Blink Charging Co. — FY2019 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2019; comparisons are to FY2018. This is an annual report, not a standalone fourth-quarter report.
Business context
Blink owns and operates EV charging stations, sells charging equipment, and provides network and related services. Revenue comes mainly from charging services, hardware sales, network fees, and other services. At year-end, the company reported 14,778 stations across its networked, other-network, and non-networked deployments, and approximately 175,000 registered drivers.
Financial performance and liquidity
| Metric | FY2019 | FY2018 |
|---|---|---|
| Revenue | $2.76 million | $2.69 million |
| Gross profit | $392,411 | $902,490 |
| Gross margin | 14.2% | 33.6% |
| Operating loss | $10.47 million | $11.61 million |
| Net loss | $9.65 million | $3.42 million |
| Net cash used in operations | $10.96 million | $13.57 million |
| Cash at year-end | $3.98 million | $15.54 million |
| Working capital | $5.79 million | $15.59 million |
Product sales increased 80% to $856,243, driven by second-generation chargers; charging-service revenue rose 7% to $1.36 million. Higher product costs, including a $437,068 provision for slow-moving or excess inventory, and increased warranty and repair costs reduced gross profit. Compensation and total operating expenses declined, but net loss widened as other income fell sharply from FY2018’s unusual gains, including a $5.8 million gain on settling JMJ liabilities for equity. FY2019 included $823,443 of total other income.
Year-end marketable securities were $3.15 million. Notes payable were $10,000; total liabilities were $4.51 million, including operating lease liabilities. The company used $552,820 in investing activities and $52,379 in financing activities during FY2019. Accumulated deficit was $169.50 million.
Material changes, outlook, and risks
- Management said available cash was expected to fund operations into the second quarter of 2020 while it sought additional capital. No new financing commitments were in place. The auditor’s report includes a going-concern explanatory paragraph, citing significant losses and the need for additional funding.
- The filing reports positive working capital of $5.79 million, while the auditor’s going-concern paragraph describes a “significant working capital deficiency.” This is an apparent inconsistency in the filing that investors may wish to clarify.
- Management’s strategy includes expanding equipment sales and channels, growing company-owned charging deployments, and potentially introducing occupancy fees and subscriptions. The filing provides no quantified revenue or profitability guidance.
- Key risks include continued losses and financing dependence, competition, EV adoption uncertainty, customer concentration, technology and cybersecurity risks, and possible COVID-19-related supplier and supply-chain disruption. A significant charger supplier is in Taiwan and sources parts from China.
- Material weaknesses in financial reporting controls remained at year-end, including deficiencies in formalized procedures, segregation of duties, monitoring, IT access, master-file changes, journal-entry review, and account reconciliations. Management was working toward remediation during 2020; disclosure controls were deemed ineffective.
- Other notable items include a $1.56 million remaining charger purchase commitment; estimated repairs of approximately $231,000 for company-owned deployed chargers; and a former COO’s lawsuit seeking unspecified damages alleged to exceed $1 million. The company said it would defend the suit. A separate vendor case over approximately $53,000 plus interest and costs was pending again after a dismissal was vacated.
Important facts for investors to verify
- Cash runway, financing progress, and whether operations could be funded beyond the second quarter of 2020.
- The working-capital discrepancy between the balance-sheet/MD&A figure and the auditor’s going-concern discussion.
- Whether gross margins recover after the inventory reserve and elevated warranty and repair costs.
- Execution and economics of the InterEnergy order, including shipments and collection of the remaining purchase price; the filing describes differing purchase-order amounts in its discussion and notes.
- Progress in remediating internal-control weaknesses and the status and potential exposure of the disclosed litigation.