Blink Charging Co. — Form 10-Q Summary
Business context and reporting period
Blink owns and operates EV charging stations and provides charging equipment, network services, and related support. This unaudited report covers the three months ended March 31, 2018, compared with the same period in 2017. As of May 11, 2018, the company reported approximately 14,165 stations deployed across its network and other locations.
Key financial metrics
| Metric | Q1 2018 | Q1 2017 / prior date |
|---|---|---|
| Revenue | $595,920 | $595,620 |
| Gross profit and margin | $171,821; 28.8% | $163,213; 27.4% |
| Operating expenses | $3,973,760 | $1,854,006 |
| Operating loss | $(3,801,939) | $(1,690,793) |
| Net income (loss) | $2,204,088 | $(3,097,732) |
| Net loss attributable to common shareholders | $(21,862,643), or $(2.58) per share | $(3,852,632), or $(2.39) per share |
| Cash used in operating activities | $(4,814,971) | $(783,135) |
| Cash / working capital at period end | $9,946,654 / $2,212,757 | Cash at Dec. 31, 2017: $185,151 |
| Total assets / total liabilities | $11,700,807 / $9,041,579 | At Dec. 31, 2017: $2,687,013 / $38,781,396 |
Current notes payable were $337,966; the balance sheet reported no convertible notes payable at March 31. The company raised capital through a February public offering of common stock and warrants, with approximately $14.9 million of net proceeds reported. Cash from financing activities was $14.6 million. Subsequent warrant exercises generated a further $4.1 million gross after quarter end.
Material changes versus the prior comparable period
- Revenue was essentially flat. Company-owned charging-service revenue rose 14% to $305,747, while product sales fell 12% to $135,760 and grant and rebate revenue fell 51% to $16,231.
- Gross profit increased modestly, but operating expenses more than doubled. Compensation increased 270% to $3.69 million, largely due to approximately $2.8 million of non-cash compensation, including executive stock awards.
- Reported net income was driven by non-operating and largely non-cash items, including a $5.8 million gain on settlement of JMJ obligations and a $3.0 million gain from changes in warrant fair value. It did not reflect operating profitability: the company recorded an operating loss and used $4.8 million of operating cash.
- Common shareholders’ loss widened substantially, mainly because of a $23.5 million deemed preferred-stock dividend and $607,800 of Series C dividends. These items also explain why common-shareholder loss differs sharply from reported net income.
- Total liabilities fell substantially from year-end as obligations were settled or converted to equity, including through issuance of Series D preferred stock to JMJ and common shares to creditors. These transactions also increased potential dilution.
Outlook, risks, contingencies, and unusual items
- Management said existing cash was sufficient for operating and capital requirements for at least 12 months from the filing date, but anticipated needing additional financing thereafter. No new financing commitments were in place. Failure to raise capital could require curtailing development, marketing, or other activities and could threaten continued operations.
- Management identified planned uses of offering proceeds including charging-station deployment, product development, staffing, debt and obligation repayment, and general working capital. The filing provides no revenue or earnings guidance.
- Management stated the company had not yet achieved operating profitability. The quarter’s positive net income depended on significant settlement and fair-value gains and should not be taken as evidence of recurring profitability.
- Federal and state corporate income tax returns for 2014–2017 had not been filed. Sales-tax filings or payments were delinquent in some states, with approximately $219,000 accrued. Approximately $528,000 of payroll taxes was delinquent at quarter end; $483,620 was paid after quarter end, and the company was seeking resolution of penalties and fees.
- The company disclosed four continuing material weaknesses in internal control, including lack of written control documentation, insufficient accounting resources and segregation of duties, inadequate communication to financial reporting personnel, and insufficient evidence of review. Disclosure controls were deemed ineffective as of March 31, 2018.
- JMJ’s settlement involved $12.005 million of Series D preferred stock, convertible into common shares; subsequent conversion and warrant exercises add dilution. After quarter end, 4,368 Series D shares converted into 1.4 million common shares.
- Other notable matters include a remaining $100,000 JNS settlement payment, a separate $75,000 payment to former 350 Green principals reported unpaid as of the filing, and various disclosed legacy disputes. The company also reported the President’s resignation, with no replacement appointed at the time described.
Important facts for investors to verify
- Whether cash burn and operating losses improve, and whether management can reach recurring operating profitability without settlement or warrant valuation gains.
- Whether the company’s cash runway assumptions hold and whether additional equity or debt financing will be required.
- The full potential dilution from outstanding warrants, convertible preferred stock, and equity issuances to creditors and insiders.
- Progress in filing and paying delinquent taxes, resolving penalties, and completing remaining settlement obligations.
- Whether management remediates the disclosed material weaknesses and improves the reliability of financial reporting and internal controls.
- Delivery of the remaining ITT Cannon charging cables and resolution of other outstanding legal and legacy creditor matters.