UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2013
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______.
Commission File Number: 33-1155965
(Exact name of registrant as specified in charter)
Nevada
|
|
03-0608147
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S Employee
Identification No.)
|
1691 Michigan Avenue, Sixth Floor
Miami Beach, FL 33139
(Address of principal executive offices) (Zip Code)
(305) 521-0200
(Registrant’s telephone number, including area code)
N/A
(Former name or former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer o
|
Accelerated Filer o
|
Non-Accelerated Filer o (Do not check if smaller reporting company)
|
Smaller Reporting Company x
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes o No x
As of August 17, 2013: 56,319,360 shares of common stock, $0.001 par value were issued and outstanding.
CAR CHARGING GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
FORM 10-Q
June 30, 2013
INDEX
PART I - FINANCIAL INFORMATION
|
|
|
|
|
Item 1.
|
Condensed Consolidated Financial Statements
|
1
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
26
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
31
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Item 4.
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Control and Procedures
|
31
|
PART II-- OTHER INFORMATION
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|
|
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Item 1.
|
Legal Proceedings
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32
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Item 1A.
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Risk Factors
|
32
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
|
32
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Item 3.
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Defaults Upon Senior Securities
|
34
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Item 4.
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Mine Safety Disclosures
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34
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Item 5.
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Other Information
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34
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Item 6.
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Exhibits
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34
|
|
|
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SIGNATURES
|
35
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PART I- FINANCIAL INFORMATION
Item 1. Financial Statements
CAR CHARGING GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
June 30, 2013
Index to Financial Statements
FINANCIAL STATEMENTS
|
Page #
|
|
|
Condensed Consolidated Balance Sheets as of June 30, 2013 (Unaudited) and December 31, 2012
|
2
|
Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2013 and 2012 (Unaudited)
|
3 |
|
|
Condensed Consolidated Statements of Operations for the Six Months Ended June 30, 2013 and 2012 and for the Period from September 3, 2009 (Inception) through June 30, 2013 (Unaudited)
|
4
|
|
|
Condensed Consolidated Statements of Stockholders’ Equity from December 31, 2011 through June 30, 2013 (Unaudited)
|
5
|
|
|
Condensed Consolidated Statements of Cash flows for the Six Months Ended June 30, 2013 and 2012 and for the Period from September 3, 2009 (Inception) through June 30, 2013 (Unaudited)
|
6
|
|
|
Notes to the Condensed Consolidated Financial Statements (Unaudited)
|
7
|
CAR CHARGING GROUP, INC.
|
(A Development Stage Company)
|
Condensed Consolidated Balance Sheets
|
|
|
June 30,
|
|
|
DECEMBER 31,
|
|
|
|
2013
|
|
|
2012
|
|
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|
(UNAUDITED)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
165,165
|
|
|
$
|
13,416
|
|
Advanced commissions
|
|
|
349,250
|
|
|
|
300,750
|
|
Prepaid expenses and other current assets
|
|
|
655,487
|
|
|
|
357,312
|
|
Total current assets
|
|
|
1,169,902
|
|
|
|
671,478
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS
|
|
|
|
|
|
|
|
|
EV charging stations, net of accumulated depreciation of $968,677 and $363,918, respectively
|
|
|
5,852,106
|
|
|
|
960,234
|
|
Automobiles, net of accumulated depreciation of $26,762 and $15,292 respectively
|
|
|
87,931
|
|
|
|
99,400
|
|
Office and computer equipment, net of accumulated depreciation of $42,550 and $26,604, respectively
|
|
|
55,963
|
|
|
|
36,717
|
|
Total fixed assets, net
|
|
|
5,996,000
|
|
|
|
1,096,351
|
|
|
|
|
|
|
|
|
|
|
DEPOSITS
|
|
|
42,265
|
|
|
|
42,265
|
|
|
|
|
|
|
|
|
|
|
INTANGIBLE ASSETS, net
|
|
|
4,022,727
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
GOODWILL
|
|
|
2,725,235
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
OTHER ASSETS
|
|
|
405,814
|
|
|
|
232,727
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
14,361,943
|
|
|
$
|
2,042,821
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
Current portion of note payable
|
|
$
|
324,164
|
|
|
$
|
12,105
|
|
Current portion of note payable related party
|
|
|
120,000
|
|
|
|
- |
|
Convertible note payable-related party, net of discount of $0 and $4,918
|
|
|
-
|
|
|
|
82
|
|
Convertible note, net of discount of $0 and $168,567 respectively
|
|
|
150,000
|
|
|
|
122,433
|
|
Accounts payable and accrued expenses
|
|
|
4,896,058
|
|
|
|
547,874
|
|
Accrued interest- related party
|
|
|
-
|
|
|
|
5
|
|
Stock subscription payable
|
|
|
525,000
|
|
|
|
-
|
|
Warrants payable
|
|
|
187,000
|
|
|
|
-
|
|
Current portion of deferred revenue
|
|
|
2,702,304
|
|
|
|
19,996
|
|
Current portion of deferred rent
|
|
|
11,633
|
|
|
|
9,731
|
|
Total current liabilities
|
|
|
8,916,159
|
|
|
|
712,226
|
|
|
|
|
|
|
|
|
|
|
DEFERRED REVENUE
|
|
|
798,932
|
|
|
|
34,747
|
|
|
|
|
|
|
|
|
|
|
DEFERRED RENT
|
|
|
14,441
|
|
|
|
20,445
|
|
|
|
|
|
|
|
|
|
|
NOTE PAYABLE
|
|
|
245,914
|
|
|
|
44,836
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
9,975,456
|
|
|
|
812,254
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A Convertible Preferred Stock, $0.001 par value; 10,000,000 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
Series B Convertible Preferred Stock, $0.001 par value; 1,000,000 shares issued and outstanding at June 30, 2013 and December 31, 2012, respectively
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
Common Stock, 500,000,000 shares authorized at $0.001 par value; 51,743,228 and 42,434,705 shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively
|
|
|
51,743
|
|
|
|
42,435
|
|
Additional paid-in capital
|
|
|
31,127,658
|
|
|
|
20,117,559
|
|
Deficit accumulated during development stage
|
|
|
(26,803,904
|
)
|
|
|
(18,940,427
|
)
|
TOTAL STOCKHOLDERS' EQUITY
|
|
|
4,386,497
|
|
|
|
1,230,567
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
14,361,943
|
|
|
$
|
2,042,821
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
CAR CHARGING GROUP, INC
|
(A Development Stage Company)
|
Condensed Consolidated Statements of Operations
|
(UNAUDITED)
|
|
|
For the Three
|
|
|
For the Three
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
June 30, 2013
|
|
|
June 30, 2012
|
|
Revenues
|
|
|
|
|
|
|
Service fees
|
|
$
|
32,227
|
|
|
$
|
3,410
|
|
Grant revenue
|
|
|
32,750
|
|
|
|
-
|
|
Sales
|
|
|
12,762
|
|
|
|
231,472
|
|
TOTAL REVENUE
|
|
|
77,739
|
|
|
|
234,882
|
|
|
|
|
|
|
|
|
|
|
Costs
|
|
|
|
|
|
|
|
|
Cost of services
|
|
|
42,309
|
|
|
|
1,382
|
|
Cost of sales
|
|
|
7,710
|
|
|
|
187,056
|
|
TOTAL COST OF REVENUE
|
|
|
50,019
|
|
|
|
188,438
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
|
|
|
46,444
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
3,287,420
|
|
|
|
587,178
|
|
Other operating expenses
|
|
|
|
|
|
|
179,412
|
|
General and administrative
|
|
|
2,032,197
|
|
|
|
177,561
|
|
TOTAL OPERATING EXPENSES
|
|
|
|
|
|
|
944,151
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
|
)
|
|
|
(897,707
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(11,234
|
)
|
|
|
(509
|
)
|
Amortization of discount on convertible debt
|
|
|
(8,791
|
) |
|
|
-
|
|
Provision for warrant liability
|
|
|
(187,000
|
) |
|
|
- |
|
Total other (expense)
|
|
|
|
) |
|
|
(509
|
) |
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(5,640,416
|
)
|
|
|
(898,216
|
) |
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
$
|
(5,640,416
|
)
|
|
$
|
(898,216
|
) |
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and diluted
|
|
$
|
(0.11
|
)
|
|
$
|
(0.02
|
) |
Weighted average number of common shares outstanding – basic & diluted
|
|
|
51,321,981
|
|
|
|
40,292,090
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
CAR CHARGING GROUP, INC
|
(A Development Stage Company)
|
Condensed Consolidated Statements of Operations
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
For the Period
|
|
|
|
|
|
|
|
|
|
From
|
|
|
|
For the Six
|
|
|
For the Six
|
|
|
September 3, 2009
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
(Inception) to
|
|
|
|
June 30, 2013
|
|
|
June 30, 2012
|
|
|
June 30, 2013
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
Service fees
|
|
$
|
42,803
|
|
|
$
|
6,015
|
|
|
$
|
62,345
|
|
Grant revenue
|
|
|
37,749
|
|
|
|
-
|
|
|
|
43,345
|
|
Sales
|
|
|
12,762
|
|
|
|
231,472
|
|
|
|
307,978
|
|
TOTAL REVENUE
|
|
|
93,314
|
|
|
|
237,487
|
|
|
|
413,668
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services
|
|
|
46,718
|
|
|
|
1,790
|
|
|
|
52,971
|
|
Cost of sales
|
|
|
7,710
|
|
|
|
187,056
|
|
|
|
262,596
|
|
TOTAL COST OF REVENUE
|
|
|
54,428
|
|
|
|
188,846
|
|
|
|
315,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
38,886
|
|
|
|
48,641
|
|
|
|
98,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
4,305,473
|
|
|
|
1,115,957
|
|
|
|
15,529,226
|
|
Other operating expenses
|
|
|
274,344
|
|
|
|
304,220
|
|
|
|
1,553,020
|
|
General and administrative
|
|
|
2,892,722
|
|
|
|
1,058,944
|
|
|
|
8,946,327
|
|
TOTAL OPERATING EXPENSES
|
|
|
7,472,539
|
|
|
|
2,479,121
|
|
|
|
26,028,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(7,433,653
|
)
|
|
|
(2,430,480
|
)
|
|
|
(25,930,472
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
(21,484
|
)
|
|
|
(542
|
)
|
|
|
(85,483
|
)
|
Loss on exchange of warrants for common stock
|
|
|
-
|
|
|
|
-
|
|
|
|
(485,000
|
)
|
Amortization of discount on convertible debt
|
|
|
(126,783
|
)
|
|
|
-
|
|
|
|
(266,609
|
)
|
Loss on settlement of accounts payable for common stock
|
|
|
(47,856
|
)
|
|
|
-
|
|
|
|
(47,856
|
)
|
Loss on payment convertible notes payable
|
|
|
(46,701
|
)
|
|
|
-
|
|
|
|
(46,701
|
)
|
Provision for warrant liability
|
|
|
(187,000
|
)
|
|
|
-
|
|
|
|
(187,000
|
)
|
Gain on change in fair value of derivative liability
|
|
|
-
|
|
|
|
-
|
|
|
|
245,217
|
|
Total other (expense)
|
|
|
(429,824
|
)
|
|
|
(542
|
)
|
|
|
(873,432
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(7,863,477
|
)
|
|
|
(2,431,022
|
)
|
|
|
(26,803,904
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(7,863,477
|
)
|
|
$
|
(2,431,022
|
)
|
|
$
|
(26,803,904
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share - basic and diluted
|
|
$
|
(0.16
|
)
|
|
$
|
(0.06
|
)
|
|
|
|
|
Weighted average number of common shares outstanding – basic & diluted
|
|
|
48,428,883
|
|
|
|
39,245,533
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
CAR CHARGING GROUP, INC.
(A Development Stage Company)
Condensed Consolidated Statements of Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit Accumulated
|
|
|
|
|
|
Total
|
|
|
|
Preferred
- A
|
|
|
Preferred
-A
|
|
|
Preferred
-B
|
|
|
Preferred
-B
|
|
|
Common
|
|
|
Common
|
|
|
Additional
Paid-in
|
|
|
during the Development
|
|
|
Stock Subscriptions
|
|
|
Stockholders
Equity
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Receivable
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2011
|
|
|
10,000,000 |
|
|
$ |
10,000 |
|
|
|
- |
|
|
|
- |
|
|
$ |
37,384,414 |
|
|
$ |
37,384 |
|
|
$ |
15,557,096 |
|
|
$ |
(13,650,817 |
) |
|
$ |
(999,000 |
) |
|
$ |
954,663 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,075,000 |
|
|
|
2,075 |
|
|
|
481,228 |
|
|
|
|
|
|
|
999,000 |
|
|
|
1,482,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Preferred Shares
|
|
|
|
|
|
|
|
|
|
|
1,000,000 |
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
|
899,000 |
|
|
|
|
|
|
|
|
|
|
|
900,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of convertible notes and accrued interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,529,036 |
|
|
|
1,529 |
|
|
|
2,294 |
|
|
|
|
|
|
|
|
|
|
|
3,823 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for compensation and services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,171,255 |
|
|
|
1,172 |
|
|
|
1,595,141 |
|
|
|
|
|
|
|
|
|
|
|
1,596,313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for director compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
275,000 |
|
|
|
275 |
|
|
|
461,975 |
|
|
|
|
|
|
|
|
|
|
|
462,250 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued for compensation and services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
843,899 |
|
|
|
|
|
|
|
|
|
|
|
843,899 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued with convertible debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
276,926 |
|
|
|
|
|
|
|
|
|
|
|
276,926 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,289,610 |
) |
|
|
|
|
|
|
(5,289,610 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2012
|
|
|
10,000,000 |
|
|
$ |
10,000 |
|
|
|
1,000,000 |
|
|
$ |
1,000 |
|
|
|
42,434,705 |
|
|
$ |
42,435 |
|
|
$ |
20,117,559 |
|
|
$ |
(18,940,427 |
) |
|
$ |
- |
|
|
$ |
1,230,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,990,000 |
|
|
|
4,990 |
|
|
|
430,690 |
|
|
|
|
|
|
|
|
|
|
|
435,680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of warrants in conjunction with sale of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,772,320 |
|
|
|
|
|
|
|
|
|
|
|
1,772,320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for compensation and services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,563,086 |
|
|
|
1,563 |
|
|
|
2,049,649 |
|
|
|
|
|
|
|
|
|
|
|
2,051,212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for director compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000 |
|
|
|
100 |
|
|
|
145,400 |
|
|
|
|
|
|
|
|
|
|
|
145,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for software development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113,636 |
|
|
|
114 |
|
|
|
149,886 |
|
|
|
|
|
|
|
|
|
|
|
150,000 |
|
Warrants issued for compensation and services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,307,423 |
|
|
|
|
|
|
|
|
|
|
|
3,307,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for acquisition
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,541,801 |
|
|
|
2,541 |
|
|
|
3,154,731 |
|
|
|
|
|
|
|
|
|
|
|
3,157,272 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,863,477 |
) |
|
|
|
|
|
|
(7,863,477 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2013
|
|
|
10,000,000 |
|
|
$ |
10,000 |
|
|
|
1,000,000 |
|
|
$ |
1,000 |
|
|
|
51,743,228 |
|
|
$ |
51,743 |
|
|
$ |
31,127,658 |
|
|
$ |
(26,803,904 |
) |
|
$ |
- |
|
|
$ |
4,386,497 |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
CAR CHARGING GROUP, INC.
|
(A Development Stage Company)
|
Condensed Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
For the
Period from
|
|
|
|
|
|
|
|
|
|
September 3, 2009
|
|
|
|
For the Six Months Ended
|
|
|
(Inception) to
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(7,863,477
|
)
|
|
$
|
(2,431,022
|
)
|
|
$
|
(26,803,904
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
761,370
|
|
|
|
93,637
|
|
|
|
1,179,855
|
|
Amortization of discount on convertible notes payable
|
|
|
126,783
|
|
|
|
-
|
|
|
|
266,609
|
|
Loss on common stock issued in exchange for extinguishment of warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
485,000
|
|
Gain on change in fair value of derivative liability
|
|
|
-
|
|
|
|
|
-
|
|
|
(245,217
|
)
|
Non-cash compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for services and incentive fees
|
|
|
1,837,881
|
|
|
|
620,230
|
|
|
|
12,734,339
|
|
Warrants and options issued for services and incentive fees
|
|
|
3,307,423
|
|
|
|
236,651
|
|
|
|
4,151,322
|
|
Loss on settlement of accounts payable for stock
|
|
|
47,856
|
|
|
|
-
|
|
|
|
47,856
|
|
Loss on repayment of convertible notes payable
|
|
|
46,701
|
|
|
|
-
|
|
|
|
46,701
|
|
Provision for warrant liability
|
|
|
187,000
|
|
|
|
-
|
|
|
|
187,000
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory
|
|
|
-
|
|
|
|
-
|
|
|
|
(72,768
|
)
|
Advanced commissions
|
|
|
(48,500
|
)
|
|
|
(77,000
|
)
|
|
|
(349,250
|
)
|
Deposits
|
|
|
|
-
|
|
|
(35,821
|
)
|
|
|
(33,957
|
)
|
Prepaid expenses and other current assets
|
|
|
(24,734
|
)
|
|
|
51,385
|
|
|
|
(91,937
|
)
|
Other assets
|
|
|
(24,600)
|
|
|
|
(32,257
|
)
|
|
|
(30,114)
|
|
Accounts payable and accrued expenses
|
|
|
(261,719
|
)
|
|
|
100,573
|
|
|
|
311,191
|
|
Deferred rent
|
|
|
(4,101
|
)
|
|
|
33,972
|
|
|
|
26,075
|
|
Deferred revenue
|
|
|
919,091
|
|
|
|
-
|
|
|
|
973,834
|
|
Accrued interest-related party
|
|
|
(5
|
)
|
|
|
(40
|
)
|
|
|
4,480
|
|
Net Cash Used in Operating Activities
|
|
|
(993,031
|
)
|
|
|
(1,439,692
|
)
|
|
|
(7,212,885
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of office and computer equipment
|
|
|
|
-
|
|
|
(9,139
|
)
|
|
|
(63,321
|
)
|
Purchase of accounts receivable
|
|
|
(163,292
|
) |
|
|
-
|
|
|
|
(163,292
|
) |
Purchase of automobile
|
|
|
|
-
|
|
|
(50,000
|
)
|
|
|
(50,000
|
)
|
Purchase of EV stations
|
|
|
(905,502
|
)
|
|
|
(437,154
|
)
|
|
|
(2,162,507
|
)
|
Cash from acquisitions in excess of amount paid
|
|
|
9,354
|
|
|
|
-
|
|
|
|
9,354
|
|
Net Cash Used in Investing Activities
|
|
|
(1,059,440
|
)
|
|
|
(496,293
|
)
|
|
|
(2,429,766
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of notes payable
|
|
|
145,000
|
|
|
|
-
|
|
|
|
541,000
|
|
Proceeds from stock subscription payable
|
|
|
525,000
|
|
|
|
-
|
|
|
|
525,000
|
|
Proceeds from sale of preferred stock
|
|
|
-
|
|
|
|
900,000
|
|
|
|
900,000
|
|
Sale of common stock, net of issuance costs
|
|
|
2,208,000
|
|
|
|
1,360,000
|
|
|
|
8,523,348
|
|
Payment of notes and convertible notes payable
|
|
|
(673,780
|
)
|
|
|
(1,915
|
)
|
|
|
(681,532
|
)
|
Net Cash Provided by Financing Activities
|
|
|
2,204,220
|
|
|
|
2,258,085
|
|
|
|
9,807,816
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH
|
|
|
151,749
|
|
|
|
322,100
|
|
|
|
165,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH AT THE BEGINNING OF PERIOD
|
|
|
13,416
|
|
|
|
406,859
|
|
|
|
-
|
|
CASH AT END OF PERIOD
|
|
$
|
165,165
|
|
|
$
|
728,959
|
|
|
$
|
165,165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Paid For:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expenses
|
|
$
|
8,735
|
|
|
$
|
517
|
|
|
$
|
10,770
|
|
Income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NONCASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for debt and accrued interest
|
|
$
|
-
|
|
|
$
|
3,823
|
|
|
$
|
577,695
|
|
Beneficial conversion feature of notes payable and related warrants issued
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
276,926
|
|
Inventory reclassified to electric car charging stations
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
72,768
|
|
Issuance of warrants in consideration of equity investment
|
|
$
|
1,195,888
|
|
|
$
|
-
|
|
|
$
|
1,469,585
|
|
Debt and accrued interest converted to common stock
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
100,691
|
|
Common stock issued for settlement of accounts payable
|
|
$
|
213,331
|
|
|
$
|
-
|
|
|
$
|
238,331
|
|
Note payable for purchase of automobile
|
|
$
|
-
|
|
|
$
|
64,693
|
|
|
$
|
64,693
|
|
Purchase of software development for common stock
|
|
$
|
150,000
|
|
|
$
|
-
|
|
|
$
|
150,000
|
|
Issuance of common stock for acquisition
|
|
$
|
3,750,000
|
|
|
$
|
-
|
|
|
$
|
3,750,000
|
|
Issuance of note payable for acquisition
|
|
$
|
1,005,918
|
|
|
$
|
-
|
|
|
$
|
1,005,918
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
CAR CHARGING GROUP, INC.
September 30, 2012
(A Development Stage Company)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Car Charging Group Inc. (“CCGI”) was incorporated on October 3, 2006 under the laws of the State of Nevada as New Image Concepts, Inc. On November 20, 2009, New Image Concepts, Inc. changed its name to Car Charging Group, Inc.
Car Charging, Inc., was incorporated as a Delaware corporation on September 3, 2009. Car Charging Inc. was created to develop electric charging service facilities for the electric vehicle (EV) automobile market. Pursuant to its business plan, Car Charging Inc. (or its affiliates) acquires and installs EV charging stations, and shares servicing fees received from customers that use the charging stations with the property owner(s), on a property by property basis. Additionally, the Company sells hardware to others. Car Charging, Inc., therefore, enters into individual arrangements for this purpose with various property owners, which may include cities, counties, garage operators, hospitals, multi-family properties, shopping-malls and facility owner/operators.
During February, 2011, the Shareholders and Board of Directors authorized a decrease of our issued and outstanding common stock, in the form of a reverse stock-split, on a one-for-fifty (1:50) basis (the “Reverse Stock-Split”). There was no change to the authorized amount of shares or to the par value. All share and per share amounts included in the consolidated financial statements have been retroactively adjusted to reflect the effects of the Reverse Stock-Split.
Merger
On December 7, 2009, CCGI entered into a Share Exchange Agreement (the “Agreement”) among CCGI and Car Charging, Inc. (“CCI”)
Pursuant to the terms of the Agreement, CCGI agreed to issue an aggregate of 10,000,000 restricted shares of CCGI's common stock and 10,000,000 shares of its Series A Convertible Preferred Stock to the CCI Shareholders in exchange for all of the issued and outstanding shares of CCI.
The merger was accounted for as a reverse acquisition and recapitalization. CCI is the acquirer for accounting purposes and CCGI is the issuer. Accordingly, CCGI’s historical financial statements for periods prior to the acquisition become those of the acquirer retroactively restated for the equivalent number of shares issued in the merger. Operations prior to the merger are those of CCI. From inception on September 3, 2009 until the merger date, December 7, 2009, CCI had minimal operations with no revenues. Earnings per share for the period prior to the merger are restated to reflect the equivalent number of shares outstanding.
ACQUISITIONS
The consolidated financial statements consist of CCGI and its wholly-owned subsidiaries, including Beam Charging LLC, EV Pass LLC and 350Green LLC. Beam Charging LLC was acquired on February 26, 2013, EV Pass LLC was acquired on April 3, 2013 and 350Green LLC was acquired on April 22, 2013. Accordingly, the operating results of these businesses are included from their respective acquisition dates. They are collectively referred to herein as the “Company” or “Car Charging.” All intercompany transactions and balances have been eliminated in consolidation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying unaudited interim condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2012 and notes thereto contained in the Company’s Annual Report on Form 10-K as filed with the SEC on April 16, 2013.
DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915-10 “Development Stage Entities.” The Company is still devoting substantially all of its efforts on establishing the business and developing revenue generating opportunities through its planned principal operations. In the latter half of 2011, the Company’s principal sales operations began, however the Company has not recognized significant revenues during the subsequent period through June 30, 2013. All losses accumulated since inceptions have been considered as part of the Company’s development stage activities.
USE OF ESTIMATES
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and reporting period. Accordingly, actual results could differ from those estimates.
LIQUIDITY
Historically, the Company has been dependent on debt and equity raised from individual investors to sustain its operations. The Company’s product has not been placed in enough locations nor have a sufficient number of plug-in electric vehicles been sold that utilize public charging stations to generate significant revenue. The Company has incurred recurring losses and used cash for operating activities and has negative working capital as of June 30, 2013. As of June 30, 2013, the Company had an accumulated deficit of $26,803,904. In addition, as of June 30, 2013, the Company had a net working capital deficit of $7,746,256. These conditions raise substantial doubt about its ability to continue as a going concern. Management plans include seeking additional equity investments, sale of energy tax credits, and institution of a cost reduction plan. The accompanying condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents in both the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows. The Company has cash on deposit in several financial institutions which, at times, may be in excess of FDIC insurance limits. Management has deemed this a normal business risk.
EV CHARGING STATIONS
EV charging stations represent the depreciable cost of charging devices that have been installed on the premises of participating owner/operator properties. They are stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over an estimated useful life of three years. Upon sale, replacement or retirement, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the Condensed Consolidated Statements of Operations. The Company held approximately $2,120,000 and $218,000 in EV charging stations that were not placed in service as of June 30, 2013 and December 31, 2012, respectively. The Company will begin depreciating this equipment when installation is substantially complete. Depreciation for the three months and six months ended June 30, 2013 and 2012 and for the period from September 3, 2009 (inception) through June 30, 2013 was $490,151, $54,916, $604,760, $83,384 and $968,677, respectively.
While the Company’s primary strategy is to earn revenue through the installation of EV charging stations, the Company will sell EV charging stations on occasion when the opportunity presents itself.
OFFICE AND COMPUTER EQUIPMENT
Office and computer equipment are stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over an estimated useful life of five years. Upon sale or retirement, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the Condensed Consolidated Statements of Operations. Depreciation for the three months and six months ended June 30, 2013 and 2012 and for the period from September 3, 2009 (inception) through June 30, 2013 was $12,078, $3,053, $15,946, $5,673 and $42,550, respectively.
AUTOMOBILES
Automobiles are stated at cost less accumulated depreciation. Depreciation is provided on the straight-line basis over an estimated useful life of five years. Upon sale or retirement of automobiles, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected in the Condensed Consolidated Statements of Operations. The Company’s electrically-charged enabled automobile was placed in service in May 2012. Depreciation for the three months and six months ended June 30, 2013 and 2012 and for the period from September 3, 2009 (inception) through June 30, 2013 was $5,734, $3,823 $11,469, $3,823 and $26,761 respectively.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company has adopted paragraph 360-10-35-17 of the FASB ASC for its long-lived assets. The Company’s long-lived assets, which include EV charging stations, office and computer equipment, automobile, domain names, and security deposits, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
The Company assesses the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily determinable. If long-lived assets are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated, the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives. The Company determined that there were no impairments of long-lived assets as of June 30, 2013 or December 31, 2012.
INTANGIBLE ASSETS
The Company accounts for the fair value of intangible assets acquired as a result of the acquisition transactions completed during the six month period ended June 30, 2013, pending finalization of a valuation, in the following manner :
|
Estimated Useful Life
|
|
|
|
Provider agreements for locations awaiting installation of EV charging stations
|
7 – 10 years
|
|
$
|
3,062,541
|
|
Awarded government grants for installation of EV charging stations
|
Upon invoicing grantor
|
|
|
638,000
|
|
Trademark
|
Indefinite
|
|
|
300,000
|
|
Present value of EV charging stations to be acquired in October 2016
|
Commencing in October 2016 and over the estimated remaining useful life at such time
|
|
|
150,000
|
|
Total
|
|
|
$
|
4,150,541
|
|
Less: Accumulated amortization
|
|
|
|
(127,814
|
)
|
Balance at June 30, 2013
|
|
|
$
|
4,022,727
|
|
Amortization expense pertaining to intangible assets over the five year period ending December 31, 2018 and thereafter is as follows:
Year ending December 31,:
|
|
|
|
2013 (remaining six months)
|
|
$
|
373,606
|
|
2014
|
|
|
373,606
|
|
2015
|
|
|
407,177
|
|
2016
|
|
|
626,278
|
|
2017
|
|
|
734,307
|
|
2018 and thereafter
|
|
|
1,207,753
|
|
Total
|
|
$
|
3,722,727
|
|
GOODWILL
Goodwill represents the premium paid over the fair value of the intangible and net tangible assets acquired in business combinations. The Company is required to assess the carrying value of its reporting units that contain goodwill at least on an annual basis.
DERIVATIVE INSTRUMENTS
The Company evaluates its convertible debt, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with paragraph 810-10-05-4 of the FASB ASC and paragraph 815-40-25 of the FASB ASC. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the Condensed Consolidated Statements of Operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.
In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.
FAIR VALUE OF FINANCIAL INSTRUMENTS
U.S. GAAP for fair value measurements establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three levels. The fair value hierarchy gives the highest priority to quoted market prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Level 2 inputs are inputs, other than quoted prices included within Level 1, which are observable for the asset or liability, either directly or indirectly. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, accounts payable and accrued expenses, approximate their fair values because of the short maturity of these instruments. The Company’s notes and convertible notes payable approximates the fair value of such instrument based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangement at June 30, 2013 and December 31, 2012.
The Company revalues its derivative liability at every reporting period and recognizes gains or losses in the Condensed Consolidated Statement of Operations that are attributable to the change in the fair value of the derivative liability. The Company has no other assets or liabilities measured at fair value on a recurring basis.
REVENUE RECOGNITION
The Company recognizes revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured. Accordingly, when a customer completes use of a charging station, the service can be deemed rendered and revenue is recognized based on the time duration of the session or the kilowatt hours drawn during the session. Sales of EV stations are recognized upon shipment to the customer, F.O.B. shipping point.
Governmental grants and rebates pertaining to expense reimbursement are recognized as income when the related expense is incurred. Government grants and rebates related to EV charging stations and their installation are deferred and amortized in a manner consistent with the recognition of the related depreciation expense of the related asset over their useful lives.
The Company entered into joint marketing agreement with Nissan North America for which among other matters requires the Company to build, own, operate and maintain a network of 48 fast chargers throughout the United States and create an auto dealer network promotion and referral program so as to facilitate sales of electric vehicles to their potential customers. Revenue received from the agreement on March 29, 2013 of $782,880 is deferred and will be recognized ratably over the life of the chargers, due to inseparable elements. The multiple deliverables are not separate units of accounting because Nissan North America has not delineated specific amounts of the revenue to particular elements of the agreement. The Company is required to install the network by December 31, 2013. None of the fast chargers have been installed as of June 30, 2013 and therefore no revenue has been recognized.
For the three months and six months ended June 30, 2013 and 2012 and for the period of September 3, 2009 (inception) through June 30, 2013, the Company recognized $32,750, $0, $37,749, $0 and $43,344, respectively, of grant revenue.
STOCK-BASED COMPENSATION FOR OBTAINING EMPLOYEE SERVICES
Stock based awards granted to employees have been appropriately accounted for as required by ASC topic 718 “Compensation – Stock Compensation” (“ASC topic 718”). Under ASC topic 718 share based awards are valued at fair value on the date of grant, and that fair value is recognized over the requisite service period. The Company values its stock based awards using the Black-Scholes option valuation model.
EQUITY INSTRUMENTS ISSUED TO PARTIES OTHER THAN EMPLOYEES FOR ACQUIRING GOODS OR SERVICES
The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of section 505-50-30 of the FASB Accounting Standards Codification (“FASB ASC Section 505-50-30”). Pursuant to FASB ASC Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur. The equity instrument is remeasured each reporting period until a measurement date is reached.
ADVERTISING
The Company expenses non-direct advertising as incurred. Total advertising expense for the three months and six months ended June 30, 2013 and 2012, and for the period from September 3, 2009 (inception) through June 30, 2013 was $0, $75, $0 and $75 and $12,124, respectively.
INCOME TAXES
The Company follows Section 740-10-30 of the FASB ASC, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Condensed Consolidated Statements of Operations in the period that includes the enactment date. The Company has a deferred tax asset for which a full valuation allowance has been applied as the utilization of such tax benefit is not more likely than not at this time
The Company adopted section 740-10-25 of the FASB ASC (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company has open tax years going back to inception (2009) until 2012 which may be subject to audit. The Company’s policy is to recognize interest and penalties accrued on uncertain tax positions in interest expense in Company’s Consolidated Statement of Operations.
NET LOSS PER COMMON SHARE
Net loss per common share is computed pursuant to section 260-10-45 of the FASB ASC. Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period.
At June 30, 2013, the potentially dilutive securities included 47.5 million shares reserved for the conversion of convertible notes and convertible preferred stock, and the exercise of outstanding warrants and options which were excluded from the calculation of net loss per share as they are anti-dilutive. At June 30, 2012, the potentially dilutive securities included 36.9 million shares reserved for the conversion of convertible preferred stock, and the exercise of outstanding warrants which were excluded from the calculation of net loss per share as they are anti-dilutive.
COMMITMENTS AND CONTINGENCIES
The Company follows subtopic 450-20 of the FASB ASC to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory agencies. Because of the tentative and preliminary nature of these proposed standards, management has not determined whether implementation of such proposed standards would be material to the condensed consolidated financial statements.
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.
BEAM LLC ACQUISITION
On February 26, 2013, the Company, entered into an equity exchange agreement (the “Exchange Agreement”) by and among the Company, Beam Acquisition LLC, a Nevada limited liability company and wholly-owned subsidiary of the Company (“Beam Acquisition”), Beam Charging LLC, a New York limited liability company (“Beam”), and Manhattan Charging LLC, a New York limited liability company (“Manhattan Charging”), Eric L’Esperance (“L’Esperance”), and Andrew Shapiro (“Shapiro” and together with Manhattan Charging, L’Esperance and the individual members of Manhattan Charging LLC, the “Beam Members”). The Company had previously entered into an agreement, dated December 31, 2012, (the “Initial Agreement”) with Beam Acquisition and Manhattan Charging, pursuant to which Beam Acquisition acquired all of the outstanding membership interests in Beam in exchange for 1,265,822 restricted shares (the “Exchange Shares”) of the Company’s common stock, par value $0.001 (the “Common Stock”) valued at $1,645,569, valued based on the market price on the date of issuance, subject to certain conditions to be met. In the Exchange Agreement and after the conditions had been met, the Company, through Beam Acquisition, further identified the specific terms under which it acquired all of the outstanding membership interests of Beam and Beam became a wholly owned subsidiary of Beam Acquisition (the “Equity Exchange”).
As part of the Equity Exchange, the Company issued an aggregate amount of $461,150 of promissory notes (the “Promissory Notes”) to Manhattan Charging and paid $38,850 in transaction costs. The Promissory Notes accrue interest at a rate of 6% per annum on the aggregate principal amount, and was paid on April 15, 2013 (the “Maturity Date”).
Prior to the Equity Exchange, the Company entered into an Assignment of Promissory Note (the “Note Assignment”) with certain creditors of Beam (the “Creditors”), pursuant to which the Creditors sold to the Company two certain secured promissory notes (the “Notes”) totaling an aggregate principal amount of $130,000 and accrued interest of $33,292. In connection with the Note Assignment, the Company entered into an Amendment to the Promissory Note (the “Note Amendment”). Pursuant to the Note Amendment, the Notes held by the Company accrue interest at a rate of 8% per annum on the aggregate principal amount, payable on February 26, 2016. The Notes are secured by a lien on and continuing security interest in all of the Beam assets as described in the Note Amendment.
The Company acquired Beam in order to expand its presence in the New York City market and has accounted for the transaction as a business combination. Pending the finalization of a valuation, the following table summarizes the preliminary fair value of assets acquired and liabilities assumed at the closing date:
|
|
February 26,
2013
|
|
Cash
|
|
$
|
69
|
|
Fixed assets, net
|
|
|
489,155
|
|
Amortizable intangible assets
|
|
|
1,467,000
|
|
Current liabilities
|
|
|
(631,945
|
)
|
Net identifiable assets
|
|
|
1,324,279
|
|
Goodwill
|
|
|
782,440
|
|
Total consideration given
|
|
$
|
2,106,719
|
|
Acquisition related costs consisting of commission expense of $18,000 and legal fees of $20,850 are reflected as compensation and general and administrative expenses, respectively on the statement of operations for the six months ended June 30, 2013.
The fair value of intangible assets pending finalization of a valuation at February 26, 2013 consist of the following:
|
|
February 26,
2013
|
|
Provider agreements for locations awaiting installation of EV charging stations
|
|
$
|
829,000
|
|
Awarded government grants for installation of EV charging stations
|
|
|
638,000
|
|
|
|
$
|
1,467,000
|
|
The Exchange Agreement provided for an anti-dilution benefit to former members of Beam whereby until such time as a former member sells or disposes of all of his Company common shares of stock, any Triggering Event, as defined by the Agreement, whereby the issue price of the Company stock is below $1.58 shall cause the Company to issue a warrant to each former member to purchase an additional number of Company common shares at the Triggering Event price so as to preserve such Beam Member’s pre-Triggering Event percentage ownership in the Company. From an historical perspective, the Company has raised capital through the issuance of stock and issued stock, options and warrants for services and compensation on a frequent basis since inception at various prices, differing vesting periods and differing expiration dates. The Company has recorded warrants payable and a provision for warrants payable of $187,000 representing the fair value of the warrants, based on the Black Scholes valuation model, that would have been issued based on the Triggering Events occurring during the period of February 26, 2013 through June 30, 2013. The Company can not estimate how long the former members will hold their stock, what market conditions will be when stock is sold and or when stock, options or warrants will be issued and under what terms of issuance as of the date of the acquisition. It is for those reasons, that the Company can not estimate the amount of additional consideration associated with the anti-dilution benefit. The Company will continue to record warrants payables based on the occurrence of Triggering Events.
Synapse Acquisition
On April 3, 2013 (the “Closing Date”), the Company, entered into an equity exchange agreement (the “Exchange Agreement”) by and among the Company, EV Pass, LLC, a New York limited liability company (“EV Pass”) and Synapse Sustainability Trust, Inc., a New York non-profit corporation (“Synapse”) pursuant to which the Company acquired from Synapse (i) all of the outstanding membership interests in EV Pass; (ii) the right to operate, maintain and receive revenue from 68 charging stations located throughout Central New York State (“CNY”) in exchange for 671,141 shares (the “Exchange Shares”) of the Company’s common stock, par value $0.001 (the “Common Stock”) valued at $791,946 valued based on the market value on the issuance date of the stock; and (iii) title to the registered trademark “EV Pass” (the “Equity Exchange”).
As part of the Equity Exchange, the Company made a cash payment of $25,000 to Synapse, on the Closing Date and $75,000 was issued in the form of a promissory note (the “Promissory Note”). The Promissory Note does not bear interest and is payable in three installment payments of $25,000 on each subsequent three month anniversary of the Closing Date.
On the Closing Date, the parties also executed (i) a Revenue Sharing Agreement wherein the Company agreed to pay Synapse 3.6% of the net revenues earned from all current and future charging units installed at any of the 68 CNY locations and (ii) a Bleed-Out Agreement pursuant to which Synapse agreed to limit its total daily trading of the Common Stock to no more than 5% of the total daily trading volume of the Company’s shares.
The Company purchased the assets of EV Pass to expand its presence in central New York State and is accounting for the transaction as a purchase of a collection of assets and liabilities. Pending the finalization of a valuation, the following table summarizes the preliminary fair value of assets acquired and liabilities assumed at the closing date:
|
|
April 3, 2013
|
|
Cash
|
|
$
|
652
|
|
Intangible assets
|
|
|
891,408
|
|
Current liabilities
|
|
|
(114
|
)
|
Net identifiable assets
|
|
|
891,946
|
|
Total consideration given
|
|
$
|
891,946
|
|
There were no acquisition costs associated with this transaction.
The fair value of intangible assets pending finalization of a third party valuation at April 3, 2013 consist of the following:
|
|
April 3, 2013
|
|
Provider agreements for locations awaiting installation of EV charging stations
|
|
$
|
441,408
|
|
Trademark
|
|
|
300,000
|
|
Present value of EV charging stations to be acquired in October 2016
|
|
|
150,000
|
|
Total
|
|
$
|
891,408
|
|
350Green Acquisition
On April 22, 2013 (the “Closing Date”), the Company entered into an addendum (the “Addendum”) to an equity exchange agreement, dated March 8, 2013 (the “Exchange Agreement ”), by and among the Company, 350 Holdings, LLC, a Florida limited liability company (“CCGI Sub”), 350 Green, LLC, a Virginia limited liability company (“350 Green”), Mariana Gerzanych (“Gerzanych”), and Timothy Mason (“Mason” and, together with Gerzanych, the “350 Members”) for the acquisition of 350 Green.
350 Green operates a scalable network of plug-in electric vehicle (“EV”) charging stations across the U.S. It distributes its stations by partnering with retail hosts at select, high-traffic shopping centers and other places where EV drivers live and work, to create an expansive and convenient network of EV charging locations. The Company undertook the acquisition to expand its footprint of deployed EV charging stations.
Pursuant to the Addendum, the Company (through CCGI Sub) acquired all the membership interests of 350 Green from the 350 Members in exchange for $1,219,757 of which: (a) $719,757, valued at the market price on the date of issuance, was paid in the form of 604,838 unregistered shares of the Company’s common stock, par value $0.001 (such shares, the “Exchange Shares”), and (b) $500,000 was paid in the form of a promissory note (the “Promissory Note”) payable to the 350 Members (the “Equity Exchange”). The Promissory Note does not bear interest and is payable in the following installments: (i) a payment of $10,000 on the Closing Date, (ii) an additional $10,000 payment on the thirty (30) day anniversary of the Closing Date, and (iii) monthly installments in the amount of $20,000 thereafter until paid in full. Based on the life of the note, the Company imputed interest at 12% per annum and recorded the note at its present value of $444,768 on the date of issuance. The Company has made payments of principal and interest totaling $40,000 as of June 30, 2013.
In connection with the Equity Exchange, the Company entered into a right of first refusal agreement (the “ROFR Agreement”) between the Company and the 350 Members pursuant to which the Company obtained a right of first refusal to participate in any and all EV charging and infrastructure related business opportunities presented to the 350 Members for one (1) year following the Closing Date. If the Company participates in business opportunities presented to it by the 350 Members pursuant to the ROFR Agreement that results in the Company installing EV charging stations (each an “EV Station”), the Company shall pay the 350 Members $250 for the first station, $125 for each additional EV Station, and 1% of any revenues generated by each EV Station for five (5) years from date of installation. The 350 Members are not currently, and will not be, affiliated with, nor employees of, the Company in any way in the future.
On October 19, 2010, 350 Green was awarded a grant from the City of Chicago to install and maintain an EV charging network throughout the city pursuant to a grant agreement (the “Grant”). On or about June 14, 2012, the City of Chicago delivered a Notice of Default to 350 Green citing, among other deficiencies, that all work had stopped on the Grant project because of 350 Green’s failure to pay its subcontractors and that 350 Green had made misrepresentations with regard to such payments and financial obligations. On February 5, 2013, the Company and the City of Chicago accepted a Preliminary Terms of Approval of Transfer of Grant Agreement (the “Terms of Approval”) that set forth (i) that the Company will be allowed to receive assignment of the Grant if it, among other criteria, settles all of the outstanding claims by the unpaid subcontractors and finishes the Grant project pursuant to a revised scope and budget and (ii) that the City of Chicago will release 350 Green and the Company from any and all liability with respect to misrepresentations regarding payments and financial obligations made by 350 Green prior to the Closing Date. The 350 members will not receive a release as part of this settlement with the City of Chicago.
On March 1, 2013, the City of Chicago delivered approval of the Equity Exchange (the “Chicago Approval”).
On April 22, 2013, the Company acquired 350 Green, and 350 Green became a wholly-owned subsidiary of CCGI Sub.
The Company has accounted for the transaction as a business combination. Pending the finalization of a valuation, the following table summarizes the preliminary fair value of assets acquired and liabilities assumed at the closing date:
|
|
April 22, 2013
|
|
Cash
|
|
$
|
33,632
|
|
Fixed assets, net
|
|
|
4,137,166
|
|
Amortizable intangible assets
|
|
|
1,792,133
|
|
Current liabilities
|
|
|
(4,213,799
|
)
|
Deferred revenue
|
|
|
(2,527,402
|
)
|
Net identifiable liabilities
|
|
|
(778,270
|
)
|
Goodwill
|
|
|
|
|
Total consideration given
|
|
$
|
|
|
The fair value of intangible asset pending finalization of a valuation consists of provider agreements for locations awaiting installation of EV charging stations.
The revenues and net loss of the acquirees as of their respective acquisition dates included in the consolidated statements of operations for the six months ended June 30, 2013 is as follows:
|
|
Car
Charging
Group Inc.
|
|
|
Beam
Charging
LLC
|
|
|
350Green
LLC
|
|
|
Total
|
|
Revenues
|
|
$
|
54,250
|
|
|
$
|
25,292
|
|
|
$
|
|
|
|
$
|
|
|
Net Loss
|
|
$
|
(7,069,084
|
)
|
|
$
|
(414,540
|
)
|
|
$
|
(379,853
|
)
|
|
$
|
(7,863,477
|
)
|
The pro forma revenues and net loss of Car Charging Group, Inc. and the the acquirees as if the acquisitions occurred as of January 1, 2013 and for the period ended June 30, 2013 is as follows:
|
|
Car
Charging
Group Inc.
|
|
|
Beam
Charging
LLC
|
|
|
350Green
LLC
|
|
|
Total
|
|
Revenues
|
|
$
|
54,250
|
|
|
$
|
26,052
|
|
|
$
|
|
|
|
$
|
|
|
Net Income (Loss)
|
|
$
|
(7,069,084
|
)
|
|
$
|
(368,798
|
)
|
|
$
|
(869, 352
|
)
|
|
$
|
|
)
|
The pro forma revenues and net loss of Car Charging Group, Inc. and the the acquirees as if the acquisitions occurred as of January 1, 2012 and for the period ended June 30, 2012 is as follows:
|
|
Car
Charging
Group Inc.
|
|
|
Beam
Charging
LLC
|
|
|
350Green
LLC
|
|
|
Total
|
|
Revenues
|
|
$
|
237,487
|
|
|
$
|
1,000
|
|
|
$
|
276,856
|
|
|
$
|
515,343
|
|
Net Income (Loss)
|
|
$
|
(2,431,022
|
)
|
|
$
|
(73,283
|
)
|
|
$
|
(1,359,218
|
)
|
|
$
|
(3,863,523
|
)
|
4. PREPAID AND OTHER CURRENT ASSETS
Prepaid and other current assets consist of the following at:
|
|
June 30,
2013
|
|
|
December 31,
2012
|
|
Prepaid consulting fees
|
|
$
|
321,386
|
|
|
$
|
181,849
|
|
Prepaid compensation
|
|
|
387,084
|
|
|
|
311,090
|
|
Receivable New York State Energy Research and Development Authority
|
|
|
154,002
|
|
|
|
-
|
|
Sundry prepaid expenses and other current assets
|
|
|
31,292
|
|
|
|
78,170
|
|
Subtotal
|
|
|
893,764
|
|
|
|
571,109
|
|
Less: non current portion
|
|
|
(238,277
|
)
|
|
|
(213,797
|
)
|
Prepaid and other current assets
|
|
$
|
655,487
|
|
|
$
|
357,312
|
|
On October 22, 2012, the Company entered into a one year agreement with a firm to provide consulting services which included business development and capital raising functions. As consideration for such services, the firm received 150,000 fully vested shares of the Company’s common stock valued at $225,000 which is based on the market value on the date of issuance. The expense will be recognized ratably over the term of the agreement. As of June 30, 2013, the prepaid portion of those services was $70,274.
On December 6, 2012, the Company retained an individual to serve as chairman of the Company’s Board of Directors for three years. As part of the chairman’s compensation, the Company issued to him 200,000 fully vested shares of the Company’s common stock valued at $316,000 which is based on the market value on the date of issuance. The expense will be recognized ratably over the term of the agreement. As of June 30, 2013, the prepaid portion of the compensation was $258,856.
On January 11, 2013, the Company retained an individual to serve on the Company’s Board of Directors for three years. As part of the individual’s compensation, the Company issued to him 50,000 fully vested shares of the Company’s common stock valued at $74,500 which is based on the market value on the date of issuance under the 2013 Omnibus Plan. The expense will be recognized ratably over the term of the agreement. As of June 30, 2013, the prepaid portion of the compensation was $62,934.
On January 14, 2013, the Company entered into a contract with a firm to provide strategic planning consulting services. The Company issued 250,000 fully vested shares of its common stock at $1.49 per share, for a total value of $372,500 which is based on the market value on the date of issuance, covering the year ended January 14, 2014. The expense will be recognized ratably over the term of the agreement. As of June 30, 2013, the prepaid portion of those services was $202,069.
On February 19, 2013, the Company retained an individual to serve on the Company’s Board of Directors for three years subject to the Board of Directors approval. As part of the agreement and the individual’s compensation, the Company was obligated to issue him fully vested 50,000 shares of the Company’s common stock valued at $71,000 which is based on the market value on the date of issuance under the 2013 Omnibus Plan. The Company’s Board of Directors did not approve his appointment to the Board of Directors until April 3, 2013 in conjunction with the Company’s acquisition of EV Pass LLC. The expense will be recognized ratably over the term of the agreement. As of June 30, 2013, the prepaid portion of those services was $65,294.
On March 8, 2013, the Company entered into a contract with a firm to provide investor relations consulting services. The Company issued 150,000 shares of its common stock under the 2013 Omnibus Plan at $1.28 per share covering the six month period ended September 8, 2013. As of June 30, 2013, the prepaid portion of those services was $49,043.
The Company entered into an agreement with the New York State Energy and Research Development Authority (“NYSERDA’) to install 58 EV units by December 31, 2013. The Company currently has a billed receivable from NYSERDA for $154,002 for services performed in conjunction with the agreement.
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following at:
|
|
June 30,
2013
|
|
|
December 31,
2012
|
|
Accounts payable
|
|
$
|
4,618,212
|
|
|
$
|
370,675
|
|
Accrued wages
|
|
|
25,500
|
|
|
|
97,961
|
|
Accrued sales and payroll taxes
|
|
|
124,757
|
|
|
|
-
|
|
Accrued fees
|
|
|
112,013
|
|
|
|
72,038
|
|
Accrued interest expense
|
|
|
15,576
|
|
|
|
7,200
|
|
Total
|
|
$
|
4,896,058
|
|
|
$
|
547,874
|
|
Accrued fees consist primarily of fees owed to consultants, revenue share and electricity reimbursements to property owners where the EV chargers are situated.
In conjunction with the acquisition of 350Green, the 350Green vendor’s accounts payable was collateralized by 28 EV charging stations installed by 350Green in California and Maryland to be paid in monthly installments of $10,000. The vendor’s account payable was $126,141 at such time.
CONVERTIBLE NOTES PAYABLE
On September 14, 2012, the Company issued an unsecured $65,000 convertible note payable to an investor which bears interest at 12% per annum and is due with accrued interest on June 14, 2013 for working capital purposes. The note is convertible, at the discretion of the holder into the Company’s common stock at the fixed rate of $1.00 per principal value for any unpaid principal and accrued interest thereon until the note is paid in full. In conjunction with the issuance of the note, the Company issued a warrant, to a stockholder to purchase 65,000 shares of the Company’s common stock at a $1.00 per share until September 14, 2014. The amount allocated to the warrants based on the relative fair value of the warrants on the date of the grant was estimated at $30,934 using a Black-Scholes valuation model under the following assumptions: (1) expected volatility of nearly 222% based on historical volatility, (2) an interest rate of 0.27%, (3) expected life of 2 years and (4) zero dividend yield. The amount allocated to the beneficial conversion feature based on the relative fair value of the beneficial conversion feature of the convertible note on the date of issuance was estimated at $32,884 resulting in an aggregate debt discount of $63,818 on September 14, 2012. The note was paid in full with accrued interest thereon on March 5, 2013, resulting in a loss of $2,284.
On October 10, 2012, the Company issued a convertible note in the amount of $100,000, to an investor, collateralized by all the assets of the Company, due April 10, 2013 with interest at 12% per annum for working capital purposes. The note is convertible, at the discretion of the holder into the Company’s common stock at the fixed rate of $1.00 per principal value for any unpaid principal and accrued interest thereon until the note is paid in full. The noteholder is entitled to be repaid $25,000 for every $1,000,000 raised in equity by the Company which the Company has not met. In conjunction with the issuance of the note, the Company issued a warrant, to a stockholder to purchase 100,000 shares of the Company’s common stock at a $1.00 per share until October 10, 2015. The amount allocated to the warrants based on the relative fair value of the warrants on the date of the grant was estimated at $54,464 using a Black-Scholes valuation model under the following assumptions: (1) expected volatility of 182% based on historical volatility, (2) an interest rate of 0.23%, (3) expected life of 3 years and (4) zero dividend yield. The amount allocated to the beneficial conversion feature based on the relative fair value of the beneficial conversion feature of the convertible note on the date of issuance was estimated at $45,536 resulting in an aggregate debt discount of $100,000 on October 10, 2012. As of June 30, 2013 the related debt discount was fully amortized. As of August 20, 2013, the note remains unpaid and accruing interest.
On October 12, 2012, the Company issued a convertible note in the amount of $50,000 to an investor, collateralized by all the assets of the Company, due April 12, 2013 with interest at 12% per annum for working capital purposes. The note is convertible, at the discretion of the holder into the Company’s common stock at the fixed rate of $1.00 per principal value for any unpaid principal and accrued interest thereon until the note is paid in full. The noteholder is entitled to be repaid $25,000 for every $1,000,000 raised in equity by the Company which the Company has not met. In conjunction with the issuance of the note, the Company issued a warrant, to a stockholder to purchase 50,000 shares of the Company’s common stock at a $1.00 per share until October 12, 2015. The amount allocated to the warrants based on the relative fair value of the warrants on the date of the grant was estimated at $27,938 using a Black-Scholes valuation model under the following assumptions: (1) expected volatility of 181% based on historical volatility, (2) an interest rate of 0.23%, (3) expected life of 3 years and (4) zero dividend yield. The amount allocated to the beneficial conversion feature based on the relative fair value of the beneficial conversion feature of the convertible note on the date of issuance was estimated at $22,062 resulting in an aggregate debt discount of $50,000 on October 12, 2012. As of June 30, 2013, the related debt discount was fully amortized. As of August 20, 2013, the note remains unpaid and accruing interest.
The noteholders pertaining to the October 10, 2012 and October 12, 2012 transactions have mutually agreed to enjoy equal rights as secured lenders under each of their respective notes and that neither shall have priority over the other.
On March 22, 2013, the holder of the $50,000 convertible note issued on October 12, 2012 assigned his interest and accrued interest thereon to the holder of the $100,000 convertible note issued on October 10, 2012.
On December 3, 2012, the Company issued an unsecured $20,000 convertible note payable to an investor which bears interest at 12% per annum and is due with accrued interest on June 3, 2013. The note is convertible, at the discretion of the holder into the Company’s common stock at the fixed rate of $1.00 per principal value for any unpaid principal and accrued interest thereon until the note is paid in full. In conjunction with the issuance of the note, the Company issued a warrant, to a stockholder to purchase 20,000 shares of the Company’s common stock at a $1.00 per share until December 3, 2014. The amount allocated to the warrants based on the relative fair value of the warrants on the date of the grant was estimated at $10,049 using a Black-Scholes valuation model under the following assumptions: (1) expected volatility of nearly 124% based on historical volatility, (2) an interest rate of 0.18%, (3) expected life of 2 years and (4) zero dividend yield. The amount allocated to the beneficial conversion feature based on the relative fair value of the beneficial conversion feature of the convertible note on the date of issuance was estimated at $9,951 resulting in an aggregate debt discount of $20,000 on December 3, 2012. The note was paid in full with accrued interest thereon on March 5, 2013, resulting in a loss of $9,891.
On December 12, 2012, the Company issued an unsecured $56,000 convertible note payable to an investor which bears interest at 12% per annum and is due with accrued interest on June 12, 2013. The note is convertible, at the discretion of the holder into the Company’s common stock at the fixed rate of $1.00 per principal value for any unpaid principal and accrued interest thereon until the note is paid in full. In conjunction with the issuance of the note, the Company issued a warrant, to a stockholder to purchase 56,000 shares of the Company’s common stock at a $1.00 per share until December 12, 2014. The amount allocated to the warrants based on the relative fair value of the warrants on the date of the grant was estimated at $26,925 using a Black-Scholes valuation model under the following assumptions: (1) expected volatility of nearly 109% based on historical volatility, (2) an interest rate of 0.14%, (3) expected life of 2 years and (4) zero dividend yield. The amount allocated to the beneficial conversion feature based on the relative fair value of the beneficial conversion feature of the convertible note on the date of issuance was estimated at $29,075 resulting in an aggregate debt discount of $56,000 on December 12, 2012. The note was paid in full with accrued interest thereon on March 5, 2013, resulting in a loss of $30,462.
On December 28, 2012, the Company issued an unsecured $5,000 convertible note payable to the Chief Executive Officer which bears interest at 12% per annum and is due with accrued interest on June 28, 2013. The note is convertible, at the discretion of the holder into the Company’s common stock at the fixed rate of $1.00 per principal value for any unpaid principal and accrued interest thereon until the note is paid in full. In conjunction with the issuance of the note, the Company issued a warrant, to the Chief Executive Officer to purchase 5,000 shares of the Company’s common stock at a $1.00 per share until December 28, 2014. The amount allocated to the warrants based on the relative fair value of the warrants on the date of the grant was estimated at $2,160 using a Black-Scholes valuation model under the following assumptions: (1) expected volatility of nearly 107% based on historical volatility, (2) an interest rate of 0.15%, (3) expected life of 2 years and (4) zero dividend yield. The amount allocated to the beneficial conversion feature based on the relative fair value of the beneficial conversion feature of the convertible note on the date of issuance was estimated at $2,840 resulting in an aggregate debt discount of $5,000 on December 28, 2012. The note was paid in full with accrued interest of $56 thereon on January 31, 2013, resulting in a loss of $4,064.
Amortization expense for the three and six months ended June 30, 2013 and 2012 and for the period from September 3, 2009 (inception) through June 30, 2013 $8,791, $0, $126,783, $0 and $266,609, respectively, related to convertible notes payable.
NOTES PAYABLE
In connection with the purchase of an electrically charged enabled automobile by the Company in the first quarter, of 2012, the Company entered into a financing agreement. The five-year note, collateralized by the related asset, bears interest at 4.75% and requires minimum monthly payments, inclusive of interest, of $1,216 commencing in May 2012. The unpaid principal balance of the note as of June 30, 2013 is $50,961.
In May 2012, an individual lent Beam Charging LLC (“Beam”), $10,000 payable on demand and personally guaranteed by the then President of Beam. The debt remains unpaid as of June 30, 2013.
In conjunction with the acquisition of Beam, the Company issued notes to six former members of Beam totaling $461,150 due on April 15, 2013 at 6% interest per annum. The notes were paid in full with accrued interest thereon on April 15, 2013.
In conjunction with the acquisition of EV Pass in April 2013, the Company issued a non interest bearing $75,000 note, to be paid in three equal quarterly installments of $25,000 on the three month anniversary date of the note. The note will be paid in full by November 3, 2013.
In conjunction with the acquisition of 350Green, the Company issued a non interest bearing note to the former members of 350Green in the amount of $500,000 requiring a $10,000 payment at closing, a subsequent monthly payment of $10,000 and monthly payments of $20,000 until such time as the note is paid in full, circa May 2015. The Company imputed an interest rate of 12% to the note and recorded the debt at its present value on date of issuance of $444,768. The Company has paid $40,000 in aggregate principal and interest as of June 30, 2013. The unpaid principal balance of the note as of June 30, 2013 was $409,117. Additionally, the Company also assumed a $25,000 note payable with interest payable at 8% per annum due June 29, 2012 in conjunction with the 350Green acquisition. The Company has accrued interest of $2,504 as of June 30, 2013, however, no payments have been made as of August 20, 2013.
During the quarter ended June 30, 2013, the Company issued five notes to a shareholder totaling $145,000 with interest at 12% per annum and payable on demand for working capital purposes. As of June 30, 2013, the Company had repaid the shareholder two notes totaling $25,108 inclusive of accrued interest thereon. The CEO of the Company has had numerous financial dealings with the lender over the years, including personal and business loans and investments. The unpaid balance of the notes, inclusive of accrued interest as of June 30, 2013 is $120,135.
Future minimum monthly note payments, exclusive of interest, by year as of June 30, 2013 are as follows:
Year
|
|
Amount
|
|
2014
|
|
$
|
444,164
|
|
2015
|
|
|
220,366
|
|
2016
|
|
|
13,655
|
|
2017
|
|
|
11,893
|
|
Total
|
|
$
|
690,078
|
|
Total interest expense for the three months and six months ended June 30, 2013 and 2012 and for the period from September 3, 2009 (inception) through June 30, 2013 was $11,234, $509, $21,484, $542 and $85,483, respectively.
7. STOCK SUBSCRIPTION PAYABLE
During June 2013, the Company had received $525,000 from five investors for 1,050,000 shares of the Company’s $0.001 par value common stock and 1,050,000 warrants at an exercise price of $2.25, exercisable immediately and expiring in three years for which all required documentation was not received as of June 30, 2013. All shares and warrants were issued by the Company as of August 19, 2013.
8. COMMON STOCK EQUIVALENTS
SUBSCRIPTION WARRANTS
In connection with a private offering initiated on January 28, 2013, the Company issued 4,990,000 shares of its common stock and issued warrants to purchase 4,990,000 shares of its common stock at an exercise price of $2.25 per share to 14 accredited investors during the period of January 28, 2013 through June 11, 2013 for $2,208,000. The warrants expire three years from the date of issuance and vest immediately. The amount allocated to the warrants based on the relative fair value of the warrants issued was estimated at approximately $1,772,320 using the Black-Scholes valuation model and the following assumptions: (1) expected volatility of ranging from 140% - 467% based on historical volatility; (2) an interest rate ranging from 0.35% - 0.42%; (3) expected life of 3 years and (4) zero dividend yield. The fair value of the options were determined based on the respective closing price on the dates of the grants.
COMPENSATION AND SERVICE WARRANTS
On January 11, 2013, the Board of Directors of the Company approved the Company’s 2013 Omnibus Incentive Plan (the “2013 Plan”), which enables the Company to grant stock options, stock appreciation rights, restricted stock, restricted stock units, phantom stock and dividend equivalent rights to associates, directors, consultants, and advisors of the Company and its affiliates, and to improve the ability of the Company to attract, retain, and motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company. Stock options granted under the Plan may be Non-Qualified Stock Options or Incentive Stock Options, within the meaning of Section 422(b) of the Internal Revenue Code of 1986, except that stock options granted to outside directors and any consultants or advisers providing services to the Company or an affiliate shall in all cases be Non-Qualified Stock Options. The Plan is to be administered by the Board, which shall have discretion over the awards and grants thereunder. The aggregate maximum number of shares of Common Stock for which stock options or awards may be granted pursuant to the Plan is 5,000,000, adjusted as provided in Section 11 of the Plan. The Plan expires on December 1, 2015. The Plan was approved by a majority of the Company’s shareholders on February 13, 2013. In conjunction with the Plan, the Company recognized compensation expense for the three month and six month period ended June 30, 2013 of $520,321 and $1,039,065. As of June 30, 2013, there was $5,202,796 of unrecognized expense that will be recognized over 2.5 years. As of June 30, 2013, 4,350,000 options were outstanding.
On January 11, 2013, the Company issued 12,000 options from the 2013 Omnibus Plan at an exercise price of $1.50 per share of the of the Company’s common stock to the Company’s newly appointed Board member as part of his compensation package. The options vest ratably over two years from date of issuance and expire on January 11, 2018. The fair value of the options issued on the date of the grant was estimated at $17,880, which will be recognized over the service period, using the Black-Scholes valuation model and the following assumptions: (1) expected volatility of nearly 760% based on historical volatility; (2) an interest rate of 0.43%; (3) expected life of 3.5 years and (4) zero dividend yield. The stock price was determined based on the closing price on the date of the grant.
During the period of March 22, 2013 through June 12, 2013, the Company issued 848,000 warrants to a shareholder in connection with the procurement of investor capital. The warrants vest immediately and expire five years from date of issuance; 424,000 warrants have an exercise price of $0.50 and the remaining 424,000 warrants have an exercise price of $2.25. The fair value of the warrants issued on the date of the grant was estimated at $1,008,457, which was recognized as a reduction of proceeds from sale of when issued, using the Black-Scholes valuation model and the following assumptions: (1) expected volatility ranging from 142% - 146% based on historical volatility; (2) an interest rate ranging from 0.80% - 1.15%; (3) expected life of 5 years and (4) zero dividend yield. The stock price was based on the closing price of the stock on the date of the grant.
On April 1, 2013, the Company issued 150,000 options under the 2013 Omnibus Incentive Plan to a company for the procurement of investor capital. The options expire in five years from date of issuance and have an exercise price of $0.50. The fair value of the options issued on the date of the grant was estimated at $187,431 which was recognized when issued and netted against proceeds, using the Black-Scholes valuation model and the following assumptions: (1) expected volatility of nearly 435% based on historical volatility; (2) an interest rate of 0.30%; (3) expected life of 2.5 years and (4) zero dividend yield. The stock price was determined based on the closing price on the date of the grant.
On April 29, 2013, the Company issued 2,200,000 warrants to a company that is owned by the Chief Executive Officer of the Company and is a shareholder of the Company to replace a grant of 2,200,000 warrants which had recently expired. The warrants vest immediately, expire three years from date of issuance and have an exercise price of $1.31. The fair value of the warrants issued on the date of the grant was estimated at $2,253,119, which was recognized when issued, using the Black-Scholes valuation model and the following assumptions: (1) expected volatility of 144% based on historical volatility; (2) an interest rate of 0.32%; (3) expected life of 3 years and (4) zero dividend yield. The stock price was determined based on the closing price on the date of the grant.
The Company recognized compensation cost related to the vesting of these warrants and options for the three and six months ended June 30, 2013 and 2012 of $2,782,260, $142,864, $3,307,423, $236,651 and $4,151,322 for the period of September 3,2009 (inception) to June 30, 2013, respectively.
The fair value of all warrant issuances was computed using the Black-Scholes Model, incorporating transaction details such as stock price, contractual terms, maturity and risk free rates, as well as assumptions about future financing, volatility and holder behavior.
The following table summarizes outstanding warrants by Expiration Date at June 30, 2013:
|
|
|
|
Exercise
|
|
Expiration
|
|
Quantity
|
|
|
Price
|
|
Date
|
|
|
|
|
|
|
|
|
|
500,000 |
|
|
$ |
10.00 |
|
August 10, 2013
|
|
|
500,000 |
|
|
$ |
7.50 |
|
August 10, 2013
|
|
|
500,000 |
|
|
$ |
5.00 |
|
August 10, 2013
|
|
|
10,000 |
|
|
$ |
51.50 |
|
August 25, 2013
|
|
|
4,652,165
|
|
|
$ |
3.00 |
|
August 25, 2013
|
|
|
1,277,170 |
|
|
$ |
1.66 |
* |
July 13, 2014
|
|
|
65,000 |
|
|
$ |
1.00 |
|
September 14, 2014
|
|
|
250,000 |
|
|
$ |
1.50 |
|
November 15, 2013
|
|
|
20,000 |
|
|
$ |
1.00 |
|
December 2, 2014
|
|
|
56,000 |
|
|
$ |
1.00 |
|
December 11, 2014
|
|
|
5,000 |
|
|
$ |
1.00 |
|
December 28, 2014
|
|
|
3,834 |
|
|
$ |
30.00 |
|
May 5, 2015
|
|
|
100,000 |
|
|
$ |
1.00 |
|
October 10, 2015
|
|
|
50,000 |
|
|
$ |
1.00 |
|
October 12, 2015
|
|
|
500,000 |
|
|
$ |
2.25 |
|
October 25, 2015
|
|
|
25,000 |
|
|
$ |
2.25 |
|
November 14, 2015
|
|
|
100,000 |
|
|
$ |
1.64 |
|
December 13, 2015
|
|
|
50,000 |
|
|
$ |
20.00 |
|
January 11, 2016
|
|
|
250,000 |
|
|
$ |
2.25 |
|
January 23, 2016
|
|
|
150,000 |
|
|
$ |
2.25 |
|
January 25, 2016
|
|
|
100,000 |
|
|
$ |
2.25 |
|
January 28, 2016
|
|
|
300,000 |
|
|
$ |
2.25 |
|
January 30, 2016
|
|
|
250,000 |
|
|
$ |
2.25 |
|
February 5, 2016
|
|
|
40,000 |
|
|
$ |
2.25 |
|
February 21, 2016
|
|
|
3,500,000 |
|
|
$ |
2.25 |
|
March 1, 2016
|
|
|
200,000 |
|
|
$ |
2.25 |
|
March 11, 2016
|
|
|
5,000 |
|
|
$ |
1.75 |
|
March 19, 2016
|
|
|
200,000 |
|
|
$ |
2.25 |
|
March 22, 2016
|
|
|
2,200,000 |
|
|
$ |
1.31 |
|
April 29, 2016
|
|
|
150,000 |
|
|
$ |
2.25 |
|
June 4, 2016
|
|
|
600,000 |
|
|
|