Blink Charging / Car Charging Group, Inc. — FY2015 Form 10-K
Reporting period: Fiscal year ended December 31, 2015; comparison is FY2014. The registrant’s legal name was Car Charging Group, Inc.; Blink was its charging-network brand. The annual report was signed July 29, 2016. This is an annual filing, not a standalone fourth-quarter report.
Business context and operating model
The company owns and operates EV charging stations, sells charging equipment, and provides network, payment, maintenance, and related services. It serves property partners through company-owned, shared-cost, and equipment-sale arrangements. At the time described, its network included approximately 4,880 public Level 2 chargers, 130 DC fast chargers, and 2,800 residential chargers; it also reported units on other networks and non-networked residential installations.
Financial results and liquidity
| Metric | FY2015 | FY2014 |
|---|---|---|
| Revenue | $3.96 million | $2.79 million |
| Gross profit (loss) | $1.10 million | $(2.84) million |
| Operating loss | $(11.32) million | $(24.49) million |
| Net loss | $(8.24) million | $(23.23) million |
| Net loss attributable to common shareholders | $(9.58) million | $(22.72) million |
| Cash used in operating activities | $(5.94) million | $(7.04) million |
- Revenue increased approximately 42%. Charging-service revenue was $1.70 million (+36%), grant and rebate revenue $1.17 million (+23%), equipment sales $805,143 (+42%), and other revenue $280,490, up from $28,451, primarily from host network and transaction fees.
- Gross profit improved by approximately $3.94 million, chiefly as FY2014 included substantial inventory obsolescence and higher depreciation and amortization. FY2015 gross margin was approximately 28%, compared with a gross loss in FY2014.
- Cash from financing was $4.60 million, mainly proceeds from Series C preferred stock and warrants. Cash used in investing was $102,264; cash fell by $1.44 million to $189,231.
- At year-end, current assets were $1.91 million versus current liabilities of $16.35 million, a reported working-capital deficit of $14.44 million. Total liabilities were $16.47 million; stockholders’ deficiency was $13.62 million. Accumulated deficit was $73.37 million.
- Year-end current borrowings included $50,000 of convertible notes, $351,954 current notes payable, and $20,000 related-party notes; non-current notes payable were $4,815. The company also reported $1.35 million in derivative liabilities.
Material changes and unusual items
- The net loss narrowed substantially, but the improvement included non-cash and unusual items. Other income included a $1.83 million release of a DOE obligation and a $3.26 million gain from changes in warrant-liability fair value; it was partly offset by $1.72 million in penalties for delinquent SEC filings and a $228,750 SEC registration-related penalty.
- Cost of revenue declined 49%, primarily because FY2014 had higher depreciation and amortization following asset impairment. FY2014 also included $4.90 million of goodwill impairment, $2.85 million of charger impairment/loss of title, $1.20 million impairment related to the ECOtality estate, and other charges.
- Government grants represented approximately 29% of FY2015 revenue, creating reliance on public incentives. A Nissan joint-marketing agreement was terminated in 2015; Nissan took possession of 28 uninstalled fast chargers.
- The company raised $4.93 million in 2015 financing proceeds through Series C preferred stock and warrants. After year-end, it received $1.37 million under 2016 preferred-stock financings and issued $400,000 of short-term convertible notes to an entity owned by the Executive Chairman.
Outlook, risks, and contingencies
- Management planned to expand equipment sales and sales channels, improve station utilization and network services, and pursue occupancy fees, subscriptions, and advertising. No specific revenue, profit, or cash-flow guidance was provided.
- Management said existing cash and operating margins were insufficient to meet obligations and planned to raise additional capital. If financing could not be obtained, it might cut headcount, salaries, and other costs. The auditor’s report included a substantial-doubt going-concern paragraph; the company said it was funding operations month to month.
- Preferred-stock issuances and warrants create material dilution and potential financing constraints. At December 31, 2015, potentially dilutive securities included approximately 48.4 million preferred-stock equivalents, 61.0 million warrants, and 7.8 million options; these were excluded from diluted loss per share as anti-dilutive.
- Management concluded disclosure controls and internal control over financial reporting were ineffective, citing undocumented controls, limited accounting resources and expertise, inadequate information flow, and ineffective audit-committee oversight. Consultants were engaged, with remediation planned as resources permitted.
- SEC filing delays had caused accrued public-information fees of $2.43 million and restricted access to public-market financing and Rule 144 resales. The company reported its common stock traded on OTC Pink and disclosed that it had not filed its March 31, 2016 Form 10-Q as of the report date.
- Material disputes included ITT Cannon’s $737,425 arbitration claim over charging cables (company disputed the claim) and JNS litigation alleging unspecified lost revenues and costs. The filing also disclosed other creditor and professional-fee disputes; some claims were accrued, but the potential total exposure is not clearly stated.
Key facts investors should verify
- Whether the company obtained adequate financing after the disclosed preferred-stock proceeds and related-party notes, and how long available funds supported operations.
- Whether reported revenue growth translated into recurring cash generation, particularly given the grant contribution and the company’s operating cash burn.
- The status and enforceability of registration-rights and public-information-fee obligations, SEC filing compliance, and the company’s ability to access capital markets.
- Current outcomes and potential exposure from the ITT Cannon, JNS, and other legal matters, including any liabilities beyond amounts accrued.
- The extent of dilution from preferred shares, warrants, options, and subsequent issuances, and the terms and related-party nature of later financing.
- Whether material weaknesses in financial reporting controls were remediated and whether the going-concern uncertainty changed after the filing.