Business Context and Reporting Period
Company: Car Charging Group, Inc. (formerly New Image Concepts, Inc.)
Reporting Period: Quarterly period ended June 30, 2010 (Six months ended June 30, 2010)
Status: Development Stage Company
Business Model: The Company acquires and installs electric vehicle (EV) charging stations (manufactured by Chargepoint/Coulomb Technologies) at third-party properties (malls, hospitals, cities) and shares servicing fees with property owners. The Company has generated no revenue since inception as mass production of EVs was not anticipated until late 2010.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2010 |
Six Months Ended June 30, 2010 |
Cumulative Since Inception (Sep 3, 2009) |
|---|---|---|---|
| Revenues | $0 | $0 | $0 |
| Operating Expenses | $311,232 | $640,882 | $979,669 |
| Net Loss | $(3,562,838) | $(1,491,316) | $(8,292,499) |
| Cash Balance (End of Period) | $35,032 (as of June 30, 2010) | ||
| Net Cash Used in Operating Activities | $(609,805) (Six Months) | ||
| Total Liabilities | $8,046,103 (as of June 30, 2010) | ||
| Derivative Liabilities | $7,857,207 (as of June 30, 2010) | ||
| Convertible Notes Payable (Net) | $65,869 (as of June 30, 2010) |
Material Changes vs. Prior Period
- Cash Position: Cash decreased significantly from $603,156 at December 31, 2009, to $35,032 at June 30, 2010, a reduction of approximately 94%.
- Derivative Liability Impact: The Company recorded a loss on the change in fair value of derivative liabilities of $3,244,249 for the three months ended June 30, 2010, and $835,601 for the six-month period. This non-cash accounting item drove the majority of the net loss.
- Stock Issuances: During the six months, the Company issued common stock for services ($42,500 value), to extinguish founder debt ($4,600), and in conversion of notes ($5,000). Additionally, 191,665 shares were sold for cash proceeds of $57,500.
- Asset Acquisition: The Company purchased EV charging devices ($15,281) and office equipment ($5,538) during the six-month period.
Guidance, Outlook, Risks, and Unusual Items
- Going Concern: The filing explicitly states substantial doubt about the Company's ability to continue as a going concern. The Company has an accumulated deficit of $8.3 million and no revenue. Continued operations depend on raising additional capital.
- Unusual Items: The financial results are heavily distorted by the fair value accounting of embedded derivatives (warrants and convertible notes with full ratchet reset features). These instruments are marked-to-market, creating large non-cash losses.
- Outlook: Management expects significant revenue generation only after the third quarter of 2010, coinciding with the mass production of electric vehicles. The Company is actively negotiating installation sites and hiring sales staff.
- Subsequent Events: In July and August 2010 (post-period), the Company raised $1,213,500 through the sale of 4,045,000 shares to 26 individuals.
- Risks: Reliance on third-party property owners, timing of EV market adoption, and the necessity of securing further equity or debt financing to fund operations.
Investor Verification Checklist
- Capital Adequacy: Verify the sufficiency of the $1.2M raised in July/August 2010 to cover the burn rate of ~$610k per six months.
- Derivative Liability Valuation: Review the assumptions used to value the $7.8M derivative liability, as this is a non-cash item that significantly impacts the balance sheet and net loss.
- Revenue Timeline: Confirm the status of EV charging station installations and the actual timeline for revenue generation versus the projected late-2010 start.
- Dilution: Assess the impact of the 79.7 million potentially dilutive shares (warrants and convertible notes) on future earnings per share.
- Related Party Transactions: Review the $4,600 debt extinguishment and $42,500 stock-for-services transactions for fair value and necessity.