Business Context and Reporting Period
Company: Car Charging Group, Inc. (formerly New Image Concepts, Inc.)
Filing Type: Form 10-K (Annual Report)
Period: Year ended December 31, 2009 (Inception: September 3, 2009)
Status: Development Stage Company / Smaller Reporting Company
The Company was formed via a reverse merger on December 7, 2009, between New Image Concepts, Inc. and Car Charging, Inc. The business intends to own, provide, and service electric vehicle (EV) charging stations at public locations (parking garages, municipalities, sporting venues) at no cost to landowners, deriving revenue from shared fees. As of the filing date, the Company had no significant operating history, no revenue, and was in the pre-revenue development phase.
Key Financial Metrics
| Metric | Value (Period from Inception to Dec 31, 2009) |
|---|---|
| Revenue | $0 |
| Net Loss | $(6,801,183) |
| Operating Loss | $(338,787) |
| Cash and Cash Equivalents | $603,156 |
| Total Assets | $825,066 |
| Total Liabilities | $7,368,541 |
| Stockholders' Deficit | $(6,543,475) |
| Convertible Notes Payable (Net) | $56,753 |
| Derivative Liabilities | $7,126,823 |
Key Expense Drivers: The operating loss of $338,787 consisted primarily of consulting fees ($211,358), legal fees ($56,910), insurance ($16,093), and accounting fees ($14,675). The massive net loss is driven by a non-cash loss of $6,454,754 related to the change in fair value of derivative liabilities associated with convertible notes and warrants.
Material Changes and Unusual Items
- Reverse Merger: On December 7, 2009, the Company completed a reverse acquisition of Car Charging, Inc., changing its name and business focus to EV charging infrastructure.
- Derivative Liability Volatility: The Company recorded a significant non-cash loss of $6,454,754 due to the mark-to-market adjustment of derivative liabilities. This arose from full ratchet reset features embedded in convertible notes and warrants issued during the merger and financing activities.
- Capital Structure: The Company issued 10,000,000 shares of Series A Convertible Preferred Stock and approximately 72.8 million shares of Common Stock. There are 68,566,665 potentially dilutive shares excluded from EPS calculations due to anti-dilutive effects.
- Inventory: The Company holds $72,768 in inventory consisting of purchased EV charging stations (ChargePoint CT1000/CT2000 families).
Outlook, Risks, and Management Commentary
Outlook: Management anticipates that significant revenue generation will not occur until the third quarter of 2010 or later, coinciding with the mass production and sale of electric vehicles by major manufacturers. The Company plans to launch services in South Florida before expanding nationally and internationally.
Liquidity and Going Concern: The Company has an accumulated deficit of $6,801,183 and used $364,212 in cash for operations. The auditors have expressed substantial doubt about the Company's ability to continue as a going concern. Continued operations are dependent on raising additional capital through debt or equity financing, which is not guaranteed.
Risks:
- Market Dependency: Success is entirely dependent on the adoption of electric vehicles and the availability of EVs on the road.
- Capital Needs: The Company requires significant additional funding to install charging stations and cover operating expenses.
- Competition: The industry is fragmented with competitors including ECOtality, Shorepower, SolarCity, and Better Place.
- Internal Controls: As a small developing company, there are risks regarding the effectiveness of internal controls over financial reporting.
Investor Verification Checklist
- Derivative Liability Valuation: Verify the assumptions used to value the $7.1 million derivative liability, as this non-cash item dominates the balance sheet and income statement.
- Capital Raise Progress: Confirm whether the Company has secured the additional financing required to fund operations beyond the current cash balance of $603,156.
- Revenue Timeline: Assess the validity of the management's projection that revenue will not begin until late 2010 or 2011.
- Contractual Commitments: Review the specific terms of the consulting and public relations agreements (noted as $10,000/month and $85,000/month respectively) to understand fixed cash outflows.
- Stock Ownership: Note that major shareholders (Gravity Capital Partners, Herb Hersey) hold significant voting power via Series A Preferred Stock (5:1 voting rights).