Blink Charging Co. — FY2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020; comparisons are with the year ended December 31, 2019. This is an annual report, not a standalone fourth-quarter filing. Blink owns and operates EV charging stations and sells charging equipment and network services. Its business models range from host-owned equipment to Blink-funded stations that generate charging revenue.
Key financial results
| Metric | FY2020 | FY2019 | Change |
|---|---|---|---|
| Revenue | $6.23 million | $2.76 million | Up 126% |
| Gross profit | $1.52 million | $0.39 million | Gross margin 24.3%, versus 14.2% |
| Operating loss | $17.81 million | $10.47 million | Loss widened |
| Net loss | $17.85 million | $9.65 million | Loss widened 85%; basic and diluted loss per share were $0.59 and $0.37, respectively |
| Cash used in operating activities | $18.07 million | $10.76 million | Use of cash increased |
| Cash at year-end | $22.34 million | $4.17 million | Increased |
| Working capital | $19.58 million | $5.79 million | Increased |
| Notes payable, gross | $870,696 | $10,000 | Includes a $855,666 PPP loan; forgiveness had not been confirmed |
Product sales drove growth, rising 418% to $4.43 million. Charging-service revenue from Blink-owned stations fell 43% to $772,540, which management attributed mainly to lower station use during COVID-19. Network fees rose 14% to $344,819; other revenue increased to $529,782, including higher low-carbon fuel credit revenue and $168,824 of BlueLA rideshare revenue. Operating expenses rose to $19.33 million, including compensation of $12.72 million and general and administrative expenses of $4.05 million. The company reported an accumulated deficit of $187.35 million and had not achieved profitability.
Business developments and material changes
- Blink reported 16,617 stations sold or deployed at year-end, including 7,062 on the Blink Network.
- Product sales and deployments accelerated in the second half of 2020 following sales-team expansion. Blink also reported new healthcare and other property-partner agreements and product and network technology investments.
- Blink acquired BlueLA in September 2020, adding Los Angeles EV carsharing operations, and U-Go in November 2020, adding a portfolio of 44 DC fast-charging locations and grants for up to 45 additional stations.
- In 2020, Blink raised approximately $20 million gross through its at-the-market stock program and received $16.26 million from warrant exercises. Shares outstanding increased to 35.95 million at year-end from 26.32 million a year earlier.
- After year-end, Blink raised approximately $221.5 million net in a January 2021 public offering. It said proceeds would support station deployment, acquisitions, working capital and general corporate purposes. The filing states that cash on hand was expected to fund operations for at least 12 months from issuance of the financial statements.
Outlook, risks and unusual items
- Management expects continued operating cash outflows and rising operating expenses, and says significant product revenue growth is needed to reach profitability. It provided no quantified revenue or earnings guidance.
- COVID-19 reduced charging-station use and service revenue and temporarily delayed some equipment shipments. Management expected usage to recover as economies reopened but said the ultimate impact remained uncertain.
- Revenue is concentrated among a small number of customers: three significant customers accounted for 25% of total revenue, 11% of total revenue, and 12% of product sales, respectively, with the first two also representing 34% and 15% of product sales. The filing says these customers were not contractually required to make long-term purchases.
- Other risks include ongoing losses and dependence on external financing, competition, EV adoption and incentives, supplier and technology risks, and possible dilution. Management identified material weaknesses in internal control over financial reporting, including IT access controls and incomplete effectiveness testing; disclosure controls were deemed ineffective. Remediation was planned for 2021.
- Unusual items include a $400,000 settlement expense related to a former executive; a $2.3 million cash tax gross-up payment to non-employee directors related to vesting of stock awards; and a 2019 gain of $310,000 from settlement of debt. The 2020 securities class action and shareholder derivative suits had no recorded accrual because management concluded losses were not probable or estimable. A separate former-warrant-holder lawsuit was settled in January 2021 with delivery of 66,000 shares and no cash payment.
- The auditor issued an unqualified opinion on the financial statements and reported no critical audit matters. The auditor was not engaged to audit internal-control effectiveness and expressed no opinion on it.
Important facts for investors to verify
- Whether Blink converts rapid product-sales growth and a larger station network into recurring service revenue, improved margins and lower cash burn.
- Use of the January 2021 offering proceeds, and the resulting funding runway, deployment returns and dilution.
- Status and potential consequences of the PPP loan forgiveness application and the reported internal-control weaknesses and remediation.
- Customer concentration, station utilization and the extent of any lingering COVID-19 effects.
- Developments in the securities and derivative litigation, including any change in the company’s loss-contingency assessment.