PART
I
Overview
Blink
Charging Co., through its wholly-owned subsidiaries, is a leading owner, operator, and supplier of electric vehicle (“EV”)
charging equipment and networked EV charging services. Blink serves both commercial and residential EV charging settings, enabling
EV drivers to recharge at various location types easily. At Blink, we are dedicated to slowing climate change by reducing greenhouse
gas emissions caused by transportation.
Blink’s
principal line of products and services is its Blink EV charging network (the “Blink Network”) and Blink EV charging
equipment, also known as electric vehicle supply equipment (“EVSE”) and other EV-related services. The Blink Network
is a proprietary, cloud-based system that operates, maintains, and manages Blink charging stations and handles the associated
charging data, back-end operations, and payment processing. The Blink Network provides property owners, managers, parking companies,
and state and municipal entities (“Property Partners”) with cloud-based services that enable the remote monitoring
and management of EV charging stations. The Blink Network also provides EV drivers with vital station information, including station
location, availability, and any fees (if applicable). Blink offers Property Partners a range of business models for EV charging
equipment and services that generally fall into one of the business models below, differentiated by who bears the costs of installation,
equipment, maintenance, and the percentage of revenue shared (as applicable).
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In
our Blink-owned turnkey business model, Blink incurs the costs of the charging equipment and installation, as well as maintenance.
We own and operate the EV charging station and provide connectivity of the charging station to the Blink Network. In this
model, Blink retains substantially all EV charging revenues after deducting network connectivity and processing fees.
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In
our Blink-owned hybrid business model, Blink incurs the costs of the charging equipment while the Property Partner incurs
the costs of installation costs, as well as ongoing maintenance. We own and operate the EV charging station and provide connectivity
of the charging station to the Blink Network. In this model, the Property Partner incurs the installation costs associated
with the EV stations; accordingly, here, Blink shares a more generous portion of the EV charging revenues with the Property
Partner generated from the EV charging station after deducting Blink’s charges for network connectivity and processing
fee.
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In
our host-owned business model, the Property Partner purchases, owns and operates the Blink EV charging station and incurs
the installation and maintenance costs. Blink works with the Property Partner, providing site recommendations, connectivity
to the Blink Network, payment processing, and optional maintenance services. In this model, the Property Partner retains and
keeps all the EV charging revenues after payment for network connectivity and processing fees.
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In
our Blink-as-a-service model, Blink owns and operates the EV charging station, while the Property Partner incurs the installation
cost. The Property Partner pays to Blink a fixed monthly fee and keeps all the EV charging revenues after deducting Blink’s
charges for network connectivity and processing fees.
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We
have strategic partnerships across numerous transit/destination locations, including airports, auto dealers, healthcare/medical,
hotels, mixed-use, municipal sites, multifamily residential and condos, parks and recreation areas, parking lots, religious institutions,
restaurants, retailers, schools and universities, stadiums, supermarkets, transportation hubs, and workplace locations.
Throughout
2020, Blink saw a significant increase in agreements with healthcare providers, including an agreement with Lehigh Valley Health
Network in Pennsylvania to make EV charging stations available to the medical staff, patients, and visitors of Lehigh Valley Health
Network. In December 2020, Blink signed an exclusive long-term agreement with Blessing Health System and an add-on agreement with
St. Luke’s University Healthcare in Pennsylvania.
In
2020, Blink announced three new products and accessories for our innovative IQ 200 charging station. These products included a
pole mounting kit, cable management solution, the IQ 250-EU European-focused charger. Additionally, Blink was the first to the
market to deploy a portable emergency EV charger.
We
also significantly invested in technology, updating the Blink Network and associated product technology, specifically, including
OpenADR 2.0 and implementing local load management. Further, we overhauled our website and mobile app with a streamlined, modern,
and intuitive design. We launched research and development of fast charging with battery storage with Chakratec after being awarded
the BIRD grant in 2019. We undertook continued utilization of the patented inductive/wireless charging bumper and entered into
a strategic master development and production agreement with SG Blocks to design and bring to market solar, off-grid, modular
EV charging solutions.
During
2020, Blink grew its number of strategic partnerships in the U.S. and globally. Blink expanded its Property Partners portfolio with an
agreement with Cushman and Wakefield, Envoy Technologies, and Enersys. Additionally, our international business grew with sales of EV
charging infrastructure in the Dominican Republic. Also, Blink signed an agreement with Migdal Insurance to deploy EV charging stations
in Israel. Blink Charging Hellas (an affiliated company) announced a partnership with Nissan Nik. I. Theocharakis S.A. to expand
Greece’s EV charging infrastructure. Blink continues to grow its network and brand, both domestically and internationally.
As
of December 31, 2020, Blink deployed 16,617 charging stations, of which 7,062 were on the Blink Network (consisting of 4,348 Level
2 publicly accessible commercial charging units; 1,404 Level 2 private commercial charging units; 120 DC Fast Charging EV publicly
accessible chargers; 14 DC Fast Charging EV private chargers, and 1,176 residential Level 2 Blink EV charging units). The remaining
are non-networked, on other networks or international sales or deployments (228 Level 2 commercial charging units, 8,773 residential
Level 2 Blink EV charging stations, 521 sold internationally, and 33 deployed internationally).
Industry
Overview
The
market for plug-in electric vehicles experienced significant growth in recent years. In response to consumer demands, electric
cars now feature extended ranges, and improved performance. Notable events in 2020 further propelled the EV industry. Stay-at-home
orders and the resulting reductions in global carbon dioxide emissions showcased the potential of cleaner, lower-emission air
quality worldwide. Battery technology advances have allowed EVs to achieve approximate cost parity with internal combustion engine
vehicles. Finally, the new United States administration’s focus on climate initiatives and its large-scale commitment to
expanding EV charging infrastructure has spurred widespread interest and promotion of the EV industry.
Electric
vehicle demand has also been spurred by federal, state, and local incentives and rebates for both vehicles and their required
charging infrastructure. For example, California, Oregon, New York, Maryland, Massachusetts, and other states have created mandates
for EVs to achieve more than 6.8 million EVs on the road by 2030. Further, a shift towards EV car-sharing has boosted demand for
EV fleets, leading to increased EV charging station needs. In response to consumer demand and governmental regulations, major
automakers and OEMs have accelerated the development and production of a diverse EV model lineup. More than seventy EV models
are currently available from automakers such as Tesla, Nissan, Kia, GM, Ford, Fiat, BMW, Mercedes-Benz, Audi, Volkswagen, Toyota,
Mitsubishi, Land Rover, and Porsche. According to 2020 J.P. Morgan global research, global sales of plug-in electric vehicles
are estimated to grow to 8.4 million units, or 7.7% of all vehicles sold, by 2025.
According
to Meticulous Research®, an independent market research firm, the electric vehicle charging stations market is forecasted
to reach $29.7 billion by 2027. In its analysis, the industry is expected to grow at a compound annual growth rate of 39.8% from
2020.
These
market demands well position Blink for rapid growth in its EV charging network, the number of its members, and its site host Property
Partners’ expansion. We have been preparing for this high-growth environment through its initiatives, including securing
large national and international strategic partnerships and agreements, and further developing the Company’s technology.
These strategic actions will help ensure the Company is well positioned to meet the growing infrastructure demand in the United
States and globally. In addition to meeting the required demand for EV charging infrastructure, Blink’s unique, owner-operator
focused business models help the Company significantly benefit from increased utilization as the industry expands through revenue
share at Blink-owned charging stations.
Our
EV Charging Solutions
We
offer a variety of EV charging products and services to Property Partners and EV drivers.
EV
Charging Products
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Level
2. We offer Level 2 (AC) EV charging equipment, which is ideal for commercial and residential use, and has the standard J1772
connector, which is compatible with all major auto manufacturer electric vehicle models. Our commercial equipment is available
in pedestal or wall mount configurations, with the ability to connect to our Blink Network. Our non-networked residential product,
Blink HQ, is available in a wall-mount configuration and offers a delay start feature that allows users to optimize charging when
utility rates are lowest. Level 2 charging stations typically provide a full charge in two to eight hours. Level 2 chargers are
ideally suited for low-cost installations and frequently used parking locations, such as workplace, multifamily residential, retail
and mixed-use, parking garages, municipalities, colleges/schools, hospitals and airports.
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We
have enhanced our current Level 2 equipment line by offering a new generation of EV charging equipment. Blink’s latest generation
of EV charging equipment offers a modern, stylish appearance, the versatility of both wall and pedestal configurations, and peer-to-peer
architecture, which provides the ability to support a single primary charger and multiple secondary chargers. Additionally, the
new generation of our EV charging hardware considerably reduces the current standard charging times within the industry and adds
new network features, including near-field communication (NFC) payment capabilities. In addition, advanced energy management features
have been added including Automated Demand Response 2.0 compliance, local load management, and ability to add features via remote
firmware upgrades.
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DCFC.
The DC Fast Charging equipment (“DCFC”) currently has the ‘CHAdeMo’ connector, which is compatible
with Nissan, Kia and Tesla electric vehicle models (additional models may be potentially available in the future), and typically
provides an 80% charge in less than 30 minutes. Installation of DCFC stations and grid requirements are typically greater
than Level 2 charging stations and are ideally suited for transportation hubs and locations between travel destinations.
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Blink’s
rapid expansion into DCFC sites is supported by reseller type relationships with all the major equipment manufacturers globally.
This assures Blink access to the best-in-class equipment for each specific requirement, allowing Blink to provide the best
possible charging solutions for its customers. The third-party DCFC’s operate on the Blink Network as all of our other
products. The third-party equipment currently operating on Blink’s network include ABB, BTC, Signet, and Tritium.
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During
2020, Blink introduced three new products and accessories for our innovative IQ 200 charging station. These products included
a pole mounting kit, cable management solution, and the IQ 250-EU European-focused charger. Blink launched a portable emergency
EV charger. Further, Blink invested in technology, updating the Blink Network and associated product technology, such as Open
ADR 2.0 and local load management. Blink overhauled its website and mobile app with a streamlined, modern, and intuitive design.
The Company launched research and development of fast charging stations with battery storage with Chakratec after being awarded
the BIRD grant in 2019. The Company undertook continued utilization of the patented inductive/wireless charging bumper and entered
into a strategic master development and production agreement with SG Blocks to design and bring to market solar, off-grid, modular
EV charging solutions.
Competitive
Advantages/Operational Strengths
Long-Term
Contracts with Property Owners. We have strategic and often long-term agreements with location exclusivity with Property
Partners across numerous transit/destination locations, including airports, car dealers, healthcare/medical, hotels, mixed-use,
municipal locations, multifamily residential and condo, parks and recreation areas, parking lots, religious institutions, restaurants,
retailers, schools and universities, stadiums, supermarkets, transportation hubs, and workplace locations. We have hundreds of
Property Partners that include well-recognized companies, large municipalities and local businesses. Representative examples are
City of Miami Beach, City of Chula Vista, City of Phoenix, City of Portland, University of San Diego, Ohlone College, ACE Parking,
Icon Parking, SP+ Parking, iPark, LAZ Parking, Reef Parking, IKEA, Federal Realty, Equity Residential, Related Group, Johnson
& Johnson, Kaiser Permanente, Blessing Healthcare, Sony Pictures Entertainment, Starbucks, JBG Associates, Kroger Company,
Fred Meyer Stores, Inc., Fry’s Food & Drug, Inc., Raising Cane’s, McDonald’s, Carl’s Jr., Burger King,
and Ralphs Grocery Company. We continue to establish new contracts with Property Partners that previously secured our services
independently or had contracts with the EV service providers that we acquired in the past.
Differentiated
but Flexible Business Models. We own, operate and supply proprietary electric vehicle (“EV”) charging equipment
and networked EV charging services. We believe that our ability to flexibly provide various business models, including a comprehensive
turnkey solution, to Property Partners and leverage our technology to meet both Property Partners’ and EV drivers’
needs provides a competitive advantage in addition to more compelling long-term growth opportunities than possible through equipment
sales only.
Ownership
and Control of EV Charging Stations and Services. We own a large percentage of our stations, which is a significant differentiation
between us and some of our primary competitors. This ownership model allows us to control the settings and pricing for our EV
charging services, service the equipment as necessary, and have more effective brand management and price uniformity. As to those
stations that we do not own, we are using our best efforts to encourage their owners to keep the stations operating and, in some
cases, to replace faulty stations with our new charging stations equipment.
Experience
with Products and Services of Other EV Charging Service Providers. From our early days and through our acquisitions, we
have had the experience of owning and operating EV charging equipment provided by other EV charging service providers, including
General Electric, ChargePoint, and SemaConnect. This experience has provided us with the working knowledge of other equipment
manufacturers’ benefits and drawbacks and their applicable EV charging networks.
Our
Growth Strategy
Our
objective is to continue becoming a leading provider of EV charging solutions by deploying mass-scale EV charging infrastructure.
By doing so, we aim to enable the accelerated growth of EV adoption and the EV industry. Key elements of our strategy include:
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Pursue
Strategic Opportunities to Expand Blink-Owned Turnkey and Hybrid Model. We have structured our business to identify
and pursue opportunities to develop Blink’s owner and operator business model with locations with potential high utilization,
where grant monies are available, and where we can realize long-term benefit for the EV charging location and establish long-term
recurring revenue relationships.
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Relentless
Focus on Customer Satisfaction. We aim to increase overall customer satisfaction with new and existing Property Partners
and EV drivers by upgrading and expanding the EV charging footprint throughout high-demand, high-density geographic areas.
Another objective is to improve productivity and utilization of existing EV charging stations and enhance the valuable features
of our EV charging station hardware and the Blink Network.
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Continue
to Invest in Technology Innovations. We will continue to enhance the product offerings available in our EV charging
hardware, cloud-based software, and networking capability. This includes the design and launch of our next generation of EV
charging solutions, including accelerating the charge currents currently available in EV charging hardware and new, robust
Blink Network features to distance ourselves from the competition. Our key service solutions allow us to remain technology
agnostic so that, if market conditions shift, we have the option to leverage pure-play hardware providers to augment our products.
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Strengthen
and Support our Human Capital. Our experienced employees and management team are our most valuable resources. Attracting,
training, and retaining key personnel has been and will remain critical to our success. To achieve our human capital goals,
we intend to stay focused on providing our personnel with entrepreneurial opportunities to expand our business within their
areas of expertise. We will also continue to provide our personnel with personal and professional growth opportunities, including
additional training, performance-based incentives such as opportunities for stock ownership, and other competitive benefits.
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Expand
Sales and Marketing Resources. We intend to invest in sales and marketing infrastructure to capitalize on the growth
in the market and expand our go-to-market strategy. Today, we use a direct sales force, as well as resellers, and will continue
expanding through the use of independent sales agents, utilities, solar distributors, contractors, automotive manufacturers
and dealers.
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Seek
Strategic Acquisition Opportunities. We seek domestic and international acquisition opportunities which will allow
us to expeditiously expand our footprint of EV charging station locations, product offerings, and enhance our Blink Network.
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Leverage
Our Early Mover Advantage. We continue to leverage our extensive and defendable first-mover advantage and the digital
customer experience we have created for both EV drivers and Property Partners. We believe that tens of thousands of Blink
driver registrants appreciate the value of transacting charging sessions on an established, robust network experience. Blink
chargers are deployed across the United States, and the tendency, among users, is to stay within one consistent network for
expansion on any given property.
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Appropriately
Capitalize Our Business. We continue to pursue new potential capital sources to deliver critical operational objectives
and the necessary resources to execute our overall strategy. The EV charging industry as a whole is undercapitalized to deliver
the full potential of the expected EV market growth in the near future. We expect to retain our leadership position with new
growth capital as required.
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Sales
Blink’s
in-house field sales force builds and maintains long-term business relationships with our Property Partners for our four business
models. Our team identifies locations that will successfully pair with each business model, in particular prioritizing Blink-owned
turnkey and hybrid models where there’s an opportunity to create long-term, recurring value and for the Property Partner
and Blink, respectively. The sales team develops new near-term and long-term opportunities with potential site hosts through relationship
building, lead generation and nurturing, and marketing. The in-house sales team is supplemented with key strategic reseller agreements.
These resellers are utilized to sell our EV charging hardware, software services (connectivity to Blink Network), and service
plans to strategic site hosts and in specific locations. We also sell residential Level 2 chargers through various internet channels,
such as Amazon, Lowes.com, and other online retailers, to further reach the single-family residential charging market in the United
States.
Our
in-house staff performs marketing. Our marketing team works to promote and sell our services to property owners and managers,
parking companies, and EV drivers. We also utilize marketing and communication channels, including press releases, email marketing,
website (www.blinkcharging.com), pay-per-click advertising, social media marketing, webinars, sponsorships and partnerships,
advertising, and conferences. Our websites’ information is not, and will not be deemed, a part of this Annual Report or
incorporated into any other filings we make with the SEC.
During
2020, Blink significantly expanded its sales and business development capabilities, which resulted in an acceleration of unit
sales and deployments in the second half of the year. Some highlights from the year include:
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hiring
a new head of sales,
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establishing
three distinct sales regions in the U.S. to better target consumers, and
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growing
the number of salespeople from six to fifteen.
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Following
this expansion, we won several new prominent customers, including Cushman & Wakefield, Reef Technology, Lehigh Valley Health,
St. Luke’s University Health Network, Lion Electric, and several others, that expand Blink’s potential for unit sales
and deployments. Commensurate with these new business relationships, we also forged critical strategic relationships with organizations
that directly or indirectly influence EV charging purchase decisions. Examples include Sustainable Westchester, in New York, and
Clean Cities Organizations in Virginia, Vermont and Ohio.
We
continue to invest in improving our company-owned stations’ service and maintenance and those stations with service and
maintenance plans and expanding our cloud-based network capabilities. We anticipate continuing to grow our revenues by (i) selling
our next generation of EV charging equipment to current as well as to new Property Partners, which includes 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, and (ii) expanding our sales channels to wholesale distributors, utilities, auto original equipment manufacturers
(“OEMs”), solar integrators, and dealers, which will include implementing EV charging station occupancy fees (after
charging is completed, fees for remaining connected to the charging station beyond an allotted grace period), and subscription
plans for EV drivers on our company-owned public charging locations.
Our
Customers and Partners
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.
We have hundreds of Property Partners that include well-recognized companies, large municipalities, and local businesses. We engage
with all Blink-owned turnkey and hybrid property partners with exclusive long-term contracts for EV charging at their locations
further supporting our owner and operator model to generate long-term recurring value and revenue for both the Property Partner
and Blink. Representative examples are McDonald’s, Sony Pictures, Caltrans, Porsche Design Tower, City of Azusa, City of
Chula Vista, City of Springfield, City of Tucson, Federal Realty, Fred Meyer Stores, Inc., Fry’s Food & Drug, Inc.,
IKEA, JBG Associates, LLC, Kroger Company and Ralphs Grocery Company. We continue to establish new contracts with Property Partners
that previously secured our services independently or had contracts with the EV services providers that we acquired, including
ECOtality, the former owner of the Blink-related assets.
Our
revenues are primarily derived from fees charged to EV drivers for EV charging in public locations, EV charging hardware sales,
government grants, and sales of equipment warranties. EV charging fees to EV drivers are based either on an hourly rate, or by
energy dispensed per kilowatt-hour (“kWh”), or by session. They are calculated based on a variety of factors, including
associated station costs and local electricity tariffs. EV charging hardware is sold to our Property Partners such as InterEnergy,
Green Commuter, IKEA, Nashville Music Center, Wendy’s, and other Property Partners engaged with our host-owned business
model. Other income sources from EV charging services are network fees, extended warranty fees, membership fees, and payment processing
fees paid by our Property Partners.
We
teamed up with Google Maps to make locating EV charging stations more straightforward and more accessible. Google Maps has launched
a new capability that brings EV charging stations to its map. As part of this effort, we have worked with the Google Maps team
to ensure our charging stations and relevant information about these stations are available to Google Map users on Android, iOS,
and desktops globally. This is designed to quickly search for keywords such as “EV charging” or “EV charging
stations” to display the nearest supported stations. Additional information such as the business where the station is located,
charging speed, and the quantities of ports available is expected to be accessible directly within the map in the future.
Our
Competition
The
EV charging equipment and service market is highly competitive, and we expect the market to become increasingly competitive as
new entrants enter this growing market. Our products and services compete on product performance and features, the total cost
of ownership, sales capabilities, financial stability, brand recognition, product reliability, and the installed base’s
size. Our existing competition currently includes ChargePoint, which manufactures EV charging equipment and operates the ChargePoint
Network, and EVgo, which offers home and public charging with pay-as-you-go and subscription models. Other entrants into the connected
EV charging station equipment market, include companies like Volta, Clipper Creek, SemaCharge, and EVConnect. We believe these
additional competitors struggle with gaining the necessary network traction but could gain momentum in the future. While Tesla
does offer EV charging services, the connector type currently restricts the chargers to Tesla vehicles only. Many other large
and small EV charging companies offer non-networked or “basic” chargers that have limited customer leverage but could
provide a low-cost solution for basic charger needs in commercial and home locations.
Our
competitive advantage includes our exclusive, long-term contracts with our Property Partners and our four flexible business models.
We offer both our EV charging station equipment and provide access to an established EV charging network. However, many of our
current and expected future competitors have considerably greater financial and other resources and may leverage those resources
to compete effectively.
Government
Grants
Blink
has established a full-time dedicated team to identify and process federal and state funding opportunities for EV charging infrastructure
development. Blink is committed to pursuing EV charging development grant opportunities in all 50 states. Sources of funding include
funding from the United States Department of Energy, the United States Department of Transportation, the VW mitigation settlement
trust fund, and funding initiatives from utility service providers.
Government
Regulation and Incentives
State,
regional and local regulations for installing EV charging stations vary from jurisdiction to jurisdiction and may include permitting
requirements, inspection requirements, licensing of contractors, and certifications. Compliance with such regulations may cause
installation delays.
Currently,
we apply charging fees by the kWh for our services in states that permit this policy and hourly and by session for our services
in states that do not permit per kWh pricing. California, Colorado, District of Columbia, Florida, Hawaii, Illinois, Maryland,
Massachusetts, Minnesota, New York, Oregon, Pennsylvania, Utah, Virginia, and Washington have determined that companies that sell
EV charging services to the public will not be regulated as utilities, allowing us to charge fees based on kWh usage. These individual
state determinations are not binding on any other regulator or jurisdiction. However, they demonstrate a trend in the way states
view the industry. Other jurisdictions are in the process of adopting such reforms.
We
intend to continue to vigorously seek additional grants, loans, rebates, subsidies, and incentives as cost-effective means of
reducing our capital investment in the promotion, purchase and installation of charging stations where applicable. We expect that
these incentives, rebates and tax credits will be critical to our future growth. Additionally, some incentives are currently offered
to encourage electric vehicle adoption at the federal, state and local levels. The Federal government provides a personal income
tax credit for qualified plug-in electric vehicles, with a minimum credit of $2,500, and a maximum of $7,500, depending on vehicle
weight and battery capacity. Such credits begin to phase out when the vehicle manufacturer reaches certain production levels.
States such as California, Colorado, Delaware, Louisiana, Massachusetts, New York, and Rhode Island offer various rebates, grants,
and tax credits to incentivize EV and EVSE purchases.
CESQG
As
a Conditionally Exempt Small Quantity Generator (“CESQG”), we generate a limited quantity of hazardous waste, mostly
solvent contaminated wipes transported to local solid waste facilities. Scrapped electronic boards are transported to a local
recycler. A CESQG of hazardous waste is defined as a generator that:
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produces
no more than 100 kg (220 lbs.) of hazardous waste per month;
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produces
no more than 1 kg (2.2 lbs.) of acutely hazardous waste per month;
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does
not accumulate more than 1,000 kg (2,204 lbs.) of hazardous waste on-site; and
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a
CESQG has no time limit for accumulation.
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The
use of our machinery and equipment must comply with the following applicable laws and regulations, including safety and environmental
regulations:
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General
Safety for All Employees - Includes health hazard communication, emergency exit plans, electrical safety-related work practices,
office safety, and hand-powered tools.
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Technicians
and Engineers - Only authorized persons (technicians and engineers) perform product testing and repair in the facility’s
production and engineering areas, including those engineers involved in field service work. Regulations include control of
hazardous energy and personal protective equipment.
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Logisticians
- Includes forklift operations performed only by certified shipping/receiving personnel and material handling and storage.
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We
are in full compliance with the general industry category’s environmental regulations applicable to us as a CESQG.
OSHA
We
are subject to the Occupational Safety and Health Act of 1970, as amended (“OSHA”). OSHA establishes specific employer
responsibilities, including maintaining a workplace free of recognized hazards likely to cause death or serious injury, compliance
with standards promulgated by the Occupational Safety and Health Administration and various recordkeeping, disclosure and procedural
requirements. Multiple standards, including standards for notices of hazards, safety in excavation and demolition work and the
handling of asbestos, may apply to our operations. We are in full compliance with OSHA regulations.
NEMA
The
National Electrical Manufacturers Association (“NEMA”) is the association of electrical equipment and medical imaging
manufacturers. NEMA provides a forum for developing technical standards in the industry and users’ best interests, advocating
industry policies on legislative and regulatory matters, and collecting, analyzing, and disseminating industry data. All three
of our products comply with the NEMA standards that apply to such products.
Intellectual
Property
We
rely on a combination of patent, trademark, copyright, unfair competition and trade secret laws, as well as confidentiality procedures
and contractual restrictions, to establish, maintain and protect our proprietary rights. Our success depends in part upon our
ability to obtain and maintain proprietary protection for our products, technology and know-how, to operate without infringing
the proprietary rights of others, and to prevent others from infringing our proprietary rights.
As
of December 31, 2020, we had four active patents issued in the United States (in the name of our subsidiary Ecotality, Inc.).
These patents relate to various EV charging station designs. We intend to regularly assess opportunities for seeking patent protection
for those aspects of our technology, designs and methodologies that we believe provide a meaningful competitive advantage. However,
our ability to do so may be limited until we can generate cash flow from operations to continue to invest in our intellectual
property. If we cannot do so, our ability to protect our intellectual property or prevent others from infringing our proprietary
rights may be impaired.
Corporate
Information
We
maintain our principal offices at 605 Lincoln Road, 5th Floor, Miami Beach, Florida 33139. Our telephone number is
(305) 521-0200. Our website is www.blinkcharging.com. We can be contacted by email at info@BlinkCharging.com. Our website’s
information is not, and will not be deemed, a part of this Annual Report or incorporated into any other filings we make with the
SEC.
Human
Capital Resources
Our
experienced employees and management team are some of our most valuable resources, and we are committed to attracting, motivating,
and retaining top professionals. As of December 31, 2020, we had 91 employees, including 90 full-time employees. None of our employees
are represented by a union or covered by a collective bargaining agreement. We have not experienced any work stoppages, and we
consider our relationship with our employees to be good.
Our
success is directly related to the satisfaction, growth, and development of our employees. We strive to offer a work environment
where employee opinions are valued and allow our employees to use and augment their professional skills. To achieve our human
capital goals, we intend to remain focused on providing our personnel with entrepreneurial opportunities to expand our business
within their areas of expertise and continue to provide our personnel with personal and professional growth. Blink emphasizes
several measures and objectives in managing our human capital assets, including, among others, employee safety and wellness, talent
acquisition and retention, employee engagement, development and training, diversity and inclusion, and compensation and pay equity.
COVID-19
and Employee Safety and Wellness. In response to the COVID-19 pandemic, we implemented significant changes that we determined
were in the best interest of our employees as well as the communities in which we operate. These measures include allowing most
employees to work from home and implementing additional safety measures for employees continuing critical on-site work. We believe
in supporting our employees’ health and well-being. Our goal is to help employees make informed decisions about their health
by providing the tools and resources necessary to achieve a healthier lifestyle. We offer our employees a wide array of benefits
such as life and health (medical, dental, and vision) insurance, paid time off and retirement benefits, as well as emotional well-being
services through our health insurance program.
Diversity
and Inclusion and Ethical Business Practices. We believe that a company culture focused on diversity and inclusion is a crucial
driver of creativity and innovation. We also believe that diverse and inclusive teams make better business decisions, ultimately
driving better business outcomes. We are committed to recruiting, retaining, and developing high-performing, innovative and engaged
employees with diverse backgrounds and experiences. This commitment includes providing equal access to, and participation in,
equal employment opportunities, programs, and services without regard to race, religion, color, national origin, disability, sex,
sexual orientation, gender identity, stereotypes, or assumptions based thereon. We welcome and celebrate our teams’ differences,
experiences, and beliefs, and we are investing in a more engaged, diverse, and inclusive workforce.
Blink
also fosters a strong corporate culture that promotes high standards of ethics and compliance for our business, including policies
that set forth principles to guide employee, officer, director, and vendor conduct, such as our Code of Business Conduct and Ethics.
We also maintain a whistleblower policy and anonymous hotline for the confidential reporting of any suspected policy violations
or unethical business conduct on the part of our businesses, employees, officers, directors, or vendors.
In
addition to other information in this Annual Report on Form 10-K and in other filings we make with the Securities and Exchange
Commission, the following risk factors should be carefully considered in evaluating our business as they may have a significant
impact on our business, operating results and financial condition. If any of the following risks occurs, our business,
financial condition, results of operations and future prospects could be materially and adversely affected. Because of the following
factors, as well as other variables affecting our operating results, past financial performance should not be considered as a
reliable indicator of future performance and stockholders and investors should not use historical trends to anticipate results
or trends in future periods.
Relating
to Our Business
We
have a history of substantial net losses and expect losses to continue in the future; if we do not achieve and sustain profitability,
our financial condition could suffer.
We
have experienced substantial net losses, and we expect to continue to incur substantial losses for the foreseeable future. We
incurred net losses of approximately $17.8 million and $9.6 million for the years ended December 31, 2020 and 2019, respectively.
As of December 31, 2020, we had net working capital of approximately $19.6 million and an accumulated deficit of approximately
$187.4 million. We have not yet achieved profitability.
If
our revenue grows slower 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. We can give no assurance that we will ever achieve profitable operations.
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 achieved, we may need to borrow additional funds or sell our 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.
Our
revenue growth ultimately depends on consumers’ willingness to adopt electric vehicles in a market which is still in its
early stages.
Our
growth is highly dependent upon the adoption by consumers of EVs, and we are subject to a risk of any reduced demand for EVs.
If the market for EVs does not gain broad market acceptance or develops slower than we expect, our business, prospects, financial
condition and operating results will be harmed. The market for alternative fuel vehicles is relatively new, rapidly evolving,
characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and
industry standards, frequent new vehicle announcements, long development cycles for EV original equipment manufacturers, and changing
consumer demands and behaviors. Factors that may influence the purchase and use of alternative fuel vehicles, and specifically
EVs, include:
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perceptions
about EV quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost, especially
if adverse events or accidents occur that are linked to the quality or safety of EVs;
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the
limited range over which EVs may be driven on a single battery charge and concerns about running out of power while in use;
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improvements
in the fuel economy of the internal combustion engine;
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consumers’
desire and ability to purchase a luxury automobile or one that is perceived as exclusive;
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the
environmental consciousness of consumers;
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volatility
in the cost of oil and gasoline;
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consumers’
perceptions of the dependency of the United States on oil from unstable or hostile countries and the impact of international
conflicts;
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government
regulations and economic incentives promoting fuel efficiency and alternate forms of energy;
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access
to charging stations, standardization of EV charging systems and consumers’ perceptions about convenience and cost to
charge an EV; and
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the
availability of tax and other governmental incentives to purchase and operate EVs or future regulation requiring increased
use of nonpolluting vehicles.
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The
influence of any of the factors described above may negatively impact the widespread consumer adoption of EVs, which would materially
and adversely affect our business, operating results, financial condition and prospects.
Changes
to corporate average fuel economy standards may negatively impact the EV market and demand for our products.
As
regulatory initiatives have required an increase in the consumption of renewable transportation fuels, such as ethanol and biodiesel,
consumer acceptance of electric and other alternative vehicles is increasing. To meet higher fuel efficiency and greenhouse gas
emission standards for passenger vehicles, automobile manufacturers are increasingly using technologies, such as turbocharging,
direct injection and higher compression ratios, which require high octane gasoline. If fuel efficiency of vehicles continues to
rise, and affordability of vehicles using renewable transportation fuels increases, the demand for electric and high energy vehicles
could diminish. If consumers no longer purchase EVs, it would materially and adversely affect our business, operating results,
financial condition and prospects.
We
have global operations and face risks related to health crises that could negatively impact our financial condition.
Our
business, the businesses of our customers and the businesses of our charging equipment suppliers could be materially and adversely
affected by the risks, or the public perception of the risks, related to a pandemic or other health crisis, such as the pressure
of the coronavirus COVID-19. A significant component supplier of our Blink IQ 200 charging station is located in Taiwan and it,
in turn, sources assembly parts from China. A significant outbreak of contagious diseases in the human population could result
in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in
an economic downturn that could affect demand for our electric vehicle supply equipment and related networked services and likely
impact our operating results. Such events could result in the complete or partial closure of our Taiwan supplier’s manufacturing
facility, the interruption of our distribution system, temporary or long-term disruption in our supply chains from Asia and other
international suppliers, disruptions, or restrictions on our employees to work or travel, delays in the delivery of our
charging stations to customers, and potential claims of exposure to diseases through contact with our charging stations. If the
impact of an outbreak continues for an extended period, it could materially adversely impact our supply chain, access to capital
and the growth of our revenues.
Computer
malware, viruses, hacking, phishing attacks and spamming that could result in security and privacy breaches and interruption in
service could harm our business and our customers.
Computer
malware, viruses, physical or electronic break-ins and similar disruptions could lead to interruption and delays in our services
and operations and loss, misuse or theft of data. Computer malware, viruses, computer hacking and phishing attacks against online
networking platforms have become more prevalent and may occur on our systems in the future. Any attempts by hackers to disrupt
our website service or our internal systems, if successful, could harm our business, be expensive to remedy and damage our reputation
or brand. Our network security business disruption insurance may not be sufficient to cover significant expenses and losses related
to direct attacks on our website or internal systems. Efforts to prevent hackers from entering our computer systems are expensive
to implement and may limit the functionality of our services. Though it is difficult to determine what, if any, harm may directly
result from any specific interruption or attack, any failure to maintain performance, reliability, security and availability of
our products and services and technical infrastructure may harm our reputation, brand and our ability to attract customers. Any
significant disruption to our website or internal computer systems could result in a loss of customers and could adversely affect
our business and results of operations.
We
have previously experienced, and may in the future experience, service disruptions, outages and other performance problems due
to a variety of factors, including infrastructure changes, third-party service providers, human or software errors and capacity
constraints. If our mobile application is unavailable when customers attempt to access it or it does not load as quickly as they
expect, customers may seek other services.
Our
platform functions on software that is highly technical and complex and may now or in the future contain undetected errors, bugs,
or vulnerabilities. Some errors in our software code may only be discovered after the code has been deployed. Any errors, bugs
or vulnerabilities discovered in our code after deployment, inability to identify the cause or causes of performance problems
within an acceptable period of time or difficultly maintaining and improving the performance of our platform, particularly during
peak usage times, could result in damage to our reputation or brand, loss of revenues, or liability for damages, any of which
could adversely affect our business and financial results.
We
expect to continue to make significant investments to maintain and improve the availability of our platform and to enable rapid
releases of new features and products. To the extent that we do not effectively address capacity constraints, upgrade our systems
as needed and continually develop our technology and network architecture to accommodate actual and anticipated changes in technology,
our business and operating results may be harmed.
We
have a disaster recovery program to transition our operating platform and data to a failover location in the event of a catastrophe
and have tested this capability under controlled circumstances. However, there are several factors ranging from human error to
data corruption that could materially lengthen the time our platform is partially or fully unavailable to our user base as a result
of the transition. If our platform is unavailable for a significant period of time as a result of such a transition, especially
during peak periods, we could suffer damage to our reputation or brand, or loss of revenues any of which could adversely affect
our business and financial results.
Growing
our customer base depends upon the effective operation of our mobile applications with mobile operating systems, networks and
standards that we do not control.
We
are dependent on the interoperability of our mobile applications with popular mobile operating systems that we do not control,
such as Google’s Android and iOS, and any changes in such systems that degrade our products’ functionality or give
preferential treatment to competitive products could adversely affect the usage of our applications on mobile devices. Additionally,
to deliver high quality mobile products, it is important that our products work well with a range of mobile technologies,
systems, networks and standards that we do not control. We may not be successful in developing relationships with key participants
in the mobile industry or in developing products that operate effectively with these technologies, systems, networks or standards.
If
we are unable to keep up with advances in EV technology, we may suffer a decline in our competitive position. The EV industry
is characterized by rapid technological change. If we are unable to keep up with changes in EV technology, our competitive position
may deteriorate which would materially and adversely affect our business, prospects, operating results and financial condition.
As technologies change, we plan to upgrade or adapt our EV charging stations and Blink Network software in order to continue to
provide EV charging services with the latest technology. However, due to our limited cash resources, our efforts to do so may
be limited. For example, the EV charging network that we acquired from ECOtality was originally funded in part by the U.S. Department
of Energy, which funding is no longer available to us. As a result, we may be unable to grow, maintain and enhance the network
of charging stations that we acquired from ECOtality at the same rate and scale as ECOtality did prior to the acquisition or at
levels comparable our current competitors. Any failure of our charging stations to compete effectively with other manufacturers’
charging stations will harm our business, operating results and prospects.
We
need to manage growth in operations to realize our growth potential and achieve expected revenues; our failure to manage growth
could disrupt our operations and ultimately prevent us from generating the revenues we expect.
In
order to take advantage of the growth that we anticipate in our current and potential markets, we believe that we must expand
our marketing operations. This expansion will place a significant strain on our management and our operational, accounting, and
information systems. We expect that we will need to continue to improve our financial controls, operating procedures and management
information systems. We will also need to effectively train, motivate and manage our employees. Our failure to manage our growth
could disrupt our operations and ultimately prevent us from generating the revenues we expect.
In
order to achieve the above-mentioned targets, the general strategies of our company are to maintain and search for hard-working
employees who have innovative initiatives, as well as to keep a close eye on expansion opportunities through merger and/or acquisition.
Our
growth strategy depends in part on our acquiring businesses and expanding our operations, which we may not be able to do due to
the risks inherent in acquisitions.
We
may pursue strategic acquisitions in the future. Risks in acquisition transactions include difficulties in the integration of
acquired businesses into our operations and control environment, difficulties in assimilating and retaining employees and intermediaries,
difficulties in retaining the existing clients of the acquired entities, assumed or unforeseen liabilities that arise in connection
with the acquired businesses, the failure of counterparties to satisfy any obligations to indemnify us against liabilities arising
from the acquired businesses, and unfavorable market conditions that could negatively impact our growth expectations for the acquired
businesses. Fully integrating an acquired company or business into our operations may take a significant amount of time. We cannot
assure you that we will be successful in overcoming these risks or any other problems encountered with acquisitions and other
strategic transactions. These risks may prevent us from realizing the expected benefits from acquisitions and could result in
the failure to realize the full economic value of a strategic transaction or the impairment of goodwill and/or intangible assets
recognized at the time of an acquisition. These risks could be heightened if we complete a large acquisition or multiple acquisitions
within a short period of time.
We
have limited insurance coverage for various liabilities and damages, including potential injuries, and such insurance coverage
may not be adequate in a catastrophic situation.
We
hold employer liability insurance generally covering death or work-related injury of employees. We hold product and general liability
insurance covering certain incidents involving third parties that occur on or in the premises of our company. We do not maintain
business interruption insurance. Our insurance coverage may be insufficient to cover any claim for product liability, damage to
our fixed assets or employee injuries. Any liability or damage to, or caused by, our facilities or our personnel beyond our insurance
coverage may result in our incurring substantial costs and a diversion of resources.
Our
future success is largely dependent on the performance and continued service of Michael D. Farkas, our Chairman and Chief Executive
Officer.
We
presently depend to a significant extent upon the experience, abilities and continued services of Michael D. Farkas, our Chairman
and Chief Executive Officer. Even with a replacement, the loss of Mr. Farkas’ services could prove disruptive to
our daily operations, require a disproportionate amount of resources and management attention and could have an adverse
effect on our business, financial condition and results of operations.
Our
future success also depends on our ability to attract and retain highly qualified personnel.
Our
future success also depends upon our ability to attract and retain highly qualified personnel. Expansion of our business and the
management and operation of our company will require additional managers and employees with industry experience, and our success
will be highly dependent on our ability to attract and retain skilled management personnel and other employees. There can be no
assurance that we will be able to attract or retain highly qualified personnel. As our industry continues to evolve, competition
for skilled personnel with the requisite experience will be significant. This competition may make it more difficult and expensive
to attract, hire and retain qualified managers and employees.
We
are in a highly competitive EV charging services industry and there can be no assurance that we will be able to compete with many
of our competitors which are larger and have greater financial resources.
We
face strong competition from competitors in the EV charging services industry, including competitors who could duplicate our model.
Many of these competitors may have substantially greater financial, marketing and development resources and other capabilities
than us. In addition, there are very few barriers to entry into the market for our services. There can be no assurance, therefore,
that any of our current and future competitors, many of whom may have far greater resources, will not independently develop services
that are substantially equivalent or superior to our services. Therefore, an investment in our company is very risky and speculative
due to the competitive environment in which we may operate.
Our
competitors may be able to provide customers with different or greater capabilities or benefits than we can provide in areas such
as technical qualifications, past contract performance, geographic presence and driver price. Further, many of our competitors
may be able to utilize substantially greater resources and economies of scale to develop competing products and technologies,
divert sales away from us by winning broader contracts or hire away our employees by offering more lucrative compensation packages.
In the event that the market for EV charging stations expands, we expect that competition will intensify as additional competitors
enter the market and current competitors expand their product lines. In order to secure contracts successfully when competing
with larger, well-financed companies, we may be forced to agree to contractual terms that provide for lower aggregate payments
to us over the life of the contract, which could adversely affect our margins. Our failure to compete effectively with respect
to any of these or other factors could have a material adverse effect on our business, prospects, financial condition or operating
results.
We
have experienced significant customer concentration in recent periods, and our revenue levels would likely decline if any significant
customer failed to purchase product from us at anticipated levels or auto manufacturers do not extend driver incentive
programs.
We
are subject to customer concentration risk because of our reliance on a relatively small number of customers for a significant
portion of our revenues. The relative magnitude and the mix of revenue from our largest customers have significantly varied
quarter to quarter. During the year ended December 31, 2020, sales to a significant customer represented 25% and 34% of total
revenue and product sales, respectively; sales to another significant customer represented 11% and 15% of total revenue and product
sales, respectively; and sales to another significant customer represented 12% of product sales. These customers are not contractually
bound to purchase products from us on a long-term basis. The loss of these customers or their reduction in business would likely
cause our revenues to decline.
If
a third party asserts that we are infringing upon its intellectual property rights, whether successful or not, it could subject
us to costly and time-consuming litigation or expensive licenses, and our business may be harmed.
The
EV and EV charging industries are characterized by the existence of many patents, copyrights, trademarks and trade secrets.
As we face increasing competition, the possibility of intellectual property rights claims against us grows. Our technologies may
not be able to withstand any third-party claims or rights against their use. Additionally, although we have acquired from other
companies’ proprietary technology covered by patents, we cannot be certain that any such patents will not be challenged,
invalidated or circumvented. Intellectual property infringement claims against us could harm our relationships with our customers,
may deter future customers from subscribing to our services or could expose us to litigation with respect to these claims. Even
if we are not a party to any litigation involving a customer and third party, an adverse outcome in any such litigation could
make it more difficult for us to defend our intellectual property in any subsequent litigation in which we are a named party.
Any of these results could harm our brand and operating results.
Any
intellectual property rights claim against us or our customers, with or without merit, could be time-consuming, expensive to litigate
or settle and could divert management resources and attention. An adverse determination also could prevent us from offering our
services to our customers and may require that we procure or develop substitute services that do not infringe.
With
respect to any intellectual property rights claim against us or our customers, we may have to pay damages or stop using technology
found to be in violation of a third party’s rights. We may have to seek a license for the technology, which may not be available
on reasonable terms, may significantly increase our operating expenses or require us to restrict our business activities in one
or more respects. The technology also may not be available for license to us at all. As a result, we may also be required to develop
alternative non-infringing technology, which could require significant effort and expense.
The
success of our business depends in large part on our ability to protect our proprietary information and technology and enforce
our intellectual property rights against third parties.
We
rely on a combination of patent, copyright, service mark, trademark and trade secret laws, as well as confidentiality procedures
and contractual restrictions, to establish and protect our proprietary rights, all of which provide only limited protection. We
cannot assure you that any patents will issue with respect to our currently pending patent applications, in a manner that gives
us the protection that we seek, if at all, or that any future patents issued to us will not be challenged, invalidated or circumvented.
Our currently issued patents and any patents that may issue in the future with respect to pending or future patent applications
may not provide sufficiently broad protection or they may not prove to be enforceable in actions against alleged infringers. Also,
we cannot assure you that any future service mark registrations will be issued with respect to pending or future applications
or that any registered service marks will be enforceable or provide adequate protection of our proprietary rights.
We
endeavor to enter into agreements with our employees and contractors and agreements with parties with whom we do business to limit
access to and disclosure of our proprietary information. We cannot be certain that the steps we have taken will prevent unauthorized
use of our technology or the reverse engineering of our technology. Moreover, others may independently develop technologies that
are competitive to ours or infringe our intellectual property. The enforcement of our intellectual property rights also depends
on our legal actions against these infringers being successful, but we cannot be sure these actions will be successful, even when
our rights have been infringed.
Further,
effective patent, trademark, service mark, copyright and trade secret protection may not be available in every country in which
our services are available over the Internet. In addition, the legal standards relating to the validity, enforceability and scope
of protection of intellectual property rights in EV-related industries are uncertain and still evolving.
Changes
to existing federal, state or international laws or regulations applicable to us could cause an erosion of our current competitive
strengths.
Our
business is subject to a variety of federal, state and international laws and regulations, including those with respect government
incentives promoting fuel efficiency and alternate forms of energy, electric vehicles and others. These laws and regulations,
and the interpretation or application of these laws and regulations, could change. Any reduction, elimination or discriminatory
application of government subsidies and economic incentives because of policy changes, fiscal tightening or other reasons may
result in diminished revenues from government sources and diminished demand for our products. In addition, new laws or regulations
affecting our business could be enacted. These laws and regulations are frequently costly to comply with and may divert a significant
portion of management’s attention. If we fail to comply with these applicable laws or regulations, we could be subject to
significant liabilities which could adversely affect our business.
There
are many federal, state and international laws that may affect our business, including measures to regulate EVs and charging systems.
If we fail to comply with these applicable laws or regulations, we could be subject to significant liabilities which could adversely
affect our business.
There
are a number of significant matters under review and discussion with respect to government regulations which may affect business
and/or harm our customers, and thereby adversely affect our business, financial condition and results of operations.
We
have identified material weaknesses in our internal control over financial reporting and failure to maintain effective internal
controls could cause our stockholders and investors to lose confidence in us and adversely affect the market price of our common
stock.
We
identified certain material weaknesses in our internal controls related to (i) not maintaining effective controls over the management
of logical and administrative access. Specifically, effective controls were not in place to ensure that only authorized individuals
with adequate segregation of duties are permitted access to IT systems, resources and facilities or to administer IT applications,
and (ii) we were not able to complete the operational effectiveness of some of the controls due to the timing of the remediation
actions.
If
we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report
our financial results or prevent fraud. As a result, stockholders and investors could lose confidence in our financial and other
public reporting, which would harm our business and the trading price of our shares. See Item 9A – Controls and Procedures
– Management’s Annual Report on Internal Control over Financial Reporting for further information on material weaknesses.
If
our estimates or judgments relating to our critical accounting policies prove to be incorrect, our financial condition and results
of operations could be adversely affected.
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience
and on various other assumptions that we believe to be reasonable under the circumstances, as discussed under “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” included elsewhere in this Annual Report and
in our consolidated financial statements included herein. The results of these estimates form the basis for making judgments about
the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from
other sources. Significant assumptions and estimates used in preparing our consolidated financial statements include those related
to revenue recognition, allowance for doubtful accounts, inventory reserves, impairment of goodwill, indefinite-lived and long-lived
assets, pension and other post-retirement benefits, product warranty, valuation allowances for deferred tax assets, valuation
of common stock warrants, and share-based compensation. Our financial condition and results of operations may be adversely affected
if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations
to fall below the expectations of securities analysts and investors, resulting in a decline in the price of our common stock.
Risks
Associated with Our Securities
Our
common stock price has fluctuated considerably and has recently reached our highest price levels, which may not be sustained.
The
market price of shares of our common stock has fluctuated substantially in recent years and is likely to fluctuate significantly
from its current level. During the 52-week period prior to the filing of this Annual Report, for example, the market price of
our shares has ranged from a low of $1.25 per share to a recent high of $64.50 per share. Future announcements concerning the
introduction of new products, services or technologies or changes in product pricing policies by us or our competitors or changes
in earnings estimates by analysts, among other factors, could cause the market price of our common stock to fluctuate substantially.
Also, stock markets have experienced extreme price and volume volatility in the last year. This volatility has had a substantial
effect on the market prices of securities of many public companies for reasons frequently unrelated to the operating performance
of the specific companies. These broad market fluctuations may also cause declines in the market price of our common stock. Investors
seeking short-term liquidity should be aware that we cannot assure that the stock price will continue at these or any higher levels.
A
possible “short squeeze” due to a sudden increase in demand of our common stock that largely exceeds supply may lead
to further price volatility in our common stock.
Investors
may purchase shares of our common stock to hedge existing exposure in our common stock or to speculate on the price of our common
stock. Speculation on the price of our common stock may involve long and short exposures. To the extent aggregate short exposure
exceeds the number of shares of our common stock available for purchase in the open market, investors with short exposure may
have to pay a premium to repurchase our common stock for delivery to lenders of our common stock. Those repurchases may in turn,
dramatically increase the price of our common stock until investors with short exposure are able to purchase additional shares
of common stock to cover their short position. This is often referred to as a “short squeeze.” A short squeeze could
lead to volatile price movements in shares of our common stock that are not directly correlated to the performance or prospects
of our company and once investors purchase the shares necessary to cover their short position the price of our common stock may
decline. We believe that the recent volatility in our common stock may be due, in part, to short squeezes that may be temporarily
increasing the price of our common stock, which could result in a loss of some or all of your investment in our common stock.
We
have a significant number of shares of common stock issuable upon exercise or conversion of outstanding warrants, convertible
preferred stock and stock options, and the issuance of such shares could have a significant dilutive impact on our stockholders.
As
of March 29, 2021, we had outstanding warrants to purchase 3,446,466 shares of common stock, and outstanding stock options to
purchase 650,487 shares of common stock. In addition, our Articles of Incorporation permit us to issue up to approximately 500
million additional shares of common stock. Thus, we have the ability to issue a substantial number of additional shares of common
stock in the future, which would dilute the percentage ownership held by existing stockholders.
Sales
of a substantial number of shares of our common stock in the public market could cause the market price of our common stock to
decline. If there are more shares of common stock offered for sale than buyers are willing to purchase, then the market price
of our common stock may decline to a market price at which buyers are willing to purchase the offered shares of common stock and
sellers remain willing to sell the shares.
Our
executive officers and directors, including our Chairman and Chief Executive Officer and his affiliates, possess significant voting
power with respect to our common stock, which will limit your influence on corporate matters.
As
of March 29, 2021, our directors and executive officers collectively beneficially owned approximately 17% of our outstanding
shares of common stock, including the beneficial ownership of Michael D. Farkas and his affiliates of approximately 16% of our
outstanding shares of common stock.
As
a result, our insiders have the ability to significantly influence our management and affairs through the election and removal
of our Board and all other matters requiring stockholder approval, including any future merger, consolidation or sale of all or
substantially all of our assets. This concentrated voting power could discourage others from initiating any potential merger,
takeover or other change-of-control transaction that may otherwise be beneficial to our stockholders. Further, this concentrated
control will limit the practical effect of your influence over our business and affairs, through any stockholder vote or otherwise.
Any of these effects could depress the price of our common stock.
Our
Articles of Incorporation grant our board the power to issue additional shares of common and preferred stock and to designate
additional series of preferred stock, all without stockholder approval.
We
are authorized to issue 540,000,000 shares of capital stock, of which 40,000,000 shares are authorized as preferred stock. Our
Board, without any action by our stockholders, may designate and issue shares of preferred stock in such series as it deems appropriate
and establish the rights, preferences and privileges of such shares, including dividends, liquidation and voting rights, provided
it is consistent with Nevada law.
The
rights of holders of our preferred stock that may be issued could be superior to the rights of holders of our shares of common
stock. The designation and issuance of shares of capital stock having preferential rights could adversely affect other rights
appurtenant to shares of our common stock. Further, any issuances of additional stock (common or preferred) will dilute the percentage
of ownership interest of then-current holders of our capital stock and may dilute our book value per share.
Certain
provisions of our corporate governing documents and Nevada law could discourage, delay or prevent a merger or acquisition at a
premium price.
Certain
provisions of our organizational documents and Nevada law could discourage potential acquisition proposals, delay or prevent a
change in control of our company, or limit the price that investors may be willing to pay in the future for shares of our common
stock. For example, our Articles of Incorporation and Bylaws permit us to issue, without any further vote or action by the stockholders,
up to 40,000,000 shares of preferred stock in one or more series and, with respect to each series, to fix the number of shares
constituting the series and the designation of the series, the voting powers (if any) of the shares of the series, and the preferences
and relative, participating, optional, and other special rights, if any, and any qualifications, limitations or restrictions of
the shares of the series.
If
securities or industry analysts do not publish research or reports about our business or publish inaccurate or unfavorable research
reports about our business, our share price and trading volume could decline.
The
trading market for our common stock will, to some extent, depend on the research and reports that securities or industry analysts
publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us
from time to time should downgrade our shares or change their opinion of our business prospects, our share price would likely
decline. If one or more of these analysts ceases coverage of our company or fails to regularly publish reports on us, we could
lose visibility in the financial markets, which could cause our share price or trading volume to decline.
We
do not intend to pay cash dividends on our common stock for the foreseeable future, and you must rely on increases in the market
prices of our common stock for returns on your investment.
For
the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not
anticipate paying any cash dividends on our common stock. Accordingly, stockholders and investors must be prepared to rely on
sales of their common stock after price appreciation to earn an investment return, which may never occur. Stockholders and investors
seeking cash dividends should not purchase our common stock. Any determination to pay dividends in the future will be made at
the discretion of our Board and will depend on our results of operations, financial condition, contractual restrictions, restrictions
imposed by applicable law and other factors the Board deems relevant.
ITEM
1B.
|
UNRESOLVED
STAFF COMMENTS.
|
This
information is not required for smaller reporting companies.
We
maintain our principal offices at 605 Lincoln Road, 5th Floor, Miami Beach, Florida 33139.
On
January 22, 2021, we closed on the purchase of approximately 10,000 square feet of office condominium space which is our principal
office. This new office space is our corporate headquarters.
Our
premises are suitable for our current operations.
ITEM
3.
|
LEGAL
PROCEEDINGS.
|
We
have been party to certain legal proceedings that have arisen in the ordinary course of our business and have been incidental
to our business. Certain of the claims that have been made against us allege, among other things, breach of contract or breach
of express and implied warranties with regard to our products. Although litigation is inherently uncertain, and we believe we
are insured against many such instances, based on past experience and the information currently available, management does not
believe that any currently pending and threatened litigation or claims will have a material adverse effect on our financial position,
liquidity or results of operations. However, future events or circumstances, currently unknown to management, will determine whether
the resolution of pending or threatened litigation or claims will ultimately have a material effect on our financial position,
liquidity or results of operations in any future reporting periods.
On
March 26, 2020, James Christodoulou, the former President and Chief Operating Officer of the Company, filed a Complaint in the
Miami-Dade County Court, State of Florida, James Christodoulou vs. Blink Charging Co. et al. The Complaint asserts claims against
the Company, as well as Michael Farkas, Aviv Hillo and Yechiel Baron. Mr. Farkas is Chairman of the Board and Chief Executive
Officer. Messrs. Hillo and Baron are the Company’s General Counsel and Assistant General Counsel, respectively. The Complaint
asserted claims for breach of contract in connection with Mr. Christodoulou’s termination by the Company in March
2020, as well as claims under Florida state law for alleged retaliatory termination and slander. Among other things, Mr. Christodoulou
asserted that the Company terminated his employment without cause and in retaliation for his alleged plan to disclose that
Company executives had engaged in alleged “questionable business practices.” As
previously reported in the Company’s Current Report on Form 8-K filed with the SEC on October 9, 2020, the litigation between
the Company and its former President pending in Miami-Dade County Court, State of Florida, James Christodoulou vs. Blink Charging
Co. et al., has been settled for an aggregate sum of $400,000, of which $125,000 related to compensation related matters. As a
result, the Company has recorded a loss on settlement of $400,000 within operating expenses on its consolidated statement of operations
during the year ended December 31, 2020.
On August 24, 2020, a
purported securities class action lawsuit, captioned Bush v. Blink Charging Co. et al., Case No. 20-cv-23527, was filed in the United
States District Court for the Southern District of Florida against the Company, Michael Farkas (Blink’s Chairman of the Board and
Chief Executive Officer), and Michael Rama (Blink’s Chief Financial Officer) (the “Bush Lawsuit”). On September 1,
2020, another purported securities class action lawsuit, captioned Vittoria v. Blink Charging Co. et al., Case No. 20-cv-23643, was filed
in the United States District Court for the Southern District of Florida against the same defendants and seeking to recover the same
alleged damages (the “Vittoria Lawsuit”). On October 1, 2020, the court consolidated the Vittoria Lawsuit with the Bush Lawsuit
and on December 21, 2020 the court appointed Tianyou Wu, Alexander Yu and H. Marc Joseph to serve as the Co-Lead Plaintiffs. The Co-Lead
Plaintiffs filed an Amended Complaint on February 19, 2021. The Amended Complaint alleges, among other things, that the defendants made
false or misleading statements about the size and functionality of the Blink Network, and asserts claims under Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934. The Amended Complaint does not quantify damages but seeks to recover damages on behalf of investors
who purchased or otherwise acquired Blink’s common stock between March 6, 2020 and August 19, 2020. Currently, the deadline for
Blink’s motion to dismiss the Amended Complaint is April 20, 2021; the deadline for the Co-Lead Plaintiffs to file an opposition
brief in response to the motion to dismiss is June 21, 2021; and the deadline for Blink to file a reply in support of the motion to dismiss
is July 21, 2021.
On September 15,
2020, a shareholder derivative lawsuit, captioned Klein (derivatively on behalf of Blink Charging Co.) v. Farkas et al., Case
No. 20-19815CA01, was filed in Miami-Dade County Circuit Court seeking to pursue claims belonging to the Company against Blink’s
Board of Directors and Michael Rama (the “Klein Lawsuit”). Blink is named as a nominal defendant. The Klein Lawsuit
asserts that the Director defendants caused Blink to make the statements that are at issue in the securities class action and,
as a result, the Company will incur costs defending against the consolidated Bush Lawsuit and other unidentified investigations.
The Klein Lawsuit asserts claims against the Director defendants for breach of fiduciary duties and corporate waste and against
all of the defendants for unjust enrichment. Klein did not quantify the alleged damages in his complaint, but he seeks damages
sustained by the Company as a result of the defendants’ breaches of fiduciary duties, corporate governance changes, restitution,
and disgorgement of profits from the defendants and attorneys’ fees and other litigation expenses. The parties agreed to
temporarily stay the Klein Lawsuit until there is a ruling on the yet-to-be-filed motion to dismiss in the consolidated Bush Lawsuit.
On
December 22, 2020, JMJ Financial v. Blink Charging Co. was filed in the United States District Court for the Southern District
of New York, seeking to pursue claims for alleged breach of contract and conversion (the “JMJ Lawsuit”). The complaint
alleges that JMJ Financial purchased warrants to acquire 147,057 shares of Blink common stock on or about April 9, 2018, which
permitted a cashless exercise, and that on November 23, 2020, JMJ Financial delivered a notice of warrant exercise to Blink and
that the Company failed to deliver the shares. The claim alleges breach of contract and conversion; the plaintiff requests damages
of at least $4.2 million, attorneys’ fees, and specific enforcement requiring delivery of the shares. In January 2021, the
Company entered into a settlement agreement with JMJ under which the parties exchanged releases and the litigation was discontinued
with prejudice. The Company did not make a cash payment in the settlement, but rather delivered 66,000 shares of stock, representing
a modification of the initial terms of the warrant grant.
On
December 23, 2020, another shareholder derivative action, captioned Bhatia (derivatively on behalf of Blink Charging Co.) v. Farkas
et al., Case No. 20-27632CA01, was filed in Miami-Dade County Circuit Court against the same defendants sued in the Klein
Lawsuit and asserting similar claims, as well as additional claims relating to the Company’s nomination, appointment and
hiring of minorities and women and the Company’s decision to retain its outside auditor (the “Bhatia Lawsuit”).
On February 17, 2021, the parties agreed to consolidate the Klein and Bhatia actions, which the court consolidated under the caption
In re Blink Charging Company Stockholder Derivative Litigation, Lead Case No. 2020-019815-CA-01. The parties also agreed to keep
in place the temporary stay.
On
February 12, 2021, another shareholder derivative lawsuit, captioned Wolery (derivatively on behalf of Blink Charging Co.) v.
Buffalino et al., Case No. A-21-829395-C, was filed in the Eighth Judicial District Court in Clark County, Nevada seeking to pursue
claims belonging to the Company against Blink’s Board of Directors (the “Wolery Lawsuit”). Blink is named as
a nominal defendant. The Wolery complaint alleges that the amount of restricted stock awarded to Blink’s outside directors
in December 2020 exceeded the amounts permitted by Blink’s incentive compensation plan. The complaint asks the court to
rescind the excess restricted stock awards, as well as other relief. The parties agreed that the defendants could have 60 days
to respond to the complaint (i.e., until April 22, 2021).
ITEM
4.
|
MINE
SAFETY DISCLOSURES.
|
Not
applicable.
PART
III
ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|
Directors
and Executive Officers
The
following table sets forth the name and ages of our directors and executive officers, and their positions with us, as of March
29, 2021:
Name
|
|
Age
|
|
Positions
With Us
|
|
|
|
|
|
Michael
D. Farkas
|
|
49
|
|
Chairman
of the Board and Chief Executive Officer
|
Brendan
S. Jones
|
|
57
|
|
President,
Chief Operating Officer and Director
|
Michael
P. Rama
|
|
54
|
|
Chief
Financial Officer
|
Aviv
Hillo
|
|
56
|
|
General
Counsel
|
Louis
R. Buffalino
|
|
65
|
|
Director
|
Donald
Engel
|
|
88
|
|
Director
|
Jack
Levine
|
|
70
|
|
Director
|
Kenneth
R. Marks
|
|
75
|
|
Director
|
Ritsaart
J.M. van Montfrans
|
|
49
|
|
Director
|
The
principal occupations for the past five years (and, in some instances, for prior years) of each of our directors and executive
officers are as follows:
Michael
D. Farkas has served as our Chief Executive Officer from 2010 to July 2015 and from October 2018 to date. Mr. Farkas has served
as a member of the Board since 2010 and has been the Chairman of the Board since January 2015. Mr. Farkas is the founder and manager
of FGI, a privately-held investment firm. Mr. Farkas is the founder, a director and the Chief Executive Officer of Balance Labs,
Inc., a consulting firm that provides business development and consulting services to startup development stage business. Mr.
Farkas also currently holds the position of Chairman and Chief Executive Officer of the Atlas Group, in which its subsidiary,
Atlas Capital Services, was a broker-dealer that had successfully raised capital for a number of public and private clients until
it withdrew its FINRA registration in 2007. Over the last 20 years, Mr. Farkas has established a successful track record as a
principal investor across a variety of industries, including telecommunications, technology, aerospace and defense, agriculture,
and automotive retail. Mr. Farkas attended Brooklyn College where he studied Finance.
As
the Chairman and Chief Executive Officer and one of the company’s largest stockholders, Mr. Farkas leads the Board and guides
the company. Mr. Farkas brings extensive industry knowledge of the company and a deep background in emerging growth companies
and capital market activities. His service as Chairman and Chief Executive Officer creates a critical link between management
and the Board.
Brendan
S. Jones has served as our Chief Operating Officer since April 20, 2020. On February 25, 2021, Mr. Jones was appointed by
the Company’s Board of Directors to President and was elected to become a member of Blink’s Board of Directors. Mr.
Jones has more than 25 years of day-to-day operational experience in the electric vehicle (EV) charging, automotive and alternative
energy industries and in-depth knowledge in the areas of EV charging sales, technology and infrastructure development. Prior to
joining Blink, he served as the Chief Operating Officer of Electrify America, LLC, the United States-based EV subsidiary of Volkswagen
Group AG, from September 2016 to March 2020. Mr. Jones was Electrify America’s first employee and is credited with building
Electrify America from its original startup concept into one of the largest ultrafast EV charging companies in the world, establishing
strategy, design implementation and management teams at Electrify America, negotiating numerous contracts for charging services
with leading car makers, retail property owners and EV infrastructure companies, and managing the installation and servicing of
thousands of charging stations. Mr. Jones previously served as Vice President - OEM Strategy and Business Development of EVgo,
a subsidiary of NRG Energy which operates EV fast charging stations, from March 2014 to September 2016. Prior to these positions,
Mr. Jones served in various leadership positions with Nissan North America, Inc., from April 1994 to March 2015. At Nissan, he
assumed increasingly senior positions including Director - Electric Vehicle Sales Operations and Infrastructure Development from
2013 to 2015, Director - Chief Marketing Manager EV Model Line from 2011 to 2013, and Senior Manager of the Nissan LEAF Launch
Team from 2009 to 2011. Mr. Jones has been a board member of several EV industry groups including the Electric Drive Transportation
Association, a trade association that promotes electric drive technologies and infrastructure (2015 and 2016), and the ROEV Association,
a collaboration between EV charging network operators and electric vehicle manufacturers to allow drivers to charge at multiple
stations using one card (from 2015 to 2017). Mr. Jones received B.A. and M.A. degrees from George Mason University and a professional
certificate from Vanderbilt University for completing the accelerated executive leadership development program.
Michael
P. Rama has served as our Chief Financial Officer since February 10, 2020. Prior to joining us, Mr. Rama was an independent
financial consultant (not associated with Blink) from July 2019 until he joined us on February 10, 2020. Mr. Rama served as the
Vice President and Chief Financial Officer of NV5 Global, Inc., a Nasdaq Capital Markets-traded company that provides professional
and technical engineering and consulting solutions for public and private sector clients in the infrastructure, energy, construction,
real estate and environmental markets, from September 2011 to June 2019. At NV5 Global, Mr. Rama was responsible for all accounting,
finance and treasury functions and the company’s SEC reporting. From October 1997 until August 2011, Mr. Rama held various
accounting and finance roles with AV Homes, Inc. (formerly known as Avatar Holdings, Inc.), including as principal financial officer,
chief accounting officer and controller. Mr. Rama has more than 20 years of experience with SEC compliance, establishment and
maintenance of internal controls, and capital markets and acquisition transactions. Mr. Rama earned a Bachelor of Science degree
in accounting from the University of Florida and is a Certified Public Accountant.
Aviv
Hillo has served as our General Counsel since June 2018. Prior to joining us, Mr. Hillo practiced law in New York and Israel
as a partner in the law firm Schechter Hillo, which he founded in October 2004. Mr. Hillo has also been involved in starting and
operating new businesses. He served as Chief Executive Officer of K-Lawyers.com, an internet legal platform, from February 2016
to June 2018, co-founder and general counsel of Ariel Photonics Assembly Ltd., a developer of lasers for defense applications,
from September 2007 to September 2015, and in-house counsel at LSL Biotechnologies, Inc., a developer of seeds with long shelf-life
qualities, from March 1998 to April 2006. Currently, Mr. Hillo serves on the board of Balance Labs, Inc., a consulting firm that
provides business development and consulting services to startup development stage businesses, since February 2017. Mr. Hillo
received his law degree from Tel Aviv University in Israel and a Master of Laws degree (Cum Laude) from Fordham University in
New York, where he specialized in banking, corporate and finance law. Mr. Hillo is a member of the New York State Bar Association,
the Israeli Bar Association and certified to practice as in-house counsel in Florida. Mr. Hillo is a veteran of the Israeli Defense
Forces where he retired as a ranked Major.
Louis
R. Buffalino joined our Board of Directors in December 2019. He has been a senior real estate executive for more than 35 years.
He is currently a Senior Vice President of Cushman & Wakefield, a global real estate services firm, since 2012. At Cushman
& Wakefield, Mr. Buffalino is responsible for institutional property investment sales, site selection, lease negotiations
and corporate consulting. Mr. Buffalino has previously worked at other commercial real estate services and investment firms including
serving as a Senior Vice President at Jones Lang LaSalle from 2009 to 2012, a First Vice President at CB Richard Ellis from 2002
to 2009, and a First Vice President at Donaldson, Lufkin & Jenrette/Credit Suisse in its corporate real estate group from
2000 to 2002. Mr. Buffalino received a B.A. degree from Providence College.
Mr.
Buffalino has extensive experience and contacts working with large property owners, managers and developers, making his input
invaluable to the Board’s discussions of EV charging station deployment decisions, and our ongoing sales, marketing and
growth strategies.
Donald
Engel has served on our Board of Directors since July 2014 and has been a business development officer of our company since
January 2020. Mr. Engel is also a consultant to Palisades Capital Management LLC, which serves as an investment advisor with regard
to our marketable securities portfolio. Mr. Engel served as Managing Director and consultant at Drexel Burnham Lambert for 15
years. Mr. Engel managed and developed new business relationships and represented clients such as Warner Communications and KKR
& Co., L.P. Mr. Engel also served as a consultant to Bear Stearns and as a Director of such companies as Revlon, Uniroyal
Chemical, Levitz, Banner Industries, Savannah Pulp & Paper, and APL Corp. In the last decade, Mr. Engel consulted to Morgan
Joseph TriArtisan. Mr. Engel attended the University of Richmond.
Mr.
Engel has extensive knowledge of capital markets and fostering new business relationships in particular, making his input invaluable
to the Board’s discussions on the company’s capital markets and mergers and acquisitions activities.
Jack
Levine joined our Board of Directors in December 2019. He has been the President of Jack Levine, PA, a certified public accounting
firm, since 1984. For more than 35 years, he has been advising corporations on financial and accounting matters and serving as
an independent director on numerous boards, frequently as head of their audit committees. Mr. Levine is currently a director and
chairman of the audit committee of SignPath Pharma, Inc., a development-stage biotechnology company, since 2010.
Mr.
Levine’s previous board memberships included Provista Diagnostics, Inc., a cancer detection and diagnostics company focused
on women’s cancer, from 2011 to 2018 (also serving as chairman of its audit committee); Biscayne Pharmaceuticals, Inc.,
a biopharmaceutical company discovering and developing novel therapies based on growth hormone-releasing hormone analogs; Grant
Life Sciences, a research and development company focused on early detection of cervical cancer, from 2004 to 2008 (also serving
as chairman of its audit committee); and Pharmanet, Inc., a global drug development services company providing a comprehensive
range of services to pharmaceutical biotechnology, generic drug and medical device companies, from 1999 to 2007 (also serving
as chairman of its audit and other committees). Mr. Levine also served as a director and audit committee chair of Beach Bank,
a community bank, from 2000 to 2006, Prairie Fund, a mutual fund, from 2000 to 2006, and Bankers Savings Bank, a community bank,
from 1996 to 1998, and was a member of the audit committee of Miami Dade County School Board, the nation’s third largest
school system, from 2004 to 2006. Mr. Levine is a certified public accountant licensed by the States of Florida and New York.
He also is a member of the National Association of Corporate Directors, Association of Audit Committee Members and American Institute
of Certified Public Accountants. Mr. Levine received a B.A. degree from Hunter College of the City University of New York and
an M.A. from New York University.
Mr.
Levine demonstrates extensive knowledge of complex financial, accounting, tax and operational issues highly relevant to our growing
business. Through his decades of service as a board member, he also brings significant working experience in corporate controls
and governance.
Kenneth
R. Marks joined our Board in March 2020. He is currently the President of KRM Energy Advisors LLC, which focuses on providing
strategic and financing advice in the clean energy sector. Mr. Marks was previously Managing Director and Head of Power, Utilities
and Renewables for the Americas for HSBC from 2011 to 2016 in which he was responsible for leading the bank’s investment
banking and commercial banking services for clients in the sector in North and South America, including the provision of strategic
advice, financing and other bank products. Prior to HSBC, he worked for Morgan Stanley as an investment banker for 33 years in
increasingly senior roles, including as Managing Director in the Global Power and Utility Group. In this role, Mr. Marks provided
the full range of Morgan Stanley’s banking products to clients in the sector, including strategic advice, debt and equity
financing, and derivatives/hedging. Mr. Marks’ experience at Morgan Stanley also included participation in specialized groups
at the investment bank focusing on mergers and acquisitions, financial restructuring, project financing, valuations and corporate
finance. Throughout his tenure at Morgan Stanley, Mr. Marks was based in the United States, except for three years when he was
based in Hong Kong as Head of M&A and Project Finance for the region.
Mr.
Marks is a member of the Board of Directors of the Coalition for Green Capital, a non-profit entity which is a leading advisor
on Green Banks and related clean energy finance and deployment entities, and Chairman of its Audit Committee. Mr. Marks received
a B.S. degree in electrical engineering from Bucknell University, an M.B.A. in industrial management from the Wharton School of
University of Pennsylvania, and a Ph.D. in finance from New York University. For a number of years, Mr. Marks served on the faculty
at NYU teaching courses in its M.B.A. program and has published articles in numerous journals including Public Utilities Fortnightly,
Energy Biz and Harvard Business Review.
Mr.
Marks’ experience in the power, utility and renewable areas and his leadership positions at a leading global investment
bank, one of the largest global commercial banks and at a non-profit entity applicable to the sector makes his input invaluable
to our Board’s discussions of the EV charging and alternative energy markets. He also brings transactional expertise in
mergers and acquisitions and capital markets.
Ritsaart
J.M. van Montfrans joined our Board of Directors in December 2019. He is an experienced entrepreneur in Europe. He is currently
the Chief Executive Officer of Incision Group, a medtech startup in team performance and education, since January 2017, and co-founded
and led ScaleUpNation, a growth accelerator for ventures with large scale-up potential, from February 2016 to January 2017, each
in Amsterdam, the Netherlands.
In
February 2009, Mr. van Montfrans founded NewMotion, which grew to become the leading service provider for electric vehicles in
Europe, with the largest public network of charging stations. Mr. van Montfrans served as Chief Executive Officer and International
Business Development Director of NewMotion until February 2016, shortly before the company was purchased by Royal Dutch Shell.
Prior to NewMotion, Mr. van Montfrans was a partner of H2 Equity Partners, an investment firm in Amsterdam, from September 2002
to February 2009, an engagement manager at McKinsey & Co. in Amsterdam from May 1999 to September 2002, and an associate in
the mergers and acquisitions group of J.P. Morgan in London. Mr. van Montfrans received a Master of Science degree in business
from the University of Groningen in the Netherlands.
Mr.
van Montfrans’ day-to-day operational leadership of NewMotion and in-depth knowledge of the EV charging market and broad
range of companies in the industry (with a focus on Western Europe) make him well qualified to be a member of the Board.
Our
directors are appointed at the annual meeting of stockholders and hold office until the annual meeting of the stockholders next
succeeding his or her election, or until his or her prior death, resignation or removal in accordance with our bylaws. Our officers
are appointed by the Board and hold office until the annual meeting of the Board next succeeding his or her election, and until
his or her successor shall have been duly elected and qualified, subject to earlier termination by his or her death, resignation
or removal.
There
are no family relationships between any of our officers or directors.
Board
of Directors
The
Board held 17 meetings in 2020 and all of the directors attended at least 75% of the total number of meetings of the Board and
committees on which they served. In addition, the Board of Directors took action three times during 2020 by unanimous written
consent in lieu of a meeting, as permitted by applicable law. We, and the Board, expect all current directors to attend our annual
meetings of stockholders barring unforeseen circumstances or irresolvable conflicts. We do not have a written policy on Board
attendance at annual meetings of stockholders; however, we do schedule a Board meeting immediately after the annual meeting for
which members attending receive compensation.
Board
Composition
Our
Board is currently comprised of six directors. In December 2019, Mr. Levine was designated as our lead independent director. The
Board’s committees are described below.
Committees
of the Board
Our
Board has established an audit committee, a compensation committee, and a nominating and corporate governance committee. The composition
and responsibilities of each of the committees of our Board are described below. Members serve on such committees until their
resignation or until otherwise determined by our Board.
Audit
Committee
Our
audit committee was established in December 2013 to oversee our corporate accounting and financial reporting processes. Our audit
committee is, among other things, responsible for:
|
●
|
selecting
and hiring the independent registered public accounting firm to audit our financial statements;
|
|
●
|
helping
to ensure the independence and performance of the independent registered public accounting firm;
|
|
●
|
approving
audit and non-audit services and fees;
|
|
●
|
reviewing
financial statements and discussing with management and the independent registered public accounting firm our annual audited
and quarterly financial statements, the results of the independent audit and the quarterly reviews, and the reports and certifications
regarding internal controls over financial reporting and disclosure controls;
|
|
●
|
preparing
the audit committee report that the SEC requires to be included in our annual proxy statement;
|
|
●
|
reviewing
reports and communications from the independent registered public accounting firm;
|
|
●
|
reviewing
earnings press releases and earnings guidance;
|
|
●
|
reviewing
the adequacy and effectiveness of our internal controls and disclosure controls and procedures;
|
|
●
|
reviewing
our policies on risk assessment and risk management;
|
|
●
|
reviewing
related party transactions;
|
|
●
|
establishing
and overseeing procedures for the receipt, retention and treatment of accounting related complaints and the confidential submission
by our employees of concerns regarding questionable accounting or auditing matters; and
|
|
●
|
reviewing
and monitoring actual and potential conflicts of interest.
|
Our
audit committee is currently comprised of Messrs. Levine (Chair), Marks and van Montfrans. Our Board has determined that each
of the directors presently serving on the audit committee meets the requirements for financial literacy under applicable rules
and regulations of the SEC and Nasdaq. In addition, our Board has determined that Mr. Levine meets the requirements of a financial
expert as defined under the applicable rules and regulations of the SEC and who has the requisite financial sophistication as
defined under the applicable rules and regulations of Nasdaq. Our Board has considered the independence and other characteristics
of each member of our audit committee, and our Board believes that each member meets the independence and other requirements of
Nasdaq and the SEC. Our audit committee operates under a written charter that satisfies the applicable standards of the SEC and
Nasdaq.
During
2020, the audit committee met 19 times.
Compensation
Committee
Our
compensation committee was established in December 2013 to oversee our corporate compensation policies, plans and benefit programs.
Our compensation committee is, among other things, responsible for:
|
●
|
reviewing,
approving and determining, or making recommendations to our Board regarding, the compensation of our executive officers, including
our Chief Executive Officer and other executive officers;
|
|
●
|
administering
our equity compensation plans and programs;
|
|
●
|
reviewing
and discussing with our management our SEC disclosures; and
|
|
●
|
overseeing
our submissions to stockholders on executive compensation matters.
|
Our
compensation committee is currently comprised of Messrs. Marks (Chair), Buffalino and Levine. Our Board has considered the independence
and other characteristics of each member of our compensation committee. Our Board believes that each present member of our compensation
committee meets the requirements for independence under the current requirements of Nasdaq, is a non-employee director as defined
by Rule 16b-3 promulgated under the Exchange Act and is an outside director as defined pursuant to Section 162(m) of the Internal
Revenue Code of 1986. Our compensation committee operates under a written charter that satisfies the applicable rules and regulations
of the SEC and the listing standards of Nasdaq.
During
2020, the compensation committee met 16 times separately and took action two times by unanimous written consent in lieu of a meeting,
as permitted by applicable law.
Nominating
and Corporate Governance Committee
Our
nominating and corporate governance committee was established in December 2013. Our nominating and corporate governance committee
is currently comprised of Messrs. Buffalino (Chair) and Levine. Our nominating and corporate governance committee
is responsible for the review of corporate governance, identifying, review the composition of and evaluate the performance of
the Board; recommend persons for election to the Board and evaluate director compensation; review the composition of committees
of the Board and recommend persons to be members of such committees; review and maintain compliance of committee membership with
applicable regulatory requirements; and review conflicts of interest of members of the Board and corporate officers. The committee
may use outside consultants to assist in identifying candidates and will also consider advice and recommendations from stockholders,
management, and others as it deems appropriate. When evaluating director nominees, our directors consider the following factors:
|
●
|
the
current size and composition of the Board and the needs of the Board and the respective committees of the Board;
|
|
●
|
such
factors as character, integrity, judgment, diversity of experience, independence, area of expertise, corporate experience,
length of service, potential conflicts of interest, other commitments and the like; and
|
|
●
|
other
factors that the directors may consider appropriate.
|
Our
nominating and corporate governance committee operates under a written charter. Our goal is to assemble a Board that brings together
a variety of skills derived from high quality business and professional experience.
During
2020, the nominating and corporate governance committee met three times separately and in conjunction with several meetings
of the Board of Directors due to the small size of the Board and the committee’s limited activities.
While
we do not have a formal diversity policy for Board membership, the Board does seek to ensure that its membership consists of sufficiently
diverse backgrounds, meaning a mix of backgrounds and experiences that will enhance the quality of the Board’s deliberations
and decisions. In considering candidates for the Board, the independent directors consider, among other factors, diversity with
respect to viewpoints, skills, experience and other demographics.
Each
of our directors is a member of the National Association of Corporate Directors, an independent nonprofit membership organization
of corporate board members that provides governance guidelines to assist directors in discharging their responsibilities and ensuring
their commitment to the highest standards of corporate conduct and compliance.
Director
Independence
Our
shares of common stock and warrants are traded on the Nasdaq Capital Market. Under the rules of Nasdaq, “independent”
directors must make up a majority of a listed company’s board of directors. In addition, applicable Nasdaq rules require
that, subject to specified exceptions, each member of a listed company’s audit and compensation committees be independent
within the meaning of the applicable Nasdaq rules. Audit committee members must also satisfy the independence criteria set forth
in Rule 10A-3 under the Exchange Act.
Our
Board has undertaken a review of the independence of each director and considered whether any director has a material relationship
with us that could compromise his ability to exercise independent judgment in carrying out his responsibilities. As a result of
this review, our Board determined that Messrs. Buffalino, Levine, Marks and van Montfrans qualify as “independent”
directors within the meaning of the Nasdaq rules. As a result, a majority of our directors are independent, as required under
applicable Nasdaq rules. As required under applicable Nasdaq rules, we anticipate that our independent directors will meet in
regularly scheduled executive sessions at which only independent directors are present.
Board
Leadership Structure
Michael
D. Farkas has been a director since 2010, our Chairman of the Board since January 2015 and Chief Executive Officer from 2010 to
July 2015 and again since October 2018. We believe that having one person, particularly Mr. Farkas with his wealth of industry
and executive management experience, his extensive knowledge of the operations of the company and his own history of strategic
thinking, serve as both Chairman and Chief Executive Officer is the best leadership structure for us because it demonstrates to
our employees, customers and stockholders that the company is under strong leadership, with a single person setting the tone and
having primary responsibility for managing our operations. This unity of leadership promotes strategy development and execution,
timely decision-making and effective management of our resources. We believe that we have been well served by this structure.
As
described above, [four] of our six directors are independent. In addition, all of the directors on each of the audit committee,
compensation committee and nominating and corporate governance committee are independent directors and each of these committees
is led by a committee chair. The committee chairs set the agendas for their committees and report to the full board on their work.
As required by Nasdaq, our independent directors meet in executive session without management present as frequently as they deem
appropriate, typically at the time of each regular in-person Board meeting. All our independent directors are highly accomplished
and experienced businesspeople in their respective fields, who have demonstrated leadership in significant enterprises and are
familiar with Board processes. Our independent directors bring experience, oversight and expertise from outside the company and
industry, while our Chairman and Chief Executive Officer brings company-specific experience and expertise.
Board
Role in Risk Oversight
Risk
assessment and oversight are integral parts of our governance and management processes. Our Board does not have a standing risk
management committee, but rather administers this oversight function directly through our Board as a whole, as well as through
various standing committees of our Board that address risks inherent in their respective areas of oversight.
Our
Board oversees an enterprise-wide approach to risk management, which is designed to support the achievement of our company’s
objectives, including the strategic objective to improve long-term financial and operational performance and enhance stockholder
value. Our Board believes that a fundamental part of risk management is understanding the risks that we face, monitoring these
risks and adopting appropriate control and mitigation of these risks.
The
Board discusses risks with our senior management on a regular basis, including as a part of its strategic planning process, annual
budget review and approval, and through reviews of compliance issues in the appropriate committees of our Board. While the Board
has the ultimate oversight responsibility for the risk management process, various committees of the Board are structured to oversee
specific risks, as follows:
Committee
|
|
Primary
Risk Oversight Responsibility
|
Audit
Committee
|
|
Oversees
financial risk, including capital risk, financial compliance risk, internal controls over financial reporting and reporting
of violations involving financial risk, internal controls and other non-compliance with our Code of Conduct.
|
|
|
|
Compensation
Committee
|
|
Oversees
our compensation policies and practices to ensure compensation appropriately incentivizes and retains management and determines
whether such policies and practices balance risk-taking and reward in an appropriate manner.
|
|
|
|
Nominating
and Corporate Governance Committee
|
|
Oversees
the assessment of each Board member’s independence to avoid conflict, determine effectiveness of the Board and committees,
and maintain good governance practices through our Corporate Governance Guidelines and Code of Conduct.
|
The
Board also considers our internal control structure which, among other things, limits the number of persons authorized to execute
material agreements, requires approval of our Board for matters outside of the ordinary course and includes our whistleblower
policy. This policy establishes procedures for the submission by our employees and consultants, on a confidential and anonymous
basis, of complaints and concerns regarding our financial statement disclosures, accounting practices, internal controls or auditing
matters, or possible violations of the federal securities laws or the rules or regulations promulgated thereunder. Complaints
submitted through this policy are promptly routed to the Chair of our Audit Committee.
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires our executive officers, directors and holders of more than 10% of our common stock to file
with the SEC initial reports of ownership and reports of changes in ownership of our common stock. Such persons are required to
by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
Based
solely upon our review of the copies of such forms received by us, or representations from certain reporting persons that no year-end
Forms 5 were required for those persons, we believe that, during the year ended December 31, 2020, all filing requirements applicable
to our executive officers, directors and greater than 10% beneficial owners were complied with, except for late Form 4 filings
by Messrs. Engel, Farkas, Rama and Jones, due to administrative delays.
ITEM
11.
|
EXECUTIVE
COMPENSATION.
|
The
following summary compensation table sets forth all compensation awarded to, earned by, or paid to our principal executive officer
who served as such during all of 2020 (Michael D. Farkas), and our two most highly compensated executive officers other than our
principal executive officer who were serving as executive officers at the end of 2020 (Brendan S. Jones and Michael P. Rama (the
“named executive officers”)).
Summary
Compensation Table
|
|
Award
Compensation
|
|
Name and
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
All Other
|
|
|
|
|
Principal
Position
|
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
(4)
|
|
|
Awards
(4)
|
|
|
Compensation
|
|
|
Total
|
|
Michael
D. Farkas (1)
|
|
2020
|
|
$
|
479,999
|
|
|
$
|
120,000
|
|
|
$
|
60,000
|
|
|
$
|
180,000
|
|
|
$
|
103,758
|
|
|
$
|
943,757
|
|
Chairman and Chief Executive Officer
|
|
2019
|
|
$
|
480,102
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
68,336
|
|
|
$
|
548,438
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brendan S. Jones (2)
|
|
2020
|
|
$
|
256,417
|
|
|
$
|
55,000
|
|
|
$
|
72,746
|
|
|
$
|
-
|
|
|
$
|
57,336
|
|
|
$
|
441,499
|
|
Chief Operating Officer
|
|
2019
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael P. Rama (3)
|
|
2020
|
|
$
|
273,144
|
|
|
$
|
100,000
|
|
|
$
|
110,000
|
|
|
$
|
298,911
|
|
|
$
|
22,444
|
|
|
$
|
804,499
|
|
Chief Financial Officer
|
|
2019
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
(1)
|
Michael D. Farkas serves as our Chairman and Chief Executive Officer and was appointed to these positions in January 2015 and October 2018 (and previously from 2010 to July 2015), respectively. Included in All Other Compensation for Mr. Farkas are (i) company-paid health insurance benefits of $23,883 and $23,877 in 2020 and 2019, respectively, (ii) company-paid car lease and insurance expenses of $40,947 and $44,459 in 2020 and 2019, respectively, and (iii) tax gross-up of $38,928 relating to the vesting of stock awards in 2020.
|
(2)
|
Mr.
Jones has served as our Chief Operating Officer since April 2020. Included in Bonus for
Mr. Jones is a cash signing bonus of $55,000 in accordance with the Employment Agreement.
Included in All Other Compensation for Mr. Jones is company-paid health insurance benefits
of $14,183 in 2020 and reimbursement of relocation expenses pursuant to his contract
of $43,153 in 2020.
|
(3)
(4)
|
Mr.
Rama has served as our Chief Financial Officer since February 2020. Included in Bonus
for Mr. Rama is a cash signing bonus of $50,000 in accordance with the Employment Agreement.
Included in All Other Compensation for Mr. Rama is company-paid health insurance benefits
of $22,444 in 2020.
Represents
stock and option awards granted in 2020 and 2019 pursuant to our 2018 Plan. The aggregate grant date fair value of such
awards was calculated in accordance with FASB ASC Topic 718. These amounts do not represent actual amounts paid or to
be realized. Amounts shown are not necessarily indicative of values to be achieved, which may be more or less than the
amounts shown as awards are subject to time-based vesting. The assumptions used in calculating these amounts are discussed
in Note 12 of the Notes to Consolidated Financial Statements included in this Annual Report.
|
Employment
and Management Contracts, Termination of Employment and Change-in-Control Arrangements
Michael
D. Farkas Employment Agreement. On October 15, 2010, we entered into an employment agreement with Michael D. Farkas to
serve as our Chief Executive Officer (“Original Farkas Employment Agreement”). The agreement was for three years and
stipulated a base salary of $120,000 in year one, $240,000 in year two and $360,000 in year three. The agreement also included
a signing bonus of $60,000. At a Board meeting on April 17, 2014, the Board resolved to enter into a three-year contract with
Mr. Farkas, in which Mr. Farkas was to receive a monthly salary of $40,000 with an increase to $50,000 per month in the event
our shares became listed for trading on a national securities exchange. On December 23, 2014, in connection with the closing and
as a condition to the closing of a series C preferred stock securities purchase agreement, we entered into an amendment to the
employment agreement with Mr. Farkas (who was still Chief Executive Officer at that time) (“First Amendment”). The
First Amendment provided that Mr. Farkas was to have a salary of $40,000 per month. However, for such time as any of the aggregate
subscription amount from the December 2014 securities purchase agreement was still held in escrow, Mr. Farkas was to receive $20,000
in cash and the remaining amount of his compensation (i) was to be deferred and (ii) was to be determined by the compensation
committee of the Board to be fair and equitable. Additionally, beginning on the date that the aggregate subscription amount was
released from escrow and continuing for so long as the series C preferred stock remained outstanding, Mr. Farkas’ salary
was only to be paid in cash if doing so would not have put us in a negative operating cash flow position. Effective July 24, 2015,
we again amended our employment agreement with Mr. Farkas, such that Mr. Farkas was appointed our Chief Visionary Officer and
was no longer our Chief Executive Officer (“Second Amendment”).
Effective
June 15, 2017, we and Mr. Farkas entered into a third amended employment agreement (“Third Amendment”). The Third
Amendment was approved by our compensation committee and the Board as a whole (with Mr. Farkas recusing himself from this vote).
The Third Amendment, which superseded the First Amendment and Second Amendment, clarified that, on a going-forward basis, the
Chairman position held by Mr. Farkas would be the principal executive officer of our company. Mr. Farkas was appointed to this
position for a term of three years, with an automatic one-year renewal unless either party terminates Mr. Farkas’ employment
with our company at least 60 days prior to the expiration of the term. We agreed that Mr. Farkas was to be paid $20,000 per month
from July 24, 2015 to November 24, 2015 and we agreed to pay Mr. Farkas the equivalent of $15,000 per month in cash compensation
for the past 18 months (from December 1, 2015 to May 31, 2017), or $270,000. Prior to entering into the Original Farkas Employment
Agreement, we and an entity controlled by Mr. Farkas entered into (i) a Consulting Agreement, dated October 20, 2009 (“Consulting
Agreement”), and (ii) a Car Charging Group, Inc. Fee/Commission Agreement, dated November 17, 2009 (“Fee Agreement”),
and, after entering into the Original Farkas Employment Agreement, the parties entered into a Patent License Agreement, dated
March 29, 2012, among our company, Mr. Farkas and Balance Holdings, LLC and the March 11, 2016 Agreement regarding the Patent
License Agreement (with the Fee Agreement and the Consulting Agreement, “Affiliate Agreements”). Additionally, the
Original Farkas Employment Agreement included a provision whereby any stock options or warrants awarded to Mr. Farkas (or Farkas
Group, Inc.) by us that were exercised by Mr. Farkas or that expired would be replaced by us. Such replacement stock options and
warrants would have a new exercise price that is 1% above the market price on the new issue date.
Pursuant
to a December 6, 2017 letter agreement between our company and Mr. Farkas, Mr. Farkas’ monthly salary, as of the closing
of our 2018 public offering, is $40,000 of cash compensation. From February 16, 2018 to April 16, 2018, in connection with the
closing of our 2018 public offering, we (i) paid $80,000 to Mr. Farkas in repayment of accrued cash compensation for the period
from July 2015 to November 2015, (ii) issued to Mr. Farkas 223,456 units of unregistered shares of common stock and warrants (with
each unit consisting of one share of common stock and two warrants each to purchase one share of common stock for a total of 223,456
shares and 446,912 warrants) issuable as payment of $712,500 in shares of common stock owed to Mr. Farkas for the period from
December 1, 2015 to May 31, 2017 pursuant to the Third Amendment and a Conversion Agreement, dated August 23, 2017, between our
company and Mr. Farkas, divided by the public offering price of $4.25 multiplied by 80%, (iii) issued to Mr. Farkas 153,039 units
of unregistered shares of common stock and warrants (for a total of 153,039 shares and 306,078 warrants) issuable as payment of
(a) $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 from November 2015 to March 2017 pursuant to the Third Amendment divided by the public offering price
of $4.25 multiplied by 80%, and (b) $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 from April 2017 to February 13, 2018 pursuant to a verbal agreement between
our company and Mr. Farkas, divided by the public offering price of $4.25 multiplied by 80%, and (iv) issued to Mr. Farkas 74,753
shares of common stock issuable as payment of principal and interest of $221,009 owed to BLNK Holdings, LLC, a company controlled
by Mr. Farkas, pursuant to the Conversion Agreement, dated August 23, 2017, between our company and BLNK Holdings. In March 2018,
Mr. Farkas also received 886,119 shares of common stock issuable pursuant to the December 6, 2017 letter agreement.
Mr.
Farkas is owed stock options for 7,000 shares of common stock at an exercise price of $30 per share and stock options for 8,240
shares of common stock at an exercise price of $37.50 per share in connection with amounts owed pursuant to the Third Amendment.
With the exception of the Farkas additional amounts for the period from April 2017 to February 13, 2018, pursuant to a verbal
agreement between our company and Mr. Farkas, the Third Amendment resolved all claims Mr. Farkas had with regard to the Affiliate
Agreements. Following the closing of our 2018 public offering and the issuance of all securities owed to Mr. Farkas pursuant to
the verbal agreement, Mr. Farkas no longer has any claims with regard to the Affiliate Agreements. The Affiliate Agreements are
not currently in effect and will retain that status while Mr. Farkas is employed by us with a monthly salary of at least $30,000.
Pursuant to the Third Amendment, Mr. Farkas will be entitled to salary and benefits for 18 months if he is terminated for a reason
other than for cause, which is defined in the Original Farkas Employment Agreement as a conviction for committing or participating
in an injurious act that constitutes fraud, gross negligence, misrepresentation or embezzlement with regard to our company.
Brendan
S. Jones Employment Agreement. We entered into an Employment Offer Letter, dated as of March 29, 2020, with Brendan S.
Jones to become our Chief Operating Officer commencing on April 20, 2020. The Offer Letter extends for a two-year term expiring
on April 20, 2022 and is automatically renewable for an additional one-year period unless we provide notice of non-renewal prior
to the initial termination date. The Offer Letter provides that Mr. Jones is entitled to receive an annual base salary of $350,000,
payable in regular installments in accordance with our general payroll practices. Mr. Jones will be eligible for an annual performance
cash bonus of 40% of his base salary based on the satisfaction of certain key performance indicators set with the Board’s
Compensation Committee. Mr. Jones also received a cash signing bonus of $55,000 and an equity signing bonus of $70,000 worth of
our common stock, which shares will vest on April 20, 2021 (provided he is not terminated for Cause).
If
Mr. Jones’s employment is terminated by us other than for Cause (which includes willful material misconduct and willful
failure to materially perform his responsibilities to our company), he is entitled to receive severance equal to 12 months of
his base salary or such lesser number of months actually worked. If there is a buy-out or a “change of control,” Mr.
Jones will be entitled to obtain his base salary for a period of 12 months as a severance payment. Mr. Jones is also entitled
to relocation assistance in an amount of up to $35,000, a car allowance of up to $1,000 per month, inclusive of insurance, and
other employee benefits in accordance with our policies.
As
part of executing the Offer Letter, Mr. Jones entered into our standard Employee Confidentiality and Assignment of Inventions
Agreement prohibiting Mr. Jones from disclosure of confidential information regarding our company, restricting Mr. Jones from
engaging in any activities competitive with our business and confirming that all intellectual property developed by Mr. Jones
relating to our business constitutes our exclusive property.
Michael
P. Rama Employment Agreement. In February 2020, we entered into an Employment Offer Letter with
Mr. Rama. Pursuant to the Offer Letter, Mr. Rama agreed to devote his full business efforts and time to our company as its Chief
Financial Officer. The Offer Letter extends for a term expiring on February 10, 2022 and is automatically renewable for an additional
one-year period. The Offer Letter provides that Mr. Rama is entitled to receive an annual base salary of $300,000, payable in regular
installments in accordance with our general payroll practices. Mr. Rama will be eligible for an annual performance cash bonus of
25% of his base salary based on the satisfaction of certain key performance indicators set with the Board’s Compensation
Committee. Mr. Rama will be entitled to receive equity awards under our 2018 Incentive Compensation Plan with an aggregate annual
award value equal to 50% of his base salary in the form of restricted stock and stock options. Mr. Rama also received a $50,000
cash signing bonus.
If
Mr. Rama’s employment is terminated by us other than for Cause (which includes willful material misconduct and willful failure
to materially perform his responsibilities to us), he is entitled to receive severance equal to up to 12 months of his base salary.
If there is a buy-out or a “change of control,” Mr. Rama will also be entitled to obtain his base salary for a period
of 12 months as a severance payment. Mr. Rama is entitled to vacation and other employee benefits in accordance with our policies.
As
part of executing the Offer Letter, Mr. Rama entered into our standard Employee Confidentiality and Assignment of Inventions Agreement
prohibiting Mr. Rama from disclosure of confidential information regarding our Company, restricting Mr. Rama from engaging in
any activities competitive with our business and confirming that all intellectual property developed by Mr. Rama relating to our
business constitutes our exclusive property.
Donald
Engel Employment Agreement. Effective January 9, 2020, Donald Engel, a current member of our Board of Directors, entered
into an employment agreement with us. The employment agreement with Mr. Engel extends for a term expiring on January 9, 2021,
subject to automatic renewal for two additional one-year periods if not otherwise previously terminated by either party. Pursuant
to the employment agreement, Mr. Engel has agreed to devote his attention, energy and skills to our business as a business development
officer by introducing potential customers to us and assisting us in establishing strategic partnerships. The employment agreement
provides that Mr. Engel will receive a base salary at an annual rate of $175,000 for services rendered in such position. In addition,
he will be eligible to earn stock options to purchase up to 700,000 shares of our common stock, in increments of 140,000 options
on each occasion that we execute an agreement for the sale or deployment of electric vehicle charging stations or ancillary eco-friendly
energy products with a customer he has introduced to us. The stock options will have an exercise price equal to the closing market
price of our common stock immediately prior to the issuance date, expire five years after the issuance date and be subject to
the terms of our 2018 Incentive Compensation Plan.
The
employment agreement provides for termination by us for cause upon conviction of a felony, misconduct resulting in significant
economic or reputational harm to us, any act of fraud or a material breach of his obligations to us. Upon a change of control
of our company, Mr. Engel’s employment will terminate and he will be entitled to all unpaid and outstanding salary and expenses
due through the termination date. The employment agreement also contains covenants restricting Mr. Engel from engaging in any
activities competitive with our business during the term of the employment agreement and two years thereafter and prohibiting
him from disclosure of confidential information regarding us at any time.
Aviv
Hillo Employment Agreement. In September 2020, we entered into an Employment Offer Letter with
Mr. Hillo. Pursuant to the Offer Letter, Mr. Hillo agreed to devote his full business efforts and time to our company as our General
Counsel. The Offer Letter extends for a term expiring on June 19, 2022 and is automatically renewable for an additional one-year
period. The Offer Letter provides that Mr. Hillo is entitled to receive an annual base salary of $300,000, payable in regular installments
in accordance with our general payroll practices. Mr. Hillo will be eligible for an annual performance cash bonus of 25% of his
base salary based on the satisfaction of certain key performance indicators set with the Board’s Compensation Committee.
Mr. Hillo will be entitled to receive equity awards under our 2018 Incentive Compensation Plan with an aggregate annual award value
equal to 50% of his base salary in the form of restricted stock and stock options.
If
Mr. Hillo’s employment is terminated by us other than for Cause (which includes willful material misconduct and willful
failure to materially perform his responsibilities to us), he is entitled to receive severance equal to up to 12 months of his
base salary. If there is a buy-out or a “change of control,” Mr. Hillo will also be entitled to obtain his base salary
for a period of 12 months as a severance payment. Mr. Hillo is entitled to vacation and other employee benefits in accordance
with our policies.
As
part of executing the Offer Letter, Mr. Hillo entered into our standard Employee Confidentiality and Assignment of Inventions
Agreement prohibiting him from disclosure of confidential information regarding our company, restricting him from engaging in
any activities competitive with our business and confirming that all intellectual property developed by him relating to our business
constitutes our exclusive property. Beginning in 2021, as a result of his significant participation in our business activities,
we have determined that Mr. Hillo is an executive officer of our company.
Incentive
Compensation Plans
As
of December 31, 2020, stock options to purchase an aggregate of 572,838 shares of common stock and 1,177,937 restricted shares
of our common stock were outstanding and initially issued to employees and consultants under previous incentive compensation plans.
In
July 2018, our Board adopted the Blink Charging Co. 2018 Incentive Compensation Plan (the “2018 Plan”). The holders
of a majority of our shares of common stock approved the 2018 Plan at our stockholders meeting held on September 7, 2018. The
2018 Plan enables us 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 employees, directors, consultants
and advisors, and to improve our ability to attract, retain and motivate individuals upon whom our sustained growth and financial
success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in us. 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 us 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 administered by the Compensation Committee of the Board, which has 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, as adjusted. No awards may be issued on or after September 7, 2028. Through December 31, 2020, we have granted an
aggregate of 563,538 stock option and restricted stock awards under the 2018 Plan, including the grants described below to our
executive officers, directors and consultants.
Outstanding
Equity Awards at Fiscal Year-End
The
following table provides information on outstanding equity awards as of December 31, 2020 to the named executive officers.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
securities
underlying
unexercised
options
exercisable
|
|
|
Number of
securities
underlying
unexercised
options
unexercisable
|
|
|
Equity
incentive
plan
awards:
Number of
securities
underlying
unexercised
unearned
options
|
|
|
Option
exercise
price
|
|
|
Option
expiration
date
|
|
|
Number
of
shares
or units
of stock
that
have not
vested
|
|
|
Market
value of
shares
of units
that
have
not
vested
|
|
|
Equity
incentive
plan
awards:
Number
of
unearned
shares,
units or
other
rights
vested
|
|
|
Equity
Incentive
plan awards: Market or payout value of unearned shares, units or other not vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
9.00
|
|
|
|
02/10/21
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
7.50
|
|
|
|
02/12/21
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
8.50
|
|
|
|
02/23/21
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
16.50
|
|
|
|
03/29/21
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
18.50
|
|
|
|
03/31/21
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
200
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.53
|
|
|
|
12/13/23
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.17
|
|
|
|
12/13/23
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.50
|
|
|
|
12/13/23
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
15,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
5.25
|
|
|
|
12/13/23
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
7,000
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
30.00
|
|
|
|
12/13/23
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
8,240
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
37.50
|
|
|
|
12/13/23
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
6.00
|
|
|
|
12/13/23
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.52
|
|
|
|
12/13/23
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.63
|
|
|
|
12/13/23
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.30
|
|
|
|
04/16/24
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
4,200
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
3.06
|
|
|
|
05/13/24
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.55
|
|
|
|
06/06/24
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.99
|
|
|
|
08/21/24
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.61
|
|
|
|
10/21/24
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.33
|
|
|
|
12/17/24
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.51
|
|
|
|
03/09/25
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
1.89
|
|
|
|
04/29/25
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2.66
|
|
|
|
06/17/25
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
25.59
|
|
|
|
12/04/25
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
26.41
|
|
|
|
12/07/25
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
100
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
31.13
|
|
|
|
12/11/25
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
-
|
|
|
|
-
|
|
|
|
37,543
|
|
|
$
|
2.01
|
|
|
|
04/20/26
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
-
|
|
|
|
-
|
|
|
|
36,916
|
|
|
$
|
2.01
|
|
|
|
04/20/27
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael D. Farkas
|
|
|
-
|
|
|
|
-
|
|
|
|
36,372
|
|
|
$
|
2.01
|
|
|
|
04/20/28
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Brendan S. Jones (2)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
7,839
|
|
|
$
|
335,117
|
|
Michael P. Rama
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
$
|
2.20
|
|
|
|
02/07/26
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael P. Rama
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
$
|
2.20
|
|
|
|
02/07/27
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael P. Rama
|
|
|
-
|
|
|
|
-
|
|
|
|
50,000
|
|
|
$
|
2.20
|
|
|
|
02/07/28
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
Michael P. Rama (3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
50,000
|
|
|
$
|
2,137,500
|
|
|
(1)
|
Calculated
by multiplying the number of shares of common stock by $42.75, which is the quoted market price per share of our common stock
as of December 31, 2020.
|
|
(2)
|
These
shares vest on April 20, 2021, subject to immediate vesting upon an event constituting a change of control of the Company.
|
|
(3)
|
These
shares vest in three equal annual increments on February 7, 2021, 2022 and 2023, subject to immediate vesting upon an event
constituting a change of control of the Company.
|
The
following table sets forth our securities authorized for issuance under any equity compensation plans approved by our stockholders,
as well as any equity compensation plans not approved by our stockholders, as of December 31, 2020:
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|
Plan Category
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by security holders
|
|
|
572,838
|
|
|
$
|
4.39
|
|
|
$
|
3,335,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity compensation plans not approved by security holders
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
572,838
|
|
|
$
|
4.39
|
|
|
|
3,335,163
|
|
Pension
Benefits and Nonqualified Deferred Compensation
We
do not provide a pension plan for our employees, and none of our named executive officers participated in a nonqualified deferred
compensation plan in 2020 and 2019.
401(k)
Plan
We
maintain a tax qualified retirement plan (the “401(k) Plan”), that provide eligible employees with an opportunity
to save for retirement on a tax advantaged basis. Eligible employees may participate in the 401(k) Plan on the entry date coincident
with or following the date they meet the 401(k) Plan’s age and service eligibility requirements. The entry date is either
January 1 or July 1. In order to meet the age and service eligibility requirements, otherwise eligible employees must be age 21
or older and complete 3 consecutive months of employment. Participants are able to defer up to 100% of their eligible compensation
subject to applicable annual Code limits. All participants’ interest in their deferrals are 100% vested when contributed.
Currently, the 401(k) Plan does not provide for any matching contributions on employee deferrals.
Compensation
of Directors
The
following table provides information for 2020 regarding all compensation awarded to, earned by or paid to each person who served
as a director for some portion or all of 2020:
|
|
Fees Earned or
|
|
|
Stock
|
|
|
Option/Warrants
|
|
|
All Other
|
|
|
|
|
Name
|
|
Paid in Cash
|
|
|
Awards (1)
|
|
|
Awards
|
|
|
Compensation (2)
|
|
|
Total
|
|
Louis R. Buffalino
|
|
$
|
86,324
|
|
|
$
|
50,000
|
|
|
$
|
-
|
|
|
$
|
462,410
|
|
|
$
|
598,734
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jack Levine
|
|
$
|
127,648
|
|
|
$
|
65,000
|
|
|
$
|
-
|
|
|
$
|
601,139
|
|
|
$
|
793,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth R. Marks
|
|
$
|
67,505
|
|
|
$
|
50,000
|
|
|
$
|
-
|
|
|
$
|
495,977
|
|
|
$
|
613,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ritsaart J.M. van Montfrans
|
|
$
|
76,500
|
|
|
$
|
50,000
|
|
|
$
|
-
|
|
|
$
|
771,756
|
|
|
$
|
898,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
357,977
|
|
|
$
|
215,000
|
|
|
$
|
-
|
|
|
$
|
2,331,282
|
|
|
$
|
2,904,259
|
|
|
(1)
|
Mr.
Levine was awarded 2,312 shares of restricted stock and Messrs. Buffalino, Marks, and van Montfrans were each awarded 1,778
shares of restricted stock. These awards were granted pursuant to the 2017 Board Plan with respect to service as a director
during the 2021 fiscal year. The shares vest on the earlier of (a) November 24, 2021 or (b) the date preceding the next annual
meeting of the stockholders of the Company.
|
|
(2)
|
Reflects
gross-up tax payments related to the vesting of 23,419 (Mr. Buffalino), 30,445 (Mr. Levine), 25,119 (Mr. Marks) and 23,419
(Mr. van Montfrans) shares of restricted stock awarded pursuant to the 2017 Board Plan as a result of the vesting on November
23, 2020 of the annual award to our non-employee directors granted on December 12, 2019 for Messrs. Buffalino, Levine and
van Montfrans and on March 19, 2020 for Mr. Marks.
|
Agreements
Regarding Board Service
On
December 11, 2017, the Board approved a Board compensation plan (the “2017 Board Plan”). The 2017 Board Plan had an
effective date of November 1, 2017. The 2017 Board Plan applied to the entire Board from November 1, 2017 through February 16,
2018. Since that date, the 2017 Board Plan only applies to the non-employee members of the Board. The employee members of the
Board are no longer paid separate compensation for serving on the Board. The 2017 Board Plan superseded all prior compensation
arrangements with the Board members.
Pursuant
to the 2017 Board Plan, each non-employee member of the Board receives an annual cash retainer of $60,000. The lead independent
director of the Board (currently, Mr. Levine) receives a supplemental annual cash retainer in an amount $30,000. Each non-employee
member of the Board that serves in a chairperson role or as a member of a committee receives a supplemental annual cash retainer
in an amount equal to the corresponding role: (i) Chair of the audit committee — $15,000; Member of the audit committee
— $7,500; (ii) Chair of the compensation committee — $10,000; Member of the compensation committee — $5,000;
and (iii) Chair of the nominating and corporate governance committee — $10,000; Member of the nominating and corporate governance
committee —$5,000. Each non-employee member of the Board receives $1,500 for each in-person Board meeting and $500 for each
telephone Board meeting. The annual and supplemental cash retainers are payable quarterly during the last month of each quarter.
We also reimburse our non-employee directors for reasonable travel and other expenses incurred in connection with attending Board
and company meetings or events.
In
addition, each year on the date of the annual meeting of stockholders, each non-employee director will receive an annual award
for the number of shares of our common stock that have a market value of $50,000 based on the closing price of the common stock
on the last business day preceding the grant date. The lead independent director will receive an additional annual award for the
number of shares of our common stock that have a market value of $15,000. The stock award will fully vest the sooner of: (i) 12
months from grant; or (ii) one day before the following year’s annual meeting. All stock awards will include a cash payment
upon vesting to cover expected ordinary income tax charges and will be calculated at the highest individual personal income tax
rate.
Code
of Business Conduct and Ethics
We
adopted a Code of Business Conduct and Ethics in December 2013. Our Code of Business Conduct and Ethics applies to all our employees,
officers and directors, including our principal executive and senior financial officers. A copy of our Code of Business Conduct
and Ethics is posted on our website at www.blinkcharging.com. We intend to disclose future amendments to certain provisions
of our Code of Conduct and Business Ethics, or waivers of these provisions with respect to executive officers on our website or
in our public filings with the SEC. There were no waivers of the Code of Business Conduct and Ethics in 2020. A copy of our Code
of Business Conduct and Ethics will be provided without charge to any person submitting a written request to the attention of
the Chief Executive Officer at our principal executive office.
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
The
following table sets forth certain information regarding our shares of common stock beneficially owned as of March 29,
2021, for (i) each stockholder known to be the beneficial owner of 5% or more of our outstanding shares of common stock, (ii)
each Named Executive Officer and director, and (iii) all executive officers and directors as a group. A person is considered to
beneficially own any shares: (a) over which such person, directly or indirectly, exercises sole or shared voting or investment
power, or (b) of which such person has the right to acquire beneficial ownership at any time within 60 days after such date upon
the exercise of stock options, warrants or convertible securities. Unless otherwise indicated, voting and investment power relating
to the shares shown in the table for our directors and executive officers is exercised solely by the beneficial owner or shared
by the owner and the owner’s spouse or children.
For
purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common
stock that such person has the right to acquire within 60 days after March 29, 2021 For purposes of computing the percentage
of outstanding shares of common stock held by each person or group of persons, any shares that such person or persons has the
right to acquire within 60 days after March 29, 2021 is deemed to be outstanding, but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person. The inclusion of any shares listed as beneficially owned
does not constitute an admission of beneficial ownership.
|
|
Shares of Common Stock
Beneficially Owned
|
|
Name of Beneficial Owner (1)
|
|
Number
|
|
|
Percent (2)
|
|
|
|
|
|
|
|
|
Michael D. Farkas
|
|
|
6,718,829
|
(3)
|
|
|
16.0
|
%
|
|
|
|
|
|
|
|
|
|
Brendan S. Jones
|
|
|
7,839
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Michael P. Rama
|
|
|
100,000
|
(4)
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Aviv Hillo (4)
|
|
|
33,366
|
(5)
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Louis R. Buffalino
|
|
|
25,197
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Donald Engel (5)
|
|
|
140,100
|
(6)
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Jack Levine
|
|
|
103,044
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Kenneth R. Marks
|
|
|
36,897
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Ritsaart J.M. van Montfrans
|
|
|
25,197
|
|
|
|
|
*
|
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group (9 persons)
|
|
|
7,190,469
|
(7)
|
|
|
17.1
|
%
|
*
Less than 1% of the outstanding shares.
(1)
Each person maintains a mailing address at c/o Blink Charging Co., 605 Lincoln Road, 5th Floor, Miami Beach, Florida
33139.
(2)
Applicable percentage ownership is based on 41,939,156 shares of common stock outstanding as of March 29, 2021.
(3)
Represents (i) 1,197,295 shares of common stock owned directly, (ii) 4,197,616 shares of common stock held by Farkas Group
Inc., of which Mr. Farkas is the President and has voting and investment power with respect to such shares, (iii) 81,441 shares
of common stock held by Balance Group LLC, of which Mr. Farkas is the managing member and has voting and investment power with
respect to such shares, (iv) 7,200 shares of common stock held by the Michael D. Farkas Charitable Foundation, of which Mr. Farkas
is the trustee and has voting and investment power with respect to such shares, (v) 80 shares of common stock held by Farkas Family
Irrevocable Trust, of which Mr. Farkas is the trustee and has voting and investment power with respect to such shares, (vi) 15,000
shares of common stock held by Mr. Farkas’ minor children, (vii) 74,283 shares of common stock issuable upon the exercise
of stock options, and (viii) 1,145,914 shares of common stock issuable upon the exercise of warrants. For purposes of voting,
on an actual basis, Mr. Farkas owns 19.2% of the outstanding shares.
Additionally,
Mr. Farkas has a less than 5% ownership interest in Ardour Capital Investments LLC and Ardour Capital Partners LLC, which, to
the Company’s knowledge, own 42,771 shares and 14,117 shares of common stock, respectively. Mr. Farkas has no voting or
investment power with respect to the shares of common stock held by the Ardour Capital entities, and their ownership interests
are not included in the shares of common stock beneficially owned by Mr. Farkas.
(4)
Includes 50,000 shares of common stock issuable upon the exercise of stock options.
(5)
Incudes 20,661 shares of common stock issuable upon the exercise of stock options.
(6)
Represents shares of common stock issuable upon the exercise of stock options.
(7)
Includes currently exercisable stock options and warrants to purchase an aggregate of 1,430,958 shares of common stock.
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|
Other
than the transactions described under “Executive Compensation – Employment and Management Contracts, Termination of
Employment and Change-in-Control Arrangements; Michael D. Farkas Employment Agreement and Related Transactions,” and as
described below, there are no transactions requiring disclosure between us and related persons, promotors or control persons.
Transactions
with BLNK Holdings, LLC
On
March 16, 2018, 74,753 shares of common stock were issued as payment of $221,009 in principal and interest owed to BLNK Holdings,
pursuant to a Conversion Agreement, dated August 23, 2017, between our company and BLNK Holdings. These shares were subsequently
transferred to Mr. Farkas, the principal owner of BLNK Holdings.
Transactions
with Michael D. Farkas
Certain
persons who provide services to us, including Michael D. Farkas, our Chairman and Chief Executive Officer, and Aviv Hillo, our
General Counsel, also provide services and/or serve as officers or directors of Balance Labs, Inc., a consulting firm controlled
by Mr. Farkas that provides business development and consulting services to startup development-stage businesses.
In
February 2018, in connection with the closing of our 2018 public offering, we repaid $688,238 in principal and interest owed to
Mr. Farkas pursuant to convertible notes issued to Farkas Group Inc. (“FGI”), a company controlled by Michael D. Farkas,
the principal owner of BLNK Holdings.
Transactions
with Ardour Capital
On
August 3, 2016, we executed a consulting agreement with Ardour Capital to serve as our financial advisor with respect to any private
equity offerings, derivative equity offerings or debt offerings. Mr. Farkas has a less than 5% ownership interest in Ardour Capital.
For acting as our placement agent, Ardour Capital is entitled to receive a sales commission of 5% of the gross proceeds from any
private equity offering and a five-year warrant to purchase 5% of the common stock from such private equity transaction with an
exercise price based on the valuation of the private equity transaction. Ardour Capital is entitled to receive a sales commission
of 3% of gross proceeds from a non-convertible debt-related transaction in which there is no equity component other than customary
warrant coverage not in excess of 10% of the associated debt. JMJ lent $3,500,000 to us between October 2016 and October 2017.
In connection with these loans, we had paid $120,000 (and owed $120,000) to Ardour Capital as sales commissions. In February 2018,
in connection with the closing of our 2018 public offering, we paid $120,000 to Ardour Capital.
On
March 22, 2018, in connection with the closing of our 2018 public offering, we issued 360,441 shares of common stock to Ardour
Capital as placement agent fees related to the $3,500,000 lent by JMJ and the separate $250,000 lent by JMJ to us on January 22,
2018. On the same day, we issued 1,167 shares of common stock to Ardour Capital in connection with placement agent fees related
to the sale of our series C preferred stock in December 2014.
On
December 6, 2018, in connection with the sale of series C convertible preferred stock in 2014 and 2016, we paid Ardour Capital
$93,333 in sales commissions.
Transaction
between BLNK Holdings and JMJ Financial
In
February 2018, prior to the closing of our 2018 public offering, Mr. Farkas reached an agreement with JMJ Financial, a Nevada
sole proprietorship owned by Justin Keener (“JMJ”), that, following the closing of the 2018 public offering, BLNK
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 us. This transfer took place on April 18, 2018. 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 our consolidated statements of operations during the year ended December 31, 2018, with a corresponding credit to additional
paid-in capital.
Transactions
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 6% per year. 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.
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 our 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 a 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 a warrant to purchase 8,429 shares of our common stock was issued
on the same date. On July 27, 2017, an additional advance of $50,000 was made to us and a warrant to purchase 1,429 shares of
our common stock was issued to JMJ. We and JMJ entered into a Lockup, Conversion and Additional Investment Agreement, dated October
23, 2017 (the “Additional Agreement”). In accordance with the terms of the Additional Agreement, on October 24, 2017,
JMJ advanced to us $949,900 available pursuant to previous agreements with JMJ and a warrant to purchase 27,140 shares of our
common stock was issued to JMJ. As of the closing of our 2018 public offering, ten warrants to purchase a total of 100,001 shares
of our 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, we and JMJ entered
into the first amendment to the Additional Agreement, extending the maturity date to December 31, 2017. On January 4, 2018, we
and JMJ entered into the second amendment to the Additional Agreement, extending the maturity date to January 31, 2018. On February
1, 2018, we and JMJ entered into the third amendment to the Additional Agreement, extending the maturity date to February 10,
2018. On February 7, 2018, we and JMJ entered into the fourth amendment to the Additional Agreement, extending the maturity date
to February 15, 2018.
In
addition, JMJ claimed that we would owe JMJ $12 million as a mandatory default amount pursuant to previous agreements with us.
JMJ, in the Additional Agreement, agreed to allow us 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 closing of our 2018 public offering by December
15, 2017 (subsequently extended to February 15, 2018). The option chosen was at our sole discretion. “Origination Shares”
was defined in the purchase agreement with JMJ as the following: on the fifth trading day after the closing of our public offering
we would deliver to JMJ shares of our common stock equal to 48% of the consideration paid by JMJ under the Promissory Note divided
by the lowest of (i) $35 per share, or (ii) the lowest daily closing price of our common stock during the ten days prior to delivery
of the Origination 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
offering. The number of shares to be issued was to be determined based on the offering price of the public offering.
The
first option was that we, upon the closing of our 2018 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
we, upon the closing of our 2018 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 our public offering, we chose the second option
and did not pay any cash to JMJ. Although our public offering closed one day after the February 15, 2018 maturity date, JMJ accepted
payment on February 16, 2018 and did not declare a default. Prior to our 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, on February 16, 2018, we issued to JMJ 12,005 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.
On May 7, 2018, we received a notice of conversion from JMJ to convert 4,368 shares of series D preferred stock with a stated
value of $4,368,000 at the conversion price of $3.12 per share into 1,400,000 shares of our common stock. On May 10, 2018, we
effected the preferred stock conversion and issued 1,400,000 shares of common stock to JMJ.
Separately
from and unrelated to the JMJ financing, JMJ lent $250,000 to us 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 our 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, we issued
73,529 shares of common stock to JMJ and, on April 9, 2018, we issued 147,058 warrants to JMJ. These warrants were exercised for
66,000 shares in January 2021.
Related
Person Transaction Policy
Our
policy with regard to related party transactions is for the Board as a whole to approve any material transactions involving our
directors, executive officers or holders of more than 5% of our outstanding shares of common stock.
Director
and Executive Officer Indemnification Agreements
Nevada
corporation law limits or eliminates the personal liability of directors to corporations and their stockholders for monetary damages
for breaches of directors’ fiduciary duties as directors. Our bylaws include provisions that require us to indemnify our
directors or officers against monetary damages for actions taken as a director or officer of our company. We are also expressly
authorized to carry directors’ and officers’ insurance to protect our directors, officers, employees and agents for
certain liabilities. Our articles of incorporation do not contain any limiting language regarding director immunity from liability.
We
have entered into or intend to enter into separate indemnification agreements with our directors and executive officers, in addition
to indemnification provided for in our bylaws. These agreements, among other things, provide for indemnification of our directors
and executive officers for certain expenses, judgments, fines and settlement amounts, among others, incurred by such person in
any action or proceeding arising out of such person’s service as a director or executive officer in any capacity. We believe
that these provisions in our bylaws and indemnification agreements are necessary to attract and retain qualified persons as directors
and executive officers.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling
our company pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is therefore unenforceable.
Director
Independence
Our
shares of common stock and warrants are traded on the Nasdaq Capital Market. Nasdaq Listing Rule 5605(a)(2) provides that an “independent
director” is a person other than an officer or employee of our company or any other individual having a relationship which,
in the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director. The Nasdaq listing rules provide that a director cannot be considered independent if:
|
●
|
the
director is, or at any time during the past three years was, an employee of the company;
|
|
●
|
the
director or a family member of the director accepted any compensation from the company in excess of $120,000 during any period
of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including,
among other things, compensation for board or board committee service);
|
|
●
|
a
family member of the director is, or at any time during the past three years was, an executive officer of the company;
|
|
●
|
the
director or a family member of the director is a partner in, controlling stockholder of, or an executive officer of an entity
to which the company made, or from which the company received, payments in the current or any of the past three fiscal years
that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject
to certain exclusions); or
|
|
●
|
the
director or a family member of the director is employed as an executive officer of an entity where, at any time during the
past three years, any of the executive officers of the company served on the compensation committee of such other entity;
or the director or a family member of the director is a current partner of the company’s outside auditor, or at any
time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s
audit.
|
Our
Board of Directors has determined that Louis R. Buffalino, Jack Levine, Kenneth R. Marks and Ritsaart J.M. van Montfrans are “independent,”
as independence is defined in the listing rules for the Nasdaq Stock Market. Accordingly, three of our six directors are independent.
ITEM
14.
|
PRINCIPAL
ACCOUNTING FEES AND SERVICES.
|
Marcum
LLP served as our independent registered public accountants for the years ended December 31, 2020 and 2019.
Audit
Fees
For
our fiscal years ended December 31, 2020 and 2019, we were billed approximately $261,034 and $233,257, respectively, for professional
services rendered by our independent auditors for the audit and review of our financial statements.
Audit
Related Fees
There
were no fees for audit related services rendered by our independent auditors for the years ended December 31, 2020 and
2019.
Tax
Fees
For
our fiscal years ended December 31, 2020 and 2019, there were no fees for professional services rendered by our independent auditors
for tax compliance, tax advice, and tax planning.
All
Other Fees
For
our fiscal years ended December 31, 2020 and 2019, we were billed approximately $56,135 and $0, respectively, for professional
services rendered by our independent auditors related procedures required pursuant to the Registration Statement on Form S-3 related
to the ATM filed with the SEC.
Pre-Approval
Policies
Following
the election of all three current members to the Board’s audit committee, such newly constituted committee began its
activities in December 2019 and has reviewed and approved all services and fees from that date forward. Prior to then and
since November 2017, all of the above services and fees were reviewed and approved by the Board’s former audit
committee that consisted of Messrs. Robert C. Schweitzer, Donald Engel and Grant E. Fitz. No services were performed before
or without approval.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
2019
1.
BUSINESS ORGANIZATION, NATURE OF OPERATIONS AND RISKS AND UNCERTAINTIES
Organization
and Operations
Blink
Charging Co., through its wholly-owned subsidiaries (collectively, the “Company” or “Blink”), is a leading
owner, operator, and provider of electric vehicle (“EV”) charging equipment and networked EV charging services. Blink
offers residential and commercial EV charging equipment, enabling EV drivers to recharge at various location types. Blink’s
principal line of products and services is its Blink EV charging network (the “Blink Network”) and Blink EV charging
equipment, also known as electric vehicle supply equipment (“EVSE”) and other EV-related services. The Blink Network
provides property owners, managers, parking companies, and state and municipal entities (“Property Partners”) with
cloud-based services that enable the remote monitoring and management of EV charging stations. The Blink Network also provides
EV drivers with vital station information, including station location, availability, and any fees (if applicable).
Risks
and Uncertainties
The
Covid-19 pandemic has impacted global stock markets and economies. The Company continues to closely monitor the impact the impact
of the outbreak of the coronavirus (“Covid-19”). The Company has taken precautions to ensure the safety of our employees,
customers and business partners, while assuring business continuity and reliable service and support to its customers. The Company
continue to receive orders for our products, although some shipments of equipment have been temporarily delayed. The Company has
experienced what it expects is a temporary reduction in the usage of our charging stations, which has resulted in a decrease in
charging service revenue. As federal, state and local economies begin to reopen and with a vaccine underway the Company expects
demand for charging station usage to return, but the Company is unable to predict the ultimate impact that it may have on the
business, future results of operations, financial position, or cash flows.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include
the accounts of Blink Charging Co. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated
in consolidation. The results of operations for the year ended December 31, 2020 include the results of operations of BlueLA Carsharing
LLC and U-Go Stations Inc as of their respective dates of acquisition.
BLINK CHARGING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
2019
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
USE
OF ESTIMATES
Preparation
of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses, together with amounts disclosed in the related notes to the financial statements. The Company’s significant
estimates used in these financial statements include, but are not limited to, stock-based compensation, accounts receivable reserves,
warranty reserves, accrued property taxes, inventory valuations, goodwill, the valuation allowance related to the Company’s
deferred tax assets, the carrying amount of intangible assets, right of use assets and related leases payable estimates of future
EV sales and the effects thereon, derivative liabilities and the recoverability and useful lives of long-lived assets. Certain
of the Company’s estimates could be affected by external conditions, including those unique to the Company and general economic
conditions. It is reasonably possible that these external factors could have an effect on the Company’s estimates and could
cause actual results to differ from those estimates.
LIQUIDITY
As
of December 31, 2020, the Company had cash and working capital of $22,341,433 and $19,579,775, respectively. During the
year ended December 31, 2020 and 2019, the Company incurred a net loss of $17,846,467 and $9,648,500, respectively. During the
year ended December 31, 2020, the Company used cash in operating activities of $18,069,954.
Since
April 17, 2020 and through December 31, 2020, the Company has sold 3,597,833 shares of common stock under an “at-the-market”
equity offering program for aggregate gross proceeds of approximately $20.0 million. See Note 13 – Stockholders’ Equity.
The
Company expects that its cash on hand will fund its operations for a least 12 months after the issuance date of these financial
statements.
In
January 2021, the Company completed an underwritten registered public offering of 5,660,000 shares of our common stock at a public
offering price of $41.00 per share. The Company received approximately $232.1 million in gross proceeds from the public offering,
and approximately $221.5 million in net proceeds after deducting the underwriting discount and offering expenses paid by the Company.
Our Chief Executive Officer and one other officer participated in the offering by selling a total of 550,000 shares of our common
stock from the exercise of the underwriter’s option to purchase additional shares. The public offering was made pursuant
to our automatic shelf registration statement on Form S-3 filed with the SEC on January 6, 2021 and prospectus supplement dated
January 7, 2021.
Since
inception, the Company’s operations have primarily been funded through proceeds received in equity and debt financings.
The Company believes it has access to capital resources and continues to evaluate additional financing opportunities. There is
no assurance that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance
that the amount of funds the Company might raise will enable the Company to complete its development initiatives or attain profitable
operations.
The
Company’s operating needs include the planned costs to operate its business, including amounts required to fund working
capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will
depend on many factors, including the Company’s ability to successfully commercialize its products and services, competing
technological and market developments, and the need to enter into collaborations with other companies or acquire other companies
or technologies to enhance or complement its product and service offerings.
BLINK CHARGING CO. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2020 AND
2019
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
CASH
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.
INVESTMENTS
Available-for-sale
debt securities are recorded at fair value with the net unrealized gains and losses (that are deemed to be temporary) reported as a component
of other comprehensive income loss. Realized gains and losses and charges for other-than-temporary impairments are included in
determining net income, with related purchase costs based on the first-in, first-out method. The Company evaluates its available-for-sale-investments
for possible other-than-temporary impairments by reviewing factors such as the extent to which, and length of time, an investment’s
fair value has been below the Company’s cost basis, the issuer’s financial condition, and the Company’s ability and
intent to hold the investment for sufficient time for its market value to recover. For impairments that are other-than-temporary, an
impairment loss is recognized in earnings equal to the difference between the investment’s cost and its fair value at the balance
sheet date of the reporting period for which the assessment is made. The fair value of the investment then becomes the new amortized
cost basis of the investment and it is not adjusted for subsequent recoveries in fair value. During the year ended December 31, 2020
the remaining marketable securities were redeemed.
The
following summarizes our investments as of December 31, 2019:
|
|
December 31,
|
|
|
|
2019
|
|
Short-term investments:
|
|
|
|
|
Available- for-sale investments
|
|
$
|
2,956,989
|
|
The
following is a summary of the unrealized gains, and fair value by investment type as of December 31, 2019:
|
|
December 31, 2019
|
|
|
|
Amortized Cost
|
|
|
Gross Unrealized Gains
|
|
|
Gross Unrealized Losses
|
|
|
Fair Value
|
|
Fixed income
|
|
$
|
2,773,816
|
|
|
$
|
183,173
|
|
|
$
|
-
|
|
|
$
|
2,956,989
|
|
ACCOUNTS
RECEIVABLE
Accounts
receivable are carried at their contractual amounts, less an estimate for uncollectible amounts. As of December 31, 2020 and 2019,
there was an allowance for uncollectible amounts of $356,292 and $71,935, respectively. Management estimates the allowance for
uncollectible accounts based on existing economic conditions, the financial conditions of the customers, and the amount and
age of past due accounts. Receivables are considered past due if full payment is not received by the contractual due date. Past
due accounts are generally written off against the allowance for bad debts only after all collection attempts have been exhausted.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
INVENTORY
Inventory
is comprised of electric charging stations and related parts, which are available for sale or for warranty requirements. Inventory
is stated at the lower of cost and net realizable value. Cost is determined by the first-in, first-out method. Inventory that
is sold to third parties is included within cost of sales and inventory that is installed on the premises of participating owner/operator
properties, where the Company retains ownership, is transferred to property and equipment at the carrying value of the inventory.
The Company periodically reviews for slow-moving, excess or obsolete inventories. Products that are determined to be obsolete,
if any, are written down to net realizable value. Based on the aforementioned periodic reviews, the Company recorded an inventory
reserve for slow-moving or excess inventory of $217,000 and $892,000 as of December 31, 2020 and 2019, respectively.
As
of December 31, 2020 and 2019, the Company’s inventory was comprised solely of finished goods that are available
for sale.
PROPERTY
AND EQUIPMENT
Property
and equipment is stated at cost, net of accumulated depreciation and amortization which is recorded commencing at the in-service
date using the straight-line method over the estimated useful lives of the assets.
|
|
Useful Lives
|
Asset
|
|
(In Years)
|
|
|
|
Computer software and office and computer equipment
|
|
3 - 5
|
Machinery and equipment, automobiles, furniture and fixtures
|
|
3 - 10
|
Installed Level 2 electric vehicle charging stations
|
|
3 - 7
|
Installed Level 3 (DC Fast Chargers (“DCFC”)) electric vehicle charging stations
|
|
5
|
When
property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts
and any resulting gain or loss is included in the statements of operations for the respective period. Minor additions and repairs
are expensed in the period incurred. Major additions and repairs which extend the useful life of existing assets are capitalized
and depreciated using the straight-line method over their remaining estimated useful lives.
EV
charging stations represents the cost, net of accumulated depreciation, of charging devices that have been installed on the premises
of participating owner/operator properties or are earmarked to be installed. The Company had no EV charging stations that were
not placed in service as of December 31, 2020 and 2019.
The
Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of the asset may not be recoverable. The Company assesses the recoverability of its long-lived assets by monitoring current
selling prices of car charging units in the open market, the adoption rate of various auto manufacturers in the EV market and
projected car charging utilization at various public car charging stations throughout its network in determining fair value. An
impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual
disposition are less than its carrying amount. See Note 5 – Property and Equipment for additional details.
GOODWILL
Goodwill is an asset representing the
future economic benefits arising from other assets acquired in a business combination that are not individually identified and
separately recognized.
Goodwill is reviewed for impairment
at least annually, and when triggering events occur. The Company has the option to perform a qualitative assessment to determine
if an impairment is more likely than not to have occurred. If the Company can support the conclusion that it is not more likely
than not that the fair value of a reporting unit is less than its carrying amount, then the Company would not need to perform
the impairment test for the reporting unit. If the Company cannot support such a conclusion or does not elect to perform the qualitative
assessment, then the Company will compare the fair value of the reporting unit with its carrying amount, including goodwill. If
the fair value of the reporting unit exceeds its carrying value, no impairment charge is recognized. If the fair value of the
reporting unit is less than its carrying value, an impairment charge will be recognized for the amount by which the reporting
unit’s carrying amount exceeds its fair value. A significant amount of judgment is required in performing goodwill impairment
tests including estimating the fair value of a reporting unit and the implied fair value of goodwill. Management compared the
fair value of the reporting unit, the design segment which holds the goodwill, with its carrying value. Based on management’s
evaluation, there were no impairments to goodwill as of December 31, 2020.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
INTANGIBLE
ASSETS
Intangible
assets were acquired in conjunction with the acquisition of Blink Network LLC (“Blink Network”) during 2013 and were
recorded at their fair value at such time. Trademarks are amortized on a straight-line basis over their useful life of ten years.
Patents are amortized on a straight-line basis over the lives of the patent (twenty years or less), commencing when the patent
is approved and placed in service. Internal-use software is amortized over the term of the agreement with the software provider.
See Note 6 – Intangible Assets for additional details.
SEGMENTS
The
Company operates a single segment business. The Company’s Chief Executive Officer, who is the chief operating decision maker,
views the Company’s operating performance on a consolidated basis as Blink’s only business is the sale and distribution
of electric vehicle charging equipment and its associated revenues earned from customers and/or Property Partners who use equipment
connected to its network.
REVENUE
RECOGNITION
The
Company recognizes revenue pursuant to Topic 606 of the Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”), “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 previous 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
consolidated financial statements as of the date of adoption. As a result, a cumulative-effect adjustment was not required.
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 – Revenue is recognized at the point where the customer obtains control of the goods and the Company satisfies
its performance obligation, which generally is at the time it ships the product to the customer.
|
|
●
|
Network
fees and other – Represents a stand-ready obligation whereby the Company is obligated to perform over a period of
time and, as a result, revenue is recognized on a straight-line basis over the contract term. Network fees are billed annually.
|
|
●
|
Other
Primarily related to charging service revenue from non-company-owned charging stations.
Revenue is recognized from non-company-owned charging stations at the point when a particular charging session is completed
in accordance with a contractual relationship between the Company and the owner of the station. Other revenues are also comprised
of sales related to alternative fuel credits.
|
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
REVENUE
RECOGNITION - CONTINUED
The
following table summarizes our revenue recognized under ASC 606 in our consolidated statements of operations:
|
|
For The Years Ended
|
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Revenues - Recognized at a Point in Time
|
|
|
|
|
|
|
|
|
Charging service revenue - company-owned charging stations
|
|
$
|
772,540
|
|
|
$
|
1,359,218
|
|
Product sales
|
|
|
4,432,423
|
|
|
|
856,243
|
|
Other
|
|
|
529,782
|
|
|
|
166,710
|
|
Total Revenues - Recognized at a Point in Time
|
|
|
5,734,745
|
|
|
|
2,382,171
|
|
|
|
|
|
|
|
|
|
|
Revenues - Recognized Over a Period of Time:
|
|
|
|
|
|
|
|
|
Network and other fees
|
|
|
473,928
|
|
|
|
354,623
|
|
Total Revenues - Recognized Over a Period of Time
|
|
|
473,928
|
|
|
|
354,623
|
|
|
|
|
|
|
|
|
|
|
Total Revenue Under ASC 606
|
|
$
|
6,208,673
|
|
|
$
|
2,736,794
|
|
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 December 31, 2020, the Company had $431,218 related to contract liabilities where performance obligations have not yet been satisfied,
which has been included within deferred revenue on the consolidated balance sheets as of December 31, 2020. The Company expects to satisfy
$424,564 of its remaining performance obligations for network fees, warranty revenue, and product sales and recognize the revenue
within the next twelve months.
During
the year ended December 31, 2020, the Company recognized $466,388 of revenues related to network fees and warranty contracts,
which was included in deferred revenues as of December 31, 2019. During the year ended December 31, 2019, the Company recognized
$190,860 of revenues related to network fees and warranty contracts, which was included in deferred revenues as of December 31,
2018.
During
the years ended December 31, 2020 and 2019, there was no revenue recognized from performance obligations satisfied (or partially
satisfied) in previous periods.
Grants,
rebates and alternative fuel credits, which are not within the scope of ASC 606, pertaining to revenues and periodic expenses
are recognized as income when the related revenue and/or periodic expense are recorded. Grants and rebates related to EV charging
stations and their installation are deferred and amortized in a manner consistent with the related depreciation expense of the
related asset over their useful lives over the useful life of the charging station. During the years ended December 31, 2020 and
2019, the Company recorded $21,558 and $22,396, respectively, related to grant and rebate revenue. At December 31, 2020 and 2019,
there was $70,356 and $83,670, respectively, of deferred grant and rebate revenue to be amortized. During the years ended December
31, 2020 and 2019, the Company recognized $225,372 and $123,446, respectively, of revenue related to alternative fuel credits,
which is included within other revenue on the consolidated statement of operations.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
CONCENTRATIONS
As
of December 31, 2019, accounts receivable from a significant customer were approximately 10% of total accounts
receivable. During the year ended December 31, 2020, sales to a significant customer represented 25% and 34% of total revenue
and product sales, respectively. During the year ended December 31, 2020, sales to another significant customer represented 11%
and 15% of total revenue and product sales, respectively. During the year ended December 31, 2020, sales to another significant
customer represented 12% of product sales.
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.
The fair value of the award is measured on the grant date and then is 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.
LEASES
The
Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”)
assets and operating lease liabilities in our consolidated balance sheets.
ROU
assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make
lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on
the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, the Company uses
its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the
lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives.
Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that
option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
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 CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
INCOME
TAXES
The
Company recognizes deferred tax assets and liabilities for the expected future tax consequences of items that have been included
in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences
between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes
it is more likely than not that the assets will not be realized. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in the statements of operations in the period that includes the enactment date. As of December 31,
2020 and 2019, the Company maintained a full valuation allowance against its deferred tax assets, since it is more likely than
not that the future tax benefit on such temporary differences will not be realized.
The
Company recognizes the tax benefit from an uncertain income tax position only if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized
in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood
of being realized upon ultimate settlement by examining taxing authorities. The Company has open tax years going back to 2014
(or the tax year ended December 31, 2011 if the Company were to utilize its NOLs) which will be subject to audit by federal and
state authorities upon filing. The Company’s policy is to recognize interest and penalties accrued on uncertain income tax
positions in interest expense in the Company’s consolidated statements of operations. As of December 31, 2020 and 2019 the
Company had no liability for unrecognized tax benefits. The Company does not expect the unrecognized tax benefits to change significantly
over the next 12 months.
On
March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”).
The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side
social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net
interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. Under
ASC 740, the effects of new legislation are recognized upon enactment. Accordingly, the CARES Act is effective beginning in the
quarter ended March 31, 2020. The Company does not currently believe that such provisions will have a material impact on the Company’s
consolidated financial statements.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
NET
LOSS PER COMMON SHARE
Basic
net loss per common share is computed by dividing net loss attributable to common shareholders by the weighted average number
of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable
to common shareholders by the weighted average number of common shares outstanding, plus the number of additional common shares
that would have been outstanding if the common share equivalents had been issued (computed using the treasury stock or if converted
method), if dilutive.
The
following common share equivalents are excluded from the calculation of weighted average common shares outstanding because their
inclusion would have been anti-dilutive:
|
|
For the Years Ended
|
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Convertible preferred stock
|
|
|
-
|
|
|
|
1,642,628
|
|
Warrants
|
|
|
3,897,461
|
|
|
|
6,840,049
|
|
Options
|
|
|
572,838
|
|
|
|
265,550
|
|
Total potentially dilutive shares
|
|
|
4,470,299
|
|
|
|
8,748,227
|
|
COMMITMENTS
AND CONTINGENCIES
Liabilities
for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it
is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
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 STANDARDS
In
June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU
2016-13”) and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively,
“Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held.
The Company will be required to adopt this ASU for fiscal years beginning after December 15, 2022, including interim periods within
those fiscal years. The Company is currently evaluating the effect that adopting this new accounting guidance will
have on its consolidated financial statements and related disclosures.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
RECENTLY
ISSUED ACCOUNTING STANDARDS - CONTINUED
In
November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic
808 and Topic 606 (“ASU 2018-18”), which clarifies that certain transactions between participants in a collaborative
arrangement should be accounted for under ASC 606 when the counterparty is a customer. In addition, ASU 2018-18 precludes an entity
from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the
counterparty is not a customer for that transaction. For public business entities, the amendments in this update are effective
for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other entities, the
amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning
after December 15, 2021. Early adoption is permitted, including adoption in any interim period, (1) for public business entities
for periods for which financial statements have not yet been issued and (2) for all other entities for periods for which financial
statements have not yet been made available for issuance. The Company is currently evaluating the effect that adopting this new
accounting guidance will have on its consolidated financial statements and related disclosures.
In
November 2019, the FASB issued ASU 2019-10, “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging
(Topic 815), and Leases (Topic 842)” (“ASU 2019-10”). ASU 2019-10 (i) provides a framework to stagger effective
dates for future major accounting standards and (ii) amends the effective dates for certain major new accounting standards to
give implementation relief to certain types of entities. Specifically, ASU 2019-10 changes some effective dates for certain new
standards on the following topics in the FASB Accounting Standards Codification (ASC): (a) Derivatives and Hedging (ASC 815) –
now effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal years beginning after December
15, 2021; (b) Leases (ASC 842) - now effective for fiscal years beginning after December 15, 2020 and interim periods within fiscal
years beginning after December 15, 2021; (c) Financial Instruments — Credit Losses (ASC 326) - now effective for fiscal
years beginning after December 15, 2022, including interim periods within those fiscal years; and (d) Intangibles — Goodwill
and Other (ASC 350) - now effective for fiscal years beginning after December 15, 2019, including interim periods within those
fiscal years. The Company adopted certain provisions which have become effective during fiscal 2020 within ASU 2019-10 and its
adoption did not have a material impact on the Company’s financial statements and financial statement disclosures. The Company
is currently evaluating the effect that adopting the remaining new accounting guidance will have on its consolidated financial
statements and related disclosures.
In
November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments – Credit
Losses” (“ASU 2019-11”). ASU 2019-11 is an accounting pronouncement that amends ASU 2016-13, “Financial
Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” The amendments update
guidance on reporting credit losses for financial assets. These amendments affect loans, debt securities, trade receivables, net
investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded
from the scope that have the contractual right to receive cash. The amendments in this ASU are effective for annual reporting
periods beginning after December 15, 2022, including interim periods within those fiscal years. All entities may adopt the amendments
through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance
is effective (that is, a modified-retrospective approach). The Company is currently evaluating ASU 2019-11 and its impact on its
consolidated financial statements and financial statement disclosures.
In
December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,”
which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to
the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12
is effective for the Company beginning in fiscal 2021. The Company is currently assessing the impact that this pronouncement will
have on its consolidated financial statements.
In
January 2021, the FASB issued ASU No. 2021-01 “Reference Rate Reform — Scope,” which clarified the scope of
ASC 848 relating to contract modifications. The Company is evaluating the impacts of this guidance and has not determined whether
LIBOR transition and this guidance will have material effects on the Company’s business operations and consolidated financial
statements.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
3.
BUSINESS COMBINATION
BLUELA
CARSHARING, LLC ACQUISITION
On
September 11, 2020 (“Closing Date”), the Company’s wholly-owned subsidiary, Blink Mobility, LLC (the “Purchaser”),
entered into an Ownership Interest Purchase Agreement (the “Agreement”) with Blue Systems USA, Inc. (the “Seller”),
and pursuant thereto acquired from the Seller all of the ownership interests of BlueLA Carsharing, LLC (“BlueLA”).
The
consideration by the Purchaser for the acquisition of BlueLA included: (a) a cash payment of $1.00, which was paid to the Seller at closing,
and (b) in the event BlueLA timely amends its carsharing services agreement with the City of Los Angeles, California, a cash payment
to the Seller of $1,000,000, payable within three business days after such amendment (“Contingent Consideration”). The amendment
to the carsharing services agreement with the City of Los Angeles must be obtained by BlueLA no later than December 31, 2020, subject
to an extension to March 31, 2021 if a representative of the City of Los Angeles indicates to the Purchaser by the December 31, 2020
deadline its approval of the modifications to the carsharing services agreement, as more particularly outlined in the Agreement. As of
December 31, 2020, the Company did not receive an amendment nor indication to amend the carsharing service agreement thus the Company
is not obligated to the Contingent Consideration.
The
Agreement contains customary representations, warranties and covenants for a transaction of this type and nature. Pursuant to
the terms of the Agreement, the Seller will indemnify the Company, the Purchaser and their respective affiliates and representatives
for breaches of the Seller’s representations and warranties, breaches of covenants and losses related to pre-closing taxes
of BlueLA. The Purchaser has agreed to indemnify the Seller and its affiliates and representatives for any breaches of the Purchaser’s
representations and warranties, breaches of covenants and losses related to post-closing taxes of BlueLA. The representations
and warranties under the Agreement will survive until December 10, 2021.
Pursuant
to the Agreement, the Seller and BlueLA entered into a Transition Service Agreement pursuant to which the Seller and its affiliate,
Bluecarsharing, S.A.S., agreed to provide certain transition and support services to BlueLA and the Purchaser following the closing
and until December 31, 2020. The Seller also guaranteed the payment of up to $175,000 in parking fees payable by BlueLA to the
City of Los Angeles, and BlueLA agreed to pay the Seller for any as-yet uncollected grants and rebates that BlueLA is entitled
to obtain under its carsharing services agreement with the City of Los Angeles. In addition, the Seller agreed that, until September
10, 2023, the Seller will not and will cause its subsidiaries or affiliates not to directly or indirectly, (i) own, operate, acquire,
or establish a business, or in any other manner engage alone or with others in carsharing and/or electric vehicle charging operation,
or activity in the State of California (whether as an operator, manager, employee, officer, director, consultant, advisor, representative
or otherwise) excluding any de minimis ownership interest in any business); or (ii) intentionally induce or attempt to
induce any customer, supplier or other business relation of BlueLA to cease or refrain from working with BlueLA, or in any way
adversely interfere with the relationship between any such customer, supplier or other business relation and BlueLA. The Company
had acquired BlueLA in order to expand its presence in the State of California.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
3.
BUSINESS COMBINATION – CONTINUED
BLUELA
CARSHARING, LLC ACQUISITION - CONTINUED
Under
the terms of the City of Los Angeles Agreement, amongst other obligations, during the initial term of the City of Los Angeles
Agreement (defined as approximately six years from the effective date of the City of Los Angeles Agreement), BlueLA shall provide,
manage, operate and maintain (i) usage agreements for electric vehicles in a quantity of no less than one hundred (100) (see payment
terms of Car Lease Agreement) and (ii) charging stations in a quantity of no less than two hundred (200) at approximately forty
(40) locations for an aggregate cost of approximately $20,000 per month. Following the initial term, the City of Los Angeles shall
have the right to renew the City of Los Angeles Agreement for renewal terms of two (2) years each, with prior notice required,
for a maximum of three renewal terms.
The
Company has accounted for this transaction as a business combination under ASC 805. Accordingly, the assets acquired and the liabilities
assumed were recorded at their estimated fair value based on the date of acquisition. Goodwill from the acquisition principally
relates to the Contingent Consideration as well as the excess value of assumed liabilities over the fair value of identified net
assets. Since this transaction was a stock acquisition, goodwill is not tax deductible.
At
the date of acquisition, the preliminary purchase consideration consisted of cash, assumed liabilities and Contingent Consideration.
The preliminary purchase price allocation is expected to be completed within 12 months after the acquisition date. The Contingent
Consideration of $1,000,000 is non-interest bearing and was recorded at its estimated fair value of $245,000 based on a probability-weighted
valuation technique used to determine the fair value of the Contingent Consideration on the acquisition date. See Note 8 –
Fair Value Measurement for assumptions utilized in the estimate of fair value of the Contingent Consideration. During the fourth
quarter of 2020, the Company had recorded a measurement period adjustment in order reduce the Contingent Consideration to $0 as
of December 31, 2020 with a corresponding decrease to goodwill. The aggregate preliminary purchase price was allocated to
the assets acquired and liabilities assumed as follows:
Purchase price allocation
Purchase Consideration:
|
|
|
|
|
Cash
|
|
$
|
1
|
|
Assumed liabilities
|
|
|
87,860
|
|
|
|
|
|
|
Total Purchase Consideration
|
|
$
|
87,861
|
|
|
|
|
|
|
Less:
|
|
|
|
|
Right of use assets
|
|
|
597,812
|
|
Debt-free net working capital deficit
|
|
|
(286,324
|
)
|
Non-current portion of lease liabilities
|
|
|
(370,698
|
)
|
|
|
|
|
|
Fair Value of Identified Net Liabilities
|
|
|
(59,210
|
)
|
|
|
|
|
|
Remaining Unidentified Goodwill Value
|
|
$
|
147,071
|
|
The
components of debt free net working capital deficit are as follows:
Current assets:
|
|
|
|
|
Cash
|
|
$
|
3,379
|
|
Accounts receivable
|
|
|
72,599
|
|
Prepaid expenses and other current assets
|
|
|
88,212
|
|
|
|
|
|
|
Total current assets
|
|
$
|
164,190
|
|
|
|
|
|
|
Less current liabilities:
|
|
|
|
|
Accounts payable
|
|
|
162,640
|
|
Current portion of lease liabilities
|
|
|
227,114
|
|
Accrued expenses and other current liabilities
|
|
|
60,759
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
450,513
|
|
|
|
|
|
|
Debt free net working capital deficit
|
|
$
|
(286,323
|
)
|
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
3.
BUSINESS COMBINATION – CONTINUED
BLUELA
CARSHARING, LLC ACQUISITION - CONTINUED
The
below table provides select unaudited, pro forma consolidated results of operations as if the acquisition of BlueLA had occurred
on January 1, 2019. The pro forma results are not indicative of (i) the results of operations that would have occurred had the
operations of this acquisition actually occurred at the beginning of fiscal year 2019 or (ii) future results of operations.
|
|
For the Year Ended
December
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Revenues
|
|
$
|
6,698,868
|
|
|
$
|
3,336,902
|
|
Net loss
|
|
$
|
(20,510,966
|
)
|
|
$
|
(18,322,887
|
)
|
The
above pro forma information includes pro forma adjustments to remove the effect of the following non-recurring transactions:
|
1)
|
Gain
of $15,550,263 recognized in the Seller’s results of operations during the year ended December 31, 2020 related to the
forgiveness of debt associated with liabilities to the Seller’s parent;
|
|
2)
|
Interest
expense of $164,946 and $322,407 recognized in the Seller’s results of operations during the year ended December 31,
2020 and 2019, respectively, associated with the debt due to the Seller’s parent that was subsequently forgiven; and
|
|
3)
|
Nonrecurring
merger expenses of $17,535 recognized in the Company’s results of operations during the year ended December 31, 2020.
|
As
of the date of the acquisition and December 31, 2020, the Company expects to collect all contractual cash flows related to receivables
acquired in the acquisition. Acquisition related costs are expensed as incurred and are recorded within general and administrative
expenses on the consolidated statements of operations. Acquisition-related costs were $17,535 during the year ended December 31,
2020.
U-GO
STATIONS, INC. ACQUISITION
On
November 19, 2020 (“Closing Date”), the Company (the “Buyer”), entered into a Stock Purchase Agreement
(the “SPA Agreement”) with U-Go Stations, Inc. (the “Target”), and pursuant thereto acquired from the
Seller all of the ownership interests of U-Go Stations, Inc. (“U-Go”).
The
consideration by the Buyer for the acquisition of U-Go included: (a) 66,454 shares of the Company’s common stock and (b)
$60,000 cash payment on the later of (i) the first anniversary of the closing date; or (ii) the date on which the final project
of the Additional Projects is awarded to U-Go and paid in full, the funds shall be held in escrow by the escrow agent until the
second anniversary of the closing date. At the expiration of the escrow agreement, the balance of the $60,000, if any, shall be
converted to the Company’s common stock determined by a formula outlined in the agreement.
The
Agreement contains customary representations, warranties and covenants for a transaction of this type and nature. Pursuant to
the terms of the SPA Agreement, the Seller will indemnify the Company, the Purchaser and their respective affiliates and representatives
for breaches of the Seller’s representations and warranties, breaches of covenants and losses. The Purchaser has agreed
to indemnify the Seller and its affiliates and representatives for any breaches of the Purchaser’s representations and warranties,
breaches of covenants and losses.
The
Company has accounted for this transaction as a business combination under ASC 805. Accordingly, the assets acquired and the liabilities
assumed were recorded at their estimated fair value based on the date of acquisition. Goodwill from the acquisition principally
relates to the fair value of the common stock consideration as well as the excess value of assumed liabilities over the fair value
of identified net assets. Since this transaction was a stock acquisition, goodwill is not tax deductible.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
3.
BUSINESS COMBINATION – CONTINUED
U-GO
STATIONS, INC. ACQUISITION - CONTINUED
At
the date of acquisition, the preliminary purchase consideration consisted of the Company’s common stock. The preliminary
purchase price allocation is expected to be completed within 12 months after the acquisition date. The aggregate preliminary purchase
price was allocated to the assets acquired and liabilities assumed as follows:
Purchase price allocation
Purchase Consideration:
|
|
|
|
|
Share consideration
|
|
$
|
1,218,767
|
|
|
|
|
|
|
Total Purchase Consideration
|
|
$
|
1,218,767
|
|
|
|
|
|
|
Less:
|
|
|
|
|
Fixed assets
|
|
|
418,486
|
|
Notes payable
|
|
|
(165,000
|
)
|
Debt-free net working capital deficit
|
|
|
(388,221
|
)
|
|
|
|
|
|
Fair Value of Identified Net Assets
|
|
|
(134,735
|
)
|
|
|
|
|
|
Remaining Unidentified Goodwill Value
|
|
$
|
1,353,502
|
|
The
components of debt free net working capital deficit are as follows:
Current assets:
|
|
|
|
|
Cash
|
|
$
|
30,266
|
|
Accounts receivable
|
|
|
3,000
|
|
Prepaid expenses and other current assets
|
|
|
6,488
|
|
|
|
|
|
|
Total current assets
|
|
$
|
39,754
|
|
|
|
|
|
|
Less current liabilities:
|
|
|
|
|
Accounts payable and accrued expenses
|
|
|
427,975
|
|
|
|
|
|
|
Total current liabilities
|
|
$
|
427,975
|
|
|
|
|
|
|
Debt free net working capital deficit
|
|
$
|
(388,221
|
)
|
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
3.
BUSINESS COMBINATION – CONTINUED
U-GO
STATIONS, INC. ACQUISITION - CONTINUED
The
below table provides select unaudited, pro forma consolidated results of operations as if the acquisition of U-Go had occurred
on January 1, 2019. The pro forma results are not indicative of (i) the results of operations that would have occurred had the
operations of this acquisition actually occurred at the beginning of fiscal year 2019 or (ii) future results of operations.
|
|
For the Year Ended
December
31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Revenues
|
|
$
|
6,467,706
|
|
|
$
|
2,831,804
|
|
Net loss
|
|
$
|
(18,021,526
|
)
|
|
$
|
(9,734,286
|
)
|
The
above pro forma information includes pro forma adjustments to remove the effect of the following non-recurring transactions:
|
1)
|
Nonrecurring
merger expenses of $6,200 recognized in the Company’s results of operations during the year ended December 31, 2020.
|
As
of the date of the acquisition and December 31, 2020, the Company expects to collect all contractual cash flows related to receivables
acquired in the acquisition. Acquisition related costs are expensed as incurred and are recorded within general and administrative
expenses on the consolidated statements of operations. Acquisition-related costs were $6,200 during the year ended December 31,
2020.
4.
PREPAID EXPENSES AND OTHER CURRRENT ASSETS
As
of December 31, 2020, prepaid expenses and other current assets included alternative fuel credits of $30,937. As of December 31,
2019, alternative fuel credits were $476,992.
During
the year ended December 31, 2019, the Company entered into purchase commitments to acquire second generation charging stations
with an aggregate value of $1,563,600. As of December 31, 2020, the Company had a remaining purchase commitment of $2,308,000
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.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
5.
PROPERTY AND EQUIPMENT
Property
and equipment consist of the following:
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
EV charging stations
|
|
$
|
5,510,879
|
|
|
$
|
3,094,537
|
|
Software
|
|
|
1,020,761
|
|
|
|
464,997
|
|
Automobiles
|
|
|
1,331,436
|
|
|
|
13,950
|
|
Office and computer equipment
|
|
|
304,714
|
|
|
|
241,803
|
|
Leasehold improvements
|
|
|
53,540
|
|
|
|
44,893
|
|
Machinery and equipment
|
|
|
162,325
|
|
|
|
177,484
|
|
|
|
|
8,383,655
|
|
|
|
4,037,664
|
|
Less: accumulated depreciation
|
|
|
(2,747,592
|
)
|
|
|
(2,690,355
|
)
|
Property and equipment, net
|
|
$
|
5,636,063
|
|
|
$
|
1,347,309
|
|
Depreciation
and amortization expense related to property and equipment was $378,442 and $187,214 for the years ended December 31, 2020 and
2019, respectively, of which, $345,018 and $127,929, respectively, was recorded within cost of sales in the accompanying consolidated
statements of operations.
During
the years ended December 31, 2020 and 2019, the Company disposed of property and equipment with a net book value of $367,925 and
$5,488 which resulted in a loss on disposal of $278,698 and $65,488, respectively, which was included within general and administrative
expenses in the consolidated statements of operations.
During the years ended December 31, 2020
and 2019, the Company transferred charging stations of $1,980,188 and $663,624 from inventory into property and equipment.
6.
INTANGIBLE ASSETS
Intangible
assets consist of the following:
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Internal use software
|
|
$
|
184,141
|
|
|
$
|
184,141
|
|
Less: accumulated amortization
|
|
|
(138,106
|
)
|
|
|
(76,725
|
)
|
Intangible assets, net
|
|
|
46,035
|
|
|
$
|
107,415
|
|
On
October 16, 2018, the Company entered into a software license agreement with Oracle America, Inc. for the purchase of a three-year
license, related training, custom programming and implementation of NetSuite SuiteSuccess Wholesale/Distribution Emerging Edition
Cloud Service. The performance obligations of NetSuite commenced in December 2018. The Company’s payment obligations were
deferred for six months from NetSuite’s performance obligation date; however, the payment schedule was condensed to a 30-month
schedule of equal monthly payments. The Company’s outstanding liability of $59,572 and $131,762 as of December 31, 2020
and 2019, respectively, is included within other current liabilities and other liabilities on the consolidated balance sheets.
During
the year ended December 31, 2019, the Company determined the carrying value of its trademarks and patents was not recoverable
and, as a result, recorded an impairment charge of $83,135 which was included within general and administrative expenses on the
consolidated statement of operations.
Amortization
expense related to intangible assets was $61,380 and $89,442 for the years ended December 31, 2020 and 2019, respectively.
The
estimated future amortization expense is as follows:
For the Years Ending December 31,
|
|
Total
|
|
2021
|
|
$
|
46,035
|
|
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
7.
OTHER ASSETS
As
of December 31, 2020 and 2019, other assets primarily consisted of deposits for rent, utilities and professional services.
8.
ACCRUED EXPENSES
Accrued
expenses consist of the following:
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Accrued host fees
|
|
$
|
119,906
|
|
|
$
|
108,683
|
|
Accrued professional fees
|
|
|
109,809
|
|
|
|
40,518
|
|
Accrued wages
|
|
|
403,024
|
|
|
|
295,250
|
|
Accrued commissions
|
|
|
46,577
|
|
|
|
-
|
|
Warranty payable
|
|
|
10,000
|
|
|
|
12,000
|
|
Accrued income, property and sales taxes payable (Note 17)
|
|
|
357,467
|
|
|
|
417,669
|
|
Other accrued expenses
|
|
|
38,246
|
|
|
|
23,428
|
|
Total accrued expenses
|
|
$
|
1,085,028
|
|
|
$
|
897,548
|
|
See
Note 17 – Commitments and Contingencies – Taxes.
WARRANTY
PAYABLE
The
Company provides a limited product warranty against defects in materials and workmanship for its Blink Network residential and
commercial chargers, ranging in length from one to two years. The Company accrues for estimated warranty costs at the time of
revenue recognition and records the expense of such accrued liabilities as a component of cost of sales. Estimated warranty costs
are based on known warranty issues and anticipated warranty costs. Should actual cost to repair and failure rates differ significantly
from estimates, the impact of these unforeseen costs would be recorded as a change in estimate in the period identified. For the
year ended December 31, 2020, the change in reserve was approximately $(2,000). Warranty expenses for the years ended December
31, 2020 and 2019 were $120,412 and $187,016, respectively, which has been included within cost of revenues on the consolidated
statement of operations. As of December 31, 2020 and 2019 the Company recorded a warranty liability of $10,000 and $12,000, respectively,
which represents the estimated cost to repair those chargers under warranty or host owned chargers for which the host has procured
a maintenance contract. The Company records maintenance and repairs expenses for chargers it owns deployed at host locations as
incurred. The Company estimates an approximate cost of $70,000 to repair those deployed chargers which it owns as of December
31, 2020.
9.
ACCRUED ISSUABLE EQUITY
Accrued
issuable equity, which represents the fair value of unissued equity instruments that the Company was obligated to issue, consists
of the following:
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Warrants
|
|
$
|
178,234
|
|
|
$
|
5,102
|
|
Common stock
|
|
|
6,000
|
|
|
|
252,584
|
|
Total accrued issuable equity
|
|
$
|
184,234
|
|
|
$
|
257,686
|
|
The
common stock balance as of December 31, 2020 is primarily related to the fair value of compensation earned by the Company’s
Board members and officers that is to be settled by the future issuance of common stock.
See
Note 12 – Fair Value Measurement and Note 13 - Stockholders’ Equity for additional details.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
10.
NOTES PAYABLE
PAYCHECK
PROTECTION PROGRAM
On
May 7, 2020, the Company received $855,666 in connection with a loan (the “PPP Loan”) under the CARES Act Paycheck
Protection Program (the “PPP”). The PPP provides for loans to qualifying businesses for amounts of up to 2.5 times
their average monthly payroll expenses. The loan principal and accrued interest are forgivable, as long as the borrower uses loan
proceeds for eligible purposes during the covered period following disbursement, such as payroll, benefits, rent, and utilities,
and maintains its payroll levels. The amount of loan forgiveness is reduced if the borrower terminates employees or reduces salaries
during the covered period, subject to certain qualifications and exclusions. The unforgiven portion of the PPP loan is payable
over two years at an interest rate of 1%. The Company used PPP proceeds it received for purposes consistent with PPP criteria.
While the Company believes its use of PPP loan proceeds should meet the conditions for forgiveness of the loan, it cannot provide
assurance that it will not take actions that may cause the Company to be ineligible for loan forgiveness in whole or in part or
that PPP eligibility requirements may not change that would result in making the Company or the Company’s use of the PPP
proceeds ineligible. As of December 31, 2020, the Company had not received any notice of forgiveness of the PPP Loan. Once an
amount is forgiven under the PPP Loan, the Company intends to recognize a gain on forgiveness of note payable in the period in
which it obtained forgiveness. As of December 31, 2020, the Company utilized all $855,666 of the proceeds of the PPP Loan.
On
June 5, 2020, the President signed into law the Payroll Protection Program Flexibility Act (“PPP Flexibility Act”)
which made several critical changes to the PPP, which was created under the CARES Act. Under the act, the deferral period was
extended to the date the lender received the forgiven amount from SBA. If the Company does not apply for loan forgiveness within
10 months following the end of the covered period, the deferral period will end on the date that is 10 months after the last day
of the covered period. Following enactment of the CARES Act, SBA issued guidance requiring that no more than 25 percent of the
forgiven amount be attributable to non-payroll costs. This meant that if payroll costs did not account for at least 75 percent
of the total costs eligible for forgiveness, then the borrower’s loan forgiveness would be capped at the 75 percent level.
The PPP Flexibility Act loosens this requirement and increases the percentage for non-payroll costs to up to 40 percent. However,
the actual language of the PPP Flexibility Act requiring a borrower to use at least 60 percent of the loan amount for payroll
costs.
OTHER
NOTES PAYABLE
In
connection with the U-Go acquisition, the Company had also assumed $165,000 in notes payable, however, these notes were subsequently
repaid during the year ended December 31, 2020. See Note 3 – Business Combination – U-GO Stations, Inc. Acquisition
for details.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
11.
DEFERRED REVENUE
The
Company is the recipient of various private and governmental grants, rebates and marketing incentives. Reimbursements of periodic
expenses are recognized as income when the related expense is incurred. Private and government grants and rebates related to EV
charging stations and their installation are deferred and amortized in a manner consistent with the recognition of the related
depreciation expense of the related asset over their useful lives.
Grant,
rebate and incentive revenue recognized during the years ended December 31, 2020 and 2019 was $21,558 and $22,396, respectively.
During the year ended December 31, 2020, the Company recognized $452,556 of revenue related to warranty and network fees, of which,
$145,693 was included within deferred revenue as of December 31, 2019.
Deferred
revenue consists of the following:
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Interenergy
|
|
$
|
-
|
|
|
$
|
338,817
|
|
PA Turnpike
|
|
|
-
|
|
|
|
8,287
|
|
AFIG-PAT
|
|
|
70,356
|
|
|
|
75,382
|
|
Prepaid network and maintenance fees
|
|
|
288,119
|
|
|
|
145,692
|
|
Other
|
|
|
72,743
|
|
|
|
-
|
|
Total deferred revenue
|
|
|
431,218
|
|
|
|
568,178
|
|
Deferred revenue, non-current portion
|
|
|
(6,654
|
)
|
|
|
(565
|
)
|
Current portion of deferred revenue
|
|
$
|
424,564
|
|
|
$
|
567,613
|
|
It
is anticipated that deferred revenue as of December 31, 2020 will be recognized as follows:
For the Year Ending
|
|
|
|
December 31,
|
|
Revenue
|
|
|
|
|
|
2021
|
|
$
|
424,564
|
|
2022
|
|
|
6,654
|
|
Total
|
|
$
|
431,218
|
|
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
12.
FAIR VALUE MEASUREMENT
Assumptions
utilized in the valuation of Level 3 liabilities are described as follows:
|
|
For the Years Ended
|
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Risk-free interest rate
|
|
|
0.16%-1.69
|
%
|
|
|
1.47%-2.45
|
%
|
Contractual term (years)
|
|
|
1.00-8.00
|
|
|
|
1.00-10.00
|
|
Expected volatility
|
|
|
78%-143.8
|
%
|
|
|
74%-140
|
%
|
Expected dividend yield
|
|
|
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:
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Warrants Payable
|
|
|
|
|
|
|
|
|
Beginning balance as of January 1
|
|
$
|
5,102
|
|
|
$
|
5,965
|
|
Change in fair value of warrants payable
|
|
|
153,459
|
|
|
|
(863
|
)
|
Ending balance as of December 31
|
|
$
|
158,561
|
|
|
$
|
5,102
|
|
Assets
and liabilities measured at fair value on a recurring or nonrecurring basis are as follows:
|
|
December 31, 2020
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alternative fuel credits
|
|
$
|
-
|
|
|
$
|
30,937
|
|
|
$
|
-
|
|
|
$
|
30,937
|
|
Total assets
|
|
$
|
-
|
|
|
$
|
30,937
|
|
|
$
|
-
|
|
|
$
|
30,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants payable
|
|
|
-
|
|
|
|
-
|
|
|
|
158,561
|
|
|
|
158,561
|
|
Total liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
158,561
|
|
|
$
|
158,561
|
|
|
|
December 31, 2019
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alternative fuel credits
|
|
$
|
-
|
|
|
$
|
476,992
|
|
|
$
|
-
|
|
|
$
|
476,992
|
|
Marketable securities
|
|
|
3,150,332
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,150,332
|
|
Total assets
|
|
$
|
3,150,332
|
|
|
$
|
476,992
|
|
|
$
|
-
|
|
|
$
|
3,627,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants payable
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
5,102
|
|
|
$
|
5,102
|
|
Total liabilities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
5,102
|
|
|
$
|
5,102
|
|
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
13.
STOCKHOLDERS’ EQUITY
AUTHORIZED
CAPITAL
The
Company is authorized to issue 500,000,000 shares of common stock, $0.001 par value, and 40,000,000 shares of preferred stock,
$0.001 par value. The holders of the Company’s common stock are entitled to one vote per share. The preferred stock is designated
as follows: 20,000,000 shares to Series A Convertible Preferred Stock; 10,000 shares to Series B Convertible Preferred Stock;
250,000 shares to Series C Convertible Preferred Stock; 13,000 shares to Series D Convertible Preferred Stock; and 19,727,000
shares undesignated.
OMNIBUS
INCENTIVE PLANS
On
March 31, 2014, the Board of the Company approved the Company’s 2014 Omnibus Incentive Plan (the “2014 Plan”),
which enables the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units, phantom
stock and dividend equivalent rights 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 2014 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 110% of the fair market value on the date of the grant. The 2014 Plan is to be administered by 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 2014 Plan is 5,000,000, adjusted as provided in Section 11 of the 2014 Plan.
No awards may be issued after December 1, 2016. The 2014 Plan was approved by a majority of the Company’s shareholders on
April 17, 2014. As of December 31, 2020 and 2019, options to purchase 8,000 and 22,768 common stock were outstanding to employees
and former members of the of the Board of Directors and 43,166 shares of common stock were outstanding to consultants of the Company.
On
February 10, 2015, the Board of the Company approved the Company’s 2015 Omnibus Incentive Plan (the “2015 Plan”),
which enables the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units, phantom
stock and dividend equivalent rights 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 2015 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 110% of the fair market value on the date of the grant. The 2015 Plan is to be administered by 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 2015 Plan is 5,000,000, adjusted as provided in Section 11 of the 2015 Plan.
No awards may be issued after March 11, 2017. The 2015 Plan was approved by a majority of the Company’s shareholders on
April 21, 2015. As of December 31, 2020 and 2019, options to purchase 1,300 shares of common stock were outstanding to employees.
As of December 31, 2020 and 2019, 9,788 shares of common stock were outstanding to consultants of the Company.
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.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
13.
STOCKHOLDERS’ EQUITY – CONTINUED
OMNIBUS
INCENTIVE PLANS - CONTINUED
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 December 31, 2020 and 2019, options to purchase 617,071 and 239,082 shares of common stock were outstanding to employees, respectively.
As of December 31, 2020 and 2019, 1,151,299 and 849,919 shares of common stock were outstanding to employees and members of the
Board of Directors of the Company, respectively. As of December 31, 2020 and 2019, there were 3,231,630 and 3,910,999 securities
available for future issuance under the 2018 Plan, respectively.
AT-THE-MARKET
OFFERING
On
April 17, 2020, the Company entered into a sales agreement (“Sales Agreement”) with Roth Capital Partners, LLC (the
“Agent”) to conduct an “at-the-market” equity offering program (the “ATM”), pursuant to which
the Company may issue and sell from time-to-time shares of its common stock having an aggregate offering price of up to
$20,000,000 (the “Shares”) through the Agent. Sales of the Shares under the Sales Agreement were made in transactions
that were deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended,
including sales made by means of ordinary brokers’ transactions, including on the Nasdaq Capital Market, at market prices
or as otherwise agreed to with the Agent. A “shelf” registration statement on Form S-3 for the Shares was filed with
the SEC, which became effective on September 16, 2019, and a prospectus supplement thereto was filed with the SEC on April 17,
2020.
Since
April 17, 2020 and through December 31, 2020, the Company sold an aggregate of 3,597,833 shares of common stock under the ATM
program for aggregate gross proceeds of $19,999,984, less issuance costs of $819,438 which were recorded as a reduction to additional
paid-in capital.
PREFERRED
STOCK
SERIES
D CONVERTIBLE PREFERRED STOCK
On
February 22, 2019, JMJ elected to convert 16 shares of Series D Convertible Preferred Stock into 5,128 shares of the Company’s
common stock at a conversion price of $3.12 per share.
During
the year ended December 31, 2020, a holder elected to convert 5,125 shares of Series D Convertible Preferred Stock into 1,642,628
shares of the Company’s common stock at a conversion price of $3.12 per share. The Company determined that the Series D
Convertible Preferred Stock did not include a beneficial conversion feature. There are no longer any currently outstanding shares
of Series D Convertible Preferred Stock.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
13.
STOCKHOLDERS’ EQUITY – CONTINUED
COMMON
STOCK
On
February 19, 2019, the Company retired 8,066 shares of common stock in accordance with a settlement agreement with the former
members of 350 Green LLC. See Note 17 – Commitments and Contingencies – Litigation and Disputes for additional details.
During
the year ended December 31, 2019, the Company issued an aggregate of 178,615 shares of common stock to independent board members
and an former officer of the Company pursuant to a certain agreement with an aggregate grant date fair value of $474,513 such
amount was previously accrued for as of December 31, 2018.
During
the year ended December 31, 2019, the Company issued an aggregate of 28,831 shares of common stock to consultants with an aggregate
issuance date fair value of $73,728
During
the year ended December 31, 2020, the Company issued an aggregate of 113,027 shares of common stock to employees
of the Company with an aggregate issuance date fair value of $163,782.
During
the year ended December 31,2020 the Company issued an aggregate of 17,695 shares of common stock as compensation to consultants
with an aggregate issuance date fair value of $161,697.
During
the year ended December 31, 2020, the Company issued 102,402 shares of common stock to employees with a grant
date fair value of $200,920. Such amount was previously accrued for as of December 31, 2019.
See
Note 9 – Stockholder’s Equity - Preferred Stock for details associated with the issuance of common stock in connection
with the conversion of Series D Convertible Preferred Stock.
See
elsewhere within this note, Note 3- Business Combinations and Note 15 – Related Parties for additional details.
STOCK-BASED
COMPENSATION
The
Company recognized stock-based compensation expense related to common stock, stock options and warrants for the years ended December
31, 2020 and 2019 of $948,270 and $728,541, respectively, which is included within compensation expense on the consolidated statement
of operations. As December 31, 2020, there was $658,140 of unrecognized stock-based compensation expense that will be recognized
over the weighted average remaining vesting period of 2.49 years.
Pursuant
to the compensation plan approved by the Company’s board of directors on December 11, 2017, each year on the date of the
annual meeting of stockholders, each non-employee director of the Company receives an annual award for the number of shares of the
Company’s common stock that has a market value of $50,000 based on the closing price of the common stock on the last business
day preceding the grant date (the “2017 Board Plan”). The lead independent director receives an additional annual award
for the number of shares of the Company’s common stock that has a market value of $15,000. The stock award fully vests the
sooner of: (i) 12 months from grant; or (ii) one day before the following year’s annual meeting. All stock awards include a
cash payment upon vesting to cover expected ordinary income tax charges and is calculated at the highest individual personal income
tax rate. During the fourth quarter of 2020, the Company paid to the Company’s non-employee directors $2.3 million related to
the gross-up tax cash payment pursuant to the 2017 Board Plan as a result of the vesting on November 23, 2020 of the annual award to
the Company’s non-employee directors granted on December 12, 2019 and March 19, 2020.
WARRANT
AND OPTION VALUATION
The
Company has computed the fair value of certain warrants and options granted using the Black-Scholes option pricing model. Option
forfeitures are reduction of previous expensed amount at the time of occurrence. The expected term used for options issued is
the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified”
method to develop an estimate of the expected term of “plain vanilla” employee option grants. The Company is utilizing
an expected volatility figure based on a review of the historical volatility of the Company over a period equivalent to the expected
life of the instrument being valued. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon
bonds with a remaining term consistent with the expected term of the instrument being valued.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
13.
STOCKHOLDERS’ EQUITY – CONTINUED
STOCK
OPTIONS
In
applying the Black-Scholes option pricing model to options granted, the Company used the following assumptions:
|
|
For the Years Ended
|
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Risk free interest rate
|
|
|
0.33%-1.44
|
%
|
|
|
1.52%-1.71
|
%
|
Expected term (years)
|
|
|
5.00-8.00
|
|
|
|
5.00-6.00
|
|
Expected volatility
|
|
|
121.8%-139.9
|
%
|
|
|
131.10%-138.40
|
%
|
Expected dividends
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
During
the year ended December 31, 2019, the Company issued five and ten-year immediately vested options to purchase an aggregate of
4,700 shares of common stock to the Chief Executive Officer with exercise prices ranging from $2.55 to $3.30 per share. The options
had an aggregate grant date fair value of $12,522, which was recognized immediately.
During
the year ended December 31, 2019, the Company granted options to purchase an aggregate of 72,000 shares of common stock to an
executive with an exercise price of $3.45 per share. The options vest ratably over a six-month period from the date of grant.
The options had an aggregate grant date fair value of $220,831, which will be recognized ratably over the vesting period. During
the year ended December 31, 2019, the Company recognized $147,221 of expense related to this award.
During
the year ended December 31, 2019, the Company granted five-year options to purchase an aggregate of 4,467 shares of common
stock to an executive with an exercise prices ranging from $2.45-$2.63 per share. 2,313 options vested immediately, and
the remainder will vest on September 28, 2020. The options had an aggregate grant date fair value of $4,467 which will be recognized
ratably over the vesting period.
During
the year ended December 31, 2019, the Company granted options to employees with an aggregate value of $122,011 for bonuses earned
during 2018. The option grants will vest in three tranches with each tranche having a six-year, seven-year, and eight-year
contractual term. The tranches vest yearly from the date of grant. The number of options issued under this award is 42,176.
The Company recognized $40,671 expense related to the award during the year ended December 31, 2019.
During
the year ended December 31, 2019, the Company granted six-year vested, options to an employee to purchase an aggregate of 260,000
shares of common stock with exercise prices and value to be determined on each grant date. One-third of the options will be granted
immediately and will vest one year from the date of grant. The second third will be granted on the first anniversary of the first
grant and will be vest one year from the date of grant. The final third will be granted on the first anniversary of the first
grant and will be vest one year from the date of grant. The Company recognized $47,902 of expense related to these awards during
the year ended December 31, 2019.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
13.
STOCKHOLDERS’ EQUITY – CONTINUED
STOCK
OPTIONS – CONTINUED
During
April 2020, the Company granted five-year options to purchase an aggregate of 160,416 shares of common stock to executives with
an exercise prices ranging from of $1.83-$2.01 per share. 54,325 options will vest one year from the date of grant, 53,433 options
will vest the second year and 52,658 will vest the third year. The options had an aggregate grant date fair value of $180,000,
which will be recognized over the vesting period.
During
June 2020, the Company granted five-year options to purchase an aggregate of 150,000 shares of common stock to executives with
an exercise price of $2.20 per share. One-third of the options will vest on February 7, 2021, the second third will vest on February
7, 2022 and the final third will vest on February 7, 2023. The options had an aggregate grant date fair value of $298,911, which
will be recognized over the vesting period.
During
September 2020, the Company granted five-year options to purchase an aggregate of 603 shares of common stock to employees with
an exercise price of $9.14 per share. The options vest on September 27, 2021. The options had an aggregate grant date fair value
of $5,000, which will be recognized over the vesting period.
During
October 2020, the Company granted five-year, immediately vested options to purchase an aggregate of 10,000 shares of common stock
to an employee with an exercise price of $9.64 per share. The options had an aggregate grant date fair value of $85,787, which
will be recognized over the vesting period.
During
the year ended December 31, 2020, the Company issued an aggregate of 8,256 shares of the Company’s common stock pursuant
to the cashless exercise of options.
A
summary of the option activity during the year ended December 31, 2020 is presented below:
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Number of
|
|
|
Exercise
|
|
|
Life
|
|
|
Intrinsic
|
|
|
|
Shares
|
|
|
Price
|
|
|
In Years
|
|
|
Value
|
|
Outstanding, January 1, 2020
|
|
|
265,550
|
|
|
$
|
33.10
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
511,073
|
|
|
|
2.21
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(15,879
|
)
|
|
|
17.03
|
|
|
|
|
|
|
|
|
|
Cancelled/forfeited/expired
|
|
|
(187,906
|
)
|
|
|
3.79
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2020
|
|
|
572,838
|
|
|
$
|
4.38
|
|
|
|
5.2
|
|
|
$
|
22,040,063
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable, December 31, 2020
|
|
|
199,607
|
|
|
$
|
8.53
|
|
|
|
1.4
|
|
|
$
|
6,893,331
|
|
The
following table presents information related to stock options at December 31, 2020:
|
|
|
Options Outstanding
|
|
|
Options Exercisable
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
Range of
|
|
|
Average
|
|
|
Outstanding
|
|
|
Average
|
|
|
Exercisable
|
|
Exercise
|
|
|
Exercise
|
|
|
Number of
|
|
|
Remaining Life
|
|
|
Number of
|
|
Price
|
|
|
Price
|
|
|
Options
|
|
|
In Years
|
|
|
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.73-$9.00
|
|
|
|
2.16
|
|
|
|
533,395
|
|
|
|
1.0
|
|
|
|
165,767
|
|
$
|
15.50-30.00
|
|
|
|
20.76
|
|
|
|
13,503
|
|
|
|
0.2
|
|
|
|
7,900
|
|
$
|
31.13-$50.50
|
|
|
|
41.48
|
|
|
|
25,940
|
|
|
|
0.2
|
|
|
|
25,940
|
|
|
|
|
|
|
|
|
|
|
572,838
|
|
|
|
1.4
|
|
|
|
199,607
|
|
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
13.
STOCKHOLDERS’ EQUITY – CONTINUED
STOCK
WARRANTS
See
Note 8 – Accrued Issuable Equity, Note 12– Fair Value Measurement, and elsewhere within this note for additional details.
During
the year ended December 31, 2020, the Company issued an aggregate of 3,827,181 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 $16,264,687.
During
the year ended December 31, 2020, the Company issued an aggregate of 253,038 shares of the Company’s common stock pursuant
to the cashless exercise of warrants.
The
following table accounts for the Company’s warrant activity for the year ended December 31, 2020:
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Number of
|
|
|
Exercise
|
|
|
Life
|
|
|
Intrinsic
|
|
|
|
Shares
|
|
|
Price
|
|
|
In Years
|
|
|
Value
|
|
Outstanding, January 1, 2020
|
|
|
6,835,811
|
|
|
$
|
4.64
|
|
|
|
|
|
|
|
|
|
Issued
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(2,942,588
|
)
|
|
|
4.25
|
|
|
|
|
|
|
|
|
|
Cancelled/forfeited/expired
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2020
|
|
|
3,893,223
|
|
|
$
|
4.93
|
|
|
|
2.2
|
|
|
$
|
147,496,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable, December 31, 2020
|
|
|
3,893,223
|
|
|
$
|
4.93
|
|
|
|
2.2
|
|
|
$
|
147,496,067
|
|
The
following table presents information related to stock warrants at December 31, 2020:
|
|
|
Warrants
Outstanding
|
|
|
Warrants
Exercisable
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
|
|
|
Range
of
|
|
|
Average
|
|
|
Outstanding
|
|
|
Average
|
|
|
Exercisable
|
|
Exercise
|
|
|
Exercise
|
|
|
Number
of
|
|
|
Remaining
Life
|
|
|
Number
of
|
|
Price
|
|
|
Price
|
|
|
Warrants
|
|
|
In
Years
|
|
|
Warrants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.25-35.00
|
|
|
$
|
4.70
|
|
|
|
3,876,564
|
|
|
|
2.1
|
|
|
|
3,876,564
|
|
$
|
75.00-$150.00
|
|
|
$
|
57.99
|
|
|
|
16,659
|
|
|
|
0.0
|
|
|
|
16,659
|
|
|
|
|
|
|
|
|
|
|
3,893,223
|
|
|
|
2.2
|
|
|
|
3,893,223
|
|
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
14.
INCOME TAXES
The
Company is subject to U.S. federal and various state income taxes.
During
the year ended December 31, 2019 and into the first quarter of fiscal 2020, the Company brought itself into compliance with respect
to all federal, state and local income and franchise tax filings through fiscal 2018. As part of the filings of the Company’s
net operating loss carryforwards of were reduced by approximately $30 million.
The
income tax provision (benefit) for the years ended December 31, 2020 and 2019 consists of the following:
|
|
Year Ended December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Federal:
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred
|
|
|
(4,451,900
|
)
|
|
|
4,684,600
|
|
|
|
|
|
|
|
|
|
|
State:
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
-
|
|
|
$
|
-
|
|
Deferred
|
|
|
(1,059,700
|
)
|
|
|
1,115,400
|
|
|
|
|
(5,511,600
|
)
|
|
|
5,800,000
|
|
Change in valuation allowance
|
|
|
5,511,600
|
|
|
|
(5,800,000
|
)
|
Income tax provision (benefit)
|
|
$
|
-
|
|
|
$
|
-
|
|
No
current tax provision has been recorded for the years ended December 31, 2020 and 2019 because the Company had net operating losses
for federal and state tax purposes. The net operating loss carryovers may be subject to annual limitations under Internal Revenue
Code Section 382, and similar state provisions, should there be a greater than 50% ownership change as determined under the applicable
income tax regulations. The amount of the limitation would be determined based on the value of the company immediately prior to
the ownership change and subsequent ownership changes could further impact the amount of the annual limitation. An ownership change
pursuant to Section 382 may have occurred in the past or could happen in the future, such that the NOLs available for utilization
could be significantly limited. The Company will perform a Section 382 analysis in the future. The related decrease in the deferred
tax asset was offset by the decrease in valuation allowance.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
14.
INCOME TAXES – CONTINUED
A
reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:
|
|
For the Year Ended
|
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Tax benefit at federal statutory rate
|
|
|
(21.0
|
)%
|
|
|
(21.0
|
)%
|
State income taxes, net of federal benefit
|
|
|
(5.0
|
)%
|
|
|
(5.0
|
)%
|
Permanent differences
|
|
|
|
|
|
|
|
|
Stock Compensation
|
|
|
(5.0
|
)%
|
|
|
0.0
|
%
|
Other
|
|
|
1.0
|
%
|
|
|
0.8
|
%
|
Tax credits
|
|
|
0.0
|
%
|
|
|
0.2
|
%
|
Prior period differences
|
|
|
(1.0
|
)%
|
|
|
85.1
|
%
|
Change in valuation allowance
|
|
|
31.0
|
%
|
|
|
(60.1
|
)%
|
Effective income tax rate
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
The
Company has determined that a valuation allowance for the entire net deferred tax asset is required. A valuation allowance is
required if, based on the weight of evidence, it is more likely than not that some or the entire portion of the deferred tax asset
will not be realized. After consideration of all the evidence, both positive and negative, management has determined that a full
valuation allowance is necessary to reduce the deferred tax asset to zero, the amount that will more likely not be realized.
The
disaggregation of the Company’s domestic and foreign pre-tax loss for the years ended December 31, 2020 and 2019 is as follows:
|
|
Year Ended December 31,
|
|
|
|
2020
|
|
|
2019
|
|
U.S.
|
|
$
|
(17,636,705
|
)
|
|
$
|
(9,433,649
|
)
|
Foreign
|
|
|
(210,762
|
)
|
|
|
(214,851
|
)
|
Total
|
|
$
|
(17,847,467
|
)
|
|
$
|
(9,648,500
|
)
|
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
14.
INCOME TAXES – CONTINUED
The
tax effects of temporary differences that give rise to deferred tax assets and liabilities are presented below:
|
|
As of December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Deferred Tax Assets:
|
|
|
|
|
|
|
|
|
Net operating loss carryforwards
|
|
$
|
26,066,000
|
|
|
$
|
20,650,000
|
|
Stock-based compensation
|
|
|
400,900
|
|
|
|
240,700
|
|
Accruals
|
|
|
127,700
|
|
|
|
129,400
|
|
Goodwill
|
|
|
728,500
|
|
|
|
728,500
|
|
Intangible assets
|
|
|
211,600
|
|
|
|
299,800
|
|
Inventory
|
|
|
56,400
|
|
|
|
178,900
|
|
Allowance for doubtful accounts
|
|
|
92,600
|
|
|
|
18,700
|
|
Capital loss
|
|
|
22,100
|
|
|
|
39,200
|
|
Tax credits
|
|
|
563,100
|
|
|
|
508,100
|
|
|
|
|
28,268,900
|
|
|
|
22,793,300
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Liabilities
|
|
|
|
|
|
|
|
|
Alternative fuel credits
|
|
|
-
|
|
|
|
(32,100
|
)
|
Fixed assets
|
|
|
(31,300
|
)
|
|
|
(43,200
|
)
|
Deferred revenue
|
|
|
(8,000
|
)
|
|
|
-
|
|
|
|
|
(39,300
|
)
|
|
|
(75,300
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
|
28,229,600
|
|
|
|
22,718,000
|
|
Valuation allowance
|
|
|
(28,229,600
|
)
|
|
|
(22,718,000
|
)
|
Deferred tax assets, net of valuation allowance
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Change in valuation allowance
|
|
$
|
5,511,600
|
|
|
$
|
(5,800,000
|
)
|
As
of December 31, 2020, the Company had net operating loss carry forwards for federal and state income tax purposes of approximately
$100.2 million, of which, $70.2 million may be used to offset future taxable income through 2038 and the remaining
$30.0 million of net operating loss carry forwards incurred in 2020 and 2019 do not have an expiration date. The Company
has approximately $563,000 in business credits expiring between 2030 and 2040.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
15.
RELATED PARTIES
TRANSACTIONS
WITH PALISADES CAPITAL MANAGEMENT LLC
Mr.
Engel is currently a consultant to Palisades Capital Management LLC which serves as an investment advisor with regard to our marketable
securities portfolio. For the years ended December 31, 2020 and 2019, the Company paid Palisades Capital Management LLC fees of
$14,092 and $29,057, respectively.
JOINT
VENTURE
The
Company and a group of three Cyprus entities entered into a shareholders’ agreement on February 11, 2019, pertaining to
the parties’ respective shareholdings in a new joint venture entity, Blink Charging Europe Ltd. (the “Entity”),
that was formed under the laws of Cyprus on the same date. Pursuant to the agreement, the Company is not required to fund operating
losses. The Company owns 40% of the Entity while the other three entities own 60% of the Entity. The Entity currently owns
100% of a Greek subsidiary, Blink Charging Hellas SA (“Hellas”), which started operations in the Greek EV market.
There are currently no plans for the Company to make any capital contributions or investments. During year ended December 31,
2020 and 2019, the Company recognized sales of $272,964 and $42,000, respectively, to Hellas. As of December 31, 2020 and
2019 the Company had a receivable from Hellas of approximately $0 and $42,000, respectively. The Company determined that the Entity is a variable interest entity, however,
the Company does not have a controlling financial interest and, as a result, the Company is not required to consolidate the Entity and
instead has applied equity method accounting to its investment in the Entity. From inception through December
31,2020, the Entity has not generated net income and, as a result, pursuant to ASC 323, the Company has not recorded a gain or
loss on its equity method investment in the Entity during the years ended December 31, 2020 and 2019.
16.
LEASES
OPERATING
LEASES
See
Note 3 – Business Combination regarding details associated with lease agreements for (i) certain parking locations in connection
with the City of Los Angeles Agreement.
On
March 5, 2019, the Company entered into a 26-month lease agreement for an additional 1,241 square feet of office space in its
current Miami Beach office building, beginning April 1, 2019 and ending May 31, 2021. The tenant and landlord have the option
to cancel the contract after the first six months with 90 day’s written notice. The lease does not contain an option to
extend past the lease term.
On
November 7, 2019 the Company entered into a 18-month lease agreement for an additional 1,600 square feet of office space in its
current Miami Beach office building, beginning December 1, 2019 and ending May 31, 2021. The tenant and landlord have the option
to cancel the contract after the first six months with 90 day’s written notice. The lease does not contain an option to
extend past the lease term.
As
of December 31, 2020, the Company had no leases that were classified as a financing lease. As of December 31, 2020, the Company
did not have additional operating and financing leases that have not yet commenced.
Total
operating lease expenses for the year ended December 31, 2020 and 2019 was $220,001 and $409,419, respectively, and is recorded
in other operating expenses on the consolidated statements of operations. Operating lease expenses consist of rent expense, CAM
adjustments and other expenses.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
16.
LEASES – CONTINUED
OPERATING
LEASES – CONTINUED
Supplemental
cash flows information related to leases was as follows:
|
|
For the Year Ended
|
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
|
|
|
Operating cash flows from operating leases
|
|
$
|
206,662
|
|
|
$
|
157,672
|
|
|
|
|
|
|
|
|
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
|
|
|
|
|
|
|
Operating leases
|
|
$
|
597,812
|
|
|
$
|
143,339
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Remaining Lease Term
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
2.10
|
|
|
|
1.42
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Discount Rate
|
|
|
|
|
|
|
|
|
Operating leases
|
|
|
6.0
|
%
|
|
|
6.0
|
%
|
Future
minimum payments under non-cancellable leases as of December 31, 2020 were as follows:
For the Years Ending December 31,
|
|
Amount
|
|
2021
|
|
$
|
398,469
|
|
2022
|
|
|
249,320
|
|
2023
|
|
|
72,728
|
|
Total future minimum lease payments
|
|
|
720,517
|
|
Less: imputed interest
|
|
|
(31,101
|
)
|
Total
|
|
$
|
689,416
|
|
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
17.
COMMITMENTS AND CONTINGENCIES
PATENT
LICENSE AGREEMENT
On
March 29, 2012, the Company, as licensee (the “Licensee”) entered into an exclusive patent license agreement with
the Executive Chairman of the Board and Balance Holdings, LLC (an entity controlled by the Executive Chairman) (collectively,
the “Licensor”), whereby the Company agreed to pay a royalty of 10% of the gross profits received by the Company from
commercial sales and/or use of two provisional patent applications, one relating to an inductive charging parking bumper and one
relating to a process which allows multiple EVs to plug into an EV charging station simultaneously and charge as the current becomes
available.
On
March 11, 2016, the Licensee and the Licensor entered into an agreement related to the March 29, 2012 patent license agreement.
The parties acknowledged that the Licensee has paid a total of $8,525 in registration and legal fees for the U.S. Provisional
Patent Application No. 61529016 (the “Patent Application”) (related to the inductive charging parking bumper) to date.
Effective March 11, 2016, the patent license agreement, solely with respect to the Patent Application and the parties’ rights
and obligations thereto, was terminated. The Executive Chairman of the Board agreed to be solely responsible for all future costs
and fees associated with the prosecution of the patent application. In the event the Patent Application is successful, the Executive
Chairman of the Board shall grant a credit to the Licensee in the amount of $8,525 to be applied against any outstanding amount(s)
owed to him. If the Licensee does not have any outstanding payment obligations to the Executive Chairman of the Board at the time
the Patent Application is approved, the Executive Chairman of the Board shall remit the $8,525 to the Licensee within twenty (20)
days of the approval. The parties agreed to a mutual release of any claims associated with the patent license agreement. As of
December 31, 2020, the Company has not paid nor incurred any royalty fees related to this patent license agreement.
TAXES
During
the third quarter of 2019, the Company filed its Federal corporate income tax returns for the years ended December 31, 2014, 2015,
2016, 2017 and 2018. The Company has sustained losses for the years ended December 31, 2014, 2015, 2016, 2017, and 2018. The Company
has determined that no tax liability, other than required minimums and related interest and penalties, has been incurred. The
Company is current with its state and local tax filings in the first calendar quarter of 2020.
LITIGATION
AND DISPUTES
In
July 2017, the Company was sued by Zwick and Banyai PLLC and Jack Zwick. The case alleges a breach of contract and unjust enrichment
for failure to pay invoices in the aggregate amount of $53,069 for services rendered, plus interest and costs. The Company is
one of six defendants in the case.
On
October 26, 2018, the Company filed amended affirmative defenses. Following that, there was no record activity in the case and
on September 20, 2019, the Court entered its Notice of Lack of Prosecution and Order to Appear for Hearing on November 19, 2019.
When Plaintiffs failed to appear for the hearing, the Court dismissed the case. A couple of weeks later, Plaintiffs filed a motion
to vacate the dismissal, asserting that they had moved offices in June of 2019, and were never provided notice of the hearing
at their new address. At the January 23, 2020 hearing on Plaintiffs’ motion to vacate, the Court vacated the dismissal over
the objections of counsel and the case is once again pending.
On
January 31, 2020, the Company’s new attorney for this matter filed a notice of appearance and took over as defense counsel.
On February 11, 2020, Jack Zwick and Zwick & Banyai PLLC each served a Request for Production of Documents on the Company,
and Zwick & Banyai PLLC served a set of 14 Interrogatories. On July 20, 2020 the Company settled this case for approximately
$48,000. On July 24, 2020, the Company was dropped as a party from the case.
On
March 26, 2020, James Christodoulou, the former President and Chief Operating Officer of the Company, filed a Complaint in the
Miami-Dade County Court, State of Florida, James Christodoulou vs. Blink Charging Co. et al. The Complaint asserted claims against
the Company, as well as Michael Farkas, Aviv Hillo and Yechiel Baron. Mr. Farkas is Chairman of the Board and Chief Executive
Officer. Messrs. Hillo and Baron are the Company’s General Counsel and Assistant General Counsel, respectively. The Complaint
asserted claims for breach of contract in connection with Mr. Christodoulou’s termination by the Company in March 2020,
as well as claims under Florida state law for alleged retaliatory termination and slander. Among other things, Mr. Christodoulou
asserted that the Company terminated his employment without cause and in retaliation for his alleged plan to disclose that Company
executives had engaged in alleged “questionable business practices.” As previously reported in the Company’s
Current Report on Form 8-K filed with the SEC on October 9, 2020, the litigation between the Company and its former President
pending in Miami-Dade County Court, State of Florida, James Christodoulou vs. Blink Charging Co. et al., has been settled for
an aggregate sum of $400,000, of which $125,000 related to compensation related matters. As a result, the Company has recorded
a loss on settlement of $400,000 within operating expenses on its consolidated statements of operations during the year ended
December 31, 2020.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
17.
COMMITMENTS AND CONTINGENCIES – CONTINUED
LITIGATION
AND DISPUTES – CONTINUED
Effective
October 9, 2020, the Company settled the litigation brought by James Christodoulou, its former President, and Chief Operating
Officer. In connection with a review arising from the settlement process, the Company determined that the termination of Mr. Christodoulou
should be and has been reclassified as ‘without cause.’ The settlement includes compensation consistent with the reclassification.
On
August 24, 2020, a purported securities class action lawsuit, captioned Bush v. Blink Charging Co. et al., Case No. 20-cv-23527, was
filed in the United States District Court for the Southern District of Florida against the Company, Michael Farkas (Blink’s
Chairman of the Board and Chief Executive Officer), and Michael Rama (Blink’s Chief Financial Officer) (the “Bush
Lawsuit”). On September 1, 2020, another purported securities class action lawsuit, captioned Vittoria v. Blink Charging Co.
et al., Case No. 20-cv-23643, was filed in the United States District Court for the Southern District of Florida against the same
defendants and seeking to recover the same alleged damages (the “Vittoria Lawsuit”). On October 1, 2020, the court
consolidated the Vittoria Lawsuit with the Bush Lawsuit and on December 21, 2020 the court appointed Tianyou Wu, Alexander Yu and H.
Marc Joseph to serve as the Co-Lead Plaintiffs. The Co-Lead Plaintiffs filed an Amended Complaint on February 19, 2021. The Amended
Complaint alleges, among other things, that the defendants made false or misleading statements about the size and functionality of
the Blink Network, and asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The Amended Complaint
does not quantify damages but seeks to recover damages on behalf of investors who purchased or otherwise acquired Blink’s
common stock between March 6, 2020 and August 19, 2020. Currently, the deadline for Blink’s motion to dismiss the
Amended Complaint is April 20, 2021; the deadline for the Co-Lead Plaintiffs to file an opposition brief in response to the motion
to dismiss is June 21, 2021; and the deadline for Blink to file a reply in support of the motion to dismiss is July 21, 2021. The
Company believes that the claim has no merit, and wholly and completely disputes the allegations therein. The Company has retained
legal counsel in order to defend the action vigorously. The Company has not recorded an accrual related to this matter as of
December 31, 2020 as it determined that any such loss contingency was either not probable or estimable.
On
September 15, 2020, a shareholder derivative lawsuit, captioned Klein (derivatively on behalf of Blink Charging Co.) v. Farkas et al.,
Case No. 20-19815CA01, was filed in Miami-Dade County Circuit Court seeking to pursue claims belonging to the Company against Blink’s
Board of Directors and Michael Rama (the “Klein Lawsuit”). Blink is named as a nominal defendant. The Klein Lawsuit asserts
that the Director defendants caused Blink to make the statements that are at issue in the securities class action and, as a result, the
Company will incur costs defending against the consolidated Bush Lawsuit and other unidentified investigations. The Klein Lawsuit asserts
claims against the Director defendants for breach of fiduciary duties and corporate waste and against all of the defendants for unjust
enrichment. Klein did not quantify the alleged damages in his complaint, but he seeks damages sustained by the Company as a result of
the defendants’ breaches of fiduciary duties, corporate governance changes, restitution, and disgorgement of profits from the defendants
and attorneys’ fees and other litigation expenses. The parties agreed to temporarily stay the Klein Lawsuit until there is a ruling
on the yet-to-be-filed motion to dismiss in the consolidated Bush Lawsuit. The Company believes that the claim has no merit, and wholly
and completely disputes the allegations therein. The Company has retained legal counsel in order to defend the action vigorously. The
Company has not recorded an accrual related to this matter as of December 31, 2020 as it determined that any such loss contingency was
either not probable or estimable.
On
December 22, 2020, JMJ Financial v. Blink Charging Co. was filed in the United States District Court for the Southern District of New
York, seeking to pursue claims for alleged breach of contract and conversion (the “JMJ Lawsuit”). The complaint alleges that
JMJ Financial purchased warrants to acquire 147,057 shares of Blink common stock on or about April 9, 2018, which permitted a cashless
exercise, and that on November 23, 2020, JMJ Financial delivered a notice of warrant exercise to Blink and that the Company failed to
deliver the shares. The claim alleges breach of contract and conversion; the plaintiff requests damages of at least $4.2 million, attorneys’
fees, and specific enforcement requiring delivery of the shares. In January 2021, the Company entered into a settlement agreement with
JMJ under which the parties exchanged releases and the litigation was discontinued with prejudice. The Company did not make a cash payment
in the settlement, but rather delivered 66,000 shares of stock, representing a modification of the initial warrant exercise. The Company
determined that no additional accrual was required to be recorded related to this matter as of December 31, 2020.
On
December 23, 2020, another shareholder derivative action, captioned Bhatia (derivatively on behalf of Blink Charging Co.) v. Farkas et
al., Case No. 20-27632CA01, was filed in Miami-Dade County Circuit Court against the same defendants sued in the Klein Lawsuit and asserting
similar claims, as well as additional claims relating to the Company’s nomination, appointment and hiring of minorities and women
and the Company’s decision to retain its outside auditor (the “Bhatia Lawsuit”). On February 17, 2021, the parties
agreed to consolidate the Klein and Bhatia actions, which the court consolidated under the caption In re Blink Charging Company Stockholder
Derivative Litigation, Lead Case No. 2020-019815-CA-01. The parties also agreed to keep in place the temporary stay. The Company believes
that the claim has no merit, and wholly and completely disputes the allegations therein. The Company has retained legal counsel in order
to defend the action vigorously. The Company has not recorded an accrual related to this matter as of December 31, 2020 as it determined
that any such loss contingency was either not probable or estimable.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
17.
COMMITMENTS AND CONTINGENCIES – CONTINUED
LITIGATION
AND DISPUTES – CONTINUED
On
February 12, 2021, another shareholder derivative lawsuit, captioned Wolery (derivatively on behalf of Blink Charging Co.) v. Buffalino
et al., Case No. A-21-829395-C, was filed in the Eighth Judicial District Court in Clark County, Nevada seeking to pursue claims belonging
to the Company against Blink’s Board of Directors (the “Wolery Lawsuit”). Blink is named as a nominal defendant. The
Wolery complaint alleges that the amount of restricted stock awarded to Blink’s outside directors in December 2020 exceeded the
amounts permitted by Blink’s incentive compensation plan. The complaint asks the court to rescind the excess restricted stock awards,
as well as other relief. The parties agreed that the defendants could have 60 days to respond to the complaint (i.e., until April 22,
2021). The Company believes that the claim has no merit, and wholly and completely disputes the allegations therein. The Company has
retained legal counsel in order to defend the action vigorously. The Company has not recorded an accrual related to this matter as of
December 31, 2020 as it determined that any such loss contingency was either not probable or estimable.
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.
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, 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 stock by the former principals
of 350 Green LLC, in accordance with a Settlement Agreement between the parties dated August 21, 2015, that would have resulted
in a gain of $285,000.
On
December 31, 2018, the Company entered into a modification of the Settlement Agreement and Mutual Release dated August 21, 2015
with the former members of 350 Green LLC whereby the members would return to the Company 8,064 common shares and would also cancel
the outstanding note (“Note”) issued to the members with a balance of $360,000, both, initially issued in conjunction
with the acquisition of 350 Green LLC in exchange for $50,000. The Company paid the $50,000 as of December 31, 2018. The Note
and common shares were returned and cancelled in January 2019. The Company recorded a gain of $310,000 during the year
ended December 31, 2019 which was included in other income and expense on the consolidated statement of operations.
EMPLOYMENT
AGREEMENTS
DONALD
ENGEL EMPLOYMENT AGREEMENT
Effective
January 9, 2020, Donald Engel, a member of the Company’s Board of Directors, entered into an employment agreement with the Company.
The employment agreement with Mr. Engel extends for a term expiring on January 9, 2021, subject to automatic renewal for two additional
one-year periods if not otherwise previously terminated by either party. Pursuant to the employment agreement. The employment agreement
provides that Mr. Engel will receive a base salary at an annual rate of $175,000 for services rendered in such position. In addition,
he will be eligible to earn stock options to purchase up to 700,000 shares of our common stock, in increments of 140,000 options on each
occasion that the Company executes an agreement for the sale or deployment of electric vehicle charging stations or ancillary eco-friendly
energy products with a customer he has introduced to the Company. The stock options will have an exercise price equal to the closing
market price of our common stock immediately prior to the issuance date, expire five years after the issuance date and be subject to
the terms of the Company’s 2018 Incentive Compensation Plan. On January 20, 2020, the Company granted immediately vested options
to purchase an aggregate of 140,000 shares of common stock at an exercise price of $2.05 per share to the employee with a grant date
fair value of $252,309, which was recognized during the year ended December 31, 2020.
The
employment agreement provides for termination by the Company for cause upon conviction of a felony, misconduct resulting in significant
economic or reputational harm to the Company, any act of fraud or a material breach of his obligations to us. Upon a change of
control of the Company, Mr. Engel’s employment will terminate, and he will be entitled to all unpaid and outstanding
salary and expenses due through the termination date. The employment agreement also contains covenants restricting Mr. Engel from
engaging in any activities competitive with the Company’s business during the term of the employment agreement and two years
thereafter and prohibiting him from disclosure of confidential information regarding us at any time.
BLINK
CHARGING CO. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2020 AND 2019
17.
COMMITMENTS AND CONTINGENCIES – CONTINUED
EMPLOYMENT
AGREEMENTS - CONTINUED
MICHAEL
P. RAMA EMPLOYMENT AGREEMENT
In
February 2020, the Company entered into an Employment Offer Letter with Michael P. Rama. Pursuant to the Offer Letter, Mr. Rama
agreed to devote his full business efforts and time to the Company as its Chief Financial Officer. The Offer Letter extends for
a term expiring on February 10, 2022 and is automatically renewable for an additional one-year period. The Offer Letter provides
that Mr. Rama is entitled to receive an annual base salary of $300,000, payable in regular installments in accordance with the
Company’s general payroll practices. Mr. Rama will be eligible for an annual performance cash bonus of 25% of his base salary
based on the satisfaction of certain key performance indicators set with the Board’s Compensation Committee. Mr. Rama will
be entitled to receive equity awards under the Company’s 2018 Incentive Compensation Plan with an aggregate annual award
value equal to 50% of his base salary in the form of restricted stock and stock options. Mr. Rama also received a $50,000 cash
signing bonus.
If
Mr. Rama’s employment is terminated by the Company other than for Cause (which includes willful material misconduct and
willful failure to materially perform his responsibilities to the Company), he is entitled to receive severance equal to up to
12 months of his base salary. If there is a buy-out or a “change of control,” Mr. Rama will also be entitled to obtain
his base salary for a period of 12 months as a severance payment. Mr. Rama is entitled to vacation and other employee benefits
in accordance with the Company’s policies.
BRENDAN
S. JONES EMPLOYMENT AGREEMENT
The
Company entered into an Employment Offer Letter, dated as of March 29, 2020, with Brendan S. Jones. Pursuant to the Offer Letter,
Mr. Jones agreed to devote his full business efforts and time to the Company as its Chief Operating Officer. The Offer Letter
extends for a two-year term expiring on April 20, 2022 and is automatically renewable for an additional one-year period unless
the Company provides notice of non-renewable prior to the initial termination date. The Offer Letter provides that Mr. Jones is
entitled to receive an annual base salary of $350,000, payable in regular installments in accordance with the Company’s
general payroll practices. Mr. Jones is eligible for an annual performance cash bonus of 40% of his base salary based on the satisfaction
of certain key performance indicators set with the Board’s Compensation Committee. Mr. Jones received a cash signing bonus
of $55,000 and an equity signing bonus of $70,000 worth of the Company’s common stock, which vests on April 20, 2021 (provided
he is not terminated for Cause).
If
Mr. Jones’s employment is terminated by the Company other than for Cause (which includes willful material misconduct and
willful failure to materially perform his responsibilities to the Company), he is entitled to receive severance equal to 12 months
of his base salary or such lesser number of months actually worked. If there is a buy-out or a “change of control,”
Mr. Jones will be entitled to obtain his base salary for a period of 12 months as a severance payment.
Mr.
Jones is also entitled to relocation assistance in an amount of up to $35,000, a car allowance of up to $1,000 per month, inclusive
of insurance, and other employee benefits in accordance with the Company’s policies.
WARRANTY
The
Company estimates an approximate cost of $70,000 to repair deployed chargers, which the Company owns as of December 31, 2020
18.
SUBSEQUENT EVENTS
In
January 2021, the Company completed an underwritten registered public offering of 5,660,000 shares of our common stock at a public
offering price of $41.00 per share. The Company received approximately $232.1 million in gross proceeds from the public offering,
and approximately $221.5 million in net proceeds after deducting the underwriting discount and offering expenses paid by the Company.
Our Chief Executive Officer and one other officer participated in the offering by selling a total of 550,000 shares of our common
stock from the exercise of the underwriter’s option to purchase additional shares. The public offering was made pursuant
to our automatic shelf registration statement on Form S-3 filed with the SEC on January 6, 2021 and prospectus supplement dated
January 7, 2021.
On January 22, 2021, the Company closed
on the purchase of approximately 10,000 square feet of office condominium space which is the Company’s corporate headquarters.
The purchase price was $4 million of which $600,000 was paid in the Company’s common stock (13,123 shares) and $3,400,000
in cash.
On February 8, 2021, the Company was
awarded a state-wide grant of approximately $1.7 million for the deployment of 11 new DC fast chargers across the state of
Vermont in the next two years.