolidated Results of Operations

Three Months Ended March 31,September 30, 2018 Compared With Three Months Ended March 31,September 30, 2017

Revenues

 

Total revenue for the three months ended March 31,September 30, 2018 remained relatively flat at $595,920decreased by $60,055, or 10%, to $546,844 compared to $595,620$606,899 during the three months ended March 31, 2017.September 30, 2017 due to lower sales volume during the 2018 period.

 

Charging service revenue company-ownedfrom Company-owned charging stations was $305,747$320,388 for the three months ended March 31,September 30, 2018 as compared to $267,874$295,202 for the three months ended March 31,September 30, 2017, an increase of $37,873,$25,186, or 14%. The increase is attributable to9.0%, primarily due a largergreater number of charging stations in the network as compared to the same 2017 period.

Total revenue from warranty revenue and network fees was $87,653 for the three months ended March 31, 2018, compared to $84,087 the three months ended March 31, 2017 a slight increase of $3,566, or 4%.

 

Revenue from product sales was $135,760$102,958 for the three months ended March 31,September 30, 2018 compared to $153,587$157,264 during the three months ended March 31,September 30, 2017, a decrease of $17,827$54,306 or 12%35%. This decrease iswas attributable to a lower volume of residentialcommercial units and commercial unitsparts sales as compared to the 2017 period.

 

Network fee revenues were $55,540 for the three months ended September 30, 2018 compared to $59,604 for the three months ended September 30, 2017, a decrease of $4,064 or 7%. The decrease was attributable to retroactive billing of network fees in 2017.

Warranty revenues were $25,099 for the three months ended September 30, 2018 compared to $36,484 for the three months ended September 30, 2017, a decrease of $11,385 or 31%.The decrease is primarily attributable to a property partners of host owned chargers not renewing their warranty contracts.

Grant and rebate revenue was $16,231$6,724 during the three months ended March 31,September 30, 2018, compared to $32,810$14,978 during the three months ended March 31,September 30, 2017, a decrease of $16,579$8,254, or 51%55%. 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 ability to secure grant revenues is typically unpredictable and, therefore, uncertain. We have not recently received any new grants and, as a result, theThe 2018 revenue iswas related to the amortization of previous years’ grants.

 

Other revenue decreased by $6,733$7,232 to $50,529$36,135 for the three months ended March 31,September 30, 2018 as compared to $57,262$43,367 for the three months ended March 31,September 30, 2017. The decrease was primarily attributable to in host owned station charging revenue.

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, 2018 were $440,081 as compared to $305,610 for the three months ended September 30, 2017, an increase of $134,471 or 44%. There is a degree of variability in our costs in relationship to our revenues from period to period. primarily due to:

(i)Electricity reimbursements which are unique to those Property Partner host agreements which provide for such reimbursements
(ii)Revenue share payments are predicated on the contractual obligation under the Property Partner agreement and the revenue generated by the applicable chargers.
(iii)Cost of charging stations sold is predicated on the mix of types of charging stations and parts sold during the period
(iv)Network costs are fixed in nature based on the number of chargers connected to the telco network regardless of regardless of whether the charger generates revenue.
(v)Warranty and repairs and maintenance expenses are based on both the number of service cases completed during the period and the number of service cases awaiting service as of the end of the period.

Cost of charging services-company-owned charging stations (electricity reimbursements) decreased by $87,783 to $18,823 for the three months ended September 30, 2018 as compared to $106,606 for the three months ended September 30, 2017 or 82%. The decrease is attributable in 2018 to the mix of charging stations generating charging service revenues requiring electricity reimbursement.

Host provider fees increased by $36,517, or 66%, to $91,564 during the three months ended September 30, 2018 as compared to $55,047 during the three months ended September 30, 2017. This increase was a result of more recently installed Company owned charging station installations having higher revenue share obligations during the three months ended September 30, 2018 as compared to the same 2017 period.

Cost of product sales increased by $58,922 or 1,264% from $4,661 for the three months ended September 30, 2017 as compared to $63,583 for the three months ended September 30, 2018. The cost of product sales is based on the mix of types of charging stations and parts sold. The 2018 period included a write-off of obsolete inventory of $18,558 The 2017 period included a change in estimate of chargers sold in the period that were previously thought to have a lower net realizable value than the prices that they were actually sold for.

Network costs increased by $52,077, or 239%, to $73,858 during the three months ended September 30, 2018 as compared to $21,781 during the three months ended September 30, 2017. The 2017 period was understated due to over-accruals in prior 2017 periods. The 2017 period included a change in estimate as a result of prior period over accruals in 2017.

Warranty and repairs and maintenance costs increased by $91,186, or 296%, to $121,957 during the three months ended September 30, 2018 from $ 30,771 during the three months ended September 30, 2017. In  2017, our actual cost of fulfilling warranty obligations were less than expected  as warranty work was performed by employees at a lower cost than estimated. In 2018, in order to resolve the warranty backlog issue, the Company retained third parties to perform these services at a cost more closely approximating the estimate.

Depreciation and amortization expense declined by $16,448, or 19%, to $70,296 for the three months ended September 30, 2018 as compared to $86,744 for the three months ended September 30, 2017, as additional underlying assets became fully depreciated during 2018.

Operating Expenses

Compensation expense increased by $1,762,089, or 163%, to $2,842,733 (consisting of approximately $2.1 million of cash compensation and approximately $0.7 million of non-cash compensation) for the three months ended September 30, 2018. Compensation expense was $1,080,644 (consisting of approximately $0.8 million of cash compensation and approximately $0.3 million of non-cash compensation) for the three months ended September 30, 2017. The increase was primarily attributable to increased payroll and related tax expenses of $507,283 to $1,136,455 during the three months ended September 30, 2018 compared to $629,172 during the 2017 period due to the hiring of additional employees and senior management. Furthermore, $1,097,770 of the compensation expense increase was due to non-cash stock based compensation, inclusive of payroll tax gross ups, granted to officers and directors of Company during the period. Recruiting fees related to the hiring of additional senior management in 2018 resulted in $156,735 of fees in 2018.

General and administrative expenses increased by $244,674, or 110%, to $467,073 for the three months ended September 30, 2018. General and administrative expenses were $222,399 for the three months ended September 30, 2017. The increase was primarily due to increased legal fees of $111,392 to $157,282 during the three months ended September 30, 2018 compared to $45,890 during the three months ended September 30, 2017. This increase was attributable to current invoices received for $108,000 in professional services rendered in prior periods of 2018. Additionally, we incurred $83,490 in investor relations fees during the three months ended September 30, 2018. Furthermore, our annual shareholder meeting was held on September 7, 2018 resulting in incremental expenses specific to the period totaling $69,027. Audit and valuation fees decreased by $37,161 or 41% from $89,545 in the 2017 period to $52,384 in the 2018 period.

Other operating expenses increased by $78,912, or 35%, to $306,839 for the three months ended September 30, 2018 from $227,927 for the three months ended September 30, 2017. The increase was primarily attributable to an increase in rent expense of $51,918 related to our move to a larger office space in Miami Beach, Florida and our leasing of additional adjacent space to our existing Phoenix, Arizona location during the three months ended September 30, 2018 offset by a decrease in storage facility rentals of $19,935. Additionally, there was an increase in software development expense of $27,263 in order to enhance our existing systems as well as increase in taxes associated with company owned charging stations of $28,765 during the three months ended September 30, 2018 as a result of a higher provision during the 2018 period relating to the increase in the number of Company owned chargers.

Other Income (Expense)

Other income (expense) decreased by $93,764,700, or 101%, to income of $1,373,949 for the three months ended September 30, 2018 as compared to an expense of $92,390,751 for the three months ended September 30, 2017. The decrease was primarily attributable to 2017 items consisting of:

●a non-cash change in fair value of derivative and other accrued liabilities of approximately $72.1 million of which approximately $43.8 million was primarily attributable to the quantity of warrants held by our Executive Chairman not being subject to our Reverse Split, which, as a result of the Reverse Split, caused them to increase in value;
●The increase in other expense was also attributable to a loss on settlement reserve of $12.5 million, which was primarily related to our default on our note with JMJ, and
●a non-cash loss on the settlement of liabilities for equity of approximately $7.6 million which related to exchange agreements whereby the value consideration received by the counterparty exceeded the carrying value of the liability.

Other income in 2018 consisted primarily of a change in fair value of derivative liabilities and accrued liabilities.

Net Loss

Our net loss for the three months ended September 30, 2018 decreased by $91,484,499, or 98%, to $2,135,933 as compared to $93,620,432 for the three months ended September 30, 2017. The decrease was primarily attributable to an increase in other income (expenses) of $93,764,700. Our net loss attributable to common shareholders for the three months ended September 30, 2018 decreased by $92,312,999, or 98% from $94,448,932 to $2,135,933 for the aforementioned reasons and due to a decrease in the dividend attributable to Series C Convertible Preferred shareholders of $828,500.

Nine Months Ended September 30, 2018 Compared With Nine Months Ended September 30, 2017

Revenues

Total revenue for the nine months ended September 30, 2018 increased by $31,689, or 2%, to $1,767,182 compared to $1,735,493 during the nine months ended September 30, 2017.

Charging service revenue company-owned charging stations was $927,485 for the nine months ended September 30, 2018 compared to $879,428 for the nine months ended September 30, 2017, an increase of $48,057, or 5%. The increase was attributable to a greater number of charging stations in the network as compared to the same 2017 period.

Revenue from product sales was $381,557 for the nine months ended September 30, 2018 compared to $367,808 during the nine months ended September 30, 2017, an increase of $13,749, or 4%. This increase was attributable to a higher volume of commercial units as compared to the same 2017 period.

Network fee revenues were $168,825 for the three months ended September 30, 2018 compared to $168,334 for the three months ended September 30, 2017, an increase of $491.

Warranty revenue was $89,458 for the nine months ended September 30, 2018, compared to $103,188 for the nine months ended September 30, 2017, a decrease of $6,733$13,730 or 13%. The decrease is primarily attributable to property partners of host owned charger not renewing their warranty contracts.

Grant and rebate revenue was $68,062 during the nine months ended September 30, 2018, compared to $93,798 during the nine months ended September 30, 2017, a decrease of $25,736, or 27%. 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 ability to secure grant revenues is typically unpredictable and, therefore, uncertain. The 2018 revenue was related to the amortization of previous years’ grants

Other revenue increased by $8,858 or 7% to $131,795 for the nine months ended September 30, 2018 as compared to $122,937 for the nine months ended September 30, 2017. The increase was primarily attributable to an increase in charging revenue from host-owned stations as a result of property owners converting their charging stations from host-owned to company-owned.

Cost of Revenues

 

Cost of revenues primarily consists of depreciation of installed charging stations, amortization of the Blink Network infrastructure,electricity reimbursements, revenue share payments to our Property Partner hosts, the cost of charging station goodsstations sold, connectivity charges provided by telco and related services sold,other networks, warranty, repairs and maintenance electricity reimbursementsservices, and revenue share payments to hosts when we are the primary obligor in the revenue share arrangement.depreciation of our installed charging stations. Cost of revenues for the threenine months ended March 31,September 30, 2018 were $424,099$1,317,823 as compared to $432,407$1,128,066 for the threenine months ended March 31,September 30, 2017, an increase of $189,757 or 17%. There is a decreasedegree of $8,308 or 2%.variability in our costs in relationship to our revenues from period to period. primarily due to:

 

(vi)Electricity reimbursements which are unique to those Property Partner host agreements which provide for such reimbursements
(vii)Revenue share payments are predicated on the contractual obligation under the Property Partner agreement and the revenue generated by the applicable chargers.
(viii)Cost of charging stations sold is predicated on the mix of types of charging stations and parts sold during the period
(ix)Network costs are fixed in nature based on the number of chargers connected to the telco network regardless of regardless of whether the charger generates revenue.
(x)Warranty and repairs and maintenance expenses are based on both the number of service cases completed during the period and the number of service cases awaiting service as of the end of the period.

This is primarily attributable

Cost of charging services-company-owned charging stations (electricity reimbursements) decreased by $29,640 to an increase in host provider fees of $53,958 or 99% to $108,405 during$141,644 for the threenine months ended March 31,September 30, 2018 as compared to $54,447$171,284 for the nine months ended September 30, 2017 or 17%. The decrease is attributable in 2018 to the mix of charging stations generating charging service revenues requiring electricity reimbursement.

Host provider fees increased by $94,864, or 47%, to $297,296 during the threenine months ended March 31,September 30, 2018 as compared to $202,432 during the nine months ended September 30, 2017. This increase iswas a result of more recent companyrecently installed Company owned chargercharging station installations having higher revenue share obligations to hosts during the three months ended March 31,September 30, 2018 as compared to the same 2017 period.

 

Cost of product sales decreased by $79,429 or 32% from $245,832 for the three months ended September 30, 2017 as compared to $166,403 for the three months ended September 30, 2018. The cost of product sales is based on the mix of types of charging stations and parts sold.

Network costs decreased by $18,592, or 8%, to $218,083 during the nine months ended September 30, 2018 as compared to $236,675 during the nine months ended September 30, 2017. This decrease was attributed to renegotiated contracts with connectivity service providers (telco).

Warranty and repairs and maintenance costs increased by $44,580,$298,011, or 233%1,132%, to $63,728$271,686 during the threenine months ended March 31,September 30, 2018 from $19,148$(26,325) during the threenine months ended March 31,September 30, 2017. This was primarily attributable to an increase in volumeIn  2017, our actual cost of fulfilling warranty obligations were less than expected  as warranty work was performed duringby employees at a lower cost than estimated. In 2018, in order to resolve the three months ended March 31, 2018 as comparedwarranty backlog issue, the Company retained third parties to perform these services at a cost more closely approximating the 2017 period.estimate.

 

Network costs decreased by $74,656 or 53% to $66,928 during the three months ended March 31, 2018 as compared to $141,584 during the three months ended March 31, 2017. This decrease is attributed to renegotiated contracts with service providers.

Depreciation and amortization expense declined by $34,409$75,457, or $31%25%, to $77,744$222,711 for the threenine months ended March 31,September 30, 2018 as compared to $112,153$298,168 for the threenine months ended March 31,September 30, 2017, as someadditional underlying assets became fully depreciated during 2018.

 

There is a degree of variability in our gross margins related to charging services revenues from period to period primarily due to (i) the mix of revenue share payment arrangements, (ii) electricity reimbursements, and (iii) the costs of maintaining charging stations not currently in operation.

Any variability in our gross margins related to equipment sales depends on the mix of products sold. Accordingly, the cost of product sales decreased by $14,979 to $63,533 during the three months March 31, 2017 as compared to $78,512 during 2017 due to decrease in the volume of residential and commercial units sold in 2018.

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Operating Expenses

Compensation expense increased by $2,691,279,$3,626,052, or 270%89%, from $997,357$4,091,681 (consisting of approximately $0.8$2.7 million of cash compensation and approximately $0.2$1.4 million of non-cash compensation) for the threenine months ended March 31,September 30, 2017 to $3,688,636$7,717,733 (consisting of approximately $0.9$4.0 million of cash compensation and approximately $2.8$3.7 million of non-cash compensation) for the threenine months ended March 31,September 30, 2018.

The increase iswas primarily attributable to anincreased payroll expenses of $640,601 to $2,542,494 during the nine months ended September 30, 2018 compared to $1,901,893 during the 2017 period. The increase in non-cash compensationwas primarily attributable to increased payroll and related tax expenses of $2.6 million$655,101 to $2,761,987 during the nine months ended September 30, 2018 compared to $2,106,886 during the 2017 period due to commonthe hiring of additional employees and senior management. Furthermore, $3,106,475 of the compensation expense increase was due to stock awardsbased compensation, inclusive of payroll tax gross ups, granted to officers and directors of Company during the period. Recruiting fees related to the Executive Chairman and the Chief Operating Officer.hiring of additional senior management in 2018 resulted in $156,735 of fees in 2018. This isincrease was partially offset, by a decrease in commissions consulting, and other payroll expensesexpense of $182,631 due$276,239 to a reduction in head count in 2017.

Other operating expenses decreased by $58,986, or 24%, from $242,941 for$12,229 during the threenine months ended March 31, 2017September 30, 2018, compared to $183,955 for$288,468 during the threenine months ended March 31, 2018. The decreaseSeptember 30, 2017 as the old commissions program was primarily attributable to a decrease in business insurance costs of $25,476 to $30,367terminated during the three months March 31, 2018 from $55,844 during the three months ended March 31, 2017. Additionally, there was a decrease in rent expense of $25,994 to $30,554 during the three months ended March 31, 2018 from $56,549 during the three months ended March 31, 2017 due to our move to smaller spaces in both Arizona and Florida.period

 

General and administrative expenses decreasedincreased by $212,539,$175,110, or 68%23%, from $313,708$774,482 for the nine months ended September 30, 2017 to $949,592 for the three months ended March 31, 2017 to $101,169 forSeptember 30, 2018. Investor relations fees increased by $189,890 during the threenine months ended March 31,September 30, 2018 as investor relations professionals were initially retained in 2018. The decreaseFurthermore, our annual shareholder meeting was primarily dueheld on September 7, 2018 resulting in incremental expenses specific to the period totaling $91,776. This was partially offset in a decrease in professional and legal fees of $215,074 to $24,374$149,909 during the three months ended March 31,September 30, 2018 compared to $240,248the 2017 period as result of a decrease in litigation matters.

Other operating expenses increased by $314,899, or 46%, from $681,630 for the nine months ended September 30, 2017 to $996,529 for the nine months ended September 30, 2018. The increase was primarily attributable to an increase in rent expense of $58,049 related to our move to a larger office space within Miami Beach, Florida and our leasing of additional adjacent space to our existing Phoenix, Arizona location during the three months ended March 31, 2017September 30, 2018 offset by a decrease in storage facility rentals of $28,130. Additionally, there was an increase in second generation electric charger product development expense of $93,554 as well as an increase in personal property tax expense of $36,902 as a result of our focus ona higher provision during the Public Offering during 2018 and legal costs incurred in conjunction therewith are charged against Offering proceeds. This was partially offset by anperiod relating to the increase in credit card processing feesthe number of $21,318 to $43,687 during the three months ended March 31, 2018 compared to $22,367 during the three months ended March 31, 2017.Company owned chargers. Past due sales, payroll taxes and related penalties resulted in an increased expense of $92,317.

 

Other Income (Expense)

 

Other income (expense) increased by $7,412,966$103,943,830 from ($1,406,939)an expense of $95,893,965 for the threenine months ended March 31,September 30, 2017 to $6,006,027income of $8,049,865 for the threenine months ended March 31,September 30, 2018. During the threenine months ended March 31,September 30, 2018, we settled approximately $17.8 million of obligations to JMJ with the issuance of Series D Convertible Preferred Stock, which resulted in a gain of approximately $5.8 million. Additionally, we realized a decrease in the change in fair value of warrantderivative and other accrued liabilities of $3,488,887$77,879,937 to $3,024,598$4,997,721 during the threenine months ended March 31,September 30, 2018 compared to ($464,289)$72,882,216 of expense during the threenine months ended March 31,September 30, 2017 as a result of warrant holders exchanging their warrants for equity. During the threenine months ended March 31,September 30, 2018 we recorded a gain on the settlement of accounts payable of $920,352 which increased by $896,424$897,438 from $23,928$22,914 during the threenine months ended March 31,September 30, 2017 period. This increase was due to liabilities being settled pursuant to agreements contingent upon the closing of our public offering on February 16, 2018. These items were offset by a loss on settlement of liabilities for equity of approximately $2.2$2.1 million, a reduction in amortization of debt discount of $1,334,751, as well as a charge of $785,200 related to a contribution of capital by the Executive Chairman during the threenine months ended March 31,September 30, 2018. During the nine months ended September 30, 2018 we recorded a loss on settlement reserve of $127,941 from $12,975,588 during the nine months ended September 30, 2017 a decrease of $12,847,647 this was a result of our default on obligations to JMJ of approximately $12.5 million.

 

Net Income (Loss)Loss

Our net income (loss)loss for the threenine months ended March 31,September 30, 2018 increaseddecreased by $5,301,820,$99,969,701, or 171%99%, to $2,204,088$1,164,630 as compared to ($3,097,732)$101,134,331 for the threenine months ended March 31,September 30, 2017. The increasedecrease was primarily attributable to an increase in other income (expenses) of $7,412,966.$103,931,132. Our net loss attributable to common shareholders for the threenine months ended March 31,September 30, 2018 increaseddecreased by 18,010,011,$78,277,270 or 467%76%, from $3,852,632$103,508,631 to $21,862,643$25,231,361 for the aforementioned reasons and due to an increasedecrease in the dividend attributable to Series C Convertible Preferred shareholders of $607,800, as well as the deemed dividend attributable to the immediate accretion of the beneficial conversion feature related to the Series B and C Convertible Preferred Stock of $23,458,931.

 

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Liquidity and Capital Resources

 

On February 16, 2018, we closed our underwritten public offering of an aggregate 4,353,000 shares of common stock and warrants to purchase an aggregate of 8,706,000 shares of common stock at a combined public offering price of $4.25 per unit comprised of one share and two warrants. The Public Offering resulted in $18,504,320 and $14,880,815 of gross and net proceeds, respectively, including underwriting discounts, commissions and other offering expenses of $3,623,505, which was recorded as a reduction of additional paid-in capital. Furthermore, during the nine months ended September 30, 2018, we issued an aggregate of 4,033,660 shares of common stock pursuant to the exercise of warrants at an exercise price of $4.25 per share for aggregate gross proceeds of $17,143,056.

We measure our liquidity in a number of ways, including the following:

  September 30, 2018  December 31, 2017 
   (unaudited)     
         
Cash $21,304,407  $185,151 
         
Working Capital (Deficiency) $16,955,916  $(34,762,130)
         
Notes Payable (Gross) $337,966  $5,095,064 

During the threenine months ended March 31,September 30, 2018, we financed our activities from proceeds derived from debt and equity financing. A significant portion of the funds raised from the sale of capital stock havehas been used to repay certain debt and other obligations, cover working capital needs and personnel, office expenses and various consulting and professional fees.

 

For the threenine months ended March 31,September 30, 2018 and 2017, we used cash of $4,814,971$10,584,061 and $783,135,$2,020,021, respectively, in operations. Our cash useused for the threenine months ended March 31,September 30, 2018 was primarily attributable to our net incomeloss of $2,204,088, adjusted for$1,164,630, reduced by net non-cash income in the aggregate amount of $3,173,205,$4,070,303, and $3,845,854by $5,349,129 of net cash used in changes in the levels of operating assets and liabilities. Our cash useused for the threenine months ended March 31,September 30, 2017 was primarily attributable to our net loss of $3,097,732,$101,134,331, adjusted for net non-cash expenses in the aggregate amount of $1,477,377,$84,498,217, partially offset by $837,220$14,616,093 of net cash provided by changes in the levels of operating assets and liabilities.

 

During the threenine months ended March 31,September 30, 2018, cash used in investing activities was $21,499,$37,711, which was used to purchase charging stations and other fixed assets. Net cash used in investing activities was $206$12,681 during the threenine months ended March 31,September 30, 2017, which was used to purchase charger cables.

 

Net cash provided by financing activities for the threenine months ended March 31,September 30, 2018 was $14,597,973,$31,741,028, of which $16,243,055$15,052,973 was attributable to the net proceeds from the sale of common stock and warrants in our public offering, reduced by issuance costs related to theand $17,143,055 in proceeds derived from investors in our public offering of $1,190,082 that were paid by us during the period. In addition,subsequently exercising their purchased warrants to purchase our common stock. Additionally, $305,000 was provided in connection with the issuances of notes payable, offset by the repayment of notes payable of $760,000.$760,000 from public offering proceeds. Net cash provided by financing activities for the threenine months ended March 31,September 30, 2017 was $780,431,$2,035,866, of which $805,100$2,067,745 was provided in connection with the issuance of convertible notes payable and $47,567 was provided in connection with proceeds from the issuance of notes payable to a related party, partially offset by $24,720$38,263 of payment of future offering costs, $39,000 of payment of debt issuance costs, repayment of notes payable of $3,604 and $4,912 of net cash used in connection with bank overdrafts.

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Through March 31,September 30, 2018, we incurred an accumulated deficit since inception of $154,231,190.$157,599,908. As of March 31,September 30, 2018, we had cash and working capital of $9,946,654$21,304,407 and $2,212,757,$16,955,916, respectively. During the three and nine months ended March 31,September 30, 2018, we generatedhad net incomeloss of $2,204,088, but$2,135,933 and $1,164,630, respectively.

During the nine months ended September 30, 2018, the Company entered into purchase commitments to acquire second generation charging stations with an aggregate value of $3,156,629. The Company has an aggregate deposit of $792,204 for these charging stations, which is included within prepaid expenses and other current assets on the Company’s condensed consolidated balance sheet as of September 30, 2018. As of September 30, 2018, the Company had a loss from operationsremaining purchase commitment of $3,801,939.

$2,512,010, which will come due upon delivery of the charging stations.

There has been no material change in the planned use of proceeds from the Public Offeringpublic offering as described in our Prospectus.Prospectus, dated February 13, 2018. Approximately $4.4 million was to be used for the repayment of certain debt and other obligations, of which, as of March 27, 2018, approximately $3.8 million, has been paid. The remaining amount will be used as follows:

 

 (1)Approximately $4.0 million for the deployment of charging stations;
 (2)Approximately $1.0 million to expand our product offerings including but not limited to completing the research and development, as well as the launch of our next generation of EV charging equipment;
 (3)Approximately $3.0 million to add additional staff in the areas of finance, sales, customer support, and engineering; and
 (4)The remainder for working capital and other general corporate purposes

 

Subsequent to March 31, 2018, we issued an aggregate of 957,619 shares of common stock pursuant to the exercise of warrants at an exercise price of $4.25 per share for aggregate gross proceeds of $4,069,881.

We believe our current cash on hand is sufficient to meet our obligations, operating and capital requirements for at least the next twelve months from the date of this filing. Thereafter, we willmay need to raise further capital, through the sale of additional equity or debt securities, or other debt instruments to support our future operations. Our operating needs include the planned costs to operate our business, including amounts required to fund working capital and capital expenditures. Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our 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 our product and service offerings. There is also no assurance that the amount of funds we might raise will enable us to complete our development initiatives or attain profitable operations. If we are unable to obtain additional financing on a timely basis, we may have to curtail our development, marketing and promotional activities, which would have a material adverse effect on our business, financial condition and results of operations, and ultimately, we could be forced to discontinue our operations and liquidate.

 

Since inception, our operations have primarily been funded through proceeds from equity and debt financings. Although management believes that we have access to capital resources, there are currently no commitments in place for new financing at this time, except as described below under the heading Recent Developments, and theretime. There is no assurance that we will be able to obtain funds on commercially acceptable terms, if at all.

 

Recent Developments

Resignation of Andy Kinard as President

On March 19, 2018, Andy Kinard resigned as the Company’s President, effective immediately. Mr. Kinard remains a non-executive employee of the Company. The Company has not yet appointed a new President.

Public Offering and Nasdaq Uplisting

On February 16, 2018, we closed our underwritten public offering (the “Public Offering”) of an aggregate 4,353,000 shares of our common stock and warrants to purchase 8,706,000 shares of common stock at a combined public offering price of $4.25 per unit comprised of one share and two warrants. The Public Offering resulted in approximately $18.5 million of gross proceeds, less underwriting discounts and commissions and other offering expenses of approximately $3.6 million, a portion of which is included within deferred public offering costs on the balance sheet as of December 31, 2017, for aggregate net proceeds of approximately $14.9 million. The common stock and warrants were approved to list on the Nasdaq Capital Market under the symbols BLNK and BLNKW, respectively, and began trading on February 14, 2018.

Each warrant is exercisable for five years from issuance and has an exercise price equal to $4.25 per share. We granted the Public Offering’s underwriters a 45-day option to purchase up to an additional 652,950 shares of common stock and/or warrants to purchase 1,305,900 shares of common stock to cover over-allotments, if any. In connection with the closing of the Public Offering, the underwriters partially exercised their over-allotment option and purchased additional warrants to purchase 406,956 shares of common stock at an exercise price of $4.25 per share for aggregate gross proceeds of $4,070, or $0.01 per warrant. The 45-day option expired on April 2, 2018.

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Securities Purchase Agreement with JMJ Financial

On October 7, 2016, we executed a Promissory Note in favor of JMJ in the amount up to $3,725,000 bearing interest on the unpaid balance at the rate of six percent. The initial amount borrowed under the Promissory Note was $500,000, with the remaining amounts permitted to be borrowed under the Promissory Note being subject to us achieving certain milestones.

We initially issued one warrant to JMJ to purchase a total of 14,286 shares of our Common Stock at an exercise price equal to the lesser of: (i) 80% of the Common Stock price of the Public Offering, (ii) $35.00 per share, (iii) 80% of the unit price of the Public Offering (if applicable), (iv) the exercise price of any warrants issued in the Public Offering, or (v) the lowest conversion price, exercise price, or exchange price, of any security issued by us that is outstanding on October 13, 2016.

The initial amount borrowed under the Promissory Note was $500,000, with the remaining amounts permitted to be borrowed under the Promissory Note being subject to us achieving certain milestones. With the achievement of certain milestones in November 2016 (the filing with the SEC of a Preliminary Information Statement on Schedule 14C regarding the Reverse Stock Split), an additional advance of $500,000 under the Promissory Note occurred on November 28, 2016. Another warrant to purchase 14,286 shares of our Common Stock was issued as of November 28, 2016. With the achievement of certain milestones in February 2017 (the filing with the SEC of a revised Preliminary Information Statement and a Definitive Information Statement, each on Schedule 14C regarding the Reverse Stock Split), additional advances of $225,100 and $300,000 under the Promissory Note occurred on February 10 and February 27, respectively. Thus, two more warrants to purchase the Company’s Common Stock were issued, one for 6,431 shares and the other for 8,571 shares, respectively.

All advances after February 28, 2017 were at the discretion of JMJ without regard to any specific milestones occurring. Additional advances of $250,000 and $30,000 under the Promissory Note occurred on March 14, 2017 and March 24, 2017, respectively, and two more warrants to purchase the Company’s Common Stock were issued, one for 7,143 shares and the other for 857 shares. An additional advance of $400,000 occurred on April 5, 2017 and another warrant to purchase 11,429 shares of our Common Stock was issued on the same date. An additional advance of $295,000 occurred on May 9, 2017 and another warrant to purchase 8,429 shares of the Company’s Common Stock was issued on the same date. On July 27, 2017, an additional advance of $50,000 was made to the Company and another warrant to purchase 1,429 shares of the Company’s Common Stock was issued to JMJ. JMJ and the Company entered into a Lockup, Conversion, and Additional Investment Agreement dated October 23, 2017 (the “Additional Agreement”), however, it became effective upon the document being fully executed on October 24, 2017. In accordance with the terms of the Additional Agreement, on October 24, 2017, JMJ advanced to the Company $949,900 available pursuant to previous agreements with JMJ and another warrant to purchase 27,140 shares of the Company’s Common Stock was issued to JMJ. As of the closing of the Public Offering, ten (10) warrants to purchase a total of 100,001 shares of the Company’s Common Stock had been issued to JMJ. The aggregate exercise price was $3,500,000.

The Additional Agreement extended the maturity date of the JMJ loans to December 15, 2017. On November 29, 2017, the Company and JMJ entered into the first amendment to the Additional Agreement, extending the maturity date to December 31, 2017. On January 4, 2018, the Company and JMJ entered into the second amendment to the Additional Agreement, extending the maturity date to January 31, 2018. On February 1, 2018, the Company and JMJ entered into the third amendment to the Additional Agreement, extending the maturity date to February 10, 2018. On February 7, 2018, the Company and JMJ entered into the fourth amendment to the Additional Agreement, extending the maturity date to February 15, 2018.

In addition, JMJ claimed that the Company would owe JMJ $12 million as a mandatory default amount pursuant to previous agreements with the Company. JMJ, in the Additional Agreement, agreed to allow the Company to have two options for settling a previously issued note (including settling the mandatory default amount for either $1.1 million or $2.1 million), securing a lockup agreement from JMJ, and exchanging previously issued warrants for shares of Common Stock. Each of these options depended upon the Public Offering closing by December 15, 2017 (subsequently extended to February 15, 2018). The option chosen was at the Company’s sole discretion.

The first option was that the Company, upon the closing of the Public Offering: (a) would pay $2.0 million in cash to JMJ; and (b) would issue shares of Common Stock to JMJ with a value of $9,005,000 (including the Origination Shares). The second option was that the Company, upon the closing of the Public Offering, would not pay any cash to JMJ and would issue shares of Common Stock to JMJ with a value of $12,005,000 (including the Origination Shares).

Upon the closing of the Public Offering (February 16, 2018), the Company chose the second option and did not pay any cash to JMJ. Although the Public Offering closed one day after the February 15, 2018 Maturity Date, JMJ accepted payment on February 16, 2018 did not declare a default.

In each case, the Company was to issue such number of duly and validly issued, fully paid and non-assessable shares of Common Stock equal to the amount in question divided by the lowest of (i) $35.00 per share, or (ii) the lowest daily closing price of the Common Stock during the ten days prior to delivery of shares (subject to adjustment for stock splits), or (iii) 80% of the Common Stock price of the Public Offering, or (iv) 80% of the unit price of the Public Offering (if applicable), or (v) the exercise price of any warrants issued in the Public Offering.

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Prior to the Company choosing the option at the closing (with the first option including some cash and the second option not including any cash), JMJ could elect to receive some or all of the share consideration (to be issued pursuant to either option) in the form of convertible preferred stock. On January 29, 2018, JMJ made the election to receive all of the share consideration in the form of shares of convertible preferred stock.

Pursuant to the second option and to the election by JMJ to receive convertible preferred stock instead of common stock as permitted by the Additional Agreement, the Company, on February 16, 2018 issued to JMJ shares of Series D Preferred Stock convertible into 3,847,756 shares of Common Stock, to reflect the full payment of all dollar amounts and share amounts owed in connection with the JMJ Financing. Because the Series D Preferred Stock is convertible into shares of our Common Stock, upon JMJ’s conversion of the Series D Preferred Stock into shares of our Common Stock, holders of our Common Stock will experience dilution.

On May 7, 2018, JMJ elected to convert 4,368 shares of Series D Convertible Preferred Stock into 1,400,000 shares of the Company’s common stock at a conversion price of $3.12 per share. The Company issued the shares on May 10, 2018.

We refer herein to these transactions with JMJ as the “JMJ Financing”.

Separately from and unrelated to the JMJ Financing, JMJ lent $250,000 to the Company on January 22, 2018. We agreed with JMJ to issue units of unregistered shares of Common Stock and warrants as repayment of this $250,000 advance at the closing of the Public Offering (with each unit consisting of one share of Common Stock and two warrants each to purchase one share of Common Stock). On March 16, 2018, the Company issued 73,529 shares of Common Stock to JMJ and on April 9 the Company issued 147,058 warrants to JMJ.

Issuances of Securities

In connection with the closing of the Public Offering, and pursuant to obligations previously incurred by the Company, on March 16, 19, 22, and 27, 2018 and on April 9, 2018, the Company issued a total of 12,305,228 restricted sharesofCommon Stock and 1,703,429 five-year warrants to purchase shares of its common stock, to approximately seventy (70) individuals or entities (the “Securities Issuance”). Details of the Securities Issuance are described below.

Upon the closing of the Public Offering, all outstanding shares of Series B Preferred Shares of the Company were converted into 223,235 shares of Common Stock. These 223,235 shares of Common Stock are equal to $825,000 payable to ECOtality Consolidated Qualified Creditor Trust. The Company issued to ECOtality Consolidated Qualified Creditor Trust 223,235 shares of Common Stock as payment. As of March 28, 2018, there are no longer any Series B Preferred Shares outstanding.

The Company issued to Mr. Michael J. Calise, the Company’s Chief Executive Officer, 10,269 restricted shares of the Company’s Common Stock. The shares were issued in settlement and consideration of services rendered during the period of April 1, 2016 through March 31, 2017. The 20,538 five-year warrants to purchase Common Stock with an exercise price of $4.25 were issued to Mr. Calise on April 9, 2018 in settlement and consideration of services rendered during the period of April 1, 2016 through March 31, 2017.

9,440 shares were issued to Mr. Andy Kinard, the Company’s former President, in settlement and consideration of services rendered during the period of April 1, 2016 through March 31, 2017. The 18,880 five-year warrants to purchase Common Stock with an exercise price of $4.25 were issued to Mr. Kinard on April 9, 2018 in settlement and consideration of services rendered during the period of April 1, 2016 through March 31, 2017.

68,150 warrants to purchase shares of Common Stock were issued to Mr. Donald Engel, a member of the Company’s Board of Directors pursuant to an agreement with the Company.

107,143 warrants to purchase shares of Common Stock were issued to Shapiro Ventures LLC, a limited liability company controlled by Mr. Andrew Shapiro, a member of the Company’s Board of Directors, pursuant to an agreement with the Company.

46,655 shares of Common Stock were issued as payment of a total of $153,529 to both SemaConnect Inc. and their legal counsel pursuant to the Settlement Agreement dated June 23, 2017.

Pursuant to a Confidential Settlement Agreement between the Company and ITT Cannon, LLC, dated May 17, 2017, the Company owed $200,000 to ITT Cannon which was to be paid entirely in the form of shares of Common Stock. On March 16, 2018, the Company issued 47,059 shares of Common Stock to ITT Cannon as partial payment of this $200,000 in stock. On March 30, 2018 the Company issued an additional 25,669 shares to satisfy in full its obligations to ITT.

74,753 shares of Common Stock were issued as payment of $221,009 owed to BLNK Holdings, in principal and interest pursuant to a Conversion Agreement between the Company and BLNK Holdings, dated August 23, 2017.

73,529 shares of Common Stock were issued to JMJ as repayment of a $250,000 advance pursuant to a Letter Agreement between the Company and the counterparty, dated February 1, 2018. The 147,058 five-year warrants to purchase Common Stock with an exercise price of $4.25 were issued to JMJ on April 9, 2018 pursuant to that same Letter Agreement.

141,176 shares of Common Stock were issued to JNS Power & Control Systems, Inc. (“JNS”) as payment of $600,000 in connection with an asset purchase agreement entered into with the counterparty on February 2, 2018 in settlement of litigation.

23,529 shares of Common Stock were issued to JNS to be held in escrow as security for the $100,000 payment to be paid within six months of the closing of the Public Offering. At the time the $100,000 payment is made by the Company, the 23,529 shares currently held in escrow will be cancelled.

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17,132 shares of Common Stock were issued to Genweb2 as repayment of a $58,250 debt pursuant to a Letter Agreement between the Company and the counterparty, dated February 12, 2018.

2,353 shares of Common Stock were issued as payment of $10,000 to Russ Klenet & Associates, Inc. pursuant to the Settlement and Release Agreement between the Company and the counterparty, dated December 29, 2016.

17,647 shares of Common Stock were issued as payment of $75,000 owed to Wilson Sonsini Goodrich & Rosati pursuant to a Settlement Agreement between the Company and the counterparty, dated June 8, 2017.

119,700 shares of Common Stock were issued to Schafer & Weiner, PLLC as part of a repayment of a $406,981.47 debt pursuant to a Letter Agreement between the Company and the counterparty. The 239,400 five-year warrants to purchase Common Stock with an exercise price of $4.25 were issued to Schafer & Weiner, PLLC on April 9, 2018 to satisfy the Company’s obligations pursuant to that same Letter Agreement.

1,882 shares of Common Stock were issued to IBIS Co. in connection with an introduction to an investor.

550,000 shares of Common Stock were issued pursuant to letter agreements, dated December 6, 2017 and December 7, 2017 signed by the two holders of the Series A Convertible Preferred Stock (“Series A Preferred Shares”) (Mr. Farkas, our Executive Chairman is receiving 500,000 shares of Common Stock and Ira Feintuch, our Chief Operating Officer is receiving 50,000 shares of Common Stock) to convert 11,000,000 Series A Preferred Shares issued and outstanding as of February 13, 2018. As of March 28, 2018, there are no longer any Series A Preferred Shares outstanding.

886,119 shares of Common Stock were issued to Mr. Farkas pursuant to the December 6, 2017 letter agreement.

13,721 shares of Common Stock were issued to Mr. Farkas as payment of $46,651 in Board fees owed to Mr. Farkas.

223,456 shares of Common Stock were issued to Mr. Farkas as payment of $712,500 in shares of Common Stock owed to Mr. Farkas for the period of December 1, 2015 through May 31, 2017 pursuant to the Third Amendment to Executive Employment Agreement between the Company and Mr. Farkas, dated June 15, 2017 (the “Third Amendment”) and pursuant to a Conversion Agreement between the Company and Mr. Farkas, dated August 23, 2017.

153,039 shares of Common Stock were issued to Mr. Farkas as payment of $375,000 in shares of Common Stock owed to Mr. Farkas for accrued commissions on hardware sales and revenue from charging stations for the period of November 2015 through March 2017 pursuant to the Third Amendment and $145,334 in shares of Common Stock owed to Mr. Farkas for accrued commissions on hardware sales and revenue from charging stations for the period of April 2017 through February 13, 2018 pursuant to an oral agreement between the Company and Mr. Farkas. This oral agreement was reached pursuant to Section 7(B) of the Third Amendment.

On April 9, 2018, 780,432 warrants to purchase shares of Common Stock were issued to Mr. Michael D. Farkas (a) in settlement and consideration of services rendered to the Board during the period of April 1, 2016 through March 31, 2017; (b) as payment of $712,500 owed to Mr. Farkas for the period of December 1, 2015 through May 31, 2017 pursuant to the Third Amendment to Executive Employment Agreement between the Company and Mr. Farkas, dated June 15, 2017 (the “Third Amendment”) and pursuant to a Conversion Agreement between the Company and Mr. Farkas, dated August 23, 2017; (c) as payment of $375,000 owed to Mr. Farkas for accrued commissions on hardware sales and revenue from charging stations for the period of November 2015 through March 2017 pursuant to the Third Amendment ; (d) as payment of $145,334 owed to Mr. Farkas for accrued commissions on hardware sales and revenue from charging stations for the period of April 2017 through February 13, 2018 pursuant to an oral agreement between the Company and Mr. Farkas (the “Farkas Oral Agreement”). The Farkas Oral Agreement was reached pursuant to Section 7(B) of the Third Amendment.

In total 1,776,335 restricted shares of the Company’s Common Stock and 780,432 warrants to purchase shares of Common Stock were issued to Mr. Farkas.

26,500 shares of Common Stock were issued to Mr. Feintuch pursuant to the December 7, 2017 letter agreement.

17,487 shares of Common Stock were issued to Mr. Feintuch as payment of $43,555 in shares of Common Stock owed to Mr. Feintuch which represents 25% of the accrued commissions on hardware sales and revenue from charging stations for the period of November 2015 through March 2017 owed to Mr. Feintuch pursuant to the Compensation Agreement between the Company and Mr. Feintuch, dated June 16, 2017 and $15,902 in shares of Common Stock owed to Mr. Feintuch which represents 25% of the accrued commissions on hardware sales and revenue from charging stations for the period of April 2017 through February 13, 2018 owed to Mr. Feintuch pursuant to an oral agreement between the Company and Mr. Feintuch. This oral agreement was reached pursuant to Section 3(B) of the Compensation Agreement.

On April 9, 2018, 34,974 warrants to purchase shares of Common Stock were issued to Mr. Ira Feintuch, the Company’s Chief Operating Officer, as payment of (a) $43,555 owed to Mr. Feintuch which represents 25% of the accrued commissions on hardware sales and revenue from charging stations for the period of November 2015 through March 2017 owed to Mr. Feintuch pursuant to the compensation agreement between the Company and Mr. Feintuch, dated June 16, 2017 (the “Compensation Agreement”) and; (b) $15,902 owed to Mr. Feintuch which represents 25% of the accrued commissions on hardware sales and revenue from charging stations for the period of April 2017 through February 13, 2018 owed to Mr. Feintuch pursuant to an oral agreement between the Company and Mr. Feintuch (the “Feintuch Oral Agreement”). The Feintuch Oral Agreement was reached pursuant to Section 3(B) of the Compensation Agreement.

In total 93,987 restricted shares of the Company’s Common Stock and 34,974 warrants to purchase shares of Common Stock were issued to Mr. Feintuch.

360,441 shares of Common Stock were issued to Ardour Capital Investments, LLC (“Ardour”) (an entity of which Mr. Farkas owns less than 5%) in placement agent fees related to the $3,500,000 lent by JMJ Financial (“JMJ”) to the Company between October 2016 and October 2017. This share amount also includes placement agent fees owed to Ardour in connection with a separate $250,000 lent by JMJ to the Company on January 22, 2018.

1,167 shares of Common Stock were issued to Ardour in connection with placement agent fees related to the sale of Series C Preferred Stock in December 2014.

9,868 shares of Common Stock were issued to Sunrise Securities Corp. (“Sunrise”) in connection with placement agent fees related to the sale of Series C Preferred Stock in December 2014.

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143,427 shares of Common Stock were issued to Sunrise as repayment of a $487,653 debt pursuant to a Letter Agreement between the Company and the counterparty, dated February 3, 2018. The 286,854 five-year warrants to purchase Common Stock with an exercise price of $4.25 were issued to Sunrise on April 9, 2018.

9,111,644 shares of Common Stock were issued to fifty-three (53) holders to convert all Series C Preferred Shares outstanding and owed as of the February 16th closing date of the Public Offering. As of March 28, 2018, there are no longer any Series C Preferred Shares outstanding. Among the 9,111,644 shares issued, BLNK Holdings was issued 6,827,092 shares and Mr. Farkas was issued 211,276 shares.

These securities were not registered under the Securities Act of 1933, as amended (the “Securities Act”), but qualified for exemption under Section 4(a)(2) of the Securities Act. The securities were exempt from registration under Section 4(a)(2) of the Securities Act because the issuance of such securities by the Company did not involve a “public offering,” as defined in Section 4(a)(2) of the Securities Act, due to the insubstantial number of persons involved in the transaction, size of the offering, manner of the offering and number of securities offered. All of the securities were issued without registration under the Securities Act of 1933 in reliance upon the exemption provided in Section 4(a)(2).

Share Cancellation

Pursuant to the December 6, 2017 letter agreement, on April 13, 2018, Mr. Farkas cancelled 2,930,596 shares of Common Stock on behalf of FGI (the “FGI Cancellation”).

On February 3, 2018, the Company and Schafer entered into a letter agreement (the “Schafer Letter Agreement”) whereby the parties agreed that, concurrent with the closing of the Public Offering, Schafer would return to the Company 11,503 shares of Common Stock (post-reverse stock split effected on August 29, 2017) of the Company. On April 13, 2018, Schafer cancelled 11,503 shares of Common Stock (the “Schafer Cancellation”, together with the FGI Cancellation, the “Share Cancellation”).

Critical Accounting Policies

 

For a description of our critical accounting policies, see Note 2 – Summary of Significant Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Recently Issued Accounting Pronouncements

For a description of our recently issued accounting pronouncements, see Note 2 – Summary of Significant Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are not required to provide the information required by this Item because we are a smaller reporting company.

 

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of September 30, 2018, being the end of the period covered by this Report, our management conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure.

Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of September 30, 2018, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting as discussed in Item 9A. Controls and Procedures of the Company’s Form 10-K for the fiscal year ended December 31, 2017, under the heading “Management’s Report on Internal Control Over Financial Reporting” and that continued to exist as of September 30, 2018.

Changes in Internal Control over Financial Reporting

We continue to address the remediation of identified material weaknesses by hiring additional finance and accounting personnel, including a new Chief Financial Officer (“CFO”) who we hired in July 2018. The CFO will monitor progress in this regard and make arrangements to obtain outside advisory and consulting services to assist with the SOX compliance effort.

Effective July 1, 2018, we adopted Accounting Standards Codification (“ASC”) 842, “Leases” (“ASC 842”). ASC 842 requires management to make significant judgments and estimates. As a result, we implemented changes to our internal controls related to lease evaluation for the three and nine months ended September 30, 2018. These changes include updated accounting policies affected by ASC 842 as well as redesigned internal controls over financial reporting related to ASC 842 implementation. Additionally, management has expanded data gathering procedures to comply with the additional disclosure requirements and ongoing contract review requirements.

Except as stated above, there were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended September 30, 2018 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Limitations on Effectiveness of Controls and Procedures

 

In designing and evaluating ourthe disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2018. The term “disclosure controls and procedures,” as defined in Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Based on our evaluation, our Chief Executive Officer concluded that, as of March 31, 2018, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described below, which were identified as of December 31, 2017 in the normal course and continued to exist as of March 31, 2018:

 1.33We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the year ended December 31, 2017. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

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 2.We do not have sufficient resources in our accounting function, which restricts the Company’s ability to gather, analyze and properly review information related to financial reporting in a timely manner. In addition, due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
3.We have inadequate controls to ensure that information necessary to properly record transactions is adequately communicated on a timely basis from non-financial personnel to those responsible for financial reporting. Management evaluated the impact of the lack of timely communication between non–financial personnel and financial personnel on our assessment of our reporting controls and procedures and has concluded that the control deficiency represented a material weakness.
4.Certain control procedures were unable to be verified due to performance not being sufficiently documented. As an example, some procedures requiring review of certain reports could not be verified due to there being no written documentation of such review. Management evaluated the impact of its failure to maintain proper documentation of the review process on its assessment of its reporting controls and procedures and has concluded deficiencies represented a material weakness.

Notwithstanding the assessment that our disclosure controls and procedures and our internal controls over financial reporting were not effective and that there are material weaknesses as identified herein, we believe that our condensed consolidated financial statements contained in this Quarterly Report fairly present our financial position, results of operations and cash flows for the periods covered thereby in all material respects.

Changes in Internal Control over Financial Reporting

Effective January 1, 2018, we adopted Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” (“ASC 606”). ASC 606 will require management to make significant judgments and estimates. As a result, we implemented changes to our internal controls related to revenue recognition for the quarter ended March 31, 2018. These changes include updated accounting policies affected by ASC 606, redesigned internal controls over financial reporting related to ASC 606, expanded data gathering to comply with the additional disclosure requirements, and ongoing contract review requirements.

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PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

From time to time, we areFor a defendant or plaintiffdescription of our legal proceedings, see Note 11 – Commitments and Contingencies – Litigation and Disputes in various legal actions that arise in the normal coursePart 1, Item 1 of business. We record legal costs associated with loss contingencies as incurred and has accrued for all probable and estimable settlements.

We are not currently involved in any material disputes and do not have any material litigation matters pending except:

350 GREEN, LLC

There have been five lawsuits filed against 350 Green by creditors of 350 Green regarding unpaid claims. These lawsuits relate solely to alleged pre-acquisition unpaid debts of 350 Green. Also, there are other unpaid creditors, aside from those noted above, that claim to be owed certain amounts for pre-acquisition work done on behalf of 350 Green solely, that potentially could file lawsuits at some point in the future.

On August 7, 2014, 350 Green received a copy of a complaint filed by Sheetz, a former vendor of 350 Green alleging breach of contract and unjust enrichment of $112,500. The complaint names 350 Green, 350 Holdings LLC and the Company in separate breach of contract counts and names all three entities together in an unjust enrichment claim. The Company and 350 Holdings will seek to be dismissed from the litigation, because, as the complaint is currently plead, there is no legal basis to hold the Company or 350 Green liable for a contract to which they are not parties. The Company settled with Sheetz and the parties signed two agreements on February 23, 2017: a General Release and Settlement Agreement and an Exclusive Electronic Vehicle Charging Services Agreement. The settlement involved a combination of DC charging equipment, installation, charging services, shared driver charging revenue and maintenance for two systems in exchange for no further legal action between 350 Holdings or the Company. The Exclusive Electronic Vehicle Charging Services Agreement with Sheetz is for a five (5) year term. Pursuant to the agreement, Blink shall remit to Sheetz gross revenue generated by electric vehicle charging fees and advertising, minus (i) any and all taxes, (ii) 8% transaction fees, (iii) $18.00 per charger per month; and (iv) any electricity costs incurred by Blink ((i), (ii), (iii), and (iv) being referred to as the “Service Fees”). In the event the aggregate gross revenues are insufficient to cover the Service Fees incurred in a given month by the charging stations, such unpaid Service Fees will accrue to the following month. The agreement is subject to an automatic five year renewal unless written notice for the contrary is provided.

Concurrent with the closing of the Public Offering, the Company was to pay the former principals of 350 Green LLC $25,000 in installment debt and $50,000 within 60 days thereafter in settlement of a $360,000 debt (inclusive of imputed interest) in accordance with a Settlement Agreement between the parties dated August 21, 2015 resulting in a gain of $285,000. As of May 11, 2018, this payment has not yet been made.

LITIGATION UPDATES

On July 28, 2015, a Notice of Arbitration was received stating ITT Cannon has a dispute with Blink Network for the manufacturing and purchase of approximately 6,500 charging cables by Blink Network, which had not taken delivery or made payment on the contract price of $737,425. ITT Cannon also seeks to be paid the cost of attorney’s fees as well as punitive damages. On June 13, 2017, as amended on November 27, 2017, Blink Network and ITT Cannon agreed to a settlement agreement under which the parties agreed to the following: (a) the Blink Network purchase order dated May 7, 2014 for approximately 6,500 charging cables is terminated, cancelled and voided; (b) three (3) business days following the closing date of a public offering of the Company’s securities and listing of such securities on NASDAQ, the Company shall issue to ITT Cannon shares of the same class of the Company’s securities with an aggregate value of $200,000 (which was accrued at September 30, 2017); and (c) within seven (7) calendar days of the valid issuance of the shares in item (b) above, ITT Cannon shall ship and provide the remaining approximately 6,500 charging cables to Blink Network and dismiss the arbitration without prejudice. On January 31, 2018, ITT Cannon, Blink Network and the Company agreed that if the Company fails to consummate a registered public offering of its common stock, list such stock on NASDAQ and issue to ITT Cannon shares of the same class of the Company’s securities by February 28, 2018, the settlement agreement will expire. The Public Offering closed on February 16, 2018. The Company issued 47,059 shares on March 16, 2018. This was a partial payment of the $200,000 in stock owed to ITT Cannon. On March 30, 2018 the Company has issued an additional 25,669 shares to satisfy in full its obligations to ITT. As of May 11, 2018, ITT Cannon has shipped approximately 4,600-4,900 charging cables and has agreed to ship the remaining balance shortly thereafter.

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On April 8, 2016, Douglas Stein filed a Petition for Fee Arbitration with the State Bar of Georgia against the Company for breach of contract for failure to pay invoices in the amount of $178,893 for legal work provided. The invoices have been accrued for in the periods in which the services were provided. The Company has responded to the claim and is simultaneously pursuing settlement options. The parties failed to settle after numerous attempts. On February 15, 2017, the case was brought to the Georgia Arbitration Committee. On February 26, 2017, The Stein Law firm was awarded a summary judgment for $178,893, which has been confirmed and converted into a judgment by the Superior Court of Fulton County, Georgia on August 7, 2017 in the amount of $179,168, inclusive of court costs, which continues to accrue both interest at the rate of 7.25% per annum on that amount calculated on a daily as of February 28, 2014, and costs to-date of $40,000 which are hereby added to the foregoing judgment amount (all of which was accrued at December 31, 2017). In connection with perfecting the Georgia judgment in the State of New York, Mr. Stein served an Information Subpoena with Restraining Notice dated September 12, 2017 on the underwriter of the offering for which the Company filed a registration statementQuarterly Report on Form S-1 on November 7, 2016 (as amended) (the “Restraining Notice”). The Restraining Notice seeks to force the underwriter to pay the judgment amount directly out of the proceeds of the offering. On January 8, 2018, the Company and Mr. Stein had entered into a forbearance agreement, pursuant to which Mr. Stein has agreed to forbear from any efforts to collect or enforce the judgment awarded to him as a result of a legally-entered award of arbitration. As a result, the Company has agreed to: (i) wire transfer $30,000 to Mr. Stein within three days of the effective date of this agreement; (ii) beginning on the first calendar day of each successive month following the effective date of this agreement, the Company has agreed to pay Mr. Stein $5,000 per month until the full amount of the judgment awarded to Mr. Stein ($223,168) has been satisfied, however, the full amount awarded to Mr. Stein must be paid in full no later than April 30, 2018; and (iii) provide Mr. Stein with certain financial information of the Company. On February 16, 2018, the Company paid the full amount owed to Mr. Stein.10-Q.

On May 18, 2016, the Company was served with a complaint from Solomon Edwards Group, LLC for breach of written agreement and unjust enrichment for failure to pay invoices in the amount of $172,645 for services provided, plus interest and costs. The invoices have been accrued for in the periods in which the services were provided. The Company has responded to the claim and is simultaneously pursuing settlement options. On May 9, 2017, the Company issued 7,281 shares of common stock to Solomon Edwards Group, LLC in satisfaction of $121,800 of the Company’s liability. On November 28, 2017, the Company and Solomon Edwards Group LLC entered into a Settlement Agreement and Release whereby the parties agreed that the Company will pay $63,445 to Solomon Edwards Group LLC over the course of eleven (11) months in full and complete satisfaction of the previously filed complaint.

On March 20, 2017, in connection with the Company’s Miami Beach, Florida lease, the Company’s landlord filed a complaint for eviction with the Miami-Dade County Court against the Company as a result of the Company’s default under the lease for failing to pay rent, operating expenses and sales taxes of approximately $175,000, which represents the Company’s obligations under the lease through March 31, 2017, which was accrued for as of September 30, 2017. Concurrent with the closing of the Public Offering, the Company was to pay $234,000 to the landlord pursuant to a Settlement Agreement and Release between the Company and the counterparty, dated January 19, 2018. On February 16, 2018, the Company paid the full amount owed.

On June 8, 2017, the Company entered into a settlement agreement with Wilson Sonsini Goodrich & Rosati to settle $475,394 in payables owed for legal services as of June 30, 2017 requiring: (a) $25,000 to be paid in cash at the closing of the Public Offering; and (b) $75,000 in the form of 17,647 shares of Common Stock issuable upon the closing of the Public Offering. On February 16, 2018, the Company paid the $25,000 in cash and on March 19, 2018, the Company issued the 17,647 shares of common stock.

On July 21, 2017, as amended on February 26, 2018, the Company was served with a complaint from Zwick and Banyai PLLC and Jack Zwick for a breach of a written agreement and unjust enrichment for failure to pay invoices in the aggregate of amount $53,069 for services rendered, plus interest and costs, which has been accrued as of March 31, 2018.

On May 30, 2013, JNS Power & Control Systems, Inc. (“JNS”) filed a complaint against 350 Green, LLC alleging claims for breach of contract, specific performance and indemnity arising out of an Asset Purchase Agreement between JNS and 350 Green entered on April 13, 2013, whereby JNS would purchase car chargers and related assets from 350 Green. On September 24, 2013, the District Court entered summary judgment in favor of JNS on its claim for specific performance. On September 9, 2015, the United States Court of Appeals for the Seventh Circuit of Chicago, Illinois affirmed the ruling of the District Court, which affirmed the sale of certain assets by 350 Green to JNS and the assumption of certain 350 Green liabilities by JNS. On April 7, 2016, JNS amended the complaint to add the Company, alleging an unspecified amount of lost revenues from the chargers, among other matters, caused by the defendants. Plaintiff also seeks indemnity for its unspecified attorney’s fees and costs in connection with enforcing the Asset Purchase Agreement in courts in New York and Chicago. As of December 31, 2017, the Company accrued a $750,000 liability in connection with its settlement offer to JNS. On February 2, 2018, the parties entered into an asset purchase agreement whereby the parties agreed to settle the litigation. The Company purchased back the EV chargers it previously sold to JNS for: (a) shares of Common Stock worth $600,000 with a price per share equal to $4.25 (the price per share of the Public Offering); (b) $50,000 cash payment within ten days of the closing of the Public Offering; and (c) $100,000 cash payment within six months following the closing of the Public Offering. The Public Offering closed on February 16, 2018. The Company issued 141,176 shares on March 16, 2018. The Company made the $50,000 payment on March 16, 2018. JNS filed a motion to dismiss the lawsuit without prejudice on March 23, 2018 and the judge granted the motion on March 26, 2018. JNS will file a motion to convert the dismissal without prejudice to dismissal with prejudice within three business days of the $100,000 payment. On March 16, 2018, the Company issued 23,529 shares of Common Stock to JNS to be held in escrow as security for the $100,000 payment. At the time the $100,000 payment is made by the Company, the 23,529 shares currently held in escrow will be cancelled.

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ITEM 1A. RISK FACTORS.

 

There have been no material changesIn addition to the risk factors discussed ininformation set forth under Item 1A. Risk Factors in1A of Part I to our Annual Report on Form 10-K for the year ended December 31, 2017, the information set forth at the beginning of Management’s Discussion and Analysis entitled “Special Note Regarding Forward-Looking Information,” and updates noted below, you should consider that there are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition or results of operation may be materially and adversely affected. In such case, the trading price of our common stock could decline, and investors could lose all or part of their investment. These risk factors may not identify all risks that we face and our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations.

We have a history of significant losses, and if we do not achieve and sustain profitability, our financial condition could suffer.

We have experienced significant net losses, and we expect to continue to incur losses for the foreseeable future. We incurred net losses of approximately $2,135,933 and $93,620,432 for the three months ended September 30, 2018 and 2017, respectively, and incurred net losses of approximately $1,164,630 and incurred a net loss of approximately $101,134,331 during the nine months ended September 30, 2018 and 2017, respectively. Our accumulated deficit at September 30, 2018 is $157,599,908.

Our net loss for the three months ended September 30, 2018 decreased by $91,484,499, or 98%, to $2,135,933 as compared to $93,620,432 for the three months ended September 30, 2017. The decrease was primarily attributable to a decrease in other income (expenses) of $93,764,700. Our net loss for the nine months ended September 30, 2018 decreased by $99,969,701, or 99%, to $1,164,630 as compared to $101,134,331 for the nine months ended September 30, 2017. The decrease was primarily attributable to an increase in other income (expenses) of $103,931,132.

If our revenue grows more slowly than we anticipate, or if our operating expenses are higher than we expect, we may not be able to achieve profitability and our financial condition could suffer. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Whether we can achieve cash flow levels sufficient to support our operations cannot be accurately predicted. Unless such cash flow levels are attained, we may need to borrow additional funds or sell debt or equity securities, or some combination of both, to provide funding for our operations. Such additional funding may not be available on commercially reasonable terms, or at all.

We have a significant number of shares of our common stock issuable upon conversion of certain outstanding options, warrants and convertible preferred stock, and the issuance of such shares upon exercise or conversion will have a significant dilutive impact on our stockholders. Sales of a substantial number of shares of our common stock following the expiration of lock-ups may also adversely affect the market price of our common stock and the issuance of additional shares will dilute all other stockholders.

As of November 9, 2018, there are outstanding warrants and stock options to purchase 6,852,861 and 58,968 shares of our common stock, respectively.

As of November 9, 2018, there are 1,747,756 shares of common stock issuable upon conversion of our outstanding shares of Series D preferred stock.

In addition, our articles of incorporation, as amended, permits the issuance of up to approximately 463 million additional shares of common stock. Thus, we have the ability to issue a substantial number of shares of common stock in the future, which waswould dilute the percentage ownership held by our stockholders.

We and our officers, directors and certain stockholders have agreed, subject to customary exceptions, not to, without the prior written consent of Joseph Gunnar & Co., LLC, the representative of the underwriters in our February 2018 public offering, during the period ending on August 15, 2018 (180 days from February 16, 2018, the closing date of the public offering) in the case of our company and our directors and officers, and up to November 13, 2018 (270 days from February 16, 2018) in the case of certain stockholders, directly or indirectly, offer to sell, sell, pledge or otherwise transfer or dispose of any of shares of our common stock, enter into any swap or other derivatives transaction that transfers to another any of the economic benefits or risks of ownership of shares of our common stock, make any demand for or exercise any right or cause to be filed a registration statement with respect to the SECregistration of any shares of common stock or securities convertible into or exercisable or exchangeable for common stock or any other securities of our company or publicly disclose the intention to do any of the foregoing.

After the lock-up agreements with certain stockholders expire: (i) on April 17, 2018.November 13, 2018 (270 days from February 16, 2018), unless waived earlier by the representative, up to 8,367,879 shares that had been locked up will be eligible for future sale in the public market. After the lock-up agreements with our directors and officers, Horton Capital and JMJ expire on August 15, 2018 (180 days from February 16, 2018), unless waived earlier by the representative, up to 7,707,819 shares (including shares of common stock issuable upon conversion of our series D preferred stock) that had been locked up will be eligible for future sale in the public market. Sales of a significant number of these shares of common stock in the public market could reduce the market price of the common stock.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

On March 16, 2018, we issued 443,542 shares of our common stock with a fair value of $1,284,271 at issuance date in satisfaction of liabilities.

There have been no unregistered sales

On March 20, 2018, we issued 141,582 shares of equity securities that have not been previously disclosedour common stock with a fair value of $461,251 at issuance date in satisfaction of liabilities.

On March 22, 2018, we issued 1,835,225 shares of our common stock with a Current Report on Form 8-K or the Company’s Annual Report on Form 10-K filedfair value of $5,249,743 at issuance date in satisfaction of liabilities.

On April 3, 2018, we issued 25,669 shares of our common stock with the SEC on April 17, 2018.a fair value of $70,000 at issuance date in satisfaction of liabilities.

On September 7, 2018, we issued 188,501 shares of our common stock with a fair value of $601,318 at issuance date in satisfaction of liabilities.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

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ITEM 6. EXHIBITS.EXHIBITS

 

    Incorporated by Reference Filed or Furnished
Exhibit Number Exhibit Description Form  Exhibit Filing
Date		 Herewith
           
1.1  Underwriting Agreement dated February 13, 2018 by and among Blink Charging Co. and Joseph Gunnar & Co., LLC as representative of the several underwriters named therein. 8-K  1.1 02/14/2018  
3.1 Bylaws, as amended most recently on January 29, 2018  10-K 3.2 04/17/2018  
3.2 Certificate of Designation for Series C Convertible Preferred Stock, as amended through January 8, 2018.  10-K 3.5 04/17/2018  
3.6 Certificate of Designations for Series D Preferred Stock  8-K 3.1 02/21/2018  
4.1 Warrant Agency Agreement by and between the Company and Worldwide Stock Transfer, LLC and Form of Warrant Certificate for Registered Offering 8-K 4.1 02/21/2018  
4.2 Form of Warrant Dated April 9, 2018 8-K 4.1 04/18/2018  
10.1 Amendment #1 to Conversion Agreement between the Company and Michael D. Farkas, dated January 4, 2018. S-1/A 10.59 01/10/2018  
10.2 Amendment #1 to Conversion Agreement between the Company and BLNK Holdings LLC, dated January 4, 2018.  S-1/A 10.60 01/10/2018  
10.3 Amendment #1 to Equity Agreement between Michael Farkas and the Company, dated January 4, 2018.  S-1/A 10.61 01/10/2018  
10.4 Amendment #1 to Equity Agreement between Ira Feintuch and the Company, dated January 4, 2018.  S-1/A 10.61 01/10/2018  
10.5 Amendment #2 to Lockup, Conversion, and Additional Investment Agreement with JMJ Financial, dated January 4, 2018  S-1/A 10.63 01/10/2018  
Exhibit Number Exhibit Description Form Exhibit Filing Date Herewith
           
3.1 Articles of Incorporation, as amended August 17, 2017. 10-K 3.1 04/17/2018  
           
3.2 Bylaws, as amended on January 29, 2018. 10-K 3.2 04/17/2018  
           
3.3 Certificate of Designations for Series D Preferred Stock. 8-K 3.1 02/21/2018  
           
4.1 Warrant Agency Agreement between Blink Charging Co. and Worldwide Stock Transfer, LLC and Form of Warrant Certificate for Registered Offering. 8-K 4.1 02/21/2018  
           
4.2 Form of Common Stock Purchase Warrant dated April 9, 2018. 8-K 4.1 04/18/2018  
           
10.6.1 Offer Letter, dated August 28, 2018, between Blink Charging Co. and James Christodoulou. 8-K 10.1 08/30/2018  
           
31.1 Rule 13a-14(a) Certification of Principal Executive Officer.       X
           
31.2 Rule 13a-14(a) Certification of Principal Financial Officer.       X
           
32.1* Section 1350 Certification of Principal Executive Officer.       X
           
32.2* Section 1350 Certification of Principal Financial Officer.       X

 

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10.6 Amendment #3 to Lockup, Conversion, and Additional Investment Agreement Addendum to the Transaction Documents Dated October 7, 2016  S-1/A 10.64 02/05/2018  
10.7 Amendment #4 to Lockup, Conversion, and Additional Investment Agreement Addendum to the Transaction Documents Dated October 7, 2016   S-1/A 10.65 02/09/2018  
31.1 Certification of Principal Executive Officer, pursuant to 18 U. S. C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       X
31.2 Certification of Principal Financial Officer, pursuant to 18 U. S. C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.       X
32.1* Certification of Principal Executive Officer, pursuant to 18 U. S. C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.       X
32.2* Certification of Principal Financial Officer, pursuant to 18 U. S. C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002       X

101.INS XBRL Instance.X
101.XSD XBRL Schema.X
101.PRE XBRL Presentation.X
101.CAL XBRL Calculation.X
101.DEF XBRL Definition.X
101.LAB XBRL Label.X

 

* In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not deemed filed for purposes of Section 18 of the Exchange Act.

 

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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: May 15,November 14, 2018BLINK CHARGING COCO.
   
 By:/s/ Michael D. Farkas
  Michael D. Farkas
  

Executive Chairman and Interim Chief Executive Officer

(Principal Executive Officer)

By:/s/ Jonathan New
Jonathan New

Chief Financial Officer

(Principal Financial and Accounting Officer)

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