Business context and reporting period
Car Charging Group, Inc. (using the Blink brand) filed this Form 10-K for the fiscal year ended December 31, 2016. Although the request metadata refers to 2016 Q4, this filing reports annual results; it does not provide a clear standalone fourth-quarter financial summary. The company owns and operates EV charging stations, sells charging equipment, and provides network, payment, maintenance, and related services.
The company reported approximately 13,346 deployed charging stations. It described its business as serving drivers and property partners through company-owned, host-owned, and hybrid arrangements.
Financial performance and position
| Metric | 2016 | 2015 |
|---|---|---|
| Revenue | $3.326 million | $3.958 million |
| Gross profit | $0.512 million | $1.096 million |
| Operating expenses | $7.725 million | $12.416 million |
| Loss from operations | $7.213 million | $11.320 million |
| Net loss | $7.699 million | $8.245 million |
| Net loss attributable to common shareholders | $9.168 million | $9.585 million |
| Basic and diluted loss per share | $0.11 | $0.12 |
| Cash used in operating activities | $2.749 million | $5.937 million |
- Revenue fell 16%; gross profit fell about 53%. Gross margin was approximately 15% versus 28% in 2015.
- Charging-service revenue from company-owned stations rose 7% to $1.144 million, and product sales rose 40% to $1.127 million. Grant and rebate revenue declined 72% to $0.333 million.
- Operating expenses decreased about 38%, primarily reflecting lower compensation, share-based compensation, and general and administrative costs.
- At year-end, cash was $5,898, current assets were $0.614 million, current liabilities were $21.799 million, and working capital deficiency was $21.185 million. Total liabilities were $21.898 million; total stockholders’ deficiency was $20.812 million.
- Cash used in investing activities was $80,463; financing activities provided $2.646 million. The company ended the year with $5,898 in cash, down from $189,231.
Material changes versus the prior year
- Revenue declined mainly because grant and rebate revenue dropped by $836,477 after a major grant agreement ended in 2015.
- Charging-service revenue increased modestly and equipment sales improved, but these gains did not offset lower grants and other revenue; gross profit decreased by $583,716.
- Net loss narrowed by 7%, mainly due to lower operating expenses, partly offset by lower gross profit and a swing from $3.075 million of other income in 2015 to $0.486 million of other expense in 2016. The comparison is affected by unusual prior-year gains, including a $1.834 million release of a U.S. Department of Energy obligation.
- Operating cash use improved from $5.937 million to $2.749 million, but the company remained reliant on debt and equity financing and had almost no cash at year-end.
Outlook, risks, contingencies, and unusual items
- Going concern and funding: The auditor’s report includes a substantial-doubt paragraph. Management said external funding would be needed to sustain operations over the next 12 months; no committed financing was in place apart from disclosed arrangements. The company warned it might reduce headcount, salaries, and other costs if financing could not be raised.
- Business plans: Management expected to pursue next-generation charging equipment, broader sales channels, station-occupancy fees, subscriptions for Blink-owned public stations, and advertising. A next-generation product launch was targeted for the second half of 2017. These are plans, not quantified financial guidance.
- Grants and market risks: Grants represented 10% of 2016 revenue, and management characterized grant availability as uncertain. Other key risks include EV adoption, competition, technology changes, customer concentration, and limited capital.
- Debt, preferred stock, and dilution: Year-end obligations included $0.581 million of convertible notes (net of discount), $0.495 million of related-party convertible notes, and $1.583 million of derivative liabilities. A JMJ financing arrangement allowed borrowing up to $3.725 million and included conversion and warrant terms that could be dilutive. The company also disclosed substantial outstanding preferred-stock conversion rights, warrants, and options. Series C preferred stock carried a stated liquidation preference of approximately $16.193 million and accrued dividends; the company stated it could not pay common dividends while Series C shares remained outstanding.
- Related-party and payment exposures: Certain notes owed to an entity affiliated with Executive Chairman Michael Farkas were past due and secured by substantially all company assets; the company was negotiating extensions. It also accrued $3.005 million of public-information filing penalties and $1.163 million of registration-rights penalties. The filing disclosed approximately $244,000 of delinquent federal and state payroll taxes as of March 31, 2017, and unfiled 2014 and 2015 corporate tax returns.
- Controls and listing: Management concluded disclosure controls and internal control over financial reporting were ineffective, citing five material weaknesses, including insufficient accounting resources, lack of written control documentation, and inadequate audit committee oversight. The common stock traded on OTC Pink; a proposed NASDAQ listing was not assured.
- Legal matters: Disclosed matters included creditor lawsuits relating to 350 Green, an ITT Cannon cable-purchase arbitration, claims by service providers, and litigation involving JNS Power. The filing described a proposed ITT settlement in stock, but it was not reported as completed. Sheetz litigation was settled in principle after year-end.
Important facts investors should verify
- Whether the company obtained sufficient financing after filing, and the resulting cash runway, financing terms, and dilution.
- Whether the going-concern risk, working capital deficit, and near-zero year-end cash position improved.
- Current status and amounts of past-due related-party debt, registration and filing penalties, payroll taxes, and other accrued liabilities.
- Progress on remediation of the disclosed material weaknesses and whether reporting obligations and any exchange-listing requirements were met.
- Whether the stated product, channel, and new-fee initiatives were launched, and whether station utilization and recurring revenue improved.