Blink Charging Co.: Form 10-Q for the period ended Sep 30, 2023

Special Note Regarding Forward-Looking Information

The following discussion and analysis of the results of operations and financial condition of Blink Charging Co. (together with its subsidiaries, “Blink” or the “Company”) as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this Quarterly Report on Form 10-Q. References in this Management’s Discussion and Analysis of Financial Condition and Results of Operations to “us,” “we,” “our” and similar terms refer to Blink. This Quarterly Report contains forward-looking statements as that term is defined in the federal securities laws. The events described in forward-looking statements contained in this Quarterly Report may not occur. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results. The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “plan,” “intend,” “estimate,” and “continue,” and their opposites and similar expressions, are intended to identify forward-looking statements. We caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements. Factors that may affect our results include, but are not limited to, the risks and uncertainties set forth under Part 1, Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and under a similar item in subsequent periodic reports, as discussed elsewhere in this Quarterly Report, particularly in Part II, Item IA - Risk Factors.

Any one or more of these uncertainties, risks and other influences, could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. Except as required by federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.

U.S. dollars are reported in thousands, except for share and per share amounts.

Overview

We are a leading manufacturer, owner, operator and provider of electric vehicle (“EV”) charging equipment and networked EV charging services in the rapidly growing U.S. and international markets for EVs. Blink offers residential and commercial EV charging equipment and services, enabling EV drivers to recharge at various location types. Blink’s principal line of products and services is its nationwide Blink EV charging networks (the “Blink Networks”) and Blink EV charging equipment, also known as electric vehicle supply equipment (“EVSE”) and other EV-related services. The Blink Networks are a proprietary, cloud-based system that operates, maintains, and manages Blink charging stations and handles the associated charging data, back-end operations, and payment processing. The Blink Networks provide property owners, managers, parking companies, state and municipal entities, and other types of commercial customers, (“Property Partners”) with cloud-based services that enable the remote monitoring and management of EV charging stations. The Blink Networks also provide EV drivers with vital station information, including station location, availability and fees.

In order to capture more revenues derived from providing EV charging equipment to commercial customers and to help differentiate Blink in the EV infrastructure market, Blink offers Property Partners a comprehensive range of solutions for EV charging equipment and services that generally fall into one of the business models below, differentiated by who bears the costs of installation, equipment, and maintenance, and the percentage of revenue shared.

• In our Blink-owned turnkey business model, we incur the costs of the charging equipment and installation. We own and operate the EV charging station and provide connectivity of the charging station to the Blink Networks. In this model, which favors recurring revenues, we incur most costs associated with the EV charging stations; thus, we retain substantially all EV charging revenues after deducting network connectivity and processing fees. Typically, our agreement with the Property Partner lasts seven years with extensions that can bring the term to a total of up to 21 years.
• In our Blink-owned hybrid business model, we incur the costs of the charging equipment while the Property Partner incurs the costs of installation. We own and operate the EV charging station and provide connectivity to the Blink Networks. In this model, the Property Partner incurs the installation costs associated with the EV station; thus, we share a more generous portion of the EV charging revenues with the Property Partner generated from the EV charging station after deducting network connectivity and processing fees. Typically, our agreement with the Property Partner lasts five years with extensions that can bring the term up to 15 years.
• In our host-owned business model, the Property Partner purchases, owns and operates the Blink EV charging station and incurs the installation costs. We work with the Property Partner by providing site recommendations, connectivity to the Blink Networks, payment processing, and optional maintenance services. In this model, the Property Partner retains and keeps all the EV charging revenues after deducting network connectivity and processing fees.
• In our Blink-as-a-Service model, we own and operate the EV charging station, while the Property Partner incurs the installation costs. The Property Partner pays us a fixed monthly fee for the service and keeps all the EV charging revenues after deducting network connectivity and processing fees. Typically, our agreement with the Property owner lasts five years.

We also operate an EV based ride-sharing business through our wholly-owned subsidiary, Blink Mobility LLC (“Mobility”). Blink Mobility operates a car sharing program in Los Angeles, California, through its subsidiary, BlueLA Rideshare, LLC, which allows customers the ability to rent electric vehicles through a subscription service and charge those cars through our charging stations. In April 2023, Blink Mobility acquired Envoy Technologies, Inc. (“ Envoy Technologies”), a software and mobility services company offering shared EVs as an amenity for national real estate developers and owners. In connection with the acquisition of Envoy Technologies, our board of directors authorized our management to begin planning the spin-off and initial public offering of Blink Mobility. As of the date of this report, we have engaged an investment bank to assist with this process, but there is no guarantee the spin-off or initial public offering will occur.

As part of our mission to facilitate the adoption of EVs through the deployment and operation of EV charging infrastructure globally, we are dedicated to slowing climate change by reducing greenhouse gas emissions caused by road vehicles. With the goal of being a leader in the build out of EV charging infrastructure and increasing our share of the EV charging market, we have established strategic commercial, municipal and retail partnerships across industry verticals and encompassing numerous transit/destination locations, including airports, auto dealers, healthcare/medical, hotels, mixed-use, municipal sites, multifamily residential and condos, parks and recreation areas, parking lots, religious institutions, restaurants, retailers, schools and universities, stadiums, supermarkets, transportation hubs, and workplace locations.

In 2022 and 2023, through the acquisitions of SemaConnect, Inc., Envoy Technologies, Inc. and Electric Blue Limited, we added new offices in Bowie, Maryland, St. Albans, United Kingdom, and Los Angeles, California, and manufacturing facilities in Bowie, Maryland and Bangalore, India. These new office and manufacturing facilities add to our expanding U.S. and international capacity to develop and manufacture hardware and innovate new software capabilities to better meet the needs of an evolving EV charging landscape, while also serving as a key hub for operations serving the Europe, Asia Pacific and Middle East regions. This expansion in footprint is part of our growth strategy to grow our global engineering teams and develop operational hubs to facilitate expansion into new international regions.

As of September 30, 2023, we sold or deployed 84,703 chargers, of which 65,079 were in Blink’s Networks (57,571 Level 2 publicly accessible commercial chargers, 5,134 Level 2 private commercial chargers, 1,832 DC Fast Charging EV publicly accessible chargers, 28 DC Fast Charging EV private chargers, and 514 residential Level 2 Blink EV chargers, inclusive of 10,286 chargers pending to be commissioned). Included in the Blink Networks are 5,212 chargers owned by us. The remaining were non-networked, on other networks or international sales or deployments (1,991 Level 2 commercial chargers, 145 DC Fast Charging chargers, 12,224 residential Level 2 Blink EV chargers, 3,716 sold to other U.S. networks, 1,468 sold internationally and 80 deployed internationally). The charger units noted above are net of swap-out or replacement units

As reflected in our condensed consolidated financial statements as of September 30, 2023, we had cash of $66,678, working capital of $94,455 and an accumulated deficit of $518,034. During the three and nine months ended September 30, 2023, we incurred net losses of $112,721 and $184,004, respectively. We have not yet achieved profitability.

Recent Developments

Acquisition

On April 18, 2023, the Company, Mobility and Mobility Merger Sub Inc., a Delaware corporation and wholly-owned subsidiary of Mobility (“Merger Sub”), entered into and, after all parties met the closing conditions, consummated the transactions contemplated under an Agreement and Plan of Merger, dated as of April 18, 2023 (the “Acquisition Agreement”), with Envoy Technologies. Pursuant to the Acquisition Agreement, Merger Sub merged with and into Envoy Technologies, whereupon the separate corporate existence of Merger Sub ceased, and Envoy Technologies was the surviving corporation of the merger and a wholly-owned subsidiary of Mobility (the “Acquisition”).

Under the terms of the Acquisition Agreement, the acquisition consideration was up to $35,500, paid as follows: (i) $6,000 in cash paid upon the closing of the Acquisition Agreement (the “Closing”); (ii) a promissory note of Blink Mobility in the principal amount of $5,000 which bears interest at a rate of 6% per annum and becomes due 12 months from Closing; (iii) a promissory note of Blink Mobility in the principal amount of $2,000 which bears interest at a rate of 6% per annum and becomes due 18 months from Closing; and (iv)(a) in the event of an initial public offering or direct listing of Mobility or Mobility’s successor within 24 months after the Closing (and shares of common stock of the Company are not issued in lieu thereof), $18,500, $21,000 or $22,500 worth of shares of common stock of Mobility or Mobility’s successor, depending on the timing of such offering or listing, (b) in the event there is no initial public offering or direct listing of Mobility or Mobility’s successor within 24 months after the Closing, $21,000 worth of shares of common stock of the Company, or (c) at the Company’s option, a combination of cash and common stock of the Company with an aggregate value of $21,000.

The aggregate purchase price was $30,900 as well as the assumption of working capital deficit of $1,595 (which included closing date cash of $19). The fair value of the consideration paid in the acquisition consisted of: (a) $6,000 in cash ($3,440 was paid at Closing and $2,560 was paid prior to Closing in the form of a note receivable); (b) $6,782 in aggregate promissory notes; and (c) $18,118 in common stock of Mobility subject to the conditions described above.

The payment of shares of common stock of Mobility or Mobility’s successor, if any, will be based on the public offering price per share of such stock in the initial public offering. The payment of shares of common stock of the Company, if any, will be based on the average of the daily-weighted average prices for such stock on each of the 60 days ending on the day prior to issuance thereof.

February 2023 Underwritten Public Offering

In February 2023, the Company completed an underwritten registered public offering of 8,333,333 shares of its common stock at a public offering price of $12.00 per share. The Company received approximately $100,000 in gross proceeds from the public offering and $94,766 in net proceeds after deducting the underwriting discount and offering expenses paid by the Company. The public offering was made pursuant to our automatic shelf registration statement on Form S-3 filed with the SEC on January 6, 2021, and prospectus supplement dated February 8, 2023. Barclays acted as the sole book-running manager for the offering. H.C. Wainwright & Co., Roth Capital Partners and ThinkEquity acted as co-managers for the offering. The underwriters did not exercise the over-allotment granted to them in connection with the offering.

ATM Program

During the three months ended September 30, 2023, the Company sold an additional 2,477,948 shares of common stock under the ATM program for aggregate gross proceeds of $9,392, less issuance costs of $267.

New Product and Service Offerings

In January 2023, we announced the new products which included the Vision, EQ 200, Series 3, PQ 150, and 30kW DC Fast Charger, which are designed to serve the increasing demands of the growing EV markets across the U.S., Europe, Asia and Latin America.

The reimagined Vision is designed as a two-in-one solution to attract and captivate drivers and provide site hosts and advertisers with an innovative media solution. With a newly designed 55” LCD screen capable of displaying static and dynamic advertising, the Vision is the ideal point-of-charge advertising solution with two 80 amp, 19.2kW ports that can charge simultaneously. The Vision offers easy payment via RFID, Apple Pay, Google Wallet, and all major credit cards. Additional features include cloud connectivity via built-in 4G LTE signal, retractable cable management and dual cable configurations with two universal J1772 plugs and a built-in camera for additional security. Site owners can benefit from charging and advertising revenue share models for this product.

The EQ 200 is an intelligent, affordable, and scalable charging solution designed for European and South American markets. Offering up to 22kW of power and an innovative modular design, this product fits any location and can be tailored to the specific needs of market segments. The EQ 200 is prepared for the future by supporting technologies like ISO-15118, OCPP 2.0, and bi-directional charging, also known as Vehicle-to-Grid (V2G). The charger also offers customization and rebranding options available to fit each user’s needs.

The Series 3 is a flexible and versatile EV charging solution designed for both two- and three-wheeler EVs. Designed for the APAC and Latin American markets, the Series 3 provides up to 15 amps of output in a compact form, making it ideal for installation at small shops and residential and commercial parking areas. Its built-in electric metering allows customers to manage electricity costs with an intuitive, smart network connection. Further, up to 45 charging points can be connected with a single communication gateway.

The PQ 150 is a smart charging cable designed for residential charging in European markets. Offering up to 22kW of power, the PQ 150 is simple and easy-to-use with no installation necessary and provides the highest safety level on the market today. With Bluetooth, Wi-Fi and optional SIM/GSM & GPS functionality, this product offers advanced technology in a simple, sleek design.

The Series 9 30kW DC Fast Charger is our latest solution for fast charging across global markets. A small footprint charging station designed for speed and flexibility, this product was designed to quickly charge tomorrow’s EVs today and offers the perfect balance of size and power, providing up to 100 amps and 1,000 volts of output. A 7-inch LCD touchscreen display provides drivers with an intuitive charging process and the charger integrates with the newly redesigned Blink Networks over a Wi-Fi, Ethernet or 4G connection, offering high-performance, compatibility, and remote monitoring.

Key Factors Affecting Operating Results

We believe our performance and future success depend on several factors, including those discussed below:

Competition – The EV charging equipment and service market is highly competitive, and we expect the market to become increasingly competitive as new entrants enter this growing market. Our products and services compete on product performance and features, the total cost of ownership, sales capabilities, financial stability, brand recognition, product reliability, and the installed base’s size. Existing competitors may expand their product offerings and sales strategies, and new competitors may enter the market. If our market share decreases due to increased competition, its revenue and ability to generate profits in the future may be impacted.

Growth – Our growth is highly dependent upon the adoption by consumers of EVs, and we are subject to the risk of any reduced demand for EVs. The market for alternative fuel vehicles is relatively new and rapidly evolving. It is characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements, long development cycles for EV original equipment manufacturers, and changing consumer demands and behaviors. Factors that may influence the purchase and use of alternative fuel vehicles, and specifically EVs, include perceptions about EV quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost; the limited range over which EVs may be driven on a single battery charge and concerns about running out of power while in use; improvements in the fuel economy of the internal combustion engine; consumers’ desire and ability to purchase a luxury automobile or one that is perceived as exclusive; the environmental consciousness of consumers; volatility in the cost of oil and gasoline; consumers’ perceptions of the dependency of the United States on oil from unstable or hostile countries and the impact of international conflicts; government regulations and economic incentives promoting fuel efficiency and alternate forms of energy; access to charging stations, standardization of EV charging systems and consumers’ perceptions about convenience and cost to charge an EV; and the availability of tax and other governmental incentives to purchase and operate EVs or future regulation requiring increased use of nonpolluting vehicles. If the market for EVs does not gain broad market acceptance or develops slower than we expect, our business, prospects, financial condition and operating results may be adversely affected.

Regulations - Our business is subject to a variety of federal, state and international laws and regulations, including those with respect government incentives promoting fuel efficiency and alternate forms of energy, electric vehicles and others. These laws and regulations, and the interpretation or application of these laws and regulations, could change. Any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes, fiscal tightening or other reasons may result in diminished revenues from government sources and diminished demand for our products. In addition, new laws or regulations affecting our business could be enacted. These laws and regulations are frequently costly to comply with and may divert a significant portion of management’s attention. Changes to these applicable laws or regulations could affect business and/or harm our customers, thereby adversely affect our business, financial condition and results of operations.

Expansion through Acquisitions - We may pursue strategic domestic and international acquisitions to expand our operations. Risks in acquisition transactions include difficulties in the integration of acquired businesses into our operations and control environment, difficulties in assimilating and retaining employees and intermediaries, difficulties in retaining the existing clients of the acquired entities, assumed or unforeseen liabilities that arise in connection with the acquired businesses, the failure of counterparties to satisfy any obligations to indemnify us against liabilities arising from the acquired businesses, and unfavorable market conditions that could negatively impact our growth expectations for the acquired businesses. Fully integrating an acquired company or business into our operations may take a significant amount of time. If we are unable to integrate or pursue strategic acquisitions, our financial condition and results of operations will be negatively impacted.

Consolidated Results of Operations

22

Three Months Ended September 30, 2023 Compared Three Months Ended September 30, 2022

Revenues

Total revenue for the three months ended September 30, 2023 increased by $26,130, or 152%, to $43,377 compared to $17,247 during the three months ended September 30, 2022.

Revenue from product sales was $35,059 for the three months ended September 30, 2023 as compared to $13,358 during the three months ended September 30, 2022, an increase of $21,701, or 162%. This increase was attributable to increased sales of commercial chargers, DC fast chargers and residential chargers when compared to the same period in 2022.

Charging service revenue from Company-owned charging stations was $3,859 for the three months ended September 30, 2023 as compared to $1,256 for the three months ended September 30, 2022, an increase of $2,603, or 207%. The increase is due to the increase in utilization of chargers and an increased number of chargers on the Blink Networks.

Network fee revenues were $1,973 for the three months ended September 30, 2023 as compared to $1,456 for the three months ended September 30, 2022, an increase of $517, or 36%. The increase was attributable to increases in host owned units during the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

Warranty revenues were $849 for the three months ended September 30, 2023 as compared to $309 for the three months ended September 30, 2022, an increase of $540, or 175%. The increase was primarily attributable to an increase in warranty contracts sold for the three months September 30, 2023 as compared to the three months September 30, 2022. As of September 30, 2023, we recorded a liability of $9 which represents the estimated cost of existing backlog of known warranty cases.

Grant and rebate revenues were $47 during the three months ended September 30, 2023 as compared to $83 during the three months ended September 30, 2022, a decrease of $36, or 43%. Grant and rebates relating to equipment and the related installation are deferred and amortized in a manner consistent with the depreciation expense of the related assets over their useful lives. The decrease in revenue was primarily related to the timing of the amortization of previous years’ state grants/rebates associated with the installation of chargers during the three months September 30, 2023, and 2022.

Car-sharing services revenues were $903 during the three months ended September 30, 2023 as compared to $367 during the three months ended September 30, 2022, an increase of $536, or 146%. These revenues are derived from car-sharing subscription services through a program with the City of Los Angeles, which was associated with the acquisition of BlueLA in September 2020. Also contributing to the increase in revenues is revenues of $782 from Envoy, which was acquired in April 2023.

Other revenue increased by $269 or 64% to $687 for the three months ended September 30, 2023 as compared to $418 for the three months ended September 30, 2022. The increase was primarily attributable to higher Low Carbon Fuel Standard (LCFS) credits generated during the three months September 30, 2023 compared to the same period in 2022. We generate these credits from the electricity utilized by our electric car charging stations as a byproduct from our charging services in the states of California and Oregon.

Cost of Revenues

Cost of revenues primarily consists of electricity reimbursements, revenue share payments to our Property Partner hosts, the cost of charging stations sold, connectivity charges provided by telco and other networks, warranty, repairs and maintenance services, and depreciation of our installed charging stations. Cost of revenues for the three months ended September 30, 2023 were $30,592 as compared to $12,466 for the three months ended September 30, 2022, an increase of $18,126 or 145%. There is a degree of variability in our costs in relationship to our revenues from period to period, primarily due to:

• electricity reimbursements that are unique to those Property Partner host agreements which provide for such reimbursements;
• revenue share payments are predicated on the contractual obligation under the property partner agreement and the revenue generated by the applicable chargers;
• cost of charging stations sold is predicated on the mix of types of charging stations and parts sold during the period;
• network costs are fixed in nature based on the number of chargers connected to the telco network regardless of whether the charger generates revenue;
• provisions for excess and obsolete inventory; and
• warranty and repairs and maintenance expenses are based on both the number of service cases completed during the period.

Cost of product sales increased by $15,956, or 184%, from $8,663 for the three months ended September 30, 2022 as compared to $24,619 for the three months ended September 30, 2023. The increase was primarily due to the increase in product sales of commercial chargers, DC fast chargers and home residential chargers during the three months ended September 30, 2023 compared to the same period in 2022.

Cost of charging services-company-owned charging stations (electricity reimbursements) increased by $331, or 141%, to $566 for the three months ended September 30, 2023 as compared to $235 for the three months ended September 30, 2022. The increase in 2023 was attributable to the mix of charging stations generating charging service revenues subject to electricity reimbursement.

Host provider fees increased by $1,426, or 147%, to $2,399 during the three months ended September 30, 2023 as compared to $973 during the three months ended September 30, 2022. This increase was a result of the mix of chargers generating revenue and their corresponding revenue share percentage payments to Property Partner hosts pursuant to their agreements.

Network costs decreased by $101 or 20%, to $407 during the three months ended September 30, 2023 as compared to $508 during the three months ended September 30, 2022. The decrease was a result of the increase in charging stations on our network and costs incurred related to the upgrading of our network system compared to the same period in 2022.

Warranty and repairs and maintenance costs decreased by $242, or 30%, to $561 during the three months ended September 30, 2023 from $803 during the three months ended September 30, 2022. The decrease in 2023 was attributable to significant efforts expended to reduce the backlog in warranty and repairs and maintenance cases in the prior year.

Cost of car-sharing services was $931 during the three months ended September 30, 2023 as compared to $470 during the 2022 period. The increase was due to an increase in vehicles used in this operation during the period. These costs are from car-sharing subscription services through a program with the City of Los Angeles, which was associated with the acquisition of BlueLA in September 2020. Also contributing to the increase in costs for these services is $676 from Envoy, which was acquired in April 2023.

Depreciation and amortization expense increased by $295, or 36%, to $1,109 for the three months ended September 30, 2023 as compared to $814 for the three months ended September 30, 2022. The increase in depreciation expense was attributable to an increase in the number of EV charging stations and vehicles associated with the ride-share services.

Operating Expenses

Compensation expense decreased by $2,337, or 13%, to $15,268 (consisting of approximately $14.1 million of cash compensation and benefits and approximately $1.1 million of non-cash compensation) for the three months ended September 30, 2023. Compensation expense was $17,605 (consisting of approximately $12.8 million of cash compensation and benefits and approximately $4.8 million of non-cash compensation) for the three months ended September 30, 2022. The decrease in compensation expense for the three months ended September 30, 2023 compared to the same period in 2022 was primarily related to decreases in personnel and compensation in executive, marketing, sales and operations departments as a result of the synergies realized as a result of the integration of the acquisitions from 2022. The decrease in compensation expense for the three months ended September 30, 2023 compared to the same period in 2022 was partially offset due to additional personnel in conjunction with the acquisition of Envoy in April 2023.

General and administrative expenses increased by $1,945, or 29%, to $8,539 for the three months ended September 30, 2023 as compared to $6,594 for the three months ended September 30, 2022. The increase was primarily attributable to increases in accounting, software licensing and other professional service expenditures of $2,168.

Other operating expenses increased by $365, or 7%, to $5,444 for the three months ended September 30, 2023 from $5,079 for the three months ended September 30, 2022. The increase was primarily attributable to increases in insurance, software expense, rent, hardware and software development costs and property/use tax expenditures of $1,931. Further, decreases in travel expenses of $134, partially offset the increase in other operating expenses for three months ended September 30, 2023 compared to the same period in 2022. Also contributing to the increase in other operating expenses were operating expenditures related to the 2023 acquisition of Envoy. The increase in other operating expenses for the three months ended September 30, 2023 compared to the same period in 2022 was partially offset by a decrease of $1,689 expenses related to the 4G network upgrade which was substantially performed during 2022.

During the three months ended September 30, 2023, we observed certain triggering events, including a decline in our stock price and, as a result, we conducted a quantitative impairment analysis of our goodwill and intangible assets and determined that the fair value of our reporting units were less than the carrying amount and, as a result, recorded an impairment charge of $89,087 related to goodwill and $5,143 related to intangible assets during the 2023 period.

Other Expense

We recorded other expense of $1,218 during the three months ended September 30, 2023 as compared to $1,150 for the three months ended September 30, 2022. The increase was primarily due to loss on extinguishment of notes payable of $1,000 recognized during the 2023 period, partially offset by an increase in a gain on foreign exchange of $739 as compared to the 2022 period.

Net Loss

Our net loss for the three months ended September 30, 2023 increased by $87,074, or 340%, to $112,721 as compared to $25,647 for the three months ended September 30, 2022. The increase was primarily attributable to an increase in operating expenses, partially offset by an increase in gross profit.

Total Comprehensive Loss

Our total comprehensive loss for the three months ended September 30, 2023 was $114,399 whereas our total comprehensive loss for the three months ended September 30, 2022 was $28,083.

Nine months Ended September 30, 2023 Compared Nine months Ended September 30, 2022

Revenues

Total revenue for the nine months ended September 30, 2023 increased by $59,354, or 154%, to $97,887 compared to $38,533 during the nine months ended September 30, 2022.

Revenue from product sales was $76,035 for the nine months ended September 30, 2023 compared to $30,238 during the nine months ended September 30, 2022, an increase of $45,797, or 151%. This increase was attributable to increased sales of commercial chargers, DC fast chargers and residential chargers when compared to the same period in 2022.

Charging service revenue from Company-owned charging stations was $11,111 for the nine months ended September 30, 2023 as compared to $3,857 for the nine months ended September 30, 2022, an increase of $7,254, or 188%. The increase is due to the increase in utilization of chargers and an increased number of chargers on the Blink Networks.

Network fee revenues were $5,268 for the nine months ended September 30, 2023 as compared to $2,089 for the nine months ended September 30, 2022, an increase of $3,179, or 152%. The increase was attributable to increases in host owned units during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

Warranty revenues were $2,163 for the nine months ended September 30, 2023 as compared to $475 for the nine months ended September 30, 2022, an increase of $1,688, or 355%. The increase was primarily attributable to an increase in warranty contracts sold for the nine months September 30, 2023 compared to the nine months September 30, 2022. As of September 30, 2023, we recorded a liability of $9 which represents the estimated cost of existing backlog of known warranty cases.

Grant and rebate revenues were $284 during the nine months ended September 30, 2023 as compared to $283 during the nine months ended September 30, 2022. Grant and rebates relating to equipment and the related installation are deferred and amortized in a manner consistent with the depreciation expense of the related assets over their useful lives. The decrease in revenue was primarily related to the timing of the amortization of previous years’ state grants/rebates associated with the installation of chargers during the nine months September 30, 2023, and 2022.

Car-sharing services revenues were $2,112 during the nine months ended September 30, 2023 as compared to $885 during the nine months ended September 30, 2022, an increase of $1,227, or 139%. These revenues are derived from car-sharing subscription services through a program with the City of Los Angeles, which was associated with the acquisition of BlueLA in September 2020. Also contributing to the increase in revenues is revenues of $1,406 from Envoy, which was acquired in April 2023.

Other revenue increased by $208 to $914 for the nine months ended September 30, 2023 as compared to $706 for the nine months ended September 30, 2022. The increase was primarily attributable to higher Low Carbon Fuel Standard (LCFS) credits generated during the nine months September 30, 2023 compared to the same period in 2022. We generate these credits from the electricity utilized by our electric car charging stations as a byproduct from our charging services in the states of California and Oregon.

Cost of Revenues

Cost of revenues primarily consists of electricity reimbursements, revenue share payments to our Property Partner hosts, the cost of charging stations sold, connectivity charges provided by telco and other networks, warranty, repairs and maintenance services, and depreciation of our installed charging stations. Cost of revenues for the nine months ended September 30, 2023 were $68,268 as compared to $30,209 for the nine months ended September 30, 2022, an increase of $38,059, or 126%. There is a degree of variability in our costs in relationship to our revenues from period to period, primarily due to:

• electricity reimbursements that are unique to those Property Partner host agreements which provide for such reimbursements;
• revenue share payments are predicated on the contractual obligation under the property partner agreement and the revenue generated by the applicable chargers;
• cost of charging stations sold is predicated on the mix of types of charging stations and parts sold during the period;
• network costs are fixed in nature based on the number of chargers connected to the telco network regardless of whether the charger generates revenue;
• provisions for excess and obsolete inventory; and
• warranty and repairs and maintenance expenses are based on both the number of service cases completed during the period.

Cost of product sales increased by $28,375, or 134%, from $21,134 for the nine months ended September 30, 2022 as compared to $49,509 for the nine months ended September 30, 2023. The increase was primarily due to the increase in product sales of commercial chargers, DC fast chargers and home residential chargers during the nine months ended September 30, 2023 compared to the same period in 2022.

Cost of charging services-company-owned charging stations (electricity reimbursements) increased by $1,427, or 186%, to $2,196 for the nine months ended September 30, 2023 as compared to $769 for the nine months ended September 30, 2022. The increase in 2023 was attributable to the mix of charging stations generating charging service revenues subject to electricity reimbursement.

Host provider fees increased by $3,940, or 168%, to $6,285 during the nine months ended September 30, 2023 as compared to $2,345 during the nine months ended September 30, 2022. This increase was a result of the mix of chargers generating revenue and their corresponding revenue share percentage payments to Property Partner hosts pursuant to their agreements.

Network costs increased by $415 or 45% to $1,339 during the nine months ended September 30, 2023 as compared to $924 during the nine months ended September 30, 2022. The increase was a result of the increase in charging stations on our network and costs incurred related to the upgrading of our network system compared to the same period in 2022.

Warranty and repairs and maintenance costs increased by $1,487, or 103%, to $2,924 during the nine months ended September 30, 2023 from $1,437 during the nine months ended September 30, 2022. The increase in 2023 was attributable to significant efforts expended to reduce the backlog in warranty and repairs and maintenance cases. As of September 30, 2023, we recorded a liability of $9 which represents the estimated cost of existing backlog of known warranty cases.

Cost of car-sharing services was $3,162 during the nine months ended September 30, 2023 as compared to $1,555 during the 2022 period. The increase was due to an increase in vehicles used in this operation during the period. These costs are from car-sharing subscription services through a program with the City of Los Angeles, which was associated with the acquisition of BlueLA in September 2020. Also contributing to the increase in costs for these services is $1,098 from Envoy, which was acquired in April 2023.

Depreciation and amortization expense increased by $808, or 40%, to $2,853 for the nine months ended September 30, 2023 as compared to $2,045 for the nine months ended September 30, 2022. The increase in depreciation expense was attributable to an increase in the number of EV charging stations and vehicles associated with the ride-share services.

Operating Expenses

Compensation expense increased by $38,324 or 102%, to $75,967 (consisting of approximately $55.4 million of cash compensation and benefits and approximately $20.5 million of non-cash compensation) for the nine months ended September 30, 2023. Compensation expense was $37,643 (consisting of approximately $29.8 million of cash compensation and benefits and approximately $7.8 million of non-cash compensation) for the nine months ended September 30, 2022. The increase in compensation expense for the nine months ended September 30, 2023 compared to the same period in 2022 was primarily related to increases in personnel and compensation in executive, marketing, sales and operations departments as a result of the anticipated domestic and international growth of our company. In addition, compensation expense during the nine months ended September 30, 2023 compared to the same period in 2022 increased due to additional personnel in conjunction with the acquisition of Envoy in April 2023. Also contributing to the increase in compensation expense is (1) non-cash stock-based compensation of approximately $5,500 related to the accelerated vesting of equity award grants and additional stock-based compensation associated with the resignation of our former Chief Executive Officer pursuant to the terms of the Former CEO Employment Agreement, as set forth in the Separation and General Release Agreement, dated as of September 20, 2023, between our company and the former Chief Executive Officer; and (2) non-recurring expense of approximately $11,500, consisting of the non-recurring payment of approximately $6,000 to our former Chief Executive Officer pursuant to the Former CEO Employment Agreement and a non-recurring bonus expense of $5,500 related to the achievement by our Chief Technology Officer of systems, product and IT-related key performance indicators under his employment agreement, dated April 12, 2021. In addition, compensation expense during the September 30, 2023 period compared to the same period in 2022 increased due to additional personnel in conjunction with the acquisition of Envoy in April 2023.

General and administrative expenses increased by $6,443 or 32%, to $26,466 for the nine months ended September 30, 2023 as compared to $20,023 for the nine months ended September 30, 2022. The increase was primarily attributable to increases in accounting, legal, investor/public relations, consulting , software licensing and other professional service expenditures of $4,791. Further, general and administrative expenses increased due to increases in amortization expense of $2,858 primarily related to the acquisition of Envoy in 2023.

Other operating expenses increased by $2,396, or 20%, to $14,555 for the nine months ended September 30, 2023 from $12,159 for the nine months ended September 30, 2022. The increase was primarily attributable to increases in insurance, software expense, rent, and hardware and software expenses of $4,607. Further, increases in travel and vehicle expenses of $661, contributed to the increase in other operating expenses for nine months ended September 30, 2023 compared to the same period in 2022. Also contributing to the increase in other operating expenses were operating expenditures related to the acquisition of Envoy in 2023. The increase in other operating expenses for the nine months ended September 30, 2023 compared to the same period in 2022 was partially offset by a decrease of $3,088 expenses related to the 4G network upgrade which was substantially performed during 2022.

During the nine months ended September 30, 2023, we observed certain triggering events, including a decline in our stock price and, as a result, we conducted a quantitative impairment analysis of our goodwill and intangible assets and determined that the fair value of our reporting units were less than the carrying amount and, as a result, recorded an impairment charge of $89,087 related to goodwill and $5,143 related to intangible assets during the 2023 period.

Other Expense

We recorded other expense of $1,180 during the nine months ended September 30, 2023 as compared to $1,910 for the nine months ended September 30, 2022. The decrease was primarily due to an increase in other income of $1,311 and gains of foreign exchange of $1,761, partially offset by an increase in interest expense of $1,317 and a loss on extinguishment of notes payable of $1,000.

Net Loss

Our net loss for the nine months ended September 30, 2023 increased by $120,593 or 190%, to $184,004 as compared to $63,411 for the nine months ended September 30, 2022. The increase was primarily attributable to an increase in operating expenses, partially offset by an increase in gross profit.

Total Comprehensive Loss

Our total comprehensive loss for the nine months ended September 30, 2023 was $185,387 whereas our total comprehensive loss for the nine months ended September 30, 2022 was $68,725.

Liquidity and Capital Resources

We measure our liquidity in a number of ways, including the following:

(unaudited)

During the nine months ended September 30, 2023, we financed our activities from proceeds derived from equity financings occurring in prior periods. A significant portion of the funds raised from the sale of capital stock has been used to cover working capital needs and personnel, office expenses and various consulting and professional fees.

For the nine months ended September 30, 2023 and 2022, we used cash of $77,162 and $57,776, respectively, in operations. Our cash use for the nine months ended September 30, 2023 was primarily attributable to our net loss of $184,004, adjusted for net non-cash expenses in the aggregate amount of $129,253, partially offset by $22,411 of net cash provided by changes in the levels of operating assets and liabilities. Our cash use for the nine months ended September 30, 2022 was primarily attributable to our net loss of $63,411, adjusted for net non-cash expenses in the aggregate amount of $15,730, and $10,095 of cash used to fund changes in the levels of operating assets and liabilities.

During the nine months ended September 30, 2023, net cash used in investing activities was $12,451, of which $7,265 was used to purchase charging stations and other fixed assets, $4,660 was used as cash consideration for Envoy (net of cash acquired) and $526 related to the capitalization of certain engineering costs. During the nine months ended September 30, 2022, net cash used in investing activities was $54,225, of which, $38,338 was used as cash consideration for SemaConnect (net of cash acquired), $11,360 was used as cash consideration for EB (net of cash acquired), $2,230 was used to purchase charging stations and other fixed assets, $1,500 was used as a note receivable to a target, and $797 was related to the payment of engineering costs that were capitalized.

During the nine months ended September 30, 2023, cash provided by financing activities was $120,891, of which, $122,379 was provided by offering proceeds related to the sale of common stock, $835 was provided by the exercise of options and warrants, offset by $2,103 used to pay down our liability in connection with a finance lease and $220 used to pay down our liability in connection with internal use software. During the nine months ended September 30, 2022, cash used in financing activities was $766, of which, $201 was provided by the exercise of warrants and options, offset by $235 used to pay down our liability in connection with internal use software, $144 was used to pay down our finance lease liability and $588 was used to pay down notes payable.

As of September 30, 2023, we had cash, working capital and an accumulated deficit of $66,678, $94,455 and $518,034, respectively. During the nine months ended September 30, 2023, we had a net loss of $184,004.

In February 2023, the Company completed an underwritten registered public offering of 8,333,333 shares of its common stock at a public offering price of $12.00 per share. The Company received approximately $100,000 in gross proceeds from the public offering and $94,766 in net proceeds after deducting the underwriting discount and offering expenses paid by the Company. The public offering was made pursuant to our automatic shelf registration statement on Form S-3 filed with the SEC on January 6, 2021, and prospectus supplement dated February 8, 2023. Barclays acted as the sole book-running manager for the offering. H.C. Wainwright & Co., Roth Capital Partners and ThinkEquity acted as co-managers for the offering. The underwriters did not exercise the over-allotment granted to them in connection with the offering.

We have not yet achieved profitability and expect to continue to incur cash outflows from operations. It is expected that our operating expenses will continue to increase and, as a result, we will eventually need to generate significant product revenues to achieve profitability. Historically, we have been able to raise funds to support our business operations, although there can be no assurance that we will be successful in raising significant additional funds in the future. We expect that our cash on hand will fund our operations for at least 12 months after the issuance date of the financial statements included in this Quarterly Report on Form 10-Q.

Since inception, our operations have primarily been funded through proceeds received in equity and debt financings. We believe we have access to capital resources and continue to evaluate additional financing opportunities. There is no assurance that we will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount of funds we might raise will enable us to complete our EV development initiatives or attain profitable operations.

During 2023, we commenced a plan designed to improve our liquidity by enhancing revenue economics and reducing selling, general, and administrative expenses. The plan seeks to achieve these goals by increasing gross profit through product optimization, integration of SemaConnect, Blink UK/EB and Blue Corner acquisitions, and reduction of operating expenses through cost avoidance and cost cutting strategies. There can be no assurances these strategies will be achieved.

On September 2, 2022, we entered into a Sales Agreement (“Sales Agreement”) with Barclays Capital Inc., BofA Securities, Inc., HSBC Securities (USA) Inc., ThinkEquity LLC, H.C. Wainwright & Co., LLC and Roth Capital Partners, LLC (the “Agents”) to conduct an “at-the-market” (ATM) equity offering program pursuant to which we may issue and sell from time to time shares of our common stock, having an aggregate offering price of up to $250,000 through the Agents, as our sales agents. We currently anticipate using the net proceeds from the sale of our shares of common stock under the ATM program to supplement our operating cash flows to fund EV charging station deployment and our acquisition growth plan. We also plan to use any remaining proceeds we receive for working capital and other corporate purposes. The amounts and timing of our use of the net proceeds will depend on a number of factors, such as the timing and progress of our EV charging station deployment efforts, the timing and progress of any partnering and collaboration efforts and technological advances. During the nine months ended September 30, 2023, the Company sold 5,320,635 shares of its common stock for gross proceeds of approximately $28,260 pursuant to the ATM program. As of September 30, 2023, 6,066,119 shares have been sold pursuant to the ATM program representing gross proceeds of approximately $36,528. Included within the 6,066,119 shares sold pursuant to the ATM, are 186,763 shares of the Company’s common stock sold for aggregate proceeds of $571 subsequent to September 30, 2023.

Contractual Obligations and Commitments

We entered into purchase commitments that include purchase orders and agreements in the normal course of business with contract manufacturers, parts manufacturers, vendors for research and development services and outsourced services. As of September 30, 2023, we had purchase commitment of approximately $49,492, which will become payable upon the suppliers’ delivery of the charging stations, services and other related items. The purchase commitments were made primarily for future sales, deployments of charging stations, inventory management planning and other related items, all of which are expected to be received during the next 12-24 months.

Further, we have operating and finance lease obligations over the next five years of approximately $11,176. These operating lease obligations are primarily related to corporate office space, warehousing, and parking spaces related to our car-sharing services.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP. These accounting principles require us to make estimates and judgments that can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenue and expense during the periods presented. We believe that the estimates and judgments upon which it relies are reasonably based upon information available to us at the time that it makes these estimates and judgments. To the extent that there are material differences between these estimates and actual results, our financial results will be affected. The accounting policies that reflect our more significant estimates and judgments and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results are described below.

The following is not intended to be a comprehensive list of all of our accounting policies or estimates. Our accounting policies are more fully described in Note 2 – Summary of Significant Accounting Policies, in our financial statements included elsewhere in this quarterly report. For a comprehensive list of our critical accounting estimates, refer to Part II, Item 7, Critical Accounting Estimates in our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes to our critical accounting policies and estimates since the filing of our Annual Report on Form 10-K for the year ended December 31, 2022.

Revenue Recognition

We recognize revenue primarily from four different types of contracts:

• Product sales – Revenue is recognized at the point where the customer obtains control of the goods and the company satisfies its performance obligation, which generally is at the time it ships the product to the customer or installation of the product.
• Charging service revenue – company-owned charging stations - Revenue is recognized at the point when a particular charging session is completed.
• Network fees and other – Represents a stand-ready obligation whereby the company is obligated to perform over a period of time and, as a result, revenue is recognized on a straight-line basis over the contract term. Network fees are billed annually for host-owned and monthly for Blink-owned stations.
• Other – Other revenues primarily comprises of revenues generated from alternative fuel credits.

The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied.

Grants, rebates and alternative fuel credits, which are not within the scope of ASC 606, pertaining to revenues and periodic expenses are recognized as income when the related revenue and/or periodic expense are recorded. Grants and rebates related to EV charging stations and their installation are deferred and amortized in a manner consistent with the related depreciation expense of the related asset over their useful lives over the useful life of the charging station.

Stock-Based Compensation

We measure the cost of services received in exchange for an award of equity instruments based on the fair value of the award on the date of grant. The fair value amount of the shares expected to ultimately vest is then recognized over the period for which services are required to be provided in exchange for the award, usually the vesting period. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period that the estimates are revised. We account for forfeitures as they occur.

Long-Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. We assess the recoverability of its long-lived assets by monitoring current selling prices of car charging units in the open market, the adoption rate of various auto manufacturers in the EV market and projected car charging utilization at various public car charging stations throughout its network in determining fair value. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount.

Income Taxes

We account for income taxes pursuant to the asset and liability method of accounting for income taxes pursuant to FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for taxable temporary differences and operating loss carry forwards. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Operating Leases

We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use an incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Goodwill

Goodwill is the excess of consideration paid for an acquired entity over the fair value of the amounts assigned to assets acquired, including other identifiable intangible assets, and liabilities assumed in a business combination. To determine the amount of goodwill resulting from a business combination, the Company performs an assessment to determine the acquisition date fair value of the acquired company’s tangible and identifiable intangible assets and liabilities.

Goodwill is required to be evaluated for impairment on an annual basis or whenever events or changes in circumstances indicate the asset may be impaired. An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. These qualitative factors include: macroeconomic and industry conditions, cost factors, overall financial performance and other relevant entity-specific events. If the entity determines that this threshold is met, then the Company may apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The Company determines fair value through multiple valuation techniques and weights the results accordingly. The Company is required to make certain subjective and complex judgments in assessing whether an event of impairment of goodwill has occurred, including assumptions and estimates used to determine the fair value of its reporting units. The Company has elected to perform its annual goodwill impairment review on November 1 of each year.

Recently Issued Accounting Standards

For a description of our recently issued accounting standards, see Note 2 – Summary of Significant Accounting Policies in Part 1, Item 1 of this Quarterly Report on Form 10-Q.

Foreign Currency Risk

We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar, primarily the euro, causing both our revenue and our operating results to be impacted by fluctuations in the exchange rates. Gains or losses from the revaluation of certain cash balances, accounts receivable balances and intercompany balances that are denominated in these currencies impact our net loss. A hypothetical decrease in all foreign currencies against the U.S. dollar of 1% would not result in a material foreign currency loss on foreign-denominated balances, as of September 30, 2023. As our foreign operations expand, our results may be more materially impacted by fluctuations in the exchange rates of the currencies in which we do business. At this time, we do not enter into financial instruments to hedge our foreign currency exchange risk.

Evaluation of Disclosure Controls and Procedures

As of September 30, 2023, being the end of the period covered by this Report, our management conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow for timely decisions regarding required disclosure.

Based on that evaluation, our chief executive officer and chief financial officer concluded that, as of September 30, 2023, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting as discussed in Item 9A. Controls and Procedures – in the Company’s Form 10-K for the fiscal year ended December 31, 2022, under the heading “Management’s Annual Report on Internal Control Over Financial Reporting”.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2023, management continued to validate the operational effectiveness of the remediation of the material weaknesses reported in the Company’s Form 10-K for the fiscal year ended December 31, 2022. Furthermore, management continued to commit resources to the ongoing evaluation of the internal control over financial reporting of its previously exempted subsidiaries, SemaConnect and Blink Charging UK Limited.

At the close of the third quarter of 2023, indicators of impairment were identified by the Company prompting it to undertake an impairment assessment of the carrying value of its goodwill earlier than the Company’s normal annual assessment. Although properly stated at the end of the quarter, the initial goodwill impairment was miscalculated. Accordingly, management identified this deficiency as a material weakness related to the operational effectiveness of its internal controls in the goodwill impairment process. Specifically, this related to the timing of the controls and the formalization of documentation to substantiate the review. Management expects to remediate the timing and documentation of the controls during the fourth quarter of 2023.

Except for the above, there were no other changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2023, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In addition to the information set forth under Item 1A of Part I in our Annual Report on Form 10-K for the year ended December 31, 2022, and under a similar item in subsequent periodic reports, the information set forth at the beginning of Management’s Discussion and Analysis entitled “Special Note Regarding Forward-Looking Information,” and updates noted below, you should consider that there are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition or results of operation may be materially and adversely affected. In such case, the trading price of our common stock could decline and investors could lose all or part of their investment. These risk factors may not identify all risks that we face and our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations.

We have a history of substantial net losses and expect losses to continue in the future; if we do not achieve and sustain profitability our financial condition could suffer.

We have experienced substantial net losses, and we expect to continue to incur substantial losses for the foreseeable future. We incurred net losses of approximately $113 million for the quarter ended September 30, 2023. As of September 30, 2023, we had net working capital of approximately $94 million and an accumulated deficit of approximately $518 million. We have not yet achieved profitability.

If our revenue grows slower than we anticipate, or if our operating expenses are higher than we expect, we may not be able to achieve profitability and our financial condition could suffer. We can give no assurance that we will ever achieve profitable operations. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Whether we can achieve cash flow levels sufficient to support our operations cannot be accurately predicted. We may need to borrow additional funds or sell our debt or equity securities, or some combination of both, to provide funding for our operations in the future. Such additional funding may not be available on commercially reasonable terms, or at all.

We received an SEC subpoena and are cooperating with the SEC.

In July 2023, we received a subpoena from the SEC requesting the production of documentation and other information since January 1, 2020, relating to various subjects, including executive departures, related-party transactions, and EV charging station and other discrete disclosure matters. We intend to fully cooperate with the SEC and are in the process of responding to the subpoena. At this point, we are unable to predict what the timing or the outcome of the SEC investigation may be or what, if any, consequences the SEC investigation may have on us. We can provide no assurances as to the outcome of the SEC investigation.