Car Charging Group, Inc. — FY 2012 Form 10-K
Period and identity: This is an annual report for the fiscal year ended December 31, 2012, not a standalone Q4 report. The filing identifies the registrant as Car Charging Group, Inc.; it does not identify Blink Charging Co. as the registrant.
Business context
The company was a development-stage provider of electric-vehicle charging services and equipment. Its model included installing and operating charging stations on partner properties, generally at no upfront cost to the property owner, and sharing service economics. At year-end it reported 58 provider agreements and 263 installed charging units. Management said meaningful utilization and revenue depended on broader EV adoption.
Financial performance and position
| Metric | FY 2012 / Dec. 31, 2012 | FY 2011 / Dec. 31, 2011 |
|---|---|---|
| Total revenue | $258,064 | $62,289 |
| Gross profit | $58,972; 22.9% margin | $242; 0.4% margin |
| Operating loss | $(5,176,891) | $(4,088,805) |
| Net loss | $(5,289,610); $(0.13) per share | $(1,140,075); $(0.05) per share |
| Cash used in operating activities | $(2,312,346) | $(2,000,493) |
| Cash and cash equivalents | $13,416 | $406,859 |
| Total assets | $2,042,821 | $1,323,566 |
| Total liabilities | $812,254 | $368,903 |
| Current assets / current liabilities | $671,478 / $712,226 | $742,811 / $368,903 |
FY 2012 revenue included $16,743 of charging-service fees, $235,726 from equipment sales, and $5,595 of grant/rebate revenue recognized. Equipment sales generated $41,670 gross profit; service fees remained small. The company reported $56,941 of automobile note principal outstanding at year-end and $122,515 in net carrying value of convertible notes payable, including related-party notes. Some convertible notes were secured by company assets and bore 12% interest.
Changes, outlook, and risks
- Revenue rose from a low base, but net loss widened substantially, in part because 2011 included a $3.49 million gain from changes in derivative fair value. Operating loss also increased, reflecting higher compensation and other operating expenses, partly offset by lower general and administrative expense.
- The company raised $2.67 million net from financing activities in 2012, including common and preferred stock proceeds and convertible notes. It used $751,648 for investing activities, principally charging-station purchases. Cash declined by $393,443 during the year.
- The auditor cited substantial doubt about the company’s ability to continue as a going concern. Management planned to seek equity financing, monetize energy tax credits, and reduce costs; it nevertheless believed resources would fund operations through at least December 31, 2013.
- Management anticipated significant capital needs in 2013–2014 and no substantial near-term revenue or profit. The business depended on EV adoption, financing access, partner contracts, incentives, and its ability to deploy and integrate charging stations.
- After year-end, the company disclosed a March 2013 private financing with gross proceeds of $2.495 million, alongside shares and warrants. It also reported acquisitions involving Beam and EV Pass/Synapse; the latter added rights to operate 68 charging stations and included a 3.6% net-revenue share arrangement.
- Material risks included limited operating history, very low liquidity, potential dilution from equity and warrants, intense competition, dependence on key executives, and thinly traded OTC shares. The company reported ineffective disclosure controls and a material weakness in internal control over financial reporting, citing the lack of an independent audit committee or financial expert.
- Legal and contractual uncertainties included former officer compensation disputes, a California Labor Board claim, and an unresolved charging-equipment purchase commitment for 500 units; only 90 units had been purchased under that agreement by year-end. The filing stated the agreement’s ultimate resolution was unknown.
Important facts for investors to verify
- Confirm the issuer and reporting period: the supplied filing is Car Charging Group, Inc.’s FY 2012 10-K, not a Blink Charging Co. filing or a quarterly report.
- Reconcile reported compensation and operating-expense figures: MD&A gives compensation expense of $2,378,313 and other operating expenses of $547,343, while the statements of operations show $2,367,313 and $547,353, respectively.
- Assess near-term liquidity, debt maturities, and the status of financing plans against only $13,416 of year-end cash and the auditor’s going-concern warning.
- Review subsequent financing, acquisition terms, share issuance, warrants, and potential dilution, including the Beam and EV Pass/Synapse transactions.
- Evaluate the status and possible financial exposure from the former-officer claims, the equipment purchase agreement, and related-party arrangements.