Blink Charging Co. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Blink sells and operates EV charging equipment and provides networked charging and related services. The results are unaudited.
Financial performance and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $4.36 million | $1.57 million | $6.59 million | $2.87 million |
| Gross profit / margin | $0.64 million / 14.8% | $0.41 million / 26.3% | $0.74 million / 11.2% | $0.72 million / 25.2% |
| Operating loss | $12.35 million | $3.02 million | $19.73 million | $6.04 million |
| Net loss | $13.46 million | $3.03 million | $20.82 million | $5.99 million |
| Basic and diluted loss per share | $0.32 | $0.11 | $0.50 | $0.22 |
- Revenue increased 177% in Q2 and 129% for the first half. Product sales were the largest revenue source; growth also reflected higher charging activity and the May acquisition of Blue Corner.
- Gross margin contracted as costs rose faster than revenue. Operating expenses rose substantially, including compensation, general and administrative, and other operating costs.
- Cash and cash equivalents were $142.1 million at June 30, 2021, and marketable securities were $53.6 million. Working capital was $197.8 million. Current liabilities were $10.8 million.
- Notes payable totaled approximately $874,000 gross. The balance sheet also reported $2.06 million of operating lease liabilities.
- For the first half, operating activities used $20.9 million of cash; investing activities used $81.5 million, including the Blue Corner acquisition and purchases of securities; financing activities provided $222.7 million, primarily from the January equity offering.
Material changes and significant events
- In January, Blink issued 5.66 million shares at $41 per share, generating approximately $221.4 million in net proceeds. Shares outstanding increased to 42.14 million from 35.95 million at year-end 2020.
- Blink acquired all of Blue Corner NV on May 10 for approximately $23.8 million, mostly cash, to enter the European market. The preliminary allocation included $17.8 million of goodwill. Blue Corner contributed $1.9 million in revenue and a $301,000 net loss from acquisition through June 30.
- Q2 included a $1.0 million settlement expense related to a dispute with the CEO over a prior stock transfer. CEO compensation expense also included substantial equity-based compensation; the special performance option had a grant-date fair value of approximately $13.5 million.
Outlook, risks, and contingencies
- Management said it expects cash on hand to fund operations for at least 12 months from the financial statement issuance date, while anticipating continued operating cash outflows and increasing expenses. Blink had not achieved profitability.
- Management expected charging demand to improve as economies reopened, but said it could not predict the recovery. COVID-19 variants and a global chip shortage were delaying some equipment shipments and could affect demand, operations, and results.
- Blink had approximately $12 million in remaining purchase commitments for charging equipment and related items.
- The company disclosed securities class-action and shareholder derivative litigation. It disputed the allegations and recorded no accrual because losses were considered not probable or not estimable. A separate warrant-related lawsuit was settled by issuing 66,000 shares, without a cash payment.
- Disclosure controls and procedures were deemed ineffective as of June 30 due to previously reported material weaknesses that remained under remediation.
- After quarter-end, one PPP loan of $378,744 was forgiven; forgiveness of the other PPP loan was still pending as of the filing.
Important facts for investors to verify
- Track whether revenue growth translates into improved gross margins and whether operating costs and cash burn moderate.
- Assess Blue Corner’s subsequent operating performance, integration costs, and the final purchase-price allocation.
- Monitor the remediation of material weaknesses and the status and potential outcomes of disclosed litigation.
- Review the CEO’s compensation and performance-option terms, including the $1.0 million settlement payment.
- Reconcile reported revenue: the income statement shows $4.36 million for Q2 and $6.59 million for the first half, while the revenue-recognition note shows lower totals under ASC 606, with grants and rebates reported separately. The MD&A also gives a different first-half operating cash-use figure than the cash-flow statement; the cash-flow statement reports $20.95 million used.