Blink Charging Co. — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020; filed May 13, 2020. Blink owns, operates and supplies EV charging equipment and network services, using turnkey, hybrid and host-owned business models. It reported 14,643 charging stations deployed or sold, including networked and non-networked units.
Financial performance
| Metric | Q1 2020 | Q1 2019 / comparison |
|---|---|---|
| Revenue | $1.299 million | $577,390; up 125% |
| Gross profit and margin | $308,722; 23.8% | $53,958; 9.3% |
| Operating expenses | $3.328 million | $2.369 million |
| Operating loss | $3.019 million | $2.315 million |
| Net loss / loss per share | $2.961 million / $0.11 | $1.894 million / $0.07 |
| Operating cash used | $3.413 million | $2.912 million |
Product sales rose to $777,423 from $103,204, principally reflecting sales of Generation 2 and DC Fast Chargers. Charging revenue from company-owned stations was nearly flat at $319,624, while network fees and warranty revenue declined. Gross margin improved, but operating costs and a reduction in prior-year one-time gains contributed to a larger net loss. Compensation increased 32%; general and administrative expense increased 151%, including higher accounting, tax and legal fees.
Financial position and liquidity
At March 31, 2020, cash was $1.344 million, marketable securities $1.953 million, working capital $2.159 million, and total assets $9.803 million. Cash plus marketable securities totaled approximately $3.296 million. Total liabilities were $5.234 million; notes payable were $10,000, alongside operating lease liabilities of approximately $230,000. Cash declined $2.632 million during the quarter. Investing activities provided $799,614, mainly from marketable-security sales, while financing activities used $17,989. Accumulated deficit was $172.466 million.
Management stated that operations were being funded month to month and disclosed substantial doubt about the company’s ability to continue as a going concern within one year after issuance of the financial statements. It has not achieved profitability and expects continuing operating cash outflows.
Material changes, outlook and risks
- On April 17, Blink established an at-the-market equity program of up to $20 million, with a 3% agent commission. Through May 12, it sold 87,505 shares for approximately $150,000 gross proceeds.
- On May 7, Blink received approximately $856,000 under the Paycheck Protection Program. Forgiveness depends on meeting program conditions; any unforgiven amount is payable over two years at 1% interest.
- Management said COVID-19 had minimal impact on Q1 results, but shipments were temporarily delayed. The future effects on demand, customers’ ability to pay, operations and access to capital were uncertain.
- The company reported a significant customer represented 33% of Q1 2020 revenue. The Nissan No Charge-To-Charge program was expected to end by June 2020.
- Disclosure controls and procedures were ineffective at quarter-end because of continuing material weaknesses in internal control over financial reporting. Remediation was underway.
- A former COO sued Blink and certain executives, alleging breach of contract, retaliatory termination and slander; the complaint seeks unspecified damages alleged to exceed $1 million. Blink said it intended to defend the claims. A separate vendor-related case over approximately $53,069 in invoices was pending.
- No quantified revenue, earnings or cash-flow guidance was provided. Blink said it may need further financing; without timely funding it could curtail activities or discontinue operations.
Important facts for investors to verify
- Cash runway, operating cash burn and the amount and timing of additional financing; the ATM’s actual proceeds and potential dilution.
- Whether the PPP loan qualifies for full forgiveness and whether Blink meets all program requirements.
- COVID-19 effects on equipment deliveries, demand, customer collections and capital access.
- Progress in remediating material weaknesses and the status and potential exposure of pending litigation.
- Sustainability of product-sales growth and gross-margin improvement, including customer concentration and the anticipated end of the Nissan program.