Car Charging Group, Inc. (identified in the request metadata as Blink Charging Co.) — FY 2013 Form 10-K
Reporting period: Year ended December 31, 2013; filed May 2, 2014. This is an annual report, not a standalone fourth-quarter report. The filing names the registrant Car Charging Group, Inc.
Business context
The company operated public and residential electric-vehicle charging services, selling equipment and charging services and receiving grants, rebates, and marketing incentives. It completed acquisitions of Beam Charging, EV Pass, 350Green, and Blink Network during 2013. Management reported approximately 5,200 Level 2 units and 105 DC fast-charging devices installed.
Financial results and liquidity
| Metric | FY 2013 | FY 2012 |
|---|---|---|
| Revenue | $466,403 | $258,064 |
| Gross profit (loss) | $(2,820,269) | $58,972 |
| Operating loss | $(19,385,376) | $(5,176,891) |
| Net loss | $(24,137,285) | $(5,289,610) |
| Net loss attributable to common shareholders | $(26,969,115) | $(5,289,610) |
| Basic and diluted loss per share | $(0.49) | $(0.13) |
| Cash used in operating activities | $(3,789,542) | $(2,351,641) |
| Cash at year-end | $7,837,339 | $13,416 |
Revenue rose about 81%, but remained small relative to costs; gross margin was approximately negative 605% in 2013. Service-fee revenue increased to $327,971 from $16,743, while station sales fell to $47,636 from $235,726. Cost of revenue rose to $3.29 million, including $2.51 million of depreciation and amortization.
At year-end, current assets were $9.79 million and current liabilities were $23.08 million, producing a reported working-capital deficit of $13.29 million. Total liabilities were $23.89 million. Notes payable were $439,739 current and $129,202 long-term; current liabilities also included a $9.51 million derivative warrant liability and $1.22 million of warrants payable. Stockholders’ deficit was $423,247.
Cash used in investing was $4.63 million; financing provided $16.24 million, principally from common-stock sales. The company reported $6 million of shareholder financing commitments through December 31, 2014 and management believed resources were sufficient through that date. The filing does not provide a specific forward revenue or earnings forecast.
Material changes, outlook, and notable items
- Acquisitions expanded the network and brought Blink Network operations into the company; acquired businesses’ results are included only from their respective acquisition dates. Unaudited pro forma results assuming acquisitions from January 1, 2013 show revenue of $24.67 million and net loss of $41.60 million.
- Operating loss widened by $14.21 million year over year. Compensation expense increased substantially, partly from stock- and warrant-based awards and the larger workforce. Other expenses included a $3.42 million financing-agreement settlement expense, $1.48 million warrant provision, $687,286 induced debt-conversion expense, and $606,685 impairment of EV Pass intangibles. A $2.83 million deemed dividend increased the loss attributable to common shareholders.
- Management expected EV adoption and charging use to increase after the second half of 2014, but this was an expectation, not quantified guidance. The company depended on market growth, additional capital, execution of acquisitions, and its ability to control operating costs.
- The company raised substantial equity capital and issued large numbers of warrants. At year-end, 37.90 million warrants and 4.94 million options were outstanding; potentially dilutive securities were excluded from diluted EPS as antidilutive.
- Material contingencies include the Nissan agreement to install and maintain 48 fast chargers by June 30, 2014: two were installed at year-end, and $781,521 of the $782,880 received remained deferred. The filing also reports a $2.32 million accrued Department of Energy fee and a $1.54 million accrued registration-rights penalty.
- Litigation involving 350Green resulted in transfer of certain Chicago-area assets and liabilities to JNS; the filing reports debt assumed by JNS of $2.42 million. Five creditor lawsuits concerned alleged pre-acquisition 350Green debts. The company also disclosed a Synapse dispute and litigation with 350Green’s former owners. Outcomes and potential losses were uncertain.
- Management concluded disclosure controls and internal control over financial reporting were ineffective, citing undocumented controls, limited accounting resources and segregation of duties, inadequate transaction-information flow, and ineffective audit-committee oversight. The independent auditor gave an unqualified opinion on the financial statements, but did not audit internal-control effectiveness.
- Subsequent events included a $6 million financing commitment (April 29, 2014), a trust arrangement for 350Green (April 24, 2014), and a new three-year CEO contract approved in April 2014.
Most important facts for investors to verify
- Whether the $6 million shareholder commitments were funded, and whether they were sufficient to address the working-capital deficit and continuing cash burn.
- Actual installation progress and compliance with the Nissan 48-charger deadline, and the resolution of DOE grant and fee matters.
- Final outcomes and financial effects of 350Green, JNS, Synapse, and creditor disputes, including liabilities transferred to the trust or assumed by other parties.
- Registration status and any additional penalties, plus the terms and potential dilution from outstanding warrants, options, and preferred shares.
- Whether management remedied the disclosed material weaknesses and whether later reports show improved controls and reliable financial reporting.
- Whether acquired-network revenue and charging utilization grew enough to improve the substantial gap between revenue and operating costs.