Business context and reporting period
This is Car Charging Group, Inc.’s Form 10-K for the fiscal year ended December 31, 2014, signed December 7, 2015. The company later became associated with the Blink Charging name; this filing reports historical results under Car Charging Group. Its business included EV charging equipment sales, charging services and the Blink Network. Management reported approximately 5,000 public Level 2 units, 113 public DC fast chargers and 7,600 residential units on the network.
Key financial results
| Metric | FY 2014 | FY 2013 |
|---|---|---|
| Revenue | $2.79 million | $466,403 |
| Gross loss | $2.84 million | $2.82 million |
| Operating loss | $24.49 million | $20.05 million |
| Net loss | $23.23 million | $24.14 million |
| Net cash used in operations | $7.04 million | $3.79 million |
| Cash at year-end | $1.63 million | $7.84 million |
- Revenue rose about 499%, primarily reflecting acquired Blink charging services, grants and rebates, and higher equipment sales. Despite growth, cost of revenue exceeded revenue, resulting in a gross margin of approximately negative 102%.
- Operating loss widened by $4.44 million. Net loss declined by $0.91 million, helped by higher other income, including a $3.94 million gain from changes in warrant fair value; this was a non-cash item.
- Significant 2014 charges included $4.90 million of goodwill impairment, $2.85 million of charging-station impairment and title losses, $1.20 million impairment of the ECOtality investment, and $1.44 million of inventory obsolescence.
- Cash used in investing was $0.83 million; financing provided $1.66 million. Total liabilities were $21.02 million against total assets of $6.16 million, with stockholders’ deficiency of $14.86 million. Current assets of $3.15 million were well below current liabilities of $20.73 million.
- Debt included $181,643 of current convertible notes, $536,297 of current notes (including related-party notes), and $18,803 of long-term notes. The balance sheet also reported $3.64 million of derivative liabilities.
Material changes versus the prior period
- Charging-service revenue increased to $1.25 million from $327,971; grant and rebate revenue increased to $950,358 from $90,796; equipment sales rose to $565,057 from $47,636.
- Cost of revenue increased to $5.63 million from $3.29 million, including the inventory obsolescence charge and costs associated with the Blink acquisition.
- Operating cash use increased to $7.04 million from $3.79 million, while year-end cash fell by $6.21 million. Financing cash inflows dropped to $1.66 million from $16.24 million in 2013.
- Acquisition-related goodwill was fully impaired: $3.30 million for 350 Green and $1.60 million for Beam. The company also recorded a $1.20 million impairment relating to the ECOtality estate investment.
Outlook, risks and unusual items
- Going concern: The auditor’s report and management disclosed substantial doubt about the company’s ability to continue as a going concern. Management said it needed external funding over the following 12 months and was operating month to month. Cash was approximately $193,000 as of December 7, 2015. No new financing commitment was assured.
- Financing and dilution: A December 2014 securities agreement provided for up to $6 million through Series C preferred stock and warrants. By December 7, 2015, the company reported receiving $5 million. Additional preferred-stock financings followed in 2015; preferred dividends, redemption features and warrants could add cash obligations or dilute common shareholders.
- Filing and control weaknesses: The company said it had not filed its March, June or September 2015 Forms 10-Q by the report date, impairing access to public capital and Rule 144 resales. Management concluded disclosure controls and internal controls over financial reporting were ineffective, citing five material weaknesses, including inadequate accounting resources and ineffective audit-committee oversight.
- Operating and market risks: Results depend on EV adoption, station utilization, host relationships, grants and the ability to raise capital. Management also cited competition, execution and growth-management risks. The company anticipated occupancy fees and subscriptions but provided no quantified revenue or profitability guidance.
- Contingencies and unusual events: ITT Cannon sought $737,425 plus fees and damages in an arbitration concerning charging cables the company rejected as nonconforming. The filing also described legacy 350 Green creditor litigation, a settlement with former consultants and a settlement relating to the 350 Green acquisition. Nissan terminated a marketing agreement in 2015 and took possession of 28 uninstalled fast chargers. The company accrued $711,517 for SEC public-information noncompliance and $2.57 million for registration-rights penalties.
- The company reported no dividends planned for the foreseeable future. Its OTC-traded shares were described as thinly traded and subject to penny-stock restrictions.
Most important facts for investors to verify
- Confirm the registrant and corporate-name history: this is a 2014 Car Charging Group filing, not a current-period Blink Charging report.
- Review the audited statements and notes for the going-concern warning, working-capital deficit, cash position and subsequent financing actually received.
- Check the status and terms of Series C preferred stock, warrants, registration penalties and potential dilution, including any accrued dividends or redemption rights.
- Confirm whether delinquent interim filings and the disclosed internal-control material weaknesses were subsequently remedied.
- Verify outcomes and any remaining exposure from the ITT Cannon arbitration, 350 Green matters and other litigation, and assess station ownership, impairments and grant-related obligations.