ITEM
2.
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MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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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, 2018 and for the three months ended March
31, 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. 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 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. 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
(also known as electric vehicle supply equipment) 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 portion 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.
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.
As of May 11, 2018, we have approximately 14,165 charging stations deployed of which 4,690 are Level 2 commercial charging
units, 113 DC Fast Charging EV chargers and 1,976 residential charging units in service on the Blink Network. Additionally, we
currently have approximately 436 Level 2 commercial charging units on other networks and there are also approximately an additional
6,950 non-networked, residential Blink EV charging stations. The non-networked, residential Blink EV charging stations are all
partner owned.
As
reflected in our unaudited condensed consolidated financial statements as of March 31, 2018, we had cash, working capital and
an accumulated deficit of $9,946,654, $2,212,757 and $154,231,190, respectively. During the three 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, 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.
Consolidated
Results of Operations
Three
Months Ended March 31, 2018 Compared With Three Months Ended March 31, 2017
Revenues
Total
revenue for the three months ended March 31, 2018 remained relatively flat at $595,920 compared to $595,620 during
the three months ended March 31, 2017.
Charging
service revenue company-owned charging stations was $305,747 for the three months ended March 31, 2018 compared to $267,874 for
the three months ended March 31, 2017, an increase of $37,873, or 14%. The increase is attributable to a larger number of charging
stations in the network as compared to the 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 for the three months ended March 31, 2018 compared to $153,587 during the three months ended March
31, 2017, a decrease of $17,827 or 12%. This decrease is attributable to lower volume of residential and commercial units as compared
to the 2017 period.
Grant
and rebate revenue was $16,231 during the three months ended March 31, 2018, compared to $32,810 during the three months ended
March 31, 2017, a decrease of $16,579 or 51%. 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, the 2018 revenue is related to the amortization of previous years’ grants.
Other
revenue decreased by $6,733 to $50,529 for the three months ended March 31, 2018 as compared to $57,262 for the three months
ended March 31, 2017. The decrease was primarily attributable to a decrease of $6,733 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,
the cost of charging station goods and related services sold, repairs and maintenance, electricity reimbursements and revenue
share payments to hosts when we are the primary obligor in the revenue share arrangement. Cost of revenues for the three months
ended March 31, 2018 were $424,099 as compared to $432,407 for the three months ended March 31, 2017, a decrease of $8,308 or
2%.
This
is primarily attributable to an increase in host provider fees of $53,958 or 99% to $108,405 during the three months ended March
31, 2018 as compared to $54,447 during the three months ended March 31, 2017. This increase is a result of more recent company
owned charger station installations having higher revenue share obligations to hosts during the three months ended March 31,
2018 as compared to the 2017 period.
Warranty
and repairs and maintenance costs increased by $44,580, or 233%, to $63,728 during the three months ended March 31, 2018
from $19,148 during the three months ended March 31, 2017. This was primarily attributable to an increase in volume of warranty
work performed during the three months ended March 31, 2018 as compared to the 2017 period.
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 or $31% to $77,744 for the three months ended March 31, 2018 as compared to $112,153
for the three months ended March 31, 2017, as some 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.
Operating
Expenses
Compensation
expense increased by $2,691,279, or 270%, from $997,357 (consisting of approximately $0.8 million of cash compensation and approximately
$0.2 million of non-cash compensation) for the three months ended March 31, 2017 to $3,688,636 (consisting of approximately $0.9
million of cash compensation and approximately $2.8 million of non-cash compensation) for the three months ended March 31, 2018.
The increase is attributable to an increase in non-cash compensation of $2.6 million due to common stock awards to the
Executive Chairman and the Chief Operating Officer. This is partially offset by a decrease in commissions, consulting, and other
payroll expenses of $182,631 due to a reduction in head count in 2017.
Other
operating expenses decreased by $58,986, or 24%, from $242,941 for the three months ended March 31, 2017 to $183,955 for the three
months ended March 31, 2018. The decrease was primarily attributable to a decrease in business insurance costs of $25,476 to $30,367
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.
General
and administrative expenses decreased by $212,539, or 68%, from $313,708 for the three months ended March 31, 2017 to $101,169
for the three months ended March 31, 2018. The decrease was primarily due to a decrease in professional and legal fees of $215,074
to $24,374 during the three months ended March 31, 2018 compared to $240,248 during the three months ended March 31, 2017 as a
result of our focus on the Public Offering during 2018 and legal costs incurred in conjunction therewith are charged against
Offering proceeds. This was partially offset by an increase in credit card processing fees 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.
Other
Income (Expense)
Other
income (expense) increased by $7,412,966 from ($1,406,939) for the three months ended March 31, 2017 to $6,006,027 for the
three months ended March 31, 2018. During the three months ended March 31, 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 warrant liabilities of $3,488,887 to $3,024,598
during the three months ended March 31, 2018 compared to ($464,289) during the three months ended March 31, 2017 as a result of
warrant holders exchanging their warrants for equity. During the three months ended March 31, 2018 we recorded a gain on the
settlement of accounts payable of $920,352 which increased by $896,424 from $23,928 during the three months ended March 31,
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
million as well as a charge of $785,200 related to a contribution of capital by the Executive Chairman during the three months
ended March 31, 2018.
Net
Income (Loss)
Our
net income (loss) for the three months ended March 31, 2018 increased by $5,301,820, or 171%, to $2,204,088 as compared to ($3,097,732)
for the three months ended March 31, 2017. The increase was primarily attributable to an increase in other income (expenses) of
$7,412,966. Our net loss attributable to common shareholders for the three months ended March 31, 2018 increased by 18,010,011,
or 467%, from $3,852,632 to $21,862,643 for the aforementioned reasons and due to an increase 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.
Liquidity
and Capital Resources
During
the three months ended March 31, 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 have been used to cover working capital needs and personnel, office
expenses and various consulting and professional fees.
For
the three months ended March 31, 2018 and 2017, we used cash of $4,814,971 and $783,135, respectively, in operations. Our cash
use for the three months ended March 31, 2018 was primarily attributable to our net income of $2,204,088, adjusted for net non-cash
income in the aggregate amount of $3,173,205, and $3,845,854 of net cash used in changes in the levels of operating
assets and liabilities. Our cash use for the three months ended March 31, 2017 was primarily attributable to our net loss of $3,097,732,
adjusted for net non-cash expenses in the aggregate amount of $1,477,377, partially offset by $837,220 of net cash provided by
changes in the levels of operating assets and liabilities.
During
the three months ended March 31, 2018, cash used in investing activities was $21,499, which was used to purchase charging stations
and other fixed assets. Net cash used in investing activities was $206 during the three months ended March 31, 2017, which was
used to purchase charger cables.
Net
cash provided by financing activities for the three months ended March 31, 2018 was $14,597,973, of which, $16,243,055 was attributable
to the proceeds from the sale of common stock and warrants in our public offering, reduced by issuance costs related to the public
offering of $1,190,082 that were paid by us during the period. In addition, $305,000 was provided in connection with the issuances
of notes payable, offset by the repayment of notes payable of $760,000. Net cash provided by financing activities for the three
months ended March 31, 2017 was $780,431, of which $805,100 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 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.
Through
March 31, 2018, we incurred an accumulated deficit since inception of $154,231,190. As of March 31, 2018, we had cash and
working capital of $9,946,654 and $2,212,757, respectively. During the three months ended March 31, 2018, we generated net income
of $2,204,088, but a loss from operations of $3,801,939.
There
has been no material change in the planned use of proceeds from the Public Offering as described in our Prospectus. 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:
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(1)
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Approximately
$4.0 million for the deployment of charging stations;
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(2)
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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;
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(3)
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Approximately
$3.0 million to add additional staff in the areas of finance, sales, customer support, and engineering; and
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(4)
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The
remainder for working capital and other general corporate purposes
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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 will 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 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.
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.
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 shares
of
Common 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.
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.
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 16
th
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.
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).