Quarterly report pursuant to Section 13 or 15(d)

Summary of Significant Accounting Policies

v3.19.3
Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

3. 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.

 

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 September 30, 2019, the Company had cash balances in excess of FDIC insurance limits of $7,651,611.

 

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 September 30, 2019 and December 31, 2018:

 

    September 30, 2019     December 31, 2018  
             
Short-term investments:                
Available- for-sale investments   $ 3,032,399     $ 2,878,664  

 

The following is a summary of the unrealized gains, and fair value by investment type as of September 30, 2019 and December 31, 2018:

 

    September 30, 2019  
    Gross
Unrealized Gains
    Fair Value  
Fixed income   $ 108,169     $ 3,032,399  
                 

 

    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 revenue recognized under ASC 606 in the condensed consolidated statements of operations:

 

    For The Three Months Ended     For The Nine Months Ended  
    September 30,     September 30,  
    2019     2018     2019     2018  
                         
Revenues - Recognized at a Point in Time:                                
Charging service revenue - company-owned charging stations   $ 317,990     $ 320,388     $ 937,870     $ 927,485  
Product sales     319,254       102,958       704,472       381,557  
Other     34,148       36,135       122,408       131,795  
Total Revenues - Recognized at a Point in Time     671,392       459,481       1,764,750       1,440,837  
                                 
Revenues - Recognized Over a Period of Time:                                
Network fees and other     88,516       80,639       275,137       258,283  
Total Revenues - Recognized Over a Period of Time     88,516       80,639       275,137       258,283  
                                 
Total Revenue Under ASC 606   $ 759,908     $ 540,120     $ 2,039,887     $ 1,699,120  

 

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 September 30, 2019, the Company had $167,118 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 September 30, 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 and nine months ended September 30, 2019, the Company recognized $85,674 and $260,823, respectively of revenues related to network fees and warranty contracts, which were included in deferred revenues as of December 31, 2018.

 

During the three and nine months ended September 30, 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 September 30, 2019 and 2018, the Company recorded $4,578 and $6,724, respectively, related to grant, rebate and alternative fuel credits revenue. During the nine months ended September 30, 2019 and 2018, the Company recorded $17,817 and $68,062, respectively, related to grant, rebate and alternative fuel credits revenue.

 

At September 30, 2019 and December 31, 2018, there was $88,248 and $106,066, respectively, of deferred grant and rebate revenue to be amortized.

 

CONCENTRATIONS

 

As of September 30, 2019, and December 31, 2018, accounts receivable from a significant customer was 31% and 35% of accounts receivable, respectively. During the three months ended September 30, 2019 sales to a significant customer represented 12% of the Company’s total revenues and represented 29% of product sales. During the nine months ended September 30, 2019 the same customer represented 13% of product sales. During the three months ended September 30, 2019 and 2018 another significant customer represented 17% and 19% of charging service revenues and less than 10% and 11% of total revenues, respectively. During the nine months ended September 30, 2019 and 2018 the same customer represented 18% and 17% of charging service revenues, 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.

 

For the three and nine months ended September 30, 2019 and 2018, the Company calculated the potential diluted earnings per share in accordance with ASC 260, as follows:

 

    For the Three Months Ended
September 30,
    For the Nine Months Ended
September 30,
 
    2019     2018     2019     2018  
Numerator:                                
Net loss attributable to common shareholders (numerator for basic earnings per share)   $ (2,622,989 )   $ (2,148,631 )   $ (6,753,836 )   $ (25,231,361 )
Less: change in fair value of derivative liabilities and other accrued liabilities     -       (1,040,273 )     -       (2,897,095 )
Adjusted net loss attributable to common shareholders (denominator for basic earnings per share)   $ (2,622,989 )   $ (3,188,904 )   $ (6,753,836 )   $ (28,128,456 )
                                 
Weighted average shares outstanding (denominator for basic earnings per share)     26,242,567       24,867,869       26,216,266       18,916,432  
Plus: incremental shares from assumed common stock issuance     -       424,681       -       -  
Plus: incremental shares from assumed conversion of debt     -       -       -       196,994  
Adjusted weighted average shares outstanding (denominator for diluted earnings per share)     26,242,567       25,292,550       26,216,266       19,113,426  
                                 
Basic earnings per share   $ (0.10 )   $ (0.09 )   $ (0.26 )   $ (1.33 )
Diluted earnings per share   $ (0.10 )   $ (0.13 )   $ (0.26 )   $ (1.47 )

 

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 and Nine Months Ended  
    September 30,  
    2019     2018  
Convertible preferred stock     1,642,628       1,747,756  
Warrants     6,840,049       6,852,861  
Options     128,008       106,108  
Total potentially dilutive shares     8,610,685       8,706,725  

 

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 June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. The Company will be required to adopt the provisions of this ASU on January 1, 2020, with early adoption permitted. The Company is currently assessing the impact that this pronouncement will have on its condensed consolidated financial statements.

 

In April 2019, the FASB issued 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.