Car Charging Group's (CCGI) CEO Michael Farkas on Q2 2014 Results - Earnings Call Transcript

Aug.25.14 | About: Car Charging (CCGI)

Car Charging Group, Inc. (OTCPK:CCGI) Q2 2014 Earnings Conference Call August 25, 2014 1:00 PM ET

Executives

Chris Witty - IR, Darrow Associates, Inc.

Michael D. Farkas - CEO and Co-Founder

Analysts

Peter Castellanos - Glacier Asset Management

James McIlree - Chardan Capital Markets

Operator

Welcome to the Fiscal Second Quarter Earnings Call with CarCharging. My name is Tiffany and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded. I will now turn the call over to Mr. Chris Witty. You may go ahead.

Chris Witty

Thank you and welcome to CarCharging's second quarter conference call. With me today is Michael Farkas, the Company's Chief Executive Officer. I would now like to provide a brief Safe Harbor statement.

This conference call may include forward-looking statements that represent the Company's expectations and beliefs concerning future events that involve risks and uncertainties and may cause the Company's actual performance to be materially different from the performance indicated or implied by such statements. All statements aren't the statements of historical facts included in this conference call are forward-looking statements.

Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in this conference call and in the Company's Annual Report and Form 10-K for the fiscal year ended December 31, 2013.

All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are especially qualified in their entirety by the cautionary statements. Unless otherwise required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this conference call.

I'd like to turn it over now to Michael Farkas for a review of the operating results. Michael?

Michael D. Farkas

Thanks, Chris, and hello everybody. Thank you for joining us today for our second quarter earnings call. I want to spend some time highlighting the momentum we're seeing within the electric vehicle space and our growing role in serving this market. Our financial statements are available in our public filings. First, some facts.

Through the end of July, more than 66,000 plug-in vehicles were sold year-to-date across the United States, which is almost 40% higher than the same year period in 2013. In addition, according to a report from Transparency Market Research, global demand for EVs is forecasted to rise at a steady rate of 20%, that's annually through 2019, and at that point they are expecting approximately 64 million units on the roads worldwide.

The market for our charging stations is clearly growing, as is OEM commitment to serving it. Just in the past few months, there's been news of additional battery-powered EVs on the road, batteries themselves being more powerful and easier to charge. On top of that, many popular models are already on the road such as the Tesla Model S, Nissan LEAF, Chevy Volt, and there are a lot more coming out such as the Mercedes B-Class Electric, Cadillac ELR which was recently previewed, VW e-Golf, the VW e-Up, the Kia Soul, the BMW i3, the i8, which literally was just auctioned at $825,000, a car that goes for about $150,000, $125,000. There is tremendous interest in EVs across the board.

In [2005] (ph) there's also going to be additional vehicles being released, Tesla Model X, the Audi A3 e-tron, the R8 e-tron, the Porsche Cayenne plug-in, BMW X5, Volvo XC90, there are many, many more cars coming out. Every single major auto manufacturer is continuing to invest in EVs and the market is poised to grow even faster than it's already growing.

Demand is expected to accelerate, particularly in urban areas. As the number of vehicles that are available, you're going to see more and more people in these urban areas buy them as a perfect car for their environment. It is therefore imperative for charging providers such as CarCharging to anticipate metropolitan market dynamics and be positioned to offer the most access points and the easiest, fastest method of charging, and that's exactly what we're doing.

CarCharging continues to execute on the growth strategy that targets the most attractive geographic markets and the physical locations within those markets and to expand the number of chargers available to the consumers within those geographical areas. We continue to install new chargers across the United States in parking garages, retail outlets, parking lots and other accessible locations.

Also, we are converting contracts from more than 12,500 Blink stations that we acquired along with the Blink Network and other Blink related assets in October of 2013. The Blink stations were previously installed in association with Department of Energy's EV project and we are steadily working on operating agreements with the station hosts at these various locations with the main goal of improving service and expanding the number of chargers at each site. It is most certainly a very busy time for all of us here at CarCharging.

From an operational standpoint, we currently operate charging stations in 35 states and [inaudible] countries. We have over 13,500 charging stations today including nearly 1,500 in the key state of California. Out of more than 4,600 Blink Level II public commercial charging stations installed, only 63% of them are generating revenue and we're going to be converting all of them in short order to be producing revenue, and more so we're migrating them from the Ecotality's billing methodology to CarCharging's which will be able to generate additional revenues for us.

We also have 113 Blink DC Fast Chargers, they are called the superchargers, and only 81% of those are producing revenues right now. We're going to be adding the other ones to charge for the services as well, which should also in turn increase the revenues.

Our charging stations are also being utilized more frequently, and that's the most important thing. Monthly kilowatt-hour charging output has increased over 420,000 at the end of the second quarter. That's from approximately 50,000 at the end of the quarter ending 2013.

We have also begun to see the impact of our participation in the Nissan's No Charge to Charge program. The initiative sponsored by Nissan encourages the purchasers of these vehicles by providing free charging from Nissan to the EV owner. We receive fees directly from Nissan for providing those services and both Blink and CarCharging's charging stations are enrolled in the program.

We receive revenues from Nissan, and in addition any charging over the allocated time that Nissan provides to them, we get additional fees for that. I'll remind you, that program has not impacted our financial statements, the ones we just filed, those revenues will be impacting our quarterly filings moving forward.

In addition, following Tesla's decision that it would make its patents open source to speedy adoption in support of Tesla vehicles, we recently announced that we plan to integrate Tesla's proprietary Supercharger technology. The Supercharger technology is among the fastest and most powerful in use today and we're going to add this capability at the same time as we upgrade our DC charging stations.

We have also partnered with Gridscape Solutions to integrate Nissan's DC Fast Chargers with the Blink Network which expands the network options for EV charging servicers by providing the opportunity to select the Blink Network to monitor stations and review the associated charging data. We are planning on extending that with other manufacturers as well beyond the hardware that we have.

As many of our investors already know, our growth strategy uses several revenue-generating approaches. We offer a comprehensive program whereby CarCharging actually owns and operates the charging equipment, which includes the installation and ongoing maintenance. For such properties, we share a portion of the charging revenues with the site owner. Alternatively, businesses can pay for the equipment and installation expenses and for ongoing fees we'll operate and manage the stations.

One thing that we've incorporated into all of the Blink charging stations that we acquired was an $18 a month networking fee and that's starting to be rolled out. I mean every single charging station connected to our network for connectivity being able to connect to each of the charging stations over the wireless network as well as us providing the back-end office operation systems to be able to operate those units, it's $18 a unit. So that's a new revenue stream for CarCharging and we believe it's going to be increasing month over month as we add more and more units.

The bottom line is, we have generated revenues through selling equipment, providing access to the Blink Network, and providing EV charging services, but over time the majority of our growth will be from the latter, the increased use of charging stations by EV drivers needing to charge their cars. We believe in owning and operating charging stations and we believe ultimately just like gas stations produce a tremendous amount of revenues, we ultimately believe that people in urban areas and throughout the country will need charging facilities, and we plan on owning and operating those locations.

We diligently measure utilization rates and monitor service revenues. On such revenue, our gross margins can be up to 65%. Once the station is set up, the ongoing costs are rather limited compared to the upside potential from the years of recurring revenues. Our charging stations are compatible with nearly every electric vehicle sold in North America. Due to our organic growth initiatives and prior acquisitions, including charging stations previously owned by Ecotality, 350Green, Beam Charging, and EVPass, we are the largest owner and operator of EV charging stations.

Given this advantage, along with our strategic partnerships with OEMs, retailers and property managers, we have the ability to expand the availability of our proprietary easy-to-use applications. At the end of the quarter, we had $2.3 million in cash and equivalents on our balance sheet and are managing our expenses prior to any additional financing. We expect the Company's cash burn to decline going forward based on higher revenue and the benefits of the operating leverage, without the need to add greatly to our existing administrative cost structure.

We are speaking with certain equity investors now to have additional growth capital to fund the Company. We are on track and are executing a systematic plan that involves increasing the number of units in the field to drive top line growth and improved operating performance. As the leader in the car charging space, it is imperative to reach economies of scale as quickly as possible and strengthen our brand in the market, but we remain focused on managing the Company efficiently while paving the path to profitability.

We continue to be pleased with how our operations are performing and our team is dedicated to rapidly entering new markets, improving top line growth and driving higher margins. We believe the most important thing we can do to ensure attractive results going forward is to invest and strengthen our team and our network so that we can continue to build the customer relationships that we have. I want to personally thank CarCharging staff for their passionate commitment to the Company, and our investors for their patience and interest in our continued success.

At this time, we welcome the opportunity to address any questions you may have. Operator, please open the lines for any questions.

Question-and-Answer Session

Operator

(Operator Instructions) We also ask participants to limit themselves to one question and one follow-up question, and we will take additional questions as time permits (Operator Instructions). The first question is from Peter Castellanos of Glacier Partners. You may go ahead.

Peter Castellanos - Glacier Asset Management

Mike, I missed the cash balance number you gave. Could you repeat that?

Michael D. Farkas

At the end of the quarter we had $2.3 million.

Peter Castellanos - Glacier Asset Management

Okay. And then could you just address what you think in terms of cash burn going forward, kind of like where we see a breakeven and how much money you think you need to get there?

Michael D. Farkas

Okay, the most important thing is we are reducing our cash burn and there's two ways to do that, one is by increasing revenues or the other is reducing expenses, and we're lucky enough to be able to do a little bit of both. We are going to see some major impact on our financials based upon the No Charge to Charge program and some other programs that we have started. We also inherited through our acquisition of Ecotality substantial amount of hardware. Some of that hardware we're going to be selling and we have sold in the past and we're seeing an uptick on those sales.

So we believe in very short order we should be able to cover our burn based upon our revenues, but it's not going to be enough. Bottom line, to maintain our position in this marketplace, we're going to need to spend money, we need to go out there and deploy additional hardware, additional infrastructure. No different than the expansion of cell phone companies or cable television systems in their time. It takes money to really maintain that marketplace and maintain that dominating position. But ultimately we believe we'll be able to sustain our business, cover our burn based upon revenues. I don't know if it will take place this year but we're starting to see real big turnaround in what we're doing.

Peter Castellanos - Glacier Asset Management

I guess my question just about how much money you need to go forward, I mean the opportunities as you look at them are probably infinite, and…

Michael D. Farkas

Let me give you a little couple of facts here, okay. I have charging station data right in front of me. I have a charging station in the state of Washington that did 24,000 kilowatt-hours and earned $8,200, and that's with the old billing methodology that was on Ecotality. If you look at the way CarCharging would bill for that service, we would generate $12,000 from that one unit.

Now, if you look at a unit, on the economics of the past where it cost thousands and thousands of dollars for hardware, when I started this business its cost was $6,200 for each charging station. Today I'm buying them from third parties for about $2,200, and by mid-next year the next generation of Blink hardware I'm going to be able to get these units for $700.

On installations, when you do one install, it could cost you on average about $5,500. When you're adding four units into an installation, your cost per unit goes down dramatically because instead of it being $5,500 for one, it may be only $7,500 for four.

So what we're seeing now is, if we can have units that produce these kind of numbers that I'm looking at in front of me, of actual units, I'm not talking about pro forma financials moving forward in the future, I'm talking about a year, 12 months, a unit is doing 24,000 kilowatt-hour, 16,000 kilowatt-hour,16,000, 12,000, 15,000, these are serious numbers where you are talking about being able to put a unit in the ground and make money off of it, profits in the first year, and I'm not saying that's going to happen across the board because there's just not enough EVs out there, but if we balance our deployment based upon how these cars are being sold and we balance it properly, we should be able to put units in the ground based upon profitability.

Now it wasn't done in the past and that's why Ecotality had their problems and that's why 350Green had their problems, but what we've always prided ourselves upon is the fact that we deploy based upon demand, and now that we have acquired all of these assets, we are going to continuously do that exact same thing. We should have decently profitable units as we put them in the ground, although right now we have many, many units that aren't producing revenues because they were deployed in areas that just the cars haven't been sold yet.

Remember you have a couple of hundred thousand cars on the road today and that's going to change because we're seeing a lot more cars coming out and there's a lot more focus from the automotive companies, and the demand is there, people want to buy these cars.

Peter Castellanos - Glacier Asset Management

I guess where I'm a little bit uncomfortable is, the opportunity is quite large but you could easily outspend the opportunity and what sort of metric – do you understand what I'm saying or am I clear?

Michael D. Farkas

I understand exactly what you're saying and you are correct, our competitors outspent the market at their time in the market, there's no question about it. What we're trying to do is make sure that doesn't happen and our history has proven that we have been able to take advantage of those who have done that. So we pride ourselves of that, we pride ourselves on deploying capital as little as possible.

There were certain monies that we had to spend in the last year, eight months since we bought Ecotality because we had no choice we had to do - upgrading the networks. And the company became bankrupt. If you go through a bankruptcy process, there are a lot of things internally that just aren't done. They were cutting back on their tech guys, cutting back on everything while they were going through the process. We had to take that, cut away all the bad components, people, whatever it may be, and then start hiring on that and start building upon it.

When we bought the Blink Network, it had only one way to charge a customer, which is one hour for – if you remember, $1 per hour if you were a member, and $2 per hour if you weren't a member. Those days are over and right now we're seeing a complete change in the entire billing methodology of the Blink Network with many, many, many more options.

So there's a lot of things that needed to be spent in order to clean that stuff up but a lot of that doesn't need to be spent anymore because we did a lot of that housecleaning. So we're seeing the ability to reduce a lot of our expenses. And most importantly, we're seeing our revenues increase, we're seeing our charging station revenues increase considerably, we're seeing the programs that we're involved with.

So bottom line is, we're going to make sure that we don't outspend our marketplace. And until we get a phone call from one of our property owner partners that say, we need a charging station here because someone bought an EV, we don't deploy. Our side of that, unless we have grants or money given to us to say, here's money go spend it, if it's free money, that's when we deploy today.

Unless we get a call, it's either one or the other, it's either we're getting paid to deploy, so we deploy, or it's demand based, one of our property owner partner says, we have a new customer, or we see the demand at a charging station that's currently deployed being utilized very profitably, then we'll go add one or two units in that same location because we know there are cars out there. So while I definitely – I'm more concerned about outspending the market than probably anybody and that's why we've been able to go out there and acquire our competitors who have.

Peter Castellanos - Glacier Asset Management

Okay, thanks. I'll jump back in the queue now.

Operator

Our next question is from Jim McIlree of Chardan Capital. You may go ahead, Jim.

James McIlree - Chardan Capital Markets

Can you talk about the increase in the grant and rebate revenue for the quarter and what the outlook for that is for the next couple of quarters?

Michael D. Farkas

That was really part of a program that we inherited from Ecotality. We do have a considerable amount of grant still available to us and we are constantly doing our installations and getting grant revenues. It's not a meaningful piece of our business, it's something really we inherited. Obviously if there are opportunities for us to get additional grants, we go out there and we apply for them.

We see a major switch-over from grant revenues more towards hardware sales and increase in our charging stations revenues and the No Charge to Charge program which I mentioned earlier from Nissan. The program started a few months ago, we have not [been] (ph) paid on it yet, and it's been done retroactively. So we anticipate that we'll show that revenue coming this quarter. That's a recurring revenue stream, a two-year program, if you buy the Nissan LEAF you get the fee charging for it. So we get paid over that entire life of that program for each car that's purchased within the program areas.

So we believe that we'll see a lot of replacement from the grant side, although we will continuously have grant revenues that we take and we'll see an increase on the No Charge to Charge revenues as well as an increase in our charging station revenues. Does that answer that?

James McIlree - Chardan Capital Markets

Yes, you did, and so that No Charge to Charge program, you're going to get a dollar amount per car per month, is that the idea, and that's what you'll recognize in revenues?

Michael D. Farkas

Correct.

James McIlree - Chardan Capital Markets

Okay, great.

Michael D. Farkas

It's a two-year program where we get paid monthly. So someone buys a car today, I get paid 24 payments monthly while you have that car. I mean as more cars are sold, the number just increases exponentially.

James McIlree - Chardan Capital Markets

Alright, got it. Okay, thank you.

Operator

Our next question is from [indiscernible] of [Synapse International] (ph). You may go ahead.

Unidentified Analyst

Michael, it sounds like the business is building but for all of us cut through the bottom line for us investors, what it's going to take to get on a senior exchange and when do you expect to achieve the goal?

Michael D. Farkas

We are working diligently on accomplishing that. Unfortunately, our financing that we did last time created a massive derivative warrant liability to the tune of almost $10 million. We were able to in the last quarter negotiate half of that out but it did create a different hit to our P&L for issuing some warrants to balance it out, but bottom line is we're working with the other warrant holders now to see what we could do on getting rid of the derivative warrant liability. If we are able to accomplish that, that would be really we'd be close to par on negative equity. In addition, we have a substantial amount of derivative, that's called deferred revenues.

So I'm working towards getting whatever requirements that we need for the exchanges to be dealt with but right now that's really the only one that's missing other than stock price, but we are working actively towards getting listed. We believe it's very important, we believe it will open up the doors to different customers, different suppliers, give us better terms, be able to reward our shareholders and our employees better, it is something that is very important to us and we are working diligently on doing so.

Unidentified Analyst

I understand working diligently. How long, and I'm sure we all appreciate that you'll appreciate our patience, you got a stab at when you're going to get out from under these liabilities and make it?

Michael D. Farkas

There's two ways to do it, it's either go ahead and negotiate removing those liabilities, those warrant liabilities, or going out and raising capital. Those are the two ways we can go about doing so. Obviously I'd prefer not having to raise capital, especially at these levels, but those are my two options and ultimately the goal for this Company is to get listed one way or the other.

Unidentified Analyst

You're not answering my question, Michael.

Michael D. Farkas

I can't put a timeframe on it, I don't have a crystal ball, and if I did say an approximate timeframe – bottom line is, I spoke with NASDAQ within the last I would say 30 days, and they said to me, if you hit all of these requirements you could get listed within a couple of weeks. So the bottom line is, if we want to do a financing at this level and wanted to do a reverse split, and the only goal was immediate listing, it could be accomplished in a couple of months even less, but we have to look at the long-term best interest of the Company. So right now we're balancing that. And I have to tell you, me as being the largest shareholder of the Company, I want nothing more than to be listed, but I don't want to dilute everybody to do so. So I'm balancing as best as we can and I can't give you a specific timeframe. I don't have a crystal ball but if I told you a specific timeframe I'd be lying to you.

Unidentified Analyst

Okay. Can you tell us months or years?

Michael D. Farkas

I'm hoping within months, not years. I'm hoping months. Bottom line is, if you looked at our Company and Ecotality before Ecotality went bankrupt, we were almost 2, we were at 2, they were above 2, and the two companies merged together and we got rid of almost all of the garbage for the Ecotality transaction, you would think 2 and 2 would be 4, but 2 and 2 with less garbage then there is only $0.60 today or whatever it is.

So I wish I could tell you, this is what it is, we have some good shareholders, we have some not so friendly shareholders, we had some opportunistic shareholders in some of our last offerings that really didn't care of what the long-term situation was at the Company, and I apologize for getting those investors in, it is what it is.

But the bottom line is the stock market works with the law of supply and demand, that's the only rule of law it works by, and we need more demand in our stock price than there is supply, and that's really what is – that would change the difference in the financing and it would change the difference in getting rid of the warrants, it would change a lot of things, but right now it is what it is.

Unidentified Analyst

Okay thanks.

Operator

Our next question is from [Brian Hatch] (ph) who is a private investor. You may go ahead.

Unidentified Participant

I was just curious about the 360 issue. Did you kind of fall into a trap when you bought that company and are you going to be able to dig your way out of that without a whole lot more litigation?

Michael D. Farkas

The thing is I believe recently we were granted something in our favor, some sort of appeal from the original ruling. The hole that's been dug there, while it definitely is problematic, bottom line the end result is, it wasn't such a bad transaction for us, if you really look at it. It really eliminated a competitor. There were other partners that were interested in buying it, that could have been additional competitors which could then end in competing for the Ecotality assets. They definitely sold us [average] (ph) in my opinion, but ultimately if we look at the value of what we perceived and what we're going to end up having to pay for it, I think ultimately it will prove itself to have been a good transaction.

There's no question about it, problematic for sure, but I always grew up on the street and I was really told, buy when there's blood and you'll get a good deal. And ultimately I believe when you look at the process that we took the company through the trust mortgage deed, getting rid of the liabilities and what's going to be taking place moving forward, I believe in short order it will be proven to be a good transaction for the Company.

Unidentified Participant

Thank you, and just one other, just a comment that I read in your latest quarterly report, that you expected over time to migrate your pricing schedule to by the kilowatt-hour rather than by the clock hour and [comment] (ph) on it because most of the growth in these electric cars are these plug-ins and they have a lot more options, and I don't think you lure them in so much that you'll be able to charge by the kilowatt.

Michael D. Farkas

I'm actually happy that you mentioned that because I wanted to mention that, and I just had some data. We recently converted some of our charging stations from the hourly methodology in the Bay Area, it's the first batch that we are doing, to the kilowatt-hour basis, and what happened was, bottom line on an hourly basis the Tesla's make off like a bandit and the Volts get killed because they are different charging rates. A Volt charges at 3.3 and a Tesla could charge at 7.2 on the same charging station. So literally a Volt is paying twice as much for the exact same amount of electricity that they're getting.

It is a horrible methodology. We have been working with the states and with the Feds to make sure that it's a per kilowatt-hour billing methodology nationwide. You don't want the government spending billions of dollars on trying to develop the EV and then kill it at the pump basically because the slower charging cars, which there are going to be a lot of cars out there, the plug-in hybrids, for them to have to pay on an hourly when they charge a lot slower is just not fair.

And I have to tell you something else. This past weekend, we had a car that we saw data where they were charging on an hourly basis, Tesla, they were paying $10 to fill up their car, which is very, very light, and we changed our billing methodology and that $10 to $11 now became $24 for us. So the guys who were using that electricity, they should be paying for it, the guys who aren't using it or are not using as much of it they should be paying the same kilowatt-hour price but they shouldn't pay more than they should be, and the kilowatt-hour methodology is the only way, it's the fairest way.

Just like we buy gasoline, we don't pay for how long it takes to fill up our car, we have a measurement system of a liter or a gallon, and the only fair methodology is the kilowatt-hour. And we're very happy to be one of the groups at the forefront of pushing for allowing billing under a kilowatt-hour basis, even though there's many states that don't have the regulation. So we believe it's the only way to go.

Unidentified Participant

I agree and I think it will bring you a lot of the plug-in business that otherwise just drives right on by.

Michael D. Farkas

Exactly. And we're also playing with pricing now based upon areas and what our cost are for electricity. In the past, we had a flat fee of $0.49 and now we're trying to take different things into effect that really will be able to give the EV owner the best pricing possible.

Operator

(Operator Instructions) We do have one last-minute question from [Arman Erfanfar] (ph) who is a private investor. You may go ahead.

Unidentified Participant

I read somewhere that you have applied for a patent for like a parking spot bumper with regards to the electromagnetic field type charging system that's coming out in the future.

Michael D. Farkas

Yes.

Unidentified Participant

What's the status on that and what are your plans if parking spaces become available as the pads for electromagnetic charging, do you plan on moving in that direction?

Michael D. Farkas

It's a very good question. Ultimately we believe that charging will go inductive or for a decent portion of the business, and instead of really going out there and fighting over the frequencies, the algorithms, the technology that's going to transfer the electricity, just our experience in doing installs and having to deal with ripping up locations and trenching under parking lots and just really first-hand experience of doing the actual installations, we realize that, number one, the pads that all of the other companies that are looking at putting on the ground, if you go into any public parking space and you have a couple of inches off the ground a pad that's 2 feet by 5 feet or something to that effect, you're talking about tremendous insurance liabilities and it's just not going to work.

And even more so, if you try to have it flat with the ground, if you try to go to these multi-storey subterranean parking garages, especially in major urban areas with these older buildings, you just can't do it, the structural integrity will not withstand multiple spots digging out, even 3 to 4 inches across the board.

So really the best way to do this so we don't have to rip up ground is use something that's there already. So what we did was we patented a design patent for the parking charger bumper, that concrete block that you see in almost every single parking spot all over the world. So we could partner with the likes of Qualcomm with their Halo technology or Evatran with their technology, and that really focus on the technology side, but really being involved there on the design side, and it would be the easiest, most simplest way to light up an inductive parking spot. You pull your front wheels to it or your rear wheels to it and that's all you really need, and it's a very simple method. We're moving forward with it. We filed the provisional and we're moving forward with all the different filings that are necessary.

Unidentified Participant

Is that model built and tested?

Michael D. Farkas

No, not yet. We are working with others and I can't really get into specifics just yet but there are some major manufacturers and communication companies that we're working with in developing that.

Unidentified Participant

Because I see if inductive charging becomes the method of the future, that your system is very desirable.

Michael D. Farkas

In my opinion, again maybe I'm drinking my own Kool-Aids but I have to tell you, I think it's the only product that's actually going to work. Again as I mentioned, you can't put something that's going to be on top of a parking spot where people could walk and trip. It never happened, it's not going to be possible. You're not going to do something where you're going to start ripping up all of the black top. It's much easy to just put that parking bumper, it's there already, it's really [indiscernible] in most parking spaces that you can tie it down to already and you can attach the electricity from the backside, so it doesn't create any insurance issue at all.

Unidentified Participant

When do you think this inductive system if it goes into effect will actually happen and how it will affect the Company?

Michael D. Farkas

I don't think it will impact us at all because you're going to have different technology for different situations. You're going to always have a plug-in, you'll have something inductive. What we are trying to do with CarCharging very importantly was make sure that whatever type of charging scenario there is that we have a solution for it, whether it's a single-family home, you could go to Amazon look at Blink HQ, we have a product for a single-family home, if it's a workplace we have a Blink public chargers, if it is DC fast chargers we have those. We have a product and a solution for every type of location that needs a charging station, period. So when it migrates towards another technology, it doesn't make a difference.

The thing that CarCharging has more so than anybody else in the entire marketplace is our business model is different. We're not a ChargePoint, we're not a SemaConnect, we're not a GE, we own and operate our charging stations, which the most important people need to know is we have long-term exclusive contracts at our locations to provide EV charging services. It doesn't make a difference whether it's inductive or comes through the ether or whatever it may be or if it's plug-in, we have the exclusive right to provide EV charging services at those locations. And typically for the most part, our contracts are 21 years in length, there's seven years with two automatic seven-year extensions.

So whether we're putting a Blink unit in there or we're working with a partner like GE, we have the ability of determining what hardware goes into those locations and what technology goes into those locations. We are a service provider.

Unidentified Participant

Who has the options for those extensions, do you have the option to make the extension if you wanted or is it…?

Michael D. Farkas

Typically it will be automatic.

Unidentified Participant

They're just automatic, I mean…

Michael D. Farkas

It is automatic.

Unidentified Participant

Can it be canceled by you or them or why is it seven years?

Michael D. Farkas

For the most part it's just an automatic. Sometimes when you ask for a 21 year contract, people get a little bit nervous, but when it's seven years with two automatic seven-year extensions, it's easier. You know as between charging $1 for something or $0.99, it's kind of similar.

Unidentified Participant

Okay. Thank you very much.

Michael D. Farkas

Any other questions?

Operator

Yes, we do have a follow-up question from Peter Castellanos of Glacier Partners. You may go ahead, Peter.

Peter Castellanos - Glacier Asset Management

Mike, just back on the equity issue, could you talk to us a little bit about how much you're trying to raise or – you mentioned you've been talking to equity holders, so can you share with us a little bit about what your thoughts are on that and how soon you feel like you need to get this done?

Michael D. Farkas

I wish I could go into it further, but barring any special situations, I believe that with the commitments we have on hand, the inventory we have, the programs that we are involved with, we may not need to raise anything above those commitments and anything else beyond that, other than certain special situations.

Peter Castellanos - Glacier Asset Management

Mike, let me just stop you there because in your address initially, you said we are talking to equity holders now about possibly…

Michael D. Farkas

We're talking to equity holders, some of our investors, some of our warrant holders have derivative features in their warrants. So we are communicating with them in order to remove those features which would then directly impact our balance sheet. So not necessarily from the equity holder for financing but we have investors and shareholders who come to us and say, you need any more money, so we speak to them, but there are certain things that are going on in our business where it may call for additional finance, but I can't get into different miscellaneous things because it's just stuff that's not out there just yet. But bottom line is…

Peter Castellanos - Glacier Asset Management

So we own the warrants from the last deal. Is there any chance you're going to re-price those or is that a consideration?

Michael D. Farkas

The warrants in the $1 warrants or $1.50, I can't remember – $1.05 warrants, okay, those warrants have some derivative features and right now we're trying not to re-price those, and that's part of the reason why we really don't want to look to finance at these levels right now.

Peter Castellanos - Glacier Asset Management

Okay, got it.

Michael D. Farkas

So we prefer not but if you're interested in removing those derivative features and getting some more warrants at $1.05 for it, we will definitely, we're entertaining that and we have been proposing that to some of our warrant holders.

Peter Castellanos - Glacier Asset Management

Okay, thanks, Mike. I'll get back with you off-line on that thing.

Michael D. Farkas

You got it, no problem. Any other questions?

Operator

No, at this time we do not have any further questions. Mr. Farkas, I will turn it back to you for closing remarks. Go ahead.

Michael D. Farkas

I want to end with a little story. I was fortunate enough to go to an industry meeting that was located at the Tesla factory and it was an amazing meeting, [Jeff and Holt] (ph) went up there and was talking, actually mentioned our Board member Andrew Shapiro by name which was amazing, but after the entire program, they gave these Tesla factory tours and they had these sort of like these electric golf carts that drove you around and had a bunch of people on them.

I sat near a husband and a wife and we were driving around, and I've met him before, just some industry stuff, we were just talking, and he mentioned to me, 'I don't know if you noticed but I was one of the first Tesla employees'. I was like, wow, really. He was like, yes. I was, wow, this is really impressive. I go, it is one of the most impressive things I've ever seen in the factory, they have [this stuff] (ph) I would highly recommend it. And he mentioned to me, 'I was one of the first bunch of Tesla employees'. And I said, why didn't you stay? Because I have to tell you, Michael, I really didn't have any confidence in the company. I was there, there were layoffs, there was such in-fighting, there were all these problems, all this kind of crazy stuff going on, people not getting paid, all of these growing pains, I really didn't feel the company was going to succeed and I ended up leaving. And I'm like, do you regret it? I left, I ended up doing another transaction, I needed some money, but if I would've stayed, I would've made a substantial amount of money.

And that day I looked at what went on and I saw driving around that factory and hearing the story and realizing that some of the greatest companies that you've ever seen in your life, they go through growing pains and they learn from their mistakes and they keep on going and they keep on fighting, and they make it to be the Teslas of the world.

And I have to tell you we're in the same industry and the one thing that really separates us from the Tesla, from anybody, is we're agnostic, we're agnostic to the car. If it's a Tesla, if it's an Audi, if it's a Mercedes or a BMW or a GM or a Volkswagen, they all need the same thing which is the service that we provide. So while Tesla may succeed or may not succeed, we all know, and I'm sure everyone on this phone believes the electric car is going to take off, whether it's 10%, 20%, 50% or 100% of the car market, of the transportation market, it's taking off.

Bottom line is, I drive a Tesla and it is way more economical per mile to drive an EV than it is to use gasoline. It's much, much cheaper, the cars are better, easier to maintain, and bottom line is when these production teams come out and with the economics of scale with the batteries come on, and we're seeing Teslas at $30,000 to $35,000 driving 200 miles and GMs, new Volts and other cars, $30,000 cars driving 200 to 300 miles, the bottom line is all the objectives of as to why people won't buy an EV, [due to the range because] (ph) of charging, those will all be gone. And now we have a priced car that is just going to be unbelievable, and when you drive an EV, I have to tell you, most people who drive an EV and have an EV, they have chosen not to buy anything other than an EV.

So the bottom line is, we are in the perfect space to really capitalize on whether no matter who is successful in this space, whether it's Volkswagen or whomever or Tesla, we are the agnostic fuel source, we are the standard oil to the Henry Fords or the GMs of that generation. Whether we are going to succeed or not in being that standard oil, nobody knows. There could be somebody who is better capitalized than us. But the bottom line is, what we've done in the last five years by getting the locations that we've gotten, the relationships that we have developed, the acquisitions that we have done, I believe in this industry no one is better positioned than this Company to take advantage of the switchover to EVs.

Everyone, thank you for your time and if you need me off-line, I'm available for any answer, any questions you need answered. Thank you for your time.

Operator

Thank you very much, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.

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