5. ASSETS AND LIABILITIES TRANSFERRED TO TRUST MORTGAGE – 350 GREEN

SUMMARY

The Company had, after the acquisition of 350 Green, been continuously negotiating with 350 Green’s creditors in an attempt to reduce 350 Green’s liabilities. On April 17, 2014, the Company’s Board of Directors executed a resolution to form a trust mortgage relating to 350 Green. A trust mortgage is a non-judicial vehicle for the reorganization and the debt restructuring or the sale or wind down of 350 Green and a liquidation of its assets under the control of a third party trustee. It is similar in intent to an Assignment for the Benefit of Creditors under applicable state law but unlike an Assignment or a liquidation under the United States Bankruptcy Code, the trust mortgage is not governed by statute except to the extent of Article 9 of the Uniform Commercial Code as it relates to the grant of a security interest by the Company to the trustee. The trust mortgage is a binding contract between 350 Green and the trustee, but not binding upon the creditors of 350 Green, to serve as fiduciary for the benefit of all creditors of 350 Green, whereby 350 Green irrevocably conferred upon the trustee the authority and power to manage the operations and assets of the business in a manner that will maximize recovery for 350 Green’s creditors. Upon entering into the trust mortgage, the trustee reviewed the financial records of 350 Green, attempted to contact the creditors of 350 Green in order to ascertain the amounts owed to such creditors, and performed a liquidation analysis of the assets of 350 Green in order to form a course of action by which to maximize recovery for the creditors of 350 Green. The Company retained ownership of 100% of the membership interests of 350 Green.

On May 29, 2014, the Company and EVSE Management LLC (“EVSE”) entered into a Management Services Agreement and on June 27, 2014, EVSE purchased certain assets from 350 Green.

On September 8, 2014, the Company entered into an agreement among the trustee of 350 Green, an attorney, 350 Green and the Company whereby the Company would pay the legal fees incurred in connection with an action brought by 350 Green against JNS. In the event 350 Green prevailed in its action, the charging stations restored to 350 Green would become the property of the Company to the extent of the amount of the legal fees incurred by the Company. In the event 350 Green did not prevail in its action, the Company would have the right to offset the amounts expended against the secured note payable.

On September 30, 2014, the Company (“Assignor”) entered into an Assignment Agreement with Green 350 Trust Mortgage LLC (“Assignee”), an entity formed by the trustee for the sole purpose to entering into this transaction, under which Assignor, the sole member of 350 Green, irrevocably assigned, sold and transferred 100% of the limited liability company membership interests in 350 Green to Assignee and Assignee accepted such transfer in consideration of receipt of $100 as of September 30, 2014. On September 30, 2014 350 Green’s balance sheet included $114 in cash, $319,903 in note receivable from EVSE and $4,504,490 in accounts payable and accrued expenses. This assignment did not include the right to the Company’s beneficial interest in the potential favorable outcome of an adjudication of a legal matter involving 350 Green. That right did not transfer as part of the Assignment Agreement and the Company still maintains its beneficial interest in the potential favorable outcome of the adjudication of the legal matter involving 350 Green. The trustee of trust mortgage is now, through an affiliated company of the trustee (Assignee), the 100% owner of the membership interest of 350 Green and as the 100% owner of such membership interest, the trustee fully controls the ability to file an assignment for the benefit of creditors or a federal bankruptcy proceeding. See Note 16 – Commitments and Contingencies – Litigation and Disputes for additional details.

The Company determined that it is the primary beneficiary of 350 Green due to the subordinated financing arrangements (See Note 5 – Assets and Liabilities Transferred to Trust Mortgage – 350 Green – EVSE Agreement for additional details) as well as being the primary beneficiary in the outcome of the action against JNS as of December 31, 2014, and as such, 350 Green’s assets, liabilities and results of operations are included in our consolidated financial statements.

The following amounts pertaining to 350 Green are included in the consolidated statement of operations for the period from April 17, 2014 to December 31, 2014:

The following represents the change in the balance of the non-controlling interest:

ACCRUED EXPENSES

Accrued expenses pertaining to 350 Green consisted of the following:

Accrued fees at December 31, 2014 consisted of disputed network fees and documentation requirements pertaining to chargers acquired as a result of the acquisition of 350 Green. A network operator had withheld revenues covering the period of April 2013 through June 2015. On June 29, 2015, the parties reached a settlement whereby the network operator forgave the subsidiaries of the Company, exclusive of 350 Green, of the net amount owed to the network operator by 350 Green.

NOTE PAYABLE

In conjunction with the acquisition of 350 Green, the Company assumed a note payable in the principal amount of $105,000 that bears interest at a rate of 5% per annum. The note is collateralized by 28 installed charging stations. The note requires principal payments of $10,500 per month, with the final monthly payment to be made on December 31, 2013. During the year ended December 31, 2014, the Company repaid the note and accrued interest in full, such that there was no outstanding balance as of December 31, 2014.

EVSE AGREEMENT

On May 29, 2014, EVSE, a wholly-owned subsidiary of the Company, entered into a Management Services Agreement whereby EVSE would administer the contracts, including the servicing of the related charging stations, of 350 Green on behalf of the trustee in consideration of the revenues derived from such charging stations until the sale of the charging stations or notice from the Company to terminate the Management Services Agreement. No revenues were earned by EVSE during the year ended December 31, 2014 from the charging stations noted above. In addition, 350 Green and the trustee did not pay or incur any liability to CCGI or any of its subsidiaries during the period of April 17, 2014 through December 31, 2014.

On June 27, 2014, EVSE entered into an Asset Purchase Agreement (“Agreement”) with the trustee and 350 Green to purchase from 350 Green (a) charging stations and related service contracts, together with any and all other grants, credits, licenses, and rights associated with them, (b) uninstalled car charging stations that may be in the possession of 350 Green creditors, (c) 350 Green charging stations in various stages of installation and (d) other assets, in consideration of $860,836 consisting of the following:

Since this was an intercompany transaction, it did not have any impact upon the accounting reported in the consolidated financial statements. The net book value of the assets on the date of purchase was $909,263. The loss of $48,427 on 350 Green’s books was eliminated in consolidation. As a result of the Agreement, 350 Green is no longer engaged in any revenue producing activities or any other attributes that could result in concluding that 350 Green may still constitute a business in accordance with Regulation S-X, 210.11-01 (d).