Quarterly report pursuant to Section 13 or 15(d)

Summary of Significant Accounting Policies

v3.19.1
Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2019
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Since the Annual Report for the year ended December 31, 2018, there have been no material changes to the Company’s significant accounting policies, except as disclosed in this note.

 

LIQUIDITY AND FINANCIAL CONDITION

 

As of March 31, 2019, the Company had cash, working capital and an accumulated deficit of $12,599,600, $13,995,671 and $161,750,108, respectively. During the three months ended March 31, 2019, the Company incurred a net loss of $1,893,627.

 

The Company believes its current cash on hand is sufficient to meet its operating and capital requirements for at least twelve months from the issuance date of these financial statements. Thereafter, the Company may need to raise further capital through the sale of additional equity or debt securities or other debt instruments to support its future operations. The Company’s operating needs include the planned costs to operate its business, including amounts required to fund working capital and capital expenditures. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully commercialize its products and services, competing technological and market developments, and the need to enter into collaborations with other companies or acquire other companies or technologies to enhance or complement its product and service offerings.

 

There is no assurance that the amount of funds the Company might raise in the future, will enable the Company to complete its development initiatives or attain profitable operations. If the Company is unable to obtain additional financing on a timely basis, it may have to curtail its development, marketing and promotional activities, which would have a material adverse effect on the Company’s business, financial condition and results of operations, and ultimately, the Company could be forced to discontinue its operations and liquidate.

 

CASH

 

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents in the condensed consolidated financial statements. The Company has cash on deposits in several financial institutions which, at times, may be in excess of Federal Deposit Insurance Corporation (“FDIC”) insurance limits. The Company has not experienced losses in such accounts and periodically evaluates the creditworthiness of its financial institutions. The Company reduces its credit risk by placing its cash and cash equivalents with major financial institutions. As of March 31, 2019, the Company had cash balances in excess of FDIC insurance limits of $12,249,662. As of December 31, 2018, the Company had cash balances in excess of FDIC insurance limits of $15,538,849.

 

INVESTMENTS

 

Available-for-sale securities are recorded at fair value with the net unrealized gains and losses (that are deemed to be temporary) reported as a component of other comprehensive income (loss). Realized gains and losses and charges for other-than-temporary impairments are included in determining net income, with related purchase costs based on the first-in, first-out method. The Company evaluates its available-for-sale-investments for possible other-than-temporary impairments by reviewing factors such as the extent to which, and length of time, an investment’s fair value has been below the Company’s cost basis, the issuer’s financial condition, and the Company’s ability and intent to hold the investment for sufficient time for its market value to recover. For impairments that are other-than-temporary, an impairment loss is recognized in earnings equal to the difference between the investment’s cost and its fair value at the balance sheet date of the reporting period for which the assessment is made. The fair value of the investment then becomes the new amortized cost basis of the investment and it is not adjusted for subsequent recoveries in fair value.

 

The following summarizes our investments as of March 31, 2019 and December 31, 2018:

 

    March 31, 2019     December 31, 2018  
Short-term investments:                
Available- for-sale investments   $ 2,988,175     $ 2,878,664  

 

The following is a summary of the unrealized gains, and fair value by investment type as of March 31, 2019 and December 31, 2018:

 

    March 31, 2019  
    Gross Unrealized Gains     Fair Value  
Fixed income   $ 100,686     $ 2,988,175  

 

    December 31, 2018  
    Gross Unrealized Gains     Fair Value  
Fixed income   $             -     $ 2,878,664  

 

REVENUE RECOGNITION

 

The Company recognizes revenue primarily from four different types of contracts:

 

Charging service revenue – company-owned charging stations - Revenue is recognized at the point when a particular charging session is completed.
Product sales – Revenue is recognized at the point where the customer obtains control of the goods and the Company satisfies its performance obligation, which generally is at the time it ships the product to the customer.
Network fees and other – Represents a stand-ready obligation whereby the Company is obligated to perform over a period of time and, as a result, revenue is recognized on a straight-line basis over the contract term. Network fees are billed annually.
Other – Primarily related to charging service revenue from non-company-owned charging stations. Revenue is recognized from non-company-owned charging stations at the point when a particular charging session is completed in accordance with a contractual relationship between the Company and the owner of the station.

 

The following table summarizes our revenue recognized under ASC 606 in our condensed consolidated statements of operations:

 

    For The Three Months Ended  
    March 31,  
    2019     2018  
             
Revenues - Recognized at a Point in Time:                
Charging service revenue - company-owned charging stations   $ 324,895     $ 305,747  
Product sales     103,204       135,760  
Other     51,599       50,529  
Total Revenues - Recognized at a Point in Time     479,698       492,036  
                 
Revenues - Recognized Over a Period of Time:                
Network fees and other     90,978       87,653  
Total Revenues - Recognized Over a Period of Time     90,978       87,653  
                 
Total Revenue Under ASC 606   $ 570,676     $ 579,689  

 

The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. A receivable is recorded when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related goods or services, the Company records deferred revenue until the performance obligations are satisfied.

 

As of March 31, 2019, the Company had $245,500 related to contract liabilities where performance obligations have not yet been satisfied, which has been included within deferred revenue on the condensed consolidated balance sheet as of March 31, 2019. The Company expects to satisfy its remaining performance obligations for network fees and warranty revenue and recognize the revenue within the next twelve months.

 

During the three months ended March 31, 2019, the Company recognized $83,279 of revenues related to network fees and warranty contracts, which were included in deferred revenues as of December 31, 2018.

 

During the three months ended March 31, 2019, there was no revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods.

 

Grants, rebates and alternative fuel credits, which are not within the scope of ASC 606, pertaining to revenues and periodic expenses are recognized as income when the related revenue and/or periodic expense are recorded. Grants and rebates related to EV charging stations and their installation are deferred and amortized in a manner consistent with the related depreciation expense of the related asset over their useful lives over the useful life of the charging station. During the three months ended March 31, 2019 and 2018, the Company recorded $6,714 and $16,231, respectively, related to grant, rebate and alternative fuel credits revenue. At March 31, 2019 and December 31, 2018, there was $99,351 and $106,066, respectively, of deferred grant and rebate revenue to be amortized.

 

CONCENTRATIONS

 

During the three months ended March 31, 2019 and 2018, revenues generated from a significant customer represented approximately 12% and less than 10%, respectively of the Company’s total revenue. As of March 31, 2019 and December 31, 2018, accounts receivable from a significant customer was 27% and 35% of accounts receivable, respectively.

 

NET LOSS PER COMMON SHARE

 

Basic net loss per common share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common shareholders by the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding if the common share equivalents had been issued (computed using the treasury stock or if converted method), if dilutive.

 

The following common share equivalents are excluded from the calculation of weighted average common shares outstanding because their inclusion would have been anti-dilutive:

 

    For the Three Months Ended  
    March 31,  
    2019     2018  
Convertible preferred stock     1,642,628       3,847,756  
Warrants     6,837,061       10,913,658  
Options     105,308       106,808  
Total potentially dilutive shares     8,584,997       14,868,222  

 

RECLASSIFICATIONS

 

Certain prior year balances have been reclassified in order to conform to current year presentation. These reclassifications have no effect on previously reported results of operations or loss per share.

 

RECENTLY ISSUED ACCOUNTING STANDARDS

 

In April 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”). The new ASU provides narrow-scope amendments to help apply these recent standards. The Company will be required to adopt the provisions of this ASU on January 1, 2020, with early adoption permitted for certain amendments. The Company is currently assessing the impact that this pronouncement will have on its condensed consolidated financial statements.